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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 ) Petition for Relief of ) ) FAL-COMM COMMUNICATIONS, ) Petitioner, ) ) vs. ) CSR-4698-L ) COMCAST CORPORATION, ) Respondent ) MEMORANDUM OPINION AND ORDER Adopted: May 13, 1997 Released: May 15, 1997 By the Chief, Cable Services Bureau: INTRODUCTION 1. Fal-Comm Communications ("Fal-Comm") has filed a petition for relief pursuant to 76.975 of the rules of the Federal Communications Commission against several cable television systems owned by Comcast Corporation ("Comcast") in and around Detroit, Michigan, alleging violations of 612 of the Communications Act of 1934, as amended. Neither Comcast nor its subsidiaries has responded. BACKGROUND 2. In 1984, Congress amended the Communications Act by adding, among other things, a commercial leased access requirement contained in 612, 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 the Report and Order and Further Notice of Proposed Rule Making in MM Docket No. 92-266 ("Rate Order"). The Commission revisited these regulations in the Second Report and Order and Second Order on Reconsideration of the First Report and Order in CS Docket No. 96-90 ("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. 4. In addition, 10(a) of the 1992 Cable Act provides that cable service offered pursuant to 612(b): shall not be provided, or shall be provided subject to conditions, if such cable service in the judgment of the franchising authority or the cable operator is obscene, or is in conflict with community standards in that it is lewd, lascivious, filthy, or indecent or is otherwise unprotected by the Constitution of the United States. Further, 10(a) of the 1992 Cable Act, codified as 612(h) of the Communications Act, permits the cable operator to enforce prospectively a written and published policy of prohibiting programming that the cable operator reasonably believes describes or depicts sexual or excretory activities or organs in a patently offensive manner as measured by contemporary community standards. ARGUMENTS OF THE PARTIES 5. Fal-Comm complains that Comcast's various systems have: (1) failed to afford Fal- Comm leased access pursuant to rates in accordance with the Commission's formula; (2) failed to maintain sufficient leased access capacity; (3) failed to transmit over Comcast-T's system a program provided by Fal-Comm, claiming that the program's content included obscenity, nudity, and/or indecency; and (4) violated Fal-Comm's first amendment rights. Fal-Comm submits copies of correspondence it has sent to and received from Comcast's systems concerning these issues. To support its allegation that Comcast-PW failed to offer leased access pursuant to rates in accordance with the Commission's formula, Fal-Comm submitted correspondence with Comcast-PW which states that Comcast-PW offered Fal-Comm leased access at the rate of $200 for a half-hour. However, Fal-Comm states that Comcast-PW's system has 53 activated channels and 30,000 subscribers, and should only charge in the range of $10 to $20 for a half-hour of leased access. Similarly, Fal-Comm's correspondence states that Comcast-D offered leased access at a rate of $125 for a half hour, but that the system has 75 channels and 122,000 subscribers, and should only charge about $35 for a half hour. In addition, Fal-Comm's correspondence states that Comcast East offered leased access at a rate of $130 for a half hour, but that the system has 80 channels and 130,000 subscribers, and should only charge about $35 for a half hour. 6. To support its allegation that Fal-Comm was denied access for programming due to program content which included obscenity, nudity, and/or indecency, Fal-Comm points to its request to place its program, "Fantasy Adventure," over Comcast-T's system. The correspondence with Comcast-T submitted by Fal-Comm states that "Fantasy Adventure" had already been transmitted twice by Comcast-T prior to Comcast-T's refusal, and had been carried for 18 months by other cable systems. Fal-Comm states that Comcast-T has failed to provide Fal-Comm with a copy of a written and published policy concerning programming containing nudity, indecency, or obscenity, but rather relies on the personal determinations of its system manager. Fal-Comm claims that this violates Fal- Comm's first amendment rights. 7. Finally, Fal-Comm submits no record evidence for its allegations that the systems fail to maintain sufficient leased access capacity. 8. The correspondence submitted by Fal-Comm includes a letter dated March 26, 1996 from Alan S. Dannenbaum, Assistant Deputy General Counsel for Comcast, in which Mr. Dannenbaum states that Comcast simply elected its right pursuant to 612(h) not to carry programming containing nudity, indecency, and/or obscenity. Mr. Dannenbaum in addition states that Comcast need not dedicate the maximum number of channels required by statute for leased access "so long as time slots which are reasonably comparable to the time requested are available on the system's existing leased access channel(s)." Finally, Mr. Dannenbaum notes that only a government can violate the first amendment. DISCUSSION 9. The principal issue presented by Fal-Comm's complaint is whether the leased access rates proposed by the various Comcast systems exceed the maximum reasonable rates for part-time leased access channel capacity that may be established, consistent with the requirements of 76.970 of the rules. In its initial Rate Order, the Commission adopted a "highest implicit fee" formula as the method for setting maximum reasonable rates that a cable operator may charge any non-affiliated programmer for leased access. The Commission recently modified this methodology in the Second Order, adopting an "average implicit fee" formula. 10. The record in this matter fails to provide any of the data or other information necessary for making the rate calculations and provided none of the calculations required by 76.970 of the rules. Absent such a showing, we have no basis for a finding that these systems properly applied the methodology of our rules in effect when the petition was filed, or that the required methodology was properly applied to the appropriate data as required by the rules. For those reasons, we are unable to make any determination whether the systems' monthly rate for leased access channel capacity exceeds the maximum reasonable rate requirements of 76.970. Nor can we determine whether the systems properly calculated the part time rates quoted to Fal-Comm. 11. In order to assure that a cable operator's revenues generated from part-time channel charges not exceed the maximum monthly rate, we indicated in TV-24 Sarasota, supra, that cable operators may 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 76.970 of our rules. We also indicated that the part time rate structure should be reasonably reflective of time of day values and not serve merely as a mechanism to retard use. 12. Accordingly, Comcast-PW, Comcast-D, and Comcast East will be required to establish maximum reasonable monthly rates consistent with the current "average implicit fee" requirements of 76.970 applicable to the services provided, and to establish part time rate schedules consistent with the current requirements of 76.970 of the rules and TV-24 Sarasota. We will also require the systems to maintain on file adequate records, consistent with 76.970(h) of our rules, that show the total monthly revenues derived from part time users of leased access channels, the maximum monthly charge for a full time leased access channel, and the documentation and calculations used for deriving the maximum monthly charge are in compliance with 76.970 of the rules. With respect to Fal-Comm's remaining contention, Fal-Comm has submitted no substantiating evidence for its claim that the cable systems in question lack legally mandated leased access capacity. Accordingly, this aspect of Fal-Comm's complaint will be dismissed. 13. With respect to Fal-Comm's claims against Comcast-T, as noted above, the Commission in the First Report and Order in MM Docket No. 92-258 read 612(h) as leaving to cable operators, exercising "their reasonable belief about which programming is or is not indecent," the determination of whether proffered programming should be refused or provided only pursuant to conditions. The Commission also concluded that, "[b]ecause Congress appears to have deliberately omitted any role for the Commission in the implementation of this particular provision . . . the courts, rather than this agency, are the appropriate forums for resolution of any disputes concerning whether cable operators have properly denied access pursuant to section 10(a)." Accordingly, Fal-Comm's complaint with respect to Comcast-T will be dismissed. ORDERING CLAUSES 14. Accordingly, IT IS ORDERED, that the Complaint of Fal-Comm Communications in File No. CSR-4698-L IS GRANTED only to the extent indicated at paragraph 12, supra, and in all other respects IS DISMISSED. 15. IT IS FURTHER ORDERED that Comcast Cablevision of Pontiac-Waterford, Comcast Cablevision of Detroit, and Comcast Cablevision of East Detroit shall each, 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 76.970 of our current rules, and (b) provide a copy of such schedule of rates to Fal-Comm. 16. IT IS FURTHER ORDERED that Comcast Cablevision of Pontiac-Waterford, Comcast Cablevision of Detroit, and Comcast Cablevision of East Detroit shall each maintain on file adequate records, consistent with 76.970(h) of our current rules, which show the total monthly revenues derived from part time users of each leased access channel, together with themaximum monthly charge for a full leased access channel and the documentation and calculations used for deriving the maximum monthly charge in accordance with 76.970 of the rules. 17. This action is taken pursuant to authority delegated by 0.321 of the Commission's rules, 47 C.F.R. 0.321. FEDERAL COMMUNICATIONS COMMISSION Meredith J. Jones Chief, Cable Services Bureau