Video Dialtone Systems; Regulatory Scheme for Future Use

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 63

[CS Docket No. 96-46; FCC 96-312]

Video Dialtone Systems; Regulatory Scheme for Future Use

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: The First Order on Reconsideration requires operators of

existing video dialtone systems to make an election concerning what

regulatory scheme they will operate under in the future. This order

clarifies our rules in accordance with the Telecommunications Act of

1996. This order fulfills the mandate of the Telecommunications Act of

1996.

DATES: Effective August 5, 1996.

Public and agency comments on the information collection are due

on or before August 30, 1996. OMB notification of action is requested

September 4, 1996.

ADDRESSES: Comments on the information collection 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 FURTHER INFORMATION CONTACT: For additional information concerning

the information collection contained herein contact Dorothy Conway at

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

SUPPLEMENTARY INFORMATION: This First Order on Reconsideration contains

a new information collection under the Paperwork Reduction Act of 1995

(the ``1995 Act''). The Commission has requested approval of this

collection by the Office of Management and Budget (``OMB''), under the

emergency processing provisions of the 1995 Act. Approval is requested

to be effective September 4, 1996. The Commission, as part of its

continuing effort to reduce paperwork burdens, invites the general

public and OMB to comment on the information collection contained in

this First Order on Reconsideration, as required by the1995 Act. Public

and agency comments are due on or before August 30, 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. OMB

notification of action is requested September 4, 1996.

OMB Approval Number: New collection submitted for OMB approval.

Title: Implementation of Section 302 of the Telecommunications Act

of 1996.

Type of Review: New collection.

Respondents: Businesses, and other for profit entities.

Number of Respondents: Approximately 10.

Number of Responses: 14. (10 elections letters+4 showings of good

cause=14.).

Estimated Time Per Response: .5-5.5 hours. The Commission estimates

an average burden of .5 hours to prepare and file each election letter.

The Commission estimates a burden of 5 hours to prepare and file a

showing of good cause requesting an extension of time. The Commission

estimates entities will undergo an average burden of 2 hours to

coordinate information with outside legal assistance in preparing each

showing of good cause.

Total Annual Burden: 13 hours. (10 election letters x .5 hours=5

hours.) (4 showings of good cause x 2 hours=8 hours.)

Estimated costs per respondent: $3000. The Commission estimates

that respondents will use outside legal assistance paid at $150 per

hour to prepare showings for good cause. (4 showings of good cause x 5

hours @ $150 per hour=$3000.)

Needs and Uses: The election letters and any potential showings of

good cause will be collected and reviewed by the Commission to ensure

that all existing video dialtone operators have elected an option for

the delivery of video programming services under Section 651. The

filings will serve as an official record to verify that video dialtone

operators are in compliance with the Commission's rules and the intent

of Congress.

First Order on Reconsideration

I. Introduction

1. On February 8, 1996, the Telecommunications Act of 1996 (the

``1996 Act'') was signed into law. Among other things, the 1996 Act

repealed the telephone-cable cross-ownership restriction imposed by the

Cable Communications Policy Act of 1984 (``1984 Cable Act''), which

generally prohibited common carriers from providing video programming

directly to subscribers in their telephone service areas. The 1996 Act

also repealed the Commission's ``video dialtone'' rules and policies,

which had been established to permit common carriers to participate in

the video marketplace in a manner that was consistent with the

statutory telephone-cable cross-ownership restriction. In repealing the

Commission's video dialtone rules and policies, the 1996 Act provided:

The Commission's regulations and policies with respect to video

dialtone requirements issued in CC Docket No. 87-266 shall cease to

be effective on the date of enactment of this Act. This paragraph

shall not be construed to require the termination of any video-

dialtone system that the Commission has approved before the date of

enactment of this Act.

2. Consistent with the above statutory provisions, in the Report

and Order and Notice of Proposed Rulemaking in CS Docket No. 96-46, the

Commission: (1) Eliminated our rules implementing the telephone-cable

cross-ownership restriction; (2) eliminated our video dialtone rules

and policies; (3) terminated our proceeding that established our video

dialtone rules and policies (CC Docket No. 87-266); and (4) did not

require currently approved video dialtone systems to cease operations.

3. The general regulatory treatment for video programming services

provided by common carriers is now set forth in new Sections 651

through 653 of Title VI of the Communications Act of 1934 (the

``Communications Act''). The

[[Page 40532]]

options for common carriers entering the video programming marketplace

are found in Section 651, which provides that common carriers may: (1)

Provide video programming to subscribers through radio communication

under Title III of the Communications Act; (2) provide transmission of

video programming on a common carrier basis under Title II of the

Communications Act; (3) provide video programming as a cable system

under Title VI of the Communications Act; or (4) provide video

programming by means of an ``open video system'' under new Section 653

of the Communications Act.

II. Pleadings

4. On April 1 and April 10, 1996, the National Cable Television

Association (``NCTA'') filed nearly identical petitions for

reconsideration of the Commission's decision in the First Report and

Order not to require currently approved video dialtone systems to cease

operations. NCTA filed one petition for reconsideration as part of its

comments in the open video system rulemaking proceeding. See Comments

and Petition for Reconsideration of the National Cable Television

Association, Inc., CS Docket No. 96-46, CC Docket 87-266 (Terminated)

(filed April 1, 1996) (``NCTA April 1 Petition''). NCTA then filed a

nearly identical petition for reconsideration of the order terminating

CC Docket No. 87-266. See Petition for Reconsideration, CC Docket No.

87-266 (Terminated) (filed April 10, 1996) (``NCTA April 10

Petition''). Because they present identical issues, and because CC

Docket No. 87-266 has been terminated, we will consider these

petitions, and the responses thereto, in CS Docket No. 96-46. According

to NCTA, Congress did not ``require'' the termination of existing video

dialtone authorizations, but left termination to the Commission's

discretion. With the repeal of the Commission's video dialtone rules,

NCTA argues that the Commission has two choices: either conduct another

rulemaking to establish new rules for these few systems, or require

that they select between open video and franchised cable service. NCTA

argues that the latter alternative is preferable, after a reasonable

transition period. NCTA therefore asks the Commission to require (1)

outstanding video dialtone trials to terminate in accordance with the

dates previously established by the Commission, and (2) companies

holding outstanding commercial authorizations to choose between open

video and franchised cable service by a date certain.

5. In response, BellSouth Telecommunications, Inc. (``BellSouth'')

argues that the Commission did not err by issuing an Order that

conformed strictly to Section 302(b)(3) of the 1996 Act. Further,

BellSouth and the Bell Atlantic Telephone Companies (``Bell Atlantic'')

argue that NCTA overlooks a third wireline option for telephone

companies under Section 651--common carrier video transmission subject

to Title II regulation. In addition, Pacific Bell argues that NCTA

erroneously asserts that Congress did not ``grandfather'' existing

video dialtone authorizations, and that existing video dialtone systems

should have the opportunity to continue operating as common carriers

under Section 651, under any other provision of the 1996 Act or under

any other option available prior to the 1996 Act's passage and not

repealed by Congress. Recently, Sprint Corporation (``Sprint'') filed

an ex parte letter, objecting to the proposed discontinuance of

operations of existing approved video dialtone trials. In particular,

Sprint argued that it would be disruptive for the customers of its

video dialtone trial in Wake Forest, North Carolina if its operations

were to cease prematurely, and that the 1996 Act does not require the

Commission to terminate such systems.

6. In its reply, NCTA argues that Pacific Bell is ``simply wrong''

to claim that existing video dialtone authorizations were somehow

``grandfathered'' by the 1996 Act. While the 1996 Act does not

``require'' the termination of currently authorized video dialtone

systems, NCTA asserts that the 1996 Act does not prohibit the

Commission from terminating the authorizations. NCTA further argues

that the common carrier video programming transmission model applies

when only video transmission is being provided on a common carrier

basis. If a common carrier provides more than video transmission (e.g.,

when it provides its own video programming, or provides enhanced

services associated with video transmission), NCTA asserts that the

common carrier option is not available and the common carrier must

choose either the open video or the traditional cable model.

III. Discussion

7. We agree with NCTA that Section 302(b)(3) was not intended to

``grandfather'' existing video dialtone systems indefinitely as video

dialtone systems. Again, Section 302(b)(3) of the 1996 Act provides:

``This paragraph shall not be construed to require the termination of

any video-dialtone system that the Commission has approved before the

date of enactment of this Act.'' Rather, we interpret Section 302(b)(3)

to mean that the repeal of the Commission's video dialtone rules does

not also require the immediate termination of video dialtone systems

operating under those rules. We believe that Section 302(b)(3) was

intended to give the Commission the discretion to avoid an immediate

disruption of video dialtone service, and to develop an orderly

transition plan for existing video dialtone systems.

8. We find that the public interest would be served by requiring

currently authorized video dialtone operators to select one of the four

video programming delivery options set forth in Section 651--radio-

based, common carrier transmission, traditional cable or open video.

The Commission's open video system rules were released on June 3, 1996,

and the Commission must release any reconsideration of those rules by

August 8, 1996. We believe that after August 8, 1996 video dialtone

operators will possess adequate information regarding their options to

make such an election.

9. We realize that video dialtone operators will need time to

evaluate their options under Section 651 and to implement their choice.

We therefore will provide video dialtone operators ninety days from

August 8, 1996 in which to effect a transition to one of the four

options for providing video programming services under Section 651. A

video dialtone operator may, of course, begin providing video service

under one of the regulatory options in Section 651 at any time and need

not wait until the end of the election period. This will also permit

video dialtone subscribers to continue receiving service without

disruption. At or before the end of this 90-day period, each currently

authorized video dialtone operator must inform the Office of the

Secretary of the Commission in writing, with a copy to the Chief of the

Cable Services Bureau, which option under Section 651 it has elected.

We realize, however, that it may not be possible in all circumstances

for a video dialtone operator to complete the transition in ninety

days. In those instances, we would consider reasonable extensions of

time based on a showing of good cause. For example, if the video

dialtone operator were diligently pursuing a cable franchise and the

local franchising authority had not yet granted the franchise, we would

likely consider that good cause.

10. We believe that requiring such an election is fully consistent

with congressional intent. We are not requiring video dialtone

operators to

[[Page 40533]]

cease providing video service to their subscribers, but simply to

provide service in compliance with one of the statutorily-recognized

video programming delivery options. We also believe that this

conclusion is consistent with the Conference Report, since we are not

requiring video dialtone operators to elect a different option until

after our open video system rules have become effective. To hold

otherwise, as NCTA points out, would require the Commission to initiate

a new rulemaking proceeding to establish rules governing a handful of

systems. We believe that creating a fifth option for a limited number

of systems would be unnecessary, wasteful, and contrary to Congress'

Section 651 framework. We decline to adopt such an approach.

11. We also believe that the above election requirement generally

is consistent with the positions advanced by BellSouth, Bell Atlantic

and Pacific Bell. We also believe that the election requirement

generally is consistent with Sprint's position that the Commission is

not required to terminate currently authorized video dialtone systems,

and addresses its concern that subscribers' service not be disrupted.

None of those companies has argued for, or expressed an interest in,

providing video programming service separate and apart from the

Communication Act's current framework. These parties have all posited

that entities with existing video dialtone authorizations should have

the opportunity to continue offering service under Title II. For

instance, although Pacific Bell disagrees with NCTA's assertion that

existing video dialtone authorizations were not ``grandfathered,'' it

argues that existing video dialtone systems ``should have the

opportunity to continue offering service under Title II'' or some other

permissible framework. Similarly, Bell Atlantic asserts that its video

dialtone system in Dover Township, New Jersey already qualifies as a

common carrier system, and that it will evaluate the appropriate

regulatory framework for its Dover Township system once the

Commission's open video system rules are in place. We expressly do not

reach the merits of Bell Atlantic and BellSouth's assertions that some

or all video dialtone systems qualify as common carrier video offerings

under Section 651. As noted above, common carrier transmission is one

of the Section 651 alternatives under which video dialtone operators

may continue to provide service.

12. We do not distinguish between video dialtone trials and

commercial authorizations for purposes of this election. The repeal of

our video dialtone rules requires an election comporting with the

provisions of the amended law. The type of authorization under the

video dialtone structure is not relevant to this requirement.

IV. Paperwork Reduction Act of 1995 Analysis

13. This First Order on Reconsideration contains a new information

collection under the Paperwork Reduction Act of 1995 (the ``1995

Act''). The Commission has requested approval of this collection by the

Office of Management and Budget (``OMB''), under the emergency

processing provisions of the 1995 Act. Approval is requested to be

effective September 4, 1996. The Commission, as part of its continuing

effort to reduce paperwork burdens, invites the general public and OMB

to comment on the information collection contained in this First Order

on Reconsideration as required by the 1995 Act. Public and agency

comments on the information collection are due on or before August 30,

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. OMB

notification of action is requested September 4, 1996.

14. A copy of any comments on the information collection 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].

V. Ordering Clauses

15. Accordingly, it is Ordered that NCTA's Petition for

Reconsideration in CS Docket No. 96-46 is granted in part and denied in

part, as provided herein.

16. It is further ordered that pursuant to Sections 4(i), 4(j),

651, and 653 of the Communications Act of 1934, as amended, 47 U.S.C.

Secs. 154(i), 154(j), 571, and 573, and Section 302(b)(3) of the

Telecommunications Act of 1996, the requirements and policies discussed

in this First Order on Reconsideration are adopted.

Federal Communications Commission.

William F. Caton,

Acting Secretary.

Regulatory Flexibility Analysis

The Federal Communications Commission certifies that the Regulatory

Flexibility Act is not applicable to the requirements we adopt in this

First Order on Reconsideration. There will not be a significant

economic impact on a substantial number of small business entities, as

defined by Section 601(3) of the Regulatory Flexibility Act. Entities

directly subject to the requirements herein are large corporations

engaged in the provision of video programming services, and therefore

are not ``small entities'' as defined by the Small Business Act. We are

nevertheless committed to reducing the regulatory burdens on small

communications services companies whenever possible, consistent with

our other public interest responsibilities. The Secretary shall send a

copy of this First Order on Reconsideration to the Chief Counsel for

Advocacy of the Small Business Administration in accordance with

Sections 603(a) and 605(b) of the Regulatory Flexibility Act, 5 U.S.C.

Secs. 601, et seq. (1981).

Federal Communications Commission.

[FR Doc. 96-19428 Filed 8-2-96; 8:45 am]

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