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If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of ) Petitions for Relief of ) ) LORILEI COMMUNICATIONS INC., ) d/b/a THE FIRM, ) Petitioner, ) ) vs. ) ) CONTINENTAL CABLEVISION, ) CSR 4564-L MANCHESTER, NEW HAMPSHIRE ) ) and ) ) CONTINENTAL CABLEVISION, ) CSR 4571-L WILMINGTON, MASSACHUSETTS, ) Respondents ) ) For Leased Access Channels ) MEMORANDUM OPINION AND ORDER Adopted: May 13, 1997 Released: May 15, 1997 By the Chief, Cable Services Bureau: I. INTRODUCTION 1. Lorilei Communications, Inc., d/b/a The Firm (herein "The Firm"), filed separate petitions for relief pursuant to Section 76.975 of the Commission's rules against Continental Cablevision, Manchester, New Hampshire and Continental Cablevision, Wilmington, Massachusetts (herein "Continental"). The petitions allege violations by Continental of the Commission's commercial leased access rules and requests an order for relief. Continental filed responses asserting that The Firm lacks standing to file a leased access petition, denying any violation of the leased access rules, and requesting that relief be denied. II. BACKGROUND 2. 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 video 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 rules for determining maximum reasonable rates for, and reasonable terms and conditions for the use of, commercial leased access channels. Pursuant to that Congressional directive, the Commission established 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, 5956-5961 (1993). The Commission revisited these regulations in Implementation of Sections of the Cable Television Consumer Protection and Competition Act of 1992, Leased Commercial Access, Second Report and Order and Second Order on Reconsideration of the First Report and Order, CS Docket 96-90, 62 Fed. Reg. 11364, March 12, 1997 ("Second Order"). 3. The leased access regulations initially required, among other things, that cable operators provide a schedule of rates "[u]pon request" to prospective leased access programmers. In the recently adopted Second Order, the Commission set a 15 day response time from the date of a written request. A 30 day response time was established for systems who qualify for "small system" rate relief. Additionally, the regulations provide for the determination of maximum monthly leased access rates by means of an average implicit fee formula, which is described in the regulations. The Commission also adopted procedures for resolution of disputes, providing for the filing of a petition for relief within sixty days of an alleged violation of a leased access statutory or regulatory provision and for the filing of a response. III. THE PLEADINGS A. The Petitioner's Allegations 4. The petitions describe The Firm as an advertising agency and video production company, which produces thirty minute programs for automotive dealers, recreational vehicle dealers, and real estate companies to be aired on commercial leased access channels. The Firm states that it initially sought a leased access channel on Continental's cable systems through a series of letters and facsimile messages exchanged with Continental. The Firm states that it requested information including the number of system channels, full time and part time leased access rates, the number of system subscribers reached by leased access, and system format for playback of leased access tapes. The Firm states that an initial response from Continental failed to include part time rate information, included a questionnaire to be completed to determine eligibility, indicated that a leased access programmer may be responsible for technical costs associated with activating a channel, and informed The Firm that a local origination channel was available. The Firm states further that, after requesting clarifying information, Continental responded by stating that leased access would be denied, because The Firm's programming constituted commercial advertising, and offering advertising rates to The Firm. 5. The Firm asserts that Continental's denial of leased access and failure to provide part time rate information constitute violations of the Commission's leased access regulations. It requests relief in the form of the issuance of a notice of apparent liability for forfeiture, to be paid directly to The Firm as compensation for revenues allegedly lost while trying to gain leased access from Continental. It also asks for an order requiring Continental to make as many as thirty half-hour leased access programs available at no cost to all programmers who request it, as compensation for expenses other programmers may have incurred in pursuing leased access services on Continental's cable systems. It also requests an order requiring all Continental systems using the screening process employed here to report to the Commission periodically on the manner in which leased access inquiries are processed and to act accordingly on that information. B. Continental's Responses 6. Continental asserts in response that The Firm is an advertising agency and, as such, is not entitled to leased access channels and thus lacks standing to file a leased access petition. It asserts that the Congress did not intend for the leased access obligations to extend to commercial advertising. Continental cites as support for this argument Sofer v. United States, No. 2:94cv1182, slip op. (E.D.VA., June 7, 1995), 1995 WL 576833 (E.D.Va.). 7. Continental asserts further that it has responded promptly and thoroughly to all requests from The Firm for information. It states that the information provided to The Firm included information about leased access rates, and that only after providing that information did it present a questionnaire seeking basic information about The Firm. It asserts that the offer of a local origination channel as an alternative for The Firm's advertising was not made as an attempt to dissuade The Firm from leased access. 8. Continental asserts that the relief requested is unwarranted, excessive and unavailable under the Commission's rules. Further, Continental asserts that The Firm has failed to meet its burden of showing by clear and convincing evidence that Continental has violated the leased access rules, and that The Firm therefore is not entitled to relief. III. DISCUSSION A. Eligibility for Commercial Leased Access Channels 9. The principal issue presented is whether Section 612 of the 1992 Cable Act, or the Commission's implementing regulations, obligates Continental to make a leased access channel available for the presentation of programming that includes commercial advertising. We conclude that it does. 10. Section 612(a) states that the purpose of the commercial leased access requirement is to promote competition "in the delivery of diverse sources of video programming and to assure that the widest possible diversity of information sources are made available to the public from cable systems in a manner consistent with the growth and development of cable systems." Section 612(b) implements this goal by mandating that cable operators designate stated percentages of activated channel capacity "for commercial use by persons unaffiliated with the operator." The Commission's dispute resolution rules that any person aggrieved by the failure or refusal of a cable operator to make commercial channel capacity available in accordance with the provisions of Section 612 or the Commission's implementing regulations may file a petition for relief with the Commission. 11. The Firm states that it is "an advertising agency/video production company" which produces thirty minute programs for automotive dealers, recreational vehicle dealers, real estate companies, camp grounds, and others "to air on commercial leased access channels." We read this statement as a representation by The Firm that it is a video production company (as well as an advertising agency) and that it seeks to present its video program productions on a commercial leased access channel to be obtained from Continental. Continental has presented nothing which disputes that representation. Absent a showing of any affiliation between The Firm and Continental, we find that The Firm qualifies as an unaffiliated "diverse source of video programming" for whom Continental is required by Section 612 to "designate channel capacity for commercial use." Accordingly, we reject Continental's argument that The Firm is not entitled to leased access channels because The Firm is an advertising agency. Nothing in Section 612 may be construed as disqualifying The Firm from use of a leased access channel, simply because it is engaged in business as an advertising agency, in addition to being engaged in business as a video production company providing a "diverse source of video programming" within the meaning of Section 612. B. Standing to File Section 76.975 Petition for Relief 12. Moreover, we disagree with Continental that Sofer vs. United States, supra, supports the proposition that The Firm does not have standing to file a petition for relief under 47 C.F.R.  76.975. Sofer involved a claim that a cable operator refused to sell commercial advertising time on a cable system and allegations, not specified in the court's Opinion and Order, of violations of Section 612 and related regulations. The court in Sofer found that Section 612 and related Commission regulations have no application to commercial advertising. However, the case before us deals with advertising time on a leased access channel. Nothing in Section 612 or the Commission's leased access rules prohibits a leased access user from distributing advertisements let alone programming containing advertisements. The inclusion of advertising content in video program productions does not disqualify independently produced video programming, such as that produced by The Firm, from carriage on Section 612 designated leased access channels. Moreover, cable operators may consider the content of leased access programming only to the extent necessary to establish which pricing category applies to such programming. Accordingly, we will direct Continental to provide such leased access channel capacity as may be requested by The Firm consistent with the requirements of Section 612. C. Response to Request for Rates - File No. CSR 4564-L 13. The petition further alleges that Continental failed to respond promptly and adequately to requests for leased access information and for part-time rates for leased access. The record in File CSR 4564-L shows that The Firm submitted a request to Continental dated June 27, 1995, and that Continental submitted a response to The Firm by facsimile on July 11, 1995. The response provided the number of subscribers served by the system, the areas served, and the monthly rates for three categories of service. The response also provided other information regarding availability of part-time and per-program leases, including the information that there were no leased access users on Continental's system. It included a questionnaire to be completed by The Firm. The response expressed a need to determine channel placement upon completion and return of the questionnaire, and indicated that The Firm may be responsible for "reasonable technical costs associated with activating the channel." When the petition was filed, Section 76.970(e) required cable operators to provide a schedule of leased access rates to prospective leased access programmers "[u]pon request." We find that Continental's responses, which were provided within four days of receipt of The Firm's requests, were neither untimely nor so inadequate in this instance as to constitute a violation of Section 76.970(e). This finding, of course, does not affect our conclusion that Continental improperly rejected The Firm's request for leased access capacity. D. Response to Request for Rates - File No. CSR 4571-L 14. In File No. CSR 4571-L, the record shows that The Firm first submitted a request to Continental dated June 12, 1995, and that Continental submitted a response to The Firm by facsimile on June 28, 1995, including a questionnaire to be completed before leased access rates could be discussed. Although The Firm returned the completed questionnaire that same day, June 28, 1995, Continental failed to provide The Firm any leased access rates until September 7, 1995, after the instant petition was filed with the Commission on August 9, 1995. On this record, we find that Continental failed in this instance to respond to The Firm's requests for leased access rates on a reasonably timely basis. As noted above, the Commission has clarified the requirement to specify that part-time rates as well as monthly rates should be provided within 15 days of the receipt of a written request for rates. See Second Order Appendix D, Revised Rules, Section 76.970(h). We will expect Continental to adhere to these requirements with respect to future requests for leased access rates and information. E. Other Forms of Relief 15. The Firm requests relief in the form of compensation for time expended and costs incurred in bringing this action before the Commission. Neither the Communications Act of 1934, as amended, nor the 1992 Cable Act provides for recovery of costs associated with the filing of a petition for relief with the Commission relating to the statutory leased access provisions or the Commission's leased access regulations. Accordingly, petitioner's request for compensation for such costs will be denied. IV. ORDERING CLAUSES 16. For the foregoing reasons, IT IS ORDERED pursuant to 47 C.F.R.  76.975(f) that respondent Continental shall, within twenty days from the release date of this order, provide to The Firm such leased access channel capacity as may be requested consistent with the requirements of 47 U.S.C.  532. 17. IT IS FURTHER ORDERED, that the petition for relief of The Firm (a) IS GRANTED in part insofar as indicated above and (b) IS DENIED insofar as it requests compensation for costs incurred in bringing this matter before the Commission and for other forms relief. 18. IT IS FURTHER ORDERED in File No. CSR 4564-L that the Answer to Response IS STRICKEN and the Motion to Authorize Response to Respondent's Reply filed by The Firm and the Motion to Strike Reply or in the Alternative to Authorize Respondent to Reply filed by Continental ARE DENIED. 19. 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