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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 ) ) INTERVISION PRODUCTIONS, INC., ) and RIDGE CREST PRODUCTIONS, INC., ) Petitioners, ) ) vs. ) CSR 4574-L ) TCI CABLEVISION OF PASCO ) COUNTY FLORIDA, ) Respondent, ) ) For Leased Access Channels ) MEMORANDUM OPINION AND ORDER Adopted: August 25, 1997 Released: August 28, 1997 By the Chief, Cable Services Bureau: INTRODUCTION 1. On August 14, 1995, Inter-Vision Productions, Inc. and its affiliate, Ridge Crest Productions, Inc., (herein "Ridge Crest"), filed a petition for relief pursuant to 47 C.F.R.  76.975 against TCI Cablevision of Pasco County, Florida (herein "TCI Pasco"). The petition alleges violations by TCI Pasco of the Sections 76.971(a)(1) and 76.971(c) of the Commission's commercial leased access rules and requests that the Commission make inquiries into TCI Pasco's policies and grant the necessary relief. 2. TCI Pasco filed a response on September 13, 1995, asserting that it has complied with the Commission's leased access rules, that it is not obligated to provide leased access to Ridge Crest, that the petition is untimely filed, that it has negotiated with Ridge Crest in good faith for channel placement, and that it has provided more than an adequate level of technical support. TCI Pasco requests that the petition be denied. BACKGROUND 3. 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 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 Report"). 4. 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 Report, the Commission set a 15 day response time from the date of a written request to provide 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 60 days of an alleged violation of a leased access statutory or regulatory provision and for the filing of a response. THE PLEADINGS 5. Ridge Crest complains that TCI Pasco placed its half hour program on Channel 64, "which is currently comprised of 24 hours of snow," that this channel placement "is the equivalent of being banished to Siberia." Ridge Crest argues that such a channel is not a genuine outlet for its programming, within the meaning of Section 76.971(a)(1). Ridge Crest further states TCI Pasco required it to furnish its own tape deck to run its programs because TCI Pasco refused to provide a tape deck. Ridge Crest also asserts that TCI Pasco required it to purchase indemnification insurance with a $1,000,000 in liability coverage. Ridge Crest argues that TCI Pasco, by insisting on these requirements, failed to provide a minimal level of technical support, within the meaning of Section 76.971(c). 6. TCI Pasco requests that the petition be dismissed on the grounds that it was not filed within 60 days of any alleged violation of the leased access regulation, as required by Section 76.975(d) of the rule. TCI Pasco asserts that Ridge Crest's petition complains about terms and conditions set forth in the Channel Lease Agreement, which was signed by Ridge Crest on March 21, 1995 more than sixty days before the petition was filed on August 14, 1995. TCI Pasco argues further that the petition also was filed more than 60 days after Ridge Crest last complained about the furnishing of the tape deck in May 1995 and that the petition is untimely filed in all respects. TCI Pasco also contends that it is not obligated to provide leased access to Ridge Crest, because Ridge Crest's programming consists largely of advertising content, arguing that a federal court in Sofer v. United States held that Section 612 of the Communications Act has no application to commercial advertising. 7. Addressing the merits, TCI Pasco states that it entered into a Channel Leased Agreement with Ridge Crest on March 21, 1995, pursuant to which Ridge Crest obtained leased access on Channel 64 for certain half hour periods daily on Monday through Sunday. TCI Pasco states that Ridge Crest asked to be placed on a non-leased access channel, which would have required pre-emption of an existing programming. TCI Pasco asserts Ridge Crest was offered and accepted Channel 64 in the Channel Lease Agreement. TCI Pasco states further that it provided Ridge Crest with a list of required equipment, including a tape deck, and informed Ridge Crest that all of its tape decks were currently in use, that Ridge Crest commenced service utilizing a regular consumer type VCR playback deck, and presented its programming from May 1, 1995 through June 20, 1995, except for a brief interval during which Ridge Crest added an automatic playback capability to the VCR. TCI Pasco says Ridge Crest stopped presenting its programming on the leased access channel without explanation on June 20, 1995. DISCUSSION A. Timeliness of the Petition for Relief 8. We find that the Ridge Crest petition for relief was not filed on an untimely basis. Our leased access dispute resolution rules require that a petition for relief be filed within 60 days from the alleged violation. The essence of the petition is that TCI Pasco violated Section 76.971(a)(1) of the rules by placing Ridge Crest programming on Channel 64, and violated Section 76.971(c) by not providing a tape deck and by requiring indemnity insurance. These terms and conditions of carriage were embodied by the Channel Lease Agreement entered into between Ridge Crest and TCI Pasco on March 21, 1995, and governed the carriage of Ridge Crest's programming until Ridge Crest terminated that agreement and ceased presenting its programming on TCI Pasco's system on June 20, 1995. The petition alleging that these terms and conditions of carriage violate the Commission's leased access rules was filed on August 14, 1995, which is less than 60 days from the time the terms and conditions of the Agreement ceased applying to Ridge Crest's service on June 20, 1995. Accordingly, we conclude that the petition was filed within the time required by Section 76.975(d) and may not be dismissed as untimely filed. However, Section 76.975(d) of the rules requires a petition for relief to be filed within 60 days of violations of the leased access provisions. Therefore, we will limit relief to a period starting 60 days prior to the filing by Ridge Crest of the petition. B. Channel Placement 9. Addressing the merits of the other issues, first we conclude that TCI Pasco did not violate Section 76.971(a)(1) of the rules as written when the petition was filed. TCI Pasco defends placement of Ridge Crest's programming on Channel 64, which was designated as a leased access channel and stated that there existed no demand for other leased access programming that might accompany Ridge Crest's programming on that channel. The Leased Access Agreement which Ridge Crest entered into on March 21, 1995 also provided that Ridge Crest's programming would be carried on Channel 64. In these circumstances, we cannot conclude that TCI Pasco failed to provide Ridge Crest with a genuine outlet for its programming. Nothing in Section 612 of the Communications Act or in our leased access regulations requires a cable operator to include other programming with leased access programming on a designated leased access channel as Ridge Crest suggests. We note in this connection that the Commission, in the Second Report, determined that once a cable operator provides a leased access programmer with a genuine outlet for its programming, we need not interfere with that operator's ability to structure its channel line-up. The cable operator may place the leased access programming on any reasonable channel location as long as the tier on which it is placed has a subscribership of more than 50%. C. Provision of Technical Support 10. We find that TCI apparently violated Section 76.971(c) of the Commission's by not providing a tape deck for the presentation of Ridge Crest's leased access programming. TCI is apparently providing the use of tape decks to other parties. Section 76.971(c) of the Commission's rules in effect when the petition was filed required cable operators to provide unaffiliated leased access users, such as Ridge Crest, the minimum level of technical support necessary for users to present their programming. In the Second Report the Commission clarified these requirements. Under this clarification of the requirements of Section 76.971, a cable operator may not impose an additional charge for technical support ordinarily provided in common to other programmers. If an operator must purchase equipment not typically used by non-leased access programmers to accommodate a leased access programmer, the operator may either (1) purchase the equipment for itself and lease it to the programmer at a reasonable rate or (2) purchase the equipment and require the programmer to re-purchase the equipment at full price and take ownership of it. In the future, we expect TCI Pasco to comply with these requirements. TCI Pasco may impose charges in addition to the charges determined under Section 76.970 for the reasonable cost of other equipment and technical support actually provided to Ridge Crest only if that equipment and technical support is not also provided with other non-leased access programming, as provided by 47 C.F.R.  76.971(c). D. Requirement for Insurance Coverage 11. We find that TCI Pasco did not violate Section 76.971(c) by requiring Ridge Crest to obtain liability insurance coverage. We note that cable operators have been given protection from leased access program liability as provided by Section 638 of the Communications Act. Section 638 provides program liability protection "unless the program involves obscene material." We are not aware, however, of any statutory provision that completely protects cable operators from all possible program carriage liability, or from the filing of un-meritorious actions against cable operators despite the provisions of Section 638. Moreover, the Commission does not deny cable operators the right to request indemnification from leased access programmers for the costs and expenses attributable to defending a prosecution for carriage of an allegedly obscene program, stating, "this is a reasonable term or condition relating to use of leased access channel capacity in light of the removal by Congress in amended [S]ection 638 of cable operator immunity for carriage of obscene programming." In Anthony Giannotti v. Cablevision Systems Corporation, an operator's right to require reasonable liability insurance coverage for leased access programming was confirmed. In that case, we noted that the programmer had not shown that the cost of the required insurance coverage is either prohibitive or imposes an unreasonable cost of doing business as an independent program producer. 12. However, the Commission recently modified the insurance requirements in the Second Order. In connection with the Second Order, some commenting parties contended that the cost of general liability and errors and omissions insurance represents a significant barrier to small independent producers. One party requested that the Commission set a limit on the required amount of general liability insurance. However, the Commission declined to adopt specific conditions or limits regarding the amount of coverage or the type of insurance policy that operators may require on the ground that "a specific restriction might not be appropriate for all situations." Instead, 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. 13. In its petition, Ridge Crest merely asserted that a cable operator may not require indemnification from a leased access user. This issue has been settled in Giannotti. In this decision, the Commission concluded that cable operators could require reasonable indemnification provisions from leased access users. Consequently based on the Commission's holding at the time the application was filed, which is set out in the Giannotti decision, we cannot find that TCI Pasco violated the leased access rules by requesting an indemnification policy. However, as noted above, the Commission revisited this requirement in the Second Order and imposed on the cable operator the burden under the leased access rules to show that an indemnification requirement is reasonable. Consequently, should TCI Pasco require an indemnification policy from a potential leased access user in the future, it must show its reasonableness consistent with the provision's of the Second Order. E. Eligibility for Commercial Leased Access Channels 14. Finally, we reject TCI Pasco's argument that it has no obligation under Section 612 of the 1992 Cable Act and the Commission's implementing regulations to make a leased access channel available for the presentation of programming that includes commercial advertising. Section 612(a) states that the purpose of the commercial leased access requirement is to promote competition "in the delivery of diverse sources of video programming and to assure that the widest possible diversity of information sources are made available to the public from cable systems in a manner consistent with the growth and development of cable systems." Section 612(b) implements this goal by mandating that cable operators "designate channel capacity for commercial use by persons unaffiliated with the operator." Cable operators are required to designate stated percentages of activated channels for commercial leased access use. The Commission's dispute resolution rules provide that any person aggrieved by the failure or refusal of a cable operator to make commercial channel capacity available in accordance with the provisions of Section 612 or the Commission's implementing regulations may file a petition for relief with the Commission. 15. We reject the argument that Sofer vs. United States supports the proposition that Ridge Crest's programming does not qualify for leased access channels. Sofer involved a claim that a cable operator refused to sell commercial advertising time on a cable system and other unspecified allegations of violations of Section 612 and related regulations. The court in Sofer found that Section 612 and related Commission regulations have no application to commercial advertising. However, the case before us here does not involve the purchase of commercial advertising as was the case in Sofer. Instead, this case involves a request by a video production company for a leased access channel, designated for that use pursuant to Section 612, for the presentation of program productions. Nothing in Sofer or in Section 612 suggests that the inclusion of commercial advertising content in video program productions disqualifies an independent video program producer, such as Ridge Crest, from use of leased access channels for the presentation of such program productions. Indeed, cable operators are precluded from considering the content of leased access programming, except to the extent necessary to establish a reasonable price for such programming. Accordingly, we direct TCI Pasco to provide such leased access channel capacity as may be requested by Ridge Crest consistent with the requirements of Section 612. ORDERING CLAUSES 16. For the foregoing reasons, IT IS ORDERED that the petition for relief of Ridge Crest (a) IS GRANTED in part insofar as indicated in Paragraph 10 and Paragraphs 12 through 15 and (b) in all other respects IS DENIED. 17. 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