[Federal Register Volume 67, Number 74 (Wednesday, April 17, 2002)]
[Proposed Rules]
[Pages 18848-18854]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-9102]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 76

[CS Docket No. 02-52; FCC 02-77]


Appropriate Regulatory Treatment for Broadband Access to the 
Internet Over Cable Facilities

AGENCY: Federal Communications Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: This document addresses the consequences of the Commission's 
classification of cable modem service as an information service as 
defined in section 3(20) of the Communications Act, 47 U.S.C. 153(20). 
Cable modem service is a service that uses cable system facilities to 
provide residential subscribers with high-speed Internet access, as 
well as many applications or functions that can be used with high-speed 
Internet access.
    The Notice of Proposed Rulemaking asks questions about whether, and 
if so, how, cable modem service should be regulated by the Commission. 
This document also seeks comment on how the classification decision may 
affect State and local regulation of cable modem service. This document 
provides persons with the opportunity to submit comments and 
information with which the Commission can address these issues.

DATES: Comments are due on or before June 17, 2002 and reply comments 
are due on or before July 16, 2002.

ADDRESSES: Federal Communications Commission, 445 12th Street, SW., 
Washington, DC 20554.

FOR FURTHER INFORMATION, CONTACT: Steve Garner, Media Bureau at (202) 
418-1063 or via Internet at [email protected].

SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's 
Notice of Proposed Rulemaking, CS Docket No. 02-52, adopted March 14, 
2002, and released March 15, 2002. The full text of this decision is 
available for inspection and copying during normal business hours in 
the FCC Reference Information Center, Portals II, 445 12th Street, SW., 
Room CY-A257, Washington, DC 20554, and may be purchased from the 
Commission's copy contractor, Qualex International, Portals II, 445 
12th Street, SW., Room CY-B402, Washington, DC 20554, telephone (202) 
863-2893, facsimile (202) 863-2898, or via e-mail [email protected] or 
may be viewed via Internet at http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-02-77A1.pdf.

Synopsis of the Notice of Proposed Rulemaking

    1. This Notice of Proposed Rulemaking (``NPRM'') was initiated 
based on the record developed in the Notice of Inquiry (``NOI'') 
proceeding initiated in GN Docket No. 00-185 in September 2000. The NOI 
pleading cycle, in which interested parties (``commenters'') could file 
pleadings, ended in January 2001.
    2. This NPRM concerns cable modem service, which is a high-speed 
(or ``broadband'') Internet access service provided to residential 
subscribers over cable system facilities. The Commission found in a 
Declaratory Ruling accompanying the NPRM that cable modem service is an 
information service as that terms is defined in Section 3(20) of the 
Communications Act of 1934, as amended (``the 1934 Act''), 47 U.S.C. 
153(20). The NPRM addresses a number of possible consequences of the 
Commission's classification of cable modem service as an information 
service. The following paragraphs

[[Page 18849]]

describe the issues on which the Commission asks for comment in the 
NPRM.

Background

    3. The NPRM first seeks comment on the Commission's jurisdiction 
and authority to regulate cable modem service. The NRPM also seeks 
comment on whether the Commission may, and, if so, should, impose any 
form of so-called ``multiple ISP (Internet Service Provider) access'' 
requirements on operators of cable systems (``cable operators''). The 
NPRM describes multiple ISP access as a requirement that cable 
operators provide unaffiliated ISPs with the right access to cable 
modem service customers directly. Previously, the NOI sought comment on 
a variety of models by which a cable operator could be required to 
provide multiple ISP access. The NPRM requests commenters to specify, 
in asking the questions summarized below, whether commenters are 
addressing any form of multiple ISP access in particular, on all forms 
described in the Notice of Inquiry, and whether any access requirement 
should specifically limit ISP access to uses related to the offering of 
cable modem service, or should explicitly permit other uses by ISPs.

Commission Authority

    4. Given its classification of cable modem service as an interstate 
information service, the Commission asks for comment on whether the 
Commission should exercise its ancillary authority under Title I of the 
1934 Act with regard to the provision of cable modem service. In 
another recent NPRM, concerning broadband Internet access service 
provided by traditional wireline telecommunications common carriers 
(the ``Wireline Broadband NPRM''), the Commission tentatively concluded 
that wireline broadband Internet access service is an interstate 
information service. In the present NPRM, the Commission asks how its 
findings and decisions in one proceeding should impact the other. It 
also requests comment on whether there are legal or policy reasons why 
it should reach different conclusions with respect to wireline 
broadband Internet access service and cable modem service. Should any 
decision to exercise Title I jurisdiction over either service be 
influenced by the cable operators' current status as the leading 
providers of residential broadband services?
    5. The NPRM seeks comment on any explicit statutory provisions, 
including expressions of congressional goals, which would be furthered 
by the Commission's exercise of ancillary jurisdiction over cable modem 
service. The Commission mentions as possibilities sections 1, 230(b), 
and 601(4) of the 1934 Act and section 706 of the 1996 
Telecommunications Act. The NPRM requests comment on the use of these 
or other statutory provisions as the basis for the Commission's 
exercise of Title I jurisdiction. It also requests comment on whether 
reliance on ancillary jurisdiction in support of these or other 
provisions would be analogous to the Commission's reliance on ancillary 
jurisdiction in adoption of its Computer Inquiry rules. In addition, 
given the relationship of cable modem service (including the underlying 
transmission component) to services provided by wireline common 
carriers, the NPRM seeks comment on whether there are any additional 
bases for asserting ancillary jurisdiction.
    6. The NPRM seeks comment on whether a federally mandated system of 
multiple ISP access would violate the First Amendment rights of cable 
operators. The NPRM seeks comment in particular on the level of First 
Amendment scrutiny that would apply to a federal multiple ISP access 
requirement, especially in light of recent case law or Commission 
precedent concerning the First Amendment. Have marketplace conditions 
in the residential high-speed Internet access business changed since 
the close of the pleading cycle in this proceeding in ways that alter 
the First Amendment analysis? Have trials and limited commercial 
offerings of different kinds of multiple ISP access shown that certain 
types of access place a minimal burden on the cable operators while 
achieving the maximum choice for subscribers?
    7. The NPRM also seeks comment whether multiple ISP access would 
constitute a ``per se'' or ``regulatory'' taking of the cable 
operator's property without just compensation under the Takings Clause 
of the Fifth Amendment to the U.S. Constitution. It seeks comment on 
what, if a form of multiple ISP access did entail a taking, would be 
``just compensation'' for it. Would ensuring just compensation 
necessarily involve regulators in setting the price that a cable 
operator charges unaffiliated ISPs (or vice versa)? Or could just 
compensation be ensured by some market-based process of negotiations? 
Do recent technological developments, technical trials, and limited 
commercial offerings of multiple ISP access indicate that some forms of 
multiple ISP access minimize occupation of the cable operator's 
property and economic harm to it? The NPRM requests comment on these 
issues. The NPRM also seeks comment on whether there are additional 
Constitutional concerns related to multiple ISP access requirements.

Marketplace Developments

    8. The NPRM asks that commenters update the record on what has 
changed in the cable modem service marketplace since the pleading cycle 
on the Notice of Inquiry closed, particularly with respect to evolving 
business relationships among cable operators and their service 
offerings. Do recent events demonstrate that the market will provide 
consumers a choice of ISPs without government intervention, or that the 
absence of widespread business arrangements raises a level of concern 
sufficient to warrant Commission action? The NPRM asks that commenters 
who believe that Commission intervention is necessary describe in 
detail what sort of regulations the Commission should impose. It also 
asks for comment regarding whether any decision the Commission makes 
about multiple access requirements for cable systems in this proceeding 
should apply to Open Video Systems.
    9. The NPRM asks whether, in current and likely future market 
conditions, any form of multiple ISP access is needed to promote the 
Commission's goals of, for example, promoting the deployment of 
advanced telecommunications capability; spurring investment in 
facilities to provide high-speed Internet access service and innovation 
among service providers, ISPs, and creators of content; and/or 
facilitating intramodal or intermodal competition. Or would multiple 
ISP access, if mandated by regulation, have the opposite effects? The 
NPRM seeks comment on whether the Commission's decision-making should 
be guided by principles that embrace intramodal competition. If so, the 
NPRM seeks comment on whether the market can or will satisfy these 
principles or whether some form of multiple ISP access regime for cable 
systems is needed to do so. To what extent should any decision 
regarding multiple ISP access requirements be influenced by the 
desirability of `regulatory parity,' namely the presence or absence of 
multiple ISP access regimes for other technologies (such as wireline, 
terrestrial wireless, and satellite) that offer residential high-speed 
Internet access service? To what extent should that decision be 
impacted by cable operators' current status as the leading providers of 
residential broadband services?
    10. Consumer Demand. The NPRM asks whether there is a demand for

[[Page 18850]]

access to several ISPs and, if there is, whether that demand is being 
met today. Specifically, does ``click through'' access to any ISP and 
content on the World Wide Web produce the same, or almost the same, 
value that a regulatory system of multiple ISP access would produce? Is 
any cable operator or ISP denying, or likely to deny, click through 
access? Is the threat that subscriber access to Internet content or 
services could be blocked or impaired, as compared to content or 
services provided by the cable operator or its affiliated ISP, 
sufficient to justify regulatory intervention at this time?
    11. Cost/Benefit Analysis. The NPRM requests comment on the costs 
that a multiple ISP access mandate would impose on cable operators and 
on the benefits that a mandate would bring to consumers. Would some 
forms of multiple ISP access be less costly to cable operators and more 
beneficial to consumers than others? Is the cost/benefit calculation 
for multiple ISP access different for small cable operators than it is 
for others? Would the requirements imposed on telecommunications 
carriers by the Commission's Second Computer Inquiry or Third Computer 
Inquiry provide a useful model for a multiple ISP access regime? Would 
the new forms of multiple ISP access that are being deployed or are 
under consideration by cable operators, such as the model being 
implemented by AOL Time Warner pursuant to the Federal Trade 
Commission's AOL Time Warner Merger Order, provide useful models? Other 
possible means of effecting a multiple ISP access regime include 
adopting a general rule of reasonableness for cable operators in their 
dealings with ISPs seeking access to their cable systems and/or 
requiring cable operators to make high-speed transmission available to 
other ISPs at ``market-based prices.'' The Commission could then rely 
on its complaint processes to resolve individual disputes about these 
standards. The NPRM asks whether such a system of general principles 
and case-by-case adjudication would achieve the Commission's goals in a 
timely and cost-effective manner.
    12. The NPRM asks what lessons, if any, trials and current 
commercial offerings of multiple ISP access reveal about the costs and 
benefits of multiple ISP access and how such costs and benefits can be 
balanced. Has recent experience with the addition of source-based 
routers showed that technology to be an efficient form of multiple ISP 
access?
    13. The NPRM asks for comment on be the costs of regulatory 
enforcement of a multiple ISP access mandate. Would a multiple ISP 
access mandate lead to significant opportunities for regulatory 
arbitrage--businesses making decisions based on regulatory 
classifications rather than on customers' preferences and innovative 
and sustainable business plans? Would a multiple ISP access mandate 
impose long-term costs on the market? In light of the new and fast-
changing nature of the residential high-speed Internet access business, 
would a multiple ISP access requirement, imposed at this time, hinder 
the development of a market that is still evolving? In particular, 
might a requirement preclude the discovery of network design, content, 
applications, and business models that would otherwise enjoy widespread 
adoption and enhance long-term consumer welfare? Is there a way to 
implement multiple ISP access now that would avoid any such harmful 
interference in the future and that would achieve the Commission's 
goals? If the Commission adopts a multiple ISP access mandate for cable 
systems generally, should it exempt small cable systems from such a 
mandate because of the particular conditions that they face?
    14. The NPRM notes that the Commission is particularly interested 
in comments that provide updated information and discuss relevant 
regulatory and judicial decisions issued since the comment period 
closed for the Notice of Inquiry in GN Docket 00-185. The Commission is 
likely to find particularly relevant and persuasive empirically 
supported studies that use well-established methods for quantifying 
benefits and harms, as well as comments based on well-established 
economic theory.
    15. Changing Market Conditions. Assuming that the Commission 
ultimately concludes not to impose multiple ISP access at this time, 
the NPRM asks what, if any, future events should lead it to do so. Are 
there market conditions that are not currently pervasive but, should 
they become pervasive, would suggest the need for a multiple ISP access 
mandate in the future? Would these conditions include the acquisition 
of market power by cable operators in providing residential high-speed 
Internet access, cable operators' refusals to satisfy subscriber demand 
for multiple ISP access, or the evolution of a mature market for 
residential high-speed Internet access? Would a finding that subscriber 
access to Internet content or services may be blocked or impaired, as 
compared to other content or services, particularly that provided by 
the cable operator or its affiliate, support regulatory intervention? 
The NPRM seeks comment on other conditions that would suggest 
regulation is needed and on objective, readily measurable criteria by 
which the Commission could detect the occurrence of such conditions. It 
asks whether ongoing monitoring is appropriate to ensure that any 
relevant conditions are detected accurately and in a timely manner and, 
if so, what that monitoring would consist of.
    16. The NPRM also seeks comment on indicia that a cable operator is 
offering a common carrier telecommunications service (other than local 
telephone service) or a private carrier service, on a stand-alone 
basis, to ISPs or subscribers. The NPRM asks how the Commission might 
detect that a cable operator is, in fact, making such an offering. If 
and when a cable operator makes such an offering, what, if any, access 
requirements should the Commission impose on it? For example, if the 
Commission found that a cable operator were making such an offering, 
would that trigger the requirements of the Second Computer Inquiry and 
Third Computer Inquiry with respect to the retail offering of cable 
modem service to subscribers, or make their application in the public 
interest? To what extent should these decisions impact, or be impacted 
by, the conclusions made in the Wireline Broadband NPRM proceeding? The 
NPRM asks for comment on the appropriate scope of regulation of any 
such offerings of telecommunications service.
    17. Forbearance from Telecommunications Service Obligations. The 
U.S. District Court for the Southern District of California has 
expressed the view that it is bound by the Ninth Circuit's decision in 
AT&T v. City of Portland that cable modem service is a 
telecommunications service. The Ninth Circuit had left open the 
question as to whether the Commission could forbear from particular 
Title II obligations under Section 10 of the Communications Act. To the 
extent that cable modem service may be subject to telecommunications 
service classification, the NPRM seeks comment on whether the 
Commission should forbear from applying each provision of Title II or 
common carrier regulation. The NPRM invites comment on whether 
enforcement of such provisions is not necessary to ensure that the 
charges, practices, classification or regulations in connection with 
cable modem service are just and reasonable and not unjustly or 
unreasonably discriminatory. Is enforcement not necessary for the 
protection of consumers? Would forbearance be consistent with the 
public interest? The NPRM tentatively

[[Page 18851]]

concludes that such forbearance would be justified. Given that cable 
modem service will be treated as an information service in most of the 
country, the Commission tentatively concludes that the public interest 
would be served by the uniform national policy that would result from 
the exercise of forbearance to the extent that cable modem service is 
classified as a telecommunications service. The Commission states its 
belief that forbearance would be in the public interest because cable 
modem service is still in its early stage; supply and demand are still 
evolving; and several rival networks providing residential high-speed 
Internet access are still evolving. Thus, the Commission tentatively 
concludes that enforcement of Title II provisions and common carrier 
regulation is not necessary for the protection of consumers or to 
ensure that rates are just and reasonable and not unjustly 
discriminatory. The Commission states its belief that forbearance from 
Title II and common carrier regulation is appropriate under the 
circumstances. The NPRM requests comment on this conclusion and the 
underlying analysis, and asks that commenters focus on how such 
forbearance and/or regulation would further the Commission's goals.

Consequences of Legal Classification as Information Service

    18. State and Local Regulation of Cable Modem Service and Rights-
of-Way. The NPRM seeks comment whether the Commission should interpret 
its assertion of jurisdiction over cable modem service under the 
Communications Act to preclude State and local authorities from 
regulating cable modem service and facilities in particular ways. The 
NPRM notes that the courts have recognized the Commission's authority 
under Title I to preempt non-Federal regulations that negate the 
Commission's goals, including regulations affecting enhanced services. 
The NPRM seeks comment as to any additional basis for preempting such 
regulations, including, for example, section 624(b) of the 
Communications Act.
    19. In addition to the access requirements, franchise requirements, 
and franchise fees discussed below, the NPRM seeks comment on any other 
forms of State and local regulation that would limit the Commission's 
ability to achieve its national broadband policy, discourage investment 
in advanced communications facilities, or create an unpredictable 
regulatory environment. Specifically, the NPRM seeks comment as to 
whether the Commission should use its preemption authority to preempt 
specific State laws or local regulations. It asks commenters to specify 
what preemption authority the Commission would rely on in each case.
    20. Access Requirements. The NPRM seeks comment on any regulatory 
authority that State and local governments may have with respect to 
cable modem service as an information service, including any authority 
to impose multiple ISP access requirements or to prohibit, limit, 
restrict, or condition the provision of cable modem service. Is such 
regulation consistent with any exercise of the Commission's 
jurisdiction over cable modem service under Title I, including any 
affirmative decision the Commission might make to refrain from imposing 
specific regulatory requirements?
    21. Rights-of-Way and Franchising Issues. The NPRM asks for comment 
on how the classification of cable modem service as an interstate 
information service impacts State and local regulation of rights-of-way 
and franchising. The NPRM tentatively concludes that once a cable 
operator has obtained a franchise for a cable system, the Commission's 
information service classification should not affect the right of cable 
operators to access rights-of-way as necessary to provide cable modem 
service or to use their previously franchised systems to provide cable 
modem service. The NPRM seeks comment on this tentative conclusion. It 
also seeks comment on whether providing additional services over 
upgraded cable facilities imposes additional burdens on the public 
rights-of-way such that the existing franchise process is inadequate. 
If so, the NPRM asks whether Title VI nevertheless precludes local 
franchising authorities from imposing additional requirements on cable 
modem service. The NPRM tentatively concludes that Title VI does not 
provide a basis for a local franchising authority to impose an 
additional franchise on a cable operator that provides cable modem 
service.
    22. The NPRM also seeks comment generally on the scope of local 
franchising authority over facilities-based providers of information 
services. Do State statutes and Constitutional provisions authorizing 
local franchising in terms of utility services generally, or cable and 
telecommunications networks and services specifically, authorize 
localities to franchise providers of information service under existing 
law? If so, is there any basis for treating facilities-based providers 
of information services differently based on the facilities used? The 
NPRM expresses concern that State or local regulation beyond that 
necessary to manage rights-of-way could impede competition and impose 
unnecessary delays and costs on the development of new broadband 
services. It notes questions about potential State and local actions 
that could restrict entry, impose access or other requirements on cable 
modem service, or assess fees or taxes on cable Internet service. It 
seeks comment on these issues.
    23. In the NPRM, the Commission tentatively concludes that Title VI 
of the 1934 Act does not provide an independent basis of authority for 
assessing franchise fees on cable modem service. The NPRM seeks comment 
on this issue.
    24. Franchise Fees Previously Paid Pursuant to Section 622. The 
NPRM also notes that some cable operators, believing they were 
legitimately carrying out their obligations and rights under Title VI 
of the 1934 Act and local franchise agreements, collected franchise 
fees based on cable modem service revenues, identified these fees on 
subscriber bills, and remitted these franchise fees to local 
franchising authorities pursuant to the terms of their franchising 
agreements. After the Ninth Circuit's decision in AT&T v. Portland, 
some cable operators suspended collecting and remitting franchise fees 
for revenues from cable modem service in Ninth Circuit States out of 
concern about their exposure to significant litigation risk if they 
were to continue collecting a franchise fee on cable modem service. 
Subscribers in other states are understood to have raised the issue of 
whether franchise fees were lawfully collected from them and whether 
the fees collected should be refunded. The NPRM seeks comment on 
whether disputes regarding franchise fees based on cable modem service 
implicate a national policy concerning communications that calls upon 
Commission expertise, given that the fees in question were collected 
pursuant to the Communications Act and that the Commission's 
classification decision will alter, on a national scale, the regulatory 
treatment of cable modem service. The NPRM seeks comment on whether it 
is appropriate for the Commission to exercise its jurisdiction under 
section 622 of the Communications Act to resolve the issue of 
previously collected franchise fees based on cable modem service 
revenues or whether these issues are more appropriately resolved by the 
courts.
    25. Consumer Protection and Customer Service. The NPRM also seeks 
comment on how the Commission's information service classification may

[[Page 18852]]

affect other aspects of State or local regulation, such as consumer 
protection and customer service standards regarding cable modem 
service. The NPRM asks whether the authority conferred on franchising 
authorities by section 632(a) of the Communications Act to establish 
and enforce customer service requirements applies to cable modem 
service provided by a cable operator. Do the provisions in section 
632(d), stating that nothing in Title VI ``shall be construed to 
prohibit any State or any franchising authority from enacting or 
enforcing any consumer protection law, to the extent not specifically 
preempted by [Title VI],'' or ``to prevent the establishment or 
enforcement'' of customer service laws or regulations that exceed 
Commission standards or address matters not addressed by Commission 
standards under section 632, apply to cable modem service?
    26. Protection of Subscriber Privacy. Section 631 of the 
Communications Act addresses privacy for subscribers to ``any cable 
service or other service'' provided by a cable operator. The NPRM 
states that the Commission interprets cable modem service to be an 
``other service.'' The NPRM seeks comment on this interpretation. And, 
although section 631's terms are enforced by the courts, and not by the 
Commission, the NPRM seeks comment as to how the privacy requirements 
of section 631 affect providers of cable modem service.

Initial Regulatory Flexibility Analysis

    27. As required by the Regulatory Flexibility Act of 1980, 5 U.S.C. 
601 et seq. as amended (``RFA''), the Commission has prepared an 
Initial Regulatory Flexibility Analysis (``IRFA'') of the possible 
significant economic impact on a substantial number of small entities 
by the policies and rules considered in the NPRM. Written public 
comments are requested on this IRFA. Comments must be identified as 
responses to this IRFA and must be filed by the deadlines for comments 
on the NPRM provided in paragraph 41 of this NPRM. The Commission will 
send a copy of the NPRM, including this IRFA, to the Chief Counsel for 
Advocacy of the Small Business Administration (``SBA'').
    28. Need for, and Objectives of, the Proposed Rules. With our 
declaratory ruling herein, we have sought to provide regulatory 
certainty for the emerging cable modem service industry by resolving a 
nationwide controversy concerning the proper regulatory classification 
of cable modem service under federal law. In doing so, we recognize 
that there are a number of related issues that may need resolution in 
the form of federal rules. By this Notice of Proposed Rulemaking, we 
seek comment on certain issues related to the practical implementation 
of our classification of cable modem service as an information service.
    29. Legal Basis. The authority for the action proposed in this 
rulemaking is contained in sections 1, 2(a), 3, 4(i), 4(j), 303, and 
601 of the Communications Act of 1934, as amended, 47 U.S.C. 151, 
152(a), 153, 154(i), 154(j), 303, and 521, and Section 706 of the 
Telecommunications Act of 1996, 47 U.S.C. 157 nt.
    30. Description and Estimate of the Number of Small Entities to 
Which the Proposed Rules Will Apply. The RFA, 5 U.S.C. 603(b)(3), 
directs agencies to provide a description of, and where feasible, an 
estimate of the number of small entities that may be affected by the 
proposed rules, if adopted. The RFA, 5 U.S.C. 601(6), generally defines 
the term ``small entity'' as having the same meaning as the terms 
``small business,'' ``small organization,'' and ``small governmental 
jurisdiction.'' In addition, the term ``small business'' has the same 
meaning as the term ``small business concern'' under the Small Business 
Act, 5 U.S.C. 601(3) (incorporating by reference the definition of 
``small business concern'' in the Small Business Act, 15 U.S.C. 632). 
Under 15 U.S.C. 632, a ``small business concern'' is one which: (1) Is 
independently owned and operated; (2) is not dominant in its field of 
operation; and (3) satisfies any additional criteria established by the 
SBA.
    31. The SBA has developed a small business size standard, 13 CFR 
121.201, North American Industry Classification System (``NAICS'') code 
513220, for cable and other program distribution,'' which includes all 
such companies generating $11 million or less in revenue annually. This 
category includes, among others, cable operators, closed circuit 
television services, direct broadcast satellite services, multipoint 
distribution services, open video systems (``OVS''), satellite master 
antenna television (``SMATV'') systems, and subscription television 
services. According to the Census Bureau data from 1992, there were 
1,788 total cable and other pay television services and 1,423 had less 
than $11 million in revenue. The Commission addresses cable operators 
and OVS operators below to provide a more precise estimate of the 
affected small entities. The Commission does not believe that the other 
pay television services would be affected by the proposals in the NPRM.
    32. Cable Systems. The Commission has developed its own small 
business size standard for a small cable operator for the purposes of 
rate regulation. Under the Commission's rules, 47 CFR 76.901(e), a 
``small cable company'' is one serving fewer than 400,000 subscribers 
nationwide. Based on Commission's most recent information, it estimates 
that there were 1,439 cable operators that qualified as small cable 
companies at the end of 1995. Since then, some of those companies may 
have grown to serve over 400,000 subscribers, and others may have been 
involved in transactions that caused them to be combined with other 
cable operators. Consequently, the Commission estimates that there are 
fewer than 1,439 small cable companies that may be affected by the 
NPRM.
    33. The Communications Act of 1934, 47 U.S.C. 543(m)(2) as amended, 
also contains a size standard for a ``small cable operator,'' which is 
``a cable operator that, directly or through an affiliate, serves in 
the aggregate fewer than one 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.'' The Commission 
has determined that there are 67,700,000 subscribers in the United 
States. Therefore, an operator serving fewer than 677,000 subscribers 
shall be deemed a small operator, if its annual revenues, when combined 
with the total annual revenues of all of its affiliates, do not exceed 
$250 million in the aggregate. See 47 CFR 76.1403(b). Based on 
available data, the Commission estimates that the number of cable 
operators serving 677,000 subscribers or less totals approximately 
1,450. The Commission does not request or collect information on 
whether cable operators are affiliated with entities whose gross annual 
revenues exceed $250,000,000, and therefore is unable to estimate 
accurately the number of cable system operators that would qualify as 
small cable operators under the definition in the Communications Act.
    34. Open Video Systems (``OVS''). Because OVS operators provide 
subscription services, as specified in 47 U.S.C. 573, OVS falls within 
the SBA-recognized definition of ``Cable and Other Program 
Distribution,'' 13 CFR 121.201, NAICS Codes 51321 and 51322. This 
standard provides that a small entity is one with $11 million or less 
in annual receipts. The Commission has certified approximately 25 OVS 
operators to serve 75 areas, and some of those are currently providing 
service.

[[Page 18853]]

Affiliates of Residential Communications Network, Inc. (``RCN'') 
received approval to operate OVS systems in New York City, Boston, 
Washington, D.C. and other areas. RCN has sufficient revenues to assure 
the Commission that they do not qualify as small business entities. 
Little financial information is available for the other entities 
authorized to provide OVS that are not yet operational. Given that 
other entities have been authorized to provide OVS service but have not 
yet begun to generate revenues, the Commission concludes that at least 
some of the OVS operators qualify as small entities.
    35. Description of Projected Reporting, Recordkeeping and Other 
Compliance Requirements. The NPRM seeks comment on the regulatory 
implications of the Commission's finding that cable modem service is an 
information service under the Communications Act, 47 U.S.C. 153(20) as 
amended. Specifically, the NPRM seeks comment on whether the Commission 
should require cable operators that provide cable modem service to 
allow unaffiliated ISPs to have direct access to the cable operator's 
subscribers via the cable system facilities.
    36. The NPRM also seeks comment on the scope of state and local 
government authority over cable modem service in light of the 
Commission's finding that it is an information service. This 
determination may not have a direct effect on small entities, but 
indirectly it may impact small entities, such as small cable operators, 
if local governments are permitted to require cable operators to grant 
unaffiliated ISPs access to the cable system or if local governments 
are permitted to enforce other regulations that affect a cable 
operator's provision of cable modem service.
    37. Steps Taken to Minimize Significant Impact on Small Entities 
and Significant Alternatives Considered. The IRFA requires an agency to 
describe any significant alternatives that it has considered in 
proposing regulatory approaches, which may include, among others, the 
following four alternatives: (1) The establishment of differing 
compliance or reporting requirements or timetables that take into 
account the resources available to small entities; (2) the 
clarification, consolidation, or simplification of compliance or 
reporting requirements under the rule for small entities; (3) the use 
of performance, rather than design, standards; and (4) an exemption 
from coverage of the rule, or any part thereof, for small entities.
    38. The NPRM seeks comment on several regulatory alternatives to 
implement the Commission's classification of cable modem service as an 
information service under the Communications Act. For example, 
alternatives considered in the NPRM include whether unaffiliated ISPs 
should be provided with access to cable systems and, if so, which of 
the various access models should be adopted. In addition, the 
Commission will also consider whether any access requirements 
ultimately adopted should be different for large cable operators from 
those imposed on small cable operators. Finally, the NPRM considers 
whether the Commission should refrain entirely from imposing any ISP 
access requirements on cable operators. The Commission expects that 
whichever alternatives are chosen the Commission will seek to minimize 
any adverse effects on small entities.
    39. Federal Rules Which Duplicate, Overlap, or Conflict with the 
Commission's Proposals. None.

Procedural Matters

Ex Parte

    40. This proceeding will be treated as a ``permit-but-disclose'' 
proceeding subject to the ``permit-but-disclose'' requirements under 
Sec. 1.1206(b) of the Commission's rules, 47 CFR 1.1206(b), as revised. 
Ex parte presentations are permissible if disclosed in accordance with 
Commission rules, except during the Sunshine Agenda period when 
presentations, ex parte or otherwise, are generally prohibited. Persons 
making oral ex parte presentations are reminded that a memorandum 
summarizing a presentation must contain a summary of the substance of 
the presentation and not merely a listing of the subjects discussed. 
More than a one or two sentence description of the views and arguments 
presented is generally required. See 47 CFR 1.1206(b)(2), as revised. 
Additional rules pertaining to oral and written presentations are set 
forth in Sec. 1.1206(b) of the Commission's rules, 47 CFR 1.1206(b), as 
revised. Parties submitting written ex parte presentations or summaries 
of oral ex parte presentations are urged to use the Electronic Comment 
Filing System (``ECFS'') in accordance with the Commission rules 
discussed below. Parties filing paper ex parte submissions must file an 
original and one copy of each submission with the Commission's Acting 
Secretary, William F. Caton, at the appropriate address below (see 
Filing of Comments and Reply Comments) for filings sent by either U.S. 
mail, overnight delivery, or hand or messenger delivery. Parties must 
also serve the following with either one copy of each ex parte filing 
via e-mail or two paper copies: (1) Qualex International, Portals II, 
445 12th Street, SW., Room CY-B402, Washington, DC, 20554, telephone 
(202) 863-2893, facsimile (202) 863-2898, or e-mail at 
[email protected]; and (2) Sarah Whitesell, Media Bureau, 445 12th 
Street, SW., 3-C488, Washington, DC, 20554, [email protected]; and (3) 
Steve Garner, Media Bureau, 445 12th Street, SW., 4-C468, Washington, 
DC 20554, [email protected].

Filing of Comments and Reply Comments

    41. Pursuant to applicable procedures set forth in Secs. 1.415 and 
1.419 of the Commission's rules, interested parties may file comments 
on or before June 17, 2002, and reply comments on or before July 15, 
2002. Comments may be filed using the Commission's Electronic Comment 
Filing System (``ECFS'') or by filing paper copies. See Electronic 
Filing of Documents in Rulemaking Proceedings, 63 FR 24121 (1998). 
Given recent changes in the Commission's mail delivery system, parties 
are strongly urged to use the ECFS to file their pleadings. Comments 
filed through the ECFS can be sent as an electronic file via the 
Internet to http://www.fcc.gov/e-file/ecfs.html>. Generally, only one 
copy of an electronic submission must be filed. In completing the 
transmittal screen, electronic filers should include their full name, 
Postal Service mailing address, and the applicable docket or rulemaking 
number. Parties may also submit an electronic comment by Internet e-
mail. To get filing instructions for e-mail comments, commenters should 
send an e-mail to [email protected], and should include the following words 
in the body of the message, ``get form your e-mail address>.'' A sample 
form and directions will be sent in reply.
    42. Parties who choose to file by paper must file an original and 
four copies of each filing in CS Docket No. 02-52. If parties want each 
Commissioner to receive a personal copy of their comments, an original 
plus nine copies must be filed. Filings can be sent by hand or 
messenger delivery, by commercial overnight courier, or by first-class 
or overnight U.S. Postal Service mail (although we continue to 
experience delays in receiving U.S. Postal Service mail). The 
Commission's contractor, Vistronix, Inc., will receive hand-delivered 
or messenger-delivered paper filings for the Commission's Secretary at 
236 Massachusetts Avenue, NE., Suite 110, Washington, DC 20002. The 
filing hours at this location are 8 a.m. to 7 p.m. All hand deliveries 
must

[[Page 18854]]

be held together with rubber bands or fasteners. Any envelopes must be 
disposed of before entering the building. Commercial overnight mail 
(other than U.S. Postal Service Express Mail and Priority Mail) must be 
sent to 9300 East Hampton Drive, Capitol Heights, MD 20743. U.S. Postal 
Service first-class mail, Express Mail, and Priority Mail should be 
addressed to 445 12th Street, SW., Washington, DC 20554. All filings 
must be addressed to the Commission's Secretary, Office of the 
Secretary, Federal Communications Commission. Parties must also serve 
the following with either one copy of each filing via e-mail or two 
paper copies: (1) Qualex International, Portals II, 445 12th Street, 
SW., Room CY-B402, Washington, DC 20554, telephone (202) 863-2893, 
facsimile (202) 863-2898, or e-mail at [email protected]; and (2) Sarah 
Whitesell, Media Bureau, 445 12th Street, SW., 3-C488, Washington, DC 
20554, [email protected]. In addition, five copies of each filing must 
be filed with Steve Garner, Media Bureau, 445 12th Street, SW., 4-C468, 
Washington, DC 20554, [email protected].

Availability of Documents

    43. Comments, reply comments, and ex parte submissions will be 
available for public inspection during regular business hours in the 
FCC Reference Center, Federal Communications Commission, 445 12th 
Street, SW., CY-A257, Washington, DC 20554. Persons with disabilities 
who need assistance in the FCC Reference Center may contact Bill Cline 
at (202) 418-0267, (202) 418-7365 TTY, or [email protected]. These 
documents also will be available electronically at the Commission's 
Disabilities Issues Task Force Web site: www.fcc.gov/dtf, and from the 
Commission's Electronic Comment Filing System. Documents are available 
electronically in ASCII text, Word 97, and Adobe Acrobat. Copies of 
filings in this proceeding may be obtained from Qualex International, 
Portals II, 445 12th Street, SW., Room, CY-B402, Washington, DC 20554, 
telephone (202) 863-2893, facsimile (202) 863-2898, or via e-mail at 
[email protected].
    44. This document is available in alternative formats (computer 
diskette, large print, audio cassette, and Braille). Persons who need 
documents in such formats may contact Brian Millin at (202) 418-7426, 
TTY (202) 418-7365, or send an e-mail to [email protected].

Contact Information

    45. The Media Bureau contact for this proceeding is Steve Garner at 
(202) 418-1063, [email protected].

Ordering Clause

    46. This Notice of Proposed Rulemaking is issued pursuant to 
authority contained in sections 1, 2, 3, 4, 303, 403, and 601 of the 
Communications Act of 1934, as amended, and section 706 of the 
Telecommunications Act of 1996.

    Federal Communications Commission.
William F. Caton,
Acting Secretary.
[FR Doc. 02-9102 Filed 4-16-02; 8:45 am]
BILLING CODE 6712-01-P