Opinion ID: 676985
Heading Depth: 2
Heading Rank: 2

Heading: Customer-Programmers

Text: 48 The Commission determined that the customer-programmers of a common carrier video dialtone service are not cable operators within the meaning of the Act because they neither own a significant interest in the telephone company broadband facilities, or control, or are responsible for the management and operation of those facilities. First Report and Order, 7 FCC Rcd. at 327. The Commission, referring to the statutory definition of a cable system, 47 U.S.C. Sec. 522(7), reasoned that: 49 Where the closed transmission paths and associated head-end equipment are owned and controlled by different entities (as in video dialtone), and where different configurations of equipment would be used to move video programming from the different providers to the different customers, the concepts of a single, integrated system and unified control are not present. 50 We agree. 51 NATOA argues that the Commission's interpretation of Sec. 522(7) would enable a cable operator that now leases capacity from a telephone company offering channel service to avoid the franchising requirement merely by switching to the telephone company's video dialtone offering. A cable operator could presumably do that, but it would at the same time fundamentally alter the nature of its business, offering the public programs rather than channels of programming. It would also have to give up its control over, including the right to exclude others from, the channel capacity that it formerly leased, and depend upon the capacity of the public switched network in order to reach its customers. In these important ways, video dialtone and channel service are not, as NATOA argues, functionally indistinguishable. 52 NATOA also points out that at least in some cases a customer-programmer may control (1) the head-end equipment, (2) program selection, and (3) also, pursuant to the Commission's Second Report and Order, have an ownership and operational interest in the transmission facilities, (citing Second Report and Order, 7 FCC Rcd. at 5783, p 2 and 5798, p 31). This three-part combination, NATOA argues, amounts to the customer-programmer's having a significant ownership interest in a cable system. NATOA does not argue, however, that (1) ownership of the head-end equipment and (2) selection of programming are alone enough to constitute such an interest, and we cannot possibly address an argument based upon the Second Report and Order, which is not the subject of a petition for review in this proceeding.