******************************************************** NOTICE ******************************************************** This document was converted from WordPerfect to ASCII Text format. Content from the original version of the document such as headers, footers, footnotes, endnotes, graphics, and page numbers will not show up in this text version. All text attributes such as bold, italic, underlining, etc. from the original document will not show up in this text version. Features of the original document layout such as columns, tables, line and letter spacing, pagination, and margins will not be preserved in the text version. 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 PRODUCTIONS, ) Petitioner, ) ) vs. ) CSR-4693-L ) CITY OF WYANDOTTE, ) Respondent ) MEMORANDUM OPINION AND ORDER Adopted: May 19, 1997 Released: May 20, 1997 By the Chief, Cable Services Bureau: INTRODUCTION 1. Fal-Comm Communications ("Fal-Comm") filed a petition for relief pursuant to 76.975 of the rules of the Federal Communications Commission alleging that Fal-Comm has been refused leased access rates in accordance with the Commission's formula and rules by the City of Wyandotte, Michigan ("the City") on the City's cable system. The City has failed to respond. 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. SUMMARY OF THE PLEADINGS 4. Fal-Comm complains that the City has failed to afford Fal-Comm leased access on the City's cable system pursuant to rates in accordance with the Commission's formula, in direct violation of 76.970 of the Commission's rules. Fal-Comm states that the program manager of the City's system orally offered Fal-Comm leased access at the rate of $45 for a half-hour. However, Fal-Comm states that the City's system has 54 activated channels and 10,500 subscribers, and should only charge in the range of $10 for a half-hour of leased access. Fal-Comm states that the City has never responded to any of Fal-Comm's written communications, and that the system manager claims that the City is not licensed by the Commission and therefore need not comply with Commission regulations. DISCUSSION 5. Although the City has not responded to Fal-Comm's petition, it is said that the City previously expressed the view that it was under no obligation to follow the rules relating to commercial leased access channels. The subscriber rate regulations provisions of Section 623 of the Communications Act do provide an exemption for systems "owned or operated by a local government or franchising authority." However, no similar provision is contained in Section 612, which contains the commercial leasing requirment. The principal substantive issue presented by Fal- Comm's complaint is whether the leased access rates proposed by the City's system 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. 6. 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 the City 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 have no evidence to show that the City's monthly rate for leased access channel capacity is reasonable. Nor can we determine whether the City properly calculated the part time rate quoted to Fal-Comm. 7. 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, Inc. vs. Comcast Cablevision of West Florida, Inc., 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. 8. Accordingly, the City 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 City 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, and the maximum monthly charge for a full time leased access channel. The City shall also maintain on file adequate records to show that the documentation and calculations used for deriving the maximum monthly charge are in compliance with 76.970 of the rules. ORDERING CLAUSES 9. Accordingly, IT IS ORDERED, that the Complaint of Fal-Comm Communications in File No. CSR-4693-L IS GRANTED. 10. IT IS FURTHER ORDERED that the City of Wyandotte, Michigan 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 76.970 of our current rules, and (b) provide a copy of such schedule of rates to Fal-Comm. 11. IT IS FURTHER ORDERED that the City of Wyandotte, Michigan shall 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 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 76.970 of the rules. 12. 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