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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. ) Petitioner) ) vs.)CSR-4979-L ) YORBA LINDA CABLE TV CO., INC.) Respondent) MEMORANDUM OPINION AND ORDER Adopted: July 10, 1997 Released: July 11, 1997 By the Chief, Cable Services Bureau: INTRODUCTION 1.Lorilei Communications, Inc. d/b/a The Firm ("Lorilei") has filed a petition pursuant to  76.970 of the Commission's rules, alleging that Yorba Linda Cable TV Co., Inc. ("Jones") failed to respond satisfactorily to Lorilei's various requests for information concerning leased access on its system serving Yorba Linda and Anaheim Hills, California in violation of the Commission's commercial leased access rules. In response, Jones contends that it provided the requested information to Lorilei, and that this petition should be denied. 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 recently adopted Second Order, the Commission set a 15 day response time from the date of a written request for leased access information. 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. LORILEIS' PLEADING 4.According to Lorilei, it first requested information about Jones' leased access rates in July 1996, when Jones informed it by letter dated July 31, 1996 that the rate was $50.00 per hour, and that the available times were 5:00 pm - 9:00 pm. On December 10, 1996, Lorilei informed Jones that it wanted to transmit 2 1/2 hours of material per month, including 1/2 hour between 5:00 pm and 5:30 pm and the remainder during daytime. Lorilei also inquired about the basis of the $50.00 per hour rate and why only time periods between 5:00 pm and 9:00 pm were available. On December 16, 1996, Jones responded by sending Lorilei a new rate card, which reflected much lower rates, but which also included a "tape insertion cost." Lorilei responded by letter dated December 18, 1996 asking whether or not this was a flat charge, whether it was prorated, and what did it include. Lorilei repeated this request in a letter faxed to Jones on January 2, 1997, and Jones responded on January 3, 1997 with a faxed contract, which included a tape insertion fee of $50.00 per insertion for the 4:00 pm cablecast and $25.00 for the 9:00 am transmission. Lorilei faxed Jones another request on January 3, 1997, for an explanation of the tape insertion charge, together with a question concerning the tape format used by Jones' system. Jones responded by fax on January 9, 1997, explaining that " . . . we should be charged edit time, mileage, and a minimum 3 hour labor charge each time our half hour program was inserted . . . ." On January 10, 1997, Lorilei responded by fax directing that its insertion charge be placed on "hiatus" pending resolution of the insertion charge issue, and stating that it was willing to pay for the actual labor costs of insertion, but since it also was willing to provide any standard format tape, it " . . . felt that editing costs to dub our program would be inappropriate . . . " Thereafter, Lorilei tried twice unsuccessfully to elicit an answer from Jones concerning the insertion charge, and on January 29, 1997, Lorilei submitted an updated insertion order. On February 20, 1997, Jones responded, stating that its usual $150.00 insertion charge was being discounted to $25.00. Lorilei next contacted Jones' corporate attorney on February 21, 1997 for an explanation of the $150.00 charge, and for substantiation that someone had actually been charged this amount. 5.Lorilei claims that Jones initially supplied it with false and erroneous leased access rates in a willful and malicious attempt to circumvent the leased access rule. Lorilei adds that Jones has been less than "straightforward" concerning its actual costs for technical support, considering that, in its contract, Jones stated that Lorilei would be charged $50.00 and $25.00 for technical support but in its letter dated January 9, 1997, Jones said that Lorilei was being charged $40.00 and $25.00. Lorilei asserts that Jones has not demonstrated that a $150.00 insertion charge was ever levied against any party, and Lorilei claims that Jones' technical cost breakout is merely " . . . a boldfaced attempt to mitigate the high charges levied by the system." Lorilei contends that Jones has attempted to blunt the effect of leased access, in violation of  76.970 of the Commission's rules. Lorilei asks that the Commission levy a fine of $10,000.00 on Jones and that Jones be ordered either to provide proof of its $150.00 charge or that it reimburse Lorilei $10,000.00 for Lorilei's attempts to gain access on Jones' system. Lorilei also asks that Jones be ordered to reimburse Lorilei $10,000.00 for production costs, as well as $100,000.00 for lost income during the period Lorilei was not being carried on the system. In addition, Lorilei asks that the Commission order Jones to keep all correspondence concerning leased access in its public file for the next five years. JONES' PLEADING 6.According to Jones, it first received a request for leased access rates from Lorilei in July 1996, and it promptly responded stating that its rate was $50.00 for half an hour, which included tape insertion. Jones received a second request from Lorilei in December 1996, and Jones replied that, consistent with the Commission's highest implicit fee formula, its rate for half an hour was $4.50, at 9:00 am, together with a $25.00 tape insertion charge, and it was $5.50, at 4:00 pm, with a $40.00 tape insertion charge. Lorilei then offered a total payment of $30.00 for six playbacks of its half-hour infomercial. Jones next faxed a memo back to Lorilei with an invoice and a lease agreement for $225.00, including the tape insertion/technical support charge, for six insertions. Lorilei, however, never signed the lease agreement. Instead, it requested more information concerning the tape insertion charge on January 3, 1997. On January 9, 1997, Jones provided the requested explanation. Lorilei responded on January 10, 1997, claiming that making a master tape is unnecessary and disputing various costs comprising Jones' technical charges. On January 29, 1997, Lorilei again offered Jones $30.00 for six transmissions of its infomercials, excluding any technical support payment. Jones responded on February 20, 1997 with another explanation of its technical support charge. Lorilei never signed a lease or responded. 7.Jones notes that its procedure for preparing material such as Lorilei's infomercials is to transfer it to a master tape and then to insert time codes, which accomplishes two things. It assures a seamless, professional-looking transition from one program source to another. It also provides a back-up in the event that anything goes wrong when the tape is played, which is necessary if Jones is to guarantee its performance under its contractual obligations. For a half hour program, the transfer takes about half an hour, plus a half hour playback time. Jones follows this procedure with all local origination programming, and for commercial programming it charges studio time ($150.00) to prepare the master tape, while it only charges an hour of technician's time to leased access programmers. After the master tape is prepared at Jones' studio in Walnut, California, it is then delivered to the unmanned Yorba Linda headend for tone insertion and to be transmitted on Channel 35, Jones' part-time leased access channel. This trip is about 36 miles, one-way, and the round trip takes about 1 1/2 hours, for which Jones charges $0.31 per mile for travel costs, or $11.16 for 36 miles. Moreover, it must be done by a technician qualified to play the tape, who stays while it is running in order to make sure that it is transmitted. The cost of the technician's time varies. Jones charges for three hours. A technician with low seniority is paid $9.00 per hour, which Jones rounds down from $27.00 to $25.00. After 4:00 pm, however, three hours of time (at time and a half) is $40.50, which is rounded off to $40.00. According to Jones, neither the $25.00 charge nor the $40.00 reimburses Jones for its full labor costs or for its other miscellaneous costs. 8.Jones also explains that the $50.00 charge for technical support that it initially cited to Lorilei was in error, and that it was corrected in the letter dated January 9, 1997. Jones adds that it never tried to levy the $150.00 charge on Lorilei, but that entities using Jones' editing services in connection with commercial productions do have to pay it. In addition, Jones notes that, since it is the only local origination programmer, Lorilei's argument that it does not charge local origination programmers for technical support makes no sense. However, Jones adds that it does prepare a master tape for any local event it produces (such as a football game). Jones also notes that any non-leased access commercial clients " . . . pay technical support fees at commercial rates, which are substantially more . . . " than those charged to commercial leased access ("CLA") programmers. Jones adds that "[i]f a non-CLA client sought to place a half-hour infomercial on Channel 35, Jones would follow exactly the same process as it follows with CLA programmers, except it would charge a commercial rate for preparation of the master tape." DISCUSSION 9.At the time that Lorilei filed its complaint, the leased access rules permitted cable operators to charge leased access users for providing the minimal level of technical support necessary to present their material on a cable system. Under this standard, Jones developed a technical service fee based on the average hourly rate for its cable technicians and adjusted this hourly cost figure by a factor of 50% to take account overtime hours. Jones charges for three hours of technician's time, to which it adds $0.31 per mile for travel costs. We believe this approach to be reasonable, particularly since Jones' stated policy is to charge $150.00 for studio time to commercial programmers, and only one hour of technician's time, at a base hourly rate of $9.00, to leased access programmers. We also note that in its 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 programmers 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 represents what non-leased access programmers implicitly pay for carriage, including technical costs common to all programmers. 10.Lorilei also has failed to demonstrate a pattern of abuse or any other justification for requiring Jones to keep all correspondence regarding leased access in a public file for the next five years, and we shall deny its request for such an order. 11.In addition, we do not believe that Lorilei has demonstrated actual damages, or that it is entitled to compensation for production costs or for the costs of its attempts to gain access on Jones' system. Neither the Communications Act of 1934, as amended, nor the 1992 Act, provide for such damages or for such costs. Accordingly, Lorilei's request for these damages and costs will be denied, as will its request for lost profits. Jones is correct that the Commission provided in its Rate Order that programmers are free to seek refunds later if, unlike Lorilei, they are willing at the time to accept carriage by an operator " . . . under the rates, terms and conditions set by the operator . . . ." ORDERING CLAUSES 12.Accordingly, IT IS ORDERED that the petition (CSR 4979-L) filed March 21, 1997, by Lorilei Communications, Inc., IS DENIED. 13.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