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Generally, we will consider an entity to be an open video system operator's "affiliate" if the open video  {O- x,system operator holds 5% or more of the entity's stock, whether voting or nonvoting. Implementation of Section  {O- x302 of the Telecommunications Act of 1996, Open Video Systems, CS Docket No. 9646, Third Report and Order  {O- xZand Second Order on Reconsideration, 11 FCC Rcd 20227, 20235 (1996) ("Third Report and Order"); 47 C.F.R. 1500(g).s (b) a representation that the applicant will comply  S - xwith the Commission's regulations under Section 653(b);  vhm yO- xԍUnder this section the applicant agrees to comply with the Commission's requirements regarding non xdiscriminatory carriage; just and reasonable rates, terms, and conditions; a onethird capacity limit on the amount  xof activated channel capacity on which an open video system operator may select programming when demand for  xcarriage exceeds system capacity; channel sharing; sports exclusivity, network nonduplication, and syndicated  {O!-exclusivity; and nondiscriminatory treatment in presenting information to subscribers. See 47 C.F.R.  1502(a). (c) a list of the names of the communities the  xapplicant anticipates it will serve; (d) a statement of the anticipated type and amount of capacity that the  xjsystem will provide; and (e) a representation as to whether the applicant is a cable operator applying for certification within its cable franchise area. "( ,`(`(88"Ԍ S- 8II.xBACKGROUND  S- ` x4.` ` In its first application, in response to Part C, Question No. 1, on the Form 1275, which  xasks whether the applicant is a cable operator applying for certification within its cable franchise area,  x8Wedgewood responded that the question was not applicable by marking the box labelled "N/A." Chicago  xand 21st Century opposed Wedgewood's certification on the grounds that Wedgewood is a cable operator  x[and therefore misrepresented its status as such when it checked "N/A" on Part C, Question No. 1, of the  S- xLForm 1275.\hm {OP-  ԍSee Wedgewood I at paras. 5, 8. Chicago also raised a question regarding the validity of Wedgewood's   verification of its Form 1275. Chicago asserted that the official who verified the form as "President" of Wedgewood  {O -may not, in fact, be Wedgewood's president. Id. at para. 6. The commenters described an ongoing dispute between Chicago and Wedgewood in which  xthe City has maintained that Wedgewood is a cable operator and therefore must obtain a cable franchise  S-under federal and local law, which Wedgewood has failed to do.hm {O$ - xhԍId. at paras. 89. The commenters cited Section 621(b)(1) of the Communications Act, which states that cable operators may not provide service without a franchise. 47 U.S.C.  541(b)(1).  SH - ` 2x5.` ` In Wedgewood I, the Bureau denied Wedgewood's certification application on the grounds  xthat, by simply marking the box labelled "N/A" without providing any explanation of the controversy  xsurrounding its regulatory status, Wedgewood failed to disclose material information concerning its  S - xqualifications to operate an open video system.> Fhm {O-ԍId. at para. 10.> We held that this omission was a breach of  S -Wedgewood's duty of candor1 hm {O"-ԍId.1 and stated that Wedgewood could refile its certification.> j hm {O-ԍId. at para. 13.>  SZ- III.xWEDGEWOOD'S REVISED APPLICATION  S - ` x6.` ` Wedgewood's revised certification appears identical to its previous certification in most  xrespects. The revised certification reflects the following modifications to the earlier filing: (i) Wedgewood  S- xattaches explanatory material to its "N/A" response to Part C, Question 1, of the Form 1275, hm {OV- xxԍSee Application, Exhibit 2 ("Eligibility and Compliance Information") and "Explanation of Issues Raised by the Commission's November 7, 1997 Order" ("Explanation of Issues"). which asks  xwhether the applicant is a cable operator applying for certification within its cable franchise area; and (ii)  xthe company official who verified the Form 1275 is identified as the "Chairman of the Board" of  xWedgewood rather than the "President." In its explanatory materials, discussed below, Wedgewood  xprovides factual information about its operations and responds to the arguments raised by Chicago and  x21st Century in their oppositions to Wedgewood's previous certification. Wedgewood denies that its  xprevious certification evidenced any lack of candor, states that its revised application is properly verified, and asserts that its application is procompetitive.  SR- ` x7.` ` Wedgewood states that it provides video programming service to over 9000 subscribers  xkin multiple dwelling units ("MDUs") through a headend it has constructed in the Presidential Towers"*V ,`(`(88"  S- xcomplex.Chm yOh-ԍExplanation of Issues at 4.C Wedgewood asserts that it does not construct facilities in the public rights of way but instead  S- xuses the facilities of Ameritech , a local exchange carrier ("LEC") that provides tariffed video transport  S- xservice to Wedgewood under its Supertrunking Video Service, Tariff FCC No. 2.1Xhm {O-ԍId.1 Wedgewood adds that  xzit pays Chicago a technologyneutral entertainment tax in the same amount that Chicago collects from  xfranchised cable operators through both the entertainment tax and franchise fees (7% of gross revenues,  S8-5% of which is treated as franchise fees for franchised cable operators).78hm {O -ԍId. at 8.7  S- ` x8.` ` Wedgewood contends that it is a private cable operator that is exempt from cable  S- xfranchising requirements because it does not own facilities located in the public rightsofway.7|hm {O -ԍId. at 9.7  xWedgewood recounts the history of its dealings with Chicago regarding the City's franchise ordinance,  Sp- xstating that it contacted the City to inquire whether the City would require it to obtain a cable franchise.7phm {O-ԍId. at 5.7  xIn response to its inquiry, the City informed Wedgewood on December 5, 1995, that it would not need  S - xjto obtain a franchise. hm {O`-ԍId. at 5. Wedgewood attaches a copy of the City's letter to its Explanation of Issues. See Id., Exhibit 3. On April 23, 1997, however, the City sent Wedgewood a letter where it reversed  S - x=its position and directed Wedgewood to obtain a franchise.C 2 hm {O-ԍId., Exhibit 4.C Wedgewood states that it offered to apply  xfor a franchise if the City would allow Wedgewood to continue to market its services and add subscribers  S - xpending issuance of the franchise.~ hm {O -ԍId., Exhibit 6 (letter dated October 22, 1997, from Wedgewood to Chicago).~ According to Wedgewood, the City rejected the offer and on October  x3, 1997, ordered Wedgewood to cease and desist executing contracts to serve buildings Wedgewood was  SX-not already serving.=XV hm {ON-ԍId., Exhibit 5.=  S- ` ~x9.` ` Wedgewood asserts that the Commission's decision in Metropolitan Fiber Systems/New  S- xlYork, Inc., and Metropolitan Fiber Systems/McCourt, Inc. ("MFS")Phm yOj!-ԍ11 FCC Rcd 20896 (Cab. Serv. Bur. 1996).P presented the same issues as  S- xWedgewood's certifications and therefore is controlling in this proceeding.%Zxhm {O#- x-ԍExplanation of Issues at 89. In MFS, opposing commenters argued that the applicant was not qualified to  xbecome an open video system operator because, among other things, it was providing service illegally as an  xunfranchised cable operator. The Commission granted certification, holding that the applicant's regulatory status  xhcould not be resolved in the certification proceeding and that the Commission was required to rely on the applicant's  {O&- x>verified statements regarding its qualifications. MFS, 11 FCC Rcd at 20902. In a subsequent proceeding,"&,`(`(+'"  {O- x;Metropolitan Fiber Systems/New York, Inc., and Metropolitan Fiber Systems/McCourt, Inc., 12 FCC Rcd 3536 (Cab.  xYServ. Bur. 1997), we rejected MFS's claim that, as an authorized video dialtone operator, it was entitled to transition to an open video system.% Wedgewood cites MFS in",`(`(88 "  S- xysupport of its claim that its regulatory status should not be determined in this proceeding.Ihm yO-ԍExplanation of Issues at 9.I Wedgewood  xasserts that the term "cable operator," as it is used on Form 1275 and in the Commission's rules to  S- xyestablish open video system qualifications, refers to franchised cable operators.8 zhm {O-ԍId. at 10.8 Wedgewood concludes  xthat because it has not obtained a cable franchise, it is not a franchised cable operator, and its certification  S`-therefore is proper.1!` hm {O -ԍId.1  S- ` x 10.` ` Wedgewood claims that even if it is deemed to be a cable operator, it is subject to  S- xNeffective competition and therefore is qualified to operate an open video system.;"hm {O&-ԍId. at 1113.; Wedgewood's  x/argument is premised on its use of Ameritech's facilities to provide video programming service in the  xfranchise areas of the incumbent cable operators serving Chicago. According to Wedgewood, its use of  Sp- xAmeritech's facilities satisfies the "LEC effective competition test."d#p0 hm {O@-ԍId. Under this test, a cable operator is subject to effective competition where:   XX` ` a local exchange carrier or its affiliate (or any multichannel video programming   Vdistributor using the facilities of such carrier or its affiliate) offers video   programming services directly to subscribers by any means (other than directto  home satellite services) in the franchise area of an unaffiliated cable operator   Fwhich is providing cable service in that franchise area, but only if the video   programming services so offered in that area are comparable to the video programming services provided by the unaffiliated cable operator in that area.x` 47 U.S.C.  543(l)(1)(D).d Wedgewood asserts that its  x programming services are comparable to the services provided by the incumbent cable operators and  S -claims that the MDU market, in particular, is "extremely competitive."$  hm yOR- xJԍExplanation of Issues at 12. Wedgewood states that TCI, Prime Cable, wireless cable operator People's Choice  xTV, Inc., and other private cable operators and satellite providers all serve or compete to serve the MDU market,  xthat 21st Century intends to serve it, and that Ameritech New Media is applying for a franchise to serve one or more franchise areas in Chicago.  S - ` x 11.` ` Wedgewood denies that it has violated Section 76.1502(a) of the Commission's rules,  x{which requires open video system applicants to seek certification prior to constructing facilities if  S - xconstruction is necessary and prior to initiating service where no construction is necessary.B% zhm yO&-ԍ47 C.F.R.  76.1502(a).B Wedgewood  xasserts that it has not constructed open video system facilities or provided open video system service"X %,`(`(88Z"  S- xbecause the Commission has not yet granted its certification to operate an open video system.D&hm yOh-ԍExplanation of Issues at 14.D  S-Wedgewood claims that it is currently operating as a "franchise exempt private cable operator."1'Xhm {O-ԍId.1  S- IV.xCOMMENTS  S8- ` x 12.` ` Chicago maintains that Wedgewood's revised application is still deficient because  x\Wedgewood is a cable operator and cannot properly represent otherwise on its Form 1275. As in its  xearlier comments, Chicago asserts that because Wedgewood uses the facilities of Ameritech to transport  x.video signals along portions of the transmission path from Wedgewood's headend to its subscribers, and  xbecause Ameritech's facilities are located in the public rightsofway, Wedgewood itself is using the public  Sp- x]rightsofway.>(phm yO -ԍChicago Comments at 7.> Chicago concludes that Wedgewood's facilities, in combination with Ameritech's  SH - xfacilities, create a closed transmission path that uses the public rightsofway.;)H zhm {Ob-ԍId. at 1011.; Wedgewood operates a  xP"cable system," Chicago argues, and is a "cable operator," as those terms are defined in the  S - xCommunications Act.* hm {O-ԍId. (citing 47 U.S.C.  522(5), 522(7) (definitions of "cable operator" and "cable system," respectively)). Chicago adds that Wedgewood's Explanation of Issues suggests that Wedgewood  S - xzin fact does own facilities in the public rightsofway. +" hm yO-  ԍChicago Comments at 1213. Chicago points to Wedgewood's statement that it uses Ameritech's facilities "to   deliver a signal from its headend to all of the MDU's it serves (other than Presidential Towers)" and concludes that   this statement could mean that Wedgewood owns facilities that extend from the Presidential Towers complex through  {Of-the public rights of way. Id. (quoting Explanation of Issues at 4).  Chicago states that Wedgewood continues to  xbreach its duty of candor because it has not explained whether it in fact does own facilities that are located  S -in the public rights of way.1, hm {O-ԍId.1  S0- ` x 13.` ` Rejecting Wedgewood's claim that it is subject to effective competition, Chicago asserts  xthat Wedgewood has not satisfied, and in some cases has not even addressed, all of the elements  xestablished by the Commission under the LEC effective competition test. Specifically, Chicago argues  S- xthat (i) Wedgewood has not shown that it can physically provide service throughout Chicago;;-hm {Or!-ԍId. at 1819.; (ii)  S- xWedgewood's failure to obtain a franchise is a regulatory impediment to its ability to provide service;;.hm {O#-ԍId. at 1920.;  x.(iii) Wedgewood has not provided marketing materials or other evidence to demonstrate that subscribers  S@- xare reasonably aware that they may purchase Wedgewood's services;8/@>hm {O'-ԍId. at 21.8 and (iv) Wedgewood has not"@/,`(`(88"  xdemonstrated that its programming is comparable to programming provided by the incumbent cable  S-operators.;0hm {O@-ԍId. at 2122.;  S- ` x 14.` ` Chicago also contends that Wedgewood may not be able to provide the 240 analog  xchannels it claims on its certification it will provide. Chicago alleges that existing wiring in some of the  x=buildings Wedgewood serves or intends to serve will not support 240 channels of service and states that  xWedgewood's contracts with some or all of these buildings may not permit Wedgewood to replace the  S-existing wiring and upgrade its facilities as needed.:1Zhm {O -ԍId. at 910.:  S- ` x15.` ` Chicago reiterates the argument that Wedgewood is in violation of Section 76.1502(a) of  x]the Commission's rules, arguing that Wedgewood's position on this issue, if followed to its logical  x/conclusion, would render the Commission's requirements meaningless because all open video system  x=applicants could claim that existing facilities and services are not open video system facilities or services  S - xuntil the Commission grants certification.82 hm {O-ԍId. at 31.8 In addition, as in its previous comments, Chicago asserts that  xthe Commission's fiveday comment period for open video system certifications denies interested parties  xa meaningful opportunity to comment on applications and therefore violates the constitutional right to due  S -process.;3 ~hm {O-ԍId. at 3235.;  S0- ` x16.` ` Chicago states that the Commission should deny Wedgewood's certification because it is  xfactually deficient and evidences a continuing lack of candor. As in its earlier comments, Chicago claims  S- xthat the Commission's anticipated ruling in Motion of Entertainment Connections, Inc. for Declaratory  S- xzRuling, DA 97353 ("ECI"), will likely be dispositive as to Wedgewood's status as a cable operator.4hm {Oj-  ;ԍECI is a proceeding pending before the Commission in which the regulatory status of companies offering video   programming service is at issue. The local franchising authorities and cable franchisees for the communities in which   hthe companies operate argue that they are unfranchised cable operators. The companies themselves argue that they   are satellite master antenna television ("SMATV") service providers exempt from the cable franchise requirement. Wedgewood filed comments and reply comments in support of ECI's motion.  xChicago maintains that the Commission should not grant certification to Wedgewood until it issues an  Sl- x{order in the ECI proceeding. In addition, Chicago urges us to further defer ruling on Wedgewood's  xkqualifications to operate an open video system until we issue a further order in the Cable Act Reform  S-proceeding,5 hm {O"-  ԍImplementation of Cable Act Reform Provisions of the Telecommunications Act of 1996, CS Docket No. 9685, 11 FCC Rcd 5937 (1996). which will address outstanding issues regarding the LECeffective competition test.B6hm yO$-ԍChicago Comments at 2224.B  S- ` &x17.` ` 21st Century, like Chicago, argues that Wedgewood is a cable operator because  xWedgewood's wire and Ameritech's fiber create a closed transmission path leading directly to subscribers,"6,`(`(88"  S- x-thus meeting the statutory definition of a cable system.C7hm yOh-ԍ21st Century Comments at 3.C 21st Century asserts that Wedgewood's unlawful  xoperation of its system without a franchise raises the question of whether the Commission can rely on the  S- xLstatements in Wedgewood's application.g8ZXhm yO- xԍ21st Century Comments at 2. 21st Century also reiterates its argument that Wedgewood is in violation of  xhSection 76.1502(a) of our rules because it constructed facilities and commenced service before it applied for an open  {O8-video system certification. Id. at 4.g In further support of its argument that Wedgewood is a cable  xoperator, 21st Century alleges that Wedgewood's system at the Presidential Towers complex crosses a city  xystreet and that Ameritech must undertake special construction within the public rights of way in order to  S8- xreach the buildings served by Wedgewood.998zhm {OR -ԍId. at 34.9 21st Century agrees with Chicago in urging the Commission  S-to defer ruling on Wedgewood's certification until we issue an order in the ECI proceeding.7: hm {O -ԍId. at 4.7  S- ` x18.` ` 21st Century also questions Wedgewood's ability to provide 240 channels of analog  S- xservice, arguing that the technology to support this level of service is not commercially available.7;hm {O-ԍId. at 6.7 In  xaddition, 21st Century alleges that the Wedgewood has exclusive contracts with the MDUs it serves, and  x!it contends that Wedgewood may not be able to provide unaffiliated programmers with access to  S" - xsubscribers, as required by the Communications Act and our rules.7<" 0 hm {O-ԍId. at 2.7 These defects, 21st Century asserts, constitute independent grounds for the Commission to deny Wedgewood's certification.  S - ` x19.` ` Like Chicago and 21st Century, the Alliance also opposes Wedgewood's certification on  S - xthe grounds that Wedgewood is a cable operator and is not subject to effective competition.A= hm yO-ԍAlliance Comments at 59.A The  xkAlliance supports deferral of our ruling on Wedgewood's certification until we have issued an order in  S2-ECI.9>2R hm {O$-ԍId. at 45.9  S- V.xDISCUSSION  S- ` x20.` ` According to Wedgewood, it initiated cable franchise negotiations with Chicago after  xChicago directed it on April 23, 1997, to obtain a cable franchise. On September 25, 1997, Wedgewood  xkstated in a letter to the City that it intended to obtain a franchise for the areas in which it was already  S- xyoffering service.G?hm yO%-ԍChicago Comments, Attachment A.G Wedgewood states in its revised application that it offered to obtain a franchise on the  xcondition that the City allow Wedgewood to continue adding subscribers pending issuance of the franchise. Chicago subsequently ordered Wedgewood to cease and desist from contracting to serve additional MDUs."t?,`(`(88B"Ԍ S- ` Aԙx21.` ` The open video system certification process is not easily conducive to resolving extensive  xMfactual and legal issues presented by the parties. That does not mean that our only alternative, when  xpresented with myriad issues, is to approve each application presented. Nor does it mean that to resolve  xjissues there must be a seriatim of applications, each seeking to resolve the issues raised by an applicant's  S`- xprevious application.@`hm {O-  ԍWe note that Wedgewood has submitted two replies to the comments of the opposing parties. See November   19, 1997 Letter from James A. Stenger, Counsel for Wedgewood, to Royce Dickens; November 19, 1997 Letter from  yOZ-  Daniel E. Levin, Wedgewood Chairman, to Royce Dickens. The confined nature of the certification process does   not allow reply comments and we have not considered either reply here. It is the responsibility of an applicant to   /provide the Commission adequate information at the time its files its application addressing the range of circumstances that may be raised in the proceeding. Each application comes with its own circumstances. The certification process, as  x[confined as it is, must resolve the legitimate issues each application presents, and the applicant bears the  xburden of providing a record allowing the Commission to determine whether the salient elements of the certification process have been met.  S- ` x22.` ` In this application, we are presented with a record showing that Wedgewood committed  x=to obtain a cable franchise from the City. It does not appear that having commenced a process with the  xyCity to obtain a cable franchise, Wedgewood has ever communicated directly to the City that it no longer  xseeks a franchise. Instead, Wedgewood and the City exchange a variety of allegations regarding each other's conduct.  S - ` $x23.` ` The open video system framework was established as an alternative means to provide  S - xvideo programming to subscribers.^A Bhm {Ob-ԍSecond Report and Order, 11 FCC Rcd at 1822627.^ It was not created to be used as a bargaining element in the  x\negotiations between a municipality and a prospective video provider. While video providers can, of  xkcourse, change their plans as to what regulatory alternative to pursue, where, as here, there is no clear  xunderstanding, outside Wedgewood's open video system applications, that Wedgewood has abandoned its  xpursuit of a cable franchise, we are reluctant to allow Wedgewood to use the certification process as the  xymeans of conveying its purported decision to the City. Where a local process is pending, we are hesitant  S- xLto take action that would disrupt it.Bhm yO- xԍWe have no information what action, as a matter of local law, is necessary to terminate or conclude franchise negotiations. Because we do not think that the open video system certification process should be intertwined with local franchise negotiations, Wedgewood's application is denied.  S- ` x24.` ` Beyond the uncertain status of its cable franchise negotiations, there are questions  xLregarding Wedgewood's current status and its eligibility to be an open video system operator. Under the  xCommission's rules, a cable operator subject to effective competition may apply for open video system  xmcertification in its cable franchise area. There is an unresolved assertion that Wedgewood is an  xunfranchised cable operator. The record in this proceeding is not adequate to allow us to determine  xwhether Wedgewood is a cable operator as defined by the Communications Act. Yet, if Wedgewood is  xultimately determined to be a cable operator, it is clearly an unfranchised cable operator serving  xsubscribers in violation of Section 621 of the Communications Act. Such a finding bears on  xWedgewood's eligibility as an open video system operator. While the certification process may not  xencompass resolving Wedgewood's status, we must be able to determine its eligibility to be an open video" , B,`(`(88"  xsystem provider. Our rules would present a blatant contradiction if the unfranchised operator had less of  xa burden than a franchised operator. Because the record is unclear regarding the status of the applicant,  x=we must construe the circumstances in the light least favorable to the applicant, and require Wedgewood to demonstrate that it is subject to effective competition.  S8- ` x25.` ` While we take no position on either Wedgewood's status or whether it faces effective  xcompetition, we note that there is no Commission precedent supporting Wedgewood's assertion of  xeffective competition. Wedgewood asserts that, because it is subject to LEC effective competition, its  xoperation as an open video system is permitted. Wedgewood misinterprets the LEC effective competition  xtest, which acts to deregulate the rates of an incumbent cable operator faced with competition from a LEC,  xa LEC affiliate, or an entity using the facilities of a LEC to provide comparable programming directly to  xsubscribers. Contrary to Wedgewood's assertion, the LEC effective competition test is not for the benefit  xyof a LEC, a LEC affiliate, or an entity using the facilities of a LEC to provide video programming directly to subscribers.  S - `  x26.` ` Moreover, opposing parties also contend that Wedgewood essentially does not have and  xwill not have the capacity or capability to fulfill its obligations under the open video system rules. These  xassertions are distinguishable from previous cases, where parties have challenged the representations of  xthe open video system applicant where no facilities existed, and where there were no recent or ongoing  xdisputes or negotiations with local governments. We found such assertions insufficient to deny  xLcertification. While we need not currently address Wedgewood's alleged inability to fulfill its obligations  x.as an open video system operator, we note that something more than assertions are necessary. Credible  xevidence must be submitted that Wedgewood cannot, or will not, meet its obligations as an open video  xsystem operator, such as, evidence that Wedgewood cannot provide video programmers access to enduser  S@-subscribers.KC@hm {O-ԍSee MFS, 11 FCC Rcd at 20902.K  S- VI.xORDERING CLAUSES  S- ` x27.` ` Accordingly, IT IS ORDERED that the certification of Wedgewood Communications  Sx-Company to operate an open video system IS DENIED .  S(- ` Cx28.` ` This action is taken by the Chief, Cable Services Bureau, pursuant to the authority  S-delegated by Section 0.321 of the Commission's rules.=DZhm yO-ԍ47 C.F.R.  0.321.= x` ` hhFEDERAL COMMUNICATIONS COMMISSION x` ` hhMeredith J. Jones x` ` hhChief, Cable Services Bureau