28698 Federal Register / Vol. 61, No. 109 / Wednesday, June 5, 1996 / Rules and Regulations

FEDERAL COMMUNICATIONS

COMMISSION

47 CFR Part 76

[CS Docket No. 96–46; FCC 96–249]

Open Video Systems

AGENCY: Federal Communications

Commission.

ACTION: Final rule.

SUMMARY: The Second Report and Order

describes rules and policies concerning

open video systems. The Second Report

and Order amends our regulations to

reflect the provisions regarding open

video systems in the

Telecommunications Act of 1996 (the

‘‘1996 Act’’). The Second Report and

Order fulfills Congress’ mandate in

adopting the 1996 Act and will provide

guidance to open video system

operators, video programming

providers, and consumers concerning

open video systems.

DATES: Effective date: July 5, 1996,

except for § 76.1502 which is not

effective until approval by OMB of the

new information requirements. The

Commission will publish a document at

a later date notifying the public as to the

effective date of § 76.1502.

Written comments by the public on

the proposed and/or modified

information collections are due on or

before July 5, 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 60 days after

publication of the Second Report and

Order in theFederal Register.

ADDRESSES: 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. 20554, 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 fainlt@al.eop.gov.

FOR FURTHER INFORMATION, CONTACT:

Rick Chessen, Cable Services Bureau,

(202) 418–7200. For additional

information concerning the information

collections contained herein, contact

Dorothy Conway at 202–418–0217, or

via the Internet at dconway@fcc.gov.

SUPPLEMENTARY INFORMATION: This is a

synopsis of the Commission’s Report

and Order in CS Docket No. 96–46, FCC

No. 96–249, adopted May 31, 1996 and

released June 3, 1996. The full text of

this decision is available for inspection

and copying during normal business

hours in the FCC Reference Center

(room 239), 1919 M Street, NW,

Washington, D.C. 20554, and may be

purchased from the Commission’s copy

contractor, International Transcription

Service, (202) 857–3800, 1919 M Street,

NW, Washington, D.C. 20554.

The Second Report and Order

contains proposed and/or modified

information collections. It has been

submitted to the OMB for review, as

required by the Paperwork Reduction

Act of 1995. The Commission, as part of

its continuing effort to reduce

paperwork burdens, invites the general

public and OMB to comment on the

information collections contained in the

Second Report and Order. Comments

should address: (a) whether the

proposed collections of information are

necessary to 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:3060–0700.

Title:Implementation of Section 302

of the Telecommunications Act of 1996;

Open Video Systems.

Type of Review:Revision of a

currently approved collection.

Respondents:640. (10 OVS operators,

250 video programming providers that

may request additional Notice of Intent

information, file rate complaints, or

initiate dispute cases, 60 broadcast

stations that may elect type of carriage

or make network non-duplication

notifications, 300 must-carry list

requesters, 20 oppositions to OVS

operator certifications.)

Number of Responses:3750. (10

Notices of Intent, 250 requests for

additional Notice of Intent information,

250 responses to requests for additional

Notice of Intent information, 50 rate

complaints, 50 rate justifications, 60

carriage elections, 10 must-carry

recordkeepers, 300 must-carry list

requests, 300 provisions of must-carry

lists, 1200 notifications of network nonduplication rights to OVS operators,

1200 OVS operator notifications of

network non-duplication rights to

programming providers, 10

certifications of compliance, 20

oppositions to certifications of

compliance, 20 dispute case

complainants, and 20 dispute case

defendants.)

Estimated Burden to Respondents:

Notice of Intent requirements: 10

prospective OVS operators are estimated

to be in existence within the next year.

Average number of entities that

prospective OVS operators must notify

with each Notice of Intent: 45. Average

burden to each OVS operator to

complete a Notice of Intent and to

provide copies to all applicable entities:

8 hours apiece; therefore 10 × 8 = 80

hours. Estimated number of written

requests for additional information that

will be received subsequent to Notices

of Intent: 25 per Notice of Intent × 10

Notices = 250. Average burden to

prospective video programming

providers to make each written request:

2 hours apiece; therefore 10 × 25 × 2 =

500 hours. Average burden to each OVS

operator to provide the additional

information to all prospective video

programming providers: 8 hours apiece;

therefore 10 × 8 = 80 hours. Total

burden for all respondents = 80 + 500

+ 80 = 660 hours. Rate Justification

requirements: Estimated number of rate

complaints that video programming

providers will file: 5 per OVS operator;

therefore 10 × 5 = 50. Estimated number

of rate justifications filed by OVS

operators in response to rate complaints:

50. Burden to video programming

providers for filing complaints: 1 hour

per complaint; therefore 50 × 1 = 50

hours. Burden to OVS operators for

filing rate justifications: 20 hours per

justification; therefore 10 × 5 × 20 =

1,000 hours. Total burden for all

respondents: 50 + 1,000 = 1050 hours.

Must-Carry and Retransmission

Consent requirements: Number of OVS

operators: 10. Average number of

broadcast stations in each OVS

operator’s area of carriage: 6. Average

burden to broadcast stations for each

election for must-carry or

retransmission consent: 2 hours per

election; therefore 10 × 6 × 2 hours =

120 hours. Annual recordkeeping

burden for OVS operators to maintain

list of its broadcast stations carried in

fulfillment of must-carry requirements:

4 hours per OVS operator; therefore 10

× 4 = 40 hours. Estimated annual

number of written requests received by

OVS operators: 30 per OVS operator;

therefore 10 × 30 = 300. Burden for

completing written requests: .25 hours

per request; therefore 10 × 30 × .25 = 75

hours. Burden to OVS operators to

respond to requests: .25 hours per

request; therefore 10 × 30 × .25 = 75

hours. Total burden for all respondents:

120 + 40 + 75 + 75 = 310 hours.

Sports Exclusivity, Network NonDuplication and Syndicated Exclusivity

requirements: Estimated number of

occurrences where television broadcast

stations must notify OVS operators of

exclusive or non-duplication rights
Federal Register / Vol. 61, No. 109 / Wednesday, June 5, 1996 / Rules and Regulations 28699

being exercised: 6 stations in each OVS

operator’s area of carriage × 20 annual

notifications × 10 OVS operators = 1200.

Burden to television stations to make

notifications: .5 hours per notification;

therefore 12400 × .5 = 600 hours.

Burden for each OVS operator to make

notifications available to all

programming providers on their

systems: 1 hour per notification × 1200

occurrences = 1200 hours. Total burden

for all respondents: 600 + 1200 = 1800

hours.

Certification Process requirements:

Annual burden to OVS operators to

complete certifications: 1 hour apiece;

therefore 10 × 1= 10 hours. Number of

oppositions estimated to be filed with

the Commission: 2 per certification;

therefore 2 × 10 = 20. Average burden

for completing oppositions: 4 hours per

opposition; therefore 20 × 4 = 80 hours.

Total burden for all respondents: 10 +

80 = 90 hours.

Dispute Resolution requirements:

Estimated number of notices filed by

complainant: 20. Estimated number of

defendants’ responses to notices filed:

20. Average burden for each notice and

response to notice: 4 hours apiece;

therefore 40 × 4 = 160 hours. We

estimate that the 20 notices will result

in the initiation of 10 dispute cases. The

average burden for complainants and

defendants for undergoing all aspects of

the dispute case: 25 hours per case;

therefore 20 (10 complainants + 10

defendants) × 25 = 500 hours. Total

burden to all respondents: 160 + 500 =

660 hours.

Total Annual Burden to Respondents:

4570 hours. (660 + 1050 + 310 + 18600

+ 90 + 660)

Estimated Cost to Respondents:

Notices of Intent costs of stationery and

postage at $2 apiece for (10 Notices of

Intent × 45 entities) + 250 requests for

additional information + 250 responses

to requests for additional information =

$1900.

Rate Justifications costs of stationery

and postage at $2 apiece for 50 rate

complaints + 50 rate justifications =

$200.

Must-Carry and Retransmission

Consent costs of stationery and postage

at $2 apiece for 60 carriage elections +

300 requests for lists + 300 provisions

of lists = $1320.

Sports Exclusivity, Network NonDuplication and Syndicated Exclusivity

costs of stationery and postage at $2

apiece for 1200 notifications to OVS

operators + 1200 OVS operator

notifications to programming providers

= $4800.

Certification Process costs of

stationery, diskettes, and postage at $5

for 10 certifications = $50. Costs of

stationery and postage at $2 apiece for

20 opposition filings = $40. $50 + $40

= $90.

Dispute Resolutions costs of

stationery and postage at $2 apiece for

20 notices + 20 responses to notices =

$80. Costs of stationery and postage at

$10 apiece for 10 complainants in

dispute cases + 10 defendants in dispute

cases = $200. $80 + $200 = $280.

Total Estimated Costs to Respondents:

$8590. ($1900 + $200 + $1320 + $4800

+ $90 + $280).

Needs and Uses: The information

collections contained herein are

necessary to implement the statutory

provisions for Open Video Systems

contained in the Telecommunications

Act of 1996.

Second Report and Order—Open Video

Systems

1. New Section 653 of the

Communications Act establishes a new

framework for entry into the video

programming delivery marketplace—the

‘‘open video system.’’ See Sections 651

and 653 of the Communications Act of

1934, 47 U.S.C. § 151

(‘‘Communications Act’’). As designed

by Congress, the open video framework

provides an option, particularly to a

local exchange carrier, for the

distribution of video programming other

than as a ‘‘cable system’’ governed by all

of the provisions of Title VI of the

Communications Act. If a telephone

company agrees to comply with certain

non-discrimination and other

requirements it can be certified as an

operator of an ‘‘open video system’’ and

subjected to streamlined regulation

under Title VI.

2. In establishing this structure, we

believe that Congress intended to

advance competition in two areas of the

video marketplace. First, Congress

sought to encourage telephone

companies to enter the video

programming distribution market and to

deploy open video systems in order to

‘‘introduce vigorous competition in

entertainment and information markets’’

by providing a competitive alternative

to the incumbent cable operator.

Telecommunications Act of 1996

Conference Report, S. Rep. 104–230 at

178 (February 1, 1996) (‘‘Conference

Report’’). The incentive provided by

Congress to encourage such entry was

not only exemption from particular

requirements of Title VI, but that

streamlined Title VI obligations would

apply in lieu of, and not in addition to,

any requirements under Title II. Second,

by requiring open video system

operators to provide carriage

opportunities for video programming

providers on terms that are just and

reasonable, and not unjustly or

unreasonably discriminatory, Congress

sought to foster competition by

encouraging multiple programming

sources on open video systems.

3. The open video system model can

provide the competitive benefits that

Congress hoped to achieve: market entry

by new providers, enhanced

competition, streamlined regulation,

investment in infrastructure and

technology, diversity of programming

choices and increased consumer choice.

We believe that the best way to achieve

Congress’ goals is to give open video

system operators the flexibility to enter

and compete based on the demands of

the marketplace. Our approach reflects

the reduced regulatory burdens clearly

envisioned by Congress for open video

systems. Where necessary, the

Commission has provided a level of

guidance to parties in order to comply

with Congress’ particular directives

under Section 653 and to give certainty

to the parties.

4. On March 11, 1996, the

Commission released a Report and

Order and Notice of Proposed

Rulemaking, seeking comment on how

to implement the requirements of

Section 653. See Report and Order and

Notice of Proposed Rulemaking in CS

Docket No. 96–46 and CC Docket No.

87–266 (terminated), released March 11,

1996, 61 FR 10496 (March 14, 1996) (the

‘‘NPRM’’). We received 61comments

and 79 replies in response to the NPRM.

After consideration of the comments

and reply comments, we hereby adopt

the Second Report and Order herein.

A. Qualifications To Be an Open Video

System Operator

5. We conclude that Section 653(a)(1)

authorizes the Commission to allow

non-local exchange (‘‘non-LECs’’) to

operate open video systems, and to

allow LECs to operate open video

systems outside of their telephone

service areas, when the public interest,

convenience, and necessity are served.

We further conclude that it would serve

the public interest, convenience and

necessity to permit: (1) non-LECs that

are not cable operators; (2) LECs outside

of their telephone service areas; and (3)

cable operators outside of their cable

franchise areas, to own or operate open

video systems. With respect to cable

operators within their cable franchise

areas, we conclude that it would serve

the public interest, convenience, and

necessity to allow a cable operator to

operate an open video system in its

cable franchise area if it is subject to

‘‘effective competition’’ in its cable

franchise area under Section 623(l)(1) of

the Communications Act, 47 U.S.C.
28700 Federal Register / Vol. 61, No. 109 / Wednesday, June 5, 1996 / Rules and Regulations

§ 543(l)(1). This condition shall apply

even if a cable operator also provides

local exchange services within its cable

franchise area. In certain circumstances,

particularly where the entry of a

facilities-based competitor into a market

served by an incumbent cable operator

would likely be infeasible, we believe

that it would be consistent with the

public interest to allow the incumbent

cable operator to convert its cable

system to an open video system even if

it is not subject to ‘‘effective

competition’’ in its cable franchise area

under Section 623(l)(1) of the

Communications Act, 47 U.S.C.

§ 543(l)(1). We will consider petitions

from cable operators seeking such a

public interest finding. Our decision to

allow cable operators to become open

video system operators under these

circumstances shall not be construed to

affect the terms of any existing

franchising agreements or other

contractual agreements.

B. Certification Process

6. In light of the brief period (ten

days) allowed for Commission review of

certification filings, we conclude that

Congress intended the certification

process to be streamlined. We will

require that certifications be verified by

an officer or director of the applicant,

stating that, to the best of his or her

information and belief, the

representations made therein are

accurate. The certification must contain

particular facts and representations

about the system, including: (1) the

applicant’s name, address and

telephone number; (2) a statement of

ownership, including all affiliated

entities; (3) if the applicant is a cable

operator applying for certification

within its cable franchise area, a

statement that the applicant is qualified

to operate an open video system under

Section 76.1501 of the Commission’s

rules; (4) a statement that the applicant

agrees to comply and to remain in

compliance with each of the

Commission’s regulations under Section

653(b); (5) if the applicant is required

under 47 CFR § 64.903(a) to file a cost

allocation manual, a statement that the

applicant will file changes to its manual

at least 60 days prior to commencement

of service; (6) a general description of

the anticipated communities or areas to

be served upon completion of the

system; (7) the anticipated amount and

type (i.e., analog or digital) of capacity

(for switched digital systems, the

anticipated number of available channel

input ports); and (8) a statement that the

applicant will comply with the

Commission’s notice and enrollment

requirements for unaffiliated video

programming providers. Applicants will

be required to file for certification using

FCC Form 1275 (OMB approval

pending).

7. Open video system operators may

apply for certification at any point prior

to the commencement of service, subject

to conditions. If construction of new

physical plant is required, the applicant

must obtain Commission approval of its

certification prior to the commencement

of construction. If no new construction

is required, Commission approval of

certification may be obtained at any

point prior to the commencement of

service that would allow the applicant

sufficient time to comply with the

Commission’s notification requirements

herein.

8. We will consider comments or

oppositions to a certification that are

filed within five days of the

Commission’s receipt of the

certification. Disapproval of a

certification will not preclude the

applicant from filing a revised

certification or from refiling its original

submission with a statement addressing

the issues in dispute. Such refilings

must be served on any objecting party

or parties. Any certification filing that

the Commission does not disapprove

within ten days will be deemed

approved. If the representations

contained in a certification filing prove

to be materially false or materially

inaccurate, the Commission retains the

authority to revoke an open video

system operator’s certification or to

impose such other penalties it deems

appropriate, including forfeitures.

C. Carriage of Video Programming

Providers

9. We affirm our tentative conclusion

that the 1996 Act does not require that

the open video system operator be

prohibited from participating in the

allocation of channel capacity. We

believe that the statute and

implementing rules will prevent an

open video system operator from

discriminating against unaffiliated video

programming providers,

notwithstanding the operator’s

involvement in the allocation process.

10. These rules and policies are

designed to implement Sections

653(b)(1)(A) and 653(b)(1)(B) of the

Communications Act. An open video

system operator will file a ‘‘Notice of

Intent’’ (‘‘Notice’’) with the

Commission. The Commission will

release the Notice to the public. The

Notice will contain certain information

that a video programming provider

reasonably would need in order to

assess whether to seek carriage on the

system. The Notice must include: a

heading clearly indicating that the

document is a Notice of Intent; the open

video system operator’s name, address

and telephone number; a description of

the system’s projected service area; a

description of the system’s projected

channel capacity, in terms of analog,

digital, and other type(s) of capacity,

upon activation of the system; a

description of the steps a prospective

video programming provider must

follow to seek carriage on the system,

including the name, address and

telephone number of a person to contact

for further information; the starting and

ending dates of the initial enrollment

period; and a certification that the

system operator has complied with all

relevant notification requirements under

our open video system regulations

concerning must-carry and

retransmission consent, including a list

of all local commercial and noncommercial television stations served,

and a certificate of service showing that

the Notice of Intent has been served on

all local franchising authorities entitled

to establish requirements under Section

611 of the Communications Act.

11. In addition to the information in

the Notice, the open video system

operator will be required to provide

within five business days of receiving a

written request from a potential video

programming provider certain

information, including: the projected

activation date of the system (if a system

is to be activated in stages, an operator

should describe each stage and the

projected dates on which each stage will

be activated; a preliminary rate estimate;

the information a video programming

provider will be required to provide to

qualify as a commercially bona fide

video programming provider; technical

information that is reasonably necessary

to prospective video providers to assess

whether to seek capacity on the system;

any transmission or reception

equipment needed by a video

programming provider to interface

successfully with the open video

system; and the equipment available to

facilitate the carriage of unaffiliated

video programming and the electronic

forms that will be accepted for

processing and subsequent transmission

through the system.

12. The open video system operator

may establish terms and conditions of

carriage for video programming

providers that are just and reasonable,

and are not unreasonably or unjustly

discriminatory. For instance, an open

video system operator may: (1) take

reasonable steps to ensure that a

prospective video programming

provider’s request for capacity is bona

fide; (2) generally exclude an
Federal Register / Vol. 61, No. 109 / Wednesday, June 5, 1996 / Rules and Regulations 28701

incumbent, competing in-region cable

operator from obtaining capacity on its

system when such carriage would

siginificantly impede facilities-based

competition; (3) require video

programming providers to obtain

capacity in increments of no less than

one full-time channel, however, the

operator may not require video

programming provider to obtain

capacity only in amounts greater than

one full-time channel; (4) preclude

unaffiliated video programming

providers from selecting the

programming on more capacity than the

operator itself and its affiliates; (5)

negotiate co-packaging agreements with

unaffiliated video programming

providers; and (6) require assurances

that a video programming provider will

deliver video programming over the

open video system within some

reasonable time after the system is

activated.

13. At the conclusion of the open

enrollment or notice period, the open

video system operator will determine

whether demand for carriage, including

its own demand, exceeds the system’s

channel capacity. For this purpose,

analog and digital capacity must be

treated separately. Specifically, if the

system contains both analog and digital

capacity, the open video system

operator must separately assess whether

analog demand exceeds analog capacity

and whether digital demand exceeds

digital capacity. Analog capacity shall

be measured in 6 MHz channel

increments, and digital capacity shall be

measured in bandwidth.

14. Further, we anticipate that

concerns regarding the methods for

soliciting carriage demand and

allocating system capacity will be

alleviated with capacity significantly

higher than carriage demand. Therefore,

when an open video system operator

can demonstrate that, due to technology,

the system’s capacity is plentiful as

compared to demand, we will consider

waiving the rules adopted in this Order.

15. If demand for carriage does not

exceed system capacity, the open video

system operator may fill all video

programming providers’ demands for

capacity, including its own. If demand

for carriage exceeds capacity, the open

video system operator may select the

programming services on no more than

one-third of the system’s activated

channel capacity. Public, educational,

and governmental (‘‘PEG’’) and mustcarry channels carried pursuant to

Sections 611, 614 and 615 of the

Communications Act will count in the

system’s total activated channel

capacity for purposes of calculating the

operator’s one-third limit, but will not

count against the operator’s one-third

limit. Channels carrying ‘‘shared’’

programming will count against the

operator’s one-third limit on a pro-rata

basis, e.g., if the operator shares the

channel with one other video

programming provider, it will count as

half of a channel against the operator’s

limit. The remaining two-thirds of

capacity, other than PEG and must-carry

channels, must be allocated to

unaffiliated video programming

providers on an open, fair, nondiscriminatory basis. The Commission

does not require a specific allocation

methodology.

16. After service commencement, an

open video system operator will be

required to allocate open capacity, if

any is available, at least every three

years beginning three years after the

system is activated, through an open,

fair, non-discriminatory process. Such

open capacity will include capacity that

becomes available during the year, e.g.,

due to a system upgrade or the

expiration of carriage contracts, and any

capacity on which the open video

system operator is selecting the video

programming beyond one-third of

activated channel capacity. Changes in

an operator’s PEG and must-carry

obligations which cause changes in the

level of available open video system

capacity must be accommodated in

accordance with the rules adopted in

this Order. An operator must keep a list

of qualified video programming

providers that have sought carriage or

additional carriage during the previous

three year period.

17. In addition, we find that channel

positioning is an important part of

allocating channel capacity to video

programming providers, and therefore

will require an open video system

operator to assign channel positions in

a non-discriminatory manner. We also

find that, given Section 653(b)(1)(A)’s

specific exemption of must-carry and

PEG from its general non-discrimination

requirements, an open video system

operator must comply with the channel

positioning requirements contained in

those rules. Finally, we find that the

statute leaves to an open video system

operator’s discretion whether to create

shared channels for some or all of the

duplicative programming on its system.

However, we disagree with telephone

companies who argue that the statutory

reference to ‘‘any video programming

service’’ means that an open video

system operator may select—in advance

of any actual duplication—which

program services to place on shared

channels. We also note that certain

cable operators and programmers argue

that the placement of a program service

on a shared channel must be

conditioned on the approval of the

program service. We take this to mean

simply that each video programming

provider using the shared channel has

reached its own agreement with the

programming service. We also find that

the statutory provision requiring

subscribers have ‘‘ready and

immediate’’ access to programming

carried on shared channels means that

channel sharing must be transparent to

subscribers.

18. An open video system operator

may not discriminate among video

programming providers with respect to

technology or technical information

necessary to access the system.

D. Rates, Terms, and Conditions of

Service

19. We will accord a strong

presumption that carriage rates are just

and reasonable for open video system

operators where at least one unaffiliated

video programming provider, or

unaffiliated programming providers as a

group, occupy capacity equal to the

lesser of one-third of capacity or that

occupied by the open video system

operator and its affiliates, and where

any rate complained of is no higher than

the average of the rates paid by

unaffiliated programmers receiving

carriage from the open video system

operator.

20. We adopt our tentative conclusion

that some level of rate differentiation is

permissible, provided that the bases for

the differences are not unjust or

unreasonable. We therefore agree with

those commenters that argue that open

video system operators should be given

flexibility to offer different carriage

rates.

21. We conclude that it is unnecessary

and undesirable to require open video

system operators to disclose publicly its

carriage contracts. In general, we agree

with those telephone companies that

argue that making carriage contracts

public would stifle competition by

forcing them to divulge sensitive

information. In order to protect video

programming providers from

discriminatory conduct, we will require

all open video system operators to make

preliminary rate estimates available to

potential video programming providers.

If, however, a complaint is filed,

regardless of which party bears the

burden of proof, the open video system

operator’s contracts with video

programming providers will be subject

to discovery.
28702 Federal Register / Vol. 61, No. 109 / Wednesday, June 5, 1996 / Rules and Regulations

E. Applicability of Title VI Provisions

1. Public, Educational and

Governmental Access Channels

22. The first issue we must address

with respect to PEG use is how PEG

access obligations should be established

for open video systems, including the

extent and amount of channel capacity

and other resources that open video

system operators should be required to

devote to PEG use. We conclude that

open video system operators should in

the first instance be permitted to

negotiate their PEG access obligations

with the relevant local franchising

authority. These negotiations may

include the local cable operator if the

local franchising authority, the open

video system operator and the cable

operator so desire.

23. We are unaware of any cable

operator that charges PEG programmers

for access to the PEG channels on its

cable system. Therefore, because the

PEG access obligations of open video

system operators are to the extent

possible to be no greater or lesser than

those imposed on cable operators, we do

not foresee open video system operators

charging PEG programmers for PEG use.

We recognize that certain costs will be

associated with providing PEG

channels. These costs may be recovered

as an element of the carriage rate.

24. Although we believe that

negotiation is the best way to establish

the appropriate PEG access obligations

for each open video system operator, we

recognize that the parties may be unable

to reach agreement. We therefore believe

it is necessary to have a default

mechanism for establishing PEG access

obligations. If the open video system

operator and the local franchising

authority are unable to come to an

agreement, we will require the open

video system operator to satisfy the

same PEG access obligations as the local

cable operator. We believe this can be

accomplished by connection to the

cable operator’s PEG access channel

feeds and by sharing the costs directly

related to supporting PEG access,

including costs of PEG equipment and

facilities, and equipment necessary to

achieve the connection. We also

determine that, under these

circumstances, in order to comply with

the statutory directive that to the extent

possible the obligations be no greater or

lesser than those imposed on cable

operators, the open video system

operator must provide the same amount

of channel capacity for PEG access as

the local cable operator is required to

provide.

25. If an open video system operator

builds an institutional network, the

local franchising authority may require

that educational and govermental access

channels be designated on that network

to the extent such channels are

designated on the institutional network

of the local cable operator.

26. In addition, absent an agreement

to the contrary, the open video system

operator will be subject to the same

rules and procedures as those imposed

on the local cable operator regarding the

use of PEG channels for other

programming when such channels are

not being used for PEG.

27. We will require cable operators to

permit open video system operators to

connect with their PEG feeds. We will

leave how this connection is

accomplished to the discretion of the

parties, allowing them to take into

consideration the exact physical and

technical circumstances of the cable and

open video systsms involved. If the

cable and open video system operators

cannot agree on how this connection

can best be accomplished, the local

franchising authority may decide. In

this context, the local franchising

authority may require that the

connection take place on government

property or on public rights of way.

28. With regard to cost sharing, the

costs of connection and maintaining

PEG facilities and equipment shall be

divided equitably between the cable

operator and the open video system

operator. This shall include captial

contributions and any other costs or

investments directly relating to or

supporting PEG access and required by

the cable operator’s franchise

agreement. Capital expenses incurred

prior to the open video system

operator’s connection shall be subject to

cost sharing on a pro rata basis to the

extent such investments have not been

fully amortized by the cable operator.

29. Where the open video system

operator and the local franchising

authority cannot negotiate an agreement

regarding PEG access, and the open

video system operator is instead

satisfying its PEG access obligations by

connection and cost sharing with the

cable operator’s PEG facilities, the open

video system operator’s PEG access

obligations should change to the extent

that the cable operator’s PEG access

obligations change with the franchise

renewal. Accordingly, open video

system operators should be prepared to

adjust their systems to comply with new

PEG access obligations as necessary. An

open video system operator will not,

however, be required to displace other

programmers to accommodate PEG

channels until channel capacity

becomes available, whether it be due to

increased channel capacity or decreased

demand for channel capacity. Because

PEG access channels are expressly

exempt from Section 653(b)(1)(A)’s nondiscrimination requirement, an open

video system operator need not and

should not wait until the next three-year

reallocation to comply with new PEG

access obligations, but should comply

with such obligations whenever

additional capacity is or becomes

available.

30. Where there is no local cable

operator and the open video system

operator and the local franchising

authority cannot agree on appropriate

PEG access obligations, we believe that

the open video system operator should

make a reasonable amount of channel

capacity available for PEG access, as

well as provide reasonable support of

PEG, services, facilities and equipment.

First, the open video system operator’s

PEG access obligations shall depend on

whether there used to be a cable

franchise agreement in that franchise

area. If there was, the open video system

operator shall follow the PEG terms of

the previously existing franchise

agreement. Absent a previous cable

franchise agreement, the open video

system operator’s PEG access

obligations shall be determined by

comparison to the franchise

agreement(s) for the nearest operating

cable system with a commitment to

provide PEG access.

31. We believe that PEG access

channels should be provided to all

subscribers to the open video system.

The provision of PEG channels to all

open video system subscribers is

important to ensure that the PEG access

obligations imposed on open video

system operators are ‘‘no greater or

lesser’’ than those imposed on cable

operators.

32. We also conclude that open video

system operators should be subject to

PEG access requirements for every

franchise area with which its system

overlaps. We believe that, despite open

video system operators not being subject

to franchise requirements, pursuant to

Section 653(c)(1)(C), it is appropriate to

require open video system operators to

comply with these franchise by

franchise requirements so that the

obligations imposed on the open video

system operator with respect to PEG

access are ‘‘no greater or lesser’’ than

those imposed on cable operators, as

required by Section 653(c)(2)(A) of the

Communications Act.

2. Must-Carry and Retransmission

Consent

33. We find that at this time the

public interest will best be served by

application of the cable must-carry and
Federal Register / Vol. 61, No. 109 / Wednesday, June 5, 1996 / Rules and Regulations 28703

retransmission consent rules to open

video systems, even though future

system configurations may require

modification of our regulations. If our

regulations later become inadequate for

open video system operators, we intend

to address promptly the problem. For

now, we are guided by Congress’

directive that we impose obligations

that are ‘‘no greater or lesser’’ than the

obligations currently imposed on cable

operators.

(1) Must-Carry

34. Pursuant to Section 614(b)(7) and

615(h), the operator of a cable system is

required to ensure that signals carried in

fulfillment of the must-carry

requirements are provided to every

subscriber of the system. Sections 614

and 615 also generally state the number

of must-carry stations that a cable

operator is required to provide. We

believe that in order to apply obligations

that are no greater or lesser than those

imposed on cable operators, we must

also apply these requirements to open

video system operators. Consequently,

we find that the operator of an open

video system must ensure that every

subscriber on the open video system

receives all appropriate must-carry

channels carried in accordance with our

rules. An open video system operator

will be required to fulfill this obligation

regardless of whether or not individual

subscribers on its system subscribe to

the open video system operator’s

programming package. We do not find it

necessary to prescribe a specific method

to be used by an open video system

operator to comply with these

requirements, such as a requirement

that an open video system operator must

use a basic tier. We recognize that

certain costs will be associated with

providing must-carry channels. These

costs may be recovered as an element of

the carriage rate.

35. As a related matter, we leave the

decision of how to offer any necessary

customer premises equipment to the

open video system operator, including

whether the open video system operator

will offer it directly or require video

programming providers to provide the

equipment. In addition, an open video

system operator will be required to

implement the channel positioning

requirements contained in the mustcarry rules in a manner as similar as

possible to that of a cable operator,

including, for example, identifying

broadcast stations on the same channels

as their over-the-air channel numbers,

or on a channel mutually agreed upon

by the station and the operator.

Consistent with the statutory

requirement of comparable treatment,

open video systems that span multiple

television markets will be subject to the

same must-carry and retransmission

consent rules as cable systems that span

multiple markets.

(2) Retransmission Consent

36. We find that our existing

retransmission consent rules should

also be applied to the distribution of

programming over open video systems.

These rules generally prohibit

multichannel video programming

providers from retransmitting the signal

of a commercial broadcasting station

without the station’s express authority.

Our retransmission consent rules will

apply to any video programming

provider on an open video system that

provides more than one channel of

video programming. Given the inherent

differences between cable systems and

open video systems, we believe that the

application of our retransmission

consent rules in this fashion will

impose obligations that are no greater or

lesser than those imposed on cable

operators. The open video system

operator is charged with the

responsibility for assuring that its

system meets the requirements of our

must-carry rules. We believe that it is

also appropriate as a matter of

administrative efficiency that open

video system operators receive all mustcarry/retransmission consent election

statements that broadcast stations are

required to send under our

retransmission consent rules. However,

open video system operators will not be

responsible for making retransmission

consent arrangements for all

programming carried on the system.

Once retransmission consent has been

elected, broadcast stations will have to

negotiate agreements with individual

video programming providers on the

open video system. Television broadcast

stations are not required to make the

same elections for open video systems

and cable systems in the same

geographic area.

3. Program Access

37. We believe that four general issues

arise in the context of applying the

program access rules to open video

systems. The first concerns the extent to

which the program access regime

restricts the activities of open video

system operators. The second pertains

to how the program access regime

restricts the conduct of open video

system video programming providers.

The third issue concerns the extent to

which the benefits of the program access

statute and rules apply to open video

system video programming providers.

The fourth issue raised by commenters

involves certain expansions of our

program access rules.

38. Section 653(c)(1)(A) applies the

program access provisions to open video

system operators. Given this statutory

language, we conclude that the program

access restrictions shall apply to the

conduct of open video system operators

in the same manner as they are

currently applied to cable operators and

common carriers or their affiliates that

provide video programming directly to

subscribers. Specifically, the conduct of

an open video system operator shall be

subject to Section 628(b), which

prohibits unfair methods of competition

and unfair or deceptive acts or practices.

In addition, the program access

provisions which preclude certain

specific conduct, including undue or

improper influence, and discrimination

in prices, terms, or conditions, shall

apply to open video system operators as

well. Similarly, the limitations on

exclusive contracts contained in

Sections 628(c)(2) (C) and (D) shall

apply to open video system operators so

that open video system operators will

generally be restricted from entering

into exclusive contracts with satellite

programmers in which an open video

system operator has an attributable

interest, but not in which a cable

operator has an attributable interest.

Thus, any practice, understanding,

arrangement or activity, including

exclusive contracts, between an open

video system operator and a satellite

programmer vertically integrated with

an open video system operator that

prevents an MVPD from obtaining

satellite programming in an area

unserved by a cable operator as of the

date of enactment of the 1992 Cable Act

is per se unlawful. Exclusive contracts

between an open video system operator

and a satellite programmer vertically

integrated with an open video system

operator which relate to an area served

by cable as of the date of enactment of

the 1992 Cable Act are prohibited unless

the Commission first determines that

such a contract is in the public interest

in accordance with the factors set forth

in Section 628(c)(2)(D). Moreover,

Section 628 and or program access rules

shall apply to any affiliate established

by an open video system operator to

distribute programming on its system.

We also believe it is reasonable to, and

will therefore insert a note in Section

76.1000(h) of our rules indicating that

satellite open video system

programming is included within the

definition of satellite cable

programming.

39. The programming relationships

that are likely to occur with respect to

open video systems raise additional
28704 Federal Register / Vol. 61, No. 109 / Wednesday, June 5, 1996 / Rules and Regulations

program access issues that are not raised

by the programming relationships on

cable systems. In the cable context, an

agreement to carry programming is

generally between a programmer and a

cable operator. Restricting the activities

of cable operators and satellite

programmers vertically integrated with

cable operators therefore addresses

Congress’ concern over cable operator

control over video programming. In the

open video system context, however,

there may be many programmers

providing packages of programming

directly to subscribers. An agreement to

carry programming may be between a

programmer and an open video system

operator or between a programmer who

produces programming and one who

will distribute it directly to subscribers.

Moreover, a video programmer may

provide its own programming directly to

subscribers by purchasing channel

capacity on an open video system

platform.

40. We believe that, in order to

effectuate the purposes of the program

access statute in the open video context,

open video system programming

providers should be subject to the

program access restrictions to the extent

described below. In the open video

system context, a vertically integrated

satellite programmer will not be per se

precluded from selling its programming

exclusively to one MVPD on an open

video system, as long as that MVPD is

not affiliated with the same type of

operator as the vertically integrated

satellite programmer. Similarly, cable

operators, common carrriers or their

affiliates providing video programming

directly to subscribers and open video

system operators are not generally

restricted from entering into exclusive

contracts with non-vertically integrated

programmers. We do not intend to

foreclose challenges to exclusive

contracts between vertically integrated

satellite programmers and MVPDs,

including unaffiliated MVPDs, on open

video systems under Section 628(b) or

Section 628(c)(2)(B), which prohibits,

with limited exceptions, discrimination

among competing MVPDs by a vertically

integrated satellite programmer.

41. We believe that the purposes of

the program access rules and statute are

served by extending the current program

access rules to apply to exclusive

arrangements between satellite

programmers in which a cable operator

has an attributable interest and open

video system programming providers in

which a cable operator has an

attributable interest. We believe that

Section 628(b) authorizes the

Commission to adopt additional rules to

accomplish the program access statutory

objectives should additional types of

conduct emerge as barriers to

competition and obstacles to the broader

distribution of satellite cable and

broadcast programming. We will apply

the program access rules under Section

628 to exclusive contracts between a

satellite programmer in which a cable

operator has an attributable interest

(‘‘cable-affiliated satellite programmer’’)

and an open video system video

programming provider in which a cable

operator has an attributable interest

(‘‘cable-affiliated open video system

programming provider’’). Specifically,

such exclusive contracts will be

prohibited unless the contract pertains

to an area served by a cable operator as

of the date of the enactment of the 1992

Cable Act and the Commission first

determines that the exclusive

arrangement is in the public interest

under the factors listed in Section

628(c)(4). Two types of cable-affiliated

satellite programmer/cable-affiliated

open video system programming

provider relationships will be affected

by this restriction on exclusive

contracts. First, this rule will preclude

a cable-affiliated satellite programmer

from entering into an exclusive contract

to provide its own programming to a

cable-affiliated open video system

programming provider with which the

programmer is affiliated. Second, the

new rule will preclude, absent prior

Commission approval, a cable-affiliated

satellite programmer from entering into

an exclusive contract to provide its

programming to an open video system

programming provider that is affiliated

with another cable operator.

42. We believe that subjecting these

types of exclusive contracts to prior

Commission review is necessary to

fulfill the objectives of the program

access rules in the open video system

context. The program access

requirements have at their heart the

objective of releasing programming to

existing or potential competitors of

traditional cable systems so that the

public may benefit from the

development of competitive

distributors. Our primary concern is that

exclusive arrangements among cableaffiliated open video system

programmers and cable-affiliated

satellite programmers may serve to

impede development of open video

systems as a viable competitor to cable

to the extent that popular programming

services are denied to open video

system operators or unaffiliated open

video system programmers that seek to

package such programming for

distribution to subscribers. In adopting

this rule, we recognize, as did Congress

in enacting the program access

provisions, that exclusive contracts can

often have pro-competitive effects under

certain market conditions. However,

strategic vertical restraints can also

deter entry into markets for the

distribution of multichannel video

programming. Accordingly, the

Commission’s program access policies

seek to balance the likely competitive

harm to consumers created by a

particular vertical arrangement against

its likely efficiency benefits. In the

context of open video systems, unless

the Commission first determines that

exclusive arrangements for satellite

programming which favor cableaffiliated video programming providers

are in the public interest under Section

628(c)(4), the potential for competitive

harm from such contracts requires their

prohibition.

43. As stated above, a satellite

programmer may also provide its own

programming directly to subscribers by

purchasing channel capacity on an open

video system platform. It is therefore

possible for a programmer vertically

integrated with a cable operator to

purchase channel capacity, to provide

its own programming directly to

subscribers and to refuse to sell the

programming it owns to another MVPD

on the open video system. Such a

refusal to sell would appear to be

unreasonable because it discriminates

against a class of distributors, i.e., open

video system programming providers.

Furthermore, this type of refusal to sell

would result in the same situation

which we have deemed contrary to the

purposes of Section 628 when achieved

through an exclusive contract, i.e.,

restricting competitive access to

vertically integrated satellite cable

programming to a vertically integrated

entity. We believe this would

consequently be actionable under

Section 628(c).

44. Open video system operators and

video programming providers that

provide more than one channel of

programming on an open video system

are MVPDs. We will not create an

exception to our rules that would

exclude open video system operators or

open video system programming

providers from the benefits of our

program access rules. Accordingly, we

will add a note to the definition of

MVPD contained in Section 76.1000(e)

of our rules to indicate that video

programming providers on open video

systems that provide more than one

channel of programming to subscribers

are MVPDs.
Federal Register / Vol. 61, No. 109 / Wednesday, June 5, 1996 / Rules and Regulations 28705

4. Sports Exclusivity, Network NonDuplication and Syndicated Exclusivity

45. We believe that we can directly

apply our existing cable regulations

regarding sports exclusivity, syndicated

exclusivity and network nonduplication to open video systems. We

do not believe that open video systems

that span multiple geographic zones or

communities should be treated any

differently than similar cable systems.

The record evidence indicates that large

cable systems are able to comply with

these provisions, and no commenter has

provided any reason why open video

systems should not be required to

comply with the same regulations. In

addition, we find that open video

system operators should be responsible

for compliance with these rules.

46. In all cases, we find that television

stations must notify the open video

system operator of the exclusive or nonduplication rights being exercised.

When the open video system operator

receives such a notification, it will be

required to give the appropriate video

programming providers an opportunity

to either substitute signals or delete

signals where possible. Therefore, we

require that open video system

operators make all notices of exclusive

or non-duplication rights received

immediately available to the appropriate

video programming providers on their

systems. We would not expect to

impose sanctions on an OVS operator

for violations of the exclusivity rules by

an unaffiliated program supplier if the

operator provided proper notices to the

program supplier and took prompt steps

to stop the distribution of the infringing

program once it was notified of the

violation.

5. Other Title VI Provisions

47. The Commission will, as proposed

in the NPRM, apply the following

provisions of the Communications Act

and the Commission’s rules thereunder

to open video systems: Section 613 (c)

through (h) regarding ownership

restrictions; Section 616 regarding

regulation of carriage agreements;

Section 623(f) regarding negative option

billing; Section 631 regarding subscriber

privacy; and Section 634 regarding

equal employment opportunity.

6. Preemption of Local Franchising

Requirements

48. Section 653 exempts an open

video system operator from the

requirement of obtaining a local

franchise under Section 621, although

the operator still must pay a gross

revenue fee ‘‘in lieu of’’ a franchise fee

and must satisfy obligations under

Section 611. However, we believe that

Congress did not intend to infringe

upon local communities’ prerogative to

manage their rights-of-way in order to

protect the public health and safety.

State and local authorities may impose

conditions on an open video system

operator for use of the rights-of-way, so

long as such conditions are applied

equally to all users of the rights-of-way

(i.e., are non-discriminatory and

competitively neutral). Conversely, state

and local authorities may not impose

specific conditions on use of the rightsof-way that are unrelated to their

management function or that apply to

an open video system operator

differently than they apply to other

rights-of-way users.

49. Any state or local requirement that

seeks to impose Title VI ‘‘franchise-like’’

requirements on an open video system

operator would directly conflict with

Congress’ express direction that open

video system operators need not obtain

local franchises. Examples of such

‘‘franchise-like’’ requirements include

constructing institutional networks,

donating money to local educational or

charitable institutions, or specifying the

amount or type of capacity that the

system must possess. Such requirements

are preempted because they ‘‘stand[ ] as

an obstacle to the accomplishment of

the full purposes and objectives of

Congress.’’ We believe the most natural

reading of Section 653, in light of

Congress’s stated intent, is that state and

local governments cannot require any

open video system operator to obtain a

Title VI franchise from a state or local

authority for use of public rights-of-way

necessary to operate its open video

system.

50. The state or local government

may, however, impose nondiscriminatory and competitively

conditions on an open video system

operator for use of the rights-of-way, so

long as such conditions are applied

equally to all users of the rights-of-way

(i.e., are non-discriminatory and

competitvely neutral). For instance, a

state or local government could impose

normal fees associated with zoning and

construction of an open video system,

so long as such fees were applied in a

non-discriminatory and competitively

neutral manner. Conversely, state and

local authorities may not impose

specific conditions on the use of the

rights-of-way that are unrelated to their

management function or that apply to

an open video system operator

differently than they apply to other

users of the rights-of-way.

51. Local authorities will retain their

ability to address the following valid

local concerns: (1) coordination of

construction schedules, (2)

establishment of standards and

procedures for constructing lines across

private property, (3) determination of

insurance and indemnity requirements,

(4) establishment of rules for local

building codes, (5) repairing and

resurfacing construction-damaged

streets, (6) ensuring public safety in the

use of rights-of-way by gas, telephone,

electric, cable, and similar companies,

and (7) keeping track of the various

systems using the rights-of-way to

prevent interference among facilities.

52. We will apply the fee to all gross

revenues received by an open video

system operator or its affiliates,

including all revenues received from

subscribers and all carriage revenues

received from unaffiliated video

programming providers. Gross revenues

will not include revenues collected by

unaffiliated video programming

providers from their subscribers or

advertisers, etc.—gross revenues will

only include fees paid to the OVS

operator. We will also require any gross

revenues fee that the open video system

operator or its affiliate collects from

subscribers to be excluded from gross

revenues.

53. Thus, we conclude that a state or

local government requirement that

directs an open video system operator to

obtain a Title VI franchise, or impose

Title VI ‘‘franchise like’’ requirements,

to operate an open video system directly

conflicts with Section 653 of the

Communications Act and is preempted.

F. Information Provided to Subscribers

54. We believe, as stated in the

Notice, that Section 653(b)(1)(E)(i) is

intended to be a specific application of

the non-discrimination requirement

contained in Section 653(b)(1)(A).

Specifically, we believe that this

provision is meant to ensure that an

open video system operator does not

favor itself or its affiliates in its

interaction with the customer at the

point of actual program selection (i.e.,

when the subscriber is choosing a

particular channel to watch). The type

of ‘‘material or information’’ that

therefore would fall within the scope of

Section 653(b)(1)(E)(i) includes

navigational devices, guides (electronic

or paper) and menus used by the

subscriber to actively select

programming.

55. An open video system operator

may not discriminate in favor of

affiliated programming by, for example,

‘‘burying’’ unaffiliated programmers in

difficult to access portions of electronic

guides, navigational devices or menus,

or by otherwise placing affiliated

programming in more prominent
28706 Federal Register / Vol. 61, No. 109 / Wednesday, June 5, 1996 / Rules and Regulations

positions on the electronic guides,

navigational devices or menus. To the

extent that an open video system

operator uses billing inserts to advertise

its service generally, rather than

providing inserts as a guide to program

selection, we believe that such inserts

fall outside the scope of Section

653(b)(1)(E)(i). We believe that a paper

programming guide that is intended to

be used at the point of actual channel

selection would be governed by Section

653(b)(1)(E)(i).

56. Section 653(b)(1)(E)(i) prohibits

the open video system operator from

unreasonably discriminating in favor of

its affiliated programming by means of

discriminatory use of on-system

advertising, if that advertising is

contained in any channel selection

guide, aid or menu. Accordingly, an

open video system operator may not use

its position as controller of a

navigational device or menu to advertise

its programming on the navigational

device or menu, while at the same time

disallowing unaffiliated programming

providers comparable opportunities to

advertise on the navigational device or

menu.

57. Menus offered by the OVS

operator may inform the viewer that

other services (that the consumer has

not ordered) are available on the open

video system, and direct the subscriber

how to access a second screen with

more complete information on those

other services. In addition, for

programming to which the consumer

has actually subscribed, no

programming service on the open video

system operator’s navigational device

should be more difficult to select than

any other programming service.

58. An open video system operator is

not relieved of the non-discrimination

provisions of Section 653(b)(1)(E)(i) if

the operator offers a navigational device

that works only with affiliated video

programming packages. In addition, the

open video system operator may not

evade its obligation to ensure that other

non-affiliated programming providers

are represented on a navigational

device, guide or menu simply by having

the service nominally provided by its

affiliate.

59. We find that the ‘‘suitable and

unique’’ identification requirement of

Section 653(b)(1)(E)(ii) would be

satisfied if an open video system

operator’s navigational device included

a provider’s name (broadcast station call

letters and network affiliation, for

example), but not its logo or branding

device. However, if the open video

system operator chooses to prohibit

unaffiliated providers’ logos or branding

information on its navigational device,

guide or menu, it would similarly have

to prohibit its own logo or branding

information under Section

653(b)(1)(E)(i).

G. Dispute Resolution

60. Given the short 10-day period in

which the Commission must approve or

disapprove a certification request, we

believe that the dispute resolution

process will play a key role in ensuring

the success of the open video

framework. In order for the

Commission’s review to be as efficient

and thorough as possible, we adopt our

suggestion in the Notice to model our

open video system dispute resolution

process after our rules governing

program access disputes (except for

must-carry complaints and petitions for

special relief).

61. We will seek to dispose of as

many cases as possible on the basis of

a complaint, answer and reply. Parties

should include all relevant evidence,

including documentary evidence, in the

complaint and answer to support their

claims. Discovery will not be permitted

as a matter of right, but on a case-bycase basis as deemed necessary by the

Commission staff reviewing the

complaint. Any complaint filed

pursuant to Section 653(a)(2) must be

filed within one year of the date on

which the open video system operator’s

actions allegedly violated Commission

rules.

62. Finally, while we encourage

parties to use ADR techniques to

attempt to resolve their dispute without

the Commission’s direct involvement,

we believe that a clause in a carriage

agreement requiring ADR before a

dispute could be brought to the

Commission would not be a ‘‘just and

reasonable’’ term or condition of

carriage. Such a requirement could

delay an aggrieved party’s right to

redress significantly beyond the 180-day

period mandated by Congress. In

addition, permitting operators to require

as a condition of carriage that all

disputes be resolved through ADR, may

lead operators to mandate ADR

practices that give them an unfair

advantage over complainants.

H. Joint Marketing, Bundling and

Structural Separation

63. Section 653 is silent on the issue

of joint marketing. The Act does,

however, expressly impose joint

marketing restrictions on telephone

companies in other contexts. Given that

these Sections were all enacted as part

of the 1996 Act, we find it a significant

indication of Congress’ intent that

Sections 271(e), 272(g) and 274(c)

contain express joint marketing

restrictions while Section 653 does not.

Section 272(g)(2) specifically sets a

similar competitive condition on the

lifting of the joint marketing restrictions

between telephone exchange and

interLATA services: a BOC’s

authorization under Section 271(d) to

provide interLATA services in an inregion State. Again, no such condition

was established in Section 653.

64. Since Congress chose not to adopt

joint marketing restrictions in Section

653 even though (1) it specifically

applied joint marketing restrictions to

other provisions of the 1996 Act, and (2)

it restricted joint marketing in some

provisions of the 1996 Act until the

introduction of competition in the local

telephone market, we decline to adopt

joint marketing restrictions here. We

note, however, that any entity that offers

any telecommunications service will be

subject to both the customer proprietary

network information (‘‘CPNI’’)

restrictions set forth in Section 222 of

the Communications Act and any

regulations the Commission establishes

pursuant to Section 222. Similarly, any

provider of cable or open video service

will be subject to the cable privacy

restrictions set forth in Section 631.

b. Bundling

65. Section 653 also does not address

the issue of ‘‘bundling,’’ which we

define in this context to mean the

offering of video service and local

exchange service in a single package at

a single price. We would also treat as

bundling the situation in which an

entity offers one service at a discount if

the customer purchases another service.

We disagree that the bundling of

telephone and video services will be

anti-competitive, and increase the risk

of cross-subsidization of the competitive

service by the monopoly service. We

believe that the Commission’s Part 64

cost allocation rules and any

amendments thereto will protect

adequately regulated telephone

ratepayers from a misallocation of costs

that could lead to excessive telephony

rates. However, we will impose certain

safeguards to protect consumers in these

circumstances. First, the open video

system operator, where it is the

incumbent LEC, may not require that a

subscriber purchase its video service in

order to receive local exchange service.

Second, while the open video system

operator may offer subscribers a

discount for purchasing the bundled

package, the LEC must impute the

unbundled tariff rate for the regulated

service.
Federal Register / Vol. 61, No. 109 / Wednesday, June 5, 1996 / Rules and Regulations 28707

c. Structural Separation

66. We disagree with those

commenters that argue that a separate

affiliate requirement nevertheless

should be imposed pursuant to Section

272. We believe that Congress did not

intend to impose a separate affiliate

requirement on LECs providing open

video service. First, Section 653 is silent

on whether LECs and others must

provide open video service through a

separate affiliate. In fact, Congress

expressly directed that Title II

requirements not be applied to ‘‘the

establishment and operation of an open

video system’’ under Section 653. In

addition, Section 272 exempts

‘‘incidental interLATA services’’ from

the separate affiliate requirement, and

includes certain video programming

services within the definition of

‘‘incidental interLATA services’’

described in Section 271(g). Since we

conclude that Congress did not intend

to apply a separate affiliate requirement

in this context, we need not address

whether the provision of video

programming would qualify as an

‘‘information service’’ under Section

272(a)(2)(C), or exercise our authority

under Section 272(f)(3). Rather, we will

adhere to Congress’ intent and decline

to impose a separate affiliate

requirement here.

I. Advanced Telecommunications

Incentives

67. In order to promote the

development of advanced

telecommunications to consumers, the

Commission will consider proposals for

actions to encourage open video system

deployment of advanced

telecommunications services as defined

in Section 706 of the 1996 Act. This

approach will be available on a case-bycase basis for open video system

operators that can demonstrate a need

for additional deregulatory measures to

successfully deploy advanced

telecommunications to all consumers.

Final Regulatory Flexibility Analysis

68. Pursuant to the Regulatory

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

12, the Commission’s final analysis with

respect to the Second Report and Order

is as follows:

69. Need and purpose of this action:

The Commission, in compliance with

Section 302(a) of the

Telecommunications Act of 1996

pertaining to open video systems, is

required to adopt rules and procedures

necessary to implement this section of

the Telecommunications Act of 1996.

70. Summary of issues raised by the

public in response to the Initial

Regulatory Flexibility Analysis:

Collectively, the National League of

Cities; the United States Conference of

Mayors; the National Association of

Counties; the National Association of

Telecommunications Officers and

Advisors; Montgomery County,

Maryland; the City of Los Angeles, CA;

the City of Chillicothe, OH; the City of

Dearborn, Michigan; the City of

Dubuque, Iowa; the City of St. Louis,

MO; the City of Santa Clara, CA; and the

City of Tallahassee, FL filed reply

comments in response to the Initial

Regulatory Flexibility Analysis. These

reply comments assert that a significant

number of small governmental entities

will be burdened by the proposals of the

Commission and commenters. The

Commission has considered these reply

comments and has attempted to

structure the open video system rules

set forth in this Second Report and

Order so as to minimize the

administrative burden upon small

governmental entities.

71. Significant alternatives

considered: Petitioners representing

cable interests, telephone interests,

programming interests, consumer

interests and local government interests

submitted several alternatives aimed at

minimizing administrative burdens. In

this proceeding, the Commission has

considered these alternatives and has

attempted both to accommodate the

concerns raised by the parties and to

minimize the administrative burdens

upon the parties in accordance with

Congress’ desire for the Commission to

develop a streamlined regulatory model

for open video service operators.

Paperwork Reduction Act of 1995

Analysis

72. The requirements adopted in the

Second Report and Order have been

analyzed with respect to the Paperwork

Reduction Act of 1995 (the ‘‘1995 Act’’)

and found to impose new or modified

information collection requirements on

the public. Implementation of any new

or modified requirement will be subject

to approval by the Office of

Management and Budget (‘‘OMB’’) as

prescribed by the 1995 Act. The

Commission, as part of its continuing

effort to reduce paperwork burdens,

invites the general public and OMB to

comment on the information collections

contained in this Second Report and

Order as required by the 1995 Act,

Public Law No. 104–13. OMB comments

are due on or before August 5, 1996.

Comments should address: (1) 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; (2) the accuracy of

the Commission’s burden estimates; (3)

ways to enhance the quality, utility, and

clarity of the information collected; and

(4) 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.

73. Written comments by the public

on the modified information collections

are due on or before June 20, 1996, and

reply comments are due on or before

July 1, 1996. Written comments must be

submitted by OMB on modified

information collections on or before

August 5, 1996. 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,

DC 20554, or via the Internet to

dconway@fcc.gov and to Timothy Fain,

OMB Desk Officer, 10236, NEOB, 725—

17th Street, N.W., Washington, DC

20503 or via the Internet to

fainlt@al.eop.gov. For additional

information concerning the information

collections contained herein contact

Dorothy Conway at 202–418–0217, or

via the Internet at dconway@fcc.gov.

Ordering Clauses

74. Accordingly, it is ordered that,

pursuant to Sections 4(i), 4(j), 303(r),

and 653 of the Communications Act of

1934, as amended, 47 U.S.C. 154(i),

154(j), 303(r), and 573, the rules,

requirements and policies discussed in

this Second Report and Order ARE

adopted and Sections 76.1000 and

76.1500 through 76.1515 of the

Commission’s rules, 47 CFR §§ 1000,

76.1000 and 76.1500 through 76.1515

ARE AMENDED as set forth below.

75. It is further ordered that the

requirements and regulations

established in this decision shall

become effective upon approval by

OMB of the new information collection

requirements adopted herein, but no

sooner than July 5, 1996.

76. It is further ordered that the

Secretary shall send a copy of this

Second Report and Order including the

Final Regulatory Flexibility Analysis, to

the Chief Counsel for Advocacy of the

Small Business Administration in

accordance with paragraph 603(a) of the

Regulatory Flexibility Act, Public Law

No. 96–354, 94 Stat. 1164, 5 U.S.C.

§§ 601 through 699 (1981).
28708 Federal Register / Vol. 61, No. 109 / Wednesday, June 5, 1996 / Rules and Regulations

Federal Communications Commission.

LaVera F. Marshall,

Acting Secretary.

List of Subjects in 47 CFR Part 76

Cable television.

Appendix B

Rule Changes

Part 76 of Title 47 of the Code of

Federal Regulations is amended as

follows:

PART 76—CABLE TELEVISION

SERVICE

1. The authority citation for Part 76 is

revised to read as follows:

Authority: 47 U.S.C. 151, 152, 153, 154,

301, 302, 303, 303a, 307, 308, 309, 312, 315,

317, 325, 503, 521, 522, 531, 532, 533, 534,

535, 536, 537, 543, 544, 544a, 545, 548, 552,

554, 556, 558, 560, 561, 571, 572, 573.

2. Section 76.1000 is amended by

adding notes to paragraphs (e) and (h)

to read as follows:

§ 76.1000 Definitions.

* * * * *

(e) * * *

Note to paragraph (e): A video

programming provider that provides more

than one channel of video programming on

an open video system is a multichannel

video programming distributor for purposes

of this subpart O and Section 76.1507.

* * * * *

(h) * * *

Note to paragraph (h): Satellite

programming which is primarily intended for

the direct receipt by open video system

operators for their retransmission to open

video system subscribers shall be included

within the definition of satellite cable

programming.

* * * * *

3. Section 76.1004 is amended by

designating the existing text as

paragraph (a), and adding paragraph (b)

to read as follows:

§ 76.1004 Applicability of program access

rules to common carriers and affiliates.

* * * * *

(b) Sections 76.1002(c)(1) through (3)

shall be applied to a common carrier or

its affiliate that provides video

programming by any means directly to

subscribers in such a way that such

common carrier or its affiliate shall be

generally restricted from entering into

an exclusive arrangement for satellite

cable programming or satellite broadcast

programming with a satellite cable

programming vendor in which a

common carrier or its affiliate has an

attributable interest or a satellite

broadcast programming vendor in

which a common carrier or its affiliate

has an attributable interest, unless the

arrangement pertains to an area served

by a cable system as of October 5, 1992,

and the Commission determines in

accordance with Section § 76.1002(c)(4)

that such arrangment is in the public

interest.

4. A new Subpart S is added to Part

76 to read as follows:

Subpart S—Open Video Systems

Sec.

76.1500 Definitions.

76.1501 Qualifications to be an open video

system operator.

76.1502 Certification.

76.1503 Carriage of video programming

providers on open video systems.

76.1504 Rates, terms and conditions for

carriage on open video systems.

76.1505 Public, educational and

governmental access.

76.1506 Carriage of television broadcast

signals.

76.1507 Competitive access to satellite

cable programming.

76.1508 Network non-duplication.

76.1509 Syndicated program exclusivity.

76.1510 Application of certain Title VI

provisions.

76.1511 Fees.

76.1512 Programming information.

76.1513 Dispute resolution.

76.1514 Bundling of video and local

exchange services.

Subpart S—Open Video Systems

§ 76.1500 Definitions.

(a) Open video system. A facility

consisting of a set of transmission paths

and associated signal generation,

reception, and control equipment that is

designed to provide cable service which

includes video programming and which

is provided to multiple subscribers

within a community, provided that the

Commission has certified that such

system complies with this part.

(b) Open video system operator

(‘‘operator’’). Any person or group of

persons who provides cable service over

an open video system and directly or

through one or more affiliates owns a

significant interest in such open video

system, or otherwise controls or is

responsible for the management and

operation of such an open video system.

(c) Video programming provider. Any

person or group of persons who has the

right under the copyright laws to select

and contract for carriage of specific

video programming on an open video

system.

(d) Activated channels. This term

shall have the same meaning as

provided in the cable television rules,

47 CFR 76.5(nn).

(e) Shared channel. Any channel that

carries video programming that is

selected by more than one video

programming provider and offered to

subscribers.

(f) Cable service. This term shall have

the same meaning as provided in the

cable television rules, 47 CFR 76.5(ff).

(g) Other terms. Unless otherwise

expressly stated, words not defined in

this part shall be given their meaning as

used in Title 47 of the United States

Code, as amended, and, if not defined

therein, their meaning as used in Part 47

of the Code of Federal Regulations.

§ 76.1501 Qualifications to be an open

video system operator.

Any person may obtain a certification

to operate an open video system

pursuant to Section 653(a)(1) of the

Communications Act, 47 U.S.C.

573(a)(1), except that an operator of a

cable system, regardless of any other

service that the cable operator may

provide, may not obtain such a

certification within its cable service area

unless it is subject to ‘‘effective

competition,’’ as defined in Section

623(l)(1) of the Communications Act, 47

U.S.C. 543(l)(1). A cable operator that is

not subject to effective competition

within its cable service area may file a

petition with the Commission, seeking a

finding that particular circumstances

exist that make it consistent with the

public interest, convenience, and

necessity to allow the operator to

convert its cable system to an open

video system. Nothing herein shall be

construed to affect the terms of any

franchising agreement or other

contractual agreement.

Note to § 76.1501: An example of a

circumstance in which the public interest,

convenience and necessity would be served

by permitting a cable operator not subject to

effective competition to become an open

video system operator within its cable service

area is where the entry of a facilities-based

competitor into its cable service area would

likely be infeasible.

§ 76.1502 Certification.

(a) An operator of an open video

system must certify to the Commission

that it will comply with the

Commission’s regulations in 47 CFR

76.1503, 76.1504, 76.1506(m), 76.1508,

76.1509, and 76.1513. If construction of

new physical plant is required, the

Commission must approve such

certification prior to the commencement

of construction. If no new construction

is required, the Commission must

approve such certification prior to the

commencement of service at such a

point in time that would allow the

applicant sufficient time to comply with

the Commission’s notification

requirements.

(b) Certifications must be verified by

an officer or director of the applicant,

stating that, to the best of his or her

information and belief, the
Federal Register / Vol. 61, No. 109 / Wednesday, June 5, 1996 / Rules and Regulations 28709

representations made therein are

accurate.

(c) Certifications must be filed on FCC

Form 1275 and must include:

(1) The applicant’s name, address and

telephone number;

(2) A statement of ownership,

including all affiliated entities;

(3) If the applicant is a cable operator

applying for certification in its cable

franchise area, a statement that the

applicant is qualified to operate an open

video system under Section 76.1501.

(4) A statement that the applicant

agrees to comply and to remain in

compliance with each of the

Commission’s regulations in §§ 76.1503,

76.1504, 76.1506(m), 76.1508, 76.1509,

and 76.1513;

(5) If the applicant is required under

47 CFR 64.903(a) of this chapter to file

a cost allocation manual, a statement

that the applicant will file changes to its

manual at least 60 days before the

commencement of service;

(6) A general description of the

anticipated communities or areas to be

served upon completion of the system;

(7) The anticipated amount and type

(i.e., analog or digital) of capacity (for

switched digital systems, the

anticipated number of available channel

input ports); and

(8) A statement that the applicant will

comply with the Commission’s notice

and enrollment requirements for

unaffiliated video programming

providers.

(d) Comments or oppositions to a

certification must be filed within five

days of the Commission’s receipt of the

certification and must be served on the

party that filed the certification. If the

Commission does not disapprove

certification within ten days after

receipt of an applicant’s request, the

certification will be deemed approved.

If disapproved, the applicant may file a

revised certification or refile its original

submission with a statement addressing

the issues in dispute. Such refilings

must be served on any objecting party

or parties.

§ 76.1503 Carriage of video programming

providers on open video systems.

(a) Non-discrimination principle.

Except as otherwise permitted in

applicable law or in this part, an

operator of an open video system shall

not discriminate among video

programming providers with regard to

carriage on its open video system, and

its rates, terms and conditions for such

carriage shall be just and reasonable and

not unjustly or unreasonably

discriminatory.

(b) Demand for carriage. An operator

of an open video system shall solicit

and determine the level of demand for

carriage on the system among potential

video programming providers in a nondiscriminatory manner.

(1) Notification. An open video

system operator shall file with the

Secretary of the Federal

Communications Commission a ‘‘Notice

of Intent’’ to establish an open video

system, which the Commission will

release in a Public Notice. The Notice of

Intent shall include the following

information:

(i) A heading clearly indicating that

the document is a Notice of Intent to

establish an open video system;

(ii) The name, address and telephone

number of the open video system

operator;

(iii) A description of the system’s

projected service area;

(iv) A description of the system’s

projected channel capacity, in terms of

analog, digital and other type(s) of

capacity upon activation of the system;

(v) A description of the steps a

potential video programming provider

must follow to seek carriage on the open

video system, including the name,

address and telephone number of a

person to contact for further

information;

(vi) The starting and ending dates of

the initial enrollment period for video

programming providers;

(vii) The process for allocating the

system’s channel capacity, in the event

that demand for carriage on the system

exceeds the system’s capacity; and

(viii) A certification that the operator

has complied with all relevant

notification requirements under the

Commission’s open video system

regulations concerning must-carry and

retransmission consent (§ 76.1506),

including a list of all local commercial

and non-commercial television stations

served, and a certificate of service

showing that the Notice of Intent has

been served on all local cable

franchising authorities entitled to

establish requirements concerning the

designation of channels for public,

educational and governmental use.

(2) Information. An open video

system operator shall provide the

following information to a video

programming provider within five

business days of receiving a written

request from the provider, unless

otherwise included in the Notice of

Intent:

(i) The projected activation date of the

open video system. If a system is to be

activated in stages, the operator should

describe the respective stages and the

projected dates on which each stage will

be activated;

(ii) A preliminary carriage rate

estimate;

(iii) The information a video

programming provider will be required

to provide to qualify as a video

programming provider, e.g.,

creditworthiness;

(iv) Technical information that is

reasonably necessary for potential video

programming providers to assess

whether to seek capacity on the open

video system, including what type of

customer premises equipment

subscribers will need to receive service;

(v) Any transmission or reception

equipment needed by a video

programming provider to interface

successfully with the open video

system; and

(vi) The equipment available to

facilitate the carriage of unaffiliated

video programming and the electronic

form(s) that will be accepted for

processing and subsequent transmission

through the system.

(3) Qualifications of video

programming providers. An open video

system operator may impose reasonable,

non-discriminatory requirements to

assure that a potential video

programming provider is qualified to

obtain capacity on the open video

system.

(c) One-third limit. If carriage demand

by video programming providers

exceeds the activated channel capacity

of the open video system, the operator

of the open video system and its

affiliated video programming providers

may not select the video programming

services for carriage on more than onethird of the activated channel capacity

on such system.

(1) Measuring capacity. For purposes

of this section:

(i) If an open video system carries

both analog and digital signals, an open

video system operator shall measure

analog and digital activated channel

capacity independently;

(ii) Channels that an open video

system is required to carry pursuant to

the Commission’s regulations

concerning public, educational and

governmental channels and must-carry

channels shall be included in ‘‘activated

channel capacity’’ for purposes of

calculating the one-third of such

capacity on which the open video

system operator and its affiliates are

allowed to select the video

programming for carriage. Such

channels shall not be included in the

one-third of capacity on which the open

video system operator is permitted to

select programming where demand for

carriage exceeds system capacity;

(iii) Channels that an open video

system operator carries pursuant to the
28710 Federal Register / Vol. 61, No. 109 / Wednesday, June 5, 1996 / Rules and Regulations

Commission’s regulations concerning

retransmission consent shall be

included in ‘‘activated channel

capacity’’ for purposes of calculating the

one-third of such capacity on which the

open video system operator and its

affiliates are allowed to select the video

programming for carriage. Such

channels shall be included in the onethird of capacity on which the open

video system operator is permitted to

select programming, where demand for

carriage exceeds system capacity, to the

extent that the channels are carried as

part of the programming service of the

operator or its affiliate, subject to

paragraph (c)(1)(iv); and

(iv) Any channel on which shared

programming is carried shall be

included in ‘‘activated channel

capacity’’ for purposes of calculating the

one-third of such capacity on which the

open video system operator and its

affiliates are allowed to select the video

programming for carriage. Such

channels shall be included in the onethird of capacity on which the open

video system operator is permitted to

select programming, where demand for

carriage exceeds system capacity, to the

extent the open video system operator

or its affiliate is one of the video

programming providers sharing such

channel.

Note to paragraph (c)(1)(iv): For example,

if the open video system operator and two

unaffiliated video programming providers

each carry a programming service that is

placed on a shared channel, the shared

channel shall count as 0.33 channels against

the one-third amount of capacity allocable to

the open video system operator, where

demand for carriage exceeds system capacity.

(2) Allocating capacity. An operator of

an open video system shall allocate

activated channel capacity through a

fair, open and non-discriminatory

process; the process must be insulated

from any bias of the open video system

operator and verifiable.

(i) If an open video system carries

both analog and digital signals, an open

video system operator shall treat analog

and digital capacity separately in

allocating system capacity.

(ii) Subsequent changes in capacity or

demand. An open video system operator

must allocate open capacity, if any, at

least once every three years, beginning

three years from the date of service

commencement. Open capacity shall be

allocated in accordance with this

section. Open capacity shall include all

capacity that becomes available during

the course of the three-year period, as

well as capacity in excess of one-third

of the system’s activated channel

capacity on which the operator of the

open video system or its affiliate selects

programming. An operator shall

maintain a file of qualified video

programming providers who have

requested carriage or additional carriage

since the previous allocation of

capacity. Information regarding how a

video programming provider should

apply for carriage must be made

available upon request.

Note 1 to paragraph (c)(2)(ii): An open

video system operator will not be required to

comply with the regulations contained in this

section if there is no open capacity to be

allocated at the end of the three year period.

Note 2 to paragraph (c)(2)(ii): An open

video system operator shall be required to

accommodate changes in obligations

concerning public, educational or

governmental channels or must-carry

channels in accordance with Sections 611,

614 and 615 of the Communications Act and

the regulations contained in this part.

(iii) Channel sharing. An open video

system operator may carry on only one

channel any video programming service

that is offered by more than one video

programming provider (including the

operator’s video programming affiliate),

provided that subscribers have ready

and immediate access to any such

programming service. Nothing in this

section shall be construed to impair the

rights of programming services.

Note 1 to paragraph (c)(2)(iii): An open

video system operator may implement

channel sharing only after it becomes

apparent that one or more video

programming services will be offered by

multiple video programming providers. An

open video system operator may not select,

in advance of any duplication among video

programming providers, which programming

services shall be placed on shared channels.

Note 2 to paragraph (c)(2)(iii): Each video

programming provider offering a

programming service that is carried on a

shared channel must have the contractual

permission of the video programming service

to offer the service to subscribers. The

placement of a programming service on a

shared channel, however, is not subject to the

approval of the video programming service or

vendor.

Note 3 to paragraph (c)(2)(iii): Ready and

immediate access in this context means that

the channel sharing is ‘‘transparent’’ to

subscribers.

(iv) Open video system operator

discretion. Notwithstanding the

foregoing, an operator of an open video

system may:

(A) Require video programming

providers to request and obtain system

capacity in increments of no less than

one full-time channel; however, an

operator of an open video system may

not require video programming

providers to obtain capacity in

increments of more than one full-time

channel;

(B) Limit video programming

providers from selecting the

programming on more capacity than the

amount of capacity on which the system

operator and its affiliates are selecting

the programming for carriage; and

(C) Refuse carriage on its open video

system to a competing, in-region cable

operator or its affiliates that offers cable

service to subscribers located in the

service area of the open video system,

except where the allocation of open

video system capacity to a competing

cable operator is consistent with the

public interest, convenience, and

necessity.

Note to paragraph (c)(2)(iv)(C): The

Commission will except situations where it

is determined that facilities-based

competition will not be significantly

impeded. We will provide a specific

exception in a situation in which: the

competing, in-region cable operator and

affiliated systems offer service to less than

20% of the households passed by the open

video system; and the competing, in-region

cable operator and affiliated systems provide

cable service to a total of less than 17,000

subscribers within the open video system’s

service area.

(3) Nothing in this paragraph shall be

construed to limit the number of

channels that the open video system

operator and its affiliates, or another

video programming provider, may offer

to provide directly to subscribers. Copackaging is permissible among video

programming providers, but may not be

a condition of carriage. Video

programming providers may freely elect

whether to enter into co-packaging

arrangements.

Note to paragraph (c)(3): Any video

programming provider on an open video

system may co-package video programming

that is selected by itself, an affiliated video

programming provider and/or unaffiliated

video programming providers on the system.

§ 76.1504 Rates, terms and conditions for

carriage on open video systems.

(a) Reasonable rate principle. An

open video system operator shall set

rates, terms, and conditions for carriage

that are just and reasonable, and are not

unjustly or unreasonably

discriminatory.

(b) Differences in rates.

(1) An open video system operator

may charge different rates to different

classes of video programming providers,

provided that the bases for such

differences are not unjust or

unreasonably discriminatory.

(2) An open video system operator

shall not impose different rates, terms,

or conditions based on the content of

the programming to be offered by any

unaffiliated video programming

provider.
Federal Register / Vol. 61, No. 109 / Wednesday, June 5, 1996 / Rules and Regulations 28711

(c) Just and reasonable rate

presumption. A strong presumption will

apply that carriage rates are just and

reasonable for open video system

operators where at least one unaffiliated

video programming provider, or

unaffiliated programming providers as a

group, occupy capacity equal to the

lesser of one-third of the system

capacity or that occupied by the open

video system operator and its affiliates,

and where any rate complained of is no

higher than the average of the rates paid

by unaffiliated programmers receiving

carriage from the open video system

operator.

(d) Examination of rates. Complaints

regarding rates shall be limited to video

programming providers that have sought

carriage on the open video system. If a

video programming provider files a

complaint against an open video system

operator meeting the above just and

reasonable rate presumption, the burden

of proof will rest with the complainant.

If a complaint is filed against an open

video system operator that does not

meet the just and reasonable rate

presumption, the open video system

operator will bear the burden of proof to

demonstrate, using the principles set

forth below, that the carriage rates

subject to the complaint are just and

reasonable.

(e) Determining just and reasonable

rates subject to complaints. Carriage

rates subject to complaint shall be

presumed just and reasonable if they are

no greater than an imputed carriage rate

based on the following. The imputed

rate will reflect what the open video

system operator, or its affiliate, ‘‘pays’’

for carriage of its own programming.

Use of this approach is appropriate in

circumstances where the pricing is

applicable to a new market entrant (the

open video system operator) that will

face competition from an existing

incumbent provider (the incumbent

cable operator), as opposed to

circumstances where the pricing is used

to establish a rate for an essential input

service that is charged to a competing

new entrant by an incumbent provider.

With respect to new market entrants, an

efficient component pricing model will

produce rates that encourage market

entry. If the carriage rate to an

unaffiliated program provider surpasses

what an operator earns from carrying its

own programming, the rate can be

presumed to exceed a just and

reasonable level. An open video system

operator’s price to its subscribers will be

determined by several separate costs

components. One general category are

those costs related to the creative

development and production of

programming. A second category are

costs associated with packaging various

programs for the open video system

operator’s offering. A third category

related to the infrastructure or

engineering costs identified with

building and maintaining the open

video system. Contained in each is a

profit allowance attributed to the

economic value of each component.

When an open video system operator

provides only carriage through its

infrastructure, however, the

programming and packaging flows from

the independent program provider, who

bears the cost. The open video system

operator avoids programming and

packaging costs, including profits.

These avoided costs should not be

reflected in the price charged an

independent program provider for

carriage. The imputed rate also seeks to

recognize the loss of subscribers to the

open video system operator’s

programming package resulting from

carrying competing programming.

§ 76.1505 Public, educational and

governmental access.

(a) An open video system operator

shall be subject to public, educational

and governmental access requirements

for every cable franchise area with

which its system overlaps.

(b) An open video system operator

must ensure that all subscribers receive

any public, educational and

governmental access channels within

the subscribers’ franchise area.

(c) An open video system operator

may negotiate with the local cable

franchising authority of the

jurisdiction(s) which the open video

system serves to establish the open

video system operator’s obligations with

respect to public, educational and

governmental access channel capacity,

services, facilities and equipment. These

negotiations may include the local cable

operator if the local franchising

authority, the open video system

operator and the cable operator so

desire.

(d) If an open video system operator

and a local franchising authority are

unable to reach an agreement regarding

the open video system operator’s

obligations with respect to public,

educational and governmental access

channel capacity, services, facilities and

equipment within the local franchising

authority’s jurisdiction:

(1) The open video system operator

must satisfy the same public,

educational and governmental access

obligations as the local cable operator by

connecting with the cable operator’s

public, educational and governmental

access channel feeds and by sharing the

costs directly related to supporting

public, educational and governmental

access, including costs of public,

educational and governmental access

services, facilities and equipment, and

equipment necessary to achieve the

connection. The open video system

operator must provide the same amount

of public, educational and governmental

access as the local cable operator is

required to carry.

(2) The local franchising authority

shall impose the same rules and

procedures on an open video system

operator as it imposes on the local cable

operator with regard to the open video

system operator’s use of channel

capacity designated for public,

educational and governmental access

use when such capacity is not being

used for such purposes.

(3) The local cable operator is

required to permit the open video

system operator to connect with its

public, educational and governmental

access channel feeds. The open video

system operator and the cable operator

may decide how to accomplish this

connection, taking into consideration

the exact physical and technical

circumstances of the cable and open

video systems involved. If the cable and

open video system operator cannot

agree on how to accomplish the

connection, the local franchising

authority may decide. The local

franchising authority may require that

the connection occur on government

property or on public rights of way.

(4) The costs of connection and

maintaining public, educational and

governmental access channel capacity,

services, facilities and equipment shall

be divided equitably between the cable

operator and the open video system

operator. Shared costs shall include

capital contributions and any other

costs or investments directly relating to

or supporting public, educational and

governmental access and required by

the cable operator’s franchise

agreement. Capital expenses incurred

prior to the open video system

operator’s connection shall be subject to

cost sharing on a pro-rata basis to the

extent such investments have not been

fully amortized by the cable operator.

(5) The local franchising authority

may not impose public, educational and

governmental access obligations on the

open video system operator that would

exceed those imposed on the local cable

operator.

(6) Where there is no existing local

cable operator, the open video system

operator must make a reasonable

amount of channel capacity available for

public, educational and governmental

use, as well as provide reasonable

support for services, facilities and
28712 Federal Register / Vol. 61, No. 109 / Wednesday, June 5, 1996 / Rules and Regulations

equipment relating to such public,

educational and governmental use. If a

franchise agreement previously existed

in that franchise area, the open video

system operator shall be required to

maintain the previously existing public,

educational and governmental access

terms of that franchise agreement.

Absent a previous cable franchise

agreement, the open video system

operator shall be required to provide

channel capacity, services, facilities and

equipment relating to public,

educational and governmental access

equivalent to that prescribed in the

franchise agreement(s) for the nearest

operating cable system with a

commitment to provide public,

educational and governmental access.

Note to paragraph (d)(6): If a cable system

converts to an open video system, the

operator will be required to maintain the

previously existing terms of its public,

educational and governmental access

obligations.

(7) The open video system operator

must adjust its system(s) to comply with

new public, educational and

governmental access obligations

imposed by a cable franchise renewal;

provided, however, that an open video

system operator will not be required to

displace other programmers using its

open video system to accommodate

public, educational and governmental

access channels. The open video system

operator shall comply with such public,

educational and governmental access

obligations whenever additional

capacity is or becomes available,

whether it is due to increased channel

capacity or decreased demand for

channel capacity.

(8) The open video system operator

and/or the local franchising authority

may file a complaint with the

Commission, pursuant to our dispute

resolution procedures set forth in

§ 76.1514, if the open video system

operator and the local franchising

authority cannot agree as to the

application of the Commission’s rules

regarding the open video system

operator’s connection and/or cost

sharing obligations under this section.

(e) If an open video system operator

maintains an institutional network, as

defined in Section 611(f) of the

Communications Act, the local

franchising authority may require that

educational and governmental access

channels be designated on that

institutional network to the extent such

channels are designated on the

institutional network of the local cable

operator.

(f) An open video system operator

shall not exercise any editorial control

over any public, educational, or

governmental use of channel capacity

provided pursuant to this subsection,

provided, however, that any open video

system operator may prohibit the use on

its system of any channel capacity of

any public, educational, or

governmental facility for any

programming which contains nudity,

obscene material, indecent material as

defined in § 76.701(g), or material

soliciting or promoting unlawful

conduct. For purposes of this section,

‘‘material soliciting or promoting

unlawful conduct’’ shall mean material

that is otherwise proscribed by law. An

open video system operator may require

any access user, or access manager or

administrator agreeing to assume the

responsibility of certifying, to certify

that its programming does not contain

any of the materials described above

and that reasonable efforts will be used

to ensure that live programming does

not contain such material.

§ 76.1506 Carriage of television broadcast

signals.

(a) The provisions of Subpart D shall

apply to open video systems in

accordance with the provisions

contained in this subpart.

(b) For the purposes of this Subpart S,

television stations are significantly

viewed when they are viewed in

households that do not receive

television signals from multichannel

video programming distributors as

follows:

(1) For a full or partial network

station—a share of viewing hours of at

least 3 percent (total week hours), and

a net weekly circulation of at least 25

percent; and

(2) For an independent station—a

share of viewing hours of at least 2

percent (total week hours), and a net

weekly circulation of at least 5 percent.

See § 76.1506(c).

Note to paragraph (b): As used in this

paragraph, ‘‘share of viewing hours’’ means

the total hours that households that do not

receive television signals from multichannel

video programming distributors viewed the

subject station during the week, expressed as

a percentage of the total hours these

households viewed all stations during the

period, and ‘‘net weekly circulation’’ means

the number of households that do not receive

television signals from multichannel video

programming distributors that viewed the

station for 5 minutes or more during the

entire week, expressed as a percentage of the

total households that do not receive

television signals from multichannel video

programming distributors in the survey area.

(c) Significantly viewed signals;

method to be followed for special

showings. Any provision of § 76.54 that

refers to a ‘‘cable television community’’

or ‘‘cable community or communities’’

shall apply to an open video system

community or communities. Any

provision of § 76.54 that refers to ‘‘noncable television homes’’ shall apply to

households that do not receive

television signals from multichannel

video programming distributors. Any

provision of § 76.54 that refers to a

‘‘cable television system’’ shall apply to

an open video system.

(d) Definitions applicable to the mustcarry rules. Section 76.55 shall apply to

all open video systems in accordance

with the provisions contained in this

section. Any provision of § 76.55 that

refers to a ‘‘cable system’’ shall apply to

an open video system. Any provision of

§ 76.55 that refers to a ‘‘cable operator’’

shall apply to an open video system

operator. Any provision of § 76.55 that

refers to the ‘‘principal headend’’ of a

cable system as defined in § 76.5(pp)

shall apply to the equivalent of the

principal headend of an open video

system. Any provision of § 76.55 that

refers to a ‘‘franchise area’’ shall apply

to the service area of an open video

system.

(e) Signal carriage obligations. Any

provision of § 76.56 that refers to a

‘‘cable television system’’ or ‘‘cable

system’’ shall apply to an open video

system. Any provision of § 76.56 that

refers to a ‘‘cable operator’’ shall apply

to an open video system operator.

Section 76.56(d)(2) shall apply to open

video systems as follows: An open video

system operator shall make available to

every subscriber of the open video

system all qualified local commercial

television stations and all qualified noncommercial educational television

stations carried in fulfillment of its

carriage obligations under this section.

(f) Channel positioning. Open video

system operators shall comply with the

provisions of § 76.57 to the closest

extent possible. Any provision of

§ 76.57 that refers to a ‘‘cable operator’’

shall apply to an open video system

operator. Any provision of § 76.57 that

refers to a ‘‘cable system’’ shall apply to

an open video system, except the

references to ‘‘cable system’’ in

§ 76.57(d) which shall apply to an open

video system operator.

(g) Notification. Any provision of

§ 76.58 that refers to a ‘‘cable operator’’

shall apply to an open video system

operator. Any provision of § 76.58 that

refers to a ‘‘cable system’’ shall apply to

an open video system. Any provision of

§ 76.58 that refers to a ‘‘principal

headend’’ shall apply to the equivalent

of the principal headend for an open

video system.

(h) Modification of television markets.

Any provision of § 76.59 that refers to a
Federal Register / Vol. 61, No. 109 / Wednesday, June 5, 1996 / Rules and Regulations 28713

‘‘cable system’’ shall apply to an open

video system. Any provision of § 76.59

that refers to a ‘‘cable operator’’ shall

apply to an open video system operator.

(i) Compensation for carriage. Any

provision of § 76.60 that refers to a

‘‘cable operator’’ shall apply to an open

video system operator. Any provision of

§ 76.60 that refers to a ‘‘cable system’’

shall apply to an open video system.

Any provision of § 76.60 that refers to a

‘‘principal headend’’ shall apply to the

equivalent of the principal headend for

an open video system.

(j) Disputes concerning carriage. Any

provision of § 76.61 that refers to a

‘‘cable operator’’ shall apply to an open

video system operator. Any provision of

§ 76.61 that refers to a ‘‘cable system’’

shall apply to an open video system.

Any provision of § 76.61 that refers to a

‘‘principal headend’’ shall apply to the

equivalent of the principal headend for

an open video system.

(k) Manner of carriage. Any provision

of § 76.62 that refers to a ‘‘cable

operator’’ shall apply to an open video

system operator.

(l) Retransmission consent. Section

76.64 shall apply to open video systems

in accordance with the provisions

contained in this paragraph.

(1) Any provision of § 76.64 that refers

to a ‘‘cable system’’ shall apply to an

open video system. Any provision of

§ 76.64 that refers to a ‘‘cable operator’’

shall apply to an open video system

operator.

(2) Must-carry/retransmission consent

election notifications shall be sent to the

open video system operator. An open

video system operator shall make all

must-carry/retransmission consent

election notifications received available

to the appropriate programming

providers on its system.

(3) Television broadcast stations are

not required to make the same election

for open video systems and cable

systems in the same geographic area.

(4) An open video system

commencing new operations shall

notify all local commercial and

noncommercial broadcast stations as

required under paragraph (l) of this

section on or before the date on which

it files with the Commission its Notice

of Intent to establish an open video

system.

(m) Sports broadcast. Section 76.67

shall apply to open video systems in

accordance with the provisions

contained in this paragraph.

(1) Any provisions of § 76.67 that

refers to a ‘‘community unit’’ shall

apply to an open video system or that

portion of an open video system that

operates or will operate within a

separate and distinct community or

municipal entity (including

unincorporated communities within

unincorporated areas and including

single, discrete unincorporated areas).

(2) Notification of programming to be

deleted pursuant to this section shall be

served on the open video system

operator. The open video system

operator shall make all notifications

immediately available to the appropriate

video programming providers on its

open video system. An open video

system operator shall not be subject to

sanctions for any violation of these rules

by an unaffiliated program supplier if

the operator provided proper notices to

the program supplier and subsequently

took prompt steps to stop the

distribution of the infringing program

once it was notified of a violation.

(n) Exemption from input selector

switch rules. Any provision of § 76.70

that refers to a ‘‘cable system’’ or ‘‘cable

systems’’ shall apply to an open video

system or open video systems.

(o) Special relief and must-carry

complaint procedures. The procedures

set forth in § 76.7 shall apply to special

relief and must-carry complaints

relating to open video systems, and not

the procedures set forth in § 76.1514

(Dispute resolution). Any provision of

§ 76.7 that refers to a ‘‘cable television

system operator’’ or ‘‘cable operator’’

shall apply to an open video system

operator. Any provision of § 76.7 that

refers to a ‘‘cable television system’’

shall apply to an open video system.

Any provision of § 76.7 that refers to a

‘‘system community unit’’ shall apply to

an open video system or that portion of

an open video system that operates or

will operate within a separate and

distinct community or municipal entity

(including unincorporated communities

within unincorporated areas and

including single, discrete

unincorporated areas).

§ 76.1507 Competitive access to satellite

cable programming.

(a) Any provision that applies to a

cable operator under §§ 76.1000 through

76.1003 shall also apply to an operator

of an open video system and its affiliate

which provides video programming on

its open video system, except as limited

by paragraph (a) (1)–(3) of this section.

Any such provision that applies to a

satellite cable programming vendor in

which a cable operator has an

attributable interest shall also apply to

any satellite cable programming vendor

in which an open video system operator

has an attributable interest, except as

limited by paragraph (a) (1)–(3) of this

section.

(1) Section 76.1002(c)(1) shall only

restrict the conduct of an open video

system operator, its affiliate that

provides video programming on its open

video system and a satellite cable

programming vendor in which an open

video system operator has an

attributable interest, as follows: No open

video system operator or its affiliate that

provides video programming on its open

video system shall engage in any

practice or activity or enter into any

understanding or arrangement,

including exclusive contracts, with a

satellite cable programming vendor or

satellite broadcast programming vendor

for satellite cable programming or

satellite broadcast programming that

prevents a multichannel video

programming distributor from obtaining

such programming from any satellite

cable programming vendor in which an

open video system operator has an

attributable interest, or any satellite

broadcasting vendor in which an open

video system operator has an

attributable interest for distribution to

person in areas not served by a cable

operator as of October 5, 1992.

(2) Section 76.1002(c)(2) shall only

restrict the conduct of an open video

system operator, its affiliate that

provides video programming on its open

video system and a satellite cable

programming vendor in which an open

video system operator has an

attributable interest, as follows: No open

video system operator or its affiliate that

provides video programming on its open

video system shall enter into any

exclusive contracts, or engage in any

practice, activity or arrangement

tantamount to an exclusive contract, for

satellite cable programming or satellite

broadcast programming with a satellite

cable programming vendor in which an

open video system operator has an

attributable interest or a satellite

broadcast programming vendor, unless

the Commission determines in

accordance with § 76.1002(c)(4) that

such a contract, practice, activity or

arrangement is in the public interest.

(3) Section 76.1002(c)(3) (i) through

(ii) shall only restrict the conduct of an

open video system operator, its affiliate

that provides video programming on its

open video system and a satellite cable

programming vendor in which an open

video system operator has an

attributable interest, as follows:

(i) Unserved areas. No open video

system operator shall enter into any

subdistribution agreement or

arrangement for satellite cable

programming or satellite broadcast

programming with a satellite cable

programming vendor in which an open

video system operator has an

attributable interest or a satellite

broadcast programming vendor in
28714 Federal Register / Vol. 61, No. 109 / Wednesday, June 5, 1996 / Rules and Regulations

which an open video system operator

has an attributable interest for

distribution to persons in areas not

served by a cable operator as of October

5, 1992.

(ii) Served areas. No open video

system operator shall enter into any

subdistribution agreement or

arrangement for satellite cable

programming or satellite broadcast

programming with a satellite cable

programming vendor in which an open

video system operator has an

attributable interest or a satellite

broadcast programming vendor in

which an open video system operator

has an attributable interest, with respect

to areas served by a cable operator,

unless such agreement or arrangement

complies with the limitations set forth

in § 76.1002(c)(3)(iii).

(b) No open video system

programming provider in which a cable

operator has an attributable interest

shall:

(1) engage in any practice or activity

or enter into any understanding or

arrangement, including exclusive

contracts, with a satellite cable

programming vendor or satellite

broadcast programming vendor for

satellite cable programming or satellite

broadcast programming that prevents a

multichannel video programming

distributor from obtaining such

programming from any satellite cable

programming vendor in which a cable

operator has an attributable interest, or

any satellite broadcasting vendor in

which a cable operator has an

attributable interest for distribution to

person in areas not served by a cable

operator as of October 5, 1992.

(2) enter into any exclusive contracts,

or engage in any practice, activity or

arrangement tantamount to an exclusive

contract, for satellite cable programming

or satellite broadcast programming with

a satellite cable programming vendor in

which a cable operator has an

attributable interest or a satellite

broadcast programming vendor, unless

the Commission determines in

accordance with Section 76.1002(c)(4)

that such a contract, practice, activity or

arrangement is in the public interest.

§ 76.1508 Network non-duplication.

(a) Sections 76.92 through 76.97 shall

apply to open video systems in

accordance with the provisions

contained in this section.

(b) Any provision of § 76.92 that refers

to a ‘‘cable community unit’’ or

‘‘community unit’’ shall apply to an

open video system or that portion of an

open video system that operates or will

operate within a separate and distinct

community or municipal entity

(including unincorporated communities

within unincorporated areas and

including single, discrete

unincorporated areas). Any provision of

§ 76.92 that refers to a ‘‘cable television

community’’ shall apply to an open

video system community. Any

provision of § 76.92 that refers to a

‘‘cable television system’s mandatory

signal carriage obligations’’ shall apply

to an open video system’s mandatory

signal carriage obligations.

(c) Any provision of § 76.94 that refers

to a ‘‘cable system operator’’ or ‘‘cable

television system operator’’ shall apply

to an open video system operator. Any

provision of § 76.94 that refers to a

‘‘cable system’’ or ‘‘cable television

system’’ shall apply to an open video

system except § 76.94 (e) and (f) which

shall apply to an open video system

operator. Open video system operators

shall make all notifications and

information regarding the exercise of

network non-duplication rights

immediately available to all appropriate

video programming provider on the

system. An open video system operator

shall not be subject to sanctions for any

violation of these rules by an

unaffiliated program supplier if the

operator provided proper notices to the

program supplier and subsequently took

prompt steps to stop the distribution of

the infringing program once it was

notified of a violation.

(d) Any provision of § 76.95 that

refers to a ‘‘cable system’’ or a ‘‘cable

community unit’’ shall apply to an open

video system or that portion of an open

video system that operates or will

operate within a separate and distinct

community or municipal entity

(including unincorporated communities

within unincorporated areas and

including single, discrete

unincorporated areas).

§ 76.1509 Syndicated program exclusivity.

(a) Sections 76.151 through 76.163

shall apply to open video systems in

accordance with the provisions

contained in this section.

(b) Any provision of § 76.151 that

refers to a ‘‘cable community unit’’ shall

apply to an open video system.

(c) Any provision of § 76.155 that

refers to a ‘‘cable system operator’’ or

‘‘cable television system operator’’ shall

apply to an open video system operator.

Any provision of § 76.155 that refers to

a ‘‘cable system’’ or ‘‘cable television

system’’ shall apply to an open video

system except § 76.155(c) which shall

apply to an open video system operator.

Open video system operators shall make

all notifications and information

regarding exercise of syndicated

program exclusivity rights immediately

available to all appropriate video

programming provider on the system.

An open video system operator shall not

be subject to sanctions for any violation

of these rules by an unaffiliated program

supplier if the operator provided proper

notices to the program supplier and

subsequently took prompt steps to stop

the distribution of the infringing

program once it was notified of a

violation.

(d) Any provision of § 76.156 that

refers to a ‘‘cable community’’ shall

apply to an open video system

community. Any provision of § 76.156

that refers to a ‘‘cable community unit’’

or ‘‘community unit’’ shall apply to an

open video system or that portion of an

open video system that operates or will

operate within a separate and distinct

community or municipal entity

(including unincorporated communities

within unincorporated areas and

including single, discrete

unincorporated areas). Any provision of

§§ 76.156 through 76.158, and 76.163

that refers to a ‘‘cable system’’ shall

apply to an open video system.

(e) Any provision of § 76.159 that

refers to ‘‘cable television’’ or a ‘‘cable

system’’ shall apply to an open video

system.

(f) Any provision of § 76.161 that

refers to a ‘‘community unit’’ shall

apply to an open video system or that

portion of an open video system that is

affected by this rule.

§ 76.1510 Application of certain Title VI

provisions.

The following sections within Part 76

shall also apply to open video systems:

§§ 76.71, 76.73, 76.75, 76.77 and 76.79

(Equal Employment Opportunity

Requirements); §§ 76.503 and 76.504

(ownership restrictions); § 76.981

(negative option billing); and

§§ 76,1300, 76.1301 and 76.1302

(regulation of carriage agreements);

provided, however, that these sections

shall apply to open video systems only

to the extent that they do not conflict

with this subpart S. Section 631 of the

Communications Act (subscriber

privacy) shall also apply to open video

systems.

§ 76.1511 Fees.

An open video system operator may

be subject to the payment of fees on the

gross revenues of the operator for the

provision of cable service imposed by a

local franchising authority or other

governmental entity, in lieu of the

franchise fees permitted under Section

622 of the Communications Act. Gross

revenues under this paragraph means all

gross revenues received by an open

video system operator or its affiliates,
Federal Register / Vol. 61, No. 109 / Wednesday, June 5, 1996 / Rules and Regulations 28715

including all revenues received from

subscribers and all carriage revenues

received from unaffiliated video

programming providers. Gross revenues

does not include revenues collected by

unaffiliated video programming

providers from their subscribers. Any

gross revenues fee that the open video

system operator or its affiliate collects

from subscribers shall be excluded from

gross revenues. An operator of an open

video system may designate that portion

of a subscriber’s bill attributable to the

fee as a separate item on the bill.

§ 76.1512 Programming information.

(a) An open video system operator

shall not unreasonably discriminate in

favor of itself or its affiliates with regard

to material or information (including

advertising) provided by the operator to

subscribers for the purpose of selecting

programming on the open video system,

or in the way such material or

information is provided to subscribers.

Note to paragraph (a): ‘‘Material or

information’’ as used in paragraph (a) of this

section means material or information that a

subscriber uses to actively select

programming at the point of program

selection.

(b) In accordance with paragraph (a)

of this section:

(1) An open video system operator

shall not discriminate in favor of itself

or its affiliate on any navigational

device, guide or menu;

(2) An open video system operator

shall not omit television broadcast

stations or other unaffiliated video

programming services carried on the

open video system from any

navigational device, guide (electronic or

paper) or menu. For programming

services that an open video system

subscriber has not ordered, menus

provided by an open video system

operator shall, at a minimum, inform

the subscriber how to access an

additional screen that lists the

unordered programming services.

(c) An open video system operator

shall ensure that video programming

providers or copyright holders (or both)

are able to suitably and uniquely

identify their programming services to

subscribers.

(d) An open video system operator

shall transmit programming

identification without change or

alteration if such identification is

transmitted as part of the programming

signal.

§ 76.1513 Dispute resolution.

(a) Complaints. Any party aggrieved

by conduct that it alleges to constitute

a violation of the regulations set forth in

this part or in Section 653 of the

Communications Act (47 U.S.C. 573)

may commence an adjudicatory

proceeding at the Commission. The

Commission shall resolve any such

dispute within 180 days after the filing

of a complaint.

(b) Alternate dispute resolution. An

open video system operator may not

provide in its carriage contracts with

programming providers that any dispute

must be submitted to arbitration,

mediation, or any other alternative

method for dispute resolution prior to

submission of a complaint to the

Commission.

(c) Notice required prior to filing of

complaint. Any aggrieved party

intending to file a complaint under this

section must first notify the potential

defendant open video system operator

that it intends to file a complaint with

the Commission based on actions

alleged to violate one or more of the

provisions contained in this part or in

Section 653 of the Communications Act.

The notice must be in writing and must

be sufficiently detailed so that its

recipient(s) can determine the specific

nature of the potential complaint. The

potential complainant must allow a

minimum of ten (10) days for the

potential defendant(s) to respond before

filing a complaint with the Commission.

(d) General pleading requirements.

Complaint proceedings under this part

are generally resolved on a written

record consisting of a complaint,

answer, and reply, but may also include

other written submissions such as briefs

and written interrogatories. All written

submissions, both substantive and

procedural, must conform to the

following standard:

(1) Pleadings must be clear, concise,

and explicit. All matters concerning a

claim, defense or requested remedy,

should be pleaded fully and with

specificity;

(2) Pleadings must contain facts

which, if true, are sufficient to

constitute a violation of the

Communications Act or of a

Commission regulation or order, or a

defense to such alleged violation;

(3) Facts must be supported by

relevant documentation or affidavit;

(4) Legal arguments must be

supported by appropriate judicial,

Commission, or statutory authority;

(5) Opposing authorities must be

distinguished;

(6) Copies must be provided of all

non-Commission authorities relied upon

which are not routinely available in

national reporting systems, such as

unpublished decisions or slip opinions

of courts or administrative agencies; and

(7) Parties are responsible for the

continuing accuracy and completeness

of all information and supporting

authority furnished in a pending

complaint proceeding. Information

submitted, as well as relevant legal

authorities, must be current and

updated as necessary and in a timely

manner at any time before a decision is

rendered on the merits of the complaint.

(e) Complaint.

(1) A complaint filed under this part

shall contain:

(i) The name of the complainant and

each defendant;

(ii) The type of entity that describes

complainant (e.g., individual, private

association, partnership, or

corporation), the address and telephone

number of the complainant, and the

address and telephone number of each

defendant;

(iii) The name, address and telephone

number of complainant’s attorney, if

complainant is represented by counsel;

(iv) Citation to the section of the

Communications Act and/or the

Commission regulation or order alleged

to have been violated;

(v) A complete statement of facts,

which, if proven true, would constitute

such a violation;

(vi) Any evidence that supports the

truth or accuracy of the alleged facts;

(vii) Evidence that the open video

system operator’s conduct at issue

violated a section of the

Communications Act and/or

Commission regulation or order.

(viii) If discrimination in rates, terms,

and conditions of carriage is alleged,

documentary evidence shall be

submitted such as a preliminary carriage

rate estimate or a programming contract

that demonstrates a differential in price,

terms or conditions between

complainant and a competing video

programming provider or, if no

programming contract or preliminary

carriage rate estimate is submitted with

the complaint, an affidavit signed by an

officer of complainant alleging that a

differential in price, terms or conditions

exists, a description of the nature and

extent (if known or reasonably

estimated by the complainant) of the

differential, together with a statement

that defendant refused to provide any

further specific comparative

information;

(ix) If a programming contract or a

preliminary carriage rate estimate is

submitted with the complaint in

support of the alleged violation, specific

references to the relevant provisions

therein; and

(x) The specific relief sought.

(2) Every complaint alleging a

violation of the open video system

requirements shall be accompanied by a

sworn affidavit signed by an authorized
28716 Federal Register / Vol. 61, No. 109 / Wednesday, June 5, 1996 / Rules and Regulations

officer or agent of the complainant. This

affidavit shall contain a statement that

the affiant has read the complaint and

that to the best of the affiant’s

knowledge, information, and belief

formed after reasonable inquiry, it is

well grounded in fact and is warranted

under Commission regulations and

policies, or is a good faith argument for

the extension, modification or reversal

of such regulations or policies, and it is

not interposed for any improper

purpose. If the complaint is signed in

violation of this rule, the Commission

upon motion or its own initiative, shall

impose upon the complainant an

appropriate sanction.

(3) The following format may be used

in cases to which it is applicable, with

such modifications as the circumstances

may render necessary:

Before The Federal Communications

Commission, Washington, D.C. 20554

In the Matter of Complainant

File No. (To be inserted by the

Commission) v. Defendant.

[Insert Subject or Nature of Issue: Unjust or

Unreasonable Discrimination in Rates,

Terms, and Conditions; Discriminatory

Denial of Carriage]

Open Video System Complaint

To: The Commission.

The complainant (here insert full name of

complainant and type of entity of such

complainant):

1. (Here state the complainant’s post office

address and telephone number).

2. (Here insert the name, address and

telephone number of each defendant).

3. (Here insert fully and clearly the specific

act or thing complained of, together with

such facts as are necessary to give full

understanding of the matter, including

relevant legal and documentary support).

Wherefore, complainant asks (here state

specifically the relief desired).

(Date) llllllllllllllllll

(Name of complainant) llllllllll

lllllllllllllllllllll

(Name, address, and telephone number of

attorney, if any)

(4) The complaint must be

accompanied by appropriate evidence

demonstrating that the required

notification pursuant to paragraph (c) of

this section has been made.

(f) Answer.

(1) Any open video system operator

upon which a complaint is served under

this section shall answer within thirty

(30) days of service of the complaint,

unless otherwise directed by the

Commission.

(2) The answer shall advise the parties

and the Commission fully and

completely of the nature of any and all

defenses, and shall respond specifically

to all material allegations of the

complaint. Collateral or immaterial

issues shall be avoided in answers and

every effort should be made to narrow

the issues. Any defendant failing to file

and serve an answer within the time

and in the manner prescribed by these

rules may be deemed in default and an

order may be entered against defendant

in accordance with the allegations

contained in the complaint.

(3) The answer shall state concisely

any and all defenses to each claim

asserted and shall admit or deny the

averments on which the adverse party

relies. If the defendant is without

knowledge or information sufficient to

form a belief as to the truth of an

averment, the defendant shall so state

and this has the effect of a denial. When

a defendant intends in good faith to

deny only part of an averment, the

answer shall specify so much of it as is

true and shall deny only the remainder.

The defendant may make its denials as

specific denials of designated averments

or paragraphs, or may generally deny all

the averments except such designated

averments or paragraphs as the

defendant expressly admits. When the

defendant intends to controvert all

averments, the defendant may do so by

general denial.

(4) Averments in a complaint are

deemed to be admitted when not denied

in the answer.

(5) An answer to a discrimination

complaint shall state the reasons for any

differential in prices, terms or

conditions between the complainant

and its competitor, and shall specify the

particular justification relied upon in

support of the differential. Any

documents or contracts submitted

pursuant to this paragraph (f)(5) may be

protected as proprietary pursuant to

paragraph (j) of this section.

(g) Reply. Within twenty (20) days

after service of an answer, the

complainant may file and serve a reply

which shall be responsive to matters

contained in the answer and shall not

contain new matters. Failure to reply

will not be deemed an admission of any

allegations contained in the answer,

except with respect to any affirmative

defense set forth therein. Replies

containing information claimed by

defendant to be proprietary under

paragraph (j) of this section shall be

submitted to the Commission in

confidence pursuant to the requirements

of § 0.459 of this chapter and clearly

marked ‘‘Not for Public Inspection.’’ An

edited version removing all proprietary

data shall be filed with the Commission

for inclusion in the public file within

five (5) days from the date the unedited

reply is submitted, and shall be served

on the defendant.

(h) Motions. Except as provided in

this section, or upon a showing of

extraordinary circumstances, additional

motions or pleadings by any party will

not be accepted.

(i) Discovery.

(1) The Commission staff may in its

discretion order discovery limited to the

issues specified by the Commission.

Such discovery may include answers to

written interrogatories or document

production.

(2) The Commission staff may in its

discretion direct the parties to submit

discovery proposals, together with a

memorandum in support of the

discovery requested. Such discovery

requests may include answers to written

interrogatories, document production or

depositions. The Commission staff will

then hold a status conference with the

parties, pursuant to paragraph (l) of this

section, to determine the scope of

discovery. If the Commission staff

determines that extensive discovery is

required or that depositions are

warranted, the staff will advise the

parties that the proceeding will be

referred to an administrative law judge

in accordance with paragraph (o) of this

section.

(j) Confidentiality of proprietary

information.

(1) Any materials generated or

provided by a party in connection with

the pre-complaint notification

procedure required under paragraph (c)

of this section and in the course of

adjudicating a complaint under this

provision may be designated as

proprietary by that party if the party

believes in good faith that the materials

fall within an exemption to disclosure

contained in the Freedom of

Information Act (FOIA), 5 U.S.C. 552(b).

Any party asserting confidentiality for

such materials shall so indicate by

clearly marking each page, or portion

thereof, for which a proprietary

designation is claimed. If a proprietary

designation is challenged, the party

claiming confidentiality will have the

burden of demonstrating, by a

preponderance of the evidence, that the

material designated as proprietary falls

under the standards for nondisclosure

enunciated in the FOIA.

(2) Materials marked as proprietary

may be disclosed solely to the following

persons, only for use in prosecuting or

defending a party to the complaint

action, and only to the extent necessary

to assist in the prosecution or defense of

the case:

(i) Counsel of record representing the

parties in the complaint action and any

support personnel employed by such

attorneys;

(ii) Officers or employees of the

opposing party who are named by the

opposing party as being directly
Federal Register / Vol. 61, No. 109 / Wednesday, June 5, 1996 / Rules and Regulations 28717

involved in the prosecution or defense

of the case;

(iii) Consultants or expert witnesses

retained by the parties;

(iv) The Commission and its staff; and

(v) Court reporters and stenographers

in accordance with the terms and

conditions of this section.

(3) The persons designated in

paragraph (j)(2) of this section shall not

disclose information designated as

proprietary to any person who is not

authorized under this section to receive

such information, and shall not use the

information in any activity or function

other than the prosecution or defense in

the case before the Commission. Each

individual who is provided access to the

information by the opposing party shall

sign a notarized statement affirmatively

stating, or shall certify under penalty of

perjury, that the individual has

personally reviewed the Commission’s

rules and understands the limitations

they impose on the signing party.

(4) No copies of materials marked

proprietary may be made except copies

to be used by persons designated in

paragraph (j)(2) of this section. Each

party shall maintain a log recording the

number of copies made of all

proprietary material and the persons to

whom the copies have been provided.

(5) Upon termination of the complaint

proceeding, including all appeals and

petitions, all originals and

reproductions of any proprietary

materials, along with the log recording

persons who received copies of such

materials, shall be provided to the

producing party. In addition, upon final

termination of the complaint

proceeding, any notes or other work

product derived in whole or in part

from the proprietary materials of an

opposing or third party shall be

destroyed.

(k) Other required written

submissions.

(1) The Commission may, in its

discretion, require the parties to file

briefs summarizing the facts and issues

presented in the pleadings and other

record evidence. These briefs shall

contain the findings of fact and

conclusions of law which that party is

urging the Commission to adopt, with

specific citations to the record, and

supported by relevant authority and

analysis.

(2) The Commission may require the

parties to submit any additional

information it deems appropriate for a

full, fair, and expeditious resolution of

the proceeding, including copies of all

contracts and documents reflecting

arrangements and understandings

alleged to violate the requirements set

forth in the Communications Act and in

this part, as well as affidavits and

exhibits.

(3) Any briefs submitted shall be filed

concurrently by both the complainant

and defendant at such time as is

designated by the staff. Such briefs shall

not exceed fifty (50) pages.

(4) Reply briefs may be submitted by

either party within twenty (20) days

from the date initial briefs are due.

Reply briefs shall not exceed thirty (30)

pages.

(5) Briefs containing information

which is claimed by an opposing or

third party to be proprietary under

paragraph (j) of this section shall be

submitted to the Commission in

confidence pursuant to the requirements

of § 0.459 of this chapter, and shall be

clearly marked ‘‘Not for Public

Inspection.’’ An edited version

removing all proprietary data shall be

filed with the Commission for inclusion

in the public file within five (5) days

from the date the unedited version is

submitted and served on opposing

parties.

(l) Status conference.

(1) In any complaint proceeding

under this part, the Commission staff

may in its discretion direct the attorneys

and/or the parties to appear for a

conference to consider:

(i) Simplification or narrowing of the

issues;

(ii) The necessity for or desirability of

amendments to the pleadings,

additional pleadings, or other

evidentiary submissions;

(iii) Obtaining admissions of fact or

stipulations between the parties as to

any or all of the matters in controversy;

(iv) Settlement of the matters in

controversy by agreement of the parties;

(v) The necessity for and extent of

discovery, including objections to

interrogatories or requests for written

documents;

(vi) The need and schedule for filing

briefs, and the date for any further

conferences; and

(vii) Such other matters that may aid

in the disposition of the complaint.

(2) Any party may request that a

conference be held at any time after the

complaint has been filed.

(3) Conferences will be scheduled by

the Commission at such time and place

as it may designate, to be conducted in

person or by telephone conference call.

(4) The failure of any attorney or

party, following reasonable notice, to

appear at a scheduled conference will

be deemed a waiver and will not

preclude the Commission from

conferring with those parties or counsel

present.

(5) During a status conference, the

Commission staff may issue oral rulings

pertaining to a variety of interlocutory

matters relevant to the conduct of the

complaint proceeding including, inter

alia, procedural matters, discovery, and

the submission of briefs or other

evidentiary materials. These rulings will

be promptly memorialized in writing

and served on the parties. When such

rulings require a party to take

affirmative action not subject to

deadlines established by another

provision of this part, such action will

be required within ten (10) days from

the date of the written memorialization

unless otherwise directed by the staff.

(m) Specifications as to pleadings,

briefs, and other documents;

subscriptions.

(1) All papers filed in a complaint

proceeding under this part must be

drawn in conformity with the

requirements of Sections 1.49 and 1.50

of this chapter.

(2) All averments of claims or

defenses in complaints and answers

shall be made in numbered paragraphs.

The contents of each paragraph shall be

limited as far as practicable to a

statement of a single set of

circumstances. Each claim founded on a

separate transaction or occurrence and

each affirmative defense shall be

separately stated to facilitate the clear

presentation of the matters set forth.

(3) The original of all pleadings and

submissions by any party shall be

signed by that party, or by the party’s

attorney. Complaints must be signed by

the complainant. The signing party shall

state his or her address and telephone

number and the date on which the

document was signed. Copies should be

conformed to the original. Except when

otherwise specifically provided by rule

or statute, pleadings need not be

verified. The signature of an attorney or

party shall be a certificate that the

attorney or party has read the pleading,

motion, or other paper; that to the best

of his or her knowledge, information

and belief formed after reasonable

inquiry, it is well grounded in fact and

is warranted by existing law or a good

faith argument for the extension,

modification or reversal of existing law;

and that it is not interposed for any

improper purpose. If any pleading or

other submission is signed in violation

of this provision, the Commission shall

upon motion or upon its own initiative

impose upon the party an appropriate

sanction. Where the pleading or

submission is signed by counsel, the

provisions of Sections 1.52 and 1.24 of

this chapter shall also apply.

(n) Copies; service.

(1) The complainant shall file an

original plus three copies of the

complaint with the Commission.
28718 Federal Register / Vol. 61, No. 109 / Wednesday, June 5, 1996 / Rules and Regulations

However, if the complaint is addressed

against multiple defendants,

complainant shall provide three

additional copies of the complaint for

each additional defendant.

(2) An original plus two copies shall

be filed of all pleadings and documents

other than the complaint.

(3) The complainant shall serve the

complaint on each defendant at the

same time that it is filed at the

Commission.

(4) All subsequent pleadings and

briefs, as well as all letters, documents

or other written submissions, shall be

served by the filing party on all other

parties to the proceeding, together with

proof of such service in accordance with

the requirements of § 1.47 of this

chapter.

(5) The parties to any complaint

proceeding brought pursuant to this

section may be required to file

additional copies of any or all papers

filed in the proceeding.

(o) Referral to administrative law

judge.

(1) After reviewing the complaint,

answer and reply, and at any stage of

the proceeding thereafter, the

Commission staff may, in its discretion,

designate any complaint proceeding for

an adjudicatory hearing before an

administrative law judge.

(2) Before designation for hearing, the

staff shall notify, either orally or in

writing, the parties to the proceeding of

its intent to so designate, and the parties

shall be given a period of ten (10) days

to elect to resolve the dispute through

alternative dispute resolution

procedures, or to proceed with an

adjudicatory hearing. Such election

shall be submitted in writing to the

Commission.

(3) Unless otherwise directed by the

Commission, or upon motion by the

Cable Services Bureau Chief, the Cable

Services Bureau Chief shall not be

deemed to be a party to a complaint

proceeding designated for a hearing

before an administrative law judge

pursuant to this paragraph.

(p) Petitions for reconsideration.

Petitions for reconsideration of

interlocutory actions by the

Commission’s staff or by an

administrative law judge will not be

entertained. Petitions for

reconsideration of a decision on the

merits made by the Commission’s staff

should be filed in accordance with

§§ 1.104 through 1.106 of this chapter.

(q) Interlocutory review.

(1) Except as provided below, no

party may seek review of interlocutory

rulings until a decision on the merits

has been issued by the staff or

administrative law judge.

(2) Rulings listed in this paragraph are

reviewable as a matter of right. An

application for review of such ruling

may not be deferred and raised as an

exception to a decision on the merits:

(i) If the staff’s ruling denies or

terminates the right of any person to

participate as a party to the proceeding,

such person, as a matter of right, may

file an application for review of that

ruling:

(ii) If the staff’s ruling requires

production of documents or other

written evidence, over objection based

on a claim of privilege, the ruling on the

claim of privilege is reviewable as a

matter of right; and/or

(iii) If the staff’s ruling denies a

motion to disqualify a staff person from

participating in the proceeding, the

ruling is reviewable as a matter of right.

(r) Expedited review.

(1) Any party to a complaint

proceeding under this part aggrieved by

any decision on the merits issued by the

staff pursuant to delegated authority

may file an application for review by the

Commission in accordance with Section

1.115 of this chapter.

(2) Any party to a complaint

proceeding aggrieved by any decision

on the merits by an administrative law

judge may file an appeal of the decision

directly with the Commission, in

accordance with § 1.276(a) and §§ 1.277

(a) through (c) of this chapter, except

that unless a stay is granted by the

Commission, the decision by the

administrative law judge will become

effective upon release and will remain

in effect pending appeal.

(s) Frivolous complaints. It shall be

unlawful for any party to file a frivolous

complaint with the Commission alleging

any violation of this part. Any violation

of this paragraph shall constitute an

abuse of process subject to appropriate

sanctions.

(t) Statute of limitations. Any

complaint filed pursuant to this

subsection must be filed within one year

of the date on which the following acts

or conduct occur which form the basis

of the complaint:

(1) The open video system operator

enters into a contract with the

complainant that the complainant

alleges to violate one or more of the

rules contained in this part; or

(2) The open video system operator

offers to carry programming for the

complainant pursuant to terms that the

complainant alleges to violate one or

more of the rules contained in this part;

or

(3) The complainant has notified an

open video system operator that it

intends to file a complaint with the

Commission based on a request for such

operator to carry the complainant’s

programming on its open video system

that has been denied or

unacknowledged, allegedly in violation

of one or more of the rules contained in

this part.

(u) Remedies for violations.

(1) Remedies authorized. Upon

completion of such adjudicatory

proceeding, the Commission shall order

appropriate remedies, including, if

necessary, the requiring carriage,

awarding damages to any person denied

carriage, or any combination of such

sanctions. Such order shall set forth a

timetable for compliance, and shall

become effective upon release.

(2) Additional sanctions. The

remedies provided in paragraph (u)(1) of

this section are in addition to and not

in lieu of the sanctions available under

Title VI or any other provision of the

Communications Act.

§ 76.1514 Bundling of video and local

exchange services.

An open video system operator may

offer video and local exchange services

for sale in a single package at a single

price, provided that:

(a) the open video system operator,

where it is the incumbent local

exchange carrier, may not require that a

subscriber purchase its video service in

order to receive local exchange service;

and

(b) Any local exchange carrier offering

such a package must impute the

unbundled tariff rate for the unregulated

service.

[FR Doc. 96–14238 Filed 6–4–96; 8:45 am]

BILLING CODE 6712–01–P