Open Video Systems

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 Sec. 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 Sec. 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 [email protected], and to Timothy

Fain, OMB Desk Officer, 10236 NEOB, 725-17th Street, N.W., Washington,

D.C., 20503 or via the Internet to [email protected].

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 [email protected].

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 non-duplication 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 x 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 x 10 Notices = 250. Average burden to prospective video

programming providers to make each written request: 2 hours apiece;

therefore 10 x 25 x 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 x 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

x 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 x 1 = 50 hours. Burden to OVS operators for filing rate

justifications: 20 hours per justification; therefore 10 x 5 x 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 x 6 x 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 x 4 = 40 hours. Estimated annual

number of written requests received by OVS operators: 30 per OVS

operator; therefore 10 x 30 = 300. Burden for completing written

requests: .25 hours per request; therefore 10 x 30 x .25 = 75

hours. Burden to OVS operators to respond to requests: .25 hours per

request; therefore 10 x 30 x .25 = 75 hours. Total burden for all

respondents: 120 + 40 + 75 + 75 = 310 hours.

Sports Exclusivity, Network Non-Duplication and Syndicated

Exclusivity requirements: Estimated number of occurrences where

television broadcast stations must notify OVS operators of exclusive or

non-duplication rights

[[Page 28699]]

being exercised: 6 stations in each OVS operator's area of carriage x

20 annual notifications x 10 OVS operators = 1200. Burden to

television stations to make notifications: .5 hours per notification;

therefore 12400 x .5 = 600 hours. Burden for each OVS operator to

make notifications available to all programming providers on their

systems: 1 hour per notification x 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 x 1= 10

hours. Number of oppositions estimated to be filed with the Commission:

2 per certification; therefore 2 x 10 = 20. Average burden for

completing oppositions: 4 hours per opposition; therefore 20 x 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 x 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) x 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 x 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 Non-Duplication 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. Sec. 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.

[[Page 28700]]

Sec. 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. Sec. 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

Sec. 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 non-commercial 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

[[Page 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 must-

carry 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,

non-discriminatory 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.

[[Page 28702]]

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 non-discrimination 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

[[Page 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

must-carry 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 must-carry/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

[[Page 28704]]

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 cable-affiliated 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 cable-affiliated 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.

[[Page 28705]]

4. Sports Exclusivity, Network Non-Duplication and Syndicated

Exclusivity

45. We believe that we can directly apply our existing cable

regulations regarding sports exclusivity, syndicated exclusivity and

network non-duplication 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 non-duplication 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 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 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 non-

discriminatory 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

[[Page 28706]]

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-by-case 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 in-region 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.

[[Page 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-by-case 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.

Secs. 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 [email protected] and to Timothy Fain, OMB Desk Officer,

10236, NEOB, 725--17th Street, N.W., Washington, DC 20503 or via the

Internet to [email protected]. For additional information concerning

the information collections contained herein contact Dorothy Conway at

202-418-0217, or via the Internet at [email protected].

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 Secs. 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.

Secs. 601 through 699 (1981).

[[Page 28708]]

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:

Sec. 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:

Sec. 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 Sec. 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

Sec. 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.

Sec. 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 Sec. 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.

Sec. 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

[[Page 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

Secs. 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.

Sec. 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 non-discriminatory

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

(Sec. 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 one-third 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

[[Page 28710]]

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 one-third 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 one-third 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. Co-packaging 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.

Sec. 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.

[[Page 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.

Sec. 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

[[Page 28712]]

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 Sec. 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 Sec. 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.

Sec. 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 Sec. 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 Sec. 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 Sec. 76.54 that refers to ``non-cable television homes'' shall apply

to households that do not receive television signals from multichannel

video programming distributors. Any provision of Sec. 76.54 that refers

to a ``cable television system'' shall apply to an open video system.

(d) Definitions applicable to the must-carry rules. Section 76.55

shall apply to all open video systems in accordance with the provisions

contained in this section. Any provision of Sec. 76.55 that refers to a

``cable system'' shall apply to an open video system. Any provision of

Sec. 76.55 that refers to a ``cable operator'' shall apply to an open

video system operator. Any provision of Sec. 76.55 that refers to the

``principal headend'' of a cable system as defined in Sec. 76.5(pp)

shall apply to the equivalent of the principal headend of an open video

system. Any provision of Sec. 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 Sec. 76.56 that

refers to a ``cable television system'' or ``cable system'' shall apply

to an open video system. Any provision of Sec. 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 non-commercial 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 Sec. 76.57 to the closest extent possible. Any

provision of Sec. 76.57 that refers to a ``cable operator'' shall apply

to an open video system operator. Any provision of Sec. 76.57 that

refers to a ``cable system'' shall apply to an open video system,

except the references to ``cable system'' in Sec. 76.57(d) which shall

apply to an open video system operator.

(g) Notification. Any provision of Sec. 76.58 that refers to a

``cable operator'' shall apply to an open video system operator. Any

provision of Sec. 76.58 that refers to a ``cable system'' shall apply

to an open video system. Any provision of Sec. 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 Sec. 76.59

that refers to a

[[Page 28713]]

``cable system'' shall apply to an open video system. Any provision of

Sec. 76.59 that refers to a ``cable operator'' shall apply to an open

video system operator.

(i) Compensation for carriage. Any provision of Sec. 76.60 that

refers to a ``cable operator'' shall apply to an open video system

operator. Any provision of Sec. 76.60 that refers to a ``cable system''

shall apply to an open video system. Any provision of Sec. 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 Sec. 76.61 that

refers to a ``cable operator'' shall apply to an open video system

operator. Any provision of Sec. 76.61 that refers to a ``cable system''

shall apply to an open video system. Any provision of Sec. 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 Sec. 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 Sec. 76.64 that refers to a ``cable system''

shall apply to an open video system. Any provision of Sec. 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 Sec. 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

Sec. 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 Sec. 76.7 shall apply to special relief and

must-carry complaints relating to open video systems, and not the

procedures set forth in Sec. 76.1514 (Dispute resolution). Any

provision of Sec. 76.7 that refers to a ``cable television system

operator'' or ``cable operator'' shall apply to an open video system

operator. Any provision of Sec. 76.7 that refers to a ``cable

television system'' shall apply to an open video system. Any provision

of Sec. 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).

Sec. 76.1507 Competitive access to satellite cable programming.

(a) Any provision that applies to a cable operator under

Secs. 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 Sec. 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

[[Page 28714]]

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

Sec. 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.

Sec. 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 Sec. 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 Sec. 76.92

that refers to a ``cable television community'' shall apply to an open

video system community. Any provision of Sec. 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 Sec. 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 Sec. 76.94 that refers to

a ``cable system'' or ``cable television system'' shall apply to an

open video system except Sec. 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 Sec. 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).

Sec. 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 Sec. 76.151 that refers to a ``cable community

unit'' shall apply to an open video system.

(c) Any provision of Sec. 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 Sec. 76.155 that refers to

a ``cable system'' or ``cable television system'' shall apply to an

open video system except Sec. 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 Sec. 76.156 that refers to a ``cable

community'' shall apply to an open video system community. Any

provision of Sec. 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 Secs. 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 Sec. 76.159 that refers to ``cable

television'' or a ``cable system'' shall apply to an open video system.

(f) Any provision of Sec. 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.

Sec. 76.1510 Application of certain Title VI provisions.

The following sections within Part 76 shall also apply to open

video systems: Secs. 76.71, 76.73, 76.75, 76.77 and 76.79 (Equal

Employment Opportunity Requirements); Secs. 76.503 and 76.504

(ownership restrictions); Sec. 76.981 (negative option billing); and

Secs. 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.

Sec. 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,

[[Page 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.

Sec. 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.

Sec. 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

[[Page 28716]]

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)-----------------------------------------------------------------

(Name of complainant)--------------------------------------------------

----------------------------------------------------------------------

(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 Sec. 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

[[Page 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 Sec. 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.

[[Page 28718]]

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 Sec. 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 Secs. 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 Sec. 1.276(a)

and Secs. 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.

Sec. 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