(2) CONFORMING
AMENDMENT.—Section 602
of the Communications Act of 1934 (47 U.S.C. 531)
is amended—
(A) by redesignating paragraphs (18) and
(19) as paragraphs (19 and (20) respectively;
and
(B) by inserting after paragraph (17) the
following new paragraph:
‘‘(18) the term ‘telephone service area’ when
used in connection with a common carrier subject in
whole or in part to title II of this Act means the
area within which such carrier provides telephone ex-
change service as of November 20, 1993, but if any
common carrier after such date transfers its ex-
change service facilities to another common carrier,
the area to which such facilities provide telephone
exchange service shall be treated as part of the tele-
phone service area of the acquiring common carrier
and not of the selling common carrier.
(b) PROVISIONS FOR REGULATION OF CABLE SERV-
ICE PROVIDED BY TELEPHONE COMPANIES.—Title VI of
the Communications Act of 1934 (47 U.S.C. 521 et seq.)
is amended by adding at the end the following new part:
‘‘PART V—CABLE SERVICE PROVIDED BY
TELEPHONE COMPANIES
‘‘SEC. 651. DEFINITIONS.
‘‘For purposes of this part—
‘‘(1) the term ‘affiliated video programming’
means any video programming which is (A) owned
or controlled by, or under common control with, a
common carrier, and (B) provided by the common
carrier or an affiliate directly to subscribers in its
telephone service area;
‘‘(2) the term ‘control’ means—
‘‘(A) an ownership interest in which an en-
tity has the right to vote more than 50 percent
of the outstanding common stock or other own-
ership interest; or
‘‘(B) actual working control, as defined in
the order of the Commission entitled ‘‘Imple-
mentation of Sections 11 and 13 of the Cable
Television Consumer Protection and Competi-
tive Act of 1992—Horizontal and Vertical Own-
ership Limits, Cross-Ownership Limitations,
and Anti-Trafficking Provisions’’, MM Docket
92–264, adopted September 23, 1993, if no sin-
gle entity directly or indirectly has the right to
vote more than 50 percent of the outstanding
common stock or other ownership interest;
‘‘(3) the term ‘video platform’ has the same
meaning as the term ‘basic platform’ in the order of
the Commission entitled ‘Telephone Company-Cable
Television Cross-Ownership Rules, Sections 63.54–
63.58’, CC Docket No. 87–266, adopted July 16,
1992; and
‘‘(4) the term ‘rural area’ means a geographic
area that does not include either—
‘‘(A) any incorporated or unincorporated
place of 10,000 inhabitants or more, or any
part thereof; or
‘‘(B) any territory, incorporated or unin-
corporated, included in an urbanized area.
‘‘SEC. 652. SEPARATE VIDEO PROGRAMMING AFFILIATE.
‘‘(a) IN GENERAL.—Except as provided in subsection
(d) of this section, a common carrier subject to title II
of this Act shall not provide video programming directly
to subscribers in its telephone service area unless such
video programming is provided through a video program-
ming affiliate that is separate from such carrier.
‘‘(b) BOOKS AND MARKETING.—
‘‘(1) IN GENERAL.—A video programming affili-
ate of a common carrier shall—
‘‘(A) maintain books, records, and ac-
counts separate from such carrier which iden-
tify all transactions with such carrier;
‘‘(B) carry out directly (or through any
nonaffiliate) its own promotion, except that in-
stitutional advertising carried out by such car-
rier shall be permitted so long as each party
bears its pro rata share of the costs; and
‘‘(C) not own real or personal property in
common with such carrier.
‘‘(2) 
INBOUND
TELEMARKETING.—Notwith-
standing paragraph (1)(B), a common carrier may
provide inbound telemarketing or referral services
related to the provision of video programming by a
video programming affiliate of such carrier. If such
services are provided to a video programming affili-
ate, such services shall be made available to any
video programmer or cable operator on request, on
nondiscriminatory terms, at compensatory prices,
and subject to regulations of the Commission to en-
sure that the carrier’s method of providing
telemarketing or referral and its price structure do
not competitively disadvantage any video program-
mer or cable operator, regardless of size, including
those which do not use the carrier’s telemarketing
services.
‘‘(3) JOINT
TELEMARKETING.—Notwithstand-
ing paragraph (1)(B), a common carrier may peti-
tion the Commission for permission to market video
programming directly, upon showing that a cable op-
erator or other entity directly or indirectly provides
telecommunications services and markets such serv-
ices jointly with video programming services. The
common carrier shall specify the geographic region
covered by the petition. Any such petition shall be
granted or denied within 180 days.
‘‘(c) BUSINESS TRANSACTIONS WITH CARRIER SUB-
JECT
TO REGULATION.—Any contract, agreement, ar-
rangement, or other manner of conducting business, be-
tween a common carrier and its video programming affili-
ate, providing for—
‘‘(1) the sale, exchange, or leasing of property
between such affiliate and such carrier;
‘‘(2) the furnishing of goods or services between
such affiliate and such carrier; or
‘‘(3) the transfer to or use by such affiliate for
its benefit of any asset or resource of such carrier,
shall be pursuant to regulation prescribed by the Commis-
sion, shall be on a fully compensatory and auditable basis,
shall be without cost to the telephone service ratepayers
of the carrier, shall be filed with the Commission, and
shall be in compliance with rules established by the Com-
mission which will be sufficient to enable the Commission
to assess the compliance of any transaction.
‘‘(d) WAIVER.—
‘‘(1) CRITERIA FOR WAIVER.—The Commission
may waive any of the requirements of this section
for small or rural telephone companies, and may, be-
ginning 5 years after the date of enactment of this
section, waive such requirements for any common
carrier, if the Commission determines, after notice
and comment, that—
‘‘(A) such waiver will not affect the ability
of the Commission to ensure that all video pro-
gramming activity is carried out without any
support from telephone ratepayers;
‘‘(B) the interests of telephone ratepayers
or cable subscribers will not be harmed if such
waiver is granted; and
‘‘(C) such waiver otherwise is in the public
interest.
‘‘(2) DEADLINE FOR ACTION.—The Commission
shall act to approve or disapprove a waiver applica-
tion within 180 days after the date it is filed.
‘‘SEC. 653. ESTABLISHMENT OF VIDEO PLATFORM.
‘‘(a) COMMON CARRIER OBLIGATIONS.—Any com-
mon carrier subject to title II of this Act and that pro-
vides, through a video programming affiliate, video pro-
gramming directly to subscribers in its telephone service
area, shall establish a video platform. The Commission,
together with the States, shall establish regulations to pro-
hibit a carrier from discriminating in favor of its video
programming affiliate in providing access to such platform
or with regard to rates, terms, and conditions for access
to such platform. The Commission shall take final action
on any application under section 214 seeking authority to
establish a video platform within one year after the date
such application is filed.
‘‘(b) COMMISSION STUDY.—The Commission shall
conduct a study of whether it is in the public interest to
extend the requirements of subsection (a) to cable opera-
tors in lieu of the requirements of section 612. The Com-
mission shall submit to the Congress a report on the re-
sults of such study not later than 2 years after the date
of enactment of this section.
‘‘SEC. 654. PROVISION OF AFFILIATED VIDEO PROGRAM-
MING.
‘‘(a) LIMITATION.—A common carrier which pro-
vides, through its video programming affiliate, affiliated
video programming directly to subscribers in its telephone
service area, shall make available such capacity as is re-
quested by unaffiliated video program providers upon rea-
sonable notice. A common carrier shall not be required
under this subsection to provide more than 75 percent of
the equipped capacity of its video platform to unaffiliated
video program providers.
‘‘(b) EVALUATION BY COMMISSION.—The Commis-
sion shall, not later than 2 years after the date of enact-
ment of this part, evaluate the effect of subsection (a) on
the video programming marketplace and, on the basis of
that evaluation, make recommendations to Congress con-
cerning appropriate modifications, if any, to subsection
(a).
‘‘(c) BROADCAST SIGNAL CARRIAGE EXCLUDED.—
The carriage of local broadcast signals pursuant to section
614 shall not constitute the provision of affiliated video
programming for purposes of subsection (a).
‘‘(d) TERMINATION.—Subsection (a) shall cease to be
effective five years after the date of enactment of this part.
‘‘SEC. 655. PROHIBITION OF CROSS-SUBSIDIZATION.
‘‘(a) COMMON CARRIER PROHIBITIONS.—The Com-
mission shall prescribe regulations to prohibit a common
carrier from engaging in any practice that results in the
inclusion in rates for telephone exchange service of any
operating expenses, costs, depreciation charges, capital in-
vestments, or other expenses associated with the provision
of video programming by the common carrier or its video
programming affiliate.
‘‘(b) CABLE OPERATOR PROHIBITIONS.—The Com-
mission shall prescribe regulations to prohibit a cable op-
erator from engaging in any practice that results in the
inclusion in rates for cable service of any operating ex-
penses, costs, depreciation charges, capital investments, or
other expenses associated with the provision of tele-
communications service by the cable operator or its tele-
communications service affiliate.
‘‘SEC. 656. PROHIBITION ON BUYOUTS.
‘‘(a) GENERAL PROHIBITION.—No common carrier
that provides telephone exchange service, nor any entity
owned by or under common ownership or control with such
carrier, may purchase or otherwise obtain control over any
cable system that is located within its telephone service
area and is owned by an unaffiliated person.
‘‘(b) EXCEPTIONS.—Notwithstanding subsection (a),
a common carrier may—
‘‘(1) obtain a controlling interest in, or form a
joint venture or other partnership with, a cable sys-
tem that serves a rural area;
‘‘(2) obtain a controlling interest in, or form a
joint venture or other partnership with, a cable sys-
tem or systems, if such systems in the aggregate
serve less than 10 percent of the households in the
telephone service area of such carrier and its affili-
ated common carriers; or
‘‘(3) acquire the use of that part of the trans-
mission facilities of such a cable system extending
from the last multi-user terminal to the premises of
the end user if such use is reasonably limited in
scope and duration.
‘‘(c) WAIVER.—
‘‘(1) CRITERIA FOR WAIVER.—The Commission
may waive the restrictions in subsection (a) of this
section only upon a showing by the applicant that—
‘‘(A) because of the nature of the market
served by the cable system concerned—
‘‘(i) the incumbent cable operator
would be subjected to undue economic dis-
tress by the enforcement of such sub-
section; or
‘‘(ii) the cable system would not be
economically viable if such subsection were
enforced; and
‘‘(B) the local franchising authority ap-
proves of such waiver.
‘‘(2) DEADLINE FOR ACTION.—The Commission
shall act to approve or disapprove a waiver applica-
tion within 180 days after the date it is filed.
‘‘SEC. 657. PENALTIES.
‘‘If the Commission finds that any common carrier
has knowingly violated any provision of this part, the
Commission shall assess such fines and penalties as it
deems appropriate pursuant to title V of this Act.
‘‘SEC. 658. CONSUMER PROTECTION.
‘‘(a) JOINT BOARD REQUIRED.—The Commission
shall, within 30 days after the date of enactment of this
part, convene a Federal-State Joint Board under the pro-
visions of section 410(c) for the purpose of establishing
the practices, classifications, and regulations as may be
necessary to ensure proper jurisdictional separation and
allocation of the costs of establishing and providing a video
platform and allocations of those costs between regulated
and unregulated services, including affiliated video pro-
gramming. The Board shall issue its recommendations to
the Commission within 270 days after the date of enact-
ment of this part.
‘‘(b) COMMISSION REGULATIONS REQUIRED.—The
Commission, with respect to interstate switched access
service, and the States, with respect to telephone exchange
service and intrastate interexchange service, shall, within
one year after the date of the enactment of this part, es-
tablish such rules and regulations as may be necessary to
implement section 655.
‘‘(c) NO EFFECT
ON CARRIER REGULATION AU-
THORITY.—Nothing in this section shall be construed to
limit or supersede the authority of any State or the Com-
mission with respect to the allocation of costs associated
with intrastate or interstate communication services.
‘‘SEC. 659. APPLICABILITY OF FRANCHISE AND OTHER RE-
QUIREMENTS.
‘‘(a) IN GENERAL.—Except as provided in subsection
(b)—
‘‘(1) the provisions of part II and sections 628,
631 and 632 of this title, and section 325 of title
III, shall apply, and
‘‘(2) the provisions of parts III and IV (other
than sections 628, 631, and 632) of this title shall
not apply,
to any video platform established by a common carrier in
accordance with the requirements of this part.
‘‘(b) IMPLEMENTATION OF REQUIREMENTS.—
‘‘(1) REGULATIONS.—The Commission shall
prescribe regulations to ensure that a video pro-
gramming affiliate of a common carrier shall estab-
lish a video platform under this part that provides