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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) Petitioner,) ) vs.)CSR 4832-L ) CABLEVISION OF MONMOUTH, INC.,) Respondent) ) For Leased Access Channels) MEMORANDUM OPINION AND ORDER Adopted: July 10, 1997Released: July 14, 1997 By the Chief, Cable Services Bureau: I.INTRODUCTION 1.Lorilei Communications, Inc., d/b/a The Firm ("the Firm"), has filed a petition for relief alleging that Cablevision of Monmouth, Inc., ("Cablevision") has violated the Commission's commercial leased access rules. Cablevision filed a response requesting that the petition be denied. II.BACKGROUND 2.In 1984, Congress amended the Communications Act of 1934 by 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 video 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 rules for determining maximum reasonable rates for, and reasonable terms and conditions for the use of, commercial leased access channels. Pursuant to that Congressional directive, the Commission established 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 first in Order on Reconsideration of the First Report and Order and Further Notice of Proposed Rule Making, MM Docket 92-266 & CS Docket 96-60, FCC 96-12, released March 29, 1996, 61 Fed. Reg. 16396 (April 15, 1996) ("Recon. Order"), which was in effect at the time of the complaint, and again 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 96-90, FCC 97-27, released February 4, 1997 ("Second Order"). III.PETITIONS 3.The Firm is an advertising agency/video production company doing business throughout the United States producing thirty minute programs to air on commercial leased access channels. In its petition, the Firm asserts that Cablevision has prevented access to its system by intentionally delaying and refusing to provide leased access information, charging exorbitant rates for part-time access, and creating its own restrictive rules for leased access. 4.In particular, the Firm contends that on August 28, 1996, it faxed to Cablevision an initial request for the following commercial leased access system information: (1) part-time leased access rates in the "other" or "general" category; (2) full time leased access rates in the "other" or "general" category; (3) set-aside capacity of the system; (4) channel number(s) where part-time leased access programming appears; (5) the number of "subs" reached on the channel and the programming that generally appears on the channel; (6) "avails" for part-time leased access starting with the month of September; and (7) a sample copy of any contract utilized for leased access programming. The Firm contends that it did not receive a response to its request by September 5, 1996 and on that date faxed another request to Cablevision. The Firm received confirmation from Cablevision of this latter fax on September 9, 1996 by telephone and in a letter dated September 10, 1996. 5. The Firm states that it received the following information from Cablevision on September 16, 1996 after the statutory time period for responses had expired: (1) a complete schedule of Cablevision's leased access rates; (2) a sample agreement; (3) a copy of Cablevision's leased access channel provisions; (4) a leased access channel application; (5) notification that leased access programming is carried on Channel 34 throughout the Cablevision of Monmouth viewing area; and (6) confirmation that the system provides service to approximately 120,000 homes. The Firm states that on September 16, 1996, it faxed a letter to Cablevision stating its belief that the leased access rates were too high and detailed its disagreement with Cablevision's leased access channel provisions. The Firm disagreed with Cablevision's inclusion of infomercials in the same rate category as home shopping and contended that the rates quoted to it were too high. The Firm also disputed Cablevision's provisions placing a 90 day review period on the application and a 20 day review period on the filing of a leased access contract, and providing Cablevision with some editorial control over program content. The letter demanded that Cablevision supply the Firm with corrected rates and programming categories. The Firm states that on September 17, 1996, it faxed a fourth demand letter to Cablevision requesting full time channel rates and system set-aside capacity. Finally, the Firm states that it received a letter from Cablevision, dated September 20, 1996, which provided full time rates for leased access and the channel position of leased access programming and that the full-time rates quoted in the letter are evidence that the part-time rates were improperly calculated. The Firm requests that Cablevision be required to supply the requested information that it has not received (i.e. system set-aside capacity). The Firm further requests compensatory damages in the amount of $700,000 for time expended and costs incurred in bringing this action, as well as lost revenues. 6. In response, Cablevision contends that it did not receive the faxed request for leased access information dated August 28, 1996. Cablevision states that it confirmed receipt of the September 5, 1996 fax by telephone on September 9, 1996, and in a letter dated September 10, 1997. Cablevision contends that in both the telephone conversation and the September 10th letter, it notified the Firm that the September 5, 1996 fax was the first request that it had received. Cablevision states that on September 16, 1996, within the Commission's seven business day rule, it faxed the requested information to the Firm. Cablevision states that following other correspondence from the Firm, Cablevision confirmed, in a telephone conversation on September 17, 1996, the channel placement of leased access programming, the number of subscribers to the system, and explained that the full-time leased access rates could be readily ascertained from the part-time rates by multiplying those rates by the desired number of hours and days. Cablevision also faxed a letter to the Firm on September 20, 1996, detailing its full-time rates, explaining that its rates were calculated in full compliance with the Communications Act of 1934 and the FCC's rules, and noting that inclusion of infomercials in the home-shopping category expressly is authorized by the Commission's rules. Cablevision states that the letter also indicated that it believed that all of its leased access channel provisions were in compliance with FCC regulations with one exception. Cablevision asserts that the letter informed the Firm that it was in the process of revising the provision which placed a 90 day review period on the application of a leased access contract in order to comply with a recent FCC decision. Cablevision contends that its rates, policies and response to the Firm were in compliance with the Commission's rules. IV.DISCUSSION 7.The Firm's petition raises a number of questions including : (1) whether Cablevision violated the Commissions's leased access rules by its failure to provide the Firm with rates for full-time leased access service and other leased access information within the rule's time period; (2) whether the part-time leased access rates quoted by Cablevision exceeded the maximum reasonable rates that could be charged consistent with the Commissions rules at the time; and (3) whether Cablevision's leased access channel provisions and programming classifications are inconsistent with Commission rules and improperly allow for editorial control. A.Requests For Leased Access Information 8.At the time of the filing of petitioner's complaint, Section 76.970(e) of the Commission's rules stated that within seven business days of a prospective leased access programmer's request, a cable system operator must provide the programmer with the following information: (1) a complete schedule of the operator's full-time and part-time leased access rates; (2) how much of the operator's leased access set- aside capacity is available; (3) rates associated with technical and studio costs; and (4) if specifically requested, a sample leased access contract. 9. The Firm contends that Cablevision violated Commission regulations in effect at the time because it had requested information on August 28, 1996, but only received a response on September 16, 1996. In contrast, Cablevision states that it did not receive the August 28, 1996 request, but first learned of the request on September 5, 1996, when the Firm sent a second fax. Cablevision states that its September 16, 1996 response is within the time period provided under the rules at the time. We note that the record indicates that this fax was sent on August 28, 1996. We presume that since it was sent, someone at Cablevision received it. Therefore, we find that Cablevision's response was not provided within the seven business days required under the Commission's rules. However, we note that there is nothing in the record to indicate that Cablevision had any intent to delay or avoid providing leased access information to the Firm and, in fact, provided most of the information requested in response to the second fax. Because Cablevision was responsive shortly thereafter, and in view of the fact that we will now require it to provide revised information, in this instance we will not penalize Cablevision for its violation of the rule for failure to timely respond to the Firm's initial fax. We further note that as requested Cablevision provided leased access rates and a sample contract. However, the Firm also requested the specific set aside capacity of the system. In its correspondence with the Firm, Cablevision indicated only that it has sufficient capacity available to accommodate a full-time channel lease and did not provide specific capacity information. At the time of the filing of the Firm's complaint, Section 76.970(e) of the Commission's rules provided that "[w]ithin seven business days of a prospective leased access programmer's request, a cable operator must provide such programmer with . . . information [regarding] . . . how much of the operator's leased access set aside capacity is available. . . ." Thus, we hold that Cablevision must supply the Firm with specific information regarding the leased access set-aside capacity that is available. B.Leased Access Rates 10. The Firm asserts that Cablevision's leased access rates exceeded the maximum reasonable rates for part-time leased access channel capacity that may be established under 76.970 of the rules. In its initial Rate Order, the Commission adopted a "highest implicit fee" formula as the method of 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 by adopting an "average implicit fee" formula. With respect to the rates for part-time leased access programming, we note that at the time of filing, Section 76.970(e) of the Commission's rules allowed cable operators to charge different rates for different times of day provided that the total rates for a 24-hour period did not exceed the maximum rate for one day of a full-time leased access channel (prorated evenly from the monthly rate derived in accordance with 76.970 (b),(c) and (d)). In the Second Order, we noted that this approach recognizes that different time slots have different values, furthers the statutory goal of promoting a diversity of programming sources, and promotes the full use of leased access channels by making non-prime time slots less expensive than prime-time slots, and therefore more attractive to programmers. 11.With respect to the Firm's claim that Cablevision's part-time rates violated the Commission's regulations, we note that from the record it does not appear that any leased access payments were actually made to Cablevision by the Firm. Consequently, because new regulations governing leased access rates recently have been adopted, we do not believe it would serve any purpose to request additional information from Cablevision in order to determine if its proposed rates properly were calculated under the former "highest implicit fee" regulations. Instead, Cablevision should provide the Firm 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 follow the Commission's rules 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. C.Cablevision's Leased Access Provisions 12. The Firm challenges Cablevision's programming categories asserting that they result in improperly calculated rates. The Firm further challenges certain leased access provisions. The Firm contends that Cablevision's program categories do not comport with Commission required program categories and that Cablevision improperly classified the Firm's programming. At the time of filing, Section 76.970(f) identified three program categories to be used in making leased access fee calculations: (1) programming for which a per-event or per-channel charge is made; (2) programming more than fifty percent of the capacity of which is used to sell products directly to customers; and (3) all other programming. We find that Cablevision's program categories, although labelled differently, paralleled the Commission's program categories and that Cablevision has defined their categories according to the language of 76.970(f), in effect at the time of filing. The Firm has made no showing that Cablevision improperly classified their programming in any category. 13. With respect to Cablevision's leased access channel provisions, we disagree with the Firm that Cablevision tried to exercise improper editorial control over its programming through its provisions. Cablevision did not refuse to air the Firm's programming or request that the Firm change its programming format. Finally, with respect to Cablevision's time restraints place on applications, we note that in Anthony Giannotti v. Cablevision System Corporation, DA 96-1450, (rel. September 6, 1996), the Commission held that a 90 day application period was unreasonable when the leasing involved individual programming rather than a full time channel, and required the cable operator to adopt a more brief application period. In its response, Cablevision stated that it was in the process of reducing its application period from 90 days to 20 days to conform with this Commission decision. Consequently, no further action is warranted. D.Requested Relief 14.The Firm requests relief in the form of compensation for time expended, costs incurred, and lost revenues in bringing this action before the Commission. Specifically, the Firm requests $700,000 in compensatory damages. Nothing in the Commission's rules provides for recovery of costs associated with the filing of a petition for relief relating to the leased access regulations. Accordingly, the Firm's request for compensation for such costs and revenues is denied. V. ORDERING CLAUSES 15.For the foregoing reasons, IT IS ORDERED that Cablevision comply with this Order as noted herein. In particular, Cablevision is required to provide to the Firm information regarding how much of its leased access set-aside capacity is available. Cablevision must also establish a new schedule of rates based upon the average implicit fee formula and adopt an application period for part-time users that is consistent with Commission's decision on the issue. In all other respects, the petition for relief filed by Lorilei Communications, Inc. in File Number CSR 4832-L IS DISMISSED. 16.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