[Federal Register Volume 84, Number 119 (Thursday, June 20, 2019)]
[Proposed Rules]
[Pages 28784-28787]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-13135]


=======================================================================
-----------------------------------------------------------------------

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 76

[MB Docket Nos. 07-42 and 17-105; FCC 19-52]


Leased Commercial Access; Modernization of Media Regulation 
Initiative

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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

SUMMARY: In this document, which is part of the Commission's 
Modernization of Media Regulation Initiative, the Commission proposes 
to modify the leased access rate formula so that rates will be specific 
to the tier on which the programming is carried. The Commission also 
seeks comment on whether it should make additional adjustments to the 
formula. Finally, it also seeks comment on whether leased access 
requirements can withstand First Amendment scrutiny in light of video 
programming market changes.

DATES: Comments are due on or before July 22, 2019; reply comments are 
due on or before August 5, 2019.

ADDRESSES: You may submit comments, identified by MB Docket Nos. 07-42 
and 17-105, by any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Federal Communications Commission's Web site: http://fjallfoss.fcc.gov/ecfs2/. 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. All filings must be addressed to the

[[Page 28785]]

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 Diana Sokolow, [email protected], of the Policy 
Division, Media Bureau, (202) 418-2120.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Second 
Further Notice of Proposed Rulemaking, FCC 19-52, adopted on June 6, 
2019 and released on June 7, 2019. 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, Room CY-A257, Washington, DC 20554. This document will also be 
available via ECFS at http://fjallfoss.fcc.gov/ecfs/. Documents will be 
available electronically in ASCII, Microsoft Word, and/or Adobe 
Acrobat. Alternative formats are available for people with disabilities 
(Braille, large print, electronic files, audio format), by sending an 
email to [email protected] or calling the Commission's Consumer and 
Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432 
(TTY).

Synopsis

    1. In the Second Further Notice of Proposed Rulemaking, we update 
our leased access rules as part of the Commission's Modernization of 
Media Regulation Initiative and propose to modify the leased access 
rate formula. The leased access rules, which implement the statutory 
leased access requirements, direct cable operators to set aside channel 
capacity for commercial use by unaffiliated video programmers.\1\ In 
2018, the Commission adopted a Further Notice of Proposed Rulemaking 
(FNPRM) \2\ addressing leased access proposals filed in response to the 
Media Modernization Public Notice. With this proceeding, we continue 
our efforts to modernize media regulations and remove unnecessary 
requirements that can impede competition and innovation in the media 
marketplace.
---------------------------------------------------------------------------

    \1\ The leased access rules are in subpart N of part 76, which 
was listed in the Media Modernization Public Notice as one of the 
principal rule parts that pertains to media entities and that is the 
subject of the media modernization review.
    \2\ Federal Communications Commission, Leased Commercial Access; 
Modernization of Media Regulation Initiative, 83 FR 30639 (June 29, 
2018).
---------------------------------------------------------------------------

    2. The video marketplace has changed significantly since the 
Commission initially adopted its leased access rules. Specifically, 
today a wide variety of media platforms are available to programmers, 
including in particular online platforms that creators can use to 
distribute their content for free. This change has reduced the 
importance of leased access and, thus, the justification for burdensome 
leased access requirements.
    3. In the Second Further Notice of Proposed Rulemaking (Second 
FNPRM), we address the leased access rate formula. Specifically, as 
discussed below, we propose one modification to the formula that would 
permit cable operators to calculate the ``average implicit fee'' for 
leased access based on the tier on which the leased access programming 
actually will be carried. In addition, we seek comment on whether to 
make other modifications to the existing rate formula. Finally, we seek 
comment on whether leased access requirements can withstand First 
Amendment scrutiny in light of video programming market changes.
    4. Congress authorized the Commission to adopt maximum reasonable 
rates for commercial leased access as part of the Cable Television 
Consumer Protection and Competition Act of 1992 and also provided that 
the price, terms, and conditions for leased access must be ``sufficient 
to assure that such use will not adversely affect the operation, 
financial condition, or market development of the cable system.'' The 
Commission adopted leased access rate regulations in 1993, and the 
Commission subsequently modified its leased access regulations in 1996 
and 1997. The Commission's implementing rules, which the D.C. Circuit 
upheld in 1998, included a formula for calculating maximum carriage 
rates that cable operators could charge leased access programmers.
    5. Specifically, in order to permit cable operators to recover 
their costs and earn a profit, the Commission adopted a maximum 
reasonable rate formula for full-time leased access carriage based on 
the ``average implicit fee'' that other programmers implicitly charge 
for carriage.\3\ The Commission then prorated that formula for part-
time programming. Thus, these rate rules require that an operator 
calculate the average implicit fee for all eligible tiers rather than 
just the individual tier where the channel will be placed. The 
Commission reasoned that ``because the Communications Act requires 
cable operators to transmit must-carry and PEG access channels on the 
basic service tier, the average programming cost on that tier will tend 
to be lower.''
---------------------------------------------------------------------------

    \3\ To illustrate, as the Commission stated in the 1997 Leased 
Access Order, ``if subscribers pay an average of $0.50 per channel 
for a particular tier, and the average programming or license fee on 
the tier is $0.10, then, on average, programmers on the tier are 
implicitly `paying' the operator $0.40 for carriage.''
---------------------------------------------------------------------------

    6. Although the Commission revised its commercial leased access 
rate rules in its 2008 Leased Access Order, these rules never went into 
effect. Thus, the leased access rate rules adopted in the 1993 Rate 
Regulation Order, as subsequently amended, remain in effect.
    7. As suggested by commenters, we propose to make leased access fee 
calculations specific to the tier on which the programming will be 
carried. In this regard, we propose to permit cable operators that 
carry leased access programming on the basic service tier \4\ ``to 
calculate the average implicit fee based on a basic tier-specific 
calculation, rather than based on the blended calculation required 
under the existing formula,'' as proposed by NCTA.\5\ NCTA avers that 
it would ``be much simpler to calculate the leased access rate for 
basic tier placement on a tier-specific basis, rather than on a blended 
tier basis.'' We similarly propose that the rate formula should be a 
tier-specific calculation even if the leased access programming is 
carried on a tier other than the basic service tier. We seek comment on 
these proposals. Are there other advantages or disadvantages to this 
approach that we should consider?
---------------------------------------------------------------------------

    \4\ The Commission stated in the 1993 Rate Regulation Order that 
the basic service tier ``includes, at a minimum, the broadcast 
signals distributed by the cable operator (except for 
superstations), along with any public, educational, and government 
(PEG) access channels that the local franchise authority requires 
the system operator to carry on the basic tier.''
    \5\ The ``average implicit fee'' is the maximum commercial 
leased access rate that a cable operator may charge. The current fee 
calculation is ``blended'' insofar as it utilizes a ``weighting 
scheme that accounts for differences in the number of subscribers 
and channels'' on multiple tiers, and not just on the basic service 
tier.
---------------------------------------------------------------------------

    8. We also seek comment on whether there are other changes we 
should make to our rate formula. In response to the FNPRM's request for 
information on whether the Commission should adopt any new rules 
governing leased access rates, commenters put forth a wide range of 
proposals to address their concerns. The record indicates that the 
current rate formula may be insufficient to compensate cable operators 
for their leased access administrative costs, particularly for small 
cable systems, and

[[Page 28786]]

that the current method for calculating rates is unduly complex. On the 
other hand, AIM indicates that current rates are ``a de facto barrier 
to entry for a significant number of independent programmers.'' We seek 
comment on the pros and cons of the varying rate proposals in the 
record, and on any other rate proposals we should consider. Should we 
adopt any of these suggestions if we adopt our proposal to make the 
rate formula tier-specific? Even with this change, would the rate 
formula yield rates that are unduly low? For example, is there basis 
for concern that the current rate formula yields rates that are so low 
that it encourages a programmer with limited content to lease a channel 
and then air its programming on repeat? Alternatively, we seek comment 
on whether we should retain our existing rate formula. We seek input on 
the potential costs and benefits of the various proposals in the 
record.
    9. We also seek comment today on whether the First Amendment 
concerns identified in paragraphs 39 and 40 of the Report and Order, 
FCC 19-52, apply to the Commission's rules and statutory provisions 
concerning full-time leased access requirements. In this regard, one 
commenter opines that ``[t]hese matters have already been addressed by 
the courts and they have upheld the leased access provisions enacted by 
Congress. Only the courts and Congress can change these provisions. In 
the meantime, the Commission is obligated to carry out the directions 
given to them by Congress.'' On the other hand, we note that the D.C. 
Circuit decision upholding the constitutionality of the statutory 
leased-access provisions largely antedates the market developments 
described in this order and arguably turned on the facts that existed 
at that time. We seek comment on this analysis. Can the statutory 
leased access requirements or the Commission's other leased-access 
rules continue to withstand First Amendment scrutiny in light of the 
market changes discussed in the Report and Order? If not, what 
discretion does the Commission have to reduce the burdens that those 
provisions impose on protected speech?
    10. As required by the Regulatory Flexibility Act of 1980, as 
amended (RFA), the Commission has prepared an Initial Regulatory 
Flexibility Analysis (IRFA) concerning the possible significant 
economic impact on small entities by the policies and rules proposed in 
the Second Further Notice of Proposed Rulemaking (Second FNPRM). 
Written public comments are requested on the IRFA. Comments must be 
identified as responses to the IRFA and must be filed by the deadlines 
for comments provided on the first page of the FNPRM. The Commission 
will send a copy of the Second FNPRM, including this IRFA, to the Chief 
Counsel for Advocacy of the Small Business Administration (SBA). In 
summary, the Second FNPRM:'' (1) Proposes to modify the leased access 
rate formula so that rates will be specific to the tier on which the 
programming is carried; (2) seeks comment on whether we should make 
additional adjustments to the formula; and (3) seeks comment on whether 
leased access requirements can withstand First Amendment scrutiny in 
light of video programming market changes. The proposed action is 
authorized pursuant to sections 4(i), 303, and 612 of the 
Communications Act of 1934, as amended, 47 U.S.C. 154(i), 303, and 532. 
The types of small entities that may be affected by the proposals 
contained in the FNPRM fall within the following categories: Cable 
Television Distribution Services, Cable Companies and Systems (Rate 
Regulation), Cable System Operators (Telecom Act Standard), Cable and 
Other Subscription Programming, Motion Picture and Video Production, 
and Motion Picture and Video Distribution. The projected reporting, 
recordkeeping, and other compliance requirements are: (1) Proposing one 
modification to the leased access rate formula that would permit cable 
operators to calculate the ``average implicit fee'' for leased access 
to be based on the tier on which the leased access programming actually 
will be carried; and (2) seeking comment on whether to make other 
modifications to the existing rate formula. There is no overlap with 
other regulations or laws. The record indicates that the current rate 
formula may be insufficient to compensate cable operators (including 
small operators) for their leased access administrative costs, and that 
the current method for calculating rates is unduly complex. Modifying 
the rate formula could address these concerns, thus easing the burdens 
of leased access on cable operators, including small entities. The 
Commission seeks comment on the pros and cons of the varying rate 
proposals in the record, and on alternative rate proposals it should 
consider.
    11. The Second FNPRM may result in new or revised information 
collection requirements. If the Commission adopts any new or revised 
information collection requirement, the Commission will publish a 
notice in the Federal Register inviting the public to comment on the 
requirement, as required by the Paperwork Reduction Act of 1995, Public 
Law 104-13 (44 U.S.C. 3501-3520). In addition, pursuant to the Small 
Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 
U.S.C. 3506(c)(4), the Commission seeks specific comment on how it 
might ``further reduce the information collection burden for small 
business concerns with fewer than 25 employees.''
    12. Permit-But-Disclose. This proceeding shall be treated as a 
``permit-but-disclose'' proceeding in accordance with the Commission's 
ex parte rules.\6\ 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 1.1206(b). In proceedings governed by 
rule 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.
---------------------------------------------------------------------------

    \6\ 47 CFR 1.1200 et seq.
---------------------------------------------------------------------------

    13. The proposed action is authorized pursuant to sections 4(i), 
303, and 612 of the Communications Act of 1934, as

[[Page 28787]]

amended, 47 U.S.C. 154(i), 303, and 532.

List of Subjects in 47 CFR Part 76

    Administrative practice and procedure, Cable television, Reporting 
and recordkeeping requirements.

Federal Communications Commission.
Katura Jackson,
Federal Register Liaison Officer.
[FR Doc. 2019-13135 Filed 6-19-19; 8:45 am]
 BILLING CODE 6712-01-P