[Federal Register Volume 77, Number 211 (Wednesday, October 31, 2012)]
[Proposed Rules]
[Pages 66052-66065]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-26455]



  Federal Register / Vol. 77, No. 211 / Wednesday, October 31, 2012 / 
Proposed Rules  

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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 76

[MB Docket No. 12-68; FCC 12-123]


Program Access Rules

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: In this document, the Commission seeks comment on the 
following revisions to its program access rules: the establishment of 
certain rebuttable presumptions in connection with program access 
complaints challenging exclusive contracts involving cable-affiliated 
programming; and amendments to its rules to ensure that buying groups 
utilized by small and medium-sized multichannel video programming 
distributors (``MVPDs'') can avail themselves of the program access 
rules.

DATES: Comments are due on or before November 30, 2012; reply comments 
are due on or before December 17, 2012.

ADDRESSES: You may submit comments, identified by MB Docket No. 12-68, 
by any of the following methods:
     Federal Communications Commission's Web site: http://www.fcc.gov/cgb/ecfs/. Follow the instructions for submitting comments.
     Mail: 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 the Commission continues to experience 
delays in receiving U.S. Postal Service mail). All filings must be 
addressed to the Commission's Secretary, Office of the Secretary, 
Federal Communications Commission.
     People with Disabilities: Contact the FCC to request 
reasonable accommodations (accessible format documents, sign language 
interpreters, CART, etc.) by email: [email protected] or phone: (202) 418-
0530 or TTY: (202) 418-0432.

FOR FURTHER INFORMATION CONTACT: For additional information on this 
proceeding, contact David Konczal, [email protected], or Kathy 
Berthot, [email protected], of the Media Bureau, Policy Division, 
(202) 418-2120.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's 
Further Notice of Proposed Rulemaking, FCC 12-123, adopted and released 
on October 5, 2012. The full text is available for public inspection 
and copying during regular business hours in the FCC Reference Center, 
Federal Communications Commission, 445 12th Street SW., CY-A257, 
Washington, DC 20554. This document will also be available via ECFS 
(http://www.fcc.gov/cgb/ecfs/). Documents will be available 
electronically in ASCII, Word 97, and/or Adobe Acrobat. The complete 
text may be purchased from the Commission's copy contractor, 445 12th 
Street SW., Room CY-B402, Washington, DC 20554. To request this 
document in accessible formats (computer diskettes, large print, audio 
recording, and Braille), send an email to [email protected] or call the 
Commission's Consumer and Governmental Affairs Bureau at (202) 418-0530 
(voice), (202) 418-0432 (TTY).

Summary of the Further Notice of Proposed Rulemaking

I. Introduction

    In the Further Notice of Proposed Rulemaking (``FNPRM'') in MB 
Docket No. 12-68, we seek comment on whether to establish (i) a 
rebuttable presumption that an exclusive contract for a cable-
affiliated RSN (regardless of whether it is terrestrially delivered or 
satellite-delivered) is an ``unfair act'' under section 628(b); (ii) a 
rebuttable presumption that a complainant challenging an exclusive 
contract involving a cable-affiliated RSN (regardless of whether it is 
terrestrially delivered or satellite-delivered) is entitled to a 
standstill of an existing programming contract during the pendency of a 
complaint; (iii) rebuttable presumptions with respect to the ``unfair 
act'' element and/or the ``significant hindrance'' element of a section 
628(b) claim challenging an exclusive contract involving a cable-
affiliated ``national sports network'' (regardless of whether it is 
terrestrially delivered or satellite-delivered); and (iv) a rebuttable 
presumption that, once a complainant succeeds in demonstrating that an 
exclusive contract involving a cable-affiliated network (regardless of 
whether it is terrestrially delivered or satellite-delivered) violates 
section 628(b) (or, potentially, section 628(c)(2)(B)), any other 
exclusive contract involving the same network violates section 628(b) 
(or section 628(c)(2)(B)). We also seek comment in the FNPRM on 
revisions to the program access rules to ensure that buying groups 
utilized by small and medium-sized MVPDs can avail themselves of these 
rules.

A. Rebuttable Presumptions for Cable-Affiliated RSNs

    1. We seek comment on whether to establish (i) a rebuttable 
presumption that an exclusive contract for a cable-affiliated RSN 
(regardless of whether it is terrestrially delivered or satellite-
delivered) is an ``unfair act'' under section 628(b); and (ii) a 
rebuttable presumption that a complainant challenging an exclusive 
contract involving a cable-affiliated RSN (regardless of whether it is 
terrestrially delivered or satellite-delivered) is entitled to a 
standstill of an existing programming contract for that RSN during the 
pendency of a complaint.
1. Rebuttable Presumption That an Exclusive Contract for a Cable-
Affiliated RSN Is an ``Unfair Act''
    2. As discussed above, under the case-by-case process for 
complaints alleging that an exclusive contract violates section 628(b), 
the complainant will have the burden of proving that the exclusive 
contract at issue (i) is an ``unfair act'' and (ii) has the ``purpose 
or effect'' of ``significantly hindering or preventing'' the 
complainant from providing satellite cable programming or satellite 
broadcast programming. With respect to the second element, the 
Commission has established a rebuttable presumption that an exclusive 
contract involving a satellite-delivered, cable-affiliated RSN has the 
``purpose or effect'' of ``significantly hindering or preventing'' the 
complainant from providing satellite cable programming or satellite 
broadcast programming, as set forth in section 628(b). The Commission 
established an identical presumption for terrestrially delivered, 
cable-affiliated RSNs in the 2010 Program Access Order.
    3. With respect to the first element (the ``unfair act'' element), 
however, the Commission has not established a rebuttable presumption 
that an exclusive contract involving a cable-affiliated RSN is an 
``unfair act.'' In the 2010 Program Access Order, the Commission 
established a categorical rule that all exclusive contracts involving 
terrestrially delivered, cable-affiliated programming (regardless of 
whether the programming qualifies as an RSN) are ``unfair'' under 
section 628(b). The DC Circuit vacated this aspect of the 2010 Program 
Access Order, holding that (i) just because Congress treated certain 
acts involving satellite programming as ``unfair'' does not mean the 
same acts are necessarily ``unfair'' in the context of terrestrial 
programming; (ii) even with respect to satellite-delivered programming, 
Congress established a sunset provision for the exclusivity ban and 
allowed cable operators or cable-affiliated programmers to seek prior 
approval to enter into an exclusive contract (neither

[[Page 66053]]

of which would apply to terrestrially delivered programming under the 
2010 Program Access Order); and (iii) by labeling conduct ``unfair'' 
simply because it might in some circumstances negatively affect 
competition in the video distribution market, the Commission failed to 
consider whether it should treat conduct as ``unfair'' despite it being 
procompetitive in a given instance. The court concluded that ``if the 
Commission believes that conduct involving the withholding of 
terrestrial programming should be treated as categorically unfair, as 
opposed to assessing fairness on a case-by-case basis or perhaps 
adopting a public interest exception mirroring the one for satellite 
programming, then it must grapple with whether its definition of 
unfairness would apply to conduct that appears procompetitive and, if 
so, whether that result would comport with section 628.'' Consistent 
with the court's decision, as demonstrated by the Verizon v. MSG/
Cablevision and AT&T v. MSG/Cablevision cases, the Commission to date 
has elected to address whether challenged conduct, including an 
exclusive contract, is ``unfair'' on a case-by-case basis.
    4. We seek comment on whether to establish a rebuttable presumption 
that an exclusive contract for a cable-affiliated RSN (regardless of 
whether it is terrestrially delivered or satellite-delivered) is an 
``unfair act'' under section 628(b). The D.C. Circuit has explained 
that an evidentiary presumption is only permissible (i) ``if there is a 
sound and rational connection between the proved and inferred facts'' 
and (ii) ``when proof of one fact renders the existence of another fact 
so probable that it is sensible and timesaving to assume the truth of 
[the inferred] fact * * * until the adversary disproves it.'' Would a 
rebuttable presumption that an exclusive contract for a cable-
affiliated RSN is an ``unfair act'' under section 628(b) satisfy this 
requirement? The Commission has held that determining whether 
challenged conduct is ``unfair'' requires ``balancing the 
anticompetitive harms of the challenged conduct against the 
procompetitive benefits.'' What are the potentially procompetitive 
benefits of an exclusive contract for a cable-affiliated RSN? How do 
these potential benefits compare to the potentially anticompetitive 
harms of an exclusive contract for a cable-affiliated RSN? We ask 
commenters to provide evidence supporting their positions.
2. Rebuttable Presumption That a Complainant Challenging an Exclusive 
Contract Involving a Cable-Affiliated RSN Is Entitled to a Standstill
    5. As discussed above, the Commission in the 2010 Program Access 
Order established a process whereby a complainant may seek a standstill 
of an existing programming contract during the pendency of a complaint. 
The complainant has the burden of proof to demonstrate how grant of the 
standstill will meet the following four criteria: (i) The complainant 
is likely to prevail on the merits of its complaint; (ii) the 
complainant will suffer irreparable harm absent a stay; (iii) grant of 
a stay will not substantially harm other interested parties; and (iv) 
the public interest favors grant of a stay.
    6. We seek comment on whether to establish a rebuttable presumption 
that a complainant challenging an exclusive contract involving a cable-
affiliated RSN (regardless of whether it is terrestrially delivered or 
satellite-delivered) is entitled to a standstill of an existing 
programming contract for that RSN during the pendency of a complaint. 
Would such a rebuttable presumption meet the requirements for 
establishing such a presumption as set forth by the D.C. Circuit 
described above? Would this rebuttable presumption meet the 
requirements set forth by the D.C. Circuit only if we also establish a 
rebuttable presumption that an exclusive contract for a cable-
affiliated RSN is an ``unfair act'' under section 628(b)? Are the 
rebuttable presumptions applicable to the ``unfair act'' (if adopted) 
and ``significant hindrance'' elements of a section 628(b) claim 
rationally related only to the ``likelihood to prevail on the merits'' 
prong of the four-part test for a standstill? What basis would there be 
for rationally presuming the other three elements of the test for a 
standstill (irreparable harm, no significant harm to other parties, and 
public interest) for purposes of establishing a standstill presumption 
for claims involving cable-affiliated RSNs? We ask commenters to 
provide evidence supporting their positions.

B. Other Rebuttable Presumptions

1. Rebuttable Presumptions for Exclusive Contracts Involving Cable-
Affiliated National Sports Networks
    7. We seek comment on whether to establish rebuttable presumptions 
with respect to the ``unfair act'' element and/or the ``significant 
hindrance'' element of a section 628(b) claim challenging an exclusive 
contract involving a cable-affiliated ``national sports network'' 
(regardless of whether it is terrestrially delivered or satellite-
delivered). How should the Commission define a ``national sports 
network''? What cable-affiliated national sports networks exist today? 
Would these rebuttable presumptions meet the requirements for 
establishing such presumptions as set forth by the D.C. Circuit 
described above? On what basis can the Commission conclude that these 
networks have no good substitutes, are important for competition, and 
are non-replicable, as the Commission has found with respect to RSNs? 
We ask that commenters provide reliable, empirical data supporting 
their positions and address Commission precedent.\1\ We also request 
comment on whether and how these rebuttable presumptions would be 
consistent with the First Amendment. To the extent we adopt these 
rebuttable presumptions, should we also adopt a rebuttable presumption 
that a complainant challenging an exclusive contract involving a cable-
affiliated national sports network (regardless of whether it is 
terrestrially delivered or satellite-delivered) is entitled to a 
standstill of an existing programming contract for that network during 
the pendency of a complaint?
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    \1\ See 2010 Program Access Order, 25 FCC Rcd at 777 n.182 
(discussing exclusive arrangements for ``out-of-market, non-regional 
sports programming'' and concluding that commenters ``failed to 
provide evidence in the record of this proceeding of any harm to 
competition resulting from these arrangements''); 2007 Extension 
Order, 22 FCC Rcd at 17843 n.380 (discussing national sports 
programming and concluding that ``[u]nlike in the case of cable-
affiliated regional sports programming, we have no evidence that the 
inability to access this sports programming has impacted MVPD 
subscribership'').
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2. Rebuttable Presumption for Previously Challenged Exclusive Contracts
    8. We seek comment on whether the Commission should establish a 
rebuttable presumption that, once a complainant succeeds in 
demonstrating that an exclusive contract involving a cable-affiliated 
network (regardless of whether it is terrestrially delivered or 
satellite-delivered) violates section 628(b) (or, potentially, section 
628(c)(2)(B)), any other exclusive contract involving the same network 
violates section 628(b) (or section 628(c)(2)(B)). While we sought 
comment on this issue in the NPRM in MB Docket No. 12-68, we concluded 
that the record on this issue was not sufficiently developed. Would 
this rebuttable presumption meet the requirements for establishing such 
a presumption as set forth by the D.C. Circuit described above? Is 
there a reasonable basis for

[[Page 66054]]

presuming liability based on a prior determination of a section 628(b) 
violation involving the same network? How would differences among 
complainants (e.g., differences in the complainants' market power) or 
changing circumstances over time (e.g., whether the network continues 
to carry the same highly coveted content) impact such a presumption? If 
we establish such a rebuttable presumption, should it be time limited? 
If we establish such a rebuttable presumption, should it apply if the 
complaints concern the same network but different geographic markets?

C. Buying Groups

    9. We also solicit comment on possible modifications to the program 
access rules relating to buying groups. ACA filed comments in this 
proceeding asserting that revisions to the program access rules are 
needed to ensure that buying groups utilized by small and medium-sized 
MVPDs can avail themselves of the program access rules. ACA seeks three 
modifications to the program access rules: (i) revision of the 
definition of ``buying group'' to accurately reflect the level of 
liability assumed by buying groups under current industry practices; 
(ii) establishment of standards for the right of buying group members 
to participate in their group's master licensing agreements; and (iii) 
establishment of a standard of comparability for a buying group 
regarding volume discounts. In addition to seeking comment on ACA's 
proposed modifications, we propose to revise our definition of ``buying 
group'' to provide that a buying group may not unreasonably deny 
membership to any MVPD requesting membership.
1. Definition of ``Buying Group''
    10. As ACA explains, buying groups play an important role in the 
market for video programming distribution, both for small and medium-
sized MVPDs and for programmers. A buying group negotiates master 
agreements with video programmers that its MVPD members can opt into 
and then acts as an interface between its members and the programmers 
so that the programmers are able to deal with a single entity. Thus, a 
buying group is generally able to obtain lower license fees for its 
members than they could obtain through direct deals with the 
programmers and lower transaction costs for programmers by enabling 
them to deal with a single entity, rather than many individual MVPDs, 
for their negotiations and fee collections. Because small and medium-
sized MVPDs rely on buying groups as the primary means by which they 
purchase their programming, ACA asserts that small and medium-sized 
MVPDs are protected under the program access rules only to the extent 
that buying groups are given the same protection in their dealings with 
cable-affiliated programmers as individual MVPDs are given. ACA notes 
that Congress, recognizing small MVPDs' reliance on buying groups, 
explicitly extended the non-discrimination protections of section 
628(c)(2)(B) of the Act to buying groups.\2\ The Commission likewise 
extended the protections of the non-discrimination provision of the 
program access rules to buying groups by including ``buying groups'' 
within the definition of ``multichannel video programming distributor'' 
set forth in Sec.  76.1000(e) of the Commission's program access rules.
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    \2\ The legislative history of section 628(c)(2)(B) also 
reflects Congress's intent to afford small MVPDs that purchase 
programming through buying groups the same protection against 
discrimination as other MVPDs. See S. Rep. No. 102-92, at 25 (1991), 
reprinted in 1992 U.S.C.C.A.N. 1133, 1160 (``To address the 
complaints of small cable operators that cable programmers will not 
deal with them or will unreasonably discriminate against them in the 
sale of programming, the legislation requires vertically integrated, 
national cable programmers to make programming available to all 
cable operators and their buying agents on similar price, terms, and 
conditions.''); H.R. Conf. Rep. No. 102-862, at 91 (1992), reprinted 
in 1992 U.S.C.C.A.N. 1231, 1273 (``National and regional programmers 
affiliated with cable operators are required by the Senate bill to 
offer their programming to buying groups on terms similar to those 
offered to cable operators.'').
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    11. Although Congress did not define the term ``buying group,'' the 
Commission has adopted a definition for this term. Section 76.1000(c) 
of the Commission's rules sets forth the requirements that an entity 
must satisfy in order to be considered a ``buying group'' eligible to 
avail itself of the non-discrimination protections afforded to MVPDs 
under the program access rules. One of these requirements pertains to 
the liability of the buying group or its members to the programmer for 
payments. The Commission has established three alternative ways for the 
buying group to satisfy this requirement. First, the entity seeking to 
qualify as a ``buying group'' may agree ``to be financially liable for 
any fees due pursuant to a * * * programming contract which it signs as 
a contracting party as a representative of its members'' (the ``full 
liability'' option). Second, the members of the buying group, as 
contracting parties, may agree to joint and several liability (the 
``joint and several liability'' option). Third, the entity seeking to 
qualify as a ``buying group'' may maintain liquid cash or credit 
reserves equal to the cost of one month of programming fees for all 
buying group members and each member of the buying group must remain 
liable for its pro rata share (the ``cash reserve'' option).\3\
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    \3\ ACA notes that the changes to Sec.  76.1000(c)(1) to reflect 
the ``cash reserve'' option were not included in the 1998 Program 
Access Order and that a subsequent Erratum making the relevant 
changes to Sec.  76.1000(c)(1) was not published in the Federal 
Register. While ACA notes that, as a result, the changes to Sec.  
76.1000(c)(1) to reflect the ``cash reserve'' option are not 
reflected in the Code of Federal Regulations, a summary of the 1998 
Program Access Order, including a discussion of the ``cash reserve'' 
option, was published in the Federal Register and is thus a binding 
rule. See Development of Competition and Diversity in Video 
Programming Distribution and Carriage, 63 FR 45740-02, 45742 (1998).
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    12. ACA asserts that none of these alternative liability options 
reflects current industry practice. First, with respect to the ``full 
liability'' option, ACA asserts that buying groups, such as the 
National Cable Television Cooperative (``NCTC''),\4\ never assume full 
liability for the contractual commitment that each member company makes 
when it opts into a master agreement. Rather, NCTC's obligation is 
limited to forwarding any payments that are received from members to 
the programmer and notifying the programmer of any default by one of 
its members. Additionally, NCTC's general practice is to deal with 
delinquent members by terminating their membership and thus all of the 
master agreements of the delinquent member. Second, with respect to the 
``joint and several liability'' option, ACA notes that NCTC found this 
option impracticable because it would interfere with some members' loan 
covenants as to debt and result in fewer MVPDs being able to 
participate in NCTC master agreements. Third, with respect to the 
``cash reserve'' option, ACA notes that NCTC's standard practice in its 
early years was to require its members to deposit 30 days of payments 
into an escrow account when they opted into a master agreement, but 
programmers and NCTC eventually decided this protection was 
unnecessary.
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    \4\ NCTC is a buying group with approximately 910 member 
companies representing approximately 25 million MVPD subscribers. 
NCTC's members vary widely in size, from a few dozen subscribers to 
several million subscribers. More than half of NCTC's 910 members 
have fewer than 1,000 subscribers, while a little over 100 of its 
members have more than 10,000 subscribers. In addition to 
negotiating the rates, terms, and conditions of master agreements 
with programmers, NCTC acts as an interface for all billing and 
collection activities between its member companies and the 
programmer.
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    13. According to ACA, programmers have widely accepted NCTC's 
current business model, including the reduced level of liability that 
NCTC assumes

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under a master agreement. Because the existing definition of ``buying 
group'' does not conform to these widely accepted practices, ACA 
asserts that NCTC is effectively barred from bringing a program access 
complaint concerning a master agreement on behalf of its member 
companies. ACA accordingly recommends that the Commission modernize the 
definition of ``buying group'' in Sec.  76.1000(c)(1) by adding, as an 
alternative to the existing liability options, a requirement that the 
entity seeking to qualify as a ``buying group'' assumes liability to 
forward all payments due and received from its members for payment 
under a master agreement to the appropriate programmer.
    14. Based on ACA's comments, it appears that our existing 
definition of ``buying group'' set forth in Sec.  76.1000(c)(1) does 
not reflect accepted industry practices and thus may have the 
unintended effect of barring some buying groups from availing 
themselves of the protections of the non-discrimination provision of 
the program access rules, in contravention of Congress's express intent 
in enacting section 628(c)(2)(B) of the Act. We tentatively conclude 
that we should revise Sec.  76.1000(c)(1) to require, as an alternative 
to the current liability options, that the buying group agree to assume 
liability to forward all payments due and received from its members for 
payment under a master agreement to the appropriate programmer.\5\ We 
seek comment on this tentative conclusion. We also seek comment on 
whether NCTC's practices in terms of the level of liability it assumes 
under a master agreement are consistent with that of other buying 
groups. To the extent that the practices of other buying groups differ, 
how do they differ?
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    \5\ As discussed above, the changes to Sec.  76.1000(c)(1) to 
reflect the ``cash reserve'' option adopted in the 1998 Program 
Access Order are not reflected in the Code of Federal Regulations. 
We intend to conform Sec.  76.1000(c)(1) as amended in this 
proceeding to the amendment previously adopted in the 1998 Program 
Access Order.
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    15. We note that the Commission adopted the liability options in 
Sec.  76.1000(c)(1) to address concerns about the creditworthiness and 
financial stability of buying groups and protect programmers from 
excessive financial risk. We do not believe that revising the 
definition of buying group as discussed above would subject programmers 
to greater financial risk when contracting with a buying group than 
they would be when contracting with an individual MVPD. According to 
ACA, if an individual MVPD defaults on its payments for programming, a 
programmer may attempt to require the MVPD to continue making payments 
over the life of the agreement, or it may cease delivery of the 
programming to the MVPD. ACA states that the programmer's legal rights 
are the same regardless of whether the defaulting MVPD has purchased 
service on an individual basis or through a buying group. Moreover, we 
note that NCTC's general practice of terminating membership, and thus 
all of the master agreements, of a delinquent member, may reduce the 
risk of delinquency, which could provide the programmer greater 
protection than when dealing with an individual MVPD. We invite 
commenters to address whether the proposed revision to the buying group 
definition sufficiently protects programmers from financial risks in 
dealing with buying groups. If not, what additional measures are needed 
to protect programmers from financial risk? Should we codify NCTC's 
practice of terminating membership and all of the master agreements of 
a delinquent member? Do other buying groups utilize this same practice?
    16. We further propose to revise the definition of ``buying group'' 
to provide that a buying group may not unreasonably deny membership to 
any MVPD requesting membership. As ACA submits, ``[b]uying groups play 
an extremely important role in today's marketplace, for both small and 
medium-sized MVPDs,'' because they provide ``significantly lower 
license fees for [their] members than these MVPDs could obtain through 
direct deals with programmers.'' Although a buying group would 
presumably benefit from increasing its membership in order to obtain 
better deals from programmers, we are aware of allegations in recent 
years that NCTC has denied membership to certain MVPDs. In light of the 
significance of buying groups in the marketplace today and Congress's 
recognition of the importance of buying groups for small MVPDs, we 
propose to require that a ``buying group'' eligible to receive the 
benefits of the non-discrimination provision of the program access 
rules may not unreasonably deny membership to any MVPD requesting 
membership. Under this proposal, a buying group would not be required 
to accept all members. Rather, it would only be prohibited from 
``unreasonably'' denying membership. For example, if an MVPD seeking 
membership has a history of defaulting on its payments for programming, 
or if there are legitimate antitrust reasons for denying membership to 
a particular MVPD, then the buying group's denial of membership would 
not be ``unreasonable.'' Upon being denied membership, an MVPD could 
file a Petition for Declaratory Ruling that the buying group no longer 
qualifies as a ``buying group'' as defined in Sec.  76.1000(c) because 
it has ``unreasonably'' denied the MVPD membership. The central issue 
in the Declaratory Ruling proceeding would be whether the buying 
group's conduct in denying membership was ``unreasonable.'' If the 
Commission finds that the buying group's conduct was ``unreasonable,'' 
the buying group would no longer be eligible to receive the benefits of 
the non-discrimination provision of the program access rules. We seek 
comment on this proposal.
    17. We invite commenters to discuss the potential costs and 
benefits of each of the proposed revisions of the buying group 
definition. To the extent possible, we encourage commenters to quantify 
any costs and benefits and submit supporting data. Commenters that 
propose an alternative approach should similarly provide data regarding 
the costs and benefits of the alternative approach.
2. Participation of Buying Group Members in Master Agreements
    18. ACA also urges the Commission to revise the program access 
rules to prohibit cable-affiliated programmers from unreasonably 
preventing particular members of a buying group from opting into a 
master agreement. ACA contends that, while the program access rules 
prohibit unfair methods of competition and discriminatory practices, 
including selective refusals to license, these rules do not explicitly 
restrain the ability of a cable-affiliated programmer to unreasonably 
prevent particular members of a buying group from participating in a 
master agreement, even if the member normally purchases a substantial 
share of its programming from the buying group. ACA asserts that if a 
cable-affiliated programmer had the right to arbitrarily exclude any 
buying group member that it wished from a master agreement, the 
requirement that cable-affiliated programmers negotiate non-
discriminatory agreements with buying groups could be rendered 
meaningless.
    19. To remedy its concern, ACA recommends that the Commission adopt 
clear and easily verifiable standards for determining when a buying 
group member is presumptively allowed to participate in a master 
agreement with a cable-affiliated programmer. Specifically, ACA 
suggests that the Commission establish a ``safe harbor'' subscriber 
level for buying group

[[Page 66056]]

member MVPDs to participate in a master agreement. Under ACA's proposed 
approach, a buying group member MVPD with no more than the ``safe 
harbor'' number of subscribers would be presumptively entitled to 
participate in master agreements between the programmer and the buying 
group. A buying group member MVPD which has more than the safe harbor 
number of subscribers would also be entitled to participate if it 
demonstrates that it incurs some specified minimum share of its total 
expenditures on programming through the buying group. Further, when an 
expiring master agreement is up for renewal, buying group members 
participating in the expiring agreement would have the right to 
participate in the renewed agreement. ACA states that, as a consequence 
of this safe harbor, it would be a violation of the section 
628(c)(2)(B) prohibition on discriminatory practices for a cable-
affiliated programmer to refuse to deal with a buying group member that 
regularly participates in a master agreement. Although not mentioned by 
ACA, consistent with section 628(c)(2)(B), a cable-affiliated 
programmer could refuse to deal with a buying group member for a 
legitimate business reason, such as the distributor's history of 
defaulting on other programming contracts.
    20. We seek comment generally on the need for a safe harbor for 
buying group participation in master agreements and, more specifically, 
on ACA's proposed safe harbor. Although several commenters make 
generalized allegations that cable-affiliated programmers have excluded 
particular buying group members from participating in master agreements 
negotiated with the buying group, we have not received information 
regarding specific instances in which such exclusions have occurred. We 
seek detailed information on the extent to which the exclusion of 
particular buying group members from participation in master agreements 
has occurred in the past or is occurring now. To the extent that some 
buying group members are being excluded from participating in master 
agreements, why are they being excluded?
    21. If we determine that it is necessary to establish a safe harbor 
for buying group participation in master agreements, what subscriber 
level should we establish as the safe harbor? ACA suggests that we set 
the safe harbor subscriber number at 3 million subscribers. Is this an 
appropriate safe harbor subscriber number? Commenters that recommend a 
specific safe harbor subscriber number should explain the basis for 
their recommendation. Further, under ACA's suggested approach, a buying 
group member with more than the safe harbor number of subscribers would 
be entitled to participate in a master agreement if it demonstrates 
that it incurs some specified minimum share of its total expenditures 
on programming through the buying group. What minimum share of 
programming expenditures should such a buying group member have to 
incur through the buying group in order to be entitled to participate 
in a master agreement and over what period of time? ACA suggests that 
we require a buying group member with more than the safe harbor number 
of subscribers to demonstrate that the share of programming that it 
licenses through the buying group is not significantly smaller than the 
average share of programming that other buying group members license 
through the buying group. We seek comment on this proposal. What share 
of programming should be considered ``significantly smaller'' than the 
average share for purposes of this proposal? Over what period of time 
should we measure the ``average share'' of programming that other 
buying group members license through the buying group? In addition, we 
seek comment on ACA's proposal that, when an expiring master agreement 
is up for renewal, buying group members participating in the expiring 
agreement would have the right to participate in the renewed agreement. 
We also invite commenters to suggest any alternatives to ACA's proposed 
safe harbors and explain why the alternative is preferable or less 
burdensome. For example, would it be preferable to simply require that, 
if a cable-affiliated programmer enters into a master agreement with a 
buying group, all buying group members have a right to participate in 
the master agreement? What are the potential costs and benefits of 
ACA's safe harbor approach and any alternative proposals? Commenters 
should quantify any potential costs and benefits to the extent possible 
and provide supporting data.
3. Standard of Comparability for Buying Groups Regarding Volume 
Discounts
    22. The Commission has explained that a complainant MVPD alleging 
program access discrimination must make a prima facie showing that 
there is a difference between the rates, terms, or conditions charged 
or offered by a cable-affiliated programmer to the complainant MVPD and 
to a ``competing distributor.'' The Commission has explained that 
buying groups that are ``fundamentally national in operation'' may make 
a comparison to the rates, terms, or conditions charged or offered by a 
cable-affiliated programmer to a ``national competitor.'' Once the 
complainant MVPD establishes a prima facie case of discrimination, the 
defendant programmer must demonstrate that the difference in prices, 
terms, and conditions is justified by the four factors set forth in 
section 628(c)(2)(B)(i)-(iv) of the Act. One of those factors allows 
programmers to use volume-related justifications to establish price 
differentials. If the programmer believes that the complainant MVPD and 
the ``competing distributor'' are not sufficiently similar, and thus 
cannot be realistically compared, it can state its reasons for this 
conclusion and submit an alternative contract for comparison with 
another more ``similarly situated'' alternative MVPD. The Commission's 
rules provide that the analysis of whether an alternative MVPD is 
properly comparable to the complainant includes consideration of, but 
is not limited to, the following factors: (i) Whether the alternative 
MVPD operates within a geographic region proximate to the complainant; 
(ii) whether the alternative MVPD has roughly the same number of 
subscribers as the complainant; and (iii) whether the alternative MVPD 
purchases a similar service as the complainant. Moreover, the 
Commission's rules provide that the alternative MVPD ``must use the 
same distribution technology as the `competing' distributor with whom 
the complainant seeks to compare itself.''
    23. ACA proposes that we amend our rules to clarify that the 
standard to be applied in determining whether buying groups are being 
discriminated against is the same as that applied to an individual MVPD 
providing the same number of subscribers to the programmer. In other 
words, ACA states, for purposes of determining whether prices offered 
to a buying group are discriminatory, the buying group should be 
considered ``similarly situated'' to an individual MVPD offering the 
programmer the same number of subscribers. According to ACA, ``the 
utility of the program access rules has been dramatically undercut for 
buying groups because the Commission has never established a clear 
standard upon which a buying group is to be compared for purposes of 
determining whether it is being discriminated against by a cable-
affiliated programmer.''
    24. We invite comment on ACA's proposal. In particular, we seek 
comment on whether and how any perceived lack of clarity regarding the 
standard of comparability for buying groups has affected negotiations

[[Page 66057]]

between buying groups and cable-affiliated programmers on volume 
discounts or has discouraged buying groups from filing program access 
complaints. We note, in this regard, that neither section 628 nor the 
Commission's rules distinguish between individual MVPDs and buying 
groups in describing the justifications for volume discounts. 
Therefore, it is arguably already clear that a buying group would be 
compared to an individual MVPD providing the same number of subscribers 
to the programmer. Moreover, in the 1993 Program Access Order, the 
Commission established the conditions that a buying group must meet 
``in order to benefit from treatment as a single entity for purposes of 
subscriber volume.'' The Commission therein stated that ``[v]endors can 
extend [to buying groups] the same volume discounts based on number of 
subscribers that they would ordinarily extend to single entities of 
comparable size provided that such discounts are offered in a 
nondiscriminatory fashion.'' Thus, to the extent that we adopt the 
revised definition of ``buying group'' proposed by ACA, we seek comment 
on whether it is also necessary to revise the rules to establish an 
explicit standard of comparability. Are there differences between 
individual MVPDs and buying groups that would argue against the 
standard of comparability advocated by ACA? As discussed above, the 
Commission's analysis of whether MVPDs are ``similarly situated'' for 
purposes of a program access discrimination complaint extends beyond 
consideration of whether MVPDs offer roughly the same number of 
subscribers to include other factors, such as the geographic region 
where the MVPDs operate, the services purchased, and the date of their 
contracts with the defendant programmer. What impact, if any, do these 
and other factors have on the standard of comparability advocated by 
ACA?
    25. Moreover, as discussed above, a complainant MVPD alleging 
program access discrimination must make a prima facie showing of a 
differential in the price, terms, or conditions offered or charged to 
the complainant MVPD and to a ``competing distributor.'' In the case of 
a national buying group, the comparison is made to a ``national 
competitor.'' We seek comment on how this requirement impacts 
discrimination complaints brought by national buying groups and how, if 
at all, this requirement should be modified for discrimination 
complaints filed by national buying groups. For example, are there any 
``national competitors,'' other than DBS operators, to which a national 
buying group can make a comparison? If only a DBS operator qualifies as 
a ``national competitor,'' but a defendant programmer believes that a 
DBS operator is not comparable to the national buying group, the 
defendant programmer may submit an alternative contract for comparison 
with another more ``similarly situated'' alternative MVPD. As discussed 
above, however, the Commission's rules provide that the alternative 
MVPD ``must use the same distribution technology as the `competing' 
distributor with whom the complainant seeks to compare itself.'' If 
only a DBS operator can qualify as a ``competing distributor'' for a 
national buying group, does this limit the alternative MVPDs that can 
qualify as ``similarly situated'' to only other DBS operators?
    26. ACA further proposes that we make clear that a cable-affiliated 
programmer cannot refuse to offer a master agreement to a buying group 
that specifies a schedule of non-discriminatory license fees over any 
range of subscribership levels that the buying group requests, so long 
as it is possible that the buying group could provide this number of 
subscribers from its current members eligible to participate in the 
master agreement. Under this proposal, a cable-affiliated programmer 
would violate section 628(c)(2)(B)'s prohibition on discriminatory 
practices if it fails or refuses to offer a non-discriminatory schedule 
of prices based on the number of subscribers that members of the buying 
group could provide if they chose to opt into the master agreement. ACA 
explains that under the current NCTC model, NCTC negotiates the deal 
with the programmer and then its members decide whether to opt into the 
deal. Thus, at the time of negotiation, neither NCTC nor the programmer 
knows exactly which NCTC members will take their programming through 
NCTC--and therefore neither party knows the precise number of 
subscribers that NCTC will provide. ACA maintains that its proposal 
``will solve the `chicken and egg' problem that might occur if certain 
members of a buying group are unwilling to opt into a master agreement 
because license fees are too high, even though the license fees would 
go down if the members decided to opt in.'' We seek comment on the 
benefits and burdens of ACA's proposal. To what extent has the 
``chicken and egg'' problem described above hampered negotiations 
between buying groups and programmers? If, at the time of negotiation, 
neither the buying group nor the programmer knows precisely which 
buying group members will participate in the agreement, how are volume 
discounts calculated for buying groups? Has past participation been a 
reliable indicator of which buying group members are likely to opt into 
a master agreement? Additionally, we seek comment on whether the 
Commission has the authority under section 628 or some other provision 
of the Act to require programmers to provide buying groups generally 
applicable rate schedules for differing subscribership levels.
    27. Finally, we seek comment on ACA's request that we clarify that 
the standard of comparability applies for purposes of evaluating all 
terms and conditions of the agreement, not just the price. As discussed 
above, to the extent that we adopt the revised definition of ``buying 
group'' proposed by ACA, is this proposed clarification necessary? We 
also invite commenters to analyze the potential costs and benefits of 
each of ACA's proposals relating to the standard of comparability for 
buying groups, as well as any alternative proposals, quantify any costs 
and benefits of the proposals to the extent possible, and submit 
appropriate supporting data.

II. Procedural Matters

A. Initial Regulatory Flexibility Act Analysis

    28. As required by the Regulatory Flexibility Act of 1980, as 
amended (``RFA''), the Commission has prepared this present Initial 
Regulatory Flexibility Analysis (``IRFA'') concerning the possible 
significant economic impact on small entities by the policies and rules 
proposed in the Further Notice of Proposed Rulemaking (``FNPRM''). 
Written public comments are requested on this IRFA. Comments must be 
identified as responses to the IRFA and must be filed by the deadlines 
for comments on the FNPRM specified supra. The Commission will send a 
copy of the FNPRM, including this IRFA, to the Chief Counsel for 
Advocacy of the Small Business Administration (``SBA''). In addition, 
the FNPRM and IRFA (or summaries thereof) will be published in the 
Federal Register.
Need for, and Objectives of, the Proposed Rule Changes
    29. We seek comment in the FNPRM on whether to establish a 
rebuttable presumption that an exclusive contract for a cable-
affiliated Regional Sports Network (``RSN'') (regardless of whether it 
is terrestrially delivered or satellite-delivered) is an ``unfair act'' 
under

[[Page 66058]]

section 628(b) of the Communications Act of 1934, as amended (the 
``Act''). Under the case-by-case process for complaints alleging that 
an exclusive contract violates section 628(b), the complainant has the 
burden of proving that the exclusive contract at issue (i) is an 
``unfair act'' and (ii) has the ``purpose or effect'' of 
``significantly hindering or preventing'' the complainant from 
providing satellite cable programming or satellite broadcast 
programming. With respect to the second element, the Commission has 
established a rebuttable presumption that an exclusive contract 
involving a cable-affiliated RSN has the ``purpose or effect'' of 
``significantly hindering or preventing'' the complainant from 
providing satellite cable programming or satellite broadcast 
programming, as set forth in section 628(b). With respect to the first 
element (the ``unfair act'' element), however, the Commission has not 
established a rebuttable presumption that an exclusive contract 
involving a cable-affiliated RSN is an ``unfair act.'' The FNPRM seeks 
comment on whether to establish this rebuttable presumption.
    30. We also seek comment in the FNPRM on whether to establish a 
rebuttable presumption that a complainant challenging an exclusive 
contract involving a cable-affiliated RSN (regardless of whether it is 
terrestrially delivered or satellite-delivered) is entitled to a 
standstill of an existing programming contract during the pendency of a 
complaint. The Commission previously established a process whereby a 
complainant may seek a standstill of an existing programming contract 
during the pendency of a complaint. The complainant has the burden of 
proof to demonstrate how grant of the standstill will meet the 
following four criteria: (i) The complainant is likely to prevail on 
the merits of its complaint; (ii) the complainant will suffer 
irreparable harm absent a stay; (iii) grant of a stay will not 
substantially harm other interested parties; and (iv) the public 
interest favors grant of a stay. The FNPRM seeks comment on whether to 
establish a rebuttable presumption that a complainant is entitled to a 
standstill when challenging an exclusive contract involving a cable-
affiliated RSN.
    31. The FNPRM also seeks comment on whether to establish rebuttable 
presumptions with respect to the ``unfair act'' element and/or the 
``significant hindrance'' element of a section 628(b) claim challenging 
an exclusive contract involving a cable-affiliated ``national sports 
network'' (regardless of whether it is terrestrially delivered or 
satellite-delivered). We also seek comment in the FNPRM on whether the 
Commission should establish a rebuttable presumption that, once a 
complainant succeeds in demonstrating that an exclusive contract 
involving a cable-affiliated network (regardless of whether it is 
terrestrially delivered or satellite-delivered) violates section 628(b) 
(or, potentially, section 628(c)(2)(B)), any other exclusive contract 
involving the same network violates section 628(b) (or section 
628(c)(2)(B)).
    32. We also solicit comment on modifications to the program access 
rules relating to buying groups proposed by the American Cable 
Association (``ACA'') in its comments on the Notice of Proposed 
Rulemaking in MB Docket Nos. 12-68, 07-18, and 05-182. ACA asserts that 
revisions to the program access rules are needed to ensure that buying 
groups utilized by small and medium-sized multi-channel video 
programming distributors (``MVPDs'') can avail themselves of the non-
discrimination protections of the program access rules. ACA seeks three 
modifications to the program access rules: (i) The revision of the 
definition of ``buying group'' to accurately reflect the level of 
liability assumed by buying groups under current industry practices; 
(ii) the establishment of standards for the right of buying group 
members to participate in their group's master licensing agreements; 
and (iii) the establishment of a standard of comparability for a buying 
group regarding volume discounts. In addition to ACA's proposed 
modifications, we propose to revise our definition of ``buying group'' 
to provide that a buying group may not unreasonably deny membership to 
any MVPD requesting membership.
    33. Buying groups play an important role in the market for video 
programming distribution, both for small and medium-sized MVPDs and for 
programmers. A buying group negotiates master agreements with video 
programmers that its MVPD members can opt into and then acts as an 
interface between its members and the programmers so that the 
programmers are able to deal with a single entity. Thus, a buying group 
is generally able to obtain lower license fees for its members than 
they could obtain through direct deals with the programmers, and lower 
transaction costs for programmers by enabling them to deal with a 
single entity, rather than many individual MVPDs, for their 
negotiations and fee collections. Because small and medium-sized MVPDs 
rely on buying groups as the primary means by which they purchase their 
programming, small and medium-sized MVPDs are only protected under the 
program access rules to the extent that buying groups are given the 
same protection in their dealings with cable-affiliated programmers as 
individual MVPDs are given. The non-discrimination protections of 
section 628(c)(2)(B) of the Communications Act of 1934, as amended (the 
``Act'') explicitly apply to buying groups. Further, the Commission's 
rules extend the non-discrimination protections of the program access 
rules to buying groups by including ``buying groups'' within the 
definition of ``multichannel video programming distributor'' set forth 
in Sec.  76.1000(e) of the Commission's rules.
    34. Section 76.1000(c) of the Commission's rules sets forth the 
requirements that an entity must satisfy in order to be considered a 
``buying group'' for purposes of the definition of ``multichannel video 
programming distributor'' in Sec.  76.1000(e)--that is, to avail itself 
of the non-discrimination protections afforded to MVPDs under the 
program access rules. One of these requirements pertains to the 
liability of the buying group or its members to the programmer for 
payments. The Commission has established three alternatives ways for 
the buying group to satisfy this requirement. First, the entity seeking 
to qualify as a ``buying group'' may agree ``to be financially liable 
for any fees due pursuant to a * * * programming contract which it 
signs as a contracting party as a representative of its members'' (the 
``full liability'' option). Second, the members of the buying group, as 
contracting parties, may agree to joint and several liability (the 
``joint and several liability'' option). Third, the entity seeking to 
qualify as a ``buying group'' may maintain liquid cash or credit 
reserves equal to the cost of one month of programming fees for all 
buying group members and each member of the buying group must remain 
liable for its pro rata share (the ``cash reserve'' option).
    35. ACA asserts that none of these alternative liability options 
reflect current industry practice. First, with respect to the ``full 
liability'' option, ACA asserts that buying groups, such as the 
National Cable Television Cooperative (``NCTC''), never assume full 
liability for the contractual commitment that each member company makes 
when it opts into a master agreement. Rather, NCTC's obligation is 
limited to forwarding any payments that are received from members to 
the programmer and notifying the programmer of any default

[[Page 66059]]

by one of its members. Second, with respect to the ``joint and several 
liability'' option, ACA notes that NCTC found this option impracticable 
because it would interfere with some members' loan covenants as to debt 
and result in fewer MVPDs being able to participate in NCTC master 
agreements. Third, with respect to the ``cash reserve'' option, ACA 
states that NCTC's standard practice in its early years was to require 
its members to deposit 30 days of payments into an escrow account when 
they opted into a master agreement, but programmers and NCTC eventually 
decided this protection was unnecessary.
    36. According to ACA, programmers have widely accepted NCTC's 
current business model, including the reduced level of liability that 
NCTC assumes under a master agreement. Because the existing definition 
of ``buying group'' does not conform to these widely accepted 
practices, ACA asserts that NCTC is effectively barred from bringing a 
program access complaint concerning a master agreement on behalf of its 
member companies. ACA accordingly recommends that the Commission 
modernize the definition of ``buying group'' in Sec.  76.1000(c)(1) by 
adding, as an alternative to the existing liability options, a 
requirement that the entity seeking to qualify as a ``buying group'' 
assumes liability to forward all payments due and received from its 
members for payment under a master agreement to the appropriate 
programmer.
    37. In the FNPRM, we tentatively conclude that we should revise 
Sec.  76.1000(c)(1) to require, as an alternative to the current 
liability options, that the buying group agree to assume liability to 
forward all payments due and received from its members for payment 
under a master agreement to the appropriate programmer. In light of the 
significance of buying groups in the marketplace today and Congress's 
recognition of the importance of buying groups for small MVPDs, we 
further propose to revise the definition of ``buying group'' to provide 
that a buying group may not unreasonably deny membership to any MVPD 
requesting membership.
    38. In addition, we seek comment on ACA's proposal that we 
establish a ``safe harbor'' subscriber level for buying group members 
to participate in a master agreement negotiated with a cable-affiliated 
programmer. Under ACA's proposed approach, a buying group member MVPD 
with no more than three million subscribers would be presumptively 
entitled to participate in master agreements between the programmer and 
the buying group. A buying group member MVPD which has more than the 
safe harbor number of subscribers would also be entitled to participate 
if it demonstrates that it incurs some specified minimum share of its 
total expenditures on programming through the buying group. Further, 
when an expiring master agreement is up for renewal, buying group 
members participating in the expiring agreement would have the right to 
participate in the renewed agreement. As a consequence of this safe 
harbor, it would be a violation of the section 628(c)(2)(B) prohibition 
on discriminatory practices for a cable-affiliated programmer to refuse 
to deal with a buying group member that regularly participates in a 
master agreement.
    39. Finally, we seek comment on ACA's proposals that we revise the 
rules to clarify that: (i) The standard to be applied in determining 
whether buying groups are being discriminated against is the same as 
that applied to an individual MVPD providing the same number of 
subscribers to the programmer; (ii) a cable-affiliated programmer 
cannot refuse to offer a master agreement to a buying group that 
specifies a schedule of non-discriminatory license fees over any range 
of subscribership levels that the buying group requests, so long as it 
is possible that the buying group could provide this number of 
subscribers from its current members eligible to participate in the 
master agreement; and (iii) the standard of comparability for a buying 
group is an MVPD providing the same number of customers for purposes of 
evaluating all terms and conditions of the agreement, not just the 
price.
Legal Basis
    40. The proposed action is authorized pursuant to sections 4(i), 
4(j), 303(r), and 628 of the Communications Act of 1934, as amended, 47 
U.S.C. 154(i), 154(j), 303(r), and 548.
Description and Estimate of the Number of Small Entities to Which the 
Proposed Rules Will Apply
    41. The RFA 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 herein. The RFA 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. 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 
Small Business Administration (SBA). Below, we provide a description of 
such small entities, as well as an estimate of the number of such small 
entities, where feasible.
    42. Wired Telecommunications Carriers. The 2007 North American 
Industry Classification System (``NAICS'') defines ``Wired 
Telecommunications Carriers'' as follows: ``This industry comprises 
establishments primarily engaged in operating and/or providing access 
to transmission facilities and infrastructure that they own and/or 
lease for the transmission of voice, data, text, sound, and video using 
wired telecommunications networks. Transmission facilities may be based 
on a single technology or a combination of technologies. Establishments 
in this industry use the wired telecommunications network facilities 
that they operate to provide a variety of services, such as wired 
telephony services, including VoIP services; wired (cable) audio and 
video programming distribution; and wired broadband Internet services. 
By exception, establishments providing satellite television 
distribution services using facilities and infrastructure that they 
operate are included in this industry.'' The SBA has developed a small 
business size standard for wireline firms within the broad economic 
census category, ``Wired Telecommunications Carriers.'' Under this 
category, the SBA deems a wireline business to be small if it has 1,500 
or fewer employees. Census Bureau data for 2007, which now supersede 
data from the 2002 Census, show that there were 3,188 firms in this 
category that operated for the entire year. Of this total, 3,144 had 
employment of 999 or fewer, and 44 firms had employment of 1,000 
employees or more. Thus under this category and the associated small 
business size standard, the majority of these firms can be considered 
small.
    43. Cable Television Distribution Services. Since 2007, these 
services have been defined within the broad economic census category of 
Wired Telecommunications Carriers; that category is defined above. The 
SBA has developed a small business size standard for this category, 
which is: All such firms having 1,500 or fewer employees. Census Bureau 
data for 2007, which now supersede data from the 2002 Census, show that 
there were 3,188 firms in this category that

[[Page 66060]]

operated for the entire year. Of this total, 3,144 had employment of 
999 or fewer, and 44 firms had employment of 1,000 employees or more. 
Thus under this category and the associated small business size 
standard, the majority of these firms can be considered small.
    44. Cable Companies and Systems. The Commission has also developed 
its own small business size standards, for the purpose of cable rate 
regulation. Under the Commission's rules, a ``small cable company'' is 
one serving 400,000 or fewer subscribers nationwide. Industry data 
indicate that all but ten cable operators nationwide are small under 
this size standard. In addition, under the Commission's rules, a 
``small system'' is a cable system serving 15,000 or fewer subscribers. 
Industry data indicate that, of 6,101 systems nationwide, 4,410 systems 
have under 10,000 subscribers, and an additional 258 systems have 
10,000-19,999 subscribers. Thus, under this standard, most cable 
systems are small.
    45. Cable System Operators. The Communications Act of 1934, as 
amended, also contains a size standard for small cable system 
operators, which is ``a cable operator that, directly or through an 
affiliate, serves in the aggregate fewer than 1 percent of all 
subscribers in the United States and is not affiliated with any entity 
or entities whose gross annual revenues in the aggregate exceed 
$250,000,000.'' The Commission has determined that 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 
its affiliates, do not exceed $250 million in the aggregate. Industry 
data indicate that all but nine cable operators nationwide are small 
under this subscriber size standard. We note that the Commission 
neither requests nor collects information on whether cable system 
operators are affiliated with entities whose gross annual revenues 
exceed $250 million, and therefore we are unable to estimate more 
accurately the number of cable system operators that would qualify as 
small under this size standard.
    46. Direct Broadcast Satellite (``DBS'') Service. DBS service is a 
nationally distributed subscription service that delivers video and 
audio programming via satellite to a small parabolic ``dish'' antenna 
at the subscriber's location. DBS, by exception, is now included in the 
SBA's broad economic census category, ``Wired Telecommunications 
Carriers,'' which was developed for small wireline firms. Under this 
category, the SBA deems a wireline business to be small if it has 1,500 
or fewer employees. Census Bureau data for 2007, which now supersede 
data from the 2002 Census, show that there were 3,188 firms in this 
category that operated for the entire year. Of this total, 3,144 had 
employment of 999 or fewer, and 44 firms had employment of 1,000 
employees or more. Thus under this category and the associated small 
business size standard, the majority of these firms can be considered 
small. Currently, only two entities provide DBS service, which requires 
a great investment of capital for operation: DIRECTV and DISH Network). 
Each currently offers subscription services. DIRECTV and DISH Network 
each report annual revenues that are in excess of the threshold for a 
small business. Because DBS service requires significant capital, we 
believe it is unlikely that a small entity as defined by the SBA would 
have the financial wherewithal to become a DBS service provider.
    47. Satellite Master Antenna Television (SMATV) Systems, also known 
as Private Cable Operators (PCOs). SMATV systems or PCOs are video 
distribution facilities that use closed transmission paths without 
using any public right-of-way. They acquire video programming and 
distribute it via terrestrial wiring in urban and suburban multiple 
dwelling units such as apartments and condominiums, and commercial 
multiple tenant units such as hotels and office buildings. SMATV 
systems or PCOs are now included in the SBA's broad economic census 
category, ``Wired Telecommunications Carriers,'' which was developed 
for small wireline firms. Under this category, the SBA deems a wireline 
business to be small if it has 1,500 or fewer employees. Census Bureau 
data for 2007, which now supersede data from the 2002 Census, show that 
there were 3,188 firms in this category that operated for the entire 
year. Of this total, 3,144 had employment of 999 or fewer, and 44 firms 
had employment of 1,000 employees or more. Thus, under this category 
and the associated small business size standard, the majority of these 
firms can be considered small.
    48. Home Satellite Dish (``HSD'') Service. HSD or the large dish 
segment of the satellite industry is the original satellite-to-home 
service offered to consumers, and involves the home reception of 
signals transmitted by satellites operating generally in the C-band 
frequency. Unlike DBS, which uses small dishes, HSD antennas are 
between four and eight feet in diameter and can receive a wide range of 
unscrambled (free) programming and scrambled programming purchased from 
program packagers that are licensed to facilitate subscribers' receipt 
of video programming. Because HSD provides subscription services, HSD 
falls within the SBA-recognized definition of Wired Telecommunications 
Carriers. The SBA has developed a small business size standard for this 
category, which is: All such firms having 1,500 or fewer employees. 
Census Bureau data for 2007, which now supersede data from the 2002 
Census, show that there were 3,188 firms in this category that operated 
for the entire year. Of this total, 3,144 had employment of 999 or 
fewer, and 44 firms had employment of 1,000 employees or more. Thus, 
under this category and the associated small business size standard, 
the majority of these firms can be considered small.
    49. Broadband Radio Service and Educational Broadband Service. 
Broadband Radio Service systems, previously referred to as Multipoint 
Distribution Service (MDS) and Multichannel Multipoint Distribution 
Service (MMDS) systems, and ``wireless cable,'' transmit video 
programming to subscribers and provide two-way high speed data 
operations using the microwave frequencies of the Broadband Radio 
Service (BRS) and Educational Broadband Service (EBS) (previously 
referred to as the Instructional Television Fixed Service (ITFS)). In 
connection with the 1996 BRS auction, the Commission established a 
small business size standard as an entity that had annual average gross 
revenues of no more than $40 million in the previous three calendar 
years. The BRS auctions resulted in 67 successful bidders obtaining 
licensing opportunities for 493 Basic Trading Areas (BTAs). Of the 67 
auction winners, 61 met the definition of a small business. BRS also 
includes licensees of stations authorized prior to the auction. At this 
time, we estimate that of the 61 small business BRS auction winners, 48 
remain small business licensees. In addition to the 48 small businesses 
that hold BTA authorizations, there are approximately 392 incumbent BRS 
licensees that are considered small entities. After adding the number 
of small business auction licensees to the number of incumbent 
licensees not already counted, we find that there are currently 
approximately 440 BRS licensees that are defined as small businesses 
under either the SBA or the Commission's rules. In 2009, the Commission 
conducted Auction 86, the sale of 78 licenses in the BRS areas. The 
Commission offered three levels of bidding credits: (i) A bidder with 
attributed average annual gross revenues

[[Page 66061]]

that exceed $15 million and do not exceed $40 million for the preceding 
three years (small business) received a 15 percent discount on its 
winning bid; (ii) a bidder with attributed average annual gross 
revenues that exceed $3 million and do not exceed $15 million for the 
preceding three years (very small business) received a 25 percent 
discount on its winning bid; and (iii) a bidder with attributed average 
annual gross revenues that do not exceed $3 million for the preceding 
three years (entrepreneur) received a 35 percent discount on its 
winning bid. Auction 86 concluded in 2009 with the sale of 61 licenses. 
Of the ten winning bidders, two bidders that claimed small business 
status won 4 licenses; one bidder that claimed very small business 
status won three licenses; and two bidders that claimed entrepreneur 
status won six licenses.
    50. In addition, the SBA's Cable Television Distribution Services 
small business size standard is applicable to EBS. There are presently 
2,032 EBS licensees. All but 100 of these licenses are held by 
educational institutions. Educational institutions are included in this 
analysis as small entities. Thus, we estimate that at least 1,932 
licensees are small businesses. Since 2007, Cable Television 
Distribution Services have been defined within the broad economic 
census category of Wired Telecommunications Carriers; that category is 
defined as follows: ``This industry comprises establishments primarily 
engaged in operating and/or providing access to transmission facilities 
and infrastructure that they own and/or lease for the transmission of 
voice, data, text, sound, and video using wired telecommunications 
networks. Transmission facilities may be based on a single technology 
or a combination of technologies.'' The SBA has developed a small 
business size standard for this category, which is: All such firms 
having 1,500 or fewer employees. Census Bureau data for 2007, which now 
supersede data from the 2002 Census, show that there were 3,188 firms 
in this category that operated for the entire year. Of this total, 
3,144 had employment of 999 or fewer, and 44 firms had employment of 
1,000 employees or more. Thus, under this category and the associated 
small business size standard, the majority of these firms can be 
considered small.
    51. Fixed Microwave Services. Microwave services include common 
carrier, private-operational fixed, and broadcast auxiliary radio 
services. They also include the Local Multipoint Distribution Service 
(LMDS), the Digital Electronic Message Service (DEMS), and the 24 GHz 
Service, where licensees can choose between common carrier and non-
common carrier status. At present, there are approximately 31,428 
common carrier fixed licensees and 79,732 private operational-fixed 
licensees and broadcast auxiliary radio licensees in the microwave 
services. There are approximately 120 LMDS licensees, three DEMS 
licensees, and three 24 GHz licensees. The Commission has not yet 
defined a small business with respect to microwave services. For 
purposes of the IRFA, we will use the SBA's definition applicable to 
Wireless Telecommunications Carriers (except satellite)--i.e., an 
entity with no more than 1,500 persons. Under the present and prior 
categories, the SBA has deemed a wireless business to be small if it 
has 1,500 or fewer employees. For the category of Wireless 
Telecommunications Carriers (except Satellite), Census data for 2007, 
which supersede data contained in the 2002 Census, show that there were 
1,383 firms that operated that year. Of those 1,383, 1,368 had fewer 
than 1000 employees, and 15 firms had 1000 employees or more. Thus 
under this category and the associated small business size standard, 
the majority of firms can be considered small. We note that the number 
of firms does not necessarily track the number of licensees. We 
estimate that virtually all of the Fixed Microwave licensees (excluding 
broadcast auxiliary licensees) would qualify as small entities under 
the SBA definition.
    52. Open Video Systems. The open video system (``OVS'') framework 
was established in 1996, and is one of four statutorily recognized 
options for the provision of video programming services by local 
exchange carriers. The OVS framework provides opportunities for the 
distribution of video programming other than through cable systems. 
Because OVS operators provide subscription services, OVS falls within 
the SBA small business size standard covering cable services, which is 
``Wired Telecommunications Carriers.'' The SBA has developed a small 
business size standard for this category, which is: All such firms 
having 1,500 or fewer employees. Census Bureau data for 2007, which now 
supersede data from the 2002 Census, show that there were 3,188 firms 
in this category that operated for the entire year. Of this total, 
3,144 had employment of 999 or fewer, and 44 firms had employment of 
1,000 employees or more. Thus, under this category and the associated 
small business size standard, the majority of these firms can be 
considered small. In addition, we note that the Commission has 
certified approximately 42 OVS operators, with some now providing 
service. Broadband service providers (``BSPs'') are currently the only 
significant holders of OVS certifications or local OVS franchises. 
Affiliates of Residential Communications Network, Inc. (``RCN'') 
received approval to operate OVS systems in New York City, Boston, 
Washington, DC, and other areas. RCN has sufficient revenues to assure 
that they do not qualify as a small business entity. The Commission 
does not have financial or employment information regarding the other 
entities authorized to provide OVS, some of which may not yet be 
operational. Thus, up to 41 of the OVS operators may qualify as small 
entities.
    53. Cable and Other Subscription Programming. The Census Bureau 
defines this category as follows: ``This industry comprises 
establishments primarily engaged in operating studios and facilities 
for the broadcasting of programs on a subscription or fee basis * * *. 
These establishments produce programming in their own facilities or 
acquire programming from external sources. The programming material is 
usually delivered to a third party, such as cable systems or direct-to-
home satellite systems, for transmission to viewers.'' The SBA has 
developed a small business size standard for this category, which is: 
All such firms having $15 million dollars or less in annual revenues. 
To gauge small business prevalence in the Cable and Other Subscription 
Programming industries, the Commission relies on data currently 
available from the U.S. Census for the year 2007. Census Bureau data 
for 2007, which now supersede data from the 2002 Census, show that 
there were 396 firms in this category that operated for the entire 
year. Of that number, 325 operated with annual revenues of $9,999,999 
dollars or less. Seventy-one (71) operated with annual revenues of 
between $10 million and $100 million or more. Thus, under this category 
and associated small business size standard, the majority of firms can 
be considered small.
    54. Small Incumbent Local Exchange Carriers. We have included small 
incumbent local exchange carriers in this present RFA analysis. A 
``small business'' under the RFA is one that, inter alia, meets the 
pertinent small business size standard (e.g., a telephone 
communications business having 1,500 or fewer employees), and ``is not 
dominant in its field of operation.'' The SBA's Office of Advocacy 
contends that, for RFA purposes, small incumbent local exchange 
carriers are not dominant

[[Page 66062]]

in their field of operation because any such dominance is not 
``national'' in scope. We have therefore included small incumbent local 
exchange carriers in this RFA analysis, although we emphasize that this 
RFA action has no effect on Commission analyses and determinations in 
other, non-RFA contexts.
    55. Incumbent Local Exchange Carriers (``LECs''). Neither the 
Commission nor the SBA has developed a small business size standard 
specifically for incumbent local exchange services. The appropriate 
size standard under SBA rules is for the category Wired 
Telecommunications Carriers. Under that size standard, such a business 
is small if it has 1,500 or fewer employees. Census Bureau data for 
2007, which now supersede data from the 2002 Census, show that there 
were 3,188 firms in this category that operated for the entire year. Of 
this total, 3,144 had employment of 999 or fewer, and 44 firms had 
employment of 1,000 employees or more. According to Commission data, 
1,307 carriers reported that they were incumbent local exchange service 
providers. Of these 1,307 carriers, an estimated 1,006 have 1,500 or 
fewer employees and 301 have more than 1,500 employees. Thus, under 
this category and the associated small business size standard, the 
majority of these firms can be considered small.
    56. Competitive Local Exchange Carriers, Competitive Access 
Providers (CAPs), ``Shared-Tenant Service Providers,'' and ``Other 
Local Service Providers.'' Neither the Commission nor the SBA has 
developed a small business size standard specifically for these service 
providers. The appropriate size standard under SBA rules is for the 
category Wired Telecommunications Carriers. Under that size standard, 
such a business is small if it has 1,500 or fewer employees. Census 
Bureau data for 2007, which now supersede data from the 2002 Census, 
show that there were 3,188 firms in this category that operated for the 
entire year. Of this total, 3,144 had employment of 999 or fewer, and 
44 firms had employment of 1,000 employees or more. Thus, under this 
category and the associated small business size standard, the majority 
of these firms can be considered small. Consequently, the Commission 
estimates that most providers of competitive local exchange service, 
competitive access providers, ``Shared-Tenant Service Providers,'' and 
``Other Local Service Providers'' are small entities.
    57. Motion Picture and Video Production. The Census Bureau defines 
this category as follows: ``This industry comprises establishments 
primarily engaged in producing, or producing and distributing motion 
pictures, videos, television programs, or television commercials.'' We 
note that firms in this category may be engaged in various industries, 
including cable programming. Specific figures are not available 
regarding how many of these firms produce and/or distribute programming 
for cable television. The SBA has developed a small business size 
standard for this category, which is: all such firms having $29.5 
million dollars or less in annual revenues. To gauge small business 
prevalence in the Motion Picture and Video Production industries, the 
Commission relies on data currently available from the U.S. Census for 
the year 2007. Census Bureau data for 2007, which now supersede data 
from the 2002 Census, show that there were 9,095 firms in this category 
that operated for the entire year. Of these, 8995 had annual receipts 
of $24,999,999 or less, and 100 had annual receipts ranging from not 
less that $25,000,000 to $100,000,000 or more. Thus, under this 
category and associated small business size standard, the majority of 
firms can be considered small.
    58. Motion Picture and Video Distribution. The Census Bureau 
defines this category as follows: ``This industry comprises 
establishments primarily engaged in acquiring distribution rights and 
distributing film and video productions to motion picture theaters, 
television networks and stations, and exhibitors.'' We note that firms 
in this category may be engaged in various industries, including cable 
programming. Specific figures are not available regarding how many of 
these firms produce and/or distribute programming for cable television. 
The SBA has developed a small business size standard for this category, 
which is: all such firms having $29.5 million dollars or less in annual 
revenues. To gauge small business prevalence in the Motion Picture and 
Video Distribution industries, the Commission relies on data currently 
available from the U.S. Census for the year 2007. Census Bureau data 
for 2007, which now supersede data from the 2002 Census, show that 
there were 450 firms in this category that operated for the entire 
year. Of these, 434 had annual receipts of $24,999,999 or less, and 16 
had annual receipts ranging from not less that $25,000,000 to 
$100,000,000 or more. Thus, under this category and associated small 
business size standard, the majority of firms can be considered small.
Description of Projected Reporting, Recordkeeping, and Other Compliance 
Requirements
    59. Certain proposed rule changes discussed in the FNPRM would 
affect reporting, recordkeeping, or other compliance requirements. The 
FNPRM seeks comment on whether to establish (i) a rebuttable 
presumption that an exclusive contract for a cable-affiliated RSN 
(regardless of whether it is terrestrially delivered or satellite-
delivered) is an ``unfair act'' under section 628(b); (ii) a rebuttable 
presumption that a complainant challenging an exclusive contract 
involving a cable-affiliated RSN (regardless of whether it is 
terrestrially delivered or satellite-delivered) is entitled to a 
standstill of an existing programming contract during the pendency of a 
complaint; (iii) rebuttable presumptions with respect to the ``unfair 
act'' element and/or the ``significant hindrance'' element of a section 
628(b) claim challenging an exclusive contract involving a cable-
affiliated ``national sports network'' (regardless of whether it is 
terrestrially delivered or satellite-delivered); and (iv) a rebuttable 
presumption that, once a complainant succeeds in demonstrating that an 
exclusive contract involving a cable-affiliated network (regardless of 
whether it is terrestrially delivered or satellite-delivered) violates 
section 628(b) (or, potentially, section 628(c)(2)(B)), any other 
exclusive contract involving the same network violates section 628(b) 
(or section 628(c)(2)(B)). The FNPRM tentatively concludes that the 
Commission should revise definition of ``buying group'' to require, as 
an alternative to the current liability options, that the buying group 
agree to assume liability to forward all payments due and received from 
its members for payment under a master agreement to the appropriate 
programmer. The FNPRM also proposes to revise the definition of 
``buying group'' to provide that a buying group may not unreasonably 
deny membership to any MVPD requesting membership. In addition, the 
FNPRM seeks comment on whether the Commission should establish a ``safe 
harbor'' subscriber level for buying group members to participate in 
master agreements with cable-affiliated programmers. As a consequence 
of this safe harbor, it would be a violation of the section 
628(c)(2)(B) prohibition on discriminatory practices for a cable-
affiliated programmer to refuse to deal with a buying group member that

[[Page 66063]]

regularly participates in a master agreement. Finally, the FNPRM seeks 
comment on whether the Commission should revise the rules to clarify 
that: (i) The standard to be applied in determining whether buying 
groups are being discriminated against is the same as that applied to 
an individual MVPD providing the same number of subscribers to the 
programmer; (ii) a cable-affiliated programmer cannot refuse to offer a 
master agreement to a buying group that specifies a schedule of non-
discriminatory license fees over any range of subscribership levels 
that the buying group requests, so long as it is possible that the 
buying group could provide this number of subscribers from its current 
members eligible to participate in the master agreement; and (iii) the 
standard of comparability for a buying group is an MVPD providing the 
same number of customers for purposes of evaluating all terms and 
conditions of the agreement, not just the price.
Steps Taken To Minimize Significant Impact on Small Entities and 
Significant Alternatives Considered
    60. The RFA requires an agency to describe any significant 
alternatives that it has considered in developing its proposed 
approach, which may include the following four alternatives (among 
others): ``(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 and reporting requirements under the rule 
for such 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 such small entities.''
    61. The FNPRM seeks comment on whether to establish (i) a 
rebuttable presumption that an exclusive contract for a cable-
affiliated RSN (regardless of whether it is terrestrially delivered or 
satellite-delivered) is an ``unfair act'' under section 628(b); (ii) a 
rebuttable presumption that a complainant challenging an exclusive 
contract involving a cable-affiliated RSN (regardless of whether it is 
terrestrially delivered or satellite-delivered) is entitled to a 
standstill of an existing programming contract during the pendency of a 
complaint; (iii) rebuttable presumptions with respect to the ``unfair 
act'' element and/or the ``significant hindrance'' element of a section 
628(b) claim challenging an exclusive contract involving a cable-
affiliated ``national sports network'' (regardless of whether it is 
terrestrially delivered or satellite-delivered); and (iv) a rebuttable 
presumption that, once a complainant succeeds in demonstrating that an 
exclusive contract involving a cable-affiliated network (regardless of 
whether it is terrestrially delivered or satellite-delivered) violates 
section 628(b) (or, potentially, section 628(c)(2)(B)), any other 
exclusive contract involving the same network violates section 628(b) 
(or section 628(c)(2)(B)). These presumptions may benefit small 
entities by reducing costs by eliminating the need for litigants and 
the Commission to undertake repetitive examinations of Commission 
precedent and empirical evidence on RSNs.
    62. The FNPRM also seeks comment on proposed modifications to the 
program access rules that are intended to ensure that buying groups 
utilized by small and medium-sized MVPDs can avail themselves of the 
non-discrimination protections of the program access rules. Thus, the 
proposed modifications would benefit small entities. Specifically, the 
proposed revision of the definition of ``buying group'' to include an 
alternative liability option may benefit small entities by enabling 
buying groups that do not fall within the scope of the existing 
definition to file complaints with the Commission alleging violations 
of the non-discrimination provisions of the program access rules on 
behalf of their small and medium-sized MVPD members. Additionally, the 
proposed revision of the ``buying group'' definition to provide that a 
buying group may not unreasonably deny membership to any MVPD 
requesting membership may benefit small entities by making the benefits 
of buying group membership available to more small entities. Small 
entities may also benefit from the establishment of a ``safe harbor'' 
subscriber level for buying group members to participate in master 
agreements with cable-affiliated programmers and from clarifications to 
the rules addressing the standard of comparability for a buying group 
regarding volume discounts.
Federal Rules That May Duplicate, Overlap, or Conflict With the 
Proposed Rule
    63. None.

B. Paperwork Reduction Act

    64. The FNPRM in MB Docket No. 12-68 does not contain proposed 
information collections subject to the PRA. In addition, therefore, it 
does not contain any new or modified information collection burden for 
small business concerns with fewer than 25 employees, pursuant to the 
Small Business Paperwork Relief Act of 2002.

C. Ex Parte Rules

    65. Permit-But-Disclose. The proceeding the FNPRM in MB Docket No. 
12-68 initiates shall be treated as a ``permit-but-disclose'' 
proceeding in accordance with the Commission's ex parte rules. Persons 
making ex parte presentations must file a copy of any written 
presentation or a memorandum summarizing any oral presentation within 
two business days after the presentation (unless a different deadline 
applicable to the Sunshine period applies). Persons making oral ex 
parte presentations are reminded that memoranda summarizing the 
presentation must (1) list all persons attending or otherwise 
participating in the meeting at which the ex parte presentation was 
made, and (2) summarize all data presented and arguments made during 
the presentation. If the presentation consisted in whole or in part of 
the presentation of data or arguments already reflected in the 
presenter's written comments, memoranda or other filings in the 
proceeding, the presenter may provide citations to such data or 
arguments in his or her prior comments, memoranda, or other filings 
(specifying the relevant page and/or paragraph numbers where such data 
or arguments can be found) in lieu of summarizing them in the 
memorandum. Documents shown or given to Commission staff during ex 
parte meetings are deemed to be written ex parte presentations and must 
be filed consistent with rule Sec.  1.1206(b). In proceedings governed 
by rule Sec.  1.49(f) or for which the Commission has made available a 
method of electronic filing, written ex parte presentations and 
memoranda summarizing oral ex parte presentations, and all attachments 
thereto, must be filed through the electronic comment filing system 
available for that proceeding, and must be filed in their native format 
(e.g., .doc, .xml, .ppt, searchable .pdf). Participants in this 
proceeding should familiarize themselves with the Commission's ex parte 
rules.

D. Filing Requirements

    66. Comments and Replies. Pursuant to Sec. Sec.  1.415 and 1.419 of 
the Commission's rules, interested parties may file comments and reply 
comments on or before the dates indicated on the first page of this 
document. Comments may be filed using the Commission's Electronic 
Comment Filing System (``ECFS'').
     Electronic Filers: Comments may be filed electronically 
using the Internet by

[[Page 66064]]

accessing the ECFS: http://fjallfoss.fcc.gov/ecfs2/.
     Paper Filers: Parties who choose to file by paper must 
file an original and one copy of each filing. If more than one docket 
or rulemaking number appears in the caption of this proceeding, filers 
must submit two additional copies for each additional docket or 
rulemaking number.
    Filings can be sent by hand or messenger delivery, by commercial 
overnight courier, or by first-class or overnight U.S. Postal Service 
mail. All filings must be addressed to the Commission's Secretary, 
Office of the Secretary, Federal Communications Commission.
    [cir] All hand-delivered or messenger-delivered paper filings for 
the Commission's Secretary must be delivered to FCC Headquarters at 445 
12th St. SW., Room TW-A325, Washington, DC 20554. The filing hours are 
8:00 a.m. to 7:00 p.m. All hand deliveries must be held together with 
rubber bands or fasteners. Any envelopes and boxes must be disposed of 
before entering the building.
    [cir] 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.
    [cir] U.S. Postal Service first-class, Express, and Priority mail 
must be addressed to 445 12th Street SW., Washington, DC 20554.
    67. Availability of Documents. 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. These documents will also be available via ECFS. Documents will 
be available electronically in ASCII, Microsoft Word, and/or Adobe 
Acrobat.
    68. People with Disabilities. To request materials in accessible 
formats for people with disabilities (braille, large print, electronic 
files, audio format), send an email to [email protected] or call the FCC's 
Consumer and Governmental Affairs Bureau at (202) 418-0530 (voice), 
(202) 418-0432 (TTY).
    69. Additional Information. For additional information on this 
proceeding, contact David Konczal, [email protected], or Kathy 
Berthot, [email protected], of the Media Bureau, Policy Division, 
(202) 418-2120.

III. Ordering Clauses

    70. It is ordered that, pursuant to the authority found in sections 
4(i), 4(j), 303(r), and 628 of the Communications Act of 1934, as 
amended, 47 U.S.C. 154(i), 154(j), 303(r), and 548, the Further Notice 
of Proposed Rulemaking in MB Docket No. 12-68 Is Adopted.
    71. It is further ordered that the Commission's Consumer and 
Governmental Affairs Bureau, Reference Information Center, Shall Send a 
copy of the Further Notice of Proposed Rulemaking in MB Docket No. 12-
68, including the Initial Regulatory Flexibility Analysis, to the Chief 
Counsel for Advocacy of the Small Business Administration.

List of Subjects in 47 CFR Part 76

    Administrative practice and procedure, Cable television.

Federal Communications Commission.
Marlene H. Dortch,
Secretary.

Proposed Rules

    For the reasons discussed in the preamble, Part 76 of Title 47 of 
the Code of Federal Regulations is proposed to be amended 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, 302a, 303, 
303a, 307, 308, 309, 312, 315, 317, 325, 339, 340, 341, 503, 521, 
522, 531, 532, 534, 535, 536, 537, 543, 544, 544a, 545, 548, 549, 
552, 554, 556, 558, 560, 561, 571, 572, 573.

    2. Section 76.1000 is amended by revising paragraphs (c)(1) and 
(c)(3), adding paragraph (c)(4), and revising paragraph (j) to read as 
follows:


Sec.  76.1000  Definitions.

* * * * *
    (c) * * *
    (1)(i) Agrees to be financially liable for any fees due pursuant to 
a satellite cable programming, satellite broadcast programming, or 
terrestrial cable programming contract which it signs as a contracting 
party as a representative of its members, or
    (ii) Whose members, as contracting parties, agree to joint and 
several liability, or
    (iii) Maintains liquid cash or credit reserves (i.e., cash, cash 
equivalents, or letters or lines of credit) equal to cover the cost of 
one month's programming for all buying group members, or
    (iv) Agrees to assume liability to forward to the appropriate 
programmer all fees due and received from its members for payment under 
a programming contract; and
* * * * *
    (3) Agrees either collectively or individually on reasonable 
technical quality standards for the individual members of the group; 
and
    (4) Does not unreasonably deny membership to any multichannel video 
programming distributor that requests membership.
* * * * *
    (j) Similarly situated. The term ``similarly situated'' means, for 
the purposes of evaluating alternative programming contracts offered by 
a defendant programming vendor or by a terrestrial cable programming 
vendor alleged to have engaged in conduct described in Sec.  
76.1001(b)(1)(ii), that an alternative multichannel video programming 
distributor has been identified by the defendant as being more properly 
compared to the complainant in order to determine whether a violation 
of Sec.  76.1001(a) or Sec.  76.1002(b) has occurred. The analysis of 
whether an alternative multichannel video programming distributor is 
properly comparable to the complainant includes consideration of, but 
is not limited to, such factors as whether the alternative multichannel 
video programming distributor operates within a geographic region 
proximate to the complainant, has roughly the same number of 
subscribers as the complainant, and purchases a similar service as the 
complainant. Such alternative multichannel video programming 
distributor, however, must use the same distribution technology as the 
``competing'' distributor with whom the complainant seeks to compare 
itself. For purposes of determining the size of a volume discount 
applicable to a buying group, a buying group will be considered 
similarly situated to an alternative multichannel video programming 
distributor with approximately the same number of subscribers for the 
programming as expected to be supplied by the buying group.
* * * * *
    3. Section 76.1002 is amended by revising the Note to paragraph 
(b)(3) and adding paragraph (g) to read as follows:


Sec.  76.1002  Specific unfair practices prohibited.

* * * * *
    (b) * * *
    (3) * * *

    Note: Vendors may use volume-related justifications to establish 
price differentials to the extent that such justifications are made 
available to similarly situated distributors on

[[Page 66065]]

a technology-neutral basis. When relying upon standardized volume-
related factors that are made available to all multichannel video 
programming distributors using all technologies, the vendor may be 
required to demonstrate that such volume discounts are reasonably 
related to direct and legitimate economic benefits reasonably 
attributable to the number of subscribers served by the distributor 
if questions arise about the application of that discount. In such 
demonstrations, vendors will not be required to provide a strict 
cost justification for the structure of such standard volume-related 
factors, but may also identify non-cost economic benefits related to 
increased viewership. Vendors may not use volume-related 
justifications to establish price differentials between a buying 
group and an alternative multichannel video programming distributor 
that has approximately the same number of subscribers for the 
programming as expected to be supplied by the buying group.

* * * * *
    (g) Buying Groups. (1) Right to Participate in Buying Group 
Programming Contracts. No satellite cable programming vendor in which a 
cable operator has an attributable interest or satellite broadcast 
programming vendor may unreasonably interfere with or prevent a member 
of a buying group from participating in a programming contract in which 
a buying group signs as a contracting party as a representative of its 
members if:
    (i) The member has no more than three million subscribers; or
    (ii) The share of programming that the member licenses through the 
buying group is not significantly smaller than the average share of 
programming that other members of the buying group license through the 
buying group. Upon the expiration of a satellite cable programming or 
satellite broadcast programming contract which a buying group signs as 
a contracting party as a representative of its members, all buying 
group members participating in the expiring programming contract shall 
be presumptively entitled to participate in the renewed programming 
contract.
    (2) License Fee Schedule. A programming vendor must offer a 
programming contract to a buying group that specifies a schedule of 
non-discriminatory license fees over any range of subscribership levels 
that the buying group requests, provided that it is possible that the 
buying group could provide this number of subscribers from its current 
members eligible to participate in the programming contract.

[FR Doc. 2012-26455 Filed 10-30-12; 8:45 am]
BILLING CODE 6712-01-P