[Federal Register Volume 59, Number 237 (Monday, December 12, 1994)] [Unknown Section] [Page 0] From the Federal Register Online via the Government Publishing Office [www.gpo.gov] [FR Doc No: 94-30242] [[Page Unknown]] [Federal Register: December 12, 1994] ======================================================================= ----------------------------------------------------------------------- FEDERAL COMMUNICATIONS COMMISSION 47 CFR Part 63 [CC Docket No. 87-266; FCC 94-269] Telephone Company-Cable Television Cross-Ownership Rules, and Regulatory Procedures for Video Dialtone Service AGENCY: Federal Communications Commission. ACTION: Notice of proposed rulemaking. ----------------------------------------------------------------------- SUMMARY: In a Third Further Notice of Proposed Rulemaking in Common Carrier Docket 87-266, the Commission requested information and comment on: Mechanisms for addressing the apparent short-term constraints on the expandability of analog channel capacity; modifications to the Commission's prohibition on acquisition of cable facilities and a corresponding modification to the Commission's non-ownership affiliation rules; proposals that the Commission require or permit local exchange carriers (LECs) to provide preferential video dialtone access or rates to certain classes of video programmers; and possible changes to the Commission's rules governing pole attachments and conduit rights. Each of the comment and information requests described herein are necessary to enable the Commission to consider further refinements to its existing rules and policies governing video dialtone. DATES: Comments must be submitted on or before December 16, 1994. Reply comments are due on January 17, 1995. ADDRESSES: Comments and Reply Comments may be mailed to the Office of the Secretary, Federal Communications Commission, Washington, DC 20554. FOR FURTHER INFORMATION CONTACT: Jane Jackson (202) 418-1593 or Gary Phillips (202) 418-1573, Common Carrier Bureau, Policy and Program Planning Division. SUPPLEMENTARY INFORMATION: This is a synopsis of the Third Further Notice of Proposed Rulemaking in Common Carrier Docket 87-266: Telephone Company-Cable Television Cross-Ownership Rules, Sections 63.54-63.58, adopted October 20, 1994, and released November 7, 1994. The complete text of this Third Further Notice of Proposed Rulemaking is available for inspection and copying, Monday through Friday, 9 a.m.- 4:30 p.m., in the FCC Reference Room (Room 239), 1919 M Street, NW., Washington, DC 20554. The complete text of the Third Further Notice of Proposed Rulemaking may also be purchased from the Commission's copy contractor, International Transcription Services, 2100 M Street NW., Suite 140, Washington, DC 20037, (202) 857-3800. Synopsis of Third Further Notice of Proposed Rulemaking A. Capacity Issues 1. In its Section 214 application, GTE Service Corporation (GTE) has proposed a video dialtone system that would make extensive use of digital capacity. GTE proposes a platform with approximately 168 compressed digital channels, 80 analog channels, and 4 reverse analog channels. Programmer-customers on GTE's platform would have the option of delivering to GTE an analog signal or a digital signal. If a programmer-customer delivered an analog video signal, GTE would either modulate this signal onto an analog channel, or encode and multiplex this signal input onto a digital bit stream. The analog signal or digital bit stream would then be delivered over the video dialtone network. To access all channels and services offered on the platform, GTE's proposal requires end user subscribers to purchase or rent a set- top converter, both because the converter is needed to view compressed digital video signals on today's televisions and because some channels may be encrypted. 2. The Commission sought comment on the merits of the GTE approach or some variation of it as a way of meeting its capacity and expandability goals. Parties commenting on this approach should address, in particular, the technical, economic, and operational feasibility of digital equipment and facilities. For example, the Commission sought comment on whether digital compression and transmission equipment will be commercially available on a broad scale in the near future, and on the quality of compressed digital video. The Commission also sought comment on the costs of digital equipment. Likewise, the Commission sought comment on the cost of set-top converters and on whether and when, given these costs, it should require LECs to employ all-digital video dialtone systems. In addition, the Commission sought comment on the impact of such an approach on low- income subscribers. 3. The Commission also sought comment on methods or arrangements for promoting more efficient use of analog channel capacity. In order to make more efficient use of this analog capacity, and to comply with the Commission's rules, four LECs have proposed ``channel sharing arrangements.'' The stated purpose of these analog channel sharing mechanisms is to maximize use of analog capacity by avoiding carriage of the same video programming on more than one analog channel, thereby making video dialtone more attractive and available to multiple video programmers, and more marketable to consumers. Generally, channel sharing arrangements would make available to all programmer-customers subscribing to the basic platform the programming on shared individual channels or blocks of channels. In turn, the shared channels could be made part of the programmers' general service offering. 4. The Commission tentatively concluded that channel sharing mechanisms, if properly structured, can offer significant benefits to consumers, programmer-customers, and video dialtone providers, while remaining consistent with the requirements of the cross-ownership provisions of the 1984 Cable Act. For example, these arrangements could increase the number of video programmers on the platform, thus creating diverse programming options. In addition, they would enable multiple video programmers to offer full service packages to consumers. Channel sharing arrangements would also maximize use of the platform by programmer-customers, thereby benefitting video dialtone providers. 5. At the same time, the Commission recognized that, depending upon how they are structured, these arrangements can raise significant legal and policy issues. The Commission believes that the public interest would be well-served by the establishment of specific rules and policies to govern channel sharing arrangements. To this end, the Commission sought comment on the following issues: First, if channel sharing is permitted, who should structure or administer shared channels--the LEC, a programmer-customer, a consortium of programmer- customers, or an independent third party? In this regard, the Commission sought comment on the role that LECs may play in structuring or administering channel sharing arrangements without violating the cross-ownership provisions. If the Commission were to conclude that video programmers should play a role in administering shared channel mechanisms, it also proposed to modify its rule prohibiting video programmers from jointly operating, with a LEC, a basic video dialtone platform. Second, what criteria should be used to select the shared channel administrator? Third, how should programming be selected for the shared channels? Fourth, the Commission sought comment on the terms and conditions on which shared channels should be made available to programmer-customers. Finally, the Commission sought comment on any other relevant issue regarding channel sharing arrangements. The Commission does not intend at this time to prescribe one kind of sharing arrangement, but to establish rules and policies that will ensure that any such arrangement will further the public interest and remain consistent with the 1984 Cable Act. Nor does it intend to defer consideration of Section 214 applications proposing channel sharing arrangements pending the development of rules and policies governing such arrangements. Rather, the Commission will address those proposals on a case-by-case basis. Section 214 authorizations will, however, be conditioned on compliance with any subsequent rules that the Commission may adopt with respect to channel sharing mechanisms. B. Modifications to the Commission's Prohibition on Acquisition of Cable Facilities 6. The Commission also sought comment on possible modifications to its prohibition on the acquisition by telephone companies of cable facilities in their telephone service area for provision of video dialtone. The Commission noted that while this prohibition generally promoted facilities-based competition for video services, the prohibition serves little purpose in markets that are incapable of supporting two video delivery systems. Indeed, the Commission expressed concern that in these markets, the prohibition would preclude the establishment of video dialtone service, denying consumers its benefits. 7. The Commission therefore sought comment on appropriate modifications to its prohibition that would permit acquisitions of cable facilities in markets in which two wire-based multi-channel video delivery systems are not viable, while preserving the ban in other markets. Specifically, the Commission sought comment on criteria that would permit it to identify those markets in which two wire-based multi-channel video delivery systems would likely not be viable. 8. The Commission proposed to amend its prohibition so that LECs would be permitted to purchase cable facilities in markets that meet these criteria. Alternatively, these criteria could serve as the basis for a presumption that a request for waiver of the prohibition would be granted. The Commission tentatively concluded that LECs proposing to purchase cable facilities in their service area must identify the facilities to be purchased in their Section 214 application and demonstrate that the area served by those facilities meets the Commission's established criteria. The Commission sought comment on these proposals and on any other proposals parties might offer that would accomplish the same ends. 9. The Commission also proposed to amend its rules to permit LECs and cable operators jointly to construct a video dialtone system in those areas in which the Commission permits LECs to acquire cable facilities for use in providing video dialtone. Permitting joint construction of video dialtone systems in such areas and shared costs of video dialtone might, in fact, encourage the deployment of advanced facilities in areas that otherwise might lack them. The Commission sought comment on its proposal to permit joint construction of video dialtone systems in areas in which the acquisition ban is lifted. C. Preferential Access Proposals 10. The Commission sought comment, first, on whether it legally can, and should, mandate preferential video dialtone treatment for commercial broadcasters or for certain classes of PEG or not-for-profit video programmers. The Commission has authorized preferential treatment of certain classes of consumers when such treatment is justified by a compelling showing of need and public policy concerns. The Commission invited parties to comment on whether there are public policy reasons to mandate preferential treatment for commercial broadcasters, or for certain types of PEG or not-for-profit programmers, such as, for example, noncommercial educational programmers. Parties addressing this issue were instructed to describe any such reasons with specificity, as well as the adequacy or inadequacy of alternative means of providing public support for such programmers, such as grants and direct subsidies. Parties were also instructed to address whether mandated preferences for certain types of programmers would be consistent with the First Amendment and the Supreme Court's decision in Turner v. FCC, as well as with Title II of the Act, including Sections 201(b) and 202(a). 11. The Commission also invited parties to suggest a definition of the programmers they believe any such mandate should cover. Specifically, to the extent that any policy of preferential treatment would be based upon a finding of need, the Commission sought comment on how such a policy could be fashioned to target not-for-profit video programmers most in need of preferential treatment. The Commission also sought comment on appropriate affiliation rules that might be part of any such need-based test to ensure that video programmers that have certain affiliations with nonqualifying entities do not receive preferential treatment. In addition, the Commission sought comment on whether preferential treatment should be available to any not-for- profit programmer meeting a means test or to only those programmers offering certain types of programming, such as educational programming. Parties should also address the First Amendment implications of any such classifications, as well as how such classifications would be administered. For example, parties should discuss whether a LEC role in determining eligibility of specific video programmers for preferential treatment would be consistent with the common carrier framework governing video dialtone, the cross-ownership provisions of the 1984 Cable Act, and relevant case law. 12. Finally, the Commission sought comment on the type and amount of preference that should be mandated, in the event that it decided to prescribe preferential treatment for certain programmers. Parties should address, in particular, whether preferential access is necessary, or whether discounted rates alone would meet public policy goals. Parties should also address how much of a preference should be granted. For example, parties advocating preferential rates should address how those rates should be calculated. The Commission noted that one possibility would be to base preferential rates on an incremental cost standard, whereby video programmers eligible for preferences would pay only for the incremental costs to the LEC of providing channel capacity to such programmers. The Commission sought comment on this proposal and on any other proposal for implementing a preferential treatment policy. 13. The Commission sought comment, second, on whether to permit LECs voluntarily to provide certain programmers with preferential treatment on LEC video dialtone platforms. The Commission sought comment on these ``will carry'' proposals. In addition, the Commission sought comment on whether it should permit LECs voluntarily to provide other forms of preferential treatment. For instance, should the Commission permit LECs to offer preferential access or rates only to not-for-profit video programmers? Should the Commission permit LECs to reserve capacity for local broadcast stations and PEG programmers at reduced rates? With respect to all proposals for voluntary LEC provision of preferential treatment, the Commission sought comment on whether a permissive policy toward preferential access to video dialtone would be consistent with the First Amendment and the Supreme Court's decision in Turner v. FCC. The Commission also sought comment on whether these proposals would or could be consistent with Sections 201(b) and 202(a) of the Act, and, if so, under what circumstances. The Commission invited comment as well on whether such proposals are consistent with the common carrier framework governing video dialtone, the 1984 Cable Act, and relevant case law, including NCTA v. FCC. In addition, the Commission sought comment, as it did for mandatory preferential treatment, on all the issues entailed in identifying the categories of customers eligible for preferential treatment. Finally, the Commission sought comment on whether these proposals, assuming they are lawful, would further the public interest. D. Pole Attachments and Conduit Rights 14. The Commission also requested comment on whether it should adopt additional rules with respect to pole attachments and conduit rights. Section 63.57 of the Commission rules requires LECs seeking to provide channel service to show in their Section 214 applications that the cable system for which the LECs would be providing channel service had available, within the limitations of technical feasibility, pole attachment rights or conduit space ``at reasonable charges and without undue restrictions on the uses that may be made of the channel by the operator.'' The rule seeks to prevent LECs from denying cable systems reasonable access to their pole or conduit space for the purpose of preventing competition from these cable systems. The Commission sought comment on whether a similar rule should apply to LECs providing video dialtone service. Commenting parties were instructed to address whether LECs have the incentive and ability to leverage their control over pole attachments or conduit rights to prevent facilities-based competition by video programmers to the LECs' video dialtone platforms. Advocates of a rule in this area were instructed to propose specific language, and to explain how the rule would prevent anticompetitive behavior. Initial Regulatory Flexibility Analysis Statement 15. Pursuant to the Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, The Third Further Notice of Proposed Rulemaking, seeking comment and information with respect to the Commissions's rules to require or permit LECs providing video dialtone to grant preferential access or rates to certain classes of video programmers, may directly impact entities that are small business entities, as defined in Section 602(3) of the Regulatory Flexibility Act. Granting certain small video programmers preferential access to or rates on the video dialtone platform can have a positive impact on those entities by facilitating their provision of video programming to subscribers. On the other hand, preferential access or rates for certain small entities may negatively impact those small entities that do not receive preferential treatment. 16. The Secretary shall send a copy of the Third Further Notice of Proposed Rulemaking, including the Initial Regulatory Flexibility analysis, to the Chief Counsel for Advocacy of the Small Business Administration in accordance with paragraph 603(a) of the Regulatory Flexibility Act, Pub. L. No. 96-354, 94 Stat. 1164, 5 U.S.C. 601 et seq. (1981). Ordering Clauses 17. It is ordered that, pursuant to Sections 1, 4, 201-205, 215, and 218 of the Communications Act of 1934, as amended, 47 U.S.C. 151, 154, 201-205, 215, 218 a Third Further Notice of Proposed Rulemaking is hereby adopted. 18. It is further ordered that, the Secretary shall send a copy of the Third Further Notice of Proposed Rulemaking, including the regulatory flexibility certification, to the Chief Counsel for Advocacy of the Small Business Administration, in accordance with paragraph 603(a) of the Regulatory Flexibility Act, 5 U.S.C. 601 et seq. (1981). List of Subjects in 47 CFR Part 63 Cable television, Communications common carriers, Reporting and recordkeeping requirements, Telephone, Video Dialtone. Federal Communications Commission. William F. Caton, Acting Secretary. [FR Doc. 94-30242 Filed 12-9-94; 8:45 am] BILLING CODE 6712-01-M