1998 Biennial Regulatory Review

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 76

[CS Docket No. 98-54; FCC 98-68]

1998 Biennial Regulatory Review

AGENCY: Federal Communications Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: In the Notice of Proposed Rulemaking (``NPRM``), the

Commission seeks comment or ways to simplify and make more uniform the

Cable Television Service pleading and complaint process rules. This

proceeding is initiated in conjunction with the Commission's 1998

biennial regulatory review. The intended effect of this proceeding is

to reduce the regulatory burden on franchising authorities, cable

operators, and other interested persons making filings under the rules.

DATES: Comments are due on or before June 22, 1998. Reply comments are

due on or before July 7, 1998. Public Information requirements are due

June 30, 1998.

ADDRESSES: Federal Communications Commission, 1919 M Street, NW., Room

222, Washington, D.C. 20554.

FOR FURTHER INFORMATION CONTACT: Thomas Horan, Consumer Protection and

Competition Division, Cable Services Bureau, at (202) 418-7200.

SUPPLEMENTARY INFORMATION: This is a synopsis of the Notice of Proposed

Rulemaking in CS Docket No. 98-54, FCC 98-68 which was adopted on April

13, 1998 and released on April 22, 1998. A copy of the complete item 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. The complete text may be purchased from the Commission's

copy contractor, International Transcription Service, Inc., 1231 20th

Street, NW., Washington, D.C. 20036, (202) 857-3800. The complete

Notice of Proposed Rulemaking also is available on the Commission's

Internet home page (http://www.fcc.gov).

Summary of Action:

I. Background

1. On April 13, 1998, the Federal Communications Commission

(``Commission'') adopted a Notice of Proposed Rulemaking which sought

comment or ways to simplify and make more uniform the Cable Television

Service pleading and complaint process rules, 47 CFR 76. The NPRM is

summarized below.

A. Introduction

2. Under the Commission's current part 76 rules, the procedures for

initiating Commission action on a cable television service issue vary

depending on the rules upon which the pleading or complaint is based.

Although there are practical and legal reasons for the different

pleading procedures, there may be some common elements to every

pleading or complaint that could be made uniform across the broad

spectrum of issues raised under part 76. The Commission thus seeks

comment on whether we can or should institute some uniform pleading

process and, if so, what form it should take.

B. Discussion

3. The Commission is initiating this proceeding in conjunction with

the Commission's 1998 biennial regulatory review pursuant to section 11

of the 1996 Telecommunications Act, 47 U.S.C. 161. Pursuant to section

11, Congress instructed the Commission to conduct a biennial review of

regulations that apply to operations and activities of any provider of

telecommunications service and to repeal or modify any regulation it

determines to be no longer in the public interest. Although section 11

does not specifically refer to cable operators, the Commission has

determined that the first biennial review presents an opportunity for a

thorough examination of all of the Commission's regulations. The

Commission believes that, where possible, simplification of the

complaint processes for part 76 rules by instituting a uniform system

would likely serve the public interest by lessening confusion and

reducing the regulatory burden on franchising authorities, cable

operators, and other interested persons making filings under the part

76 rules.

4. At least thirteen different types of petitions or complaints

could be filed to initiate Commission action related to the part 76

rules. Each type of petition or complaint has particular requirements

regarding the conditions that must be satisfied before a filing can be

made, who must be served with the filing, and the deadline time for a

response. One reason for this variation is that our rules have been

adopted over a period of time in response to changes in the

Communications Act and, more specifically, for changes with respect to

cable issues passed in 1984, 1992, and 1996. The rules adopted to

implement changes in the law may have adopted a complaint process with

its own unique procedures when an existing complaint process would have

been sufficient. For example, following the filing of a petition for

special relief, interested persons may submit comments or oppositions

within twenty days after the date of public notice of the filing of

such petition. In contrast, with respect to a petition for an issuance

of an order to show cause, interested persons may submit comments or

oppositions within thirty days after the petition has been filed. In

this proceeding, the Commission seeks comment on whether these types of

differences should be maintained or whether in circumstances of similar

pleadings, the procedural rules associated with those pleadings should

be the same.

5. The rules associated with each different pleading type are

designed to establish fair and expeditious procedures for receiving,

considering, and resolving issues related to the cable television

service rules. The Commission believes that there are some aspects of

the pleading requirements in part 76 rules that could be made uniform.

The Commission seeks comment on which aspects of the pleading processes

can be made consistent regardless of the part 76 rule under which the

complaint is being filed; or alternatively, which pleading processes

are similar and should have similar procedures. Specifically, is it

appropriate to have the same or different (1) periods of time to

formulate and file a complaint; (2) service requirements; (3) pleading

cycles; (4) affidavit and evidentiary requirements; and (5) burdens of

proof? The Commission also seek proposals on how to achieve a more

streamlined complaint process for part 76 pleadings. Specifically,the

Commission seeks comment on those filing requirements, now unique to a

particular type of pleading or complaint, that are beneficial and

should be applied universally to all part 76 pleadings; and conversely,

which filing requirements are not useful and should be eliminated.

II. Procedural Matters

A. Regulatory Flexibility Analysis

6. As required by the Regulatory Flexibility Act (RFA), 5 U.S.C.

603, the Commission has prepared an Initial

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Regulatory Flexibility Analysis (IRFA) of the expected impact on small

entities of the proposals in the NPRM. Written public comments are

requested on the IRFA. Comments on the IRFA must have a separate and

distinct heading designating them as responses to the IRFA and must be

filed by the deadlines for comments on the NPRM. The Commission will

send a copy of the NPRM, including this IRFA, to the Chief Counsel for

Advocacy of the Small Business Administration.

1. Need for, and objectives of, the proposed rules.

7. The Commission has proposed to simply and unify the pleading and

complaint process rules for Cable Television Service, 47 CFR 76. The

Commission has tentatively concluded that such a procedure would serve

the public interest by making the pleading and complaint process for 47

CFR 76 less confusing and less burdensome.

2. Legal basis.

8. The authority for the action proposed for this rulemaking is

contained in Section 4 of the Communications Act of 1934, 47 U.S.C.

154.

3. Description and estimate of the number of small entities

9. The Commission is required to provide a description of and,

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

be affected by the proposed rules, if adopted. The RFA defines the term

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

business'' and ``small organization.'' In addition, the term ``small

business'' has 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 which: (1) is independently

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

(3) meets any additional criteria established by the Small Business

Administration (``SBA'').

10. Small MVPDs. The SBA has developed a definition of small

entities 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

1,758 total cable and other pay television services and 1,423 had less

than $11 million in revenue. The Commission addresses below each

service individually to provide a more precise estimate of small

entities.

11. Cable Systems. The Commission has developed, with SBA's

approval, our own definition of a small cable system operator for the

purposes of rate regulation. Under 47 CFR 76.901(e), a ``small cable

company'' is one serving fewer than 400,000 subscribers nationwide.

Based on our most recent information, the Commission estimates 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, the Commission estimates that there are fewer

than 1439 small entity cable system operators that may be affected by

the decisions and rules the Commission is adopting. The Commission

believes that only a small percentage of these entities currently

provide qualifying ``telecommunications services'' as required by the

Communications Act and, therefore, estimate that the number of such

entities are significantly fewer than noted.

12. 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, the Commission 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, the Commission finds 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, the Commission is 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.

13. Multipoint Multichannel Distribution Systems (``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 MMDS auctions has been approved by the SBA.

14. 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. The Commission concludes

that, for purposes of this FRFA, there are approximately 1634 small

MMDS providers as defined by the SBA and the Commission's auction

rules.

15. Direct Broadcast Satellite (``DBS''). Because DBS provides

subscription services, DBS falls within the SBA definition of cable and

other pay television services (SIC 4841). As of December 1996, there

were eight DBS licensees. Estimates of 1996 revenues for various DBS

operators are significantly greater than $11,000,000 and range from a

low of $31,132,000 for Alphastar to a high of $1,100,000,000 for

Primestar. Accordingly, the Commission concludes that no DBS operator

qualifies as a small entity.

16. Home Satellite Dish (``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 MVPDs, 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 MVPDs;

(2) viewers who receive only nonsubscription programming; and (3)

viewers who receive satellite programming services illegally without

subscribing.

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

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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 multiple system operator

(``MSO''). Furthermore, because this an average, it is likely that some

program packagers may be substantially smaller.

18. Open Video System (``OVS''). The Commission has certified nine

OVS operators. Of these nine, only two are providing service. On

October 17, 1996, Bell Atlantic received approval for its certification

to convert its Dover, New Jersey Video Dialtone (``VDT'') system to

OVS. Bell Atlantic subsequently purchased the division of Futurevision

which had been the only operating program package provider on the Dover

system, and has begun offering programming on this system using these

resources. Metropolitan Fiber Systems was granted certifications on

December 9, 1996, for the operation of OVS systems in Boston and New

York, both of which are being used to provide programming. Bell

Atlantic and Metropolitan Fiber Systems have sufficient revenues to

assure us that they do not qualify as small business entities. Little

financial information is available for the other entities authorized to

provide OVS that are not yet operational. The Commission believes that

one OVS licensee may qualify as a small business concern. Given that

other entities have been authorized to provide OVS service but have not

yet begun to generate revenues, the Commission concludes that at least

some of the OVS operators qualify as small entities.

19. Satellite Master Antenna Television (``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 the Commission assumes 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, the Commission is 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, the Commission

concludes that a substantial number of SMATV operators qualify as small

entities.

20. Local Multipoint Distribution System (``LMDS''). Unlike the

above pay television services, LMDS technology and spectrum allocation

will allow licensees to provide wireless telephony, data, and/or video

services. A 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. However, for the purposes of this NPRM, the

Commission includes only an estimate of LMDS video service providers.

21. LMDS is a service for which licenses were auctioned by the FCC

beginning in February 1998. 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, the

Commission proposed to define 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. The Commission has not yet received approval by the SBA for

this definition.

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

providing LMDS video services. Although the Commission does not collect

data on annual receipts, the Commission assumes that CellularVision is

a small business under both the SBA definition and our proposed auction

rules. Accordingly, the Commission affirms its tentative conclusion

that a majority of the potential LMDS licensees will be small entities,

as that term is defined by the SBA.

23. Program Producers and Distributors. The Commission has not

developed a definition of small entities applicable to producers or

distributors of television programs. Therefore, the Commission will

utilize the SBA classifications of Motion Picture and Video Tape

Production (SIC 7812), Motion Picture and Video Tape Distribution (SIC

7822), and Theatrical Producers (Except Motion Pictures) and

Miscellaneous Theatrical Services (SIC 7922). These SBA definitions

provide that a small entity in the television programming industry is

an entity with $21.5 million or less in annual receipts for SIC 7812

and 7822, and $5 million or less in annual receipts for SIC 7922. The

1992 Bureau of the Census data indicate the following: (1) there were

7265 U.S. firms classified as Motion Picture and Video Production (SIC

7812), and that 6987 of these firms had $16,999 million or less in

annual receipts and 7002 of these firms had $24,999 million or less in

annual receipts; (2) there were 1139 U.S. firms classified as Motion

Picture and Tape Distribution (SIC 7822), and that 1007 of these firms

had $16,999 million or less in annual receipts and 1013 of these firms

had $24,999 million or less in annual receipts; and (3) there were 5671

U.S. firms classified as Theatrical Producers and Services (SIC 7922),

and that 5627 of these firms had less than $5 million in annual

receipts.

24. Each of these SIC categories is very broad and includes firms

that may be engaged in various industries including television.

Specific figures are not available as to how many of these firms

exclusively produce and/or distribute programming for television or how

many are independently owned and operated. Consequently, the Commission

concludes that there are approximately 6987 small entities that produce

and distribute taped television programs, 1013 small entities primarily

engaged in the distribution of taped television programs, and 5627

small producers of live television programs that may be affected by the

rules adopted in this proceeding.

4. Description of reporting, recordkeeping, and other compliance

requirements

25. The Commission is not proposing any new or modified

recordkeeping or information collection requirements.

5. Significant alternatives which minimize the impact on small

entities, and which are consistent with stated objectives.

26. The Notice solicits comments and proposals for means to

simplify or make uniform 47 CFR 76 pleading and complaint process

rules. Any significant alternatives presented in the comments will be

considered.

6. Federal rules which overlap, duplicate, or conflict with these

rules.

27. None.

7. Report to Congress.

28. The Commission shall send a copy of this IRFA along with this

Notice in a report to Congress pursuant to the Small Business

Regulatory Enforcement Fairness Act of 1996, codified at 5

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U.S.C. 801(a)(1)(A). A copy of this IRFA will also be published in the

Federal Register.

B. Paperwork Reduction Act of 1995 Analysis

29. The requirements proposed in this Notice have been analyzed

with respect to the Paperwork Reduction Act of 1995 (the ``1995 Act'')

and would impose new and modified information collection requirements

on the public. The Commission, as part of its continuing effort to

reduce paperwork burdens, invites the general public to take this

opportunity to comment on the proposed information collection

requirements contained in this Notice, as required by the 1995 Act.

Public comments are due June 30, 1998. 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 would 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.

30. Written comments by the public on the proposed new and modified

information collection requirements are June 30, 1998. Comments should

be submitted to Judy Boley, Federal Communications Commission, Room

234, 1919 M Street, NW., Washington, D.C. 20554, or via the Internet to

[email protected]. For additional information on the proposed information

collection requirements, contact Judy Boley at 202-418-0214 or via the

Internet at the above address.

C. Ex Parte Presentations

31. The NPRM is a permit but disclose notice and comment rule

making proceeding. Ex parte presentations are permitted, except during

the Sunshine Agenda period, provided they are disclosed as provided in

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

D. Comments

32. 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 June 22, 1998 and reply comments on or before July 7,

1998. To file formally in this proceeding, you must file an original

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

comments. Parties are also asked to submit, if possible, draft rules

that reflect their positions. If you want each Commissioner to receive

a personal copy of your comments, you must file an original and eleven

copies. Comments and reply comments should be sent to Office of the

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

222, Washington, D.C. 20554, with a copy to Thomas Horan of the Cable

Services Bureau, 2033 M Street, NW., 7th Floor, 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., 1231 20th Street, NW., 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, NW.,

Room 239, Washington, D.C. 20554.

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

diskette, where possible. 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

Thomas Horan of the Cable Services Bureau, 2033 M Street, NW., 7th

Floor, Washington, D.C. 20554. Such a submission must 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.

List of Subjects in 47 CFR Part 76

Administrative practice and procedure.

Federal Communications Commission.

Magalie Roman Salas,

Secretary.

[FR Doc. 98-11617 Filed 4-30-98; 8:45 am]

BILLING CODE 6712-01-F