Federal Register / Vol. 61, No. 84 / Tuesday, April 30, 1996 / Proposed Rules 19013

Shops in the autobody refinish

industry are classified as small by the

U.S. Small Business Administration if

the entity that owns the shop has total

sales of less than $3.5 million. Most

individual shops are small by this

criterion if the owning entity has no

other sales from other shops. Therefore,

an RFA was performed and is contained

in the docket for this proposed rule.

Information on the size of

manufacturers and distributors

impacted by this rule is not available,

but some small entities among

manufacturers and distributors may also

be affected.

Several industry trade associations,

including the Automotive Service

Association (ASA) that represents body

shops, and the Automotive Service

Industry Association (ASIA) that

represents coating distributors, have

submitted comments and provided

information during the development of

the national rule. Most of the members

of these associations are small

businesses. The main concerns of these

associations deal with recordkeeping

and VOC content limits. Some members

of ASA are already subject to State rules

that contain VOC content limits and

recordkeeping at the body shop. The

drying times of some coatings compliant

with State rules are significantly longer

than those of conventional coatings,

which can result in losses in body shop

productivity. Some shops report that the

recordkeeping required under some

rules is burdensome and time

consuming.

The proposed national rule applies to

automobile refinish coating

manufacturers and importers only, not

to body shops or any other users of the

coatings. After the national rule is

effective, only compliant coatings will

be available for purchase by coating

users in this country. Since the purpose

of most State recordkeeping

requirements is to demonstrate that

body shops are using compliant

coatings, some States may decide to

remove such requirements from their

rules after the national rule is effective.

Coatings compliant with the proposed

rule do not take significantly longer to

dry than conventional coatings;

therefore, small shops will be able to

apply compliant coatings without

purchasing additional equipment.

E. Unfunded Mandates Reform Act

Section 202 of the Unfunded

Mandates Reform Act of 1995

(‘‘Unfunded Mandates Act’’) (signed

into law on March 22, 1995) requires

that the Agency prepare a budgetary

impact statement to accompany any

proposed or final rule that includes a

Federal mandate that may result in

expenditure by State, local, and tribal

governments, in the aggregate, or by the

private sector, of $100 million or more

in any one year. Section 203 requires

the Agency to establish a plan for

obtaining input from and informing,

educating, and advising any small

governments that may be significantly

or uniquely affected by the rule.

Under section 205 of the Unfunded

Mandates Act, the Agency must identify

and consider a reasonable number of

regulatory alternatives before

promulgating a rule for which a

budgetary impact statement must be

prepared. The Agency must select from

those alternatives the least costly, most

cost-effective, or least burdensome

alternative that achieves the objectives

of the rule, unless the Agency explains

why this alternative is not selected or

the selection of this alternative is

inconsistent with law.

Because the proposed rule is

estimated to result in expenditure by

State, local, and tribal governments or

the private sector of less than $100

million in any one year, the Agency has

not prepared a budgetary impact

statement or specifically addressed the

selection of the least costly, most costeffective, or least burdensome

alternative. Because small governments

will not be significantly or uniquely

affected by this rule, the Agency is not

required to develop a plan with regard

to small governments.

List of Subjects in 40 CFR Part 59

Environmental protection, Air

pollution control, Automobile refinish

coatings, Consumer and commercial

products, Ozone, Volatile organic

compound.

Dated: April 19, 1996.

Carol M. Browner,

Administrator.

[FR Doc. 96–10381 Filed 4–29–96; 8:45 am]

BILLING CODE 6560–50–P

FEDERAL COMMUNICATIONS

COMMISSION

47 CFR Part 76

[CS Docket No. 96–85, FCC 96–154]

Telecommunications Act of 1996

AGENCY: Federal Communications

Commission.

ACTION: Notice of proposed rulemaking.

SUMMARY: The Commission has adopted

an Order and Notice of Proposed

Rulemaking regarding implementation

of the Cable Act reform provisions of the

Telecommunications Act of 1996 (‘‘1996

Act’’). The Order segment of this action

may be found elsewhere in this issue of

the Federal Register. This Notice of

Proposed Rulemaking (‘‘NPRM’’) solicits

comment on several issues arising from

the enactment of the 1996 Act. This

NPRM solicits comment regarding

possible revisions to the interim final

rules established in the companion

Order and requests comment on other

issues critical to the 1996 Act’s

implementation. The intended effect of

this action is to develop rules that fully

implement the mandates of the 1996 Act

with regard to cable television.

DATES: Comments filed in response to

this NPRM must be filed by May 28,

1996. Reply Comments are due June 28,

1996. Written comments by the public

on the proposed and/or modified

information collections are due on or

before May 28, 1996. Written comments

must be submitted by the Office of

Management and Budget (OMB) on the

proposed and/or modified information

collections on or before July 1, 1996.

ADDRESSES: An original and six copies

of comments and reply comments

should be sent to Office of the Secretary,

Federal Communications Commission,

1919 M Street, NW., Room 222,

Washington, DC 20554, with a copy to

Nancy Stevenson of the Cable Services

Bureau, 2033 M Street, NW., Room

408A, Washington, DC 20554. Parties

should also file one copy of any

documents filed in this docket with the

Commission’s copy contractor,

International Transcription Services,

Inc., 2100 M Street, NW., Suite 140,

Washington, DC 20037. Comments and

reply comments will be available for

public inspection during regular

business hours in the FCC Reference

Center, 1919 M Street, NW., Room 239,

Washington, DC 20554.

In addition to filing comments with

the Secretary, a copy of any comments

on the information collections

contained herein should be submitted to

Dorothy Conway, Federal

Communications Commission, Room

234, 1919 M Street, NW., Washington,

DC 20054, or via the Internet to

dconway@fcc.gov, and to Timothy Fain,

OMB Desk Officer, 10236 NEOB, 725–

17th Street, NW., Washington, DC 20503

or via the Internet to fainlt@al.eop.gov.

FOR FURTHER INFORMATION CONTACT: Tom

Power, Paul Glenchur, or Nancy

Stevenson, Cable Services Bureau, (202)

416–0800. For additional information

concerning the information collections

contained in this NPRM contact Dorothy

Conway at 202–418–0217, or via the

Internet at dconway@fcc.gov.
19014 Federal Register / Vol. 61, No. 84 / Tuesday, April 30, 1996 / Proposed Rules

SUPPLEMENTARY INFORMATION: This is a

synopsis of a Commission Notice of

Proposed Rulemaking in CS Docket No.

96–85, FCC–154, adopted April 5, 1996

and released April 9, 1996. The

complete text of this document is

available for inspection and copying

during normal business hours in the

FCC Reference Center, 1919 M St., NW.,

Washington, DC, and also may be

purchased from the Commission’s copy

contractor, International Transcription

Services, Inc. at (202) 857–3800, 2100 M

Street, NW., Suite 140, Washington, DC

20017.

This NPRM contains either proposed

or modified information collections.

The Commission has obtained Office of

Management and Budget (‘‘OMB’’)

approval, under the emergency

processing provisions of the Paperwork

Reduction Act of 1995 (5 CFR 1320.13),

of the information collections contained

herein. OMB approval is effective no

later than the date that the summary for

the NPRM appears in the Federal

Register. The OMB control number for

information collections contained in

this rulemaking is 3060–0706.

Emergency OMB approval for the

information collections expires July 31,

1996. The Commission, as part of its

continuing effort to reduce paperwork

burdens and to obtain regular OMB

approval of the information collections,

invites the general public and OMB to

comment on the information collections

contained herein, as required by the

Paperwork Reduction Act of 1995.

Public and agency comments are due at

the same time as other comments on

this Order and NPRM; OMB notification

of action is due 60 days after

publication of the NPRM in the Federal

Register. Comments should address: (a)

Whether the proposed collections of

information are 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.

OMB Approval Number: 3060–0549.

Title: FCC Form 329 Cable

Programming Service Rate Complaint

Form, 76.950 Complaints regarding

cable programming service rates and

76.1402 CPST rate complaints.

Form No.: FCC Form 329.

Type of Review: Revision of existing

collection.

Respondents: State, local and tribal

governments; individuals.

Number of Respondents: 1,600.

Estimated Time Per Response: 45

minutes.

Total Annual Burden: 1,200 hours.

Estimated costs per respondent:

$1,600. $1 per response for postage and

stationery costs.

Needs and Uses: FCC Form 329 will

be used by local franchise authorities to

file cable programming service tier rate

complaints, upon receipt of more than

one subscriber complaint about such

rates.

OMB Approval Number: 3060–0652.

Title: 76.309 Customer service

obligations and 76.964 Notice to

subscribers.

Type of Review: Revision of existing

collection.

Respondents: Businesses and other for

profit entities.

Number of Respondents: 12,000.

Estimated Time Per Response: 2.91

hours.

Total Annual Burden: 34,917 hours.

Estimated costs per respondent: None.

Needs and Uses: This information

collection accounts for the notifications

requirements found in 76.309 and

76.964. Cable operators are no longer

required to provide prior notice to

subscribers of any rate change that is the

result of a regulatory fee, franchise fee,

tax assessment, or charge of any kind

imposed by any Federal agency, State,

or franchise authority. Eliminating this

requirement reduces annual notification

burdens imposed on operators by 30

minutes per operator, for an aggregate

reduction of 6,000 hours. 12,000

systems×.30 minutes=6,000.

OMB Approval Number: 3060–0551.

Title: 76.1002 Specific unfair

practices prohibited.

Type of Review: Revision of existing

collection.

Respondents: Businesses and other for

profit entities.

Number of Respondents: 52 (26

proceedings×2 parties).

Estimated Time Per Response: Each

proceeding has an average burden of 25

hours. 50% of respondents undergo a

burden of 1 hour to instead coordinate

information with outside legal

assistance.

Total Annual Burden: 676 hours.

(26×25 hours) + (26×1 hour).

Estimated costs for respondents: 50%

of respondents will use outside legal

assistance paid at $150 per hour. 26×25

hours per proceeding×$150 per

hour=$97,500.

Needs and Uses: The information is

used by the Commission to determine

on a case-by-case basis whether

particular exclusive contracts for cable

television programming are in

compliance with the statutory public

interest standard of Section 628(c)(2)(D)

of the Communications Act of 1934.

OMB Approval Number: 3060–0552.

Title: 76.1003 Adjudicatory

proceedings.

Type of Review: Revision of existing

collection.

Respondents: Businesses and other for

profit.

Number of Respondents: 24 (12

proceedings×2 parties).

Estimated Time Per Response: Each

proceeding has an average burden of 20

hours. 50% of respondents undergo a

burden of 1 hour to instead coordinate

information with outside legal

assistance.

Total Annual Burden: 252 hours.

(12×20)+(12×1).

Estimated costs per respondent: 50%

of respondents will use outside legal

assistance paid at $150 hour. 12×20

hours per proceeding×$150 per

hour=$36,000.

Needs and Uses: Information

contained in the proceedings is used by

the Commission to resolve disputes

alleging unfair methods of competition

and deceptive practices where the

purpose or effect of which is to hinder

significantly or to prevent any

multichannel video programming

distributor from providing satellite cable

programming or satellite broadcast

programming to consumers.

OMB Approval Number: 3060–0706.

Title: 76.1401 Effective competition

and local exchange carriers, 76.1403

Small cable operators, and 76.1404 Use

of cable facilities by local exchange

carriers.

Type of Review: New collection.

Respondents: Businesses and other for

profit entities; state, local and tribal

governments.

Number of Respondents: 300 petitions

for determination of effective

competition; 400 requests for

certification of small cable operator

status; 50 contract submissions.

Estimated Time Per Response:

Petitions for determination of effective

competition have an average burden of

20 hours. However, 75% of respondents

(225) will undergo a burden of 1 hour

instead to coordinate information with

outside legal assistance. Requests for

certification of small cable operator

status have an average burden of 2

hours. However, 25% of respondents

(100) will undergo a burden of 1 hour

instead to coordinate information with

outside legal assistance. LFAs will then

undergo an average burden of 3 hours to

review each request. Sending copies of

contracts pertaining to use of cable

facilities by local exchange carriers
Federal Register / Vol. 61, No. 84 / Tuesday, April 30, 1996 / Proposed Rules 19015

along with explanations of how such

contract is reasonably limited in scope

and duration has an average burden of

1 hour.

Total Annual Burden: 3,675 hours.

(75×20 hours)+(225×1 hour)+(300×2

hours)+(400×3 hours)+(100×1

hour)+(50×1 hour).

Estimated costs for respondents:

$705,750. Outside legal assistance used

to file petitions for determination of

effective competition and requests for

certification of small operator status will

be paid at $150 per hour. 225

petitions×20 hours×$150 per

hour=$675,000. 300 petitions×$1 for

postage and stationery=$300. 100

requests for certification×2 hours×$150

per hour=$30,000. 400 requests for

certification×$1 for postage and

stationery=$400. 50 contract

submissions×$1 for postage and

stationery=$50.

Needs and Uses: Information

collected in petitions for determination

of effective competition will be used by

the Commission to make such

determinations for operators.

Information collected in requests for

certification of small operator status will

be used by franchise authorities to make

such determinations of small operator

status. Information collected in contract

submissions will be used by the

Commission to determine whether the

local exchange carrier’s use of the

transmission facilities is limited in

scope and duration.

Notice of Proposed Rulemaking

1. In this NPRM, we propose final

rules implementing certain provisions

of the 1996 Act. We seek to adopt clear

rules streamlining our processes,

establishing certainty for cable

operators, Local Franchise Authorities

(‘‘LFAs’’) and subscribers, and

effectuating the intent of Congress. A

number of the issues discussed below

are also the subject of a related Order.

In commenting on such issues, parties

should consider the discussion and

treatment of them in the Order.

A. Effective Competition

1. Generally

2. The new test for effective

competition requires that the LECdelivered programming be

‘‘comparable’’ to that of the cable

operator. The Conference Report to the

1996 Act, H.R. Rept. 104–458, states that

video programming services are

comparable if they ‘‘include access to at

least 12 channels of programming, at

least some of which are television

broadcasting signals.’’ We tentatively

conclude that this definition of

comparable programming should be

adopted. We note that after defining

‘‘comparable’’ in this manner, the

Conference Report cites Section

76.905(g) of our rules which in fact has

a slightly different definition of

comparable. The rule defines

‘‘comparable’’ as meaning a minimum of

12 channels of programming, ‘‘including

at least one channel of nonbroadcast

service programming.’’ Commenters

should consider this factor in

addressing the meaning of

‘‘comparable’’ programming for

purposes of the new test for effective

competition.

3. In light of our tentative conclusion

that ‘‘comparable programming’’

requires access to broadcast channels,

commenters should address whether

this could include satellite-delivered

broadcast channels (e.g.,

‘‘superstations’’). In the same context,

commenters should address whether a

multichannel multipoint distribution

service (‘‘MMDS’’) subscriber should be

deemed a recipient of ‘‘comparable

programming’’ if the broadcast stations

are received by way of an over-the-air

antenna located at the subscriber’s

residence, rather than as part of the

MMDS operator’s microwave signals.

Would it matter if the antenna was

provided by the subscriber as opposed

to the MMDS operator? We believe that

a single definition of ‘‘comparable

programming’’ should apply to both

prongs of the effective competition test

in which that term is used. Commenters

who disagree with this conclusion

should provide a justification for having

a different definition of comparable

programming in different prongs of the

effective competition test.

4. We tentatively conclude that the

new test for effective competition

applies with equal force regardless of

whether the LEC or its affiliate is merely

the video service provider, as opposed

to the licensee or owner of the facilities.

We seek comment on this tentative

conclusion. Further, we seek comment

as to whether the type of service

provided by, or over the facilities of, the

LEC or its affiliate should be relevant.

For example, we seek comment as to

whether satellite master antenna

television (‘‘SMATV’’) systems

constitute direct-to-home satellite

services and hence do not fall within

the class of video providers that can be

a source of effective competition under

the new test.

5. We seek comment on whether we

should follow the standards adopted in

the companion Order for purposes of

the permanent rule by which cable

operators may show that the competing

MVPD is offering service in the

franchise area. We note that the new

definition of effective competition,

unlike the other three effective

competition tests, does not include a

percentage of homes passed or a specific

penetration rate. We seek comment as to

whether Congress intended effective

competition to be found if a LEC’s, or

its affiliate’s, service was offered to

subscribers in any portion of the

franchise area, or whether the

competitor’s service must be offered to

some larger portion of the franchise area

to constitute effective competition. In

addressing this issue, commenters

should consider what level of

competition provided by a LEC or its

affiliate is sufficient to have a

restraining effect on cable rates.

Commenters also should address the

likelihood that an incumbent cable

operator’s response to the presence of a

competitor may depend not just upon

the current pass rate of the competitor,

but also on its potential pass rate. That

is, a LEC that offers service to 5% of the

residents in a franchise area and that,

due to technical constraints, will never

exceed this reach would seem to pose

less of a competitive threat than a LEC

with a 5% pass rate that eventually will

be able to offer service throughout the

franchise area. We seek comment as to

whether to take account of this factor in

implementing the new test for effective

competition.

6. In the companion Order, we have

adopted interim filing procedures by

which regulated operators may seek to

establish the presence of effective

competition under the new statutory

test. We tentatively conclude that we

should adopt these procedures as a final

rule and conform our existing

procedures accordingly, such that all

tests for effective competition would be

determined in a uniform manner. We

seek comment on this tentative

conclusion.

2. Definition of ‘‘Affiliate’’

7. With respect to the definition of

‘‘affiliate’’ for purposes of the new prong

of the effective competition test, we note

that the 1996 Act does not specifically

alter the following definition of

‘‘affiliate’’ which remains applicable for

purposes of cable regulation under Title

VI of the Communications Act, § 602(2):

The term ‘‘affiliate,’’ when used in

relation to any person, means another

person who owns or controls, is owned

or controlled by, or is under common

ownership or control with, such person;

8. Although this definition remains

unchanged, the following definition of

‘‘affiliate’’ is now found in Title I as a

result of the enactment of the 1996 Act:
19016 Federal Register / Vol. 61, No. 84 / Tuesday, April 30, 1996 / Proposed Rules

The term ‘‘affiliate’’ means a person

that (directly or indirectly) owns or

controls, is owned or controlled by, or

is under common ownership or control

with, another person. For purposes of

this paragraph, the term ‘‘own’’ means

to own an equity interest (or the

equivalent thereof) of more than 10

percent.

9. As engrafted into Sec. 3 of the

Communications Act, this definition of

‘‘affiliate’’ now applies ‘‘[f]or purposes

of this [Communications] Act, unless

the context otherwise requires * * * .’’

Commenters should address whether,

for purposes of the new effective

competition test, ‘‘the context * * *

require[s]’’ a definition of ‘‘affiliate’’

other than the one now contained in

Title I.

10. We tentatively conclude that the

Title I definition of ‘‘affiliate’’ should be

adopted for purposes of the new

effective competition test. While we do

not believe that Congress mandated the

use of this definition for purposes of

Title VI, incorporating the Title I

definition for purposes of Title VI is not

inconsistent with Congressional intent

and would create some uniformity

throughout the Commission’s rules. We

also tentatively conclude that both

passive and active ownership interests

are attributable and seek comment

accordingly. We also seek comment on

whether a beneficial interest in a cable

operator would be ‘‘equivalent’’ to an

equity interest under this proposed

definition of ‘‘affiliate’’ and, if so, how

‘‘beneficial interest’’ should be defined.

Commenters should address whether

the affiliation standard has to be met by

a single LEC or whether the interests of

more than one LEC can be aggregated.

B. CPST Rate Complaints

11. Here we propose to adopt the

interim rules regarding the filing of rate

complaints by LFAs, adopted in the

Companion Order, as final rules and

solicit comment accordingly.

12. In addition to addressing the

interim procedures, parties should

comment on whether we should

establish a deadline by which LFA

complaints must be filed. Although

Section 301(b)(1)(C) permits the LFA to

file a CPST rate complaint with the

Commission only if the LFA has

received subscriber complaints within

90 days of a CPST rate increase, it

specifies no deadline for the LFA

complaint. Commenters should propose

possible deadlines, taking into account

the steps that a LFA may be required to

undertake following the close of the 90-

day window on subscriber complaints

in order to file its own complaint with

the Commission. Finally, because

Section 301(b)(1)(C) alters the rate

complaint process, we propose

eliminating the requirement contained

in Section 76.952 of our rules that

operators must include the name,

mailing address, and telephone number

of the Cable Services Bureau of the

Commission on monthly subscriber

bills.

C. Small Cable Operators

1. National Subscriber Count

13. Here we propose specific rules to

clarify implementation of Section 301(c)

which provides for greater deregulation

of small cable operators. We first must

determine the method by which we will

establish the total number of cable

subscribers in the United States, since

only operators serving fewer than 1% of

all subscribers qualify as small cable

operators. We propose to establish such

a number on an annual basis and to

have that number serve as the

applicable threshold until a new

number is calculated the following year.

While the number of subscribers varies

daily, we tentatively conclude that

fixing a number on an annual basis will

produce certainty and reduce

administrative burdens for operators,

LFAs, and the Commission.

Commenters should address these

tentative conclusions and propose any

reasonable alternatives.

14. As noted, the method we select to

count the total number of subscribers

should minimize administrative

burdens as well as ensure a subscriber

count that is as accurate and reliable as

is reasonably possible. We are aware

that industry groups, trade journals, and

other private concerns already attempt

to track subscriber figures. We

tentatively conclude that using the most

reliable of these figures, or perhaps

some average of these figures, would

best further our goals. We solicit

comment on this tentative conclusion

and on what data would be the most

reliable for this purpose.

2. Definition of ‘‘Affiliate’’

15. In addition, we seek comment on

the proper definition of ‘‘affiliate’’ for

purposes of the small operator

provisions. We already have discussed

the separate definitions of ‘‘affiliate’’

contained in Title I and Title VI. We

note that the Title I definition of

‘‘affiliate’’ does not strictly apply to

matters under Title VI, since Title VI

contains a separate definition of that

term that, unlike the Title I definition,

does not set a percentage threshold as to

what constitutes ownership. We believe

this gives us discretion to establish a

percentage ownership threshold other

than 10% for purposes of Title VI.

16. As for the precise threshold we

should establish here, we note that last

year in applying the Title VI definition

in the context of our small system rules,

we concluded that a 20% ownership

interest, active or passive, would be

deemed affiliation. There we observed:

‘‘Relaxing regulatory burdens should

free up resources that affected operators

currently devote to complying with

existing regulations and should enhance

those operators’ ability to attract capital,

thus enabling them to achieve the goals

of Congress * * *.’’ We believe that

Congress had a similar intent when it

crafted the small cable operator

provisions of the 1996 Act and,

therefore, we tentatively conclude that

the affiliation standard applicable under

our small system cost-of-service rules

also should be applied for present

purposes. Under this approach, an

entity would be affiliated with a cable

operator if the entity held an ownership

interest of 20% or more, either active or

passive, in the cable operator. De facto

control also would constitute affiliation.

We seek comment on this proposed

definition.

3. Definition of ‘‘Gross Revenues’’

17. Once a cable operator identifies its

affiliates under whatever rule we adopt,

it will have to calculate the gross annual

revenues of those affiliates. We have

defined ‘‘gross revenues’’ in other

contexts, such as determining eligibility

for certain licenses for frequencies

devoted to personal communications

services:

Gross revenues shall mean all income

received by an entity, whether earned or

passive, before any deductions are made

for costs of doing business (e.g., cost of

goods sold), as evidenced by audited

quarterly financial statements for the

relevant period.

18. We tentatively conclude that this

definition should be applied under the

small cable operator provisions of the

1996 Act, although we do not intend to

require that all entities produce audited

financial statements. If an entity

maintains such statements as a matter of

course, they would seem to be the best

record of its gross revenues. However,

we realize that some smaller business

may not go to the expense of having

their financial statements audited;

certainly they should not be required to

do so on the basis of legislation

intended to minimize burdens for

smaller businesses. Therefore, we

propose to adopt the definition of ‘‘gross

revenues’’ quoted above, as modified to

eliminate any requirement that the

operator or its affiliates produce audited
Federal Register / Vol. 61, No. 84 / Tuesday, April 30, 1996 / Proposed Rules 19017

financial statements. Commenters

should address the propriety of this

definition for establishing operator

eligibility for small cable operator

treatment. We also seek comment as to

how the revenues of natural persons

should be measured and verified under

this rule.

19. The plain language of the statute

appears to require an operator with

multiple affiliates to aggregate the gross

annual revenues of all of the affiliates

and to compare this aggregate figure to

the $250 million threshold. We

tentatively conclude that if the gross

revenues of all affiliates, when

aggregated in this manner, exceed $250

million, the operator does not qualify as

small, even if no single affiliate has

revenues in excess of that amount. We

also solicit comment as to whether the

statute should be read to exclude the

revenues of the operator itself for

purposes of applying the $250 million

threshold. Finally, we solicit comment

on whether only affiliates of the cable

operator that are also cable operators

should be included when aggregating

gross annual revenues with respect to

the $250 million threshold.

4. System and Franchise Area

Subscribers

20. Rate regulation is reduced or

eliminated for a small cable operator ‘‘in

any franchise area in which that

operator services 50,000 or fewer

subscribers.’’ Although a single cable

system can serve more than one

franchise area, deregulation under this

provision of the 1996 Act appears to be

determined on a franchise area-byfranchise area basis, without regard to

the total number of system subscribers.

Under this analysis, a system serving

well over 50,000 subscribers spread over

multiple franchise areas could qualify

for deregulation throughout the entire

system as long as no individual

franchise area contained more than

50,000 subscribers. Likewise, a single

system could be subject to regulation in

one franchise area but not in another

because its subscriber counts are over

and under the 50,000 mark in the two

areas, respectively. We seek comment

on our tentative conclusion that system

size is irrelevant for purposes of this

provision.

21. In other contexts in which

subscriber counts are important, such as

determining whether effective

competition exists in a franchise area,

we have directed operators how to

measure subscribership to take account

of various circumstances, such as in

vacation areas that experience seasonal

shifts in population. However, in

limited circumstances we have allowed

operators to count subscribers residing

in multiple dwelling units (‘‘MDUs’’)

based on the equivalent billing unit

methodology. We seek comment on the

proper methodology to be used for

purposes of the 50,000 subscriber limit

under Section 301(c).

5. BST and CPST deregulation

22. The 1996 Act plainly eliminates

CPST rate regulation for systems that

qualify under the revenue and

subscriber criteria. For qualifying

systems that do not offer a CPST, the

statute eliminates BST regulation if that

tier ‘‘was the only service tier subject to

regulation as of December 31, 1994

* * *.’’ With respect to qualifying

systems that had only a single tier

subject to regulation as of that date, we

seek comment as to whether Congress

intended the BST to be deregulated even

if the operator has created a CPST since

then or creates a CPST hereafter. In

other words, can a qualifying system

with both a BST and a CPST be exempt

from rate regulation on both tiers, as

long as it had only a single tier as of

December 31, 1994? Assume, for

example, that as of December 31, 1994

an operator had only a single regulated

tier, consisting of all of the channels

that an operator is required to carry on

its BST plus a large number of

additional channels. Thereafter, the

operator creates a CPST and migrates

from the BST to the new CPST some or

all of the channels that are not

mandatory BST channels, including all

of the most popular satellite-delivered

cable networks. Arguably, the system’s

resulting BST would be exempt from

regulation on the grounds that the BST

‘‘was the only service tier subject to

regulation as of December 31, 1994

* * *.’’ It is also arguable, however,

that the resulting BST should be subject

to regulation because the fundamental

nature of the original BST was

significantly altered after December 31,

1994.

23. We tentatively conclude that the

scope of deregulation depends solely

upon the number of tiers that were

subject to regulation as of December 31,

1994. Under this construction of the

statute, a system currently offering two

or more tiers would be deregulated on

all tiers if the BST was the only tier

subject to regulation as of December 31,

1994, but would be deregulated only on

its CPST(s) if it had more than one tier

subject to regulation as of December 31,

1994. We seek comment on this

construction of the statute.

6. Procedures

24. As for procedures, we seek to

design a mechanism by which an

operator can obtain a prompt

determination of small operator status

with a minimum of paperwork, while

still giving LFAs and the Commission

the ability to verify, when necessary, the

subscriber and revenue data relied on by

the operator in seeking such status. We

understand that a large number of

operators entitled to deregulation under

the 1996 Act have subscriber and

revenue figures that fall far below the

statutory thresholds. We tentatively

conclude that the procedures we adopt

in this regard should be such that these

systems can obtain a prompt declaration

of their deregulatory status without

having to comply with the rules that

may be necessary for systems whose

eligibility is not so certain. Accordingly,

we propose to adopt on a permanent

basis the interim procedures described

above.

25. While designed to simplify the

process in the case of operators who

clearly meet the statutory criteria, this

process could be applied to all

operators, even though further scrutiny

may be required for operators that come

closer to those statutory criteria. We

seek comment on this approach and

invite commenters to propose other

mechanisms that would minimize the

administrative burdens on operators and

franchising authorities, particularly in

cases where there will be no dispute as

to the operator’s eligibility for

deregulation. We further seek comment

as to the procedures to be followed

where a determination of the operator’s

status will require further examination.

26. We also must determine the

treatment of systems that qualify for

deregulation now, but later exceed the

subscriber or revenue thresholds. We

tentatively conclude that the plain

language of the statute indicates that a

deregulated system would become

subject to regulation upon exceeding the

statutory thresholds. Under this

approach, would a system that qualifies

for deregulation instantly lose that

status the moment its subscriber base

exceeds 50,000 in the franchise area, or

at the moment its operator starts to serve

more than 1% of subscribers

nationwide? Is deregulated status lost

immediately upon the accumulation of

annual revenues above $250 million?

We tentatively conclude that an

instantaneous shift from complete

deregulation to full regulation may not

be in the public interest because it could

be disruptive to consumers and

operators. The addition of subscribers

by a system or operator would seem to

indicate that the company is responding

to consumer demand. We would not

want to discourage such responsiveness

on the part of cable operators.
19018 Federal Register / Vol. 61, No. 84 / Tuesday, April 30, 1996 / Proposed Rules

Nevertheless, we tentatively conclude

that the language of the 1996 Act

requires the transition into regulation to

begin as soon as the system no longer

qualifies under the subscriber or

revenue criteria. We seek comment on

these issues.

27. We note that last year the

Commission adopted rules streamlining

cost-of-service rate regulation for any

system serving fewer than 15,000

subscribers, as long as the system is not

owned by an operator serving more than

400,000 subscribers. Once a system

qualifies under these criteria, it remains

subject to the relaxed rules for so long

as the system serves fewer than 15,000

subscribers. When the system exceeds

15,000 subscribers, it may maintain its

current rates, but it is then subject to our

standard rate rules applicable to systems

generally, and therefore cannot seek an

increase until such an increase is

permitted under our standard rate rules.

We seek comment as to whether this

transition mechanism could be applied

to systems when they exceed the

statutory criteria, or whether some other

approach would be more appropriate.

D. Definition of ‘‘Affiliate’’ in the

Context of Open Video Systems and

Cable-Telco Buy Outs

28. We recently initiated a rulemaking

to implement the provisions of Section

302(a) of the 1996 Act establishing open

video systems [61 FR 10496 (March 14,

1996)]. Open video systems represent a

new medium for the provision of video

programming to subscribers. The 1996

Act specifically authorizes a LEC to

provide cable service over an open

video system within its own telephone

service area. The 1996 Act also provides

that, to the extent permitted by

Commission regulation, a cable operator

or any other person may provide video

programming through an open video

system. As with other portions of the

1996 Act, Section 302(a) requires that

we define the term ‘‘affiliate’’ in order

to implement its provisions. Although

Section 3 of the 1996 Act defines

‘‘affiliate,’’ Congress did not alter the

separate definition of ‘‘affiliate’’ set

forth in Title VI. Thus, we solicit

comment regarding the definition of

‘‘affiliate’’ in the context of the new

statutory provisions governing open

video systems.

29. The cable-telco buy out provisions

of Section 302 of 1996 Act also refer to

the ‘‘affiliates’’ of such entities. We

request comment regarding the

definition of ‘‘affiliate’’ in this context

as well.

E. Uniform Rate Requirement

30. As discussed above, Section

301(b)(2) of the 1996 Act amends the

pre-existing requirement that a cable

operator maintain a uniform rate

structure throughout its franchise area

by, among other things, exempting from

that requirement bulk discounts offered

to multiple dwelling units. We have

amended the rule to comform with the

exact statutory language. Here we solicit

comment on the meaning of several

terms in the statutory language.

31. We tentatively conclude that the

bulk rate exception does not permit a

cable operator to offer discounted rates

on an individual basis to subscribers

simply because they are residents of a

multiple dwelling unit, but rather

requires a ‘‘bulk discount[ ],’’ to use the

language of the statute, that is

negotiated by the property owner or

manager on behalf of all of the tenants.

We seek comment on this tentative

conclusion. We also seek comment as to

whether the bulk discounts permitted

under Section 301(b)(2) include

discounts offered to MDU residents who

are billed individually, or should only

be permitted where the discount is

deducted from a bulk payment paid to

the cable operator by the property

owner or manager on behalf of all of its

tenants.

32. We further seek comment as to the

meaning of the term ‘‘multiple dwelling

units’’ as used in Section 301(b)(2). The

Commission has a long-standing

definition of ‘‘multiple unit dwellings’’

that historically has been significant in

determining whether certain cable

facilities fell within the private cable

exemption to the definition of a cable

system. As noted above, prior to the

passage of the 1996 Act the definition of

a cable system excluded facilities

serving subscribers ‘‘in 1 or more

multiple unit dwellings under common

ownership, control, or management,

unless such facility or facilities uses any

public right of way * * *.’’ In that

context, we defined a multiple unit

dwelling to include a single building

that contains multiple residences, and

to exclude developments consisting of

detached single-family residences, such

as mobile home parks, planned and

resort communities, and military

installations. Congress now has

expanded the private cable exemption

to include all facilities located wholly

on private property, without regard to

the nature or common ownership of the

property served. Thus, operators of

private cable systems (e.g., SMATV

systems) now may serve mobile home

parks and planned developments

without being subject to regulations

applicable to cable systems. Since

Section 301(b)(2) clearly authorizes a

cable operator to deviate from its

standard rate structure in order to

respond to competition at multiple

dwelling units, commenters should

address whether we should interpret

‘‘multiple dwelling units’’ to correspond

to the expanded private cable

exemption to the cable system

definition.

33. Substantively, we believe that

allegations of predation should be made

and reviewed under principles of

federal antitrust law as applied and

interpreted by the federal courts.

Commenters should address what

standards should be applied to

determine whether a complainant has

made out a prima facie case ‘‘that there

are reasonable grounds to believe that

the discounted price is predatory

* * *.’’ Because complaints in this

connection are likely to involve some

measure of discovery, we propose the

adoption of procedures set forth in our

rules for the adjudication of program

access complaints. Commenters should

address whether that section, or some

modified version of procedures set forth

in that section, should apply on a

permanent basis.

F. Technical Standards

34. The Commission has adopted

technical standards that govern the

picture quality performance of cable

television systems. The rules generally

have preemptive force in situations

where there is any conflict between the

Commission’s requirements and those

that might be imposed by state or local

governments. Section 624(e) of the

Communications Act, as adopted in the

1992 Cable Act, provided that the

Commission should prescribe minimum

technical standards.

35. Current Commission rules dictate

specific technical standards and provide

for enforcement by LFAs. For example,

the Commission’s rules provide that,

upon request by a LFA, an operator

must be prepared to demonstrate

compliance with the Commission’s

technical standards. In addition, the

rules provide that, in some instances, an

operator may negotiate with its LFA for

standards less stringent than otherwise

prescribed by the Commission’s rules.

Section 76.607 of the Commission’s

rules require an operator to establish a

process for receiving signal quality

complaints, and subscriber complaints

must be referred to the franchising

authority and the operator before being

referred to the Commission.

36. Here, we seek comment on the

overall scope and meaning of new

Section 624(e) of the Communications
Federal Register / Vol. 61, No. 84 / Tuesday, April 30, 1996 / Proposed Rules 19019

Act, as amended by Section 301(e) of

the 1996 Act. For example, how does

this provision affect the Commission

rules cited above? How does the 1996

Act’s amendments to Section 624(e)

affect the scope of the cable franchising,

renewal or transfer process in the area

of the technical considerations allowed

in those situations? Commenters should

bear in mind that the 1996 Act did not

amend the franchising or the renewal

provisions of the Communications Act.

Specifically, Section 626 of the

Communications Act provides that,

‘‘subject to Section 624’’ an operator’s

proposal for franchise renewal ‘‘shall

contain such material as the franchising

authority may require, including

proposals for upgrade of the cable

system.’’ In addition, Section 626

provides for franchising authority

consideration of the ‘‘quality of the

operator’s service, including signal

quality’’ during the course of a renewal

under Section 626. Section 621

provides, in part, that a franchising

authority awarding a franchise ‘‘may

require adequate assurance that the

cable operator has the * * * technical

* * * qualifications to provide cable

service.’’

G. Prior Year Losses

37. Section 301(k)(1) of the 1996 Act

amends Section 623 of the

Communications Act by adding the

following provision:

(n) Treatment of Prior Year Losses.—

Notwithstanding any other provision of

this section or of section 612, losses

associated with a cable system

(including losses associated with the

grant or award of a franchise) that were

incurred prior to September 4, 1992,

with respect to a cable system that is

owned and operated by the original

franchisee of such system shall not be

disallowed, in whole or in part, in the

determination of whether the rates for

any tier of service or any type of

equipment that is subject to regulation

under this section are lawful.

38. This amendment was effective

upon enactment and ‘‘shall be

applicable to any rate proposal filed on

or after September 4, 1993, upon which

no final action has been taken by

December 1, 1995.’’

39. We note that this provision is

similar to a rule change we recently

made in the Second Report and Order,

First Order on Reconsideration, and

Further Notice of Proposed Rulemaking

(‘‘Final Cost Order’’), found at 61 FR

9361 (March 8, 1996) and 61 FR 9411

(March 8, 1996). The Final Cost Order

established final rules applicable to

operators that establish regulated rates

in accordance with our cost of service

rules, one of the two general approaches

we have implemented with respect to

rate regulation. The other, and primary,

method of rate regulation is the

benchmark approach. The cost of

service rules, intended as a safety valve

for operators unable to generate

reasonable revenues under the

benchmark mechanism, involve a

detailed analysis of an operators

investment, expenses, and revenues.

One of the issues in such an analysis is

the extent to which an operator should

be permitted to recover ‘‘start up losses’’

incurred by the system. Start up losses

occur in the early years of operation

when rates are set more to attract

customers than to fully cover the

significant capital and operating costs

that an operator incurs before and in the

first years after initiating service. Prior

to adoption of the Final Cost Order, we

presumptively limited the recovery of

start up losses to those losses incurred

in the first two years of operation. We

eliminated this presumption in the

Final Cost Order and now permit

operators to recover start up loses over

whatever period of time such losses

were actually incurred.

40. We tentatively conclude that the

statutory requirement of Section 301

(k)(1) is applicable to an operator’s costof-service justification, but differs

somewhat from the rule adopted in the

Final Cost Order. First, our rule

permitting the recovery of start up

losses applies to all cable operators,

while the recovery of prior year losses

under Section 301(k)(1) is limited to ‘‘a

cable system that is owned and operated

by the original franchisee of the

system.’’ Second, under our existing

rule, reasonable start up losses may be

recovered regardless of when they were

incurred, while Section 301(k)(1)

permits the recovery only of losses

incurred prior to September 4, 1992.

Third, while start up losses are those

incurred in the early years of a system’s

operation, Section 301(k)(1) contains no

such limitation. We seek comment on

these tentative conclusions. Further, we

seek comment as to whether Congress

intended to permit the recovery of prior

year losses attributable to imprudent or

unreasonable expenditures.

H. Advanced Telecommunications

Incentives

41. Subsection 706(a) of the 1996 Act

requires the Commission to ‘‘encourage

the deployment on a reasonable and

timely basis of advanced

telecommunications capability to all

Americans (including, in particular,

elementary and secondary schools and

classrooms) by utilizing, in a manner

consistent with the public interest,

convenience and necessity, price cap

regulation, regulatory forbearance,

measures that promote competition in

the local telecommunications market, or

other regulating methods that remove

barriers to infrastructure investment.’’

We seek comment on how we can

advance Congress’ goal within the

context of our cable services regulation.

The Commission has solicited such

information in other proceedings and

reserves its right to address the

implementation of Subsection 706(a) in

a consolidated action.

I. Cable Operator Refusal To Carry

Certain Programming

42. Here we solicit comment on the

proper interpretation of the term

‘‘nudity’’ as used in Sections 506 (a) and

(b) of the 1996 Act. We tentatively

conclude that the term ‘‘nudity’’ should

be interpreted in accordance with the

decision of the Supreme Court in

Erznoznik v. City of Jacksonville. In that

decision, the Supreme Court found

invalid a city ordinance that prohibited

showing films containing nudity at

drive-in theaters visible from public

places. The Court found the restriction

overly broad because it was not directed

against sexually explicit nudity or

otherwise limited. Accordingly, we

tentatively conclude that the term

‘‘nudity’’ as used in Sections 506 (a) and

(b) of the 1996 Act should be interpreted

to mean nudity that is obscene or

indecent. We seek comment on this

tentative conclusion.

J. Other Matters

43. We recognize that the cable reform

subsections of the 1996 Act that we

address in this NPRM are broad in

scope, and that there may be additional

issues regarding those subsections that

we have not specifically addressed in

the NPRM. Commenters may submit

proposals or concerns regarding the

implementation of these cable reform

subsections, including their impact on

other parts of the 1996 Act that are to

be addressed in separate proceedings.

We also seek proposals to ease the

burdens of regulation for interested

parties.

Regulatory Flexibility Analyses

44. Pursuant to the Regulatory

Flexibility Act of 1980, 5 U.S.C. 601–

612, the Commission’s Initial Regulatory

Flexibility Analysis with respect to the

NPRM is as follows:

45. Reason for action: The

Commission is issuing this NPRM to

seek comment on various issues

concerning implementation of the 1996

Act.
19020 Federal Register / Vol. 61, No. 84 / Tuesday, April 30, 1996 / Proposed Rules

46. Objectives: To provide an

opportunity for public comment and to

provide a record for a Commission

decision on the issues discussed in the

NPRM.

47. Legal Basis: The NPRM is adopted

pursuant to Section 301 of the 1996 Act;

and sections 4(i), 602, 614, 617, 623,

624, 628, 632, of the Communications

Act of 1934, as amended, 47 U.S.C. 154,

522, 534, 537, 543, 544, 548, 552, and

548.

48. Description, potential impact, and

number of small entities affected:

Amending our rules will directly affect

entities which are small business

entities, as defined in Section 601(3) of

the Regulatory Flexibility Act. The 1996

Act reduces or eliminates rate regulation

for many such entities.

49. Reporting, recordkeeping, and

other compliance requirements: None.

50. Federal rules which overlap,

duplicate, or conflict with the

Commission’s proposal: None.

51. Any significant alternatives

minimizing the impact on small entities

and consistent with state objectives: The

NPRM seeks to minimize burdens on

small entities in conformance with the

1996 Act.

52. Comments are solicited: Written

comments are requested on this Initial

Regulatory Flexibility Analysis. These

comments must be filed in accordance

with the same filing deadlines set for

comments on the other issues in this

NPRM, but they must have a separate

and distinct heading designating them

as responses to the Regulatory

Flexibility Analysis. The Secretary shall

send a copy of the NPRM to the Chief

Counsel for Advocacy of the Small

Business Administration in accordance

with Section 603(a) of the Regulatory

Flexibility Act, 5 U.S.C. 601, et seq.

Procedural Provisions

53. Pursuant to applicable procedures

set forth in Sections 1.415 and §§ 1.419

of the Commission’s rules, 47 CFR

1.415, 1.419, interested parties may file

comments on or before May 28, 1996

and reply comments on or before June

28, 1996. To file formally in this

proceeding, you must file an original

and six copies of all comments, reply

comments, and supporting comments.

Parties are also asked to submit, if

possible, draft rules that reflect their

positions. If you want each

Commissioner to receive a personal

copy of your comments, you must file

an original and eleven copies.

Comments and reply comments should

be sent to Office of the Secretary,

Federal Communications Commission,

1919 M Street, N.W., Room 222,

Washington, D.C. 20554, with a copy to

Nancy Stevenson of the Cable Services

Bureau, 2033 M Street, N.W., Room

408A, Washington, D.C. 20554. Parties

should also file one copy of any

documents filed in this docket with the

Commission’s copy contractor,

International Transcription Services,

Inc., 2100 M Street, N.W., Suite 140,

Washington, D.C. 20037. Comments and

reply comments will be available for

public inspection during regular

business hours in the FCC Reference

Center, 1919 M Street, N.W., Room 239,

Washington, D.C. 20554.

54. Parties are also asked to submit

comments and reply comments on

diskette, where possible. Such diskette

submissions would be in addition to

and not a substitute for the formal filing

requirements addressed above. Parties

submitting diskettes should submit

them to Nancy Stevenson of the Cable

Services Bureau, 2033 M Street, N.W.,

Room 408A, Washington, D.C. 20554.

Such a submission should be on a 3.5

inch diskette formatted in an IBM

compatible form using MS DOS 5.0 and

WordPerfect 5.1 software. The diskette

should be submitted in ‘‘read only’’

mode. The diskette should be clearly

labelled with the party’s name,

proceeding, type of pleading (comment

or reply comments) and date of

submission. The diskette should be

accompanied by a cover letter.

55. Written comments by the public

must be submitted by the Office of

Management and Budget (OMB) on the

proposed and/or modified information

collections on or before 60 days after

publication of the Order and NPRM in

the Federal Register. In addition to

filing comments with the Secretary, a

copy of any comments on the

information collections contained

herein should be submitted to Dorothy

Conway, Federal Communications

Commission, Room 234, 1919 M Street,

N.W., Washington, D.C. 20054, or via

the Internet to dconway@fcc.gov, and to

Timothy Fain, OMB Desk Officer, 10236

NEOB, 725–17th Street, N.W.,

Washington, D.C. 20503 or via the

Internet to fainllt@al.eop.gov.

List of Subjects in 47 CFR Part 76

Cable television.

Federal Communications Commission.

William F. Caton,

Acting Secretary.

[FR Doc. 96–10172 Filed 4–26–96; 8:45 am]

BILLING CODE 6712–01–P

DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety

Administration

49 CFR Part 571

[Docket No. 95–093, Notice 02]

RIN 2127–AF76

Federal Motor Vehicle Safety

Standards; Accelerator Control

Systems

AGENCY: National Highway Traffic

Safety Administration (NHTSA),

Department of Transportation.

ACTION: Notice of proposed rulemaking.

SUMMARY: In this document, NHTSA

proposes to change the scope of the

Federal motor vehicle safety standard

on accelerator control systems. The

current standard prohibits uncontrolled

engine speed in the event of a

disconnection or severance of the

accelerator control system at a single

point, and it also specifies return-to-idle

times for the normal operation of

accelerator control systems. The agency

has tentatively decided that it not

necessary to regulate the normal

operation of accelerator control systems.

Vehicles with return-to-idle times too

great for safe driving would be

unacceptable to prospective vehicle

buyers regardless of a regulation. The

standard will continue to require failsafe performance of accelerator control

systems in the case of a single point

disconnection or severance. This

proposed action is part of NHTSA’s

efforts to implement the President’s

Regulatory Reinvention Initiative.

DATES: Comments are due June 14, 1996.

ADDRESSES: Comments should refer to

the docket number and notice number

cited at the beginning of this notice, and

be submitted to: Docket Section, room

5109, 400 Seventh Street, SW.,

Washington, DC 20590 (Docket hours

are from 9:30 a.m. to 4 p.m.) It is

requested that 10 copies of the comment

be provided.

FOR FURTHER INFORMATION CONTACT: For

technical issues: Mr. Patrick Boyd,

Office of Crash Avoidance Standards,

NPS–21, telephone (202) 366–6346,

FAX (202) 366–4329.

For legal issues: Ms. Dorothy Nakama,

Office of Chief Counsel, NCC–20, (202)

366–2992, FAX (202) 366–3820.

Both may be reached at the National

Highway Traffic Safety Administration,

400 Seventh St., S.W., Washington,

D.C., 20590. Comments should not be

sent or FAXed to these persons, but

should be sent to the Docket Section.