[Federal Register Volume 72, Number 210 (Wednesday, October 31, 2007)]
[Proposed Rules]
[Pages 61590-61603]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 07-5388]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 76

[MB Docket No. 07-198; FCC 07-169]


Review of the Commission's Program Access Rules and Examination 
of Programming Tying Arrangements

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: In this document, the Commission seeks comment on revisions to 
the Commission's program access and retransmission consent rules and 
whether it may be appropriate to preclude the practice of programmers 
to tie desired programming with undesired programming. In the NPRM, the 
Commission also seeks comment on whether to revise its procedures for 
resolving program access complaints.

DATES: Comments for this proceeding are due on or before November 30, 
2007; reply comments are due on or before December 17, 2007. Written 
comments on the Paperwork Reduction Act proposed information collection 
requirements must be submitted by the public, Office of Management and 
Budget (OMB), and other interested parties on or before December 31, 
2007.

ADDRESSES: You may submit comments, identified by MB Docket No. 07-198, 
by any of the following methods:
    <bullet> Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
    <bullet> Federal Communications Commission's Web site: http://www.fcc.gov/cgb/ecfs/. Follow the instructions for submitting comments.
    <bullet> People with Disabilities: Contact the FCC to request 
reasonable accommodations (accessible format documents, sign language 
interpreters, CART, etc.) by e-mail: <a href="/cdn-cgi/l/email-protection#0a4c49493f3a3e4a6c6969246d657c"><span class="__cf_email__" data-cfemail="175154542227235771747439707861">[email protected]</span></a> 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 Steven Broeckaert, <a href="/cdn-cgi/l/email-protection#e0b3948596858ecea2928f85838b81859294a0868383ce878f96"><span class="__cf_email__" data-cfemail="0457706172616a2a46766b61676f65617670446267672a636b72">[email protected]</span></a>; David 
Konczal, <a href="/cdn-cgi/l/email-protection#a6e2c7d0cfc288edc9c8c5dcc7cae6c0c5c588c1c9d0"><span class="__cf_email__" data-cfemail="f7b396819e93d9bc9899948d969bb7919494d9909881">[email protected]</span></a>; or Katie Costello, 
<a href="/cdn-cgi/l/email-protection#551e34213c307b163a26213039393a153336367b323a23"><span class="__cf_email__" data-cfemail="7d361c091418533e120e09181111123d1b1e1e531a120b">[email protected]</span></a>; of the Media Bureau, Policy Division, (202) 
418-2120. For additional information concerning the Paperwork Reduction 
Act information collection requirements contained in this document, 
contact

[[Page 61591]]

Cathy Williams at 202-418-2918, or via the Internet at <a href="/cdn-cgi/l/email-protection#05555744456366662b626a73"><span class="__cf_email__" data-cfemail="1c4c4e5d5c7a7f7f327b736a">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Notice 
of Proposed Rulemaking (NPRM), MB Docket No. 07-198, FCC 07-169, 
adopted on September 11, 2007, and released on October 1, 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. This document will also be available via ECFS 
(http://www.fcc.gov/cgb/ecfs/). (Documents will be available 
electronically in ASCII, Word 97, and/or Adobe Acrobat.) The complete 
text may be purchased from the Commission's copy contractor, 445 12th 
Street, SW., Room CY-B402, Washington, DC 20554. To request this 
document in accessible formats (computer diskettes, large print, audio 
recording, and Braille), send an e-mail to <a href="/cdn-cgi/l/email-protection" class="__cf_email__" data-cfemail="21474242141115614742420f464e57">[email protected]</a> or call the 
Commission's Consumer and Governmental Affairs Bureau at (202) 418-0530 
(voice), (202) 418-0432 (TTY).
    In addition to filing comments with the Office of the Secretary, a 
copy of any comments on the Paperwork Reduction Act proposed 
information collection requirements contained herein should be 
submitted to Cathy Williams, Federal Communications Commission, 445 
12th St., SW., Room 1-C823, Washington, DC 20554, or via the Internet 
at <a href="/cdn-cgi/l/email-protection#edbdbfacad8b8e8ec38a829b"><span class="__cf_email__" data-cfemail="f6a6a4b7b6909595d8919980">[email protected]</span></a>; and also to Nicholas A. Fraser of the Office of 
Management and Budget (OMB), via Internet at <a href="/cdn-cgi/l/email-protection#713f1812191e1d10022e305f2e370310021403311e1c135f141e015f161e07"><span class="__cf_email__" data-cfemail="bff1d6dcd7d0d3decce0fe91e0f9cddeccdacdffd0d2dd91dad0cf91d8d0c9">[email protected]</span></a> or via fax at (202) 395-5167.

Initial Paperwork Reduction Act of 1995 Analysis

    This document contains proposed information collection 
requirements. The Commission, as part of its continuing effort to 
reduce paperwork burdens, invites the general public and the Office of 
Management and Budget (OMB) to comment on the information collection 
requirements contained in this document, as required by the Paperwork 
Reduction Act of 1995, Public Law 104-13. Public and agency comments 
are due December 31, 2007. Comments should address: (a) Whether the 
proposed collection of information is necessary for the proper 
performance of the functions of the Commission, including whether the 
information shall have practical utility; (b) the accuracy of the 
Commission's burden estimates; (c) ways to enhance the quality, 
utility, and clarity of the information collected; and (d) ways to 
minimize the burden of the collection of information on the 
respondents, including the use of automated collection techniques or 
other forms of information technology. In addition, pursuant to the 
Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 
U.S.C. 3506(c)(4), we seek specific comment on how we might ``further 
reduce the information collection burden for small business concerns 
with fewer than 25 employees.''
    To view a copy of this information collection request (ICR) 
submitted to OMB: (1) Go to the Web page http://www.reginfo.gov/public/do/PRAMain, (2) look for the section of the Web page called ``Currently 
Under Review,'' (3) click on the downward-pointing arrow in the 
``Select Agency'' box below the ``Currently Under Review'' heading, (4) 
select ``Federal Communications Commission'' from the list of agencies 
presented in the ``Select Agency'' box, (5) click the ``Submit'' button 
to the right of the ``Select Agency'' box, (6) when the list of FCC 
ICRs currently under review appears, look for the title of this ICR (or 
its OMB control number, if there is one) and then click on the ICR 
Reference Number to view detailed information about this ICR.
    OMB Number: 3060-0888.
    Title: Section 76.7, Petition Procedures; Sec.  76.9, 
Confidentiality Of Proprietary Information; Sec.  76.61, Dispute 
Concerning Carriage; Sec.  76.914, Revocation Of Certification; Sec.  
76.1003, Program Access Proceedings; Sec.  76.1302, Carriage Agreement 
Proceedings; Sec.  76.1513, Open Video Dispute Resolution.
    Form Number: N/A.
    Type of Review: Revision of a currently approved collection.
    Respondents: Businesses or other for-profit entities.
    Number of Respondents: 600.
    Estimated Time per Response: 4 to 60 hours.
    Frequency of Response: On occasion reporting requirement; Third 
party disclosure requirement.
    Total Annual Burden: 19,200 hours.
    Total Annual Costs: $240,000.
    Nature of Response: Required to obtain or retain benefits.
    Nature and Extent of Confidentiality: A party that wishes to have 
confidentiality for proprietary information with respect to a 
submission it is making to the Commission must file a petition pursuant 
to the pleading requirements in Sec.  76.7 and use the method described 
in Sec. Sec.  0.459 and 76.9 to demonstrate that confidentiality is 
warranted.
    Privacy Act Impact Assessment: None.
    Needs and Uses: On September 11, 2007, the Commission adopted a 
Report and Order and a Notice of Proposed Rulemaking In the Matter of 
Implementation of the Cable Television Consumer Protection and 
Competition Act of 1992--Development of Competition and Diversity in 
Video Programming Distribution: Section 628(c)(5) of the Communications 
Act: Sunset of Exclusive Contract Prohibition; Review of the 
Commission's Program Access Rules and Examination of Programming Tying 
Arrangements, MB Docket Nos. 07-29, 07-198, FCC 07-169. Section 628 of 
the Communications Act proscribes a cable operator, a satellite cable 
programming vendor in which a cable operator has an attributable 
interest, or a satellite broadcast programming vendor from engaging in 
unfair methods of competition and deceptive practices and directs the 
Commission to, among other things, prescribe regulations to provide for 
an expedited Commission review of any complaints made under this 
section. Section 76.1003 contains the Commission's procedural rules for 
resolving these program access complaints. The new proposed rules to 
this information collection are 47 CFR 76.1003(e)(1) and 47 CFR 
76.1003(j). Therefore, the rules for this information collection are as 
follows:
    47 CFR 76.1003(e)(1) requires a cable operator, satellite cable 
programming vendor, or satellite broadcast programming vendor that 
expressly references and relies upon a document in asserting a defense 
to a program access complaint filed pursuant to Sec.  76.1003 or in 
responding to a material allegation in a program access complaint filed 
pursuant to Sec.  76.1003, to include such document or documents as 
part of the answer.
    47 CFR 76.1003(j) states in addition to the general pleading and 
discovery rules contained in Sec.  76.7 of this part, parties to a 
program access complaint may serve requests for discovery directly on 
opposing parties, and file a copy of the request with the Commission. 
The respondent shall have the opportunity to object to any request for 
documents that are not in its control or relevant to the dispute. Such 
request shall be heard, and determination made, by the Commission. 
Until the objection is ruled upon, the obligation to produce the 
disputed material is suspended. Any party who fails to timely provide 
discovery requested by the opposing party to which it has not raised an 
objection as described above, or who fails to respond to a Commission 
order

[[Page 61592]]

for discovery material, may be deemed in default and an order may be 
entered in accordance with the allegations contained in the complaint, 
or the complaint may be dismissed with prejudice. This proposed rule 
would add a new universe of filers to this information collection and 
OMB approval is needed.
    47 CFR Section 76.7. Pleadings seeking to initiate FCC action must 
adhere to the requirements of Sec.  76.6 (general pleading 
requirements) and Sec.  76.7 (initiating pleading requirements). 
Section 76.7 is used for numerous types of petitions and special relief 
petitions, including general petitions seeking special relief, waivers, 
enforcement, show cause, forfeiture and declaratory ruling procedures.
    47 CFR 76.9. A party that wishes to have confidentiality for 
proprietary information with respect to a submission it is making to 
the FCC must file a petition pursuant to the pleading requirements in 
Sec.  76.7 and use the method described in Sec. Sec.  0.459 and 76.9 to 
demonstrate that confidentiality is warranted. The petitions filed 
pursuant to this provision are contained in the existing information 
collection requirement and are not changed by the proposed rule 
changes.
    47 CFR 76.61. Section 76.61(a) permits a local commercial 
television station or qualified low power television station that is 
denied carriage or channel positioning or repositioning in accordance 
with the must-carry rules by a cable operator to file a complaint with 
the FCC in accordance with the procedures set forth in Sec.  76.7. 
Section 76.61(b) permits a qualified local noncommercial educational 
television station that believes a cable operator has failed to comply 
with the FCC's signal carriage or channel positioning requirements 
(Sec. Sec.  76.56 through 76.57) to file a complaint with the FCC in 
accordance with the procedures set forth in Sec.  76.7.
    47 CFR 76.914. Section 76.914(c) permits a cable operator seeking 
revocation of a franchising authority's certification to file a 
petition with the FCC in accordance with the procedures set forth in 
Sec.  76.7.
    47 CFR 76.1003. Section 76.1003(a) permits any multichannel video 
programming distributor aggrieved by conduct that it believes 
constitutes a violation of the FCC's competitive access to cable 
programming rules to commence an adjudicatory proceeding at the FCC to 
obtain enforcement of the rules through the filing of a complaint, 
which must be filed and responded to in accordance with the procedures 
specified in Sec.  76.7, except to the extent such procedures are 
modified by Sec.  76.1003.
    47 CFR 76.1302. Section 76.1302(a) permits any video programming 
vendor or multichannel video programming distributor aggrieved by 
conduct that it believes constitutes a violation of the FCC's 
regulation of carriage agreements to commence an adjudicatory 
proceeding at the FCC to obtain enforcement of the rules through the 
filing of a complaint, which must be filed and responded to in 
accordance with the procedures specified in Sec.  76.7, except to the 
extent such procedures are modified by Sec.  76.1302.
    47 CFR 76.1513. Section 76.1513(a) permits any party aggrieved by 
conduct that it believes constitutes a violation of the FCC's 
regulations or in section 653 of the Communications Act (47 U.S.C. 573) 
to commence an adjudicatory proceeding at the Commission to obtain 
enforcement of the rules through the filing of a complaint, which must 
be filed and responded to in accordance with the procedures specified 
in Sec.  76.7, except to the extent such procedures are modified by 
Sec.  76.1513.

Summary of Notice of Proposed Rulemaking

I. Procedure for Shortening Term of Extension of Exclusive Contract 
Prohibition

    1. In light of the five-year extension of the exclusivity ban in 
Sec.  76.1002(c)(6) adopted in the Report and Order in MB Docket No. 
07-29 on September 11, 2007 (72 FR 56645, October 4, 2007), the 
Commission seeks comment on whether it can establish a procedure that 
would shorten the term of the extension if, after two years (i.e., 
October 5, 2009) a cable operator can show competition from new entrant 
MVPDs has reached a certain penetration level in the DMA. We seek 
comment on what this penetration level should be. And, we seek comment 
on whether two years or some other time frame is the appropriate period 
of time. Finally, we ask parties to comment on whether a market-by-
market analysis is appropriate as both a legal and policy matter.

II. Extending Program Access Rules to Terrestrially Delivered Cable-
Affiliated Programming

    2. In comments on the Notice of Proposed Rulemaking in MB Docket 
No. 07-29 (72 FR 9289, March 1, 2007), competitive MVPDs provided 
various examples of withholding of terrestrially delivered cable-
affiliated programming. Moreover, in the Report and Order, we note the 
Commission's previous findings that in two instances--Philadelphia and 
San Diego--withholding of terrestrially delivered cable-affiliated 
programming has had a material adverse impact on competition in the 
video distribution market. As discussed in the Report and Order, 
however, the Commission has previously concluded that terrestrially 
delivered programming is ``outside of the direct coverage'' of the 
exclusive contract prohibition in section 628(c)(2)(D). In the Report 
and Order, we state our continued view that the plain language of the 
definitions of ``satellite cable programming'' and ``satellite 
broadcast programming'' as well as the legislative history of the 1992 
Cable Act place terrestrially delivered programming beyond the scope of 
section 628(c)(2)(D). Commenters, however, cite various other 
provisions of the Communications Act as providing the Commission with 
statutory authority to extend the program access rules, including an 
exclusive contract prohibition, to terrestrially delivered cable-
affiliated programming, such as sections 4(i), 201(b), 303(r), 601(6), 
612(g), 616(a), 628(b), and 706.
    3. As demonstrated by the examples of withholding of regional 
sports networks (RSNs) in San Diego and Philadelphia, we believe that 
withholding of terrestrially delivered cable-affiliated programming is 
a significant concern that can adversely impact competition in the 
video distribution market. To address this concern, we seek comment on 
whether it would be appropriate to extend our program access rules to 
all terrestrially delivered cable-affiliated programming pursuant to 
sections 4(i), 201(b), 303(r), 601(6), 612(g), 616(a), 628(b), or 706, 
or any other provision under the Communications Act. See 47 U.S.C. 
154(i); 47 U.S.C. 201(b); 47 U.S.C. 303(r); 47 U.S.C. 521(6); 47 U.S.C. 
532(g); 47 U.S.C. 536(a); 47 U.S.C. 548(b); 47 U.S.C. 157 nt. In 
particular, we note our previous conclusion that the ability to offer a 
viable video service is ``linked intrinsically'' to broadband 
deployment. See Local Franchising Report and Order, 72 FR 13189, March 
21, 2007. We seek comment on whether the ability to offer terrestrially 
delivered cable-affiliated programming is needed to offer a viable 
video service and, accordingly, whether extending the program access 
rules, including the prohibition on exclusive contracts, to 
terrestrially delivered cable-affiliated programming would promote the 
goal of section 706 to facilitate broadband deployment. In addition, we 
note that the plain language of section 628(b), like

[[Page 61593]]

section 628(c)(2)(D), specifies ``satellite cable programming'' and 
``satellite broadcast programming.'' See 47 U.S.C. 548(b); 
548(c)(2)(D). We seek comment regarding whether we have the authority 
to extend our program access rules to all terrestrially delivered 
cable-affiliated programming by way of statutory provisions granting 
general authority to the Commission, in light of the specific authority 
in section 628 that limits their scope to satellite programming.
    4. We also seek comment on the extent to which cable operators are 
shifting delivery of affiliated programming from satellite delivery to 
terrestrial delivery and whether such action is intended to evade the 
program access rules. We note Verizon's claim that Cablevision's 
programming subsidiary, Rainbow, has made standard definition feeds of 
its RSNs available by satellite, but High Definition (HD) feeds 
available terrestrially, thereby avoiding the program access rules, 
including the exclusive contract prohibition, for HD feeds. We seek 
comment on whether the program access rules should apply to all feeds 
of the same programming, including both standard and HD feeds, 
regardless of whether one feed is delivered terrestrially. We also seek 
comment on whether shifting the HD feed of vertically integrated cable 
programming to terrestrial delivery is an unfair method of competition 
or an unfair or deceptive act in violation of section 628(b) of the 
Communications Act. 47 U.S.C. 548(b). The Commission has stated ``there 
may be circumstances where moving programming from satellite to 
terrestrial delivery could be cognizable under section 628(b) as an 
unfair method of competition or deceptive practice if it precluded 
competitive MVPDs from providing satellite cable programming.''

III. Expanding the Exclusive Contract Prohibition to Non-Cable-
Affiliated Programming

    5. We also seek comment on whether to expand the exclusive contract 
prohibition to apply to non-cable-affiliated programming that is 
affiliated with a different MVPD, principally a DBS provider. As 
discussed above, to the extent that an MVPD meets the definition of a 
``cable operator'' under the Communications Act, the exclusive contract 
prohibition in section 628(c)(2)(D) already applies to its affiliated 
programming. Moreover, as noted above, section 628(j) of the 
Communications Act provides that any provision of section 628, 
including the exclusive contract prohibition in section 628(c)(2)(D), 
that applies to a cable operator also applies to any common carrier or 
its affiliate that provides video programming. 47 U.S.C. 548(j). 
Programming affiliated with other MVPDs, such as DBS providers, is 
beyond the scope of the exclusive contract prohibition in section 
628(c)(2)(D). We seek comment on whether to extend the exclusive 
contract prohibition to non-cable-affiliated programming that is 
affiliated with a different MVPD, principally a DBS provider, pursuant 
to sections 4(i), 201(b), 303(r), 601(6), 612(g), 616(a), 628(b), or 
706, or any other provision under the Communications Act.

IV. Tying of Desired Programming With Undesired Programming

    6. Small and rural cable operators and other MVPDs have raised 
concerns regarding tying of MVPDs' rights to carry broadcast stations 
with carriage of other owned or affiliated broadcast stations in the 
same or a distant market or one or more affiliated non-broadcast 
network. For example, in 2002, the American Cable Association (ACA), 
representing small cable operators, filed a Petition for Inquiry 
stating that broadcast networks and station groups engage in unfair 
retransmission tying arrangements. See American Cable Association's 
Petition for Inquiry into Retransmission Consent Practices (filed 
October 1, 2002) (ACA 2002 Petition). ACA explains that tying harms 
small cable operators and their consumers by increasing the costs of 
basic cable and reducing program choices. Small and rural cable 
operators and other MVPDs, in addition to recent program access 
complainants, have also raised concerns regarding the practice of 
programmers to tie marquee programming, such as premium channels or 
regional sports programming, with unwanted, or less desirable, 
programming. For example, in their comments on the Notice of Proposed 
Rulemaking in MB Docket No. 07-29, OPASTCO/ITAA, representing small and 
rural MVPDs, cites the practice of programmers to require carriage of 
less popular programming in specified (usually basic) tiers in return 
for the right to carry popular programming as an onerous and 
unreasonable condition that denies consumers choice and impedes entry 
into the MVPD market.
    7. When programming is available for purchase only through 
programmer-controlled packages that include both desired and undesired 
programming, MVPDs face two choices. First, the MVPD can refuse the 
tying arrangement, thereby potentially depriving itself of desired, and 
often economically vital, programming that subscribers demand and which 
may be essential to attracting and retaining subscribers. Second, the 
MVPD can agree to the tying arrangement, thereby incurring costs for 
programming that its subscribers do not demand and may not want, with 
such costs being passed on to subscribers in the form of higher rates, 
and also forcing the MVPD to allocate channel capacity for the unwanted 
programming in place of programming that its subscribers prefer. In 
either case, the MVPD and its subscribers are harmed by the refusal of 
the programmer to offer each of its programming services on a stand-
alone basis. We note that the competitive harm and adverse impact on 
consumers would be the same regardless of whether the programmer is 
affiliated with a cable operator or a broadcaster or is affiliated with 
neither a cable operator nor a broadcaster, such as networks affiliated 
with a non-cable MVPD or a non-affiliated independent network. 
Moreover, we note that small cable operators and MVPDs are particularly 
vulnerable to such tying arrangements because they do not have leverage 
in negotiations for programming due to their smaller subscriber bases. 
As discussed in more detail below, we seek comment on these various 
types of tying arrangements. Given the problems associated with such 
tying arrangements, we seek comment on whether it may be appropriate 
for the Commission to preclude them. We also seek comment on the extent 
to which these disparities in bargaining power are the result of media 
consolidation, and, if so, what steps the Commission can and should 
take to redress the imbalance.
    8. Tying of Broadcast Programming. We seek comment on the tying of 
MVPDs' rights to carry broadcast stations with carriage of other owned 
or affiliated broadcast stations in the same or a distant market or one 
or more affiliated non-broadcast networks. Section 325(b)(3)(C) of the 
Communications Act obligates broadcasters and multichannel video 
programming distributors to negotiate retransmission consent agreements 
in good faith. 47 U.S.C. 325(b)(3)(C). Specifically, the Commission 
must establish regulations that:

    Until January 1, 2010, prohibit a television broadcast station 
that provides retransmission consent from engaging in exclusive 
contracts for carriage or failing to negotiate in good faith, and it 
shall not be a failure to negotiate in good faith if the television 
broadcast station enters into retransmission consent agreements 
containing different terms and conditions, including price terms, 
with different multichannel video programming distributors if such 
different terms and

[[Page 61594]]

conditions are based on competitive marketplace considerations. 47 
U.S.C. 325(b)(3)(C)(ii).

    Pursuant to the Satellite Home Viewer Extension and Reauthorization 
Act of 2004 (SHVERA), Congress extended 47 U.S.C. 325(b)(3)(C) until 
2010 and amended that section to impose a reciprocal good faith 
retransmission consent bargaining obligation on MVPDs. The Commission 
adopted rules implementing section 207 of SHVERA. See Reciprocal 
Bargaining Order, 70 FR 40216, July 13, 2005.
    9. In its Good Faith Order, the Commission adopted rules 
implementing the good faith negotiation provisions and the complaint 
procedures for alleged rule violations. See Good Faith Order, 68 FR 
52127, September 2, 2003. The Good Faith Order adopted a two-part test 
for good faith. The first part of the test consists of a brief, 
objective list of negotiations standards. First, a broadcaster may not 
refuse to negotiate with an MVPD regarding retransmission consent. 
Second, a broadcaster must appoint a negotiating representative with 
authority to bargain on retransmission consent issues. Third, a 
broadcaster must agree to meet at reasonable times and locations and 
cannot act in a manner that would unduly delay the course of 
negotiations. Fourth, a broadcaster may not put forth a single, 
unilateral proposal. Fifth, a broadcaster, in responding to an offer 
proposed by an MVPD, must provide considered reasons for rejecting any 
aspects of the MVPD's offer. Sixth, a broadcaster is prohibited from 
entering into an agreement with any party conditioned upon denying 
retransmission consent to any MVPD. Finally, a broadcaster must agree 
to execute a written retransmission consent agreement that sets forth 
the full agreement between the broadcaster and the MVPD. The second 
part of the good faith test is based on a totality of the circumstances 
standard.
    10. The Commission has held that ``[r]efusal by a Negotiating 
Entity to put forth more than a single, unilateral proposal'' is a per 
se violation of a broadcast licensee's good faith obligation. See 47 
CFR 76.65(b)(1)(iv). The Commission has also indicated that such 
requirement is not limited to monetary considerations, but also applies 
to situations where a broadcaster is unyielding in its insistence upon 
carriage of a secondary programming service undesired by the cable 
operator as a condition of granting its retransmission consent:

    ``Take it or leave it'' bargaining is not consistent with an 
affirmative obligation to negotiate in good faith. For example, a 
broadcaster might initially propose that, in exchange for carriage 
of its signal, an MVPD carry a cable channel owned by, or affiliated 
with, the broadcaster. The MVPD might reject such offer on the 
reasonable grounds that it has no vacant channel capacity and 
request to compensate the broadcaster in some other way. Good faith 
negotiation requires that the broadcaster at least consider some 
form of consideration other than carriage of affiliated programming. 
This standard does not, in any way, require a broadcaster to reduce 
the amount of consideration it desires for carriage of its signal. 
This standard only requires that the broadcaster be open to 
discussing more than one form of consideration in seeking 
compensation for retransmission of its signal by MVPDs.

    11. As discussed above, ACA in 2002 filed a Petition for Inquiry 
regarding the Commission's retransmission consent rules. See ACA 2002 
Petition. This petition will be placed in the record of this 
proceeding. ACA's Petition raises concerns about broadcasters' alleged 
abuse of the retransmission consent process. ACA asserts that broadcast 
networks and station groups engage in unfair retransmission tying 
arrangements. ACA asserts that small cable operators have minimal 
bargaining power during negotiations and are targets for abuse because 
of their lack of resources to file complaints and engage in disputes. 
We note that its Retransmission Consent and Exclusivity Rules: Report 
to Congress Pursuant to Section 208 of the Satellite Home Viewer 
Extension and Reauthorization Act of 2004 (September 8, 2005) 
(available at http://www.fcc.gov/mb/policy/shvera.html), the Commission 
addressed the tying issue. The Commission noted ``cable operators' 
widespread concern that retransmission consent negotiations frequently 
involve broadcasters tying carriage of their signals to numerous 
affiliated non-broadcast programming networks.'' The Report noted that 
``since the Commission's decision to deny broadcasters the ability to 
assert dual and multicast must carry, broadcasters have begun using 
their retransmission consent negotiations to negotiate carriage of 
their digital signals, thus furthering the digital transition by 
increasing the number of households with access to digital signals. If 
broadcasters are limited in their ability to accept in-kind 
compensation, they should be granted full carriage rights for digital 
signals, including all free over-the-air digital multicast streams. 
Should Congress consider proposals circumscribing retransmission 
consent compensation, we encouraged review of related rules and 
policies to maintain proper balance.''
    12. We seek comment on the current status of carriage negotiations 
in today's marketplace. We seek comment on whether broadcasters are 
tying carriage of their broadcast signals to carriage of other owned or 
affiliated broadcast stations in the same or a distant market or one or 
more affiliated non-broadcast networks and, if so, how retransmission 
consent negotiations are impacted. We ask if broadcast networks and 
station groups engage in retransmission consent tying arrangements that 
result in harm to small cable operators and their customers. We ask if 
the Commission's good faith negotiation regulations provide enough 
protection for small cable operators and small broadcasters in the 
negotiation process, taking into account the administrative burdens and 
costs of engaging in a contested case before the Commission. We seek 
comment on whether and how the Commission's good faith negotiation 
regulations should be modified to address these concerns. Also, we ask 
what the effect of any modifications would be on the economic 
underpinnings of broadcast-affiliated programmers.
    13. We also seek comment on whether the Commission has the 
jurisdiction to preclude tying arrangements by broadcasters, without 
modification of the retransmission consent regime by Congress. The 
legislative history of section 325 addresses the right of broadcasters 
to seek carriage of additional channels as part of retransmission 
consent transactions: ``Other broadcasters may not seek monetary 
compensation, but instead negotiate other issues with cable systems, 
such as joint marketing efforts, the opportunity to provide news 
inserts on cable channels, or the right to program an additional 
channel on a cable system. It is the Committee's intention to establish 
a marketplace for the disposition of the rights to retransmit broadcast 
signals; it is not the Committee's intention in this bill to dictate 
the outcome of the ensuing marketplace negotiations.'' Congress 
appeared to contemplate carriage of broadcast-affiliated cable channels 
as part of legitimate retransmission consent negotiations.
    14. In addition, we seek comment regarding whether there are 
grounds for the Commission to depart from prior holdings that permitted 
broadcasters to negotiate the carriage of affiliated channels as part 
of retransmission consent negotiations. The Commission has stated that 
examples of bargaining proposals ``presumptively * * * consistent with 
competitive marketplace considerations and the good faith

[[Page 61595]]

negotiation requirement'' include ``proposals for carriage conditioned 
on carriage of any other programming, such as a broadcaster's digital 
signals, an affiliated cable programming service, or another broadcast 
station either in the same or a different market.'' See Implementation 
of the Satellite Home Viewer Improvement Act of 1999, 65 FR 15559, 
March 23, 2000. We held that such a proposal contains ``presumptively 
legitimate terms and conditions or forms of consideration'' and found 
nothing to suggest that such a request is ``impermissible'' or anything 
``other than a competitive marketplace consideration.'' In 2001, the 
Commission considered but refused to adopt rules specifically 
prohibiting tying arrangements. See Carriage of Digital Television 
Broadcast Signals, 66 FR 16533, March 26, 2001. The Commission 
concluded that such arrangements are permitted, but stated it would 
continue to monitor the situation with respect to potential 
anticompetitive conduct by broadcasters. We seek comment on whether 
market circumstances and industry practices have changed to warrant a 
different conclusion.
    15. Lastly, we ask whether Commission action to preclude tying 
arrangements is consistent with the First Amendment. On the one hand, 
it could be argued that restricting such arrangements infringes the 
right of broadcasters to express a message by packaging together 
certain content. On the other hand, we note that the Supreme Court has 
observed that ``the programming offered on various channels'' by video 
distributors consists of ``individual, unrelated segments that happen 
to be transmitted together for individual selection by members of the 
audience.'' Unlike newspapers and magazines, the Court suggested that 
these segments do not ``contribute something to a common theme'' 
expressed by the distributor to its subscribers.
    16. Tying of Satellite Cable Programming. Small and rural MVPDs as 
well as program access complainants have asserted that tying practices 
by satellite cable programmers constitute ``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 [MVPD] 
from providing satellite cable programming * * * to subscribers or 
consumers'' in violation of section 628(b) of the Communications Act. 
47 U.S.C. 548(b). At the time of the First Report and Order, 58 FR 
27658, May 11, 1993, the Commission declined to adopt specific rules 
under section 628(b) to address tying, while clearly reserving the 
right to do so if necessary:

    Neither the record of this proceeding nor the legislative 
history offer much insight into the types of practices that might 
constitute a violation of the statute with respect to the 
unspecified ``unfair practices'' prohibited by section 628(b) * * * 
The objectives of the provision, however, are clearly to provide a 
mechanism for addressing those types of conduct, primarily 
associated with horizontal and vertical concentration within the 
cable and satellite cable programming field, that inhibit the 
development of multichannel video distribution competition.
* * * * *
    Thus, although the types of conduct more specifically referenced 
in the statute, i.e., exclusive contracting, undue influence among 
affiliates, and discriminatory sales practices, appear to be the 
primary areas of congressional concern, section 628(b) is a clear 
repository of Commission jurisdiction to adopt additional rules or 
to take additional actions to accomplish the statutory objectives 
should additional types of conduct emerge as barriers to competition 
and obstacles to broader distribution of satellite cable * * * 
programming.

    17. We seek comment on the current status of carriage negotiations 
in today's marketplace. We seek comment on whether satellite cable 
programmers are tying carriage of their desirable channels to carriage 
of other less desirable owned or affiliated channels. We ask whether 
and how such tying arrangements affect small cable operators and their 
customers. We seek comment on whether ``take-it-or-leave-it'' tying 
arrangements (i.e., where the purchase of desired programming is 
conditioned on the purchase of undesired programming) without any 
alternative offer to provide the programming on a stand-alone basis are 
prevalent in the industry; and if so, whether such an arrangement is a 
violation of section 628(b). As discussed above, in such situations, 
MVPDs are victims of an unfair method of competition that hinders 
significantly or prevents MVPDs from providing satellite cable 
programming to subscribers.
    18. We also seek comment on whether the Commission has the 
jurisdiction to preclude tying arrangements by satellite cable 
programmers under section 628(b) or any other statutory authority. We 
seek comment on whether section 628(b) requires satellite cable 
programmers to offer each of their programming services on a stand-
alone basis to all MVPDs at reasonable rates, terms, and conditions. 
Moreover, to the extent that we decide in this proceeding to extend the 
Commission's program access rules to terrestrially delivered cable-
affiliated programming networks, we seek comment on whether we should 
also require terrestrially delivered cable-affiliated programming 
networks to be offered on a stand-alone basis to all MVPDs at 
reasonable rates, terms, and conditions. Lastly, we ask whether 
Commission action to preclude tying arrangements by satellite cable 
programmers is consistent with the First Amendment.
    19. Tying of Other Programming. We also seek comment on whether we 
have the jurisdiction or authority to require networks that are 
affiliated with neither a cable operator nor a broadcaster, such as 
networks affiliated with a non-cable MVPD or a non-affiliated 
independent network, to be offered on a stand-alone basis to all MVPDs 
at reasonable rates, terms, and conditions. We seek comment on the 
extent to which such programming networks have engaged in unfair tying 
practices or other abusive practices that would require regulatory 
intervention. We seek comment on whether it would be appropriate to 
regulate these programming networks in such a manner pursuant to 
sections 4(i), 201(b), 303(r), 601(6), 612(g), 616(a), and 706, or any 
other provision under the Communications Act.

V. Program Access Concerns Raised by Small and Rural MVPDs

    20. As discussed above, small and rural MVPDs raise additional 
issues in their comments regarding obstacles they face in trying to 
obtain access to programming. They ask the Commission to examine 
various conditions they describe as onerous and unreasonable, which 
they allege are imposed by programmers on small and rural MVPDs for 
access to content, including restrictions on the use of shared headends 
for receiving content. NTCA and OPASTCO/ITTA claim that use of a shared 
headend is an economical means for multiple rural MVPDs to provide 
video service in a high-cost area, but that programmers have expressed 
concern with the potential for the use of shared headends to result in 
unauthorized reception of programming. NTCA states that while shared 
headend providers are currently negotiating with content providers to 
resolve these issues, it is concerned that rural consumers served by 
shared headends may lose access to programming if these negotiations 
fail. In addition to the issue of shared headends, small and rural 
MVPDs ask the Commission to examine other conditions imposed by 
programmers, including (i) requiring MVPDs to enter into mandatory non-
disclosure agreements with programmers, which prevents small and rural 
MVPDs from obtaining information about the market value of

[[Page 61596]]

programming; (ii) requiring small and rural MVPDs to provide 
programmers with ``hundreds of advertising slots''; and (iii) mandating 
unwarranted security requirements that extend beyond the legitimate 
need to protect programming. OPASTCO/ITTA claim that all of these 
conditions impede the entry of small and rural telephone companies into 
the video distribution marketplace. We seek comment on the extent to 
which such practices are occurring in the marketplace and, if so, 
whether we should, and whether we have the authority to, take action to 
address these practices.

VI. Modification of Program Access Complaint Procedures

    21. Remedies for Violations. We seek comment on whether to add an 
arbitration-type step as part of the Commission's determination of an 
appropriate remedy for program access violations. We agree with 
commenters that commercial arbitration requires parties to put forth 
their best effort to resolve disputes or risk the arbitrator adopting 
the opposing parties' proposals. In the Hughes Order, the Commission 
concluded that final offer arbitration has the attractive ``ability to 
induce two sides to reach their own agreement, lest they risk the 
possibility that a relatively extreme offer of the other side may be 
selected by the arbitrator.'' This type of pressure can encourage the 
parties to resolve their differences through settlement. We believe 
that a modified version of this method can encourage negotiation among 
the parties. Therefore, we seek comment on whether, when feasible, the 
Commission should request, as part of its evaluation of the appropriate 
remedy to impose for program access violations, that the parties each 
submit their best ``final offer'' proposal for the rates, terms, or 
conditions under review. We seek comment on whether the Commission 
should have the discretion to adopt one of the parties' proposals as 
the remedy for the program access complaint.
    22. Status of Existing Contract Pending Resolution of Program 
Access Complaint. While we declined to adopt mandatory arbitration in 
lieu of the Commission's complaint process in the Report and Order, we 
issue this NPRM on the issue of a provision for complainants to request 
a stay of any action or proposed action that would change an existing 
program contract that is the subject of a program access complaint, 
pending the resolution of the program access complaint. Some 
competitive providers recommend a ``standstill'' requirement for pre-
existing carriage contracts during adjudication of program access 
disputes, to preserve the status quo until the program access complaint 
has been resolved. In a recent merger transaction, in adopting 
conditions for arbitration of program access disputes, the Commission 
required that an aggrieved MVPD have continued access to the 
programming in question under the terms and conditions of the expired 
contract, pending resolution of the dispute. Provision of the disputed 
programming during the pendency of arbitration was not required in the 
case of the first time requests for programming where no carriage 
agreement had previously existed between the parties. Verizon supports 
a five-month long standstill provision while complaints are being 
resolved. BSPA, RCN, and USTelecom support a standstill provision 
pending the resolution of the complaint, wherein carriage is continued 
and the parties are subject to the same price, terms, and conditions of 
the existing contract, with any new price arising out of resolution to 
be applied retroactively to the date of the complaint. BSPA asserts 
that vertically integrated programmers covered by the program access 
rules have incentives to use temporary foreclosure strategies during 
negotiations for programming and, therefore, standstill agreements 
should be made part of the program access complaint procedures. Other 
parties favoring a standstill provision include ACA, EchoStar, and 
SureWest. EchoStar asserts that there can be no doubt that the 
Commission has the authority to promulgate a standstill requirement as 
a lesser interim remedy where interruption of carriage threatens to 
cause irreparable injury to the public.
    23. NCTA opposes any ``standstill'' provision and states that there 
is no authority that allows the Commission to interfere in the right to 
contract in this way. Time Warner asserts that the standstill 
requirement would prohibit a network from de-authorizing carriage by an 
MVPD, but would allow the MVPD to drop the network, creating an unfair 
bargaining situation. Time Warner believes that any standstill 
requirement would increase the likelihood of program access complaints 
because the MVPD will have a strong incentive to file a complaint just 
to protect the status quo and decrease the chances that parties will 
resolve their disputes because the incentive of either party to 
negotiate could be reduced once the status quo is protected. Comcast 
and the Broadcast Networks also oppose any ``standstill'' requirement.
    24. We agree that the threat of temporary foreclosure pending 
resolution of a complaint may impair settlement negotiations and may 
discourage parties from filing legitimate complaints. In the Adelphia 
Order, the Commission discussed circumstances wherein temporary 
foreclosure of programming service may be profitable even where 
permanent foreclosure is not. By temporarily foreclosing supply of the 
programming to an MVPD competitor or by threatening to engage in 
temporary foreclosure, the integrated firm may improve its bargaining 
position so as to be able to extract a higher price from the MVPD 
competitor than it could have negotiated if it were a non-integrated 
programming supplier. The Commission included, as a measure to 
alleviate such foreclosure strategies, a requirement that, upon 
receiving timely notice of an MVPD's intent to arbitrate, program 
carriage be continued under the existing terms and conditions. We 
request comment on whether the issuance of temporary stay orders would 
encourage parties to resolve program access disputes and to make use of 
the Commission's complaint procedures when needed. We request comment 
on whether complainants must formally request such relief from the 
Commission and must establish that they are likely to prevail on the 
merits of their complaint; will suffer irreparable harm absent a stay; 
that the balance of harms to the parties favors grant of a stay; and 
that the public interest favors grant of the stay. We request comment 
on whether, as part of a showing of irreparable harm, complainants may 
discuss the likelihood that subscribers would switch MVPDs to obtain 
the programming in dispute for a long enough period to make the 
strategy profitable to the respondent. We request comment on whether 
these stays should be routinely granted when the facts support their 
issuance and that they will help to encourage settlement negotiations. 
We request comment on the nature of the stay, that is, whether both the 
complainant and the respondent will be subject to the stay order, and 
required to fulfill their respective obligations under the terms and 
conditions of the carriage contract in issue, while the stay is in 
effect. We request comment on whether complainants will be permitted to 
drop the programming that is the subject of the program access dispute 
unless and until a request to dismiss the complaint with prejudice is 
granted by the Commission. We request comment on whether the length of 
the stay should be entirely discretionary. Finally, we request comment 
on whether the Commission should include, as part of

[[Page 61597]]

its final order resolving the complaint or resolving damages, 
adjustments to its remedies that make the terms of the new agreement 
between the parties retroactive to the expiration date of the previous 
agreement.

VII. Procedural Matters

A. Ex Parte Rules
    25. Permit-But-Disclose. The NPRM in this proceeding will be 
treated as ``permit-but-disclose'' subject to the ``permit-but-
disclose'' requirements under Sec.  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 two-sentence description of the 
views and arguments presented is generally required. Additional rules 
pertaining to oral and written presentations are set forth in Sec.  
1.1206(b).
B. Filing Requirements
    26. Comment Information. Pursuant to Sec. Sec.  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, 
May 1, 1998.
    <bullet> Electronic Filers: Comments may be filed electronically 
using the Internet by accessing the ECFS: http://www.fcc.gov/cgb/ecfs/ 
or the Federal eRulemaking Portal: http://www.regulations.gov. Filers 
should follow the instructions provided on the website for submitting 
comments.
    <bullet> For ECFS filers, if multiple docket or rulemaking numbers 
appear in the caption of this proceeding, filers must transmit one 
electronic copy of the comments for each docket or rulemaking number 
referenced in the caption. In completing the transmittal screen, filers 
should include their full name, U.S. Postal Service mailing address, 
and the applicable docket or rulemaking number. Parties may also submit 
an electronic comment by Internet e-mail. To get filing instructions, 
filers should send an e-mail to <a href="/cdn-cgi/l/email-protection#98fdfbfeebd8fefbfbb6fff7ee"><span class="__cf_email__" data-cfemail="bbded8ddc8fbddd8d895dcd4cd">[email protected]</span></a>, and include the following 
words in the body of the message, ``get form.'' A sample form and 
directions will be sent in response.
    <bullet> Paper Filers: Parties who choose to file by paper must 
file an original and four copies of each filing. If more than one 
docket or rulemaking number appears in the caption of this proceeding, 
filers must submit two additional copies for each additional docket or 
rulemaking number.
    Filings can be sent by hand or messenger delivery, by commercial 
overnight courier, or by first-class or overnight U.S. Postal Service 
mail (although we continue to experience delays in receiving U.S. 
Postal Service mail). All filings must be addressed to the Commission's 
Secretary, Office of the Secretary, Federal Communications Commission.
    <bullet> The Commission's contractor will receive hand-delivered or 
messenger-delivered paper filings for the Commission's Secretary at 236 
Massachusetts Avenue, NE., Suite 110, Washington, DC 20002. The filing 
hours at this location are 8 a.m. to 7 p.m. All hand deliveries must be 
held together with rubber bands or fasteners. Any envelopes must be 
disposed of before entering the building.
    <bullet> Commercial overnight mail (other than U.S. Postal Service 
Express Mail and Priority Mail) must be sent to 9300 East Hampton 
Drive, Capitol Heights, MD 20743.
    <bullet> U.S. Postal Service first-class, Express, and Priority 
mail must 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 <a href="/cdn-cgi/l/email-protection" class="__cf_email__" data-cfemail="563035356366621630353578313920">[email protected]</a> or call the 
Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), 202-
418-0432 (tty).
    27. 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. Persons with disabilities who need assistance in the FCC 
Reference Center may contact Bill Cline at (202) 418-0267 (voice), 
(202) 418-7365 (TTY), or <a href="/cdn-cgi/l/email-protection#37555e5b5b19545b5e59527751545419505841"><span class="__cf_email__" data-cfemail="3a5853565614595653545f7a5c5959145d554c">[email protected]</span></a>. These documents also will 
be available from the Commission's Electronic Comment Filing System. 
Documents are available electronically in ASCII, Word 97, and Adobe 
Acrobat. Copies of filings in this proceeding may be obtained from Best 
Copy and Printing, Inc., Portals II, 445 12th Street, SW., Room CY-
B402, Washington, DC 20554; they can also be reached by telephone, at 
(202) 488-5300 or (800) 378-3160; by e-mail at <a href="/cdn-cgi/l/email-protection#187e7b7b587a7b68716f7d7a367b7775"><span class="__cf_email__" data-cfemail="05636666456766756c7260672b666a68">[email protected]</span></a>; or via 
their Web site at http://www.bcpiweb.com. To request materials in 
accessible formats for people with disabilities (Braille, large print, 
electronic files, audio format), send an e-mail to <a href="/cdn-cgi/l/email-protection" class="__cf_email__" data-cfemail="e88e8b8bddd8dca88e8b8bc68f879e">[email protected]</a> or 
call the Consumer and Governmental Affairs Bureau at (202) 418-0531 
(voice), (202) 418-7365 (TTY).
C. Initial Paperwork Reduction Act of 1995 Analysis
    28. The NPRM has been analyzed with respect to the Paperwork 
Reduction Act of 1995 (PRA), Public Law 104-13, and contains proposed 
information collection requirements. The Commission, as part of its 
continuing effort to reduce paperwork burdens, invites the general 
public and the Office of Management and Budget (OMB) to comment on the 
proposed information collection requirements contained in this NPRM, as 
required by the PRA.
    29. Written comments on the PRA proposed information collection 
requirements must be submitted by the public, the OMB, and other 
interested parties on or before December 31, 2007. Comments should 
address: (a) Whether the proposed collection of information is 
necessary for the proper performance of the functions of the 
Commission, including whether the information shall have practical 
utility; (b) the accuracy of the Commission's burden estimates; (c) 
ways to enhance the quality, utility, and clarity of the information 
collected; and (d) ways to minimize the burden of the collection of 
information on the respondents, including the use of automated 
collection techniques or other forms of information technology. In 
addition, pursuant to the Small Business Paperwork Relief Act of 2002, 
Public Law 107-198, see 44 U.S.C. 3506(c)(4), we seek specific comment 
on how we might ``further reduce the information collection burden for 
small business concerns with fewer than 25 employees.'' In addition to 
filing comments with the Office of the Secretary, a copy of any 
comments on the proposed information collection requirements contained 
herein should be submitted to Cathy Williams, Federal Communications 
Commission, 445 12th St., SW., Room 1-C823, Washington, DC 20554, or 
via the Internet at <a href="/cdn-cgi/l/email-protection#db8b899a9bbdb8b8f5bcb4ad"><span class="__cf_email__" data-cfemail="461614070620252568212930">[email protected]</span></a>; and also to Nicholas A. Fraser of the 
Office of Management and Budget (OMB), via Internet at

[[Page 61598]]

<a href="/cdn-cgi/l/email-protection#0a4463696265666b79554b24554c786b796f784a656768246f657a246d657c"><span class="__cf_email__" data-cfemail="357b5c565d5a5954466a741b6a734754465047755a58571b505a451b525a43">[email protected]</span></a> or via fax at (202) 395-5167.
    30. Further Information. For additional information concerning the 
PRA proposed information collection requirements contained in this 
NPRM, contact Cathy Williams at 202-418-2918, or via the Internet at 
<a href="/cdn-cgi/l/email-protection#8cdcdecdcceaefefa2ebe3fa"><span class="__cf_email__" data-cfemail="2a7a786b6a4c4949044d455c">[email protected]</span></a>.
D. Initial Regulatory Flexibility Analysis
    31. As required by the Regulatory Flexibility Act, the Commission 
has prepared an Initial Regulatory Flexibility Analysis (IRFA) of the 
possible significant economic impact on a substantial number of small 
entities of the proposals addressed in this NPRM. 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. 
Comments must be identified as responses to the IRFA. 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
    32. Overview. The NPRM considers Commission action with respect to 
seven issues. First, the Commission is considering whether it can 
establish a procedure that would shorten the term of the five-year 
extension of the exclusive contract prohibition if, after two years 
(i.e., October 5, 2009) a cable operator can show competition from new 
entrant MVPDs has reached a certain penetration level in a Designated 
Market Area. Second, the Commission is contemplating the extension of 
its program access rules to terrestrially delivered cable-affiliated 
programmers in order to facilitate competition in the video 
distribution market. Third, the Commission is considering whether to 
expand the exclusive contract prohibition to apply to non-cable-
affiliated programming that is affiliated with a different MVPD, 
principally a Direct Broadcast Satellite (DBS) provider. Fourth, the 
NPRM is contemplating whether it may be appropriate for the Commission 
to preclude the practice of programmers to require multichannel video 
programming distributors (MVPDs) to purchase and carry undesired 
programming in return for the ability to purchase and carry desired 
programming. The NPRM considers whether to instead require programmers 
to offer each of their programming services on a stand-alone basis to 
all MVPDs. Fifth, the NPRM contemplates action to address concerns 
raised by small and rural MVPDs regarding conditions imposed by 
programmers for access to content. The NPRM also contemplates revising 
the Commission's program access complaint procedures in two respects. 
First, the NPRM is considering whether to establish a process whereby a 
program access complainant may seek a temporary stay of any proposed 
changes to its existing programming contract pending resolution of a 
complaint. Second, the NPRM contemplates revising the Commission's 
program access complaint procedures by requiring parties to submit to 
the Commission, when requested, ``final offer'' proposals as part of 
the remedy phase of the complaint process. Each of these issues is 
discussed in further detail below.
    33. Procedure for Shortening Term of Extension of Exclusive 
Contract Prohibition. Section 628(c)(2)(D) of the Communications Act 
prohibits, in areas served by a cable operator, exclusive contracts for 
satellite cable programming or satellite broadcast programming between 
vertically integrated programming vendors and cable operators unless 
the Commission determines that such exclusivity is in the public 
interest. See 47 U.S.C. 548(c)(2)(D). In MB Docket 07-29, the 
Commission decided to extend this prohibition for five years, until 
October 5, 2012. In light of the five-year extension of the exclusivity 
ban, the NPRM considers whether it can establish a procedure that would 
shorten the term of the extension if, after two years (i.e., October 5, 
2009), a cable operator can show competition from new entrant MVPDs has 
reached a certain penetration level in the DMA. The NPRM contemplates 
what this penetration level should be, whether two years or some other 
time frame is the appropriate period of time, and whether a market-by-
market analysis is appropriate as both a legal and policy matter.
    34. Terrestrially Delivered Cable-Affiliated Programming. Congress 
enacted the program access provisions contained in section 628 of the 
Communications Act of 1934, as amended, as part of the Cable Television 
Consumer Protection and Competition Act of 1992 (1992 Act). The program 
access provisions are intended to increase competition and diversity in 
the multichannel video programming market, as well as to foster the 
development of competition to traditional cable systems, by prescribing 
regulations that govern the access by competing MVPDs to ``satellite 
cable programming'' and ``satellite broadcast programming.'' The term 
``satellite cable programming'' means ``video programming which is 
transmitted via satellite and which is primarily intended for direct 
receipt by cable operators for their retransmission to cable 
subscribers,'' except that such term does not include satellite 
broadcast programming. 47 U.S.C. 548(i)(1); 47 U.S.C. 605(d)(1); see 
also 47 CFR 76.1000(h). The term ``satellite broadcast programming'' 
means ``broadcast video programming when such programming is 
retransmitted by satellite and the entity retransmitting such 
programming is not the broadcaster or an entity performing such 
retransmission on behalf of and with the specific consent of the 
broadcaster.'' 47 U.S.C. 548(i)(3); see also CFR 76.1000(f). The 
Commission has previously concluded that terrestrially delivered 
programming (i.e., programming transmitted or retransmitted by 
satellite for direct reception by cable operators) is not covered by 
the definitions of ``satellite cable programming'' and ``satellite 
broadcast programming.'' See 2002 Extension Order, 67 FR 49247, July 
30, 2002. Thus, terrestrially delivered programming is not subject to 
the program access provisions. The Commission has previously found that 
cable operators have withheld terrestrially delivered cable-affiliated 
programming from competitive MVPDs and that this has resulted in a 
material adverse impact on competition in the video distribution 
market. See Adelphia Order, 21 FCC Rcd 8203. To remedy this concern, 
the NPRM considers whether to extend the program access provisions to 
all terrestrially delivered cable-affiliated programming pursuant to 
various provisions of the Communications Act, such as sections 4(i), 
201(b), 303(r), 601(6), 612(g), 616(a), 628(b), and 706. The Commission 
also seeks information as to whether cable operators, again with anti-
competitive results, are shifting delivery of affiliated programming 
from satellite delivery to terrestrial delivery and whether such action 
is intended to evade the program access rules.
    35. Expanding the Exclusive Contract Prohibition to Non-Cable-
Affiliated Programming. The NPRM is considering whether to expand the 
exclusive contract prohibition to apply to non-cable-affiliated 
programming that is affiliated with a different MVPD, principally a DBS 
provider. To the extent that an MVPD meets the definition of a ``cable 
operator'' under the Communications Act, the exclusive contract 
prohibition in section

[[Page 61599]]

628(c)(2)(D) already applies to its affiliated programming. Moreover, 
section 628(j) of the Communications Act provides that any provision of 
section 628, including the exclusive contract prohibition in section 
628(c)(2)(D), that applies to a cable operator also applies to any 
common carrier or its affiliate that provides video programming. See 47 
U.S.C. 548(j). Programming affiliated with other MVPDs, such as DBS 
providers, is beyond the scope of the exclusive contract prohibition in 
section 628(c)(2)(D). The NPRM is considering whether to extend the 
exclusive contract prohibition to non-cable-affiliated programming that 
is affiliated with a different MVPD, principally a DBS provider, 
pursuant to sections 4(i), 201(b), 303(r), 601(6), 612(g), 616(a), 
628(b), or 706, or any other provision under the Communications Act.
    36. Tying. Various MVPDs have raised concerns regarding the 
practice of some programmers to require MVPDs to purchase and carry 
undesired programming in return for the right to carry desired 
programming, referred to as ``tying.'' When presented with a tying 
arrangement, MVPDs face two choices. First, the MVPD can refuse the 
tying arrangement, thereby potentially depriving itself of desired, and 
often economically vital, programming that subscribers demand and which 
may be essential to attracting and retaining subscribers. Second, the 
MVPD can agree to the tying arrangement, thereby incurring costs for 
programming that its subscribers do not demand and may not want, with 
such costs being passed on to subscribers in the form of higher rates, 
and also forcing the MVPD to allocate channel capacity for the unwanted 
programming in place of programming that its subscribers prefer. In 
either case, the MVPD and its subscribers are harmed by the refusal of 
the programmer to offer each of its programming services on a stand-
alone basis. The NPRM explains that small cable operators and MVPDs are 
particularly vulnerable to such tying arrangements because they do not 
have leverage in negotiations for programming due to their smaller 
subscriber bases. Given the problems associated with such tying 
arrangements, the NPRM is contemplating whether it may be appropriate 
for the Commission to preclude them and to instead require each 
programming service to be offered on a stand-alone basis to all MVPDs. 
The NPRM considers precluding the tying practices of broadcasters, 
satellite cable programmers, terrestrially delivered cable-affiliated 
programmers, and programmers that are affiliated with neither a cable 
operator nor a broadcaster, such as networks affiliated with a non-
cable MVPD or a non-affiliated independent programmer.
    37. Concerns Raised by Small and Rural MVPDs. Small and rural MVPDs 
have raised concerns regarding obstacles they face in trying to obtain 
access to programming which impede competition in the video 
distribution marketplace. These obstacles include (i) restrictions on 
the use of shared headends for receiving content; (ii) requiring small 
and rural MVPDs to enter into mandatory non-disclosure agreements with 
programmers; (iii) requiring small and rural MVPDs to provide 
programmers with advertising slots; and (iv) mandating unwarranted 
security requirements. The NPRM contemplates Commission action to 
address these practices.
    38. Modification of Program Access Complaint Procedures. The NPRM 
also contemplates revising the Commission's program access complaint 
procedures in two respects. First, the NPRM contemplates adding an 
arbitration-type step as part of the Commission's determination of an 
appropriate remedy for program access violations. The NPRM is 
considering whether, when feasible, the Commission should request, as 
part of its evaluation of the appropriate remedy to impose for program 
access violations, that the parties each submit their best ``final 
offer'' proposal for the rates, terms or conditions under review. The 
NPRM considers whether the Commission should have the discretion to 
adopt one of the parties' proposals as the remedy for the program 
access complaint. Second, the NPRM is considering whether to allow 
complainants to request a stay of any action or proposed action that 
would change an existing program contract that is the subject of a 
program access complaint, pending the resolution of the program access 
complaint. In the NPRM, the Commission agrees that the threat of 
temporary foreclosure pending resolution of a complaint may impair 
settlement negotiations and may discourage parties from filing 
legitimate complaints. The NPRM thus contemplates whether the issuance 
of temporary stay orders would encourage parties to resolve program 
access disputes and to make use of the Commission's complaint 
procedures when needed. The NPRM considers whether complainants should 
be required to formally request such relief from the Commission and 
establish that they are likely to prevail on the merits of their 
complaint; will suffer irreparable harm absent a stay; that the balance 
of harms to the parties favors grant of a stay; and that the public 
interest favors grant of the stay. The NPRM also considers whether, as 
part of a showing of irreparable harm, complainants may discuss the 
likelihood that subscribers would switch MVPDs to obtain the 
programming in dispute for a long enough period to make the strategy 
profitable to the respondent. The NPRM further contemplates whether 
these stays should be routinely granted when the facts support their 
issuance and that they will help to encourage settlement negotiations. 
The NPRM considers the nature of the stay, that is, whether both the 
complainant and the respondent will be subject to the stay order, and 
required to fulfill their respective obligations under the terms and 
conditions of the carriage contract in issue, while the stay is in 
effect. The NPRM also contemplates whether complainants will be 
permitted to drop the programming that is the subject of the program 
access dispute unless and until a request to dismiss the complaint with 
prejudice is granted by the Commission. The NPRM considers whether the 
length of the stay should be entirely discretionary. The NPRM also 
considers whether the Commission should include, as part of its final 
order resolving the complaint or resolving damages, adjustments to its 
remedies that make the terms of the new agreement between the parties 
retroactive to the expiration date of the previous agreement.
    39. In the NPRM, the Commission seeks comment on the foregoing 
issues. In particular, the NPRM invites comment on issues that may 
impact small entities, including MVPDs and programmers.
Legal Basis
    40. The authority for the action proposed in the rulemaking is 
contained in section 4(i), 303, and 628 of the Communications Act of 
1934, as amended, 47 U.S.C. 154(i), 303, and 548.
Description and Estimate of the Number of Small Entities to Which the 
Proposed Rules Will Apply
    41. 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. See 5 U.S.C. 603(b)(3). The 
RFA generally defines the term ``small entity'' as having the same 
meaning as the terms ``small business,'' ``small organization,''

[[Page 61600]]

and ``small governmental jurisdiction.'' See 5 U.S.C. 601(6). In 
addition, the term ``small business'' has the same meaning as the term 
``small business concern'' under the Small Business Act. See 5 U.S.C. 
601(3). 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). See 15 U.S.C. 632.
    42. Wired Telecommunications Carriers. The 2007 North American 
Industry Classification System (NAICS) defines ``Wired 
Telecommunications Carriers'' (2007 NAISC Code 517110) to include the 
following three classifications which were listed separately in the 
2002 NAICS: Wired Telecommunications Carriers (2002 NAICS Code 517110), 
Cable and Other Program Distribution (2002 NAISC Code 517510), and 
Internet Service Providers (2002 NAISC Code 518111). The 2007 NAISC 
defines this category as follows: ``This industry comprises 
establishments primarily engaged in operating and/or providing access 
to transmission facilities and infrastructure that they own and/or 
lease for the transmission of voice, data, text, sound, and video using 
wired telecommunications networks. Transmission facilities may be based 
on a single technology or a combination of technologies. Establishments 
in this industry use the wired telecommunications network facilities 
that they operate to provide a variety of services, such as wired 
telephony services, including VoIP services; wired (cable) audio and 
video programming distribution; and wired broadband Internet services. 
By exception, establishments providing satellite television 
distribution services using facilities and infrastructure that they 
operate are included in this industry.'' The SBA has developed a small 
business size standard for Wired Telecommunications Carriers, which is 
all firms having 1,500 employees or less. According to Census Bureau 
data for 2002, there were a total of 27,148 firms in the Wired 
Telecommunications Carriers category (2002 NAISC Code 517110) that 
operated for the entire year; 6,021 firms in the Cable and Other 
Program Distribution category (2002 NAISC Code 517510) that operated 
for the entire year; and 3,408 firms in the Internet Service Providers 
category (2002 NAISC Code 518111) that operated for the entire year. Of 
these totals, 25,374 of 27,148 firms in the Wired Telecommunications 
Carriers category (2002 NAISC Code 517110) had less than 100 employees; 
5,496 of 6,021 firms in the Cable and Other Program Distribution 
category (2002 NAISC Code 517510) had less than 100 employees; and 
3,303 of the 3,408 firms in the Internet Service Providers category 
(2002 NAISC Code 518111) had less than 100 employees. Thus, under this 
size standard, the majority of firms can be considered small.
    43. Cable and Other Program Distribution. The 2002 NAICS 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.'' This category 
includes, among others, cable operators, direct broadcast satellite 
(DBS) services, home satellite dish (HSD) services, satellite master 
antenna television (SMATV) systems, and open video systems (OVS). 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. Thus, under this size standard, the majority of 
firms can be considered small.
    44. Cable System Operators (Rate Regulation Standard). 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. As of 2006, 7,916 cable operators qualify as small cable 
companies under this 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 6,139 systems have under 
10,000 subscribers, and an additional 379 systems have 10,000-19,999 
subscribers. Thus, under this standard, most cable systems are small.
    45. Cable System Operators (Telecom Act Standard). The 
Communications Act of 1934, as amended, also contains a size standard 
for small cable system operators, which is ``a cable operator that, 
directly or through an affiliate, serves in the aggregate fewer than 1 
percent of all subscribers in the United States and is not affiliated 
with any entity or entities whose gross annual revenues in the 
aggregate exceed $250,000,000.'' There are approximately 65.4 million 
cable subscribers in the United States today. Accordingly, an operator 
serving fewer than 654,000 subscribers shall be deemed a small 
operator, if its annual revenues, when combined with the total annual 
revenues of all its affiliates, do not exceed $250 million in the 
aggregate. Based on available data, we find that the number of cable 
operators serving 654,000 subscribers or less totals approximately 
7,916. 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. 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.
    46. Direct Broadcast Satellite (DBS) Service. DBS service is a 
nationally distributed subscription service that delivers video and 
audio programming via satellite to a small parabolic ``dish'' antenna 
at the subscriber's location. Because DBS provides subscription 
services, DBS falls within the SBA-recognized definition of Cable and 
Other Program Distribution. This definition provides that a small 
entity is one with $13.5 million or less in annual receipts. Currently, 
three operators provide DBS service, which requires a great investment 
of capital for operation: DIRECTV, EchoStar (marketed as the DISH 
Network), and Dominion Video Satellite, Inc. (Dominion) (marketed as 
Sky Angel). All three currently offer subscription services. Two of 
these three DBS operators, DIRECTV and EchoStar Communications 
Corporation (EchoStar), report annual revenues that are in excess of 
the threshold for a small business. The third DBS operator, Dominion's 
Sky Angel service, serves fewer than one million subscribers and 
provides 20 family and religion-oriented channels. Dominion does not 
report its annual revenues. The Commission does not know of any source 
which provides this information and, thus, we have no way of confirming 
whether Dominion qualifies as a small business. Because DBS service 
requires significant capital,

[[Page 61601]]

we believe it is unlikely that a small entity as defined by the SBA 
would have the financial wherewithal to become a DBS licensee. 
Nevertheless, given the absence of specific data on this point, we 
recognize the possibility that there are entrants in this field that 
may not yet have generated $13.5 million in annual receipts, and 
therefore may be categorized as a small business, if independently 
owned and operated.
    47. Private Cable Operators (PCOs) also known as Satellite Master 
Antenna Television (SMATV) Systems. PCOs, also known as SMATV systems 
or private communication operators, are video distribution facilities 
that use closed transmission paths without using any public right-of-
way. PCOs acquire video programming and distribute it via terrestrial 
wiring in urban and suburban multiple dwelling units such as apartments 
and condominiums, and commercial multiple tenant units such as hotels 
and office buildings. The SBA definition of small entities for Cable 
and Other Program Distribution Services includes PCOs and, thus, small 
entities are defined as all such companies generating $13.5 million or 
less in annual receipts. Currently, there are approximately 150 members 
in the Independent Multi-Family Communications Council (IMCC), the 
trade association that represents PCOs. Individual PCOs often serve 
approximately 3,000-4,000 subscribers, but the larger operations serve 
as many as 15,000-55,000 subscribers. In total, PCOs currently serve 
approximately one million 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 PCOs, we believe that a substantial number of PCOs may 
qualify as small entities.
    48. Home Satellite Dish (HSD) Service. Because HSD provides 
subscription services, HSD falls within the SBA-recognized definition 
of Cable and Other Program Distribution, which includes all such 
companies generating $13.5 million or less in revenue annually. HSD or 
the large dish segment of the satellite industry is the original 
satellite-to-home service offered to consumers, and involves the home 
reception of signals transmitted by satellites operating generally in 
the C-band frequency. Unlike DBS, which uses small dishes, HSD antennas 
are between four and eight feet in diameter and can receive a wide 
range of unscrambled (free) programming and scrambled programming 
purchased from program packagers that are licensed to facilitate 
subscribers' receipt of video programming. There are approximately 30 
satellites operating in the C-band, which carry over 500 channels of 
programming combined; approximately 350 channels are available free of 
charge, and 150 are scrambled and require a subscription. HSD is 
difficult to quantify in terms of annual revenue. HSD owners have 
access to program channels placed on C-band satellites by programmers 
for receipt and distribution by MVPDs. Commission data shows that, 
between June 2004 and June 2005, HSD subscribership fell from 335,766 
subscribers to 206,358 subscribers, a decline of more than 38 percent. 
The Commission has no information regarding the annual revenue of the 
four C-Band distributors.
    49. Broadband Radio Service and Educational Broadband Service. 
Broadband Radio Service comprises Multichannel Multipoint Distribution 
Service (MMDS) systems and Multipoint Distribution Service (MDS). MMDS 
systems, often referred to as ``wireless cable,'' transmit video 
programming to subscribers using the microwave frequencies of MDS and 
Educational Broadband Service (EBS) (formerly known as Instructional 
Television Fixed Service (ITFS)). We estimate that the number of 
wireless cable subscribers is approximately 100,000, as of March 2005. 
As previously noted, the SBA definition of small entities for Cable and 
Other Program Distribution, which includes such companies generating 
$13.5 million in annual receipts, appears applicable to MDS and ITFS.
    50. The Commission has also defined small MDS (now BRS) entities in 
the context of Commission license auctions. For purposes of the 1996 
MDS auction, the Commission defined a small business as an entity that 
had annual average gross revenues of less than $40 million in the 
previous three calendar years. This definition of a small entity in the 
context of MDS auctions has been approved by the SBA. In the MDS 
auction, 67 bidders won 493 licenses. Of the 67 auction winners, 61 
claimed status as a small business. At this time, the Commission 
estimates that of the 61 small business MDS auction winners, 48 remain 
small business licensees. In addition to the 48 small businesses that 
hold BTA authorizations, there are approximately 392 incumbent MDS 
licensees that have gross revenues that are not more than $40 million 
and are thus considered small entities. MDS licensees and wireless 
cable operators that did not receive their licenses as a result of the 
MDS auction fall under the SBA small business size standard for Cable 
and Other Program Distribution, which includes all such entities that 
do not generate revenue in excess of $13.5 million annually. 
Information available to us indicates that there are approximately 850 
of these licensees and operators that do not generate revenue in excess 
of $13.5 million annually. Therefore, we estimate that there are 
approximately 850 small entity MDS (or BRS) providers, as defined by 
the SBA and the Commission's auction rules.
    51. Educational institutions are included in this analysis as small 
entities; however, the Commission has not created a specific small 
business size standard for ITFS (now EBS). We estimate that there are 
currently 2,032 ITFS (or EBS) licensees, and all but 100 of the 
licenses are held by educational institutions. Thus, we estimate that 
at least 1,932 ITFS licensees are small entities.
    52. Local Multipoint Distribution Service. Local Multipoint 
Distribution Service (LMDS) is a fixed broadband point-to-multipoint 
microwave service that provides for two-way video telecommunications. 
The SBA definition of small entities for Cable and Other Program 
Distribution, which includes such companies generating $13.5 million in 
annual receipts, appears applicable to LMDS. The Commission has also 
defined small LMDS entities in the context of Commission license 
auctions. In the 1998 and 1999 LMDS auctions, the Commission defined a 
small business as an entity that had annual average gross revenues of 
less than $40 million in the previous three calendar years. Moreover, 
the Commission added an additional classification for a ``very small 
business,'' which was defined as an entity that had annual average 
gross revenues of less than $15 million in the previous three calendar 
years. These definitions of ``small business'' and ``very small 
business'' in the context of the LMDS auctions have been approved by 
the SBA. In the first LMDS auction, 104 bidders won 864 licenses. Of 
the 104 auction winners, 93 claimed status as small or very small 
businesses. In the LMDS re-auction, 40 bidders won 161 licenses. Based 
on this information, we believe that the number of small LMDS licenses 
will include the 93 winning bidders in the first auction and the 40 
winning bidders in the re-auction, for a total of 133 small entity LMDS 
providers as defined by the SBA and the Commission's auction rules.

[[Page 61602]]

    53. Open Video Systems (OVS). The OVS framework provides 
opportunities for the distribution of video programming other than 
through cable systems. Because OVS operators provide subscription 
services, OVS falls within the SBA-recognized definition of Cable and 
Other Program Distribution Services, which provides that a small entity 
is one with $13.5 million or less in annual receipts. The Commission 
has approved approximately 120 OVS certifications with some OVS 
operators now providing service. Broadband service providers (BSPs) are 
currently the only significant holders of OVS certifications or local 
OVS franchises, even though OVS is one of four statutorily-recognized 
options for local exchange carriers (LECs) to offer video programming 
services. As of June 2005, BSPs served approximately 1.4 million 
subscribers, representing 1.49 percent of all MVPD households. Among 
BSPs, however, those operating under the OVS framework are in the 
minority. As of June 2005, RCN Corporation is the largest BSP and 14th 
largest MVPD, serving approximately 371,000 subscribers. RCN received 
approval to operate OVS systems in New York City, Boston, Washington, 
DC and other areas. The Commission does not have financial information 
regarding the entities authorized to provide OVS, some of which may not 
yet be operational. We thus believe that at least some of the OVS 
operators may qualify as small entities.
    54. Cable and Other Subscription Programming. The Census Bureau 
defines this category as follows: ``This industry comprises 
establishments primarily engaged in operating studios and facilities 
for the broadcasting of programs on a subscription or fee basis. * * * 
These establishments produce programming in their own facilities or 
acquire programming from external sources. The programming material is 
usually delivered to a third party, such as cable systems or direct-to-
home satellite systems, for transmission to viewers.'' The SBA has 
developed a small business size standard for firms within this 
category, which is all firms with $13.5 million or less in annual 
receipts. According to Census Bureau data for 2002, there were 270 
firms in this category that operated for the entire year. Of this 
total, 217 firms had annual receipts of under $10 million and 13 firms 
had annual receipts of $10 million to $24,999,999. Thus, under this 
category and associated small business size standard, the majority of 
firms can be considered small.
    55. Small Incumbent Local Exchange Carriers. We have included small 
incumbent local exchange carriers in this present RFA analysis. 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. We have therefore included 
small incumbent local exchange carriers in this RFA, although we 
emphasize that this RFA action has no effect on Commission analyses and 
determinations in other, non-RFA contexts.
    56. Incumbent Local Exchange Carriers (LECs). Neither the 
Commission nor the SBA has developed a small business size standard 
specifically for incumbent local exchange services. The appropriate 
size standard under SBA rules is for the category Wired 
Telecommunications Carriers. Under that size standard, such a business 
is small if it has 1,500 or fewer employees. According to Commission 
data, 1,307 carriers have reported that they are engaged in the 
provision of incumbent local exchange services. Of these 1,307 
carriers, an estimated 1,019 have 1,500 or fewer employees, and 288 
have more than 1,500 employees. Consequently, the Commission estimates 
that most providers of incumbent local exchange services are small 
businesses.
    57. Competitive Local Exchange Carriers, Competitive Access 
Providers (CAPs), ``Shared-Tenant Service Providers,'' and ``Other 
Local Service Providers.'' Neither the Commission nor the SBA has 
developed a small business size standard specifically for these service 
providers. The appropriate size standard under SBA rules is for the 
category Wired Telecommunications Carriers. Under that size standard, 
such a business is small if it has 1,500 or fewer employees. According 
to Commission data, 859 carriers have reported that they are engaged in 
the provision of either competitive access provider services or 
competitive local exchange carrier services. Of these 859 carriers, an 
estimated 741 have 1,500 or fewer employees and 118 have more than 
1,500 employees. In addition, 16 carriers have reported that they are 
``Shared-Tenant Service Providers,'' and all 16 are estimated to have 
1,500 or fewer employees. In addition, 44 carriers have reported that 
they are ``Other Local Service Providers.'' Of the 44, an estimated 43 
have 1,500 or fewer employees and one has more than 1,500 employees. 
Consequently, the Commission estimates that most providers of 
competitive local exchange service, competitive access providers, 
``Shared-Tenant Service Providers,'' and ``Other Local Service 
Providers'' are small entities.
    58. Electric Power Generation, Transmission and Distribution. The 
Census Bureau defines this category as follows: ``This industry group 
comprises establishments primarily engaged in generating, transmitting, 
and/or distributing electric power. Establishments in this industry 
group may perform one or more of the following activities: (1) Operate 
generation facilities that produce electric energy; (2) operate 
transmission systems that convey the electricity from the generation 
facility to the distribution system; and (3) operate distribution 
systems that convey electric power received from the generation 
facility or the transmission system to the final consumer.'' The SBA 
has developed a small business size standard for firms in this 
category: ``A firm is small if, including its affiliates, it is 
primarily engaged in the generation, transmission, and/or distribution 
of electric energy for sale and its total electric output for the 
preceding fiscal year did not exceed 4 million megawatt hours.'' 
According to Census Bureau data for 2002, there were 1,644 firms in 
this category that operated for the entire year. Census data do not 
track electric output and we have not determined how many of these 
firms fit the SBA size standard for small, with no more than 4 million 
megawatt hours of electric output. Consequently, we estimate that 1,644 
or fewer firms may be considered small under the SBA small business 
size standard.
    59. Television Broadcasting. The SBA defines a television broadcast 
station as a small business if such station has no more than $13.0 
million in annual receipts. Business concerns included in this industry 
are those ``primarily engaged in broadcasting images together with 
sound.'' The Commission has estimated the number of licensed commercial 
television stations to be 1,376. According to Commission staff review 
of the BIA Financial Network, MAPro Television Database (BIA) on March 
30, 2007, approximately 986 of an estimated 1,374 commercial television 
stations (or approximately 72 percent) have revenues of $13.5 million 
or less. We note, however, that, in assessing whether a business 
concern qualifies as small under the above definition, business 
(control) affiliations must be included. Our estimate,

[[Page 61603]]

therefore, likely overstates the number of small entities that might be 
affected by our action, because the revenue figure on which it is based 
does not include or aggregate revenues from affiliated companies. The 
Commission has estimated the number of licensed NCE television stations 
to be 380. The Commission does not compile and otherwise does not have 
access to information on the revenue of NCE stations that would permit 
it to determine how many such stations would qualify as small entities.
    60. In addition, an element of the definition of ``small business'' 
is that the entity not be dominant in its field of operation. We are 
unable at this time to define or quantify the criteria that would 
establish whether a specific television station is dominant in its 
field of operation. Accordingly, the estimate of small businesses to 
which rules may apply do not exclude any television station from the 
definition of a small business on this basis and are therefore over-
inclusive to that extent. Also, as noted, an additional element of the 
definition of ``small business'' is that the entity must be 
independently owned and operated. We note that it is difficult at times 
to assess these criteria in the context of media entities and our 
estimates of small businesses to which they apply may be over-inclusive 
to this extent.
Description of Proposed Reporting, Recordkeeping and Other Compliance 
Requirements
    61. The rules ultimately adopted as a result of this NPRM may 
contain new or modified information collections. We anticipate that 
none of the changes would result in an increase to the reporting and 
recordkeeping requirements of small entities. We invite small entities 
to comment in response to the NPRM.
Steps Taken to Minimize Significant Impact on Small Entities and 
Significant Alternatives Considered
    62. The RFA requires an agency to describe any significant 
alternatives that it has considered in proposing regulatory approaches, 
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 or reporting requirements under the rule for 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 small 
entities. First, regarding the establishment of a procedure that would 
shorten the five-year term of the extension of the exclusive contract 
prohibition, the Commission may choose to establish such a procedure 
or, in the alternative, it may not choose to do so. Second, regarding 
the extension of the program access rules to terrestrially delivered 
cable-affiliated programmers, the Commission may choose to extend these 
rules to terrestrially delivered cable-affiliated programmers or, in 
the alternative, it may choose not to extend these rules to such 
programmers. Third, regarding expansion of the exclusive contract 
prohibition to apply to non-cable-affiliated programming that is 
affiliated with a different MVPD, principally a DBS provider, the 
Commission may choose to extend the exclusive contract prohibition to 
apply to such non-cable-affiliated programming or, in the alternative, 
it may choose not to extend the exclusive contract prohibition to such 
programming. Fourth, regarding the practice of programmers to engage in 
tying of desired with undesired programming, the Commission may choose 
to preclude all such tying arrangements or, in the alternative, it may 
choose not to preclude any such arrangements or, in the alternative, it 
may choose to preclude only certain tying arrangements. Fifth, with 
respect to concerns raised by small and rural MVPDs regarding 
conditions imposed by programmers for access to content, the Commission 
may choose to take action to address some or all of these concerns or, 
in the alternative, it may choose not to take action to address these 
concerns. Sixth, regarding the establishment of a process whereby a 
program access complainant may seek a temporary stay of any proposed 
changes to its existing programming contract pending resolution of the 
complaint, the Commission may establish such a process or, in the 
alternative, it may choose not to establish such a process. Seventh, 
regarding the requirement that parties submit to the Commission, when 
requested, ``final offer'' proposals as part of the remedy phase of the 
complaint process, the Commission may adopt such a requirement or, in 
the alternative, it may choose not to adopt such a requirement. We 
invite comment on the options the Commission is considering, or 
alternatives thereto as referenced above, and on any other alternatives 
commenters may wish to propose for the purpose of minimizing 
significant economic impact on smaller entities.
Federal Rules Which Duplicate, Overlap, or Conflict With the 
Commission's Proposals
    63. None.
F. Additional Information
    64. For additional information on this proceeding, contact Steven 
Broeckaert, <a href="/cdn-cgi/l/email-protection#0d5e79687b6863234f7f62686e666c687f794d6b6e6e236a627b"><span class="__cf_email__" data-cfemail="f7a48392819299d9b5859892949c96928583b7919494d9909881">[email protected]</span></a>; David Konczal, 
<a href="/cdn-cgi/l/email-protection#490d283f202d670226272a332825092f2a2a672e263f"><span class="__cf_email__" data-cfemail="f8bc998e919cd6b397969b829994b89e9b9bd69f978e">[email protected]</span></a>; or Katie Costello, <a href="/cdn-cgi/l/email-protection#2f644e5b464a016c405c5b4a4343406f494c4c01484059"><span class="__cf_email__" data-cfemail="ace7cdd8c5c982efc3dfd8c9c0c0c3eccacfcf82cbc3da">[email protected]</span></a>; of 
the Media Bureau, Policy Division, (202) 418-2120.

VIII. Ordering Clauses

    65. Accordingly, it is ordered, pursuant to the authority found in 
sections 4(i), 303(r), and 628 of the Communications Act of 1934, as 
amended, 47 U.S.C. 154(i), 303(r), and 548, this Notice of Proposed 
Rulemaking Is Adopted.
    66. It is further ordered that the Commission's 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. 07-5388 Filed 10-30-07; 8:45 am]
BILLING CODE 6712-01-P


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