[Federal Register Volume 64, Number 127 (Friday, July 2, 1999)]
[Rules and Regulations]
[Pages 35948-35951]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-16955]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 76

[CS Docket No. 96-85; FCC 99-57]


Implementation of Cable Act Reform Provisions of the 
Telecommunications Act of 1996

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: In the Report and Order, the Commission implemented provisions 
of the 1996 Telecommunications Act that reform several parts of Title 
VI of the Communications Act of 1934, including sections on effective 
competition to a cable system, small cable operator rules, uniform rate 
requirements, technical standards, and the sunset of the Commission's 
role in regulating rates on the cable service programming tier.

DATES: Effective August 31, 1999 except for sections 76.952 and 76.990 
which contain information collection requirements that have not been 
approved by the Office of Management and Budget (``OMB''). The 
Commission will publish a document in the Federal Register announcing 
the effective date of those sections. Written comments by the public on 
the information collection requirements are due August 2, 1999. Written 
comments must be submitted by OMB on the information collection 
requirements on or before August 31, 1999.

ADDRESSES: A copy of any comments on the information collections 
contained herein should be submitted to Judy Boley, Federal 
Communications Commission, Room 1-C804, 445 12th Street, SW, 
Washington, DC 20554, and to Timothy Fain, OMB Desk Officer, 10236 
NEOB, 725--17th Street, NW, Washington, DC 20503.

FOR FURTHER INFORMATION CONTACT: Peggy Greene or Nancy Stevenson, Cable 
Services Bureau (202) 418-7200, TTY (202) 418-7172. For additional 
information concerning the information collections contained in this 
Report and Order, contact Judy Boley at 202-418-0214, or via the 
Internet at [email protected].

SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's 
Report and Order in CS Docket No. 96-85, FCC 99-57, adopted March 25, 
1999, and released March 29, 1999. The complete text of the Report and 
Order is available for inspection and copying during normal business 
hours in the FCC Reference Center, and may also be purchased from the 
Commission's copy contractor, International Transcription Service 
(``ITS, Inc.''), (202) 857-3800, 1231 20th Street, NW, Washington, DC 
20036. In addition, the complete text of the Report and Order is 
available on the Internet at http://www.fcc.gov/Bureaus/Cable/Orders/
1999/fcc99057.txt.

Paperwork Reduction Act

    This Report and Order has been analyzed with respect to the 
Paperwork Reduction Act of 1995 (the ``1995 Act'') and found to impose 
new or modified information collection requirements on the public. The 
Commission, as part of its continuing effort to reduce paperwork 
burdens, invites the general public to take this opportunity to comment 
on the information collection requirements contained in this Report and 
Order, as required by the 1995 Act. Public comments are due August 2, 
1999. Written comments must be submitted by OMB on or before August 31, 
1999. 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.
    OMB Approval Number: 3060-0706.
    Title: Cable Act Reform.
    Type of Review: Revision of existing collection.
    Respondents: Business and for-profit entities; state, local and 
tribal governments.
    Number of Respondents: 950.
    Estimated Time per Response: 1-8 hours.
    Total Estimated Annual Burden to Respondents: 3,900 hours.
    Total Estimated Annual Cost to Respondents: $4,100.
    Needs and Uses: The notice, filing and third-party disclosure 
requirements accounted for in OMB 3060-0706 serve a variety of purposes 
for subscribers, cable operators, franchising authorities and the 
Commission. For example, pursuant to section 76.952, franchising 
authority contact information is furnished on monthly billing 
statements and is used by cable subscribers when wanting to inquire 
about cable matters in their community. Franchising authorities have 
the option to not have this information furnished on billing statements 
if they so choose. The filing of a written request to the cable 
operator facilitates this option. Pursuant to section 76.990, a small 
cable operator may certify in writing to its franchising authority that 
it meets the criteria to qualify as a small operator. The information 
filed as part of the certification is reviewed by the franchising 
authority to determine whether the operator qualifies for deregulation 
as a small cable operator. Pursuant to section 76.1404, copies of 
contract information are filed with the Commission for a determination 
of whether use of a cable operator's facilities by a local exchange 
carrier is reasonably limited in scope and duration.

    OMB Approval Number: 3060-0549.
    Title: Cable Programming Services Complaints (FCC Form 329).
    Type of Review: Revision of existing collection.
    Respondents: Individuals; state, local and tribal governments.
    Number of Respondents: 1,300.
    Estimated Time per Response: 45 minutes.
    Total Estimated Annual Burden to Respondents: 1,200 hours.
    Total Estimated Annual Cost to Respondents: $3,200
    Needs and Uses: The data are used by Commission staff to examine 
the reasonableness of a cable operator's rates for programming service 
or

[[Page 35949]]

associated equipment prior to the March 31, 1999 sunset of CPST rate 
regulation. The filing of FCC Form 329 initiates an investigation of a 
cable systems's rates for cable programming service.

Synopsis of the Report and Order

    The Commission's Report and Order implements provisions of the 
Telecommunications Act of 1996 (``1996 Act'') that reform several parts 
of the Cable Television Consumer Protection and Competition Act of 1992 
(``1992 Cable Act''). These are generally known as the ``Cable Reform'' 
provisions. The Report and Order also includes information about the 
sunset of the Commission's role in regulating rates on the cable 
service programming tier (``CPST''). The Cable Reform provisions 
include sections on effective competition to a cable system, small 
cable operator rules, uniform rate requirements, technical standards 
and subscriber notice.
    2.Key findings:
     CPST rate regulation sunset: Pursuant to section 623 of 
the 1996 Act, rates for CPST services provided after March 31, 1999 
will not be subject to Commission review and regulation. The Commission 
will continue to process complaints regarding rates for services 
provided prior to March 31, 1999.
     Effective Competition: The statute provides that a cable 
operator's rates are not regulated if the cable system is subject to 
effective competition. The 1996 Act added a new effective competition 
test addressing competition from local exchange carriers (``LECs''), 
LEC affiliates, or multichannel video programming distributors using 
LEC facilities. The Commission determined that effective competition 
will be found if a LEC's service offering substantially overlaps the 
incumbent cable operator's service in the same franchise area. 
Potential as well as actual LEC service can be considered. The 1996 Act 
also requires that the LEC's programming service be comparable to the 
incumbent cable operator's service. The Commission adopted the 
definition used for the competing provider test for effective 
competition, which specifies that comparable service must include at 
least 12 channels of video programming, including at least one hannel 
of nonbroadcast service. The Report and Order provides that all 
effective competition cases, other than petitions for reconsideration 
of LFA certifications to regulate rates, will be resolved as petitions 
for determinations of effective competition under the Commission's 
special relief procedures. This will ensure uniform procedures, 
including use of the public notice provisions. The Commission retained 
its rule for handling petitions for reconsideration of LFA 
certifications, which includes an automatic stay provision so that 
erroneous certifications can be addressed before the LFA starts 
regulating rates.
     Small Cable Operators: Under the statute, small cable 
operators meeting certain criteria are exempted from some rate 
regulation. In addition to cable programming services, the exemption 
applies to a basic service tier (``BST'') that was the only service 
tier subject to regulation as of December 31, 1994 in any franchise 
area in which that operator services 50,000 or fewer subscribers. A 
small cable operator is ``a cable operator that, directly or through an 
affiliate, serves in the aggregate fewer than one percent (1%) of all 
subscribers in the United States and is not affiliated with any entity 
or entities whose gross annual revenues in the aggregate exceed 
$250,000,000.'' The Commission decided that the BST exemption is not 
lost if the operator created additional tiers of service after December 
31, 1994. An affiliation exists when an entity owns an active or 
passive equity interest of 20% or more in the cable operator or holds 
de facto control over the operator. Purely passive investment, however, 
will not be treated as an affiliation. Implementing the Cable Reform 
provisions does not affect the Commission's small system cost of 
service rules. The Report and Order concludes that the Commission lacks 
the discretion to maintain an operator's small operator status once it 
no longer meets the eligibility requirements in the statute. The Report 
and Order allows operators losing their eligibility to maintain the 
rates prevailing prior to the loss of eligibility and to implement rate 
increases pursuant to the generally applicable rate regulations. To 
prevent cable operators from imposing large rate increases in 
anticipation of a change in status, the Report and Order requires cable 
operators to demonstrate that their rates were in effect for three 
months prior to the loss of small cable status.
     Uniform Rate Requirement: Under the statute, unless a 
cable operator is subject to effective competition, its rates must be 
uniform throughout the franchise area. The statute provides a limited 
exception for bulk discounts to multiple dwelling units (``MDUs'') so 
that cable operators can respond to competition in individual MDUs by 
offering lower prices. The Report and Order concludes that a bulk 
discount is a volume discount available to all residents of the MDU. 
The operator can offer the discount directly to residents; negotiation 
about the rate with the MDU owner or manager is not required.
     Technical Standards: The 1996 Act retains the requirement 
that the Commission establish minimum technical standards for cable 
systems' technical operation and signal quality and adds that no state 
or franchising authority may prohibit, condition, or restrict a cable 
system's use of any type of subscriber equipment or any transmission 
technology. The Report and Order concludes that LFA oversight and 
enforcement of the Commission's technical standards is permitted but 
that LFAs cannot impose technical standards different from the 
Commission's technical standards. The Report and Order also finds that 
transmission technology includes, for example, an operator's use of 
digital or analog transmissions and its use of coaxial cable, fiber 
optic cable, or microwave facilities. The Report and Order also 
acknowledges the LFA's important role in determining local needs and 
access channel requirements, requiring institutional networks, 
reviewing an operator's qualifications, and managing public rights of 
way.
     Subscriber Notice: The 1996 Act provides that a cable 
operator may provide notice of service and rate changes using any 
reasonable written means at its sole discretion. The item concludes 
that Congress intended to limit the Commission's discretion in this 
area but did not completely eliminate the role of regulatory 
authorities. LFAs and the Commission retain the authority to determine 
that a particular mechanism is not reasonable.
    Ordering Clauses
    3. Accordingly, It is ordered that, pursuant to sections 4(i), 
4(j), 303(r), as amended, 47 U.S.C. 154(i), 154(j), 303(r), and the 
Telecommunications Act of 1996, sections 301 and 302, the requirements 
and policies discussed in this Report and Order, Are amended as set 
forth below.
    It is further ordered that the requirements and regulations 
established in this decision shall become effective upon approval by 
OMB of the new information collection requirements adopted herein, but 
no sooner than 60 days after publication in the Federal Register.
    5. It is further ordered that the Commission's Office of Public 
Affairs, Reference Operations Division, Shall send a copy of this 
Report and Order, including the Final Regulatory Flexibility Analysis, 
to the Chief Counsel for Advocacy of the Small Business Administration.

[[Page 35950]]

List of Subject in 47 CFR Part 76

    Cable Television.

Federal Communications Commission.
Shirley Suggs,
Chief, Publication Branch.

Rule Changes

    For the reasons discussed in the preamble, The Federal 
Communications Commission amends 47 CFR Part 76 as follows:

PART 76--MULTICHANNEL VIDEO AND CABLE TELEVISION SERVICE

    1. The authority citation for Part 76 continues to read as follows:

    Authority: 47 U.S.C. 151, 152, 153, 154, 301, 302, 303, 303a, 
307, 308, 309, 312, 315, 317, 325, 503, 521, 522, 531, 532, 533, 
534, 535, 536, 537, 543, 544, 544a, 545, 548, 549, 552, 554, 556, 
558, 560, 561, 571, 572, 573.

    2. Section 76.701 is amended by adding a new note to paragraph (b) 
to read as follows:


Sec. 76.701  Leased access channels.

* * * * *
    Note to paragraph (b): ``Nudity'' in paragraph (b) is 
interpreted to mean nudity that is obscene or indecent.

    3. Section 76.901 is amended by adding a new paragraph (f) to read 
as follows:


Sec. 76.901  Definitions.

* * * * *
    (f) Small cable operator. A small cable operator is an operator 
that, directly or through an affiliate, serves in the aggregate fewer 
than 1 percent of all subscribers in the United States and is not 
affiliated with any entity or entities whose gross annual revenues in 
the aggregate exceed $250,000,000. For purposes of this definition, an 
operator shall be deemed affiliated with another entity if that entity 
holds a 20 percent or greater equity interest (not including truly 
passive investment) in the operator or exercises de jure or de facto 
control over the operator.

    Note 1 to paragraph (f): Using the most reliable sources 
publicly available, the Commission periodically will determine and 
give public notice of the subscriber count that will serve as the 1 
percent threshold until a new number is calculated.
    Note 2 to paragraph (f): For a discussion of passive interests 
with respect to small cable operators, see Implementation of Cable 
Act Reform Provisions of the Telecommunications Act of 1996, Report 
and Order in CS Docket No. 96-85, FCC 99-57 (released March 29, 
1999).
    Note 3 to paragraph (f): If two or more entities unaffiliated 
with each other each hold an equity interest in the small cable 
operator, the equity interests of the unaffiliated entities will not 
be aggregated with each other for the purpose of determining whether 
an entity meets or passes the 20 percent affiliation threshold.

    4. Section 76.905 is amended by revising paragraph (g) to read as 
follows:


Sec. 76.905  Standards for identification of cable systems subject to 
effective competition.

* * * * *
    (g) In order to offer comparable programming as that term is used 
in this section, a competing multichannel video programming distributor 
must offer at least 12 channels of video programming, including at 
least one channel of nonbroadcast service programming.
    5. Section 76.907 is added to read as follows:


Sec. 76.907  Petition for a determination of effective competition.

    (a) A cable operator (or other interested party) may file a 
petition for a determination of effective competition with the 
Commission pursuant to the Commission's procedural rules in Sec. 76.7.
    (b) The cable operator bears the burden of rebutting the 
presumption that effective competition does not exist with evidence 
that effective competition, as defined in Sec. 76.905, exists in the 
franchise area.

    Note to paragraph (b): The criteria for determining effective 
competition pursuant to Sec. 76.905(b)(4) are described in 
Implementation of Cable Act Reform Provisions of the 
Telecommunications Act of 1996, Report and Order in CS Docket No. 
96-85, FCC 99-57 (released March 29, 1999).

    (c) If the evidence establishing effective competition is not 
otherwise available, cable operators may request from a competitor 
information regarding the competitor's reach and number of subscribers. 
A competitor must respond to such request within 15 days. Such 
responses may be limited to numerical totals. In addition, with respect 
to petitions filed seeking to demonstrate the presence of effective 
competition pursuant to Sec. 76.905(b)(4), the Commission may issue an 
order directing one or more persons to produce information relevant to 
the petition's disposition.
    6. Section 76.911 is amended by removing paragraph (b); 
redesignating paragraphs (c) through (e) as paragraphs (b) through (d); 
and by revising paragraphs (a) and (a)(1) to read as follows:


Sec. 76.911  Petition for reconsideration of certification.

    (a) A cable operator (or other interested party) may challenge a 
franchising authority's certification by filing a petition for 
reconsideration pursuant to Sec. 1.106. The petition may allege either 
of the following:
    (1) The cable operator is not subject to rate regulation because 
effective competition exists as defined in Sec. 76.905. Sections 
76.907(b) and (c) apply to petitions filed under this section.
* * * * *


Sec. 76.915  [Removed]

    7. Section 76.915 is removed.
    8. Add a note to Sec. 76.934 to read as follows:


Sec. 76.934  Small systems and small cable companies

* * * * *
    Note to Sec. 76.934: For rules governing small cable operators, 
see Sec. 76.990 of this subpart.

    9. Section 76.950 is amended by revising paragraph (b) to read as 
follows.


Sec. 76.950  Complaints regarding cable programming service rates.

* * * * *
    (b) This section shall not apply to cable programming services 
provided after March 31, 1999.
    10. Section 76.952 is amended by revising paragraph (a) to read as 
follows:


Sec. 76.952  Information to be provided by cable operator on monthly 
subscriber bills.

    (a) The name, mailing address and phone number of the franchising 
authority, unless the franchising authority in writing requests the 
cable operator to omit such information.
* * * * *
    11. Section 76.956 is amended by revising paragraph (a) to read as 
follows:


Sec. 76.956  Cable operator response.

    (a) Unless otherwise directed by the local franchising authority, a 
cable operator must file with the local franchise authority a response 
to the complaint. The response shall indicate when the cable operator 
received notice of the complaint. Service by mail is complete upon 
mailing. See Sec. 1.47(f) of this chapter. The response shall include 
the information required by the appropriate FCC form, including rate 
cards, channel line-ups, and an explanation of any discrepancy in the 
figures provided in these documents and the rate filing. The cable 
operator must file its response with the local franchise authority via 
first class mail.
* * * * *
    12. Section 76.961 is amended by revising paragraph (b) to read as 
follows:


Sec. 76.961  Refunds.

* * * * *

[[Page 35951]]

    (b) The cumulative refund due subscribers shall be calculated from 
the date of the first complaint filed with the franchising authority 
until the date a cable operator implements a prospective rate reduction 
as ordered by the Commission pursuant to Sec. 76.960. The Commission 
shall calculate refund liability according to the rules in effect for 
determining the reasonableness of the rates for the period of time 
covered by the complaint.
* * * * *
    13. Section 76.984 is amended by removing the last sentence of 
paragraph (b); revising paragraph (c)(2), adding paragraph (c)(3) and 
adding notes 1 and 2 to paragraph (c)(3) to read as follows:


Sec. 76.984  Geographically uniform rate structure.

* * * * *
    (c)(2) Any video programming offered on a per channel or per 
program basis.
    (c)(3) Bulk discounts to multiple dwelling units shall not be 
subject to this section, except that a cable operator of a cable system 
that is not subject to effective competition may not charge predatory 
prices to a multiple dwelling unit. Upon a prima facie showing by a 
complainant that there are reasonable grounds to believe that the 
discounted price is predatory, the cable system shall have the burden 
of showing that its discounted price is not predatory.

    Note 1 to paragraph (c)(3): Discovery procedures for predatory 
pricing complaints. Requests for discovery will be addressed 
pursuant to the procedures specified in Sec. 76.7(f).
    Note 2 to paragraph (c)(3): Confidential information. Parties 
submitting material believed to be exempt from disclosure pursuant 
to the Freedom of Information Act (FOIA), 5 U.S.C. 552(b), and the 
Commission's rules, Sec. 0.457 of this chapter, should follow the 
procedures in Sec. 0.459 of this chapter and Sec. 76.9.

    14. Section 76.990 is added to read as follows:


Sec. 76.990  Small cable operators.

    (a) Effective February 8, 1996, a small cable operator is exempt 
from rate regulation on its cable programming services tier, or on its 
basic service tier if that tier was the only service tier subject to 
rate regulation as of December 31, 1994, in any franchise area in which 
that operator services 50,000 or fewer subscribers.
    (b) Procedures. (1) A small cable operator, may certify in writing 
to its franchise authority at any time that it meets all criteria 
necessary to qualify as a small operator. Upon request of the local 
franchising authority, the operator shall identify in writing all of 
its affiliates that provide cable service, the total subscriber base of 
itself and each affiliate, and the aggregate gross revenues of its 
cable and non-cable affiliates. Within 90 days of receiving the 
original certification, the local franchising authority shall determine 
whether the operator qualifies for deregulation and shall notify the 
operator in writing of its decision, although this 90-day period shall 
be tolled for so long as it takes the operator to respond to a proper 
request for information by the local franchising authority. An operator 
may appeal to the Commission a local franchise authority's information 
request if the operator seeks to challenge the information request as 
unduly or unreasonably burdensome. If the local franchising authority 
finds that the operator does not qualify for deregulation, its notice 
shall state the grounds for that decision. The operator may appeal the 
local franchising authority's decision to the Commission within 30 
days.
    (2) Once the operator has certified its eligibility for 
deregulation on the basic service tier, the local franchising authority 
shall not prohibit the operator from taking a rate increase and shall 
not order the operator to make any refunds unless and until the local 
franchising authority has rejected the certification in a final order 
that is no longer subject to appeal or that the Commission has 
affirmed. The operator shall be liable for refunds for revenues gained 
(beyond revenues that could be gained under regulation) as a result of 
any rate increase taken during the period in which it claimed to be 
deregulated, plus interest, in the event the operator is later found 
not to be deregulated. The one-year limitation on refund liability will 
not be applicable during that period to ensure that the filing of an 
invalid small operator certification does not reduce any refund 
liability that the operator would otherwise incur.
    (3) Within 30 days of being served with a local franchising 
authority's notice that the local franchising authority intends to file 
a cable programming services tier rate complaint, an operator may 
certify to the local franchising authority that it meets the criteria 
for qualification as a small cable operator. This certification shall 
be filed in accordance with the cable programming services rate 
complaint procedure set forth in Sec. 76.1402. Absent a cable 
programming services rate complaint, the operator may request a 
declaration of CPST rate deregulation from the Commission pursuant to 
Sec. 76.7.
    (c) Transition from small cable operator status. If a small cable 
operator subsequently becomes ineligible for small operator status, the 
operator will become subject to regulation but may maintain the rates 
it charged prior to losing small cable operator status if such rates 
(with an allowance for minor variations) were in effect for the three 
months preceding the loss of small cable operator status. Subsequent 
rate increases following the loss of small cable operator status will 
be subject to generally applicable regulations governing rate 
increases.

    Note to Sec. 76.990: For rules governing small cable systems and 
small cable companies, see Sec. 76.934.

    15. Section 76.1401 is amended by removing paragraphs (a), (c), and 
(d) and by removing the designation from paragraph (b).


Sec. 76.1403  [Removed]

    16. Section 76.1403 is removed.
    17. Section 76.1603 is amended by revising paragraph (e) to read as 
follows:


Sec. 76.1603  Written notification of changes in rates and services.

* * * * *
    (e) To the extent the operator is required to provide notice of 
service and rate changes to subscribers, the operator may provide such 
notice using any reasonable written means at its sole discretion.
* * * * *
[FR Doc. 99-16955 Filed 7-1-99; 8:45 am]
BILLING CODE 6712-01-P