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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 ) ) LIFE SHARING, INC., ) Petitioner, ) ) vs. ) CSR 4290-L ) TIME WARNER ENTERTAINMENT, L. P. ) d.b.a. CABLEVISION, ) Respondent, ) ) For Leased Access Channels ) MEMORANDUM OPINION AND ORDER Adopted: June 4, 1997 Released: June 6, 1997 By the Chief, Cable Services Bureau: INTRODUCTION 1. Life Sharing, Inc. ("Life Sharing") filed a petition pursuant to Section 76.975 of Federal Communications Commission's rules alleging that Cablevision, Inc. of Kimberly, Wisconsin, is in violation of Sections 76.970 and 76. 971 of the Commission's commercial leased access rules and requesting relief in several forms. Time Warner Entertainment Company, L. P., d.b.a Cablevision ("Time Warner") filed a response requesting that the petition be denied. BACKGROUND 2. In 1984, Congress amended the Communications Act of 1934, 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 initial 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, 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 No. 96-90, FCC 97-27, released February 4, 1997 ("Second Order"), 62 Fed. Reg. 11364, March 12, 1997. THE PLEADINGS 3. The petition states that Life Sharing, a non-profit organization, entered into a commercial leased access agreement with Time Warner in April of 1994, pursuant to which Life Sharing was airing twelve half-hour programs at specific times for a total charge of $499.56 that covered both program time and technical support. The petition further states that, after a meeting between principals of the parties and an exchange of correspondence in April and May of 1994, Time Warner quoted petitioner a leased access rate of $550 per hour for a three month run of a one hour program. The petition alleges that Time Warner violated Section 76.970(b) by charging "a commercial leased access rate in excess of the highest implicit net fee charged any non-affiliated programmer within the same program category." 4. Time Warner, which operates the cable system serving Kimberly, Wisconsin under the name Cablevision, responds that it set the quoted $550 per hour rate for commercial leased access with reference to the highest fee paid for channel time on its system by a non-affiliated programmer, and that the quoted rate "is below that fee and, therefore, is in compliance with the Commission's regulations." Time Warner further asserts that another party has purchased "the right to exhibit programming on [its] system at a rate in excess of $550 per hour" for programming in short blocks similar to the time arrangements requested by Life Sharing. Time Warner argues that the Commission has not established rules for calculating part-time leased access rates. It argues, however, that its own method for calculation of part-time rates "is consistent with the Commission's leased access approach," because the quoted rate is "derived from the highest market value of channel capacity for the system [citation omitted]." Time Warner expresses concern that migration of non-leased access programmers to leased access will occur if it is required to charge leased access programmers a rate below that paid by other programmers. Time Warner argues that such migration will result in adverse effects on the operation, financial condition, and market development of its cable system in contravention of the 1992 Cable Act. Finally, it asserts that the previous availability of a lower rate does not limit the right to seek a higher rate that "is no higher than that permitted by law." DISCUSSIONS 5. The only issue presented is whether the leased access rate proposed by Time Warner exceeds the maximum reasonable part-time rate that may be established for a leased access channel, consistent with the requirements of our rules. In the Rate Order, the Commission rejected marketplace ratemaking for leased access channels and adopted instead a "highest implicit fee" formula for setting maximum reasonable rates that a cable operator may charge any non-affiliated programmer for leased access and developed a methodology for cable operators to follow in determining maximum reasonable rates. Subsequently, in the Second Order released after the filing of Life sharing's petition, the Commission identified problems with the highest implicit fee formula brought out in the comments of interested parties and replaced that formula with an average implicit fee formula. The Commission also clarified its guidelines for establishing rates for part-time leased access service. 6. In basing its leased access rates on "the highest market value of channel capacity for the system," it appears that Time Warner relied upon marketplace ratemaking in establishing its proposed leased access rates rather than the highest implicit fee formula estrablished in the Commission's Rate Order as the appropriate leased access rate methodology. Unnder the leased access regulatory program in effect when life sharing filed its petition, and now currently in effect, leased access users disputing rates have the option of paying the disputed rate and then seeking a refund. The record does not reflect that any leased access payments were made to Time Warner by Life Sharing. Consequently, in view of the fact that new regulations governing leased access rates have been recently adopted, we do not believe that it would serve any purpose to request additional information from Time Warner in order to determine if its proposed rates were properly calculated under the former "highest implicit fee" regulations. Consequently, Time Warner will be required to provide Life Sharing and any other potential leased access user with new rates based upon the average implicit fee formula specified in the Second Order for the calculation of leased access rates and to follow the new guidelines for part-time rates. Moreover, any future inquiries or negotiations regarding leased access rates or other leased access information should be resolved under our new rules. ORDERING CLAUSES 7. Accordingly, IT IS ORDERED, pursuant to 612 of the Communications Act of 1934, as amended (47 U.S.C. 532), that the petition (CSR-4290-L) filed by Life Sharing, Inc. v. Time Warner Entertainment, L. P. d.b.a. Cablevision regarding its cable system in Kimberly, Wisconsin is GRANTED. 8. 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