[Federal Register Volume 65, Number 3 (Wednesday, January 5, 2000)]
[Rules and Regulations]
[Pages 375-377]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-110]


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

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 76

[CS Docket No. 96-46; FCC 99-341]


Implementation of Section 302 of the Telecommunications Act of 
1996: Open Video Systems

AGENCY: Federal Communications Commission.

ACTION: Final rule; order on remand.

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

SUMMARY: This document amends various Commission rules in connection 
with the open video system proceeding as a result of rulings in the 
United States Court of Appeals Fifth Circuit case, City of Dallas, 
Texas v. FCC. The Fifth Circuit considered consolidated appeals of the 
Commission's open video system rules, affirming in part, reversing in 
part, and remanding in part, those rules to meet the needs of consumers 
and competitive entities.

DATES: Effective January 5, 2000.

FOR FURTHER INFORMATION CONTACT: Steve Broeckaert at (202) 418-7200 or 
via internet at [email protected].

SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's Order 
on Remand, CS Docket No. 96-46, FCC 99-341, adopted November 9, 1999 
and released November 19, 1999. The Commission adopted proposed rules 
on Open Video Systems in Notice of Proposed Rule Making, 61 FR 10496 
(1996). The complete text of this Order on Remand is available for 
inspection and copying during normal business hours in the FCC 
Reference Center (Room CY-A257) at its headquarters, 445 12th Street, 
SW Washington, D.C. 20554, or may be purchased from the Commission's 
copy contractor, International Transcription Service, Inc., (202) 857-
3800, 1231 20th Street, NW, Washington, D.C. 20036, or may be reviewed 
via internet at http://www.fcc.gov/csb/.

Synopsis of Order on Remand

I. Introduction and Background

    1. In this Order on Remand, the Commission amends its rules in 
accordance with the Fifth Circuit's decision in City of Dallas, Texas 
v. FCC which reviewed consolidated appeals of the Commission's open 
video system rules. The Telecommunications Act of 1996 (``1996 Act'') 
added section 653 to the Communications Act of 1934, establishing open 
video systems as a framework for entry into the video programming 
marketplace. The Commission adopted a series of orders prescribing 
rules and policies governing the establishment and operation of open 
video systems. Among the decisions reached in rulemakings implementing 
the open video system provision of the 1996 Act, the Commission 
concluded that Congress did not intend to restrict open video system 
service to telephone companies alone, and permitted non-local exchange 
carriers and cable operators to operate, and to obtain carriage on open 
video systems where consistent with the public interest, convenience, 
and necessity.
    2. Five petitions were filed with the Fifth Circuit and the 
challenges fell into three separate categories: (i) National 
Association of Telecommunications Advisors and Officers, the City of 
Dallas, and the U.S. Conference of Mayors challenged the impact of the 
Commission's open video system rules on local governments; (ii) 
National Cable Television Association challenged the treatment of cable 
operators under the video system rules; and (iii) BellSouth challenged 
the requirement that open video system operators obtain Commission 
certification before commencing construction related to open video 
systems.
    3. The Fifth Circuit affirmed the Commission's rules: (i) limiting 
the fees that localities may charge to open video system operators 
pursuant to section 653(c)(2)(B) of the Communications Act; (ii) 
prohibiting localities from requiring open video systems to provide 
institutional networks; and (iii) prohibiting non-local exchange 
carrier cable operators and cable operators whose franchises have 
expired from becoming open video system operators

[[Page 376]]

unless they face effective competition. Key provisions of the 
Commission's open video system rules, however, were reversed and 
remanded by the Fifth Circuit, requiring amendment of those rule 
provisions by the Commission. The following outlines the changes.

II. Key Changes

    4. Preemption of Open Video System Franchises. Section 653(c)(1)(C) 
of the Communications Act provides that Parts III and IV of Title VI 
shall not apply to open video system operators. Included in Title VI is 
section 621(b)(1), which provides that a cable operator may not provide 
cable service without a franchise. The Commission concluded, in 
Implementation of Section 302 of the Telecommunications Act of 1996: 
Open Video Systems, (``Second Report and Order''), FCC-96-249, 11 FCC 
Rcd 18223 (1996) that localities are prohibited from requiring that 
open video system operators obtain a franchise prior to construction 
and operation of its system.
    5. The Fifth Circuit concluded that the Commission's preemption of 
local franchising requirements is at odds with the 1996 Act's 
preservation of state and local authority. However, the Court ruled 
that simply saying that section 621 shall not apply to open video 
system operators does not expressly preempt local franchising 
authority, as section 601(c)(1) of the 1996 Act directs that amendments 
shall not be construed to modify, impair, or supercede Federal, State 
or local law unless expressly so provided in such Act or amendments.
    6. While discussed in detail by the Court, the franchise 
prohibition had not been codified and the Commission had implemented no 
rules. Consequently, in this Order on Remand the Commission need not 
amend its rules to effectuate the Fifth Circuit's decision on this 
matter. The decision to impose a franchise requirement on an open video 
system operator is left to the discretion of a locality.
    7. Commission Certification Prior to Construction of New 
Facilities. In the Second Report and Order, the Commission stated that 
open video system operators may apply for certification at any time 
before commencement of service. If construction of a new plant is 
required, however, the applicant must obtain Commission approval of its 
certification prior to commencement of construction. Bell South argued 
to the Fifth Circuit that the Commission's pre-construction 
certification requirement was contrary to language of sections 651 and 
653 of the Communications Act. The Fifth Circuit agreed, finding that 
the Commission erred in adopting a pre-construction certification rule.
    8. The Commission codified the pre-construction requirement at 
Sec. 76.1502(a) of its rules. As a result of the Fifth Circuit's 
decision, the Commission deletes the pre-construction certification 
requirement from Sec. 76.1502(a) of the Commission's Rules.
    9. Local Exchange Carriers as Cable Operators. Section 653(a)(1) 
states that a local exchange carrier (``LEC'') may provide cable 
service to subscribers in its telephone service area through an open 
video system. In adopting rules to effectuate this provision the 
Commission determined that it would not permit a cable operator to 
become an open video system operator in its cable franchise area if 
effective competition is not present for video programming delivery, 
even if it also becomes certified as a local exchange carrier within 
the franchise area. The Commission concluded that although section 
653(a) allows LECs, without qualification, to operate open video 
systems within their telephone service area, it does not apply to cable 
operators that are also LECs. The Commission codified this provision at 
Sec. 76.1501 of its rules.
    10. The Fifth Circuit disagreed with the Commission's 
determination, as it applied to LEC cable operators, holding that a 
local exchange carrier, without qualification, may provide cable 
service in its telephone area through an open video system. In 
accordance with the Fifth Circuit's decision, the Commission amends 
Sec. 76.1501 to provide that the effective competition requirement does 
not apply to a LEC cable operator that seeks open video system 
certification within its cable service area.
    11. Open Video System Operator Discretion. In the Second Report and 
Order, the Commission granted open video system operators discretion to 
permit carriage of competing, in-region cable operators or their 
affiliates' programming. This provision was codified in 
Sec. 76.1503(c)(2)(v)(A) of the Commission's rules. The Fifth Circuit 
invalidated the Commission's rules permitting an open video system 
operator discretion to permit carriage of a competing, in-region cable 
operator's programming, finding that section 653(b)(1)(A) requires the 
Commission to prohibit an operator of an open video system from 
discriminating among video programming providers with regard to 
carriage on its open video system. The Fifth Circuit instructed the 
Commission, on remand, to forbid discrimination among video programming 
providers, as section 653(b)(1)(A) requires. In this Order on Remand, 
the Commission concludes that the most efficient and expeditious method 
of discharging the Fifth Circuit's remand is to delete 
Sec. 76.1503(c)(2)(v)(A) of the Commission's rules which grants 
discretion to open video system operators with regard to carriage of 
the programming of competing, in-region cable operators and their 
affiliates.

III. Ordering Clauses

    12. Pursuant to sections 4(i), 303(r) and 653 of the Communications 
Act of 1934, as amended, 47 U.S.C. 154(i), 303(r), and 573, the 
Commission's rules are hereby amended.
    13. The Commission's Office of Public Affairs, Reference Operation 
Division, shall send a copy of this Order on Remand including the 
Supplemental Final Regulatory Flexibility Analysis, to the Chief 
Counsel for Advocacy of Small Business Administration, in accordance 
with paragraph section 603(a) of this Regulatory Flexibility Act. 
Public Law 96-354, 94 Stat. 1164, 5 U.S.C. 601 et seq. (1981).

List of Subjects in 47 CFR Part 76

    Open video system.

Federal Communications Commission.
Magalie Roman Salas,
Secretary.

    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 76.1501 is revised to read as follows:


Sec. 76.1501  Qualifications to be an open video system operator.

    Any person may obtain a certification to operate an open video 
system pursuant to Section 653(a)(1) of the Communications Act, 47 
U.S.C. 573(a)(1), except that an operator of a cable system may not 
obtain such certification within its cable service area unless it is 
subject to ``effective competition'' as defined in Section 623(l)(1) of 
the Communications Act, 47 U.S.C. 543(l)(1). The effective competition 
requirement of the preceding sentence does not apply to a local 
exchange carrier that is also a cable operator that seeks open video 
system certification within its cable

[[Page 377]]

service area. A cable operator that is not subject to effective 
competition within its cable service area may file a petition with the 
Commission, seeking a finding that particular circumstances exist that 
make it consistent with the public interest, convenience, and necessity 
to allow the operator to convert its cable system to an open video 
system. Nothing herein shall be construed to affect the terms of any 
franchising agreement or other contractual agreement.
    3. Section 76.1502 is amended by revising paragraph (a) to read as 
follows:


Sec. 76.1502  Certification.

    (a) An operator of an open video system must certify to the 
Commission that it will comply with the Commission's regulations in 47 
CFR 76.1503, 76.1504, 76.1506(m), 76.1508, 76.1509, and 76.1513. The 
Commission must approve such certification prior to the commencement of 
service at such a point in time that would allow the applicant 
sufficient time to comply with the Commission's notification 
requirements.
* * * * *
    4. Section 76.1503 is amended by revising paragraph (c)(2)(v) to 
read as follows:


Sec. 76.1503  Carriage of video programming providers on open video 
systems.

* * * * *
    (c) * * *
    (2) * * *
    (v) Notwithstanding the general prohibition on an open video system 
operator's discrimination among video programming providers contained 
in paragraph (a) of this section, a competing, in-region cable operator 
or its affiliate(s) that offer cable service to subscribers located in 
the service area of an open video system shall not be entitled to 
obtain capacity on such open video system, except where a showing is 
made that facilities-based competition will not be significantly 
impeded.
* * * * *
[FR Doc. 00-110 Filed 1-4-00; 8:45 am]
BILLING CODE 6712-01-P