95-3831. Telephone Company-Cable Television Cross-Ownership Rules  

  • [Federal Register Volume 60, Number 32 (Thursday, February 16, 1995)]
    [Proposed Rules]
    [Pages 8996-9001]
    From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
    [FR Doc No: 95-3831]
    
    
    
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    FEDERAL COMMUNICATIONS COMMISSION
    47 CFR Part 63
    
    [CC Docket No. 87-266; FCC 95-20]
    
    
    Telephone Company-Cable Television Cross-Ownership Rules
    
    AGENCY: Federal Communications Commission.
    
    ACTION: Notice of proposed rulemaking.
    
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    SUMMARY: The Commission adopted a Fourth Further Notice of Proposed 
    Rulemaking in Common Carrier Docket 87-266, with the intent of 
    soliciting information and comment on the extent to which Title II of 
    the Communications Act, Title VI, or both, apply to a telephone 
    company's provision of video programming directly to subscribers within 
    its telephone service area. The Commission also requested comment on 
    what changes, if any, need to be made to the video dialtone regulatory 
    framework if a telephone company decides to become a video programmer 
    on its own video dialtone platform in its telephone service area, and 
    in particular, whether telephone company provision of video programming 
    raises new concerns about anticompetitive behavior or cross-subsidy 
    that the Commission's existing regulatory framework may not 
    sufficiently address.
    
    DATES: Comments must be submitted on or before March 6, 1995. Reply 
    comments are due on March 27, 1995.
    
    ADDRESSES: Comments and Reply Comments may be mailed to the Office of 
    the Secretary, Federal Communications Commission, 1919 M Street NW., 
    Washington, DC 20554. A copy of each filing should also be filed with 
    Peggy Reitzel of the Common Carrier Bureau, and James Yancey of the 
    Cable Services Bureau.
    
    FOR FURTHER INFORMATION CONTACT:
    Jane Jackson (202) 418-1593, Common Carrier Bureau, Policy and Program 
    Planning Division, and Larry Walke (202) 416-0847, Cable Services 
    Bureau.
    
    SUPPLEMENTARY INFORMATION: This is a synopsis of the Fourth Further 
    Notice of Proposed Rulemaking in Common Carrier Docket 87-266: 
    Telephone Company-Cable Television Cross-Ownership Rules, Sections 
    63.54-63.58, adopted January 12, 1995, and released January 20. 1995. 
    The complete text of this Fourth Further Notice of Proposed Rulemaking 
    is available for inspection and copying, Monday through Friday, 9:00 
    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 Fourth 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 Fourth Further Notice of Proposed Rulemaking
    
    A. Governing Statutory Provisions.
    
        1. Local exchange carrier (LEC) provision of video programming 
    raises questions about whether Title II of the Communications Act, 
    Title VI of the Communications Act, or both, would govern particular 
    LEC video offerings, and how these provisions might apply to a LEC's 
    provision of video [[Page 8997]] programming directly to subscribers 
    within its telephone service area and over facilities used to provide 
    both voice and video services. We now seek comment on these issues and 
    on the analysis we offer below.
    1. Application of Title II to LEC Video Programming Offerings
        2. We first tentatively conclude that telephone companies should be 
    permitted to provide video programming over Title II video dialtone 
    platforms. We recently reaffirmed our conclusion that the construction 
    of video dialtone systems would serve the public interest goals of 
    facilitating competition in the provision of video programming 
    services, encouraging efficient investment in our national information 
    infrastructure, and fostering the availability to the American public 
    of new and diverse sources of video programming. Two U.S. Courts of 
    Appeals have now held unconstitutional the specific statutory basis for 
    prohibiting a telephone company from providing, directly or indirectly, 
    programming over its own video dialtone platform. In light of the 
    public interest benefits of a video dialtone platform, which provides 
    multiple video programmers with common carrier-based access to end 
    users, we tentatively conclude, in the absence of Section 533(b), that 
    we should not ban telephone companies from providing their own video 
    programming over their video dialtone platforms. We note that we allow 
    telephone companies to use their networks to provide their own enhanced 
    services today, subject to safeguards. Thus, in the absence of a 
    demonstration of a significant governmental interest to the contrary, 
    we propose to allow telephone companies to provide video programming 
    over their own video dialtone platforms, subject to appropriate 
    safeguards. We seek comment on this proposal, and on whether any such 
    significant governmental interest to support a ban exists and, if it 
    does, whether a ban would be a narrowly tailored restriction on the 
    telephone companies' First Amendment rights.
        3. A second Title II issue is whether we can, and should, require 
    telephone companies to provide video programming only over video 
    dialtone platforms. Even before the recent court decisions invalidating 
    the telco-cable cross-ownership ban, there were three circumstances in 
    which LECs could provide video programming directly to subscribers. In 
    these circumstances, however, LECs have not been authorized to use 
    their local exchange facilities to provide cable service, but, rather, 
    to construct or purchase interests in separate cable facilities. 
    Indeed, as noted by the court in NCTA v. FCC (1994), it was not until 
    after the 1984 Cable Act that technological advances have made it 
    practical to deliver video signals over the same common carrier 
    networks that are used to provide telephone service. Previously, as the 
    court noted, ``[a] telephone company that wanted to provide cable 
    service would have had to construct a coaxial cable distribution system 
    parallel to its telephone system.''
        4. We seek comment on whether we have authority under Section 214 
    to require LECs that seek to provide video programming directly to 
    subscribers in their telephone service areas to do so on a video 
    dialtone common carrier platform and not on a non-common carrier cable 
    television facility. We seek comment on what circumstance would warrant 
    such a requirement, and specifically on whether we should require use 
    of a video dialtone platform whenever a LEC provides video services 
    over facilities that are also used in the provision of telephone 
    services. We seek comment on our authority generally to require LECs 
    seeking Section 214 authority to acquire or construct video facilities 
    to comply with our video dialtone framework.
    2. Application of Title VI to LEC Provision of Video Programming
        5. We now seek comment on the circumstances, if any, in which a LEC 
    that, by court decision, is not subject to the 1984 Cable Act telco-
    cable cross-ownership ban may offer a cable service subject to Title VI 
    in lieu of a Title II video dialtone offering. We also seek comment on 
    the extent to which Title VI should apply to video programming provided 
    by LECs on a Title II video dialtone system. We have previously held 
    that LEC provision of a common carrier video dialtone platform is not 
    subject to Title VI of the Act. In particular, we found that such LECs 
    are not offering ``cable service,'' and are not operating a ``cable 
    system'' within the meaning of Title VI. We reasoned that LECs did not 
    actively participate in the selection and distribution of video 
    programming because they were precluded from providing video 
    programming directly to subscribers in their telephone service areas. 
    We also concluded that video dialtone facilities are not cable systems 
    because they are common carrier facilities subject to title II of the 
    Act which, under Commission rules, could not be used for LEC provision 
    of video programming directly to subscribers in the LEC's telephone 
    service area. We now seek comment on whether, if a LEC, or its 
    affiliate, does provide video programming over its video dialtone 
    system and actively engages in the selection and distribution of such 
    programming, that LEC, or its affiliate, is subject to Title VI. We 
    seek comment on the Commission's legal authority to determine whether 
    some, but not all, provisions of Title VI relating to cable operators 
    would apply to a LEC that provides video programming over its video 
    dialtone platform. We also seek comment on whether the application of 
    some or all provisions of Title VI would result in a regulatory 
    framework that is duplicative of, or inconsistent with, federal or 
    state regulation of communications common carriage. For example, the 
    goals of the leased access provision of Title VI could be met through 
    obligations Title II imposes on a LEC as the provider of the video 
    dialtone platform whether or not the LEC as a video service provider 
    provides its own leased access channels. We seek comment on the 
    potential impact of our determinations in this proceeding on existing 
    grants by state and local authorities of public rights-of-way. We also 
    invite parties to discuss both the legal and practical implications of 
    requiring, or not requiring, telephone companies providing video 
    programming over their own video dialtone systems to comply with each 
    of the various provisions of Title VI. In the event that Title VI cable 
    rate regulation rules apply, we seek comment on how such rules would 
    apply to a LEC providing video programming directly to subscribers over 
    its own video dialtone platform.
        6. In addition, we seek comment on whether, if Title VI does not 
    apply to telephone companies' provision of video programming on video 
    dialtone facilities, the Commission should adopt, under Title II, 
    provisions that are analogous to certain aspects of Title VI. For 
    example, we seek comment on whether we should adopt rules governing 
    program access by competing distributors, carriage agreements between 
    video service providers and unaffiliated programmers, and vertical 
    ownership restrictions.
        7. Finally, we note that the court's opinion in NCTA v. FCC (1994) 
    is consistent with the Commission's reasoning in the First Report and 
    Order, 56 FR 65464-01 (December 17, 1991), that a LEC providing video 
    dialtone service does not require a local franchise because the LEC 
    does not provide the video programming. We seek comment on whether this 
    view would require a LEC offering video dialtone service to secure a 
    local [[Page 8998]] franchise if that LEC also engages in the provision 
    of video programming carried on its platform.
    
    B. Regulatory Safeguards Governing a Local Exchange Carrier's Provision 
    of Video Programming on its Video Dialtone Platform
    
    1. Introduction and Scope
        8. In this section we consider what changes, if any, need to be 
    made to our video dialtone regulatory framework if a telephone company, 
    pursuant to an applicable court decision, decides to become a video 
    programmer on its own video dialtone platform in its telephone service 
    area. In addressing the issues identified below, parties should address 
    whether we should apply different safeguards for technical and market 
    trials than for commercial offerings of video dialtone.
    2. Ownership Affiliation Standards
        9. Under our current rules, LECs are prohibited from providing 
    video programming directly to subscribers, and from having a cognizable 
    (i.e., 5 percent or more) financial interest in, or exercising direct 
    or indirect control over, any entity that is deemed to provide video 
    programming in its telephone service area. We propose to retain these 
    ownership affiliation standards to identify those video dialtone 
    programmers that we will consider to be affiliated with LECs providing 
    the underlying common carriage. Under this proposal, if the Commission 
    determines that LEC ownership of video programming requires additional 
    safeguards, those safeguards would apply if the LEC owned five percent 
    or more of a video programmer. We seek comment on this proposal.
    3. Safeguards Against Anticompetitive Conduct
    a. Sufficient Capacity To Serve Multiple Service Providers
        10. Under the video dialtone regulatory framework, a LEC is 
    required to provide sufficient capacity to serve multiple service 
    providers on a nondiscriminatory basis. In the Video Dialtone 
    Reconsideration Order, 59 FR 63909-01 (December 12, 1994), we rejected 
    use of an ``anchor programmer,'' that is, allocation of all or 
    substantially all of the analog capacity of the video dialtone platform 
    to a single programmer. We seek comment on whether there are other 
    across-the-board rules that we should adopt to ensure that video 
    dialtone retains its essential Title II character when a LEC becomes a 
    video programmer on its platform.
        11. We seek comment, for instance, on whether we should limit the 
    percentage of its own video dialtone platform capacity that a LEC, or 
    its affiliate, may use. Such a limit could help ensure other 
    programmers access, but may create a risk that some capacity might go 
    unused. We seek comment on what an appropriate limit would be; whether 
    any percentage limit should vary with the platform's capacity; and 
    whether different rules should apply to analog and digital channels. 
    Video dialtone capacity constraints appear likely to be most severe in 
    the short-term, with respect to analog channels, and may be of less 
    concern on future all-digital systems. Commenters should address 
    whether LEC use of video dialtone capacity raises short-term or long-
    term concerns, and how the probable duration of the problem should 
    affect our regulatory approach. Alternatively, we seek comment on 
    whether LECs that deny capacity to independent programmers should be 
    subject to procedural requirements more detailed than those imposed 
    inthe Video Dialtone Reconsideration Order.
        12. In the Third Further Notice of Proposed Rulemaking, 59 FR 
    63971-01 (December 12, 1994), the Commission sought comment and 
    information regarding channel sharing mechanisms that LECs have 
    proposed as means of making analog capacity available to more customer-
    programmers than might otherwise be accommodated. Parties addressing 
    limits on LEC use of the video dialtone platforms should comment in 
    this proceeding on the relationship between such channel sharing 
    mechanisms and any proposal to limit LEC use of analog channels. The 
    Third Further Notice of Proposed Rulemaking also sought comment on two 
    other signal carriage issues: (1) Whether the Commission should mandate 
    preferential video dialtone access or rates for commercial 
    broadcasters, public, educational and governmental (``PEG'') channnels, 
    or other not-for-profit programmers; and (2) whether the Commission 
    should permit LECs to offer preferential treatment to certain 
    programmers on a voluntary (``will carry'') basis. Parties should 
    comment in this proceeding on the relationships among mandatory 
    preferential treatment, ``will carry,'' and any proposed limits on a 
    LEC's use of its video dialtone capacity to provide programming 
    directly to subscribers.
        13. Another example of potentially anticompetitive conduct that has 
    been cited in the context of cable television service under Title VI 
    involves channel positioning. Programmers assert that cable operators 
    can and do deliberately assign unaffiliated program services to 
    undesirable channel locations. Under Title II, such discriminatory 
    conduct is prohibited. We seek comment on whether LECs that are also 
    video program providers have an increased incentive to use their 
    control over the video dialtone platform to engage in such activities 
    and what, if any, specific safeguards we should implement to prevent 
    such conduct. In particular, we seek comment on whether the channel 
    positioning rules that apply to cable operators in the context of the 
    ``must-carry'' requirement of Title VI should also apply to video 
    dialtone platform operators providing programming directly to 
    subscribers in their local exchange service areas.
    b. Non-Ownership Relationships and Activities Between Telephone 
    Companies and Video Programmers
        14. In the Video Dialtone Reconsideration Order, the Commission 
    affirmed, with certain modifications, its decision to permit LECs to 
    enter into non-ownership relationships with video programmers that 
    exceed a carrier-user relationship. We propose at a minimum, to retain 
    these restrictions as safeguards against LEC anticompetitive conduct 
    and to promote further LEC deployment of broadband services. We believe 
    that the restrictions on non-ownership affiliations between LECs and 
    cable operators are important to the Commission's goal of promoting 
    competition in the video services marketplace, and are not overbroad 
    infrigements on LEC First Amendment rights. Parties should comment on 
    the proposal to retain these safeguards and should describe any 
    specific additional measures they believe necessary to safeguard 
    against anticompetitive conduct by LECs that offer programming on their 
    own video dialtone system.
    c. Acquisition of Cable Facilities
        15. In the Video Dialtone Reconsideration Order, the Commission 
    substantially affirmed its decision to prohibit telephone companies 
    from acquiring cable facilities in their telephone service areas for 
    the provision of video dialtone. We continue to believe that this ban 
    will benefit the public interest by promoting greater competition in 
    the delivery of video services, increasing the diversity of video 
    programming available to consumers, and advancing the deployment of the 
    national communications infrastructure. We tentatively conclude that 
    the ban on LEC acquisition of cable facilities for the provision of 
    video dialtone does not impermissibly restrict LEC speech 
    [[Page 8999]] under C&P Tel. Co. v. U.S. and U S West v. U.S., and seek 
    comment on this conclusion.
        16. In the Third Further Notice of Proposed Rulemaking, the 
    Commission recognized that some markets may be incapable of supporting 
    two video delivery systems. The Commission was concerned that, in such 
    markets, the prohibition could preclude establishment of video dialtone 
    service, thereby denying consumers the benefits of competition and 
    diversity of programming sources that our video dialtone regulatory 
    framework is designed to promote. As a result, the Commission requested 
    parties to suggest criteria that would permit us to identify those 
    markets in which two wire-based multi-channel video delivery systems 
    would not be viable. We seek comment on how, if at all, the decisions 
    in C&P Tel. Co. v. U.S. and U S West v. U.S. should affect our 
    consideration of criteria for allowing exceptions to our two-wire 
    policy. We also seek comment on whether we should ban telephone company 
    acquisition of cable facilities, with or without exceptions, if (a) 
    Title VI applies to telephone companies providing programming on their 
    own video dialtone platforms; or (b) telephone companies are permitted 
    to become traditional cable operators in their own service areas 
    instead of constructing video dialtone platforms.
    d. Joint Marketing and Customer Proprietary Network Information
        17. In the Video Dialtone Reconsideration Order, the Commission 
    also affirmed its decision to permit LECs to engage in joint marketing 
    of basic and enhanced video services, and of basic video and non-video 
    services. We found that significant public interest benefits can accrue 
    from the efficiencies and innovations that may be obtained by 
    permitting LECs to engage in joint marketing of basic and enhanced 
    video services, and of basic video and non-video services. We also 
    found that the record on reconsideration did not support a finding that 
    joint marketing of common carrier video and telephony services would 
    have an anticompetitive impact on the provision of video programming to 
    end users. We now seek comment on whether LEC provision of video 
    programming directly to end users requires that we revisit our analysis 
    of joint marketing issues.
        18. In the Bell Atlantic Market Trial Order, released on January 
    20, 1995, the Commission authorized Bell Atlantic to conduct a six-
    month video dialtone market trial that will include provision of video 
    programming directly to subscribers by a Bell Atlantic affiliate as 
    well as by independent video programmers.
        Pending resolution of the instant rulemaking proceeding, we 
    conditioned Bell Atlantic's authorization on its compliance with 
    existing safeguards for the provision of nonregulated services, 
    including enhanced services, and with several additional, interim 
    safeguards against discrimination. We seek comment on whether any or 
    all of these interim safeguards should be adopted as permanent 
    requirements for LECs that provide video programming over their own 
    video dialtone platforms.
        19. Under the Commission's customer proprietary network information 
    (CPNI) requirements, the Commission limits the Bell Operating 
    Companies' (BOCs') and GTE Service Corporation's (GTE's) use of CPNI; 
    requires them to make CPNI available to competitive enhanced service 
    providers (ESPs) designated by a customer; and requires that they make 
    available to ESPs non-proprietary aggregated CPNI on the same terms and 
    conditions on which they make such CPNI available to their own enhanced 
    service personnel. In the Video Dialtone Reconsideration Order, the 
    Commission determined that there was insufficient evidence to conclude 
    that our existing CPNI rules do not properly balance our CPNI goals 
    relating to privacy, efficiency, and competitive equity in the context 
    of video dialtone. The Commission also required the BOCs and GTE to 
    provide additional information regarding the kinds of CPNI to which 
    they will have access as a result of providing video dialtone service 
    and indicated its intent to seek further comment on such information. 
    We now seek additional comment and information on whether LEC provision 
    of video programming impacts the balancing of our goals for CPNI.
        20. In addition to concerns over possible anticompetitive use of 
    CPNI, parties should discuss whether LEC provision of video programming 
    raises new concerns regarding consumer privacy. Parties that perceive a 
    greater threat to consumer privacy should describe with specificity 
    their concerns, and suggest specific safeguards for protecting consumer 
    privacy, and explain how these suggestions benefit the public interest.
        21. We also seek comments on safeguards to ensure nondiscriminatory 
    access to network technical information. In the Bell Atlantic Market 
    Trial Order, the Commission required Bell Atlantic to provide all video 
    programmers with nondiscriminatory access to technical information 
    concerning the basic video dialtone platform and related equipment. The 
    Commission also noted that, in the circumstances of the market trial, 
    Bell Atlantic would also be subject to the more specific Computer III 
    network disclosure rules. We seek comment on whether the Bell Atlantic 
    condition should be adopted as a permanent safeguard. We also seek 
    parties to address whether the Computer III network disclosure rules 
    should be modified in any way for application in the video dialtone 
    context.
    4. Safeguards Against Cross-Subsidization of Video Programming 
    Activities
        22. In the Video Dialtone Reconsideration Order, the Commission 
    determined that price cap regulation and accounting safeguards would be 
    effective to prevent cross-subsidization of video dialtone-related 
    nonregulated activities. We tentatively conclude that these safeguards 
    against cross-subsidization apply to LEC provision of video programming 
    just as they would to any other activity not regulated as Title II 
    common carrier service, and that the existing rules are adequate to 
    forestall cross-subsidy of the video programming activity. We seek 
    comment on these tentative conclusions.
        23. Assuming we do not require structural separation, LECs will 
    have the flexibility to conduct video programming activities both 
    within the telephone operating company and through affiliates. For 
    those video programming activities conducted in the operating company, 
    the LEC will be required to record costs and revenues in accordance 
    with Part 32 of the Commission's Rules, the Uniform System of Accounts 
    (USOA), and to separate the costs of video programming activity from 
    the costs of regulated telephone service in accordance with the part 64 
    joint cost rules. We tentatively conclude that these rules are adequate 
    to prevent cross-subsidization of video programming activities. We also 
    tentatively conclude that we will apply to video programming activities 
    the rule adopted in the Video Dialtone Reconsideration Order requiring 
    LECs to amend their cost allocation manuals to reflect video dialtone-
    related nonregulated activities within 30 days of receiving video 
    dialtone facilities authorization. We seek comment on these tentative 
    conclusions.
        24. H a LEC chooses for business reasons to provide video 
    programming through an affiliate, the accounting treatment of operating 
    company transactions with that affiliate will be governed by the 
    affiliate transactions rules. We seek comment on whether amendments to 
    those rules are needed [[Page 9000]] to safeguard against abuses in 
    transactions between LECs and affiliated video program providers. 
    Specifically, we seek comment on whether we should amend Section 32.27 
    to clarify that any video program provider that is considered, because 
    of a LEC's five percent ownership interest, to be a LEC affiliate for 
    purposes of applying video dialtone safeguards will also be considered 
    an ``affiliate'' for purposes of the affiliate transactions rule.
    5. Structural Separation
        25. In the Computer III proceeding, the Commission replaced its 
    requirement that BOCs offer enhanced services through separate 
    subsidiaries with a set of nonstructural safeguards. Those 
    nonstructural safeguards were intended to protect against 
    discrimination and cross-subsidization while avoiding the 
    inefficiencies associated with structural separation. We seek comment 
    on whether our approach to these questions should differ when BOCs 
    provide video programming. Specifically, we seek comment as to whether 
    there are aspects of the video programming business that warrant our 
    treating BOC provision of video programming differently from the way we 
    treat BOC provision of customer premises equipment (CPE) and enhanced 
    services generally. We also seek comment on whether any structural 
    separation requirement should apply to LECs other than the BOCs. 
    Commenting parties should specifically identify what aspects warrant 
    different treatment, and what form of separation would be appropriate. 
    Parties should also offer information concerning the relative costs and 
    benefits of structural separation.
    6. Pole Attachments
        26. Section 63.57 of our rules requires LECs seeking to provide 
    channel service to show in their Section 214 applications that the 
    cable system for which they would be providing channel service had pole 
    attachment rights or conduit space available ``at reasonable charges 
    and without undue restrictions on the uses that may be made of the 
    channel by the operator.'' In the Third Further Notice of Proposed 
    Rulemaking, the Commission sought comment on whether a similar rule 
    should apply to LECs providing video dialtone service. We now seek 
    additional comment on that proposal in light of C&P Tel. Co. v. U.S. 
    and U S West v. U.S. Parties should address whether incentives to abuse 
    control over pole and conduit space are increased if a LEC decides to 
    offer video programming within its telephone service area. In addition, 
    as requested in the Third Further Notice of Proposed Rulemaking, 
    advocates of such a rule should propose specific language, and should 
    explain how the rule would prevent anticompetitive conduct.
    7. Legal and Constitutional Issues
    a. Waiver of the Cross-Ownership Ban
        27. Section 533(b)(4) of the Communications Act provides that, upon 
    a ``showing of good cause,'' the Commission may waive the 1984 Cable 
    Act's cross-ownership ban. Under Section 533(b)(4), a waiver ``shall be 
    granted by the Commission upon a finding that the issuance of such 
    waiver is justified by the particular circumstances demonstrated by the 
    petitioner, taking into account the policy of this subsection.'' In GTE 
    California v. FCC, the United States Court of Appeals for the Ninth 
    Circuit raises the question whether the Commission may establish 
    conditions under which it will waive the telco-cable cross-ownership 
    ban in order to obviate potential constitutional difficulties. We 
    tentatively conclude that such a reading of Section 533(b)(4) is 
    consistent with the terms of the statute. ``Good cause'' is commonly 
    interpreted to include changed circumstances, and the circumstances 
    that led us to institute the cross-ownership rule in 1970 have changed 
    dramatically. The cable industry is no longer a fledgling industry. 
    Instead, as the Supreme Court recently recognized, ``Congress found 
    that over 60 percent of the households with television sets subscribe 
    to cable * * * and for those households cable has replaced over-the-air 
    broadcast television as the primary provider of video programming.''
        28. We also tentatively conclude that the safeguards we will 
    establish will constitute ``particular circumstances * * *, taking into 
    account the policy'' of Section 533(b), under which waivers are 
    warranted. We do not intend to waive the telco-cable cross-ownership 
    rule altogether, so that telephone companies may purchase cable 
    companies that do not face competition and offer their own programming 
    via a monopoly cable system. Rather, and in fulfillment of the policy 
    underlying Section 533(b), we intend to promote competition in the 
    multi-channel video programming market by establishing particular 
    conditions under which telephone companies may establish video dialtone 
    systems that will compete with existing cable operators, thus providing 
    consumers with a choice of multi-channel video systems.
        29. The United States Court of Appeals for the District of Columbia 
    Circuit recognized, in NCTA v. FCC (1990), that ``the policy of this 
    subsection is to promote competition.'' However, in that decision the 
    D.C. Circuit also appeared to give a narrow reading to the scope of the 
    waiver provision. Specifically, the court of appeals remanded a 
    decision in which the Commission had granted a waiver because the court 
    concluded that the Commission had not shown that the participation of 
    an affiliate of a telephone company in constructing transmission 
    facilities was ``essential to the success'' of an experimental video 
    programming project. But at that time no court had declared Section 
    533(b) unconstitutional, and the D.C. Circuit did not consider whether 
    a broader reading of Section 533(b)(4) was appropriate to render the 
    provision constitutional. The Supreme Court has recently reiterated 
    that ``a statute is to be construed where fairly possible so as to 
    avoid substantial constitutional questions.'' A reading of the waiver 
    provision that authorizes telephone companies that comply with the 
    safeguards we will establish to provide video programming should render 
    Section 533(b) constitutional, because in those circumstances any 
    burden on speech by telephone companies will be minimal. Hence, under 
    U.S. v. X-Citement Video, a broad interpretation of Section 533(b)(4) 
    seems warranted. We seek comment on these tentative conclusions.
    b. Constitutionality of Proposed Safeguards
        30. As the Court of Appeals for the Fourth Circuit stated in C&P 
    Tel. Co. v. U.S., in order for a content-neutral government regulation 
    of speech, such as the cross-ownership ban, to be constitutional, that 
    regulation must be ``narrowly tailored to serve a significant 
    governmental interest, and * * * leave open ample alternative channels 
    for communication of the information.'' With respect to all proposals 
    set forth above for safeguards on LEC provision of video programming, 
    we seek comment on whether such safeguards, whether individually, or in 
    any combination, would be consistent with the First Amendment, the 
    Fourth Circuit's decision in C&P Tel. Co. v. U.S., and the Ninth 
    Circuit's decision in U.S. West v. U.S. 
    
    Ex Parte Presentations
    
        31. This Fourth Further Notice of Proposed Rulemaking is a non-
    restricted notice-and-comment rulemaking proceeding. Ex parte 
    presentations are [[Page 9001]] permitted, except during the Sunshine 
    Agenda period, provided that they are disclosed as provided in the 
    Commission's rules. See generally 47 CFR 1.1202, 1.1203, 1.1206.
    
    Comment Filing Dates
    
        32. Pursuant to applicable procedures set forth in Sections 1.415 
    and 1.419 of the Commission's rules, 47 C.F.R. 1.415, 1.419, interested 
    parties may file comments on or before March 6, 1995, and reply 
    comments on or before March 27, 1995. To file formally in this 
    proceeding, you must file an original and four copies of all comments, 
    reply comments, and supporting comments. If you want each Commissioner 
    to receive a personal copy of your comments, you must file an original 
    and nine copies. Comments and reply comments should be sent to Office 
    of the Secretary, Federal Communications Commission, Washington, DC 
    20554, with a copy to Peggy Reitzel of the Common Carrier Bureau, Room 
    544, and James Yancey of the Cable Services Bureau, Room 408C. Parties 
    should also file one copy of any documents filed in this docket with 
    the Commission's copy contractor, International Transcription Services, 
    Inc., 2100 M Street, NW., Suite 140, Washington, DC 20037. Comments and 
    reply comments will be available for public inspection during regular 
    business hours in the FCC Reference Center (Room 239), 1919 M Street 
    NW., Washington, DC.
    
    Initial Regulatory Flexibility Analysis Statement
    
        33. Pursuant to the Regulatory Flexibility Act of 1980, 5 U.S.C. 
    601-612, the Fourth Further Notice of Proposed Rulemaking, seeking 
    comment and information regarding whether additional or modified 
    safeguards and rule changes may be necessary or appropriate in the 
    context of the Commission's video dialtone regulatory framework, when a 
    telephone company provides video programming directly to subscribers in 
    its telephone service area may directly impact entities that are small 
    business entities, as defined in Section 601(3) of the Regulatory 
    Flexibility Act.
        34. The Secretary shall send a copy of this Fourth 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 Section 603(a) of the Regulatory 
    Flexibility Act, Pub. L. 96-354, 94 Stat. 1164, 5 U.S.C. 601, et seq.
    
    Ordering Clauses
    
        35. 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, and 218, a Fourth Further Notice of Proposed 
    Rulemaking is hereby adopted.
        36. It is further ordered that, the Secretary shall send a copy of 
    the Fourth 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,
    Secretary.
    [FR Doc. 95-3831 Filed 2-15-95; 8:45 am]
    BILLING CODE 6712-01-M
    
    

Document Information

Published:
02/16/1995
Department:
Federal Communications Commission
Entry Type:
Proposed Rule
Action:
Notice of proposed rulemaking.
Document Number:
95-3831
Dates:
Comments must be submitted on or before March 6, 1995. Reply comments are due on March 27, 1995.
Pages:
8996-9001 (6 pages)
Docket Numbers:
CC Docket No. 87-266, FCC 95-20
PDF File:
95-3831.pdf
CFR: (1)
47 CFR 63