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                                Before the
                     FEDERAL COMMUNICATIONS COMMISSION            DA 95-539
                          Washington, D.C. 20554


In the Matter of                   )
                              )
Application of                )          CSR-4450-T
OPTEL, INC.                   )          
                              )
For Waiver of Section 76.502 of the     )
Commission's Rules                 )


                         MEMORANDUM OPINION AND ORDER


Adopted:  March 17, 1995                   Released:   March 22, 1995                            

By the Cable Services Bureau:

  1. On January 3, 1995, OpTel, Inc. ("OpTel"), filed a request for waiver of the
Commission's anti-trafficking rule, 47 C.F.R.  76.502(a), to complete the transfer of
control of a cable system (the "System") in Houston, Texas from Nationwide
Communications Inc., to VPC Corporation, through an interim transfer to OpTel.  A
supplement was filed on January 13, 1995.  The waiver request is unopposed. 

  2.  OpTel represents that on January 11, 1995, through a wholly-owned subsidiary, OpTel
acquired the System and several other cable and SMATV systems from Nationwide
Communications Inc.  OpTel states that this was the first stage of a two-stage transaction,
the second stage of which involves the transfer of control of OpTel from its shareholders to
VPC Corporation.  According to OpTel, the two-stage transaction was necessitated by
exigencies created by the timing of the acquisition, the requirements of certain financing
arrangements, and the necessity for obtaining regulatory consents to the ultimate transaction. 
OpTel represents that in order to close its acquisition of properties from Nationwide
Communications Inc., OpTel relied upon financing provided by VPC Corporation pursuant to
a promissory note that is convertible to a controlling equity interest in OpTel after receipt of
all requisite regulatory approvals.  OpTel now seeks a waiver of the three-year holding
requirement of the anti-trafficking rule because the transfer of the System from OpTel to
VPC Corporation is occurring less than three years from OpTel's acquisition of the System
from Nationwide. 
  
  3.  Section 76.502 of the Commission's Rules implements Section 617 of the
Communications Act, as amended, which, with certain exceptions, restricts the ability of a
cable operator to sell or otherwise transfer ownership in a cable system within a 36 month
period following either the acquisition or initial construction of the system.  Both the
statutory provision and the rule provide, however, that in the case of a sale of multiple
systems, subsequent transfers of one or more such systems to one or more third parties will
be considered part of the initial transaction for purposes of the anti-trafficking provision.  In
addition, the Commission has broad discretion to grant waivers of the holding requirement.  

  4.  The three-year holding requirement rule, and its underlying statutory provision, are
aimed at restricting profiteering transactions and other transfers that are likely to adversely
affect cable rates or service in the local franchise area, and are not intended to inhibit
investment in the cable industry or delay or disrupt legitimate transactions.  Recently, the
Commission stated that unless a transaction raises serious concerns on its face or any
objections filed provide other public interest bases for concern, requests for waiver of the
three-year holding requirement will generally be looked on favorably.  

  5.  OpTel asserts that while this transaction does not fall within the letter of the subsequent
transfer exception in the statute and the rule, the transaction does fall within the spirit of that
exception.  In addition, OpTel states that neither the ultimate transfer of control to VPC
Corporation nor the interim transfer to OpTel involve profiteering or trafficking.  Rather,
OpTel asserts that the overall transaction will enable it to maximize operating efficiencies,
increase subscriber services and ultimately provide robust competition in the multichannel
video marketplace.  Finally, OpTel asserts that the System is an overbuild system which
operates pursuant to one of three non-exclusive franchises issued by the city of Houston and
that the transaction is not expected to adversely affect cable rates or services in the franchise
area.

  6.  We find that OpTel has demonstrated that the proposed transaction:  (a) does not
adversely affect the policies underlying the anti-trafficking rule; (b) is not driven by a desire
to engage in profiteering; and (c) is not expected to adversely affect cable rates or services in
the affected franchise area.  Consequently, based upon the totality of the evidence and for the
reasons stated above, we find that grant of the requested waiver is consistent with the public
interest and our obligations pursuant to Section 617(d) of the Communications Act.  

  7.  Accordingly, IT IS ORDERED that, pursuant to 47 C.F.R.  0.321, the request for
waiver of 47 C.F.R.  76.502 IS GRANTED with respect to the proposed transfer of the
Houston system from OpTel, Inc., to VPC Corporation.

                              
                         FEDERAL COMMUNICATIONS COMMISSION


                         Meredith J. Jones
                         Chief, Cable Services Bureau