Inside Wiring

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 76

[CS Docket No. 95-184; MM Docket No. 92-260; FCC 97-376]

Inside Wiring

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: The Commission has adopted a Report and Order and Second

Further Notice of Proposed Rulemaking which addresses rules and

policies concerning cable inside wiring. The Report and Order segment

of this decision may be found elsewhere in this issue of the Federal

Register. The Second Further Notice of Proposed Rulemaking (``Second

Further Notice'') segment seeks comment on proposed amendments to the

Commission's regulations relating to exclusive service contracts,

application of cable inside wiring rules to all multichannel video

programming distributors (``MVPDs''), signal leakage reporting

requirements, and simultaneous use of home run wiring. This action was

necessary because exclusive service contracts and

[[Page 61066]]

access to home run wiring are significant competitive issues in

multiple dwelling unit buildings (``MDUs''). In addition, this action

was necessary in order to ensure that all MVPDs are treated equitably

under our inside wiring rules. The intended effect of this action is to

expand opportunities for new entrants seeking to compete in

distributing video programming and to ensure that the Commission's

inside wiring rules remain pro-competitive.

DATES: Comments must be submitted on or before December 23, 1997 and

reply comments must be submitted on or before January 22, 1998.

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

Secretary, Federal Communications Commission, 1919 M Street, NW,

Washington, DC 20554. Comments and reply comments will be available for

public inspection during regular business hours in the FCC Reference

Center, Room 239, Federal Communications Commission, 1919 M Street NW,

Washington, DC 20554.

FOR FURTHER INFORMATION CONTACT: Rick Chessen, Cable Services Bureau,

(202) 418-7200.

SUPPLEMENTARY INFORMATION: The following is a synopsis of the Second

Further Notice segment of the Commission's Report and Order and Second

Further Notice of Proposed Rulemaking in CS Docket No. 95-184 and MM

Docket No. 92-260, FCC No. 97-376, adopted October 9, 1997 and released

October 17, 1997. 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, DC 20554,

and may be purchased from the Commission's copy contractor,

International Transcription Services, Inc. (202) 857-3800 (phone),

(202) 857-3805 (fax), 1231 20th Street, NW, Washington, DC 20036.

Synopsis

I. Introduction

1. The Second Further Notice addresses issues raised in the Notice

of Proposed Rulemaking in CS Docket No. 95-184, 61 FR 3657 (February 1,

1996) (``Inside Wiring Notice''), the Order On Reconsideration and

Further Notice of Proposed Rulemaking in MM Docket No. 92-260, 61 FR

6131 (February 16, 1996) and 61 FR 6210 (February 16, 1996) (``Cable

Home Wiring Further Notice''), and the Further Notice of Proposed

Rulemaking in CS Docket No. 95-184 and MM Docket No. 92-260, 62 FR

46453 (September 3, 1997) (``Inside Wiring Further Notice'') regarding

potential changes in our telephone and cable inside wiring rules in

light of the evolving telecommunications marketplace.

II. Second Further Notice of Proposed Rulemaking

A. Exclusive Service Contracts

2. We believe that exclusive service contracts between MDU owners

and MVPDs can be pro-competitive or anti-competitive, depending upon

the circumstances involved. The term ``MDU owner'' (sometime referred

to as the ``premises owner'') as used herein includes whatever entity

owns or controls the common areas of an apartment building, condominium

or cooperative. Some alternative providers have commented that in order

to initiate service in an MDU, they must be able to use exclusive

contracts to ensure their ability to recover investment costs. Other

alternative providers have argued that the Commission should limit the

ability of incumbent cable operators to enter into exclusive contracts

with MDU owners.

3. We seek comment on whether the Commission should adopt a ``cap''

on the length of exclusive contracts for all MVPDs that would limit the

enforceability of exclusive contracts to the amount of time reasonably

necessary for an MVPD to recover its specific capital costs of

providing service to that MDU, including, but not limited to, the

installation of inside wiring, headend equipment and other start-up

costs. Commenters have suggested exclusivity periods such as five to

six years, seven years and seven to ten years as reasonable. We seek

comment on what would be a reasonable period of time for a provider to

recoup its specific investment costs in an MDU. We seek comment on an

approach under which a presumption that all existing and future

exclusivity provisions would be enforceable for a maximum term of seven

years, except for exceptional cases in which the MVPD could demonstrate

that it has not had a reasonable opportunity to recover its specific

investment costs. For instance, the exclusivity of a ``perpetual''

exclusive contract entered into in 1983 would no longer be enforceable;

however, if the service provider completed a substantial rebuild of its

plant in 1996, the provider may be able to show that it has not had a

reasonable opportunity to recover its investment costs notwithstanding

the fact that the exclusive contract was entered into more than seven

years ago. Similarly, a provider may be able to show that it has not

had an opportunity to recover its costs where it provided discounted

service in the early years of an exclusive contract with the

expectation of making its returns in later years. We inquire whether

there should be different treatment accorded existing contracts and

future contracts. We also seek comment on the appropriate forum for

such a showing and whether the enforceability of an exclusivity

provision should be extended only for the time period reasonably

necessary for the provider to recover its costs.

4. If a ``cap'' is adopted, we seek comment on whether service

providers would generally be able to structure their business

arrangements so as to recover their capital costs within that time

limit. After a video service provider has had an opportunity to recover

its costs under an exclusive contract on a particular property, we seek

comment on whether we should prohibit future exclusive contracts

between the video service provider and the property owner, unless the

service provider can demonstrate that the exclusive contract is

necessary to recoup a substantial new investment in the property. We

also inquire whether MDU owners should be afforded an opportunity to

terminate the exclusive contract and retain the inside wiring, in

exchange for a payment to the provider compensating it for unrecovered

investment costs. We seek to determine what circumstances allow MDU

owners and tenants to receive the benefits of technological

improvements most expeditiously, while at the same time enhancing

competition among MVPDs.

5. In the alternative, we seek comment on whether the Commission

should only limit exclusive contracts where the MVPD involved possesses

market power. The Supreme Court has noted: ``Exclusive dealing is an

unreasonable restraint on trade only when a significant fraction of

buyers or sellers are frozen out of a market by the exclusive deal.''

Jefferson Parish Hosp. Dist. No. 2 v. Hyde, 466 U.S. 2, 45 (1984),

citing Standard Oil v. United States, 337 U.S. 293 (1949). We seek

comment on circumstances encompassing the video distribution market and

whether the Commission can and should restrict or prohibit MVPDs with

market power from entering into or enforcing exclusive service

contracts. In particular, we seek comment on how to define ``market

power'' for these purposes, as well as how to define the relevant

geographic market.

6. We are concerned about the administrative practicability of

making market power determinations on a widespread, case-by-case basis

and seek comment on whether we should establish any presumptions in

this

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regard. We seek comment on whether our decision not to preempt state

mandatory access statutes effectively means that non-cable MVPDs cannot

enforce exclusive agreements in those states, even where such

agreements may be pro-competitive. We also seek comment on any other

issues relevant to the analysis of market power and exclusive contracts

in the context of this proceeding.

7. In addition, we seek comment on whether the Commission can and

should take any specific actions regarding so-called ``perpetual''

exclusive contracts (i.e., those running for the term of a cable

franchise and any extensions thereof). For instance, under the market

power approach, we seek comment on whether the Commission should adopt

a presumption that the MVPDs involved possessed market power when such

contracts were executed. Under the seven-year ``cap'' approach, we seek

comment on whether ``perpetual'' exclusive contracts would simply fall

within the general rule limiting the enforceability of exclusive

contracts to seven years from execution unless the MVPD can demonstrate

that it has not had a reasonable opportunity to recover its specific

capital costs.

8. Under one proposal, property owners that have committed to long-

term perpetual exclusive contracts would have a window of 180 days to

take a ``fresh look'' at the marketplace to renegotiate or terminate

those contracts without liability in order to avail themselves of a

competitive alternative service provider. We seek comment on whether we

can and should adopt a ``fresh look'' for ``perpetual'' exclusive

contracts. In addition, we seek comment on several implementation

issues: (1) whether the ``fresh look'' would apply only to

``perpetual'' exclusive contracts and, if so, how such contracts

reasonably can be distinguished from other long-term exclusive

contracts; (2) the scope of the ``fresh look'' and how the ``fresh

look'' period would be triggered to ensure a viable choice exists

(e.g., whether the ``fresh look'' be applied on an MDU-by-MDU basis

upon the request of a private cable operator able to serve the MDU, or

more generally on a franchise-by-franchise basis where competitive

choices exist in the franchise area); and (3) whether the ``fresh

look'' would be a one-time opportunity or whether there could be

additional ``fresh look'' windows in light of the development of new

technology and the entry of new video service providers.

9. If we were to adopt a ``fresh look'' for ``perpetual'' exclusive

contracts, we seek comment on whether we should open a 180-day ``fresh

look'' window for MDU owners upon the effective date of our rules,

unless the ``perpetual'' exclusive contract was entered into less than

seven years earlier, in which case the ``fresh look'' window would open

for that MDU at the end of the seven-year period. We also seek comment

on whether the MVPD should be able to apply to the Commission for an

extension if the MVPD can demonstrate that it has not had a reasonable

opportunity to recover its specific capital costs by the end of this

seven-year period. Further, we seek comment on whether, if an MDU owner

does not enter into a new contract during its initial ``fresh look''

period, a new 180-day ``fresh look'' window should open at the

expiration of each subsequent franchise period until the MDU owner opts

out of its ``perpetual'' exclusive contract. We seek comment on whether

this framework would protect MDU owners who do not have a competitive

alternative and therefore would be prejudiced by a one-time ``fresh

look'' window, while ensuring that the MVPDs involved have a reasonable

opportunity to recover their costs.

10. We also seek comment on our statutory authority to adopt the

exclusive contracts proposals discussed above. We also seek comment on

any other constitutional, statutory or common law implications that

these proposals raise.

B. Application of Cable Inside Wiring Rules to All MVPDs

11. We propose to apply our cable home wiring rules for single-unit

installations to all MVPDs in the same manner that they apply to cable

operators. We believe that applying those rules to all MVPDs would

promote competitive parity and facilitate the ability of a subscriber

whose premises was initially wired by a non-cable MVPD to change

providers. We seek comment on this proposal and on our authority to

adopt it.

12. We also propose to expand to all MVPDs the rule we are adopting

herein regarding cable subscribers' rights, prior to termination of

service, to provide and install their own cable home wiring and to

connect additional home wiring to the wiring installed and owned by the

cable operator. We believe that applying this rule to all MVPDs will

promote the same consumer benefits as in the cable context: increased

competition and consumer choice, lower prices and greater technical

innovation. We seek comment on this proposal, and in particular on the

Commission's authority for expanding this rule to all MVPDs.

C. Signal Leakage Reporting Requirements

13. Section 76.615 of the Commission's signal leakage rules

requires cable operators to file certain information with the

Commission when operating in the aeronautical radio frequency bands. 47

CFR 76.615. In particular, Sec. 76.615(b)(7) requires cable operators

to file annually with the Commission the results of their signal

leakage tests conducted pursuant to Sec. 76.611. 47 CFR 76.611 and

76.615(b)(7). We are concerned that the reporting requirements of

Sec. 76.615(b)(7) may impose undue burdens on small broadband service

providers, including small cable operators. We seek comment on whether

certain categories of broadband service providers should be exempt from

the filing requirements of Sec. 76.615(b)(7) and, if so, what criteria

the Commission should use in defining those providers. We would not

propose to exempt any broadband service providers from the testing

requirements of Sec. 76.615(b)(7), but simply the requirement to report

the results of such tests to the Commission. For instance, we seek

comment on whether we should exempt small broadband service providers

from the filing requirements of Sec. 76.615(b)(7) based on an existing

definition in the Commission's rules, a particular number of

subscribers served, the length of the cable plant or some other

criteria. For example, we have defined a small cable system as any

system that serves 15,000 or fewer subscribers and a small cable

company as one serving a total of 400,000 or fewer subscribers over all

of its systems. Sixth Report and Order and Eleventh Order on

Reconsideration, MM Docket Nos. 92-266 and 93-215 (Implementation of

Sections of the Cable Television Consumer Protection and Competition

Act of 1992: Rate Regulation), 60 FR 35854 (July 12, 1995). We seek

comment on the risks to safety of life communications posed by such an

exemption. We also seek comment on any other changes in this area that

would reduce burdens, yet meet the goals of protecting against signal

leakage.

D. Simultaneous Use of Home Run Wiring

14. As stated above, DIRECTV suggests that the Commission should

establish a ``virtual'' demarcation point from which an alternative

provider could share the wiring simultaneously with the cable operator.

Other alternative providers endorse this view, if it is technically

possible, and CEMA states that some of its members are

[[Page 61068]]

currently developing equipment that will allow multiple uses of a

single broadband wire. Cable operators generally oppose DIRECTV's

suggestion that two video service providers may share a single wire,

stating that the alternative provider would have to use different

frequency bands to avoid interference, and, while theoretically

possible, most systems do not have sufficient bandwidth capacity to

carry multiple MVPDs. DIRECTV acknowledges that only service providers

that use different parts of the spectrum technically may be able to

share a single wire.

15. We believe that the sharing of a single wire by multiple

service providers deserves further exploration. We seek comment on

DIRECTV's proposal that we require competing broadband service

providers to share a single home run wire in MDUs. In particular, we

seek comment on the current technical, practical and economic

feasibility and limitations of sharing of home run wiring. We also seek

comment on our legal authority to impose such a requirement and whether

such a requirement would constitute an impermissible taking of private

property under the Fifth Amendment.

III. Initial Regulatory Flexibility Act Analysis

16. As required by section 603 of the Regulatory Flexibility Act, 5

U.S.C. 603, (``RFA''), the Commission has prepared an Initial

Regulatory Flexibility Analysis (``IRFA'') of the expected significant

impact on small entities by the policies and rules proposed in this

Second Further Notice. Written public comments are requested on the

IRFA. These comments must be filed in accordance with the same filing

procedures as other comments in this proceeding, but they must be have

a separate and distinct heading designating them as responses to the

IRFA. The Secretary shall send a copy of this Second Further Notice,

including the IRFA, to the Chief Counsel for Advocacy of the Small

Business Administration in accordance with section 603(a) of the RFA.

In addition, the Second Further Notice and IRFA (or summaries thereof)

will be published in the Federal Register, pursuant to 5 U.S.C. 603(a).

Need for Action and Objectives of the Proposed Rules

17. The Commission issues this Second Further Notice to consider

additional rules to promote competition and enhance consumer choice. In

particular, we seek comment on the competitive implications of

exclusive service contracts between MDU owners and MVPDs, and whether

we should: (1) limit exclusive contracts to a time certain; (2) adopt

restrictions on the ability of MVPDs to enter into exclusive contracts;

or (3) adopt a ``fresh look'' for ``perpetual'' exclusive contracts. In

addition, we propose to expand to all MVPDs the rule regarding cable

subscribers' rights, prior to termination of service, to provide and

install their own cable home wiring and to connect additional home

wiring to the wiring installed and owned by the MVPD. We also ask

whether certain categories of broadband service providers (e.g., small

broadband service providers, including small cable operators) should be

exempt from the signal leakage reporting requirements in

Sec. 76.615(b)(7). Finally, we seek comment on the current technical,

practical, economic, and legal limitations of requiring competing

broadband service providers to share a single home run wire in MDUs.

Legal Basis

18. This Second Further Notice is adopted pursuant to sections 1,

4, 224, 251, 303, 601, 623, 624, and 632 of the Communications Act of

1934, as amended, 47 U.S.C. Secs. 151, 154, 224, 251, 303, 521, 543,

544, and 552.

Description and Estimate of the Number of Small Entities Impacted

19. The RFA directs the Commission to provide a description of and,

where feasible, an estimate of the number of small entities that will

be affected by the proposed rules. The RFA defines the term ``small

entity'' as having the same meaning as the terms ``small business,''

``small organization,'' and ``small governmental jurisdiction,'' and

the same meaning as the term ``small business concern'' under section 3

of the Small Business Act. Under the Small Business Act, a ``small

business concern'' is one that: (1) is independently owned and

operated; (2) is not dominant in its field of operation; and (3)

satisfies any additional criteria established by the Small Business

Administration (``SBA''). The rules we propose in this Second Further

Notice will affect MVPDs and MDU owners.

20. Small MVPDs: SBA has developed a definition of a small entity

for cable and other pay television services, which includes all such

companies generating $11 million or less in annual receipts. This

definition includes cable system operators, closed circuit television

services, direct broadcast satellite services, multipoint distribution

systems, satellite master antenna systems and subscription television

services. According to the Bureau of the Census, there were 1423 such

cable and other pay television services generating less than $11

million in revenue that were in operation for at least one year at the

end of 1992. We will address each service individually to provide a

more succinct estimate of small entities.

21. Cable Systems: The Commission has developed its own definition

of a small cable company for the purposes of rate regulation. Under the

Commission's rules, a ``small cable company,'' is one serving fewer

than 400,000 subscribers nationwide. 47 CFR 76.901(e). Based on our

most recent information, we estimate that there were 1439 cable

operators that qualified as small cable companies at the end of 1995.

Since then, some of those companies may have grown to serve over

400,000 subscribers, and others may have been involved in transactions

that caused them to be combined with other cable operators.

Consequently, we estimate that there are fewer than 1439 small entity

cable system operators that may be affected by the decisions and rules

proposed in this Second Further Notice.

22. The Communications Act also contains a definition of a small

cable system operator, which is ``a cable operator that, directly or

through an affiliate, serves in the aggregate fewer than 1% of all

subscribers in the United States and is not affiliated with any entity

or entities whose gross annual revenues in the aggregate exceed

$250,000,000.'' The Commission has determined that there are 61,700,000

subscribers in the United States. Therefore, we found that an operator

serving fewer than 617,000 subscribers shall be deemed a small

operator, if its annual revenues, when combined with the total annual

revenues of all of its affiliates, do not exceed $250 million in the

aggregate. Based on available data, we find that the number of cable

operators serving 617,000 subscribers or less totals 1450. Although it

seems certain that some of these cable system operators are affiliated

with entities whose gross annual revenues exceed $250,000,000, we are

unable at this time to estimate with greater precision the number of

cable system operators that would qualify as small cable operators

under the definition in the Communications Act.

23. MMDS: The Commission refined the definition of ``small entity''

for the auction of MMDS as an entity that together with its affiliates

has average gross annual revenues that are not more than $40 million

for the preceding three calendar years. This definition of a small

entity in the context of the Commission's Report and Order

[[Page 61069]]

concerning MMDS auctions has been approved by the SBA.

24. The Commission completed its MMDS auction in March 1996 for

authorizations in 493 basic trading areas (``BTAs''). Of 67 winning

bidders, 61 qualified as small entities. Five bidders indicated that

they were minority-owned and four winners indicated that they were

women-owned businesses. MMDS is an especially competitive service, with

approximately 1573 previously authorized and proposed MMDS facilities.

Information available to us indicates that no MMDS facility generates

revenue in excess of $11 million annually. We believe that there are

approximately 1634 small MMDS providers as defined by the SBA and the

Commission's auction rules.

25. ITFS: There are presently 1,989 licensed educational ITFS

stations and 97 licensed commercial ITFS stations. Educational

institutions are included in the definition of a small business.

However, we do not collect annual revenue data for ITFS licensees and

are unable to ascertain how many of the 97 commercial stations would be

categorized as small under the SBA definition. Thus, we believe that at

least 1,989 ITFS licensees are small businesses.

26. DBS: There are presently nine DBS licensees, some of which are

not currently in operation. The Commission does not collect annual

revenue data for DBS and, therefore, is unable to ascertain the number

of small DBS licensees that could be impacted by these proposed rules.

Although DBS service requires a great investment of capital for

operation, we acknowledge that there are several new entrants in this

field that may not yet have generated $11 million in annual receipts,

and therefore may be categorized as a small business, if independently

owned and operated.

27. HSD: The market for HSD service is difficult to quantify.

Indeed, the service itself bears little resemblance to other MVPDs. HSD

owners have access to more than 265 channels of programming placed on

C-band satellites by programmers for receipt and distribution by video

service providers, of which 115 channels are scrambled and

approximately 150 are unscrambled. HSD owners can watch unscrambled

channels without paying a subscription fee. To receive scrambled

channels, however, an HSD owner must purchase an integrated receiver-

decoder from an equipment dealer and pay a subscription fee to an HSD

programming packager. Thus, HSD users include: (1) viewers who

subscribe to a packaged programming service, which affords them access

to most of the same programming provided to subscribers of other video

service providers; (2) viewers who receive only non-subscription

programming; and (3) viewers who receive satellite programming services

illegally without subscribing. Because scrambled packages of

programming are most specifically intended for retail consumers, these

are the services most relevant to this discussion.

28. According to the most recently available information, there are

approximately 30 program packagers nationwide offering packages of

scrambled programming to retail consumers. These program packagers

provide subscriptions to approximately 2,314,900 subscribers

nationwide. This is an average of about 77,163 subscribers per program

packager. This is substantially smaller than the 400,000 subscribers

used in the Commission's definition of a small MSO. Furthermore,

because this an average, it is likely that some program packagers may

be substantially smaller.

29. OVS: The Commission has certified nine OVS operators. Because

these services were introduced so recently and only one operator is

currently offering programming to our knowledge, little financial

information is available. Bell Atlantic (certified for operation in

Dover) and Metropolitan Fiber Systems (``MFS,'' certified for operation

in Boston and New York) have sufficient revenues to assure us that they

do not qualify as small business entities. Two other operators,

Residential Communications Network (``RCN,'' certified for operation in

New York) and RCN/BETG (certified for operation in Boston), are MFS

affiliates and thus also fail to qualify as small business concerns.

However, Digital Broadcasting Open Video Systems (a general partnership

certified for operation in southern California), Urban Communications

Transport Corp. (a corporation certified for operation in New York and

Westchester), and Microwave Satellite Technologies, Inc. (a corporation

owned solely by Frank T. Matarazzo and certified for operation in New

York) are either just beginning or have not yet started operations.

Accordingly, we believe that three OVS licensees may qualify as small

business concerns.

30. SMATVs: Industry sources estimate that approximately 5200 SMATV

operators were providing service as of December 1995. Other estimates

indicate that SMATV operators serve approximately 1.05 million

residential subscribers as of September 1996. The ten largest SMATV

operators together pass 815,740 units. If we assume that these SMATV

operators serve 50% of the units passed, the ten largest SMATV

operators serve approximately 40% of the total number of SMATV

subscribers. Because these operators are not rate regulated, they are

not required to file financial data with the Commission. Furthermore,

we are not aware of any privately published financial information

regarding these operators. Based on the estimated number of operators

and the estimated number of units served by the largest ten SMATVs, we

believe that a substantial number of SMATV operators qualify as small

entities.

31. LMDS: Unlike the above pay television services, LMDS technology

and spectrum allocation will allow licensees to provide wireless

telephony, data, and/or video services. An LMDS provider is not limited

in the number of potential applications that will be available for this

service. Therefore, the definition of a small LMDS entity may be

applicable to both cable and other pay television (SIC 4841) and/or

radiotelephone communications companies (SIC 4812). The SBA definition

for cable and other pay services is defined above. A small

radiotelephone entity is one with 1500 employees or less. For the

purposes of this proceeding, we include only an estimate of LMDS video

service providers. The vast majority of LMDS entities providing video

distribution could be small businesses under the SBA's definition of

cable and pay television (SIC 4841). However, in the LMDS Second Report

and Order, we defined a small LMDS provider as an entity that, together

with affiliates and attributable investors, has average gross revenues

for the three preceding calendar years of less than $40 million. We

have not yet received approval by the SBA for this definition.

32. There is only one company, CellularVision, that is currently

providing LMDS video services. Although the Commission does not collect

data on annual receipts, we assume that CellularVision is a small

business under both the SBA definition and our proposed auction rules.

We tentatively conclude that a majority of the potential LMDS licensees

will be small entities, as that term is defined by the SBA.

33. MDU Operators: The SBA has developed definitions of small

entities for operators of nonresidential buildings, apartment buildings

and dwellings other than apartment buildings, which include all such

companies generating $5 million or less in revenue annually. According

to the

[[Page 61070]]

Census Bureau, there were 26,960 operators of nonresidential buildings

generating less than $5 million in revenue that were in operation for

at least one year at the end of 1992. Also according to the Census

Bureau, there were 39,903 operators of apartment dwellings generating

less than $5 million in revenue that were in operation for at least one

year at the end of 1992. The Census Bureau provides no separate data

regarding operators of dwellings other than apartment buildings, and we

are unable at this time to estimate the number of such operators that

would qualify as small entities.

Reporting, Recordkeeping, and Other Compliance Requirements

34. The Second Further Notice seeks comment on whether small

broadband service providers, including small cable operators, should be

exempt from the signal leakage reporting requirements in

Sec. 76.615(b)(7). Such an exemption would relieve qualifying providers

from only the relevant filing requirements, but not from the signal

leakage testing requirements.

Significant Alternatives and Steps Taken to Minimize the Significant

Economic Impact on a Substantial Number of Small Entities Consistent

With the Stated Objectives

This section analyzes the impact on small entities of the

regulations proposed or considered in the Second Further Notice.

35. The Second Further Notice seeks comment on several proposals

which could minimize the economic impact on a substantial number of

small entities. For instance, in seeking comment on what policies

should be adopted with respect to exclusive contracts, the Commission

raises the option of a limit on the length of exclusive contracts that

would still permit a small MVPD to obtain exclusive contracts for the

period of time necessary to recover its investment costs in the MDU

building. In addition, the Commission seeks comment on whether small

broadband service providers, including small cable operators, should be

exempt from the signal leakage reporting requirements in

Sec. 76.615(b)(7). The issue of whether competing providers should be

required to share home run wiring explores the possibility of another

means by which small MVPDs may be able to access MDUs. Commenters are

invited to address the economic impact of these proposals on small

entities and offer any alternatives.

Federal Rules That May Duplicate, Overlap, or Conflict With the

Proposed Rules

None.

IV. Procedural Provisions

36. Ex parte Rules--``Permit-but-Disclose'' Proceeding. This

proceeding will be treated as a ``permit-but-disclose'' proceeding

subject to the ``permit-but-disclose'' requirements under

Sec. 1.1206(b) of the rules. 47 CFR 1.1206(b), as revised. Ex parte

presentations are permissible if disclosed in accordance with

Commission rules, except during the Sunshine Agenda period when

presentations, ex parte or otherwise, are generally prohibited. Persons

making oral ex parte presentations are reminded that a memorandum

summarizing a presentation must contain a summary of the substance of

the presentation and not merely a listing of the subjects discussed.

More than a one or two sentence description of the views and arguments

presented is generally required. See 47 CFR 1.1206(b)(2), as revised.

Additional rules pertaining to oral and written presentations are set

forth in Sec. 1.1206(b). 47 CFR 1.1206(b).

37. Filing of Comments and Reply Comments. Pursuant to applicable

procedures set forth in Secs. 1.415 and 1.419 of the Commission's

Rules, interested parties may file comments on or before December 23,

1997, and reply comments on or before January 22, 1998. 47 CFR 1.415

and 1.419. To file formally in this proceeding, you must file an

original plus four copies of all comments, reply comments, and

supporting comments. If you want each Commissioner to receive a

personal copy of your comments and reply comments, you must file an

original plus nine copies. You should send comments and reply comments

to Office of the Secretary, Federal Communications Commission, 1919 M

Street, NW, Washington, DC 20554. Comments and reply comments will be

available for public inspection during regular business hours in the

FCC Reference Center, Room 239, Federal Communications Commission, 1919

M Street NW, Washington DC 20554.

V. Ordering Clauses

38. It is ordered that, pursuant to sections 1, 4(i), 201-205, 214-

215, 220, 303, 623, 624 and 632 of the Communications Act of 1934, as

amended, 47 U.S.C. Secs. 151, 154(i), 201-205, 214-215, 220, 303, 543,

544 and 552, NOTICE IS HEREBY GIVEN of proposed amendments to the

Commission's rules, in accordance with the proposals, discussions and

statements of issues in the Second Further Notice of Proposed

Rulemaking, and COMMENT IS SOUGHT regarding such proposals, discussions

and statements of issues.

39. It is further ordered that the Commission SHALL SEND a copy of

this Second Further Notice of Proposed Rulemaking, including the

Initial Regulatory Flexibility Analysis, to the Chief Counsel for

Advocacy of the Small Business Administration.

Federal Communications Commission.

William F. Caton,

Acting Secretary.

[FR Doc. 97-29513 Filed 11-13-97; 8:45 am]

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