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                                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               )     CSR-4927-L
                                     )     
vs.                                  )
                                     )
CONTINENTAL CABLEVISION,             )     
Costa Mesa, California               )
            Respondent               )     

MEMORANDUM OPINION AND ORDER
         
        Adopted:  July 21, 1997                    Released:  July 23, 1997  

By the Chief, Cable Services Bureau:

INTRODUCTION
               
  1.    Lorilei Communications, Inc. d/b/a The Firm ("The Firm") filed a petition for relief
pursuant to 76.975 of the rules of the Federal Communications Commission alleging that Continental
Cablevision of Costa Mesa, California ("Continental") is in violation of Sections 76.970 and 76.971 of the
Commission's commercial leased access rules and requesting relief in several forms.  Continental filed a
response requesting that the petition be dismissed and the request for relief 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 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 a multimedia 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 Continental in July 1996 and that Continental
responded by offering a range of rates, on a one-half hour basis, depending upon the type of leased access
service.  Continental's initial response to The Firm also required a $50.00 tape insertion fee and
commitment to a minimum 13 week schedule.  Continental included a draft contract for review and
requested The Firm to complete a Leased Access Application Form.  The Firm states that it did not
contact Continental again until December 10, 1996, at which time it asked for documentation supporting
Continental's $50 tape insertion fee and for an explanation of the 13 week minimum schedule.  The Firm
also asked Continental to strike a clause from its standard contract which required insurance protection
against "willful conduct."  The Firm states that Continental agreed to reduce the minimum leased access
schedule to four weeks and provided an explanation of its tape insertion charge but insisted on an
insurance policy covering negligent and willful conduct by a lessee.  The Firm says it offered to make
Continental a co-insured on its $1 million media perils policy.  It alleges that it is impossible to obtain
the "willful conduct" coverage demanded by Continental because no insurance company would issue a
policy covering willful or intentional acts by an insured.  The Firm also says it told Continental that the
$50 tape insertion fee included administrative costs prohibited by the Commission's leased access rules.

  5.    The Firm alleges that Continental did not provide information about channel set-aside or
availability and did not clarify its policies within seven business days of The Firm's request, as required
by  76.970 as clarified in the Recon. Order.  The Firm also alleges that Continental has included items
other than technical support in its statement of costs, in violation of  76.971(c).  The Firm also contends
that Continental has included administrative fees such as salaries, rent, utilities and legal fees in its tape
insertion charge, a practice The Firm alleges the Commission rejected in a previous ruling on a leased
access petition filed by The Firm.  The Firm objects to Continental's four week minimum as contrary
to the Commission's ruling that cable operators provide leased access in one-half hour intervals.

  6.    The Firm further alleges that cable operators are indemnified by Section 618 of the
Communications Act of 1934, as amended, unless the programming is obscene.  The Firm asserts that it
has assured Continental that it will not air obscene programming, and therefore, there is no reason for
Continental to require liability insurance as a condition of providing leased access.  Moreover, The Firm
objects to Continental's requirement for insurance that covers willful acts and alleges Continental is using
this requirement as a way of avoiding compliance with the Commission's leased access rules.

  7.    The Firm maintains that Continental has maliciously barred its access to this cable system
and that it will suffer financially as a result.  The Firm recommends the Commission fine Continental
$10,000 for each of the offenses alleged plus $10,000 a day for each day The Firm is denied access.  The
Firm asks the Commission to order Continental to cease and desist from charging administrative fees
disguised as technical fees and to issue a declaratory ruling on what reasonable technical charges should
include.  The Firm also seeks declaratory rulings on requirements for liability insurance and minimum
schedules.

  8.    In response, Continental first alleges that The Firm's petition is untimely because it was
not filed within 60 days of the alleged violation, as required by  76.975(d) of the Commission's rules. 
Continental asserts that The Firm initially requested leased access information on July 23, 1996, and it
responded to that request on July 26, 1996.  The Firm did not contact Continental again until December
10, 1996, and did not file its petition until January 23, 1997, which, Continental contends, is more than
60 days after the violations allegedly were committed in July, 1996.

  9.    Continental alleges further that, within seven days of The Firm's request, it provided The
Firm with all the information required by the provisions of  76.970(e) in effect at the time.  Continental
emphasizes that this initial response included the amount of available set aside capacity on its system; to
wit, channel 69 as indicated on the channel line up card which accompanied its July 26, 1996 response
to The Firm.  Continental also asserts that it provided the additional information and clarification requested
by The Firm in July and December, 1996.  Therefore, Continental contends, The Firm's petition should
be dismissed.

  10.   Continental disputes The Firm's contention that its $50.00 charge for tape insertion
violates the Commission's rules concerning technical support and equipment charges.  Nevertheless,
Continental reports that since the time the petition was filed it has revised its technical support fee and
has communicated its revised fee to The Firm.  The revised fee, according to Continental, is limited to
personnel costs required to insert and play-back leased access programming and is consistent with the
Commission's rules.  Continental asserts that it does not provide tape play-back or insertion free of charge
for non-leased access users and charges local programmers $200 per half hour for these services.  With
respect to equipment fees, Continental asserts that the equipment required to transmit The Firm's
programming is used at no charge for transmitting access channels required by its franchise agreement and
is not used for any other non-leased access programming.  Continental argues that, therefore, it may charge
The Firm for use of this equipment and has relied on local video equipment rental fees as the basis for
its proposed charge to The Firm.  For the foregoing reasons, Continental argues that its technical support
charges are consistent with the clarifications in the Commission's Second Order, and The Firm's
allegations should be dismissed.

  11.   With respect to the four week minimum scheduling requirement, Continental states that
it has agreed not to impose this requirement on The Firm.  Nevertheless, Continental argues that this
requirement is consistent with previous Commission leased access cases as well as commercial standards. 
Continental asserts that the Commission has found that a 13-week minimum purchase requirement is not
unreasonable, and that its four-week minimum is necessary for consistency with its billing and media
schedules.

  12.   Continental states also that in a letter sent to The Firm on February 20, 1997, four weeks
after the petition was filed, it agreed to the insurance terms proposed by The Firm in its letter to
Continental dated January 5, 1997.  Specifically, Continental has agreed to The Firm's proposal to include
Continental as a co-insured party on its $1 million media perils liability insurance policy.  Continental
asserts that the Commission's Second Order allows cable operators to impose reasonable insurance
requirements on leased access programmers.  By agreeing to The Firm's proposal with respect to
insurance, Continental has, it argues, imposed terms that are reasonable.

  13.   Finally, Continental argues that The Firm's request that the Commission assess a penalty
against Continental should be denied because the leased access rules have been revised repeatedly and,
therefore, sanctions are not appropriate.  Continental contends that the Commission has not and should
not impose a forfeiture when the rules are in flux.  Continental also states that the Firm has failed to
provide a basis for its request for $10,000 per violation plus $10,000 a day for each day it is denied access
to Continental's system.

DISCUSSION

  14.   We do not agree with Continental's allegation that the petition should be dismissed
because The Firm did not file within 60 days of the alleged violations.  Section 76.975(d) of the
Commission's rules, in effect at the time of the alleged violations and the filing of the petition, requires
that a petition be filed within 60 days of the alleged violation.  The Firm's petition, filed January 23,
1997, alleges violations based on both the initial information Continental provided in July, 1996, as well
as the subsequent information and clarifications Continental provided in December, 1996, which The Firm
received in January, 1997.  If we were to dismiss The Firm's petition, we would be penalizing it for
failing to file within 60 days of its first contact with Continental, which would discourage potential leased
access users from negotiating with cable operators and would encourage premature filing of petitions.

  15.   The principal issues raised by The Firm's petition are whether Continental violated the
Commission's leased access regulations by (1) failing to provide set-aside capacity and availability and
other required information in a timely manner; (2) including impermissible charges in its proposed
technical support fees; (3) requiring a four-week minimum schedule; and (4) requiring insurance coverage
that is effectively impossible for The Firm to obtain.

  16.   Regarding the alleged failure to provide information in a timely manner, we find that the
record does not support The Firm's allegation that Continental failed to provide information as required
by the Commission's leased access rules.  At the time of The Firm's request for information, the
Commission's rules required Continental to respond to a request for leased access information within seven
days by providing a complete schedule of leased access rates, how much set-aside capacity is available,
the rates for studio and technical costs, and, if requested, a sample leased access contract.  Continental
responded to The Firm's initial request for information within three days and provided leased access rates,
technical fees, a sample contract, and channel capacity on its channel line-up card.  We note that the
Commission's Second Order, released some months after Continental's initial response to The Firm,
clarifies and emphasizes that the cable operator is responsible for calculating its system's available leased
access capacity, and that we have given cable operators additional time to do so.  Continental
acknowledges that The Firm had to calculate the approximate amount of leased access capacity from the
line-up card.  However, subsequent to the filing of the petition and the adoption of the Second Order,
Continental provided specific information to The Firm concerning its current leased access set-aside
capacity.

  17.   With respect to the second issue, we conclude, based on the information available in the
record, that Continental should recalculate the technical support fee it proposes to charge The Firm. 
Because Continental charges non-leased access programmers a separate fee for technical support, it may
charge leased access programmers a reasonable fee for technical support but may not impose a separate
charge for the same kind of technical support that it already provides to non-leased access programmers
if that fee is included in the calculation of the maximum leased access rate.  In a letter sent to The Firm
on February 20, 1997, subsequent to the filing of the petition, Continental revised its technical support
rates.  In this letter Continental lists a technical support fee of $57.09 "based on the hourly labor cost of
the personnel most likely to perform the required tasks. (Hourly rate of $15.46, plus $3.57 per hour in
fringe benefits)."  Continental asserts to us that this revised technical support fee "is limited to personnel
costs required to insert and play-back leased access programming."  Continental has not, however,
explained how its calculation of what appears to be an hourly rate of $19.03 (which would be $9.51 per
half hour) becomes the $57.09 charge Continental quotes in its February 20, 1997 letter to The Firm. 

  18.   With respect to the third and fourth issues raised by the petition -- the requirements of a
four-week minimum schedule and insurance coverage -- we note that Continental has communicated to
The Firm its willingness to drop both these requirements.  In light of Continental's abandonment of the
requirements of which The Firm complained, and in the absence of any further complaint about these
requirements from The Firm, we find it unnecessary to rule on these issues.  We note, however, that the
Second Report affirmed the clarification provided in the Recon. Order that cable operators are required
to accept leases in half hour increments.  In a ruling issued prior to the Recon. Order, we noted that a
13 week schedule requirement is not per se unreasonable but cautioned that we would expect persuasive
justification in the future for such a requirement in the face of an objection to the requirement from a
leased access programmer.  In a more recent leased access opinion, which was  issued after the Second
Report, we rejected a cable operator's 13 week minimum and its rationale that the leased access
programming would displace advertiser-supported popular prime time local origination programming. 
We concluded in that case that the 13 week minimum purchase was unwarranted because the Commission
has given cable operators considerable flexibility regarding placement of part-time leased access
programming, which is intended to minimize displacement of non-leased access programming.  We note
here, with regard to Continental's four-week minimum schedule that, in general, the leased access rules
are structured to allow leased access programmers to purchase time in half hour increments without a
minimum required purchase.

  19.   We also note, with respect to the issue of insurance required by Continental, that the
Commission recently modified the insurance requirements in the Second Order. While declining to adopt
specific conditions or limits regarding the amount of coverage or the type of insurance policy that
operators may require, the Commission stated that it would require that insurance requirements be
reasonable in relation to the objective of the requirement and placed on cable operators the burden of
proof in establishing reasonableness.  The Commission further stated that determinations of what is a
"reasonable" insurance requirement will be based on the operator's practices with respect to insurance
requirements imposed on non-leased access programmers, the likelihood that the nature of the leased
access programming will pose a liability risk for the operator, previous instances of litigation arising from
the leased access programming, and any other relevant factors.

  20.   As to The Firm's request that we impose monetary penalties, 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 Continental's systems.  Similarly, we deny The Firm's
request for compensatory damages, which are not provided for in the rules.

ORDERING CLAUSES

  21.   For the foregoing reasons, IT IS ORDERED that the petition for relief of Lorilei
Communications, Inc. d/b/a The Firm in File Number CSR 4927-L IS GRANTED to the extent indicated
in paragraph 17 above, and in all other respects IS DENIED.

  22.   Accordingly, IT IS ORDERED that Continental Cablevision of Costa Mesa, California
shall, within fifteen (15) days from the release date of this Order, provide to Lorilei Communications, Inc.
d/b/a The Firm a statement of charges for technical support revised so as to be consistent with this Order
and in accordance with 47 C.F.R.  76.971.

  23.   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