[Federal Register Volume 61, Number 51 (Thursday, March 14, 1996)]
[Proposed Rules]
[Pages 10496-10499]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-6146]



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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Chapter I

[CS Docket No. 96-46; FCC 96-99]


Open Video Systems

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: The Notice of Proposed Rulemaking (``NPRM'') requests comment 
on issues concerning the implementation of the open video system 
provisions of the Telecommunications Act of 1996. The NPRM will assist 
the Commission in devising regulations in this area. The NPRM will 
provide interested parties an opportunity to submit comments that will 
provide the Commission with a sufficient record on which to base 
ultimate regulations.

DATES: Interested parties may file comments on or before April 1, 1996 
and reply comments on or before April 11, 1996. Written comments by the 
public on the proposed and/or modified information collections are due 
on or before April 1, 1996. Written comments must be submitted by the 
Office of Management and Budget (OMB) on the proposed and/or modified 
information collections on or before May 13, 1996.

ADDRESSES: Comments and reply comments should be sent to Office of the 
Secretary, Federal Communications Commission, 1919 M Street, N.W., Room 
222, Washington, D.C. 20554, with a copy to Larry Walke of the Cables 
Services Bureau, 2033 M Street, N.W., Room 408A, 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., 2100 M Street, N.W., Suite 140, 
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, N.W., Room 239, Washington, D.C. 
20554.
    In addition to filing comments with the Secretary, a copy of any 
comments on the information collections contained herein should be 
submitted to Dorothy Conway, Federal Communications Commission, Room 
234, 1919 M Street, N.W., Washington, D.C. 20054, or via the Internet 
to [email protected], and to Timothy Fain, OMB Desk Officer, 10236 NEOB, 
725-17th Street, N.W., Washington, D.C. 20503 or via the Internet to 
[email protected].

FOR FURTHER INFORMATION CONTACT: Rick Chessen or Larry Walke, Cable 
Services Bureau, (202) 416-0800. For additional information concerning 
the information collections contained herein, contact Dorothy Conway at 
202-418-0217, or via the Internet at [email protected].

SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's NPRM 
in CS Docket No. 96-46, FCC No. 96-99, adopted March 11, 1996 and 
released March 11, 1996. The full text of this decision is available 
for inspection and copying during normal business hours in the FCC 
Reference Center (room 239), 1919 M Street, NW., Washington, D.C. 
20554, and may be purchased from the Commission's copy contractor, 
International Transcription Service, (202) 857-3800, 1919 M Street, 
NW., Washington, D.C. 20554.

Paperwork, Reduction Act

    This NPRM contains proposed or modified information collections 
subject to the Paperwork Reduction Act of 1995 (PRA). It has been 
submitted to the OMB for review under Section 3507(d) of the PRA. OMB, 
the general public, and other Federal agencies are invited to comment 
on the proposed or modified information collections contained in this 
proceeding.
    OMB Approval Number: None.
    Title: Open Video System Operator Notification of Video Programming 
Providers.
    Type of Review: New Third Party Disclosure.
    Respondents: 20. This number is our preliminary estimation of open 
video system operators that may exist in the next year.
    Number of Responses: 40. We anticipate that each open video system 
operator may make two notifications, annually.
    Estimated Time Per Response: 8 hours per response.
    Total Annual Burden: 320 hours. This is the estimated total annual 
burden though this burden will be determined by comments received.
    Estimated costs per Respondent: At this stage in the rulemaking 
process, it is too preliminary to determine the specific requirements 
for the notifications to be made by open video system operators. This 
will be determined by comments received. It is possible that 
notifications may be required to be made in newspapers or trade 
journals. Should this be required, the Commission estimates publication 
costs of $1000 per notification. Estimated annual costs per respondent 
are therefore $2000 (2 notifications @ $1000 each).
    Needs and Uses: This notification will inform video programming 
providers that the open video system operator intends to establish an 
open video system. This will permit video programming providers to 
assess their interest in seeking carriage on such systems.

I. Notice of Proposed Rulemaking

    The 1996 Act repeals the Commission's ``video dialtone'' rules and 
regulations, which were established to permit telephone companies to 
participate in the video marketplace in a manner that was consistent 
with the telephone-cable cross-ownership ban. The 1996 Act also repeals 
the telephone-cable cross ownership rules imposed by the 1984 Cable 
Act, which prohibited telephone companies from providing video 
programming directly to subscribers in their telephone service

[[Page 10497]]
area. The general regulatory treatment for video programming services 
provided by telephone companies is now set forth in Section 302 of the 
1996 Act, which establishes new Sections 651-653 of Title VI of the 
Communications Act of 1934 (``Communications Act'').
    2. The 1996 Act has adopted a different regulatory approach, and 
establishes various options for telephone companies to enter video 
programming markets, one of which is providing cable service over an 
``open video system'' under new Section 653 of the Communications Act. 
Open video systems will be a new service offered by telephone companies 
that will contain certain elements of both traditional cable service 
and common carriage. In this NPRM, we seek comment on how the 
Commission should implement the open video system provisions of the 
1996 Act in a way that will promote Congress' goals of flexible market 
entry, enhanced competition, streamlined regulation, diversity of 
programming choices, investment in infrastructure and technology, and 
increased consumer choice. In setting forth questions in the NPRM, we 
do not mean to imply that we will find it necessary to adopt rules 
addressing each of the issues raised. Rather, these questions are 
designed to develop a record that will enable us to determine what 
rules, if any, the Commission should adopt.
    3. Generally, Section 653 provides that, if a telephone company 
certifies that it complies with certain non-discrimination and other 
requirements established by the Commission, it's open video system will 
not be subject to regulation under Title II and will be entitled to 
reduced regulation under Title VI. The 1996 Act provides that the 
Commission must act upon a certification request within ten days of 
receipt. The 1996 Act also states that the Commission has the authority 
to resolve disputes regarding open video systems, but must do so within 
180 days. The 1996 Act states that certain Title VI provisions shall 
not apply to open video systems, including, leased access obligations, 
franchise requirements and fees, cable rate regulation, and consumer 
protection and customer service rules.
    4. This NPRM solicits comment on a number of relevant issues. 
First, new subsection 653(b)(1) of the Communications Act requires the 
Commission to prescribe regulations that (1) prohibit an open video 
system operator from discriminating among video programming providers 
with regard to carriage on the system, and (2) if demand exceeds 
capacity, prohibit the system operator and its affiliates from 
selecting the programming on more than one-third of the system's 
capacity. In order to implement Congress' directive, the NPRM seeks 
comment on the best method of implementing this provision. We seek 
comment on various issues related to implementing these provisions, 
including: (1) permitting open video system operators to allocate 
capacity on their system; (2) how much flexibility should be afforded 
to system operators in complying with these provisions; (3) a system 
operator's notifying video providers of its intent to establish an open 
video system; (4) an operator's discretion regarding programming: (5) 
how to measure capacity; (6) issues related to the distinction between 
analog and digital channels; (7) allocating capacity where demand for 
carriage exceeds capacity of the system; and (8) allocating capacity 
where the level of demand changes after the initial allocation of 
capacity.
    5. Second, new subsection 653(b)(1)(A) also requires the Commission 
to prescribe rules that will ensure that rates, terms, and conditions 
for the carriage of video programming on an open video system meet the 
conditions described above. In order to implement this directive, the 
NPRM solicits comment on methods for the Commission's enforcement of 
rules implementing this statutory provision, including whether the 
rates determined under market forces will comport with this statutory 
provision. We also seek comment on whether the Commission, if it were 
to adopt rules in this area, should permit some measure of 
discrimination consistent with the Act.
    6. Third, new subsection 653(b)(1)(C) of the Communications Act 
requires the Commission to prescribe regulations that permit an open 
video system operator ``to carry on only one channel any video 
programming service that is offered by more than one video programming 
provider, provided that subscribers have ready and immediate access to 
any such video programming service.'' In order to carry out this 
Congressional mandate, we first tentatively conclude that the open 
video system operator may administer channel sharing arrangements 
consistent with the Act. In addition, the NPRM solicits comment on 
issues relating to this provision, including: (1) the system operator's 
designation of another entity to administer channel sharing; (2) 
whether the Commission should prescribe any terms and conditions under 
which channels may be shared; (3) any technical differences exist 
between shared and non-shared channels that may permit system operators 
to discriminate among video providers in designating certain channels 
as shared; and (4) how to ensure that subscribers have ``ready and 
immediate access'' to the shared channels.
    7. Fourth, the 1996 Act directs the Commission to prescribe 
regulations that extend our regulations concerning sports exclusivity, 
network non-duplication, and syndicated exclusivity to the distribution 
of video programming over open video systems. In order to implement 
Congress' directives, we seek comment on our tentative conclusion that 
these existing cable policies and procedures should be extended to open 
video systems, and any related issues.
    8. Fifth, the 1996 Act directs the Commission to prescribe 
regulations that prohibit an open video system operator from 
unreasonably discriminating in favor of the operator or its affiliates 
with regard to material provided to subscribers for the purposes of 
selecting programming on the system, or in the way such material is 
presented to subscribers.
    In addition, the Commission must require an open video system 
operator to ensure that video programming providers or copyright 
holders are able to identify their programming services to subscribers. 
Finally, the 1996 Act directs that the Commission prescribe regulations 
that prohibit an open video system operator from ``omitting television 
broadcast or other unaffiliated video programming services carried on 
such system from any navigational device, guide or menu.'' In order to 
implement Congress' directives, we seek comment on how to implement the 
various provisions of this subsection, including: (1) the meaning of 
the term ``material or information;'' (2) the meaning of the term 
``selecting programming;'' (3) whether the prohibition against omitting 
broadcast stations and unaffiliated programmers from any ``navigational 
device, guide or menu'' applies to programmers that are not part of the 
subscriber's package; and (4) what would constitute proper 
identification of programming services.
    9. Sixth, the 1996 Act provides that any provision that applies to 
cable operators under our PEG access, must-carry and retransmission 
consent rules shall apply ``to any [certified] operator of an open 
video system.'' It also provides that the Commission shall, to the 
extent possible, impose obligations that are no greater or lesser than 
the obligations imposed on cable operators. In order to carry out this 
Congressional mandate, we solicit comment on issues relating to this 
provision, including: (1)

[[Page 10498]]
how PEG obligations should be established given that the 1996 Act does 
not require a video system operator to obtain a local franchise; (2) 
the treatment of situations where an open video system overlaps several 
cable franchise jurisdictions; (3) the general effect of technological 
and administrative differences between open video systems and cable 
television systems on implementing these provisions. With respect to 
program access, the 1996 Act provides that these rules shall apply to 
any operator of an open video system. In order to carry out this 
Congressional mandate, the Commission should solicit comment on issues 
relating to this provision, including: (1) what entity should be 
subject to the rules, and (2) applying the program access provisions' 
requirement that ``competing distributors'' be involved. We also seek 
comment on applying other rules provisions of Title VI of the 
Communications Act to open video systems, pursuant to the 1996 Act, 
including those concerning ownership restrictions, regulation of 
carriage agreements, negative option billing, subscriber privacy, and 
equal employment opportunity.
    10. Seventh, the 1996 Act provides generally that a local exchange 
carrier may provide cable service to its cable service subscribers in 
its telephone service area through an open video system, and that, to 
the extent permitted by Commission regulations, consistent with the 
public interest, convenience, and necessity, an operator of a cable 
system or any other person may provide video programming through an 
open video system that complies with this section. In order to 
implement Congress' directives, we seek comment on: (1) whether this 
language means that cable operators and others may or may not become 
open video system operators, or may only provide video programming on 
others' open video systems the circumstances under which this language 
permits cable operators and others to become open video system 
operators or programmers; (2) what public interest factors should be 
considered in permitting cable operators to either become open video 
system operators or provide video programming on open video systems; 
and (3) the treatment of the situation where a local exchange carrier 
jointly markets or bundles the offering of regulated telephone service 
and open video system video programming.
    11. Eighth, the 1996 Act provides that an operator of an open video 
system shall qualify for reduced regulatory burdens under subsection 
653(c) if the operator certifies to the Commission that it complies 
with the Commission's regulations under subsection 653(b) and the 
Commission approves such certification. The Commission must act on the 
certification within 10 days of receiving the certification. In order 
to implement Congress' directives, we seek comment on interpreting this 
language, including: (1) the approach we should take in establishing 
certification procedures, especially in light of this short statutory 
review period; and (2) the type of information that an open video 
system operator would be required to submit.
    12. Ninth, the 1996 Act states that the Commission shall have the 
authority to resolve disputes under this section. The Commission must 
resolve any such dispute within 180 days, and may, in the case of a 
violation, require carriage, award damages, or both. In order to 
implement Congress' directives, we seek comment on: (1) whether the 
Commission should establish a dispute resolution procedure, such as the 
one employed to resolve program access disputes; and (2) in the 
alternative, establish more informal procedures which would require or 
encourage parties to first try to resolve the dispute without the 
Commission's direct involvement.

II. Initial Regulatory Flexibility Analysis

    13. Pursuant to the Regulatory Flexibility Act of 1980, 5 U.S.C. 
601-612, the Commission's Initial Regulatory Flexibility Analysis with 
respect to the NPRM is as follows:
    14. Reason for action: The Commission is issuing this NPRM to seek 
comment on various issues concerning implementation of the open video 
system provisions of the 1996 Act.
    15. Objectives: To provide an opportunity for public comment and to 
provide a record for a Commission decision on the issues discussed in 
the NPRM.
    16. Legal Basis: The NPRM is adopted pursuant to Section 302 of the 
1996 Act; and sections 1, 2, 4(i), 201-205, 215, 220, 303(r), 601-602, 
611-616, 621-624, and 625-634 of the Communications Act of 1934, as 
amended, 47 U.S.C. 151, 152, 154, 201-205, 215, 220, 303(r), 521-522, 
531-536, and 545-554.
    17. Description, potential impact, and number of small entities 
affected: Amending our rules to, for example, increase the programming 
distribution outlets for video programming providers, may directly 
impact entities which are small business entities, as defined in 
Section 601(3) of the Regulatory Flexibility Act.
    18. Reporting, recordkeeping, and other compliance requirements: 
None.
    19. Federal rules which overlap, duplicate, or conflict with the 
Commission's proposal: None.
    20. Any significant alternatives minimizing impact on small 
entities and consistent with state objectives: The NPRM solicits 
comments on implementing the provisions of the 1996 Act concerning 
carriage by open video system operators of PEG access channels.
    21. Comments are solicited: Written comments are requested on this 
Initial Regulatory Flexibility Analysis. These comments must be filed 
in accordance with the same filing deadlines set for comments on the 
other issues in this NPRM, but they must have a separate and distinct 
heading designating them as responses to the Regulatory Flexibility 
Analysis. The Secretary shall send a copy of the Notice to the Chief 
Counsel for Advocacy of the Small Business Administration in accordance 
with Section 603(a) of the Regulatory Flexibility Act, 5 U.S.C. 601, et 
seq.

III. Initial Paperwork Reduction Act of 1995 Analysis

    22. This NPRM contains either a proposed or modified information 
collection. As part of our continuing effort to reduce paperwork 
burdens, we invite the general public and the Office of Management and 
Budget (``OMB'') to take this opportunity to comment on the information 
collections contained in this NPRM, as required by the Paperwork 
Reduction Act of 1995, Pub. L. No. 104-13. Public and agency comments 
are due at the same time as other comments on the NPRM; OMB comments 
are due May 13, 1996. 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 
shall 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.

IV. Procedural Provisions

    23. Ex parte Rules--Non-Restricted Proceeding. This is a non-
restricted notice and comment rulemaking proceeding. Ex parte 
presentations are permitted, except during the Sunshine Agenda period, 
provided that they are disclosed as provided in Commission's

[[Page 10499]]
rules. See generally 47 CFR 1.1202, 1.1203, and 1.1206(a).
    24. Pursuant to applicable procedures set forth in Sections 1.415 
and 1.419 of the Commission's rules, 47 CFR 1.415, 1.419, interested 
parties may file comments on or before April 1, 1996, and reply 
comments on or before April 11, 1996. We find these periods for the 
filing of comments and reply comments to be reasonable in light of the 
1996 Act's mandate that the Commission complete all actions necessary 
(including any reconsideration) to prescribe certain regulations 
concerning open video systems. See Florida Power & Light Co, v. United 
States, 846 F.2d 765 (D.C. Cir. 1988) cert. denied, 490 U.S. 1045 
(1989). 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, 1919 M Street, N.W., Room 222, Washington, 
D.C. 20554, with a copy to Larry Walke of the Cables Services Bureau, 
2033 M Street, N.W., Room 408A, 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., 2100 M Street, N.W., Suite 140, 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, 
N.W., Room 239, Washington, D.C. 20554.
    25. Parties are also asked to submit comments and reply comments on 
diskette. 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 Larry Walke of the Cable 
Services Bureau, 2033 M Street, N.W., Room 408A, Washington, D.C. 
20554. Such a submission should 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.

V. Ordering Clauses

    26. It is ordered that, pursuant to Section 302 of the 1996 Act; 
and sections 1, 2, 4(i), 201-205, 215, 220, 303(r), 601-602, 611-616, 
621-624, and 625-634 of the Communications Act of 1934, as amended, 47 
U.S.C. 151, 152, 154, 201-205, 215, 220, 303(r), 521-522, 531-536, and 
545-554, Notice is hereby given of proposed amendments to Part 76, in 
accordance with the proposals, discussions, and statement of issues in 
this NPRM and that comment is sought regarding such proposals, 
discussion, and statements of issues.
    27. It is further ordered that, the Secretary shall send a copy of 
this NPRM, including the IRFA, 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).
    28. For additional information regarding this proceeding, contact 
Rick Chessen or Larry Walke, Policy & Rules Division, Cable Services 
Bureau (202) 416-0800.

Federal Communications Commission.
William F. Caton,
Acting Secretary.
[FR Doc. 96-6146 Filed 3-11-96; 3:40 pm]
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