Open Video Systems

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Chapter I

[CS Docket No. 96-46; FCC 96-99]

Open Video Systems

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: The Notice of Proposed Rulemaking (``NPRM'') requests comment

on issues concerning the implementation of the open video system

provisions of the Telecommunications Act of 1996. The NPRM will assist

the Commission in devising regulations in this area. The NPRM will

provide interested parties an opportunity to submit comments that will

provide the Commission with a sufficient record on which to base

ultimate regulations.

DATES: Interested parties may file comments on or before April 1, 1996

and reply comments on or before April 11, 1996. Written comments by the

public on the proposed and/or modified information collections are due

on or before April 1, 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 May 13, 1996.

ADDRESSES: Comments and reply comments should be sent to Office of the

Secretary, Federal Communications Commission, 1919 M Street, N.W., Room

222, Washington, D.C. 20554, with a copy to Larry Walke of the Cables

Services Bureau, 2033 M Street, N.W., Room 408A, Washington, D.C.

20554. Parties should also file one copy of any documents filed in this

docket with the Commission's copy contractor, International

Transcription Services, Inc., 2100 M Street, N.W., Suite 140,

Washington, D.C. 20037. Comments and reply comments will be available

for public inspection during regular business hours in the FCC

Reference Center, 1919 M Street, N.W., Room 239, Washington, D.C.

20554.

In addition to filing comments with the Secretary, 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. 20054, 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 or Larry Walke, Cable

Services Bureau, (202) 416-0800. 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 NPRM

in CS Docket No. 96-46, FCC No. 96-99, adopted March 11, 1996 and

released March 11, 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.

Paperwork, Reduction Act

This NPRM contains proposed or modified information collections

subject to the Paperwork Reduction Act of 1995 (PRA). It has been

submitted to the OMB for review under Section 3507(d) of the PRA. OMB,

the general public, and other Federal agencies are invited to comment

on the proposed or modified information collections contained in this

proceeding.

OMB Approval Number: None.

Title: Open Video System Operator Notification of Video Programming

Providers.

Type of Review: New Third Party Disclosure.

Respondents: 20. This number is our preliminary estimation of open

video system operators that may exist in the next year.

Number of Responses: 40. We anticipate that each open video system

operator may make two notifications, annually.

Estimated Time Per Response: 8 hours per response.

Total Annual Burden: 320 hours. This is the estimated total annual

burden though this burden will be determined by comments received.

Estimated costs per Respondent: At this stage in the rulemaking

process, it is too preliminary to determine the specific requirements

for the notifications to be made by open video system operators. This

will be determined by comments received. It is possible that

notifications may be required to be made in newspapers or trade

journals. Should this be required, the Commission estimates publication

costs of $1000 per notification. Estimated annual costs per respondent

are therefore $2000 (2 notifications @ $1000 each).

Needs and Uses: This notification will inform video programming

providers that the open video system operator intends to establish an

open video system. This will permit video programming providers to

assess their interest in seeking carriage on such systems.

I. Notice of Proposed Rulemaking

The 1996 Act repeals the Commission's ``video dialtone'' rules and

regulations, which were established to permit telephone companies to

participate in the video marketplace in a manner that was consistent

with the telephone-cable cross-ownership ban. The 1996 Act also repeals

the telephone-cable cross ownership rules imposed by the 1984 Cable

Act, which prohibited telephone companies from providing video

programming directly to subscribers in their telephone service

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area. The general regulatory treatment for video programming services

provided by telephone companies is now set forth in Section 302 of the

1996 Act, which establishes new Sections 651-653 of Title VI of the

Communications Act of 1934 (``Communications Act'').

2. The 1996 Act has adopted a different regulatory approach, and

establishes various options for telephone companies to enter video

programming markets, one of which is providing cable service over an

``open video system'' under new Section 653 of the Communications Act.

Open video systems will be a new service offered by telephone companies

that will contain certain elements of both traditional cable service

and common carriage. In this NPRM, we seek comment on how the

Commission should implement the open video system provisions of the

1996 Act in a way that will promote Congress' goals of flexible market

entry, enhanced competition, streamlined regulation, diversity of

programming choices, investment in infrastructure and technology, and

increased consumer choice. In setting forth questions in the NPRM, we

do not mean to imply that we will find it necessary to adopt rules

addressing each of the issues raised. Rather, these questions are

designed to develop a record that will enable us to determine what

rules, if any, the Commission should adopt.

3. Generally, Section 653 provides that, if a telephone company

certifies that it complies with certain non-discrimination and other

requirements established by the Commission, it's open video system will

not be subject to regulation under Title II and will be entitled to

reduced regulation under Title VI. The 1996 Act provides that the

Commission must act upon a certification request within ten days of

receipt. The 1996 Act also states that the Commission has the authority

to resolve disputes regarding open video systems, but must do so within

180 days. The 1996 Act states that certain Title VI provisions shall

not apply to open video systems, including, leased access obligations,

franchise requirements and fees, cable rate regulation, and consumer

protection and customer service rules.

4. This NPRM solicits comment on a number of relevant issues.

First, new subsection 653(b)(1) of the Communications Act requires the

Commission to prescribe regulations that (1) prohibit an open video

system operator from discriminating among video programming providers

with regard to carriage on the system, and (2) if demand exceeds

capacity, prohibit the system operator and its affiliates from

selecting the programming on more than one-third of the system's

capacity. In order to implement Congress' directive, the NPRM seeks

comment on the best method of implementing this provision. We seek

comment on various issues related to implementing these provisions,

including: (1) permitting open video system operators to allocate

capacity on their system; (2) how much flexibility should be afforded

to system operators in complying with these provisions; (3) a system

operator's notifying video providers of its intent to establish an open

video system; (4) an operator's discretion regarding programming: (5)

how to measure capacity; (6) issues related to the distinction between

analog and digital channels; (7) allocating capacity where demand for

carriage exceeds capacity of the system; and (8) allocating capacity

where the level of demand changes after the initial allocation of

capacity.

5. Second, new subsection 653(b)(1)(A) also requires the Commission

to prescribe rules that will ensure that rates, terms, and conditions

for the carriage of video programming on an open video system meet the

conditions described above. In order to implement this directive, the

NPRM solicits comment on methods for the Commission's enforcement of

rules implementing this statutory provision, including whether the

rates determined under market forces will comport with this statutory

provision. We also seek comment on whether the Commission, if it were

to adopt rules in this area, should permit some measure of

discrimination consistent with the Act.

6. Third, new subsection 653(b)(1)(C) of the Communications Act

requires the Commission to prescribe regulations that permit an open

video system operator ``to carry on only one channel any video

programming service that is offered by more than one video programming

provider, provided that subscribers have ready and immediate access to

any such video programming service.'' In order to carry out this

Congressional mandate, we first tentatively conclude that the open

video system operator may administer channel sharing arrangements

consistent with the Act. In addition, the NPRM solicits comment on

issues relating to this provision, including: (1) the system operator's

designation of another entity to administer channel sharing; (2)

whether the Commission should prescribe any terms and conditions under

which channels may be shared; (3) any technical differences exist

between shared and non-shared channels that may permit system operators

to discriminate among video providers in designating certain channels

as shared; and (4) how to ensure that subscribers have ``ready and

immediate access'' to the shared channels.

7. Fourth, the 1996 Act directs the Commission to prescribe

regulations that extend our regulations concerning sports exclusivity,

network non-duplication, and syndicated exclusivity to the distribution

of video programming over open video systems. In order to implement

Congress' directives, we seek comment on our tentative conclusion that

these existing cable policies and procedures should be extended to open

video systems, and any related issues.

8. Fifth, the 1996 Act directs the Commission to prescribe

regulations that prohibit an open video system operator from

unreasonably discriminating in favor of the operator or its affiliates

with regard to material provided to subscribers for the purposes of

selecting programming on the system, or in the way such material is

presented to subscribers.

In addition, the Commission must require an open video system

operator to ensure that video programming providers or copyright

holders are able to identify their programming services to subscribers.

Finally, the 1996 Act directs that the Commission prescribe regulations

that prohibit an open video system operator from ``omitting television

broadcast or other unaffiliated video programming services carried on

such system from any navigational device, guide or menu.'' In order to

implement Congress' directives, we seek comment on how to implement the

various provisions of this subsection, including: (1) the meaning of

the term ``material or information;'' (2) the meaning of the term

``selecting programming;'' (3) whether the prohibition against omitting

broadcast stations and unaffiliated programmers from any ``navigational

device, guide or menu'' applies to programmers that are not part of the

subscriber's package; and (4) what would constitute proper

identification of programming services.

9. Sixth, the 1996 Act provides that any provision that applies to

cable operators under our PEG access, must-carry and retransmission

consent rules shall apply ``to any [certified] operator of an open

video system.'' It also provides that the Commission shall, to the

extent possible, impose obligations that are no greater or lesser than

the obligations imposed on cable operators. In order to carry out this

Congressional mandate, we solicit comment on issues relating to this

provision, including: (1)

[[Page 10498]]

how PEG obligations should be established given that the 1996 Act does

not require a video system operator to obtain a local franchise; (2)

the treatment of situations where an open video system overlaps several

cable franchise jurisdictions; (3) the general effect of technological

and administrative differences between open video systems and cable

television systems on implementing these provisions. With respect to

program access, the 1996 Act provides that these rules shall apply to

any operator of an open video system. In order to carry out this

Congressional mandate, the Commission should solicit comment on issues

relating to this provision, including: (1) what entity should be

subject to the rules, and (2) applying the program access provisions'

requirement that ``competing distributors'' be involved. We also seek

comment on applying other rules provisions of Title VI of the

Communications Act to open video systems, pursuant to the 1996 Act,

including those concerning ownership restrictions, regulation of

carriage agreements, negative option billing, subscriber privacy, and

equal employment opportunity.

10. Seventh, the 1996 Act provides generally that a local exchange

carrier may provide cable service to its cable service subscribers in

its telephone service area through an open video system, and that, to

the extent permitted by Commission regulations, consistent with the

public interest, convenience, and necessity, an operator of a cable

system or any other person may provide video programming through an

open video system that complies with this section. In order to

implement Congress' directives, we seek comment on: (1) whether this

language means that cable operators and others may or may not become

open video system operators, or may only provide video programming on

others' open video systems the circumstances under which this language

permits cable operators and others to become open video system

operators or programmers; (2) what public interest factors should be

considered in permitting cable operators to either become open video

system operators or provide video programming on open video systems;

and (3) the treatment of the situation where a local exchange carrier

jointly markets or bundles the offering of regulated telephone service

and open video system video programming.

11. Eighth, the 1996 Act provides that an operator of an open video

system shall qualify for reduced regulatory burdens under subsection

653(c) if the operator certifies to the Commission that it complies

with the Commission's regulations under subsection 653(b) and the

Commission approves such certification. The Commission must act on the

certification within 10 days of receiving the certification. In order

to implement Congress' directives, we seek comment on interpreting this

language, including: (1) the approach we should take in establishing

certification procedures, especially in light of this short statutory

review period; and (2) the type of information that an open video

system operator would be required to submit.

12. Ninth, the 1996 Act states that the Commission shall have the

authority to resolve disputes under this section. The Commission must

resolve any such dispute within 180 days, and may, in the case of a

violation, require carriage, award damages, or both. In order to

implement Congress' directives, we seek comment on: (1) whether the

Commission should establish a dispute resolution procedure, such as the

one employed to resolve program access disputes; and (2) in the

alternative, establish more informal procedures which would require or

encourage parties to first try to resolve the dispute without the

Commission's direct involvement.

II. Initial Regulatory Flexibility Analysis

13. Pursuant to the Regulatory Flexibility Act of 1980, 5 U.S.C.

601-612, the Commission's Initial Regulatory Flexibility Analysis with

respect to the NPRM is as follows:

14. Reason for action: The Commission is issuing this NPRM to seek

comment on various issues concerning implementation of the open video

system provisions of the 1996 Act.

15. Objectives: To provide an opportunity for public comment and to

provide a record for a Commission decision on the issues discussed in

the NPRM.

16. Legal Basis: The NPRM is adopted pursuant to Section 302 of the

1996 Act; and sections 1, 2, 4(i), 201-205, 215, 220, 303(r), 601-602,

611-616, 621-624, and 625-634 of the Communications Act of 1934, as

amended, 47 U.S.C. 151, 152, 154, 201-205, 215, 220, 303(r), 521-522,

531-536, and 545-554.

17. Description, potential impact, and number of small entities

affected: Amending our rules to, for example, increase the programming

distribution outlets for video programming providers, may directly

impact entities which are small business entities, as defined in

Section 601(3) of the Regulatory Flexibility Act.

18. Reporting, recordkeeping, and other compliance requirements:

None.

19. Federal rules which overlap, duplicate, or conflict with the

Commission's proposal: None.

20. Any significant alternatives minimizing impact on small

entities and consistent with state objectives: The NPRM solicits

comments on implementing the provisions of the 1996 Act concerning

carriage by open video system operators of PEG access channels.

21. Comments are solicited: Written comments are requested on this

Initial Regulatory Flexibility Analysis. These comments must be filed

in accordance with the same filing deadlines set for comments on the

other issues in this NPRM, but they must have a separate and distinct

heading designating them as responses to the Regulatory Flexibility

Analysis. The Secretary shall send a copy of the Notice to the Chief

Counsel for Advocacy of the Small Business Administration in accordance

with Section 603(a) of the Regulatory Flexibility Act, 5 U.S.C. 601, et

seq.

III. Initial Paperwork Reduction Act of 1995 Analysis

22. This NPRM contains either a proposed or modified information

collection. As part of our continuing effort to reduce paperwork

burdens, we invite the general public and the Office of Management and

Budget (``OMB'') to take this opportunity to comment on the information

collections contained in this NPRM, as required by the Paperwork

Reduction Act of 1995, Pub. L. No. 104-13. Public and agency comments

are due at the same time as other comments on the NPRM; OMB comments

are due May 13, 1996. Comments should address: (a) 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; (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.

IV. Procedural Provisions

23. Ex parte Rules--Non-Restricted Proceeding. This is a non-

restricted notice and comment rulemaking proceeding. Ex parte

presentations are permitted, except during the Sunshine Agenda period,

provided that they are disclosed as provided in Commission's

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rules. See generally 47 CFR 1.1202, 1.1203, and 1.1206(a).

24. Pursuant to applicable procedures set forth in Sections 1.415

and 1.419 of the Commission's rules, 47 CFR 1.415, 1.419, interested

parties may file comments on or before April 1, 1996, and reply

comments on or before April 11, 1996. We find these periods for the

filing of comments and reply comments to be reasonable in light of the

1996 Act's mandate that the Commission complete all actions necessary

(including any reconsideration) to prescribe certain regulations

concerning open video systems. See Florida Power & Light Co, v. United

States, 846 F.2d 765 (D.C. Cir. 1988) cert. denied, 490 U.S. 1045

(1989). To file formally in this proceeding, you must file an original

and four copies of all comments, reply comments, and supporting

comments. If you want each Commissioner to receive a personal copy of

your comments, you must file an original and nine copies. Comments and

reply comments should be sent to Office of the Secretary, Federal

Communications Commission, 1919 M Street, N.W., Room 222, Washington,

D.C. 20554, with a copy to Larry Walke of the Cables Services Bureau,

2033 M Street, N.W., Room 408A, Washington, D.C. 20554. Parties should

also file one copy of any documents filed in this docket with the

Commission's copy contractor, International Transcription Services,

Inc., 2100 M Street, N.W., Suite 140, Washington, D.C. 20037. Comments

and reply comments will be available for public inspection during

regular business hours in the FCC Reference Center, 1919 M Street,

N.W., Room 239, Washington, D.C. 20554.

25. Parties are also asked to submit comments and reply comments on

diskette. Such diskette submissions would be in addition to and not a

substitute for the formal filing requirements addressed above. Parties

submitting diskettes should submit them to Larry Walke of the Cable

Services Bureau, 2033 M Street, N.W., Room 408A, Washington, D.C.

20554. Such a submission should be on a 3.5 inch diskette formatted in

an IBM compatible form using MS DOS 5.0 and WordPerfect 5.1 software.

The diskette should be submitted in ``read only'' mode. The diskette

should be clearly labelled with the party's name, proceeding, type of

pleading (comment or reply comments) and date of submission. The

diskette should be accompanied by a cover letter.

V. Ordering Clauses

26. It is ordered that, pursuant to Section 302 of the 1996 Act;

and sections 1, 2, 4(i), 201-205, 215, 220, 303(r), 601-602, 611-616,

621-624, and 625-634 of the Communications Act of 1934, as amended, 47

U.S.C. 151, 152, 154, 201-205, 215, 220, 303(r), 521-522, 531-536, and

545-554, Notice is hereby given of proposed amendments to Part 76, in

accordance with the proposals, discussions, and statement of issues in

this NPRM and that comment is sought regarding such proposals,

discussion, and statements of issues.

27. It is further ordered that, the Secretary shall send a copy of

this NPRM, including the IRFA, to the Chief Counsel for Advocacy of the

Small Business Administration in accordance with paragraph 603(a) of

the Regulatory Flexibility Act, Pub. L. No. 96-354, 94 Stat. 1164, 5

U.S.C. 601 et seq. (1981).

28. For additional information regarding this proceeding, contact

Rick Chessen or Larry Walke, Policy & Rules Division, Cable Services

Bureau (202) 416-0800.

Federal Communications Commission.

William F. Caton,

Acting Secretary.

[FR Doc. 96-6146 Filed 3-11-96; 3:40 pm]

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