[Federal Register Volume 64, Number 230 (Wednesday, December 1, 1999)]
[Rules and Regulations]
[Pages 67198-67199]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-31024]



[[Page 67198]]

-----------------------------------------------------------------------

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 76

[MM Docket No. 92-264; FCC 99-289]


Cable Television Consumer Protection and Competition Act of 1992: 
Horizontal Ownership Limits

AGENCY: Federal Communications Commission.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: This document amends the method by which the cable horizontal 
ownership limit is calculated in order to further implements Congress' 
directive that a cable horizontal cap be established and to reflect 
dynamic changes in the marketplace.

DATES: Effective February 9, 2000, following OMB approval, unless a 
notice is published in the Federal Register stating otherwise. Written 
comments by the public on the new and/or modified information 
collections are due January 31, 2000.

ADDRESSES: In addition to filing comments with the Office of the 
Secretary, a copy of any comments on the information collection(s) 
contained herein should be submitted to Judy Boley, Federal 
Communications Commission, Room 1-C804, 445 12th Street, SW, 
Washington, DC 20554, or via the Internet to [email protected].

FOR FURTHER INFORMATION CONTACT: Darryl Cooper at (202) 418-7200 or via 
Internet at [email protected]. For additional information concerning the 
information collection(s) contained in this document, contact Judy 
Boley at 202-418-0214, or via the Internet at [email protected].

SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's Third 
Report and Order, FCC 99-289, adopted on October 8, 1999 and released 
October 20, 1999. The full text of this decision is available for 
inspection and copying during normal business hours in the FCC 
Reference Center, 445 12th Street, SW, Washington, DC 20554, or may be 
purchased from the Commission's copy contractor, International 
Transcription Service (``ITS''), (202) 857-3800, 1231 20th Street, NW, 
Washington, DC 20036, or may be reviewed via Internet at http://
www.fcc.gov/Bureaus/Cable/WWW/csb.html. For copies in alternative 
formats, such as braille, audio cassette or large print, please contact 
Sheila Ray at ITS.
    This Third Report & Order contains new or modified information 
collection(s) subject to the Paperwork Reduction Act of 1995 (PRA), 
Public Law 104-13. It will be submitted to the Office of Management and 
Budget (OMB) for review under Section 3507(d) of the PRA. OMB, the 
general public, and other Federal agencies are invited to comment on 
the new or modified information collection(s) contained in this 
proceeding.

Paperwork Reduction Act

    This Third Report and Order contains either a new or modified 
information collection. The Commission, as part of its continuing 
effort to reduce paperwork burdens, invites the general public to 
comment on the information collection(s) contained in this R&O as 
required by the Paperwork Reduction Act of 1995, Public Law 104-13. 
Public and agency comments are due January 31, 2000. Comments should 
address: (a) whether the new or modified 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 Control Number: 3060-0581.
    Title: Section 76.503 National Subscriber Limits.
    Form No.: Not applicable.
    Type of Review: Revision of an existing collection.
    Respondents: Business or other for-profit.
    Number of Respondents: 10.
    Estimated Time per Response: 1 hour.
    Total Annual Burden: 20 hours.
    Cost to Respondents: $400.00.
    Needs and Uses: The certification filings will be used by the 
Commission to: (1) Ensure that cable operators do not violate the 30 
percent share rule in their acquisitions of additional multi-channel 
programming providers; (2) verify that limited partners who so certify 
are not involved in management or operations of the media-related 
activities of the partnership. The waiver allowance filings will be 
used to verify that certain directors and officers are not involved in 
the video programming activities of partnership.

Synopsis of Report and Order

    1. The Commission's Third Report and Order amends the method by 
which the cable 30% horizontal ownership cap is calculated. The 
amendments recognize dynamic changes in the video distribution 
marketplace and will encourage further competition that will benefit 
consumers.
    2. Key Decisions:
     The old horizontal ownership rule directed that no person 
or entity should be permitted to reach more than 30% of all homes 
passed nationwide through cable systems. The old rule measured the 30% 
limit in terms of the number of homes a cable operator is capable of 
serving in its franchise areas against the total number of homes in the 
nation that all cable systems are capable of serving. This standard is 
known as cable homes passed. The Third Report and Order changed the 
standard to the actual number of subscribers that a cable operator 
serves. This decision recognized that subscriber numbers more 
accurately represent a cable operator's programming market power.
     The Third Report and Order recognized the impact that 
competition from satellite and other video providers has had on a cable 
operator's market power. In 1994, cable operators served approximately 
93% of the multichannel marketplace. In 1999, the market share of cable 
operators fell to 82% due to increased competition from non-cable video 
providers. To recognize competition from satellite providers and 
others, the Third Report and Order decided to calculate a cable 
operator's 30% horizontal limit as a percentage of the total 
multichannel video programming market, including all cable and non-
cable multichannel video programming subscribers. This new method of 
calculation creates a sliding horizontal scale that will grow as 
competition to cable grows and diminish as competition diminishes. 
Under market conditions at the time the Third Report and Order was 
adopted, a 30% limit on all multichannel video programming subscribers 
was effectively equal to a 36.7% limit on cable subscribers alone, 
thereby effectively raising the horizontal limit to 36.7%.
     The Third Report and Order decided to encourage 
competition between cable operators by not including in their limit 
subscribers that the cable operators serve through overbuilding other 
cable systems.
     Because the changes in the method of calculating the limit 
reflected the changes in the cable marketplace since the limit was 
initially established, the Third Report and Order found that it was 
unnecessary to raise or lower the 30% limit. The Third Report and Order 
found that the 30% limit strikes a balance between the dangers that a 
cable operator's size pose to programmers and the benefits to cable 
operators of economies of scale.

[[Page 67199]]

     The Third Report and Order eliminated the minority control 
allowance. This allowance was designed to permit a cable operator to 
have ownership interests in up to 35% of the market if 5% of its 
systems were controlled by minorities. However, given that no parties 
have used this allowance or have argued that they will use the 
allowance, the allowance was eliminated.
     The Third Report and Order denied a motion to lift the 
Commission's stay of the horizontal ownership rule pending 
consideration by the United States Court of Appeals for the District of 
Columbia Circuit on challenges to Section 613(f)(1)(A) of the 
Communications Act, as amended, and the horizontal ownership rule. The 
Commission had decided that affected parties must comply with the 
horizontal rule within 60 days of the court's issuance of a mandate 
upholding Section 613(f)(1)(A) and the rules. In the Third Report and 
Order, the Commission found that 60 days was an unduly burdensome time 
frame for affected parties to dispose of property to comply with the 
newly effective rules. The Commission decided that the horizontal 
ownership rules would become effective immediately upon the court's 
issuance of a mandate upholding the statute and the rules and that 
parties in violation of the rules on that date would have 180 days to 
comply with the rules.

Ordering Clauses

    3. Accordingly, pursuant to Sections 4(i), 303 and 613 of the 
Communications Act of 1934, as amended, 47 U.S.C. 154(i), 303 and 533, 
the amendments to 47 CFR 76.503 discussed in this Third Report and 
Order Are adopted. These amendments shall become effective 70 days 
after publication in the Federal Register, following OMB approval, 
unless a notice is published in the Federal Register stating otherwise.
    4. The August 17, 1999 Consumers Union, Consumer Federation of 
America, and Media Access Project's Motion to Vacate Stay of 
Enforcement of Horizontal Ownership Limits and other requested relief 
Is denied in its entirety.
    5. 47 CFR 503(a) through (f) is Stayed until the United States 
Court of Appeals for the District of Columbia Circuit issues a decision 
upholding Section 613(f)(1)(A) of the Communications Act, as amended, 
47 U.S.C. 533(f)(1)(A), and 47 CFR 76.503, and affected parties in 
violation of 47 CFR 503(a) through (f) will come into compliance within 
one hundred and eighty (180) days after the court issues its mandate.
    6. Parties shall continue to comply with the reporting requirements 
of Section 503 of our rules, as modified by 47 CFR 76.503(g) and as 
discussed in note 10 of the Third Report and Order.
    7. The Commission's Office of Public Affairs, Reference Operations 
Division, Shall Send a copy of this Third Report and Order, including 
the Final Regulatory Flexibility Analysis, to the Chief Counsel for 
Advocacy of the Small Business Administration in accordance with 
paragraph 603(a) of the Regulatory Flexibility Act, Public Law 96-354, 
94 Stat. 1164, 5 U.S.C.A. 601 et seq.

List of Subjects in 47 CFR Part 76

    Administrative practice and procedure, Cable television, Equal 
employment opportunity, Political candidates, Reporting and 
recordkeeping requirements.

Federal Communications Commission.
Magalie Roman Salas,
Secretary.

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 76.503 is revised to read as follows:


Sec. 76.503  National subscriber limits.

    (a) Subject to paragraph (b) of this section, no cable operator 
shall serve more than 30% of all multichannel-video programming 
subscribers nationwide through multichannel video programming 
distributors owned by such operator or in which such cable operator 
holds an attributable interest.
    (b) Cable subscribers that a cable operator does not serve through 
incumbent cable franchises shall be excluded from the cable operator's 
limit.
    (c) For purposes of this section, ``incumbent cable franchise'' 
means a cable franchise in existence as of October 20, 1999 and all 
successors in interest to these franchises.
    (d) Subscribers that a cable operator serves through incumbent 
cable franchises shall include all subscribers served by those 
incumbent cable franchises, regardless of when the subscribers were 
added to the incumbent cable franchise system.
    (e) ``Multichannel video-programming subscribers'' means 
subscribers who receive multichannel video-programming from cable 
systems, direct broadcast satellite services, direct-to-home satellite 
services, multichannel multipoint distribution services, local 
multipoint distribution services, satellite master antenna television 
services (as defined in Sec. 76.5(a)(2)), and open video systems.
    (f) ``Cable operator'' means any person or entity that owns or has 
an attributable interest in an incumbent cable franchise.
    (g) Prior to acquiring additional multichannel video-programming 
providers, any cable operator that serves 20% or more of multichannel 
video-programming subscribers nationwide shall certify to the 
Commission, concurrent with its applications to the Commission for 
transfer of licenses at issue in the acquisition, that no violation of 
the national subscriber limits prescribed in this section will occur as 
a result of such acquisition.

    Note 1 to Section 76.503: Certifications made under this section 
shall be sent to the attention of the Cable Services Bureau, Federal 
Communications Commission, 445 Twelfth Street, SW, Washington, DC 
20554.

[FR Doc. 99-31024 Filed 11-30-99; 8:45 am]
BILLING CODE 6712-01-P