[Federal Register Volume 61, Number 151 (Monday, August 5, 1996)]
[Rules and Regulations]
[Pages 40531-40533]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-19428]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 63

[CS Docket No. 96-46; FCC 96-312]


Video Dialtone Systems; Regulatory Scheme for Future Use

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: The First Order on Reconsideration requires operators of 
existing video dialtone systems to make an election concerning what 
regulatory scheme they will operate under in the future. This order 
clarifies our rules in accordance with the Telecommunications Act of 
1996. This order fulfills the mandate of the Telecommunications Act of 
1996.

DATES: Effective August 5, 1996.
     Public and agency comments on the information collection are due 
on or before August 30, 1996. OMB notification of action is requested 
September 4, 1996.

ADDRESSES: Comments on the information collection contained herein 
should be submitted to Dorothy Conway, Federal Communications 
Commission, Room 234, 1919 M Street, N.W., Washington, DC 20554, or via 
the Internet to dconway@fcc.gov, and to Timothy Fain, OMB Desk Officer, 
10236 NEOB, 725-17th Street, N.W., Washington, DC 20503 or via the 
Internet to fain_t@al.eop.gov.

FOR FURTHER INFORMATION CONTACT: For additional information concerning 
the information collection contained herein contact Dorothy Conway at 
202-418-0217, or via the Internet at dconway@fcc.gov.

SUPPLEMENTARY INFORMATION: This First Order on Reconsideration contains 
a new information collection under the Paperwork Reduction Act of 1995 
(the ``1995 Act''). The Commission has requested approval of this 
collection by the Office of Management and Budget (``OMB''), under the 
emergency processing provisions of the 1995 Act. Approval is requested 
to be effective September 4, 1996. The Commission, as part of its 
continuing effort to reduce paperwork burdens, invites the general 
public and OMB to comment on the information collection contained in 
this First Order on Reconsideration, as required by the1995 Act. Public 
and agency comments are due on or before August 30, 1996. Comments 
should address: (1) 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; (2) the accuracy of the Commission's burden estimates; (3) 
ways to enhance the quality, utility, and clarity of the information 
collected; and (4) 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. OMB 
notification of action is requested September 4, 1996.
    OMB Approval Number: New collection submitted for OMB approval.
    Title: Implementation of Section 302 of the Telecommunications Act 
of 1996.
    Type of Review: New collection.
    Respondents: Businesses, and other for profit entities.
    Number of Respondents: Approximately 10.
    Number of Responses: 14. (10 elections letters+4 showings of good 
cause=14.).
    Estimated Time Per Response: .5-5.5 hours. The Commission estimates 
an average burden of .5 hours to prepare and file each election letter. 
The Commission estimates a burden of 5 hours to prepare and file a 
showing of good cause requesting an extension of time. The Commission 
estimates entities will undergo an average burden of 2 hours to 
coordinate information with outside legal assistance in preparing each 
showing of good cause.
    Total Annual Burden: 13 hours. (10 election letters x .5 hours=5 
hours.) (4 showings of good cause x 2 hours=8 hours.)
    Estimated costs per respondent: $3000. The Commission estimates 
that respondents will use outside legal assistance paid at $150 per 
hour to prepare showings for good cause. (4 showings of good cause x 5 
hours @ $150 per hour=$3000.)
    Needs and Uses: The election letters and any potential showings of 
good cause will be collected and reviewed by the Commission to ensure 
that all existing video dialtone operators have elected an option for 
the delivery of video programming services under Section 651. The 
filings will serve as an official record to verify that video dialtone 
operators are in compliance with the Commission's rules and the intent 
of Congress.

First Order on Reconsideration

I. Introduction

    1. On February 8, 1996, the Telecommunications Act of 1996 (the 
``1996 Act'') was signed into law. Among other things, the 1996 Act 
repealed the telephone-cable cross-ownership restriction imposed by the 
Cable Communications Policy Act of 1984 (``1984 Cable Act''), which 
generally prohibited common carriers from providing video programming 
directly to subscribers in their telephone service areas. The 1996 Act 
also repealed the Commission's ``video dialtone'' rules and policies, 
which had been established to permit common carriers to participate in 
the video marketplace in a manner that was consistent with the 
statutory telephone-cable cross-ownership restriction. In repealing the 
Commission's video dialtone rules and policies, the 1996 Act provided:

    The Commission's regulations and policies with respect to video 
dialtone requirements issued in CC Docket No. 87-266 shall cease to 
be effective on the date of enactment of this Act. This paragraph 
shall not be construed to require the termination of any video-
dialtone system that the Commission has approved before the date of 
enactment of this Act.

    2. Consistent with the above statutory provisions, in the Report 
and Order and Notice of Proposed Rulemaking in CS Docket No. 96-46, the 
Commission: (1) Eliminated our rules implementing the telephone-cable 
cross-ownership restriction; (2) eliminated our video dialtone rules 
and policies; (3) terminated our proceeding that established our video 
dialtone rules and policies (CC Docket No. 87-266); and (4) did not 
require currently approved video dialtone systems to cease operations.
    3. The general regulatory treatment for video programming services 
provided by common carriers is now set forth in new Sections 651 
through 653 of Title VI of the Communications Act of 1934 (the 
``Communications Act''). The

[[Page 40532]]

options for common carriers entering the video programming marketplace 
are found in Section 651, which provides that common carriers may: (1) 
Provide video programming to subscribers through radio communication 
under Title III of the Communications Act; (2) provide transmission of 
video programming on a common carrier basis under Title II of the 
Communications Act; (3) provide video programming as a cable system 
under Title VI of the Communications Act; or (4) provide video 
programming by means of an ``open video system'' under new Section 653 
of the Communications Act.

II. Pleadings

    4. On April 1 and April 10, 1996, the National Cable Television 
Association (``NCTA'') filed nearly identical petitions for 
reconsideration of the Commission's decision in the First Report and 
Order not to require currently approved video dialtone systems to cease 
operations. NCTA filed one petition for reconsideration as part of its 
comments in the open video system rulemaking proceeding. See Comments 
and Petition for Reconsideration of the National Cable Television 
Association, Inc., CS Docket No. 96-46, CC Docket 87-266 (Terminated) 
(filed April 1, 1996) (``NCTA April 1 Petition''). NCTA then filed a 
nearly identical petition for reconsideration of the order terminating 
CC Docket No. 87-266. See Petition for Reconsideration, CC Docket No. 
87-266 (Terminated) (filed April 10, 1996) (``NCTA April 10 
Petition''). Because they present identical issues, and because CC 
Docket No. 87-266 has been terminated, we will consider these 
petitions, and the responses thereto, in CS Docket No. 96-46. According 
to NCTA, Congress did not ``require'' the termination of existing video 
dialtone authorizations, but left termination to the Commission's 
discretion. With the repeal of the Commission's video dialtone rules, 
NCTA argues that the Commission has two choices: either conduct another 
rulemaking to establish new rules for these few systems, or require 
that they select between open video and franchised cable service. NCTA 
argues that the latter alternative is preferable, after a reasonable 
transition period. NCTA therefore asks the Commission to require (1) 
outstanding video dialtone trials to terminate in accordance with the 
dates previously established by the Commission, and (2) companies 
holding outstanding commercial authorizations to choose between open 
video and franchised cable service by a date certain.
    5. In response, BellSouth Telecommunications, Inc. (``BellSouth'') 
argues that the Commission did not err by issuing an Order that 
conformed strictly to Section 302(b)(3) of the 1996 Act. Further, 
BellSouth and the Bell Atlantic Telephone Companies (``Bell Atlantic'') 
argue that NCTA overlooks a third wireline option for telephone 
companies under Section 651--common carrier video transmission subject 
to Title II regulation. In addition, Pacific Bell argues that NCTA 
erroneously asserts that Congress did not ``grandfather'' existing 
video dialtone authorizations, and that existing video dialtone systems 
should have the opportunity to continue operating as common carriers 
under Section 651, under any other provision of the 1996 Act or under 
any other option available prior to the 1996 Act's passage and not 
repealed by Congress. Recently, Sprint Corporation (``Sprint'') filed 
an ex parte letter, objecting to the proposed discontinuance of 
operations of existing approved video dialtone trials. In particular, 
Sprint argued that it would be disruptive for the customers of its 
video dialtone trial in Wake Forest, North Carolina if its operations 
were to cease prematurely, and that the 1996 Act does not require the 
Commission to terminate such systems.
    6. In its reply, NCTA argues that Pacific Bell is ``simply wrong'' 
to claim that existing video dialtone authorizations were somehow 
``grandfathered'' by the 1996 Act. While the 1996 Act does not 
``require'' the termination of currently authorized video dialtone 
systems, NCTA asserts that the 1996 Act does not prohibit the 
Commission from terminating the authorizations. NCTA further argues 
that the common carrier video programming transmission model applies 
when only video transmission is being provided on a common carrier 
basis. If a common carrier provides more than video transmission (e.g., 
when it provides its own video programming, or provides enhanced 
services associated with video transmission), NCTA asserts that the 
common carrier option is not available and the common carrier must 
choose either the open video or the traditional cable model.

III. Discussion

    7. We agree with NCTA that Section 302(b)(3) was not intended to 
``grandfather'' existing video dialtone systems indefinitely as video 
dialtone systems. Again, Section 302(b)(3) of the 1996 Act provides: 
``This paragraph shall not be construed to require the termination of 
any video-dialtone system that the Commission has approved before the 
date of enactment of this Act.'' Rather, we interpret Section 302(b)(3) 
to mean that the repeal of the Commission's video dialtone rules does 
not also require the immediate termination of video dialtone systems 
operating under those rules. We believe that Section 302(b)(3) was 
intended to give the Commission the discretion to avoid an immediate 
disruption of video dialtone service, and to develop an orderly 
transition plan for existing video dialtone systems.
    8. We find that the public interest would be served by requiring 
currently authorized video dialtone operators to select one of the four 
video programming delivery options set forth in Section 651--radio-
based, common carrier transmission, traditional cable or open video. 
The Commission's open video system rules were released on June 3, 1996, 
and the Commission must release any reconsideration of those rules by 
August 8, 1996. We believe that after August 8, 1996 video dialtone 
operators will possess adequate information regarding their options to 
make such an election.
    9. We realize that video dialtone operators will need time to 
evaluate their options under Section 651 and to implement their choice. 
We therefore will provide video dialtone operators ninety days from 
August 8, 1996 in which to effect a transition to one of the four 
options for providing video programming services under Section 651. A 
video dialtone operator may, of course, begin providing video service 
under one of the regulatory options in Section 651 at any time and need 
not wait until the end of the election period. This will also permit 
video dialtone subscribers to continue receiving service without 
disruption. At or before the end of this 90-day period, each currently 
authorized video dialtone operator must inform the Office of the 
Secretary of the Commission in writing, with a copy to the Chief of the 
Cable Services Bureau, which option under Section 651 it has elected. 
We realize, however, that it may not be possible in all circumstances 
for a video dialtone operator to complete the transition in ninety 
days. In those instances, we would consider reasonable extensions of 
time based on a showing of good cause. For example, if the video 
dialtone operator were diligently pursuing a cable franchise and the 
local franchising authority had not yet granted the franchise, we would 
likely consider that good cause.
    10. We believe that requiring such an election is fully consistent 
with congressional intent. We are not requiring video dialtone 
operators to

[[Page 40533]]

cease providing video service to their subscribers, but simply to 
provide service in compliance with one of the statutorily-recognized 
video programming delivery options. We also believe that this 
conclusion is consistent with the Conference Report, since we are not 
requiring video dialtone operators to elect a different option until 
after our open video system rules have become effective. To hold 
otherwise, as NCTA points out, would require the Commission to initiate 
a new rulemaking proceeding to establish rules governing a handful of 
systems. We believe that creating a fifth option for a limited number 
of systems would be unnecessary, wasteful, and contrary to Congress' 
Section 651 framework. We decline to adopt such an approach.
    11. We also believe that the above election requirement generally 
is consistent with the positions advanced by BellSouth, Bell Atlantic 
and Pacific Bell. We also believe that the election requirement 
generally is consistent with Sprint's position that the Commission is 
not required to terminate currently authorized video dialtone systems, 
and addresses its concern that subscribers' service not be disrupted. 
None of those companies has argued for, or expressed an interest in, 
providing video programming service separate and apart from the 
Communication Act's current framework. These parties have all posited 
that entities with existing video dialtone authorizations should have 
the opportunity to continue offering service under Title II. For 
instance, although Pacific Bell disagrees with NCTA's assertion that 
existing video dialtone authorizations were not ``grandfathered,'' it 
argues that existing video dialtone systems ``should have the 
opportunity to continue offering service under Title II'' or some other 
permissible framework. Similarly, Bell Atlantic asserts that its video 
dialtone system in Dover Township, New Jersey already qualifies as a 
common carrier system, and that it will evaluate the appropriate 
regulatory framework for its Dover Township system once the 
Commission's open video system rules are in place. We expressly do not 
reach the merits of Bell Atlantic and BellSouth's assertions that some 
or all video dialtone systems qualify as common carrier video offerings 
under Section 651. As noted above, common carrier transmission is one 
of the Section 651 alternatives under which video dialtone operators 
may continue to provide service.
    12. We do not distinguish between video dialtone trials and 
commercial authorizations for purposes of this election. The repeal of 
our video dialtone rules requires an election comporting with the 
provisions of the amended law. The type of authorization under the 
video dialtone structure is not relevant to this requirement.

IV. Paperwork Reduction Act of 1995 Analysis

    13. This First Order on Reconsideration contains a new information 
collection under the Paperwork Reduction Act of 1995 (the ``1995 
Act''). The Commission has requested approval of this collection by the 
Office of Management and Budget (``OMB''), under the emergency 
processing provisions of the 1995 Act. Approval is requested to be 
effective September 4, 1996. The Commission, as part of its continuing 
effort to reduce paperwork burdens, invites the general public and OMB 
to comment on the information collection contained in this First Order 
on Reconsideration as required by the 1995 Act. Public and agency 
comments on the information collection are due on or before August 30, 
1996. Comments should address: (1) 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; (2) the accuracy of the Commission's burden estimates; (3) 
ways to enhance the quality, utility, and clarity of the information 
collected; and (4) 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. OMB 
notification of action is requested September 4, 1996.
    14. A copy of any comments on the information collection contained 
herein should be submitted to Dorothy Conway, Federal Communications 
Commission, Room 234, 1919 M Street, N.W., Washington, DC 20554, or via 
the Internet to dconway@fcc.gov and to Timothy Fain, OMB Desk Officer, 
10236, NEOB, 725--17th Street, N.W., Washington, DC 20503 or via the 
Internet to fain_t@al.eop.gov. For additional information concerning 
the information collections contained herein contact Dorothy Conway at 
202-418-0217, or via the Internet at dconway@fcc.gov.

V. Ordering Clauses

    15. Accordingly, it is Ordered that NCTA's Petition for 
Reconsideration in CS Docket No. 96-46 is granted in part and denied in 
part, as provided herein.
    16. It is further ordered that pursuant to Sections 4(i), 4(j), 
651, and 653 of the Communications Act of 1934, as amended, 47 U.S.C. 
Secs. 154(i), 154(j), 571, and 573, and Section 302(b)(3) of the 
Telecommunications Act of 1996, the requirements and policies discussed 
in this First Order on Reconsideration are adopted.

Federal Communications Commission.
William F. Caton,
Acting Secretary.

Regulatory Flexibility Analysis

    The Federal Communications Commission certifies that the Regulatory 
Flexibility Act is not applicable to the requirements we adopt in this 
First Order on Reconsideration. There will not be a significant 
economic impact on a substantial number of small business entities, as 
defined by Section 601(3) of the Regulatory Flexibility Act. Entities 
directly subject to the requirements herein are large corporations 
engaged in the provision of video programming services, and therefore 
are not ``small entities'' as defined by the Small Business Act. We are 
nevertheless committed to reducing the regulatory burdens on small 
communications services companies whenever possible, consistent with 
our other public interest responsibilities. The Secretary shall send a 
copy of this First Order on Reconsideration to the Chief Counsel for 
Advocacy of the Small Business Administration in accordance with 
Sections 603(a) and 605(b) of the Regulatory Flexibility Act, 5 U.S.C. 
Secs. 601, et seq. (1981).

Federal Communications Commission.

[FR Doc. 96-19428 Filed 8-2-96; 8:45 am]
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