NOTICE ********************************************************* NOTICE ********************************************************* This document was originally prepared in Word Perfect. If the original document contained-- * Footnotes * Boldface & Italics --this information is missing in this version The document format (spacing, margins, tabs, etc.) is changed too. If you need the complete document, download the Word Perfect version. For information about downloading documents (FTP) see file how2ftp. File how2ftp (.txt & .wp) is in directory \pub\Public_Notices\Miscellaneous. ***************************************************************** ******** $//Advantage Video & Marketing vs. Comcast Cablevision, MO&O, DA95-1533//$ $/76.970 Part Time Leased Access Rates/$ $/76.970(e) Leased Access Record Maintenance/$ Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D. C. 20554 DA 95-1533 In the Matter of ) ) Petition for Relief of ) ADVANTAGE VIDEO & MARKETING, INC., ) Petitioner, ) ) vs. ) CSR 4287-L ) COMCAST CABLEVISION OF LOWER MERION, INC., ) Respondent, ) ) For Leased Access Channels ) MEMORANDUM OPINION AND ORDER Adopted: July 7, 1995 Released: July 14, 1995 By the Chief, Cable Services Bureau: I. The Pleadings 1. On July 22, 1994, Advantage Video & Marketing, Inc. (herein "Advantage") filed with the Federal Communications Commission a petition for relief alleging that Comcast Cablevision of Lower Merion, Inc. (herein "Comcast") has refused to make commercial channel capacity available in accordance with Sections 76.970 and 76.971 of the Commission's rules. The petition asserts that Comcast has refused a request of Advantage to provide it with leased access time at an hourly rate derived from a proration of Comcast's maximum monthly leased access rate, for programming that would be shown for two hours per day, seven days a week, for a thirteen week period. It requests the Commission to compel Comcast "to make leased access capacity available at the maximum implicit rate as stated in the implementing regulations of Title VI of the Communications Act." 2. Comcast, on March 6, 1995, filed a response to the petition. Comcast concedes that Advantage had correctly calculated the monthly leased access rate. It concedes also that it had refused to provide service at the requested hourly rate, that it had informed Advantage that the prorated hourly rate was non-compensatory and that it would not lease time on its access channel at those rates. It states further that the parties have entered into a Channel Lease Agreement dated January 10, 1995 providing for Advantage to lease 30-minute segments seven times per week at a rate of $37.71 per half-hour for a term of 26 weeks. Citing a prior Cable Services Bureau decision, Comcast asserts the right to charge part time rates which reasonably reflect the different values that different day parts have in the media industry, provided that the total of part time rates do not exceed its maximum monthly rate permitted under Section 76.970 of the rules. It requests the Commission to confirm that cable operators may establish hourly rates during any day part which deviate from a straight prorate of the monthly rate so long as the sum of such hourly rates does not exceed the maximum monthly rate. Finally, Comcast provides a listing of advertising rates for itself and other media entities in the Philadelphia market for comparison purposes, to support its position that a proration of its maximum monthly rate would not permit a cable operator to obtain a reasonable hourly rate. 3. On April 13, 1995, the Commission received a letter from Advantage in reply to the response of Comcast. Advantage does not deny having entered into a Channel Lease Agreement as stated by Comcast. It asserts, however, that Comcast's $71.50 per hour rate does not meet the requirements of TV-24 Sarasota for part time rates, because Comcast is allegedly charging that rate "regardless of the hour of the day or day of the week the program is scheduled." It asserts further that the media rates for the Philadelphia market are inappropriate for making comparisons with the much smaller Lower Merion, Pennsylvania market in which its programming is shown. II. Background 4. In 1984, Congress amended the Communications Act of 1934 by adding among other things a commercial leased access requirement, pursuant to which cable operators with 36 or more activated channels must set aside part of their channel capacity for use by programmers that are not affiliated with them. The Cable Television Consumer Protection and Competition Act of 1992 (the "1992 Cable Act") revisited the leased access requirement and directed the Commission to establish, among other things, rules for determining maximum reasonable rates for commercial leased access. Pursuant to that Congressional directive, the Commission established regulations, including rate regulations, applicable to leased access channels, in its proceedings in Implementation of Sections of the Cable Television Consumer Protection and Competition Act of 1992; Rate Regulation, MM Docket 92-266, (the Rate Order), 8 FCC Rcd 5631 (1993), at  531-538. The new leased access regulations relevant to this case are found at 47 C.F.R.  76.970, 76.971 and 76.975. 5. In the Rate Order, the Commission developed procedures that cable operators must follow to determine the maximum reasonable rate that a cable operator may charge any non-affiliated programmer for leased access. Sections 76.970(b), (c) and (d) of the rules describe the methodology to be used by cable operators for calculating a maximum reasonable rate for leased access channels. This methodology uses (a) the rates subscribers pay per channel for the services they receive and (b) the rates cable operators pay nonaffiliated programmers for programming (other than leased access programming) provided to subscribers. The difference between these two amounts is deemed to be the implicit fee that nonaffiliated programmers pay to be carried on the cable system. The highest implicit net fee thus determined becomes the maximum monthly rate that the operator may charge a programmer for leased access. 6. In our TV-24 Sarasota decision we recognized that the statutory provisions relating to leased access do not specifically address the question of rates for part-time use. We acknowledged that prorating the maximum monthly rate was stated in our rules as a method which can be used for establishing maximum rates for shorter periods. We observed that the only rate that cable operators are not permitted to exceed under our rules is the maximum reasonable rate as calculated on a monthly basis from the highest implicit net fee. We declined to construe our rules to require an operator to adhere to a rigid formula for determining its hourly leased access rate by prorating its maximum rate for a full-time channel into equal hourly amounts. A rational time of day rate structure that is appropriately related to time of day pricing in the media industry within the overall "highest net implicit fee" formula and that does not frustrate leased access channel use, we concluded, would not conflict with the rules. 7. We accepted the fact that the media industry places different values on the different hours of the day in recognition of the different values that different hours of the day have in the market place. Accordingly, we concluded that cable operators should be allowed to charge different time-of-day rates so long as the differences have a reasonable basis. Such an approach would better recognize the different values that different time slots have in the marketplace in which both cable operators and cable programmers, as well as other media users such as advertisers, operate, as well as furthering the statutory goal of promoting diverse programming, because programmers that could not afford rates based on uniform pro rata pricing may be better able to afford the resulting lower "non prime-time" rates. Moreover, we believed that allowing "prime-time" pricing should help promote fuller utilization of designated leased access channels by making "non prime-time" slots more attractive. IV. Discussion 8. The principal issue presented is whether Comcast has failed to make a leased access channel available to Advantage as required by Section 76.970 of the Commission's rules, as alleged. The record shows that, subsequent to the filing of the petition, Comcast and Advantage have in fact entered into a Channel Lease Agreement dated January 10, 1995, for a term of 26 weeks. Advantage in its reply has not denied the existence of that agreement. It also does not deny that it is being provided with channel capacity for the 30 minute segments seven times per week apparently called for in that agreement. On the basis of this record now before us, we conclude that Comcast has not failed to make leased access capacity available to Advantage. 9. While a substantial delay occurred between the dates of the initial requests by Advantage for leased access capacity and the date of the Channel Lease Agreement, the entire record does not support a finding that leased access capacity was refused. The petition shows that Advantage made a request for a certain amount of channel capacity at an hourly rate of $11.20 per hour. The requested rate had been developed, the petition shows, by prorating Comcast's monthly rate to obtain an hourly rate. Further, as the petition shows, Comcast had informed Advantage that it would not agree to provide leased access capacity at the requested rate. The petition was filed with matters in this posture. The record does not indicate what, if any, additional steps were taken to further negotiate a rate acceptable to both parties. However, the response shows that the Channel Lease Agreement was entered into on January 10, 1995. On these facts, we cannot find that Comcast refused to provide service as the petition asserts. Moreover, as we stated in the TV-24 Sarasota decision, Comcast was not required by our leased access rules to provide hourly service at requested hourly rates which had been derived from a straight prorate of its monthly leased access rate. For these reason, we find that Comcast's refusal to provide part time service to Advantage at the requested $11.20 per hour rate does not constitute a failure to provide leased access capacity in accordance with Section 76.970 of the rules, as alleged. 10. In its reply, Advantage raises a new complaint that the hourly rate in the Channel Lease Agreement does not meet the requirements of our TV-24 Sarasota decision, because Comcast is allegedly charging $71.50 per hour "regardless of hour of the day - or day of the week the program is scheduled." Advantage provides no clear and convincing evidence in support of this new allegation. Comcast states that the Channel Lease Agreement provides for carriage of 30 minute segments seven times per week for 26 weeks, or one 30 segment per day. The reply does not show the day part in which this daily 30 minute segment is in fact carried or that the $71.50 rate is an inappropriate rate for the day part in which it is carried. 11. Advantage asserts further that the media rates for the Philadelphia market, which Comcast provided with its response, are not useful for comparison purposes with the much smaller Lower Merion, Pennsylvania market in which its programming is shown. As we pointed out in the TV-24 Sarasota decision, a rational time of day rate structure that is appropriately related to time of day pricing in the media industry and that does not frustrate leased access channel use would not conflict with our rules. The media rate information provided by Comcast tends to confirm that time of day pricing is the norm in the Philadelphia area, which includes Lower Merion. However, Comcast has not provided a complete schedule of hourly rates for the record for our review, and the record does not show that Comcast has provided a complete schedule of hourly rates to Advantage. Accordingly, we will require Comcast to establish a schedule of rates, or rate card, for different times of day pursuant to which, if all times were used, the sum of the part time charges for any single leased access channel would not exceed its maximum monthly rate for a leased access channel calculated in accordance with Section 76.970 of our rules. Such rate structure shall be reasonably reflective of empirical time of day values and should not serve merely as a mechanism to retard use. We will also require Comcast to provide Advantage with a copy of such complete schedule of part time rates, in order that Advantage may be able to select the rates and day parts most suitable to its programming needs. Although we have concluded that Comcast has not failed to make leased access capacity available to Advantage as alleged, we remind Comcast that cable operators have an obligation under Section 76.970(e) of our rules to provide "[u]pon request, a schedule of commercial leased access rates . . . to prospective leased access programmers." 12. We will also require Comcast to maintain on file adequate records, consistent with Section 76.970(e) of our rules, that show the total monthly revenues derived from part time users of each leased access channel, together with the maximum monthly charge for a full leased access channel and the documentation and calculations used for deriving the maximum monthly charge in accordance with Section 76.970 of the rules. V. Ordering Clauses 13. For the foregoing reasons, IT IS ORDERED that the petition of Advantage Video & Marketing, Inc. (herein "Advantage") IS GRANTED in part as described above and in all other respects IS DENIED. 14. IT IS FURTHER ORDERED that the Comcast Cablevision of Lower Merion, Inc. (herein "Comcast") shall, within thirty days of the release date of this order, (a) establish a reasonable schedule of rates, or rate card for different times of day pursuant to which, if all times were used, the sum of the part time charges for any single leased access channel would not exceed its maximum monthly rate for a leased access channel calculated in accordance with Section 76.970 or our rules, and (b) provide a copy of such schedule of rates to Advantage. 15. IT IS FURTHER ORDERED that Comcast shall maintain on file adequate records, consistent with Section 76.970(e) of our rules, which show the total monthly revenues derived from part time users of each leased access channel, together with the maximum monthly charge for a full leased access channel and the documentation and calculations used for deriving the maximum monthly charge in accordance with Section 76.970 of the rules. 16. This action is taken pursuant to authority delegated by Section 0.321 of the Commission's rules, 47 C.F.R.  0.321. FEDERAL COMMUNICATIONS COMMISSION Meredith J. Jones Chief, Cable Services Bureau