[Federal Register Volume 59, Number 237 (Monday, December 12, 1994)]
[Unknown Section]
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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]
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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.
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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
