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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 ) ) LORILEI COMMUNICATIONS, INC. d/b/a) THE FIRM, ) CSR-4699-L Petitioner ) CSR-4700-L ) CSR-4701-L vs. CSR-4702-L) CSR-4703-L) TCA CABLE TV, INC., ) CSR-4704-L Respondent ) CSR-4705-L MEMORANDUM OPINION AND ORDER Adopted: June 10, 1997 Released: June 13, 1997 By the Chief, Cable Services Bureau: INTRODUCTION 1. Lorilei Communications, Inc. d/b/a The Firm ("The Firm") filed petitions for relief pursuant to 76.975 of the rules of the Federal Communications Commission alleging that The Firm has been refused leased access rates in accordance with the Commission's formula and rules by TCA Cable TV, Inc. ("TCA") on TCA's Springdale, Arkansas (CSR-4699-L), Harrison, Arkansas (CSR- 4700-L), El Dorado, Arkansas (CSR-4701-L), Newport, Arkansas (CSR-4702-L), Mountain Home, Arkansas (CSR-4703-L), Magnolia, Arkansas (CSR-4704-L), and Hot Springs Village, Arkansas (CSR-4705-L) cable systems. TCA has responded in each case. 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 Order on Reconsideration of the First Report and Order and Further Notice of Proposed Rulemaking in MM Docket No. 92-266 and CS Docket No. 96-60("Recon. Order"), and again 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 Recon. Order, the Commission set a seven business day response time from the time of a request. In the recently adopted Second Order, the Commission set a 15 calendar 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. The Firm is an advertising agency/video production company doing business throughout the United States. The Firm produces thirty-minute programs to air on commercial leased access channels. The Firm states that it initially requested commercial leased access rates from TCA in January 1996. The Firm states that TCA responded by offering rates of $25 per hour in non-prime time and $50 per hour in prime time on each of its systems, based upon a blanket rate for all of TCA's Arkansas cable systems, and requiring a minimum one-hour purchase. The Firm states that it protested this statewide rate setting to TCA, and requested by letter, phone, and fax that correct rates be sent to The Firm. TCA did not respond. The Firm filed its petitions on April 4, 1996, and states that TCA is in violation of 76.970 of the Commission's rules concerning commercial leased access. The Firm also contends that TCA's minimum purchase requirement of one hour is in conflict with 76.970 of the Commission's rules, because Commission policy mandates minimum half-hour purchases, citing the Recon. Order. Similarly, The Firm contends that TCA has violated 76.970 of the Commission's rules by failing to respond to The Firm's request within seven business days. The Firm maintains that TCA has caused The Firm to suffer the expense of faxes, long distance telephone calls, postage, letter preparation, legal research, and the cost of the instant petition, in addition to $10,000 per month in lost revenues. The Firm asks the Commission to order TCA to provide The Firm with the information it has requested, including leased access rates revised in accordance with the Commission's rules. The Firm also asks the Commission to order TCA to refund to all non-affiliated leased access programmers the difference between TCA's excessive rates and the maximum rates permitted by the Commission's rules since January 1993. Finally, The Firm asks the Commission to impose a penalty on each of TCA's seven Arkansas systems in the amount of $140,000, representing $10,000 per month for fourteen months, to be paid to The Firm in compensation of its lost revenue. 5. In response, TCA states that it provided The Firm with revised leased access rates calculated in accordance with the Commission's rules on April 29, 1996. TCA states that these rates were calculated in accordance with the Commission's Recon. Order, and include a permissible hourly fee for technical and administrative assistance, and a one-time contract fee of $50.00 to cover legal and administrative expenses associated with entering into leased access agreements. TCA also requires a security deposit equivalent to the first month's billings at the time a leased access agreement is executed. TCA argues that therefore The Firm's petition is moot and should be dismissed. 6. In addition, TCA contends that the original leased access rates TCA quoted to The Firm in January 1996, which TCA states were derived through a collective averaging of all of TCA's Arkansas cable systems' fees, plus an additional amount for technical and administrative assistance, were reasonable, legitimately compensatory, and consistent with the general intent of the Commission's rules, and also with Commission policies that recognize the public benefits of uniform rate-setting methodologies. TCA maintains that it is burdensome and inefficient to administer different leased access rates for numerous small systems, and results in additional administrative costs to the systems which are ultimately borne by the programmers. TCA asserts that its original rates were extremely reasonable when compared with the $75 to $5000 charged for 30-second spots on area television broadcast stations. TCA also maintains that some of its original rates were less than the amount TCA is currently permitted to charge. TCA further argues that it was unclear under the Commission's original leased access rules whether cable operators needed to afford part-time carriage, and, if so, in what increments. TCA states that, following adoption of the Recon. Order, TCA began offering leased access in one-half-hour increments. Moreover, TCA states that it has given The Firm the rate information it requested. TCA acknowledges that it has not given The Firm information regarding precise channel locations and times available on each of its systems, but will do so after The Firm completes a questionnaire. 7. With respect to The Firm's requests for sanctions, TCA contends that 76.975(f) of the Commission's rules provides the appropriate avenue of relief in the form of refunds. TCA states that The Firm could have paid the requested rates and challenged them, but chose not to do so. TCA additionally argues that forfeitures are particularly inappropriate where Commission rules are unclear, and are subject to revision. Finally, TCA argues that The Firm's requested order is unnecessary, as TCA has provided The Firm with the information requested. DISCUSSION 8. The principal issue raised by The Firm's petitions is whether the respondent cable operator, TCA, violated the Commission's leased access regulations because of its alleged failure to provide The Firm with rates for leased access service that were in conformance with the Commission's rules. The record shows that The Firm expressed interest in leased access services on TCA's seven Arkansas cable systems, and that TCA proposed rates that TCA now states were derived through a collective statewide averaging methodology. This methodology was not in conformance with the Commission's commercial leased access rules in effect at that time, which were adopted in the Rate Order, and which required a showing particular to a system in question that the system's rates did not exceed the "highest implicit net fee." Twenty-five days after The Firm filed its petitions, TCA provided The Firm with complete schedules of daily and hourly leased access rates. Three days later, TCA informed The Firm that half-hour increments were available at one half of the hourly rates. The Firm does not complain of these rates. 9. At the time The Firm filed its petitions, 76.970(e) required that "[u]pon request, a schedule of commercial leased access rates shall be provided to prospective leased access programmers." The Commission's rules did not specify a specific time period for providing leased access information at the time petitioner made its requests to TCA for information, but the rules did specify the manner in which maximum leased access rates were to be calculated. TCA states that it did not use the Commission's leased access rate methodology set out in the Rate Order, which was in effect at the time the petition was filed, to calculate the rates it offered The Firm. In view of the fact that TCA subsequently provided leased access rates to The Firm pursuant to the Recon. Order, and in view of the fact that the Commission's leased access rules have more recently been amended by the Second Order, we see no reason to evaluate TCA's claims concerning the Commission's original leased access rules. Nevertheless, it remains true that the rate schedule TCA initially provided to The Firm did not conform with existing Commission rules. TCA has not denied receiving The Firm's requests for accurate rates, and it admits that it did not respond to The Firm's requests until after the petitions were filed. On this record, we cannot find that TCA responded to The Firm's requests for leased access rates either on a timely basis or in a manner in conformance with the Commission's rules. 10. We also note that TCA added separate administrative and technical fees, on an hourly basis, to the hourly rates it derived from the highest implicit fee formula in effect at the time. TCA then added a contract fee of $50.00 to cover legal and administrative expenses for each of its seven cable systems. In the Second Order, the Commission clarified that cable operators are allowed to charge an additional fee only for the reasonable cost of providing technical support to a leased access programmer that is not also provided to non-leased access providers on the system. The Commission added that cable operators may not impose a separate charge for the same kind of technical support that they already provide to non-leased access programmers because the maximum leased access rate already includes technical costs common to all programmers. With respect to the additional fee for contract expenses, neither the Communications Act of 1934, as amended, nor the Commission rules makes provision for contract fees since legal and administrative fees are presumably included in the costs common to all programmers and thus included in the average implicit fee calculation. 11. We do not believe that formal administrative sanctions are warranted in this instance because of the unsettled nature of our rules at the time The Firm first requested leased access on TCA's systems. However, we conclude that TCA should provide The Firm with current commercial leased access rates computed under the Second Report's average implicit fee formula. In calculating and providing leased access rates to The Firm and other potential leased access programmers in the future, TCA should not add separate charges for administrative or technical assistance unless it can show that these charges represent costs that are both reasonable and not provided to other non-leased access programmers. In addition, TCA may not add contract fees to its leased access rates and is not permitted to delay providing leased access information to which leased access programmers are entitled, including location and availability of channels, pending the prospective programmer's completion of a questionnaire. Further we expect TCA to adhere to the Commission's current requirements with respect to responding to future requests for leased access rates and information. 12. The Firm complains of the costs it has incurred in filing the instant petitions. Nothing in the Communications Act of 1934, as amended, provides for recovery of costs associated with the filing of a petition for relief with the Commission for alleged violations of the statutory provisions or of the Commission's regulations applicable to leased access channels. Accordingly, The Firm's request for compensation for out-of-pocket expenses of litigation will be denied. Similarly, we shall deny The Firm's request for compensatory damages, which are also not provided for in the statute. Finally, with respect to The Firm's claim for refunds to other leased access programmers, it is up to those programmers themselves to seek any redress to which they may be entitled. ORDERING CLAUSES 13. For the foregoing reasons, IT IS ORDERED that the petitions for relief of Lorilei Communications, Inc. d/b/a The Firm in File Numbers CSR 4699-L, 4700-L, 4701-L, 4702-L, 4703- L, 4704-L, and CSR-4705-L ARE GRANTED to the extent indicated in paragraph 10 above, and in all other respects ARE DENIED. 14. Accordingly, IT IS ORDERED that TCA Cable TV, Inc. shall, within fifteen (15) days from the release date of this Order, provide to Lorilei Communications, Inc. d/b/a The Firm a complete schedule of leased access rates, a sample leased access contract, and availability of leased access set-aside capacity for each of its seven Arkansas cable systems in accordance with 47 C.F.R.  76.970 and 76.971. 15. 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