[Federal Register Volume 68, Number 55 (Friday, March 21, 2003)]
[Rules and Regulations]
[Pages 13850-13855]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-6782]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 76

[CS Docket No. 95-184, MM 92-260; FCC 03-9]
RIN 4105


Telecommunications Services Inside Wiring Customer Premises 
Equipment

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: This document revises rules which the Commission adopted 
relating to cable home run wiring. This document also resolves issues 
raised by the Commission regarding exclusive and perpetual contracts 
and related matters.

DATES: Effective May 20, 2003 except for Sec. Sec.  76.620, 76.802, and 
76.804 which contain information collection requirements that have not 
been approved by OMB. The Federal Communications Commission will 
publish a document in the Federal Register announcing the effective 
date for the modifications to these sections. Written comments by the 
public on the new and/or modified information collection(s) are due May 
20, 2003.

FOR FURTHER INFORMATION CONTACT: Cheryl Kornegay, Media Bureau at (202) 
418-7200 or via Internet at [email protected]; or Wanda Hardy, Media 
Bureau, (202) 418-2129. For additional information concerning the 
information collections contained in this document, contact Les Smith 
at (202) 418-0217, or via the Internet at [email protected]. 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 Les Smith, Federal Communications Commission, Room 1-A804, 
445 12th Street, Washington, DC 20554 or via the Internet to 
[email protected].

SUPPLEMENTARY INFORMATION: This document is a summary of the 
Commission's First Order on Reconsideration and Second Report and Order 
(``Order'' and ``2nd R&O''); CS 95-184, MM 92-260, FCC 03-9, adopted 
January 21, 2003 and released January 29, 2003. This document revises 
rules which the Commission adopted in the Report and Order and Second 
Further Notice of Proposed Rulemaking; 62 FR 61016, November 14, 1997, 
(``R&O'' and ``2nd FNPRM''); concerning cable home run wiring. The 
rules adopted by the Commission established specific procedural 
mechanisms requiring the sale, removal or abandonment of home run 
wiring in multiple dwelling unit buildings. This document addresses the 
eight petitions for reconsideration and ten oppositions or responses to 
the petitions for reconsideration received by the Commission in 
response to the Report and Order. This document also resolves issues 
raised by the Commission in the 2nd FNPRM relating to (1) exclusive and 
perpetual contracts; (2) the application of cable home wiring and 
subscriber termination rights to non-cable and cable MVPDs; (3) the 
exemption of small MVPDs from the annual signal leakage requirements; 
and (4) a proposal to establish a virtual demarcation point from which 
alternative providers could share cable wiring. 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://www.fcc.gov/mb/.
    Paperwork Reduction Act: This Order contains new or modified 
information collection(s). 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 Order and 
required by the Paperwork Reduction Act of 1995, Pub. L. 104-13. Public 
and agency comments are due May 20, 2003.

Synopsis of First Order on Reconsideration

Legal Authority of the Commission

    1. Several petitioners questioned the Commission's authority to 
regulate the disposition of cable home run wiring in the first 
instance. We considered these arguments at length previously in the R&O 
and concluded that the Commission has authority under section 4(i) and 
303(r) of the Communications Act of 1934 (``Communications Act''), in 
conjunction with the pervasive regulatory authority committed to the 
Commission under Title VI, and particularly section 623, to establish 
procedures for the disposition of MDU home run wiring upon termination 
of service.

Application of Building-by-Building Disposition Procedures

    2. The R&O adopted procedures for two categories of home run wiring 
disposition: building-by-building and unit-by-unit. A multiple dwelling 
unit (``MDU'') owner may invoke the building-by-building disposition 
procedures when the incumbent multichannel video programming 
distributors (``MVPD'') owns the home run wiring, but no longer has a 
legally enforceable right to remain in the building and the MDU owner 
wants to use that wiring for service from another provider. A MDU owner 
may invoke the unit-by-unit disposition procedures when the incumbent 
MVPD owns the

[[Page 13851]]

home run wiring, but no longer has a legally enforceable right to 
maintain its home run wiring dedicated to a particular unit or units, 
and the MDU owner wants to permit multiple service providers to compete 
to serve individual units in the building and to use the existing 
wiring.
    3. At least one petitioner suggested that the Commission's home run 
wiring disposition procedures should only apply where an MDU owner 
agrees to allow unit-by-unit competition and not where the owner seeks 
to contract with a new MVPD to serve the entire building. As we 
concluded in the R&O, this proposal wrongly assumes that any MVPD that 
serves the entire building has the ability to act like an entrenched 
monopolist, without regard to the quality and quantity of the video 
service provided. We observed in the R&O that MVPDs competing for the 
right to serve the building will have to offer the mix of video 
service, quality, quantity and price that will best help the MDU owner 
compete in the marketplace.

Control of Home Run Wiring

    4. Both the building-by-building and unit-by-unit home run wiring 
disposition procedures allow the MDU owner, rather than individual 
subscribers, the option to acquire the home run wiring of a departing 
MVPD. In the R&O the Commission addressed comments from at least six 
other parties contending that MDU owners do not act in the best 
interest of residents and therefore should not have the authority to 
choose among service providers. The Commission concluded in the R&O 
that many MDU owners are tenant-based condominium associations and 
cooperative boards that cannot be presumed to be non-representative of 
their tenant's interests. The Commission also concluded that the 
property owner should have the ability to control the wiring because 
the property owner is responsible for the common areas of a building. 
The Commission noted that property owners have safety and security 
responsibilities, maintain compliance with building and electrical 
codes, maintain the aesthetics of the building, and balance the 
concerns of the residents. The Commission concludes in the Order that 
considerations of fairness and efficiency persuade it to leave the 
rules addressing control of home run wiring rules intact.

Removal of Wiring by Incumbent Providers

    5. Several petitioners asked the Commission either to eliminate 
entirely an incumbent operator's option to remove its home run wiring 
or to qualify that option by requiring the incumbent to first offer to 
sell the wiring to the MDU owner or an alternative MVPD at replacement 
cost or salvage value. The Commission concludes in the R&O that the 
record in this proceeding reveals almost no concrete examples of 
incumbents removing their wiring rather than abandoning or selling it. 
The Commission is not inclined to make a decision to qualify or 
eliminate an incumbent's right to remove its property without a 
compelling record of the need to do so. Also, because the record 
contains no concrete examples of incumbent operators engaging in 
pricing activities that the negotiation and arbitration process cannot 
accommodate, the Commission declined to require an incumbent that 
elects to sell its home run wiring to do so at replacement cost or 
salvage value.

Arbitration/Independent Pricing Experts

    6. A petitioner asked the Commission to require MDU owners to agree 
to purchase the home run wiring at a price set through binding 
arbitration as a precondition to entering into negotiations with the 
incumbent regarding the sale price of the wiring. The record provides 
no evidence that MDUs have not or would not bargain in good faith under 
the current rules. We question whether a commitment by the parties to 
engage in binding arbitration prior to the onset of negotiations will 
improve the chances for successful negotiations. Instead such a 
requirement could act as a disincentive for MDU owners to invoke the 
inside wiring rules. We will not adopt the petitioner's proposal to 
impose upon the MDU owner an obligation to purchase home run wiring 
once an incumbent has elected to sell it.

MDU Owner Compensation

    7. Several petitioners argue that MDU owner decisions are 
improperly influenced by the level of consideration offered by an MVPD 
to the MDU owner, rather than by which MVPD offers the widest array of 
programming, most attractive prices, or best customer service. These 
petitioners contend that the Commission's home run wiring disposition 
rules should not apply in any situation where the owner has received 
any form of excess. As we determined in the R&O, the petitioners have 
not suggested definitions or guidelines as to what they consider 
``excessive'' and have produced no evidence that such payments have 
resulted in competitive harm. We are unable to conclude that such 
payments are anti-competitive and warrant exclusion of MDU owners who 
accept them from the protection of the inside wiring rules.

Notice Period and Transition Period for the Unit-by-Unit Disposition 
Procedures

    8. In the R&O the Commission recognized that MDU owners may permit 
service providers to compete head-to-head in a building for the right 
to use the individual home run wires dedicated to each unit in an MDU. 
Our unit-by-unit disposition procedures apply when the incumbent 
service provider does not have (or will not have at the conclusion of 
the notice period) the right to maintain its home run wiring dedicated 
to a particular unit in an MDU. If the MDU owner wishes to permit 
alternative MVPDs to compete for the right to use the individual home 
run wires dedicated to each unit, the MDU owner must give the incumbent 
60 days written notice that it intends to invoke the home run wiring 
procedures. The incumbent will then have, with respect to all of the 
incumbent's home run wiring in the MDU, 30 days to elect to remove, 
abandon or sell the wiring dedicated to individual subscribers who may 
subsequently choose the alternative MVPD's service. Several petitioners 
argued that the 60-day notice period is inordinately long. They suggest 
that the notice period will discourage vigorous unit-by-unit 
competition by allowing incumbents time to develop a competitive 
counterattack in response to the arrival of an alternative MVPD, to 
reprice or restructure their service offerings and to lock individual 
subscribers into long-term service contracts.
    9. On reconsideration, we are not convinced that a notice period 
for unit-by-unit transitions of less than 60 days would allow enough 
time to facilitate a smooth and timely transition when an alternative 
provider enters a building. The procedures adopted in the R&O are 
intended to provide all parties sufficient notice and certainty 
regarding how existing home run wiring will be made available to the 
alternative MVPD so that a change in service can be made efficiently. 
While a 60 day notice period may provide an opportunity for the 
incumbent to organize a competitive response to the alternative 
provider's service offering, we have no reason to believe the incumbent 
will necessarily have a market advantage over the alternative provider. 
The incumbent has an existing relationship with its subscribers, but 
that relationship may not be a positive one. Where subscribers are 
eager to obtain the services of an alternative provider, due in part to 
the failings of the incumbent, the existing relationship may hurt 
rather than help

[[Page 13852]]

the incumbent. Where subscribers are more than satisfied with the 
service provided by the incumbent, that existing relationship should 
help the incumbent in its efforts to retain subscribers to retain 
subscribers in the face of an alternative provider's competitive 
efforts. Beyond the fact of an existing relationship, an alternative 
provider possesses many of the same competitive tools available to the 
incumbent, such as pricing and designing service offering attractively 
and attempting to induce subscribers to enter into long term contracts. 
We decline to shorten the notice period.
    10. A petitioner suggests that in cases where the incumbent has 
elected to sell or abandon its home run wire, our rules should be 
modified to eliminate an existing ambiguity with respect to when the 
incumbent provider will make the home run wiring accessible to the 
alternative provider. The current rule provides that such access will 
be provided to the alternative provider ``within 24 hours of actual 
service termination.''
    11. We agree that the requirement as it is presently written is 
ambiguous. Accordingly, we will amend Sec.  76.804 of our rules to 
provide that where the MDU owner or the alternative provider chooses to 
purchase the home run wiring, the incumbent must provide access during 
the 24-hour period prior to actual service termination to enable the 
new provider to avoid a break in service.

Unauthorized Transfer of Customers

    12. A petitioner urges the Commission to amend its home run wiring 
rules to include an express prohibition against unauthorized customer 
transfers. Another petitioner contends that such rule modifications are 
not necessary because MVPD service does not present the same 
opportunities for ``slamming'' or the unauthorized transfer of 
customers, as telephone service transfers. The Commission is not aware 
of any unauthorized transfer complaints filed within the more than four 
years that the home run wiring disposition rules have been in effect. 
Absent such complaints, we find no basis for modifying our rules.

Mandatory Access

    13. Mandatory access laws generally provide franchised cable 
operators with a legal right to install and maintain cable wiring in 
MDU buildings, even over MDU owners' objections. Mandatory access 
statutes were generally enacted to ensure that MDU tenants would have 
cable programming service and to prevent MDU owners from denying access 
based on aesthetic or other considerations.
    14. We continue to believe that mandatory access laws may impede 
competition in the MDU marketplace and that they tend to preclude 
alternative (non-cable) MVPDs from executing MDU contracts. This is due 
to the fact that most mandatory access laws give the franchised cable 
operator a legal right to wire and remain in an MDU. The predictable 
result is that competitive providers are less likely to take the 
financial risk of entering, or to secure the necessary financial 
backing to enter the MDU marketplace in a mandatory access state. While 
we recognize the negative impact that mandatory access statues can 
have, we cannot ignore the possibility that, but for the existence of 
mandatory access statutes, some MDU owners would refuse to allow their 
buildings to be wired for cable programming. Federal preemption of 
mandatory access laws could, conceivably, leave some MDU tenants 
without access to non-broadcast video programming altogether. We will 
retain our conclusion in the R&O that we can not support federal 
preemption of state mandatory access rules at this time.

Signal Leakage

    15. In the R&O, the Commission adopted a rule extending the signal 
leakage requirements to MVPD providers other than cable systems, 
including telephone companies and other telecommunications service 
providers that deliver video service. The Commission granted a five-
year exemption from these requirements, however, for non-cable MVPDS 
that were ``substantially built'' as of January 1, 1998, in order to 
allow those MVPDs sufficient time to bring themselves into compliance. 
``Substantially built'' was defined as having 75% of the distribution 
plant completed.
    16. A petitioner suggested that we adopt a rule providing that a 
wireless cable system is ``substantially built,'' for purposes of the 
five year exemption form our signal leakage testing and reporting 
requirements, when its headend/transmitter facilities are constructed 
and operational. We reject this proposal. We note that the headend and 
transmitter of a wireless cable plant do not constitute distribution 
plant. The receiver and down-converter and associated cable strand, 
amplifiers, etc., constitute distribution plant subject to signal 
leakage. It is the deployment of such equipment that is relevant for 
purposes of the exemption.

Sharing of Molding

    17. In the R&O, the Commission adopted a rule permitting an 
alternative MVPD to install its wiring within an incumbent cable 
operator's existing molding, even over the incumbent's objection, where 
the MDU owner agrees that there is adequate space in the molding and 
the MDU owner gives its affirmative consent.
    18. A petitioner argues that our rule effects an unconstitutional 
taking of private property where an incumbent provider owns the molding 
or has contracted with the MDU owner for the exclusive right to occupy 
the moldings or conduits. The Commission's rule does not apply where 
the incumbent has an exclusive contractual right to occupy the molding 
or where the incumbent has contracted for the right to maintain its 
molding on the MDU property without alteration by the MDU owner. 
Accordingly, our rule does not interfere with the incumbent's property 
rights and does not constitute a taking, and, therefore, no 
compensation need be paid.

MDU Demarcation Point

    19. Our rules prohibit an incumbent MVPD from interfering with a 
competitor's access to existing MDU wiring at the demarcation point. 
The demarcation point for MDU installations is defined as ``a point at 
(or about) twelve inches outside of where the cable wire enters the 
subscriber's dwelling unit, or where the wire is physically 
inaccessible at such point, the closest practicable point thereto that 
does not require access to the individual subscriber's dwelling unit. A 
location is ``physically inaccessible'' when accessing the wire at that 
point ``would require significant modification of, or significant 
damage to, preexisting structural elements, and would add significantly 
to the physical difficulty and/or cost of accessing the subscriber's 
home wiring. The rule provides examples of wiring that is ``physically 
inaccessible,'' such as ``wiring embedded in brick, metal conduit or 
cinder blocks with limited or without access openings.''
    20. In the R&O, the Commission considered and rejected various 
proposals to relocate the demarcation point. Location of the 
demarcation point is significant because, under our rules, the 
demarcation point is the place where competing providers may access 
existing home wiring in an MDU building. A demarcation point that 
allows relatively unimpeded access to existing wire is likely to foster

[[Page 13853]]

competitive entry into the MDU marketplace.
    21. We conclude that cable wiring behind sheet rock is ``physically 
inaccessible'' as that term is used in 47 CFR 76.5(mm)(4) of the 
Commission's rules. As stated, our rule defines ``physically 
inaccessible'' as ``require[ing] significant modification of, or 
significant damage to, preexisting structural elements.'' We believe 
that the term ``structural elements'' encompasses sheet rock, otherwise 
known as wallboard. The ``Note'' appended to Sec.  76.5(mm)(4), which 
helps define ``inaccessibility,'' states that ``wiring embedded in 
brick, metal conduit or under cinder blocks with limited or without 
access openings would likely be physically inaccessible; wiring within 
hallway molding would not.'' Sheet rock and other similar materials are 
not identified specifically. In our view, sheet rock is more like 
``brick or cinder block,'' materials also commonly used to form 
ceilings and hallways, than molding, which is not.
    22. The definition of ``physically inaccessible'' also requires 
that accessing the wiring at that point would ``add significantly to 
the physical difficulty and/or cost'' of connecting. While we 
acknowledge that cutting a hole through and repairing sheet rock is 
neither as physically difficult nor as costly as boring through brick, 
metal or cinder block, we are satisfied that it adds significantly to 
the physical difficulty and cost of wiring an MDU. For this reason we 
conclude that wiring that is hidden behind the sheet rock in an MDU 
wall or ceiling is ``physically inaccessible'' as the term is used in 
the Commission's rule. We will amend the ``Note'' appended to Sec.  
76.5(mm)(4) to include sheet rock.

Open Video System Providers

    23. In the 1996 Act, Congress recognized the open video system 
(OVS) as a means by which a local exchange carrier may provide cable 
service to subscribers within its telephone service area. Although 
subject to streamlined regulation as compared to their cable 
counterparts, OVS operators have clearly defined obligations and 
responsibilities, such as offering up to two-thirds of their channel 
capacity to unaffiliated programmers on a non-discriminatory basis.
    24. A petitioner argues that OVS operators should not be able to 
avail themselves of the home run wiring rules because OVS operators 
have no basis to claim a right to use pre-existing MDU home run wiring. 
The petitioner submits that OVS operators are legally required to 
construct end-to-end facilities all the way to end user MDU residents. 
OVS operators, the petitioner concludes, have an obligation to 
construct end-to-end facilities to the demarcation point of each 
subscriber residence and MDU unit within its service area. Yet the 
statute prohibits an OVS operator provider from consuming all capacity 
with affiliated programming, and whether the OVS operator acquires 
existing home run wiring in an MDU or installs the wiring itself is 
irrelevant to the question of statutory compliance.
    25. It is not clear how an OVS operator's obligation to carry 
affiliated and nonaffiliated programming on a non-discriminatory basis 
would interfere with the operator's eligibility to avail itself of the 
home run wiring rules. The petitioner assumes an OVS provider will 
consume all capacity with affiliated programming, and that, in some 
way, a requirement that OVS operators must install new home wiring in 
MDUs will prevent that from happening. Yet the statute prohibits an OVS 
provider from consuming all capacity with affiliated programming, and 
whether the OVS operator acquires existing home run wiring in an MDU or 
installs the wiring itself is irrelevant to the question of statutory 
compliance.

Synopsis of Second Report and Order

Background

    1. In the R&O, the Commission amended its cable television inside 
wiring rules for the purpose of facilitating competition in video 
distribution markets. The new rules were intended to foster 
opportunities for multichannel video programming distributors 
(``MVPDs'') to provide service in multiple dwelling units (``MDU'') by 
establishing procedures regarding how and under what circumstances the 
existing cable home run wiring would be made available to alternative 
service providers.
    2. In the 2nd R&O the Commission declined to restrict exclusive 
contracts for the provision of video services in multiple dwelling unit 
buildings (``MDU''). The Commission also declined to ban perpetual 
contracts for the provision of video services in MDUs or subject such 
contracts to a fresh look window. The Commission concluded that the 
cable home wiring and cable home run wiring rules should apply to all 
multichannel video programming distributors (``MVPDs'') in the same 
manner that they currently apply to cable operators. The Commission 
adopted a limited exemption for small non-cable MVPDs from its signal 
leakage reporting requirements but declined to allow MDU owners to 
require sharing of incumbent-owned cable wiring.

Exclusive and Perpetual MDU Contracts

    3. Exclusive and perpetual contracts between MDU owners and MVPDs 
grant incumbent MVPDs the legal right to remain on MDU properties and 
thus limit application of the Commission's inside wiring rules. 
Exclusive contracts generally refer to those contracts that specify 
that, for a designated term, only a particular MVPD and no other 
provider may provide video programming and related services to 
residents of an MDU. Perpetual contracts generally refer to those 
contracts that grant the incumbent provider the right to maintain its 
wiring and provide service to the MDU for indefinite or very long 
periods of time, or for the duration of the cable franchise term, and 
any extensions thereof.
    4. Commenters noted that most long-term exclusive and perpetual MDU 
contracts were executed at a time when local competition for the 
provision of multi-channel video programming was scarce or non-
existent. As the Commission has observed, recent advancements in video 
and communications technology have contributed toward a more dynamic, 
evolving marketplace with cable and new alternative providers competing 
for MDU subscribers. It appears that some property owners who might now 
prefer to choose other providers' services may be bound by exclusive or 
perpetual contracts.
    5. In the 2nd FNPRM, the Commission recognized that exclusive 
contracts for video services in MDUs may have competitive consequences. 
Exclusive contracts could bar alternative MVPDs access to, and thus 
inhibit competition for MDUs. The Commission also noted arguments that 
exclusive contracts enable alternative providers to recoup the 
investment required to enter MDUs and thus to become or remain viable. 
The Commission asked commenters to address whether it would be 
appropriate to cap exclusive contracts to open up MDUs to potential 
competition on a building-wide or unit-to-unit basis, and if so, what 
would represent a reasonable cap.
    6. Commenters identified with real estate interests, private cable 
operators and some telecommunications entities tend to support 
exclusive contracts for video programming services as enabling 
alternative MVPDs to gain a foothold in the MDU market. These 
commenters generally advocated long-term or no caps on exclusive 
contracts. Other commenters were critical of exclusive

[[Page 13854]]

contracts and proposed, if they were to be permitted at all, very short 
caps of three to five years.
    7. We find that the record does not support a prohibition on 
exclusive contracts for video services in MDUs, nor a time limit, in 
the nature of a cap, for such contracts. The parties have identified 
both pro-competitive and anti-competitive aspects of exclusive 
contracts. We cannot state, based on the record that exclusive 
contracts are predominantly anti-competitive. With respect to capping 
such contracts, there appears to be little agreement over the length of 
the term. Again, based on the record, we cannot discern the ``correct'' 
length. We note that competition in MDU market is improving, even with 
the existence of exclusive contracts.

Perpetual Contracts

    8. The 2nd FNPRM also sought comment regarding whether it would be 
appropriate to restrict perpetual contracts between MDU owners and 
MVPDs. Although several commenters question the Commission's authority 
to act in this area, most commenters addressing the issue assert that 
perpetual contracts effectively bar alternative and/or new MVPDs entry 
into the MDU market and are inherently anti-competitive. Nonetheless, 
the record does not demonstrate the existence of widespread perpetual 
contracts nor support the need for government interference at this 
time.
    9. The majority of commenters that urged the Commission to restrict 
perpetual MDU contracts offered only conclusory statements regarding 
the prevalence of such contracts in the marketplace. One commenter 
submitted the results of a survey in which it solicited responses from 
a cross section of MDU owners on issues relating to perpetual 
contracts. The survey suggests that only a small percentage of MDUs are 
currently subject to perpetual contracts for video programming 
services.
    10. Given the results of the survey and the lack of other data 
reflecting the prevalence of perpetual contracts, we cannot conclude 
that such contracts represent a barrier to competition in the MDU 
market. Accordingly, we do not find that the current record provides a 
basis for restricting perpetual contracts.

Application of Cable Inside Wiring to All MVPDs

    11. In the 2nd FNPRM, the Commission proposed to modify its rules 
governing home wiring for single-unit installations and subscribers' 
pre-termination rights, so that they would apply to non-cable MVPDs, in 
addition to cable MVPDs. The Commission suggested that such 
modifications ``would promote competitive parity and facilitate the 
ability of a subscriber whose premises was initially wired by a non-
cable MVPD to change providers.'' The Commission opined that the 
modifications would ``promote the same consumer benefits as in the 
cable context: Increased competition and consumer choice, lower prices 
and greater technological innovation. The Commission sought comment on 
the proposal to extend its rules to all MVPDs and on its authority to 
do so.
    12. The trend in recent years has been increased competition in the 
MVPD market. The Commission anticipates this trend to continue with 
alternative MVPDs increasingly gaining market share, such that the 
entity responsible for the initial installation in a home could be a 
cable or a non-cable provider. We find it necessary to broaden our 
rules to ensure that a subscriber's ability to terminate existing 
service and accept alternative service is not contingent on whether the 
wiring was installed by a cable, as opposed to a non-cable provider. We 
further find that the proposed rule modifications will promote 
regulatory parity and enhance competition among MVPDs. We will modify 
our rules governing the disposition of home wiring and subscriber pre-
termination rights to apply uniformly to all MVPDs.

Exemption From Signal Leakage Reporting Requirements

    13. In the R&O, we extended the application of our signal leakage 
rules, which had applied only to traditional cable operators, to non-
cable MVPDs such as satellite master antenna service (``SMATV''), MMDS, 
and open video system (``OVS'') operators. A transition period for 
compliance was established for certain non-cable MVPDs. In particular, 
all non-cable MVPDs were directed to comply with the reporting 
requirement set forth in CFR 76.1804(g) by January 1, 2003. In the 2nd 
FNPRM, we sought comment on whether we should exempt small MVPDs, 
including small cable operators, from these requirements. Section 
76.1804(g) of the Commission's rules requires cable operators to file 
annually with the Commission certain information relating to their use 
of the aeronautical radio frequency bands. We sought comments in an 
effort to determine whether the annual reporting requirement may impose 
undue burdens on small service providers, including small cable 
operators.
    14. Supporters of a reporting exemption for small MVPDs argue that 
an exemption would be consistent with congressional directives to 
reduce regulatory burdens on small MVPDs where feasible. They argue 
that there is no evidence that a small MVPD exemption will result in 
abuses of the signal leakage rules or otherwise prompt small MVPDs to 
be less attentive to their signal leakage obligations. Opponents of an 
exemption argue that the proposal does not relieve MVPDs of the 
obligation to conduct tests and that the filing of signal leakage test 
results is a simple task once the testing is complete. They state that 
the signal leakage rules represent a Commission effort to protect life 
and property, and, if reporting is helpful in the oversight of signal 
leakage, then all MVPDs should report.
    15. We will adopt a very limited exemption to the annual reporting 
requirement of CFR 76.1804(g) of our rules. This exemption will apply 
to non-cable MVPDs with less than 1000 subscribers or serving less than 
1000 units. Such an exemption furthers congressional directives to 
reduce the regulatory burden on small entities where feasible. We have 
no reason to believe that such an exemption will affect enforcement of 
the Commission's signal leakage rules. We are not exempting MVPDs 
subject to existing reporting requirements. The annual reporting 
requirement is scheduled to become effective for all non-cable MVPDs on 
January 1, 2003. With this exemption, that requirement will not become 
effective for the smallest non-cable MVPDs. Relief from the annual 
reporting requirement will allow small non-cable MVPDs to focus on the 
prevention of leaks by devoting their scarce resources primarily to 
maintenance, leakage detection, and repair. The exempted systems will 
continue to perform all signal leakage tests required by our rules and 
must make the results of those tests available to Commission agents 
upon request. We believe it is sensible to treat small cable and non-
cable MVPDs differently in this regard because of the different 
environments in which each is likely to operate. Small cable systems 
have wiring that connects individual residences, is strung on utility 
poles, and is subject to all of the stresses associated with the 
outside environment, including temperature fluctuations, wind loading, 
rain and ice. Small non-cable MVPDs predominately serve MDUs and thus 
have their wiring and associated electronics protected from exposure to 
the weather and the risk of damage that could result in signal leakage.
    16. Testing will remain an important part of our enforcement 
program. It is

[[Page 13855]]

only the future obligation to report results by the smallest non-cable 
MVPDs which are changing here. Our signal leakage monitoring and 
enforcement program, conducted pursuant to CFR 76.613, which includes a 
vigorous program of field inspections and the impositions of 
forfeitures, remains unaffected. The Commission's field operations 
staff conducts routine monitoring for signal leakage and, of course, 
will continue to respond to aeronautical complaints to ensure the safe 
operation of aeronautical frequencies.

Simultaneous Use of Cable Home Run Wiring

    In the Second Further Notice, we solicited comments on whether we 
should adopt a proposal from DirecTV to give MDU owners the right to 
require that incumbent MVPDs allow competitors to share their home run 
wiring. Most of the comments we received on this issue agree that there 
are significant unresolved technical problems with the proposal, 
notwithstanding its merits from a public policy perspective. Most of 
the technical objections to the DirecTV proposal relate to the 
possibility of interference when amplified signals are transmitted on a 
single wire and the possible lack of bandwidth capacity in existing 
cable plant. We are unable to resolve this issue based on the record 
before us. Accordingly we decline to adopt DirecTV's line sharing 
proposal at this time

Ordering Clauses

    26. Pursuant to the authority granted in sections 1, 4(i), 201-205, 
214-215, 220, 303, 623, 624 and 632 of the Communications Act of 1934, 
as amended, 47 U.S.C. 151, 154(i), 201-205, 220, 303, 544 and 552, the 
petitions for reconsideration filed in response to the R&O are granted 
in part and denied in part, as provided herein.
    27. Pursuant to the authority granted in sections 1, 4(i), 201-205, 
214-215, 220, 303, 623, 624, and 632 of the Communications Act of 1934, 
as amended, 47 U.S.C. 151, 154(i), 201-205, 214-215, 220, 303, 543, 544 
and 552, the modifications to the Commission's rules are hereby 
adopted. These modifications shall become effective May 20, 2003.

List of Subjects in 47 CFR Parts 76

    Cable television.

Federal Communications Commission.
Marlene H. Dortch,
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, 338, 339, 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 76.5 is amended by revising the note to paragraph 
(mm)(4) to read as follows:


Sec.  76.5  Definitions.

* * * * *
    (mm) * * *
    (4) * * *

    Note to Sec.  76.5 Paragraph (mm)(4): For example, wiring 
embedded in brick, metal conduit, cinder blocks, or sheet rock with 
limited or without access openings would likely be physically 
inaccessible; wiring enclosed within hallway molding would not.
* * * * *

    3. Section 76.620 is amended by revising paragraph (a) to read as 
follows:


Sec.  76.620  Non-cable multichannel video programming distributors 
(MVPDs).

    (a) Sections 76.605(a)(12), 76.610, 76.611, 76.612, 76.614, 
76.1804(a) through (f), 76.616, and 76.617 shall apply to all non-cable 
MVPDs. However, non-cable MVPD systems that are substantially built as 
of January 1, 1998 shall not be subject to these sections until January 
1, 2003. ``Substantially built'' shall be defined as having 75 percent 
of the distribution plant completed. As of January 1, 2003, Sec.  
76.1804(g) shall apply to all non-cable MVPDs serving 1000 or more 
subscribers or 1000 or more units.
* * * * *

    4. Section 76.802 is amended by revising paragraph (l) to read as 
follows:


Sec.  76.802  Disposition of cable home wiring.

* * * * *
    (l) The provisions of Sec.  76.802 shall apply to all MVPDs in the 
same manner that they apply to cable operators.

    5. Section 76.804 is amended by revising paragraph (b)(3) to read 
as follows:


Sec.  76.804  Disposition of home run wiring.

* * * * *
    (b) * * *
    (3) When an MVPD that is currently providing service to a 
subscriber is notified either orally or in writing that that subscriber 
wishes to terminate service and that another service provider intends 
to use the existing home run wire to provide service to that particular 
subscriber, a provider that has elected to remove its home run wiring 
pursuant to paragraph (b)(1) or (b)(2) of this section will have seven 
days to remove its home run wiring and restore the building consistent 
with state law. If the subscriber has requested service termination 
more than seven days in the future, the seven-day removal period shall 
begin on the date of actual service termination (and, in any event, 
shall end no later than seven days after the requested date of 
termination). If the provider has elected to abandon or sell the wiring 
pursuant to paragraph (b)(1) or (b)(2) of this section, the abandonment 
or sale will become effective upon actual service termination or upon 
the requested date of termination, whichever occurs first. For purposes 
of abandonment, passive devices, including splitters, shall be 
considered part of the home run wiring. The incumbent provider may 
remove its amplifiers or other active devices used in the wiring if an 
equivalent replacement can easily be reattached. In addition, an 
incumbent provider removing any active elements shall comply with the 
notice requirements and other rules regarding the removal of home run 
wiring. If the incumbent provider intends to terminate service prior to 
the end of the seven-day period, the incumbent shall inform the party 
requesting service termination, at the time of such request, of the 
date on which service will be terminated. The incumbent provider shall 
make the home run wiring accessible to the alternative provider within 
the 24-hour period prior to actual service termination.
* * * * *

    6. Section 76.806 is amended by adding a paragraph (d) to read as 
follows:


Section 76.806  Pre-termination access to cable home wiring.

* * * * *
    (d) Section 76.806 shall apply to all MVPDs.

[FR Doc. 03-6782 Filed 3-20-03; 8:45 am]
BILLING CODE 6712-10-P