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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 MULTIMEDIA ) Petitioner, ) ) vs. ) CSR 5119-L ) CABLEVISION OF MONMOUTH, INC.,) Respondent ) ) For Leased Access Channels ) MEMORANDUM OPINION AND ORDER Adopted: July 24, 1998 Released: July 27, 1998 By the Chief, Cable Services Bureau: INTRODUCTION 1. Lorilei Communications, Inc., d/b/a The Firm Multimedia ("the Firm"), has filed a petition for relief alleging that Cablevision of Monmouth, Inc. ("Cablevision") has violated provisions of Commission's commercial leased access rules. Cablevision filed a response requesting that the petition be dismissed with prejudice. BACKGROUND 2. The 1984 Cable Act imposed on cable operators a commercial leased access requirements designed to assure access to cable systems by unaffiliated third parties who have a desire to distribute video programming free of editorial control of cable operators. Channel set aside requirements were established proportionate to a system's total activated channel capacity. The 1992 Cable Act revised the leased access requirements and directed the Commission to implement rules to govern this system of channel leasing. In its 1993 Report and Order and Further Notice of Proposed Rule Making ("Rate Order"), the Commission adopted new rules for leased access addressing maximum reasonable rates, reasonable terms and conditions of use, minority and educational programming, and procedures for resolution of disputes. The Commission recently modified some of its leased access rules in the Second Report and Order and Second Order on Reconsideration of the First Report and Order ("Second Order"). 3. In Lorilei Communications, Inc. d/b/a The Firm v. Cablevision of Monmouth, Inc., __ FCC Rcd __, (DA 97-1456, released July 14, 1997) ("Order"), Cablevision was directed to provide the Firm information regarding availability of leased access set-aside capacity, to establish a schedule of rates based on the average implicit fee formula adopted in the Second Report, and to adopt a period for advanced filing of applications for part-time service that is consistent with requirements established in an earlier decision. The Order found that Cablevision had not refused to air the Firm's programming or requested any changes to programming format and dismissed an allegation that Cablevision tried to exercise improper editorial control over the Firm's programming. A request for certain forms of relief was also dismissed. ALLEGATIONS AND ARGUMENT 4. In its new petition, the Firm states that it has entered into a contract with Cablevision for a twelve week run of programming consisting of advertisements for a company whose advertisements previously were provided to Cablevision by an advertising agency. The Firm contends Cablevision has violated provisions of the leased access rules by refusing to disclose the portion of system subscribers reached by the cable channel which carries leased access programming; by including in its Leased Access Channel Rules a provision prohibiting programming that "supports, promotes or endorses a Legally Qualified Candidate or other candidate for public office or a political cause or contains personal attacks upon any individual or group," in violation of the prohibition against exercise of editorial control of leased access programming by cable systems found in Section 612(c)(2) of the Communications Act; by imposing a program insertion fee of $25 per program that is not charged for non-leased access programming, in violation of Section 76.971 of the rules; and by requiring payment of one half of total programming contract cost in advance of program carriage, in violation of Section 76.971(d) of the rules. The Firm also requests a declaration of the kinds of technical support services for which a fee may properly be charged under the Commission's leased access rules. 5. Cablevision asserts in response that the leased access regulations impose on it no obligation to disclose the portion of system subscribers reached by the cable channel on which the Firm's leased access programming is carried. Cablevision contends further that the Commission has held that the federal candidate access provisions of Section 312(a)(7) of the Communications Act, as amended, do not apply to cable systems. Therefore, Cablevision argues, its contract provision prohibiting programming that supports, promotes or endorses candidates for public office or a political cause or contains personal attacks does not conflict with the prohibition against exercise of editorial control of leased access programming by cable systems found in Section 612(c)(2). Cablevision asserts also that insertion of the Firm's programming tapes must be accomplished manually on a program by program basis because of the vagaries of scheduling that affect part-time leased access channels. On the other hand, Cablevision contends it controls the scheduling of non-leased access programming, which permits such programming to be transferred to master tapes for future play during schedules covering periods of a week or more on an automated basis. Therefore, according to Cablevision, its non-leased access programming does not require manual insertion and the attendant costs associated with leased access programming. In this connection, Cablevision argues that Section 76.975 of the Commission's rules does not contemplate the issuance of declaratory rulings addressing situations that may or may not occur in the future for which fees for technical support services would be appropriate. Finally, Cablevision points out that Section 76.971(d) of the rules permits cable operators to require reasonable security deposits from leased access programmers unable to prepay in full for access to leased access channels. Therefore, Cablevision argues, its demand for prepayment of one half of the charges applicable to the twelve weeks of program run for which the Firm has contracted is not unreasonable, particularly since the twelve week contract period assures the availability to the Firm of the requested time slots. DISCUSSION AND ANALYSIS A. Disclosure of Leased Access Penetration Levels 6. We address first the Firm's contention that it has a right under the Commission's rules to know the percentage of subscribers to Cablevision's system reached by channels carrying leased access programming. The Firm concedes that it is not seeking subscriber penetration for purposes of determining whether Cablevision miscalculated the leased access rate. The Firm asserts, nonetheless, that the Commission's average implicit fee formula demonstrates that the number of subscribers is a factor utilized in rate calculation, and that without information concerning the number of subscribers reached a leased access programmer cannot determine whether the rate being paid is correct. The distinction being made, apparently, is that the information is not needed to contest the fee but is needed to make sure the overall rate is billed properly in relation to the number of subscribers served. The Firm also contends that a lack of subscriber penetration information blunts its ability to communicate in its marketing effort how many households or subscribers is reached by leased access programming. As noted earlier, Cablevision argues that the Commission's rules do not require cable operators to provide to leased access programmers information regarding the percentage of subscribers reached by their programming. 7. Section 76.970(h) of the rules lists the information cable operators are required to provide prospective leased access programmers. That information includes: (1) the amount of leased access set- aside capacity available, (2) a complete schedule of full-time and part-time leased access rates, (3) the rates associated with technical and studio costs, and (4) a sample leased access contract if one is requested. Although Section 76.970(h) does not separately require cable operators to disclose to leased access programmers the number of subscribers reached by its service tiers, information of this type is typically made available in other regulatory contexts, e.g. on FCC Forms 1210 and 1240 filed with the Commission and available for public inspection. However, the information on file with the Commission may not be current or easily assembled from a distant location. Moreover, we note that Cablevision has not made any case that the requested information must be kept confidential. For these reasons, we will require Cablevision to provide the Firm with the subscriber information requested. B. Leased Access Programming Involving Candidates for Public Office 8. The Firm's next contention is that Section 612(c)(2) of the Communications Act invalidates a provision in Cablevision's Leased Access Channel Rules prohibiting programming which "supports, promotes or endorses a Legally Qualified Candidate or other candidate for public office or a political cause or contains personal attacks upon any individual or group." We agree, and Cablevision will be prohibited from enforcing that provision. Section 612(c)(2) is clear and unambiguous in providing, in relevant part, that "[a] cable operator shall not exercise any editorial control over any video programming provided pursuant to this section, or in any other way consider the content of such programming, except that a cable operator . . . may consider such content to the minimum extent necessary to establish a reasonable price for the use of designated channel capacity by an unaffiliated person." We hold that the specific prohibition against exercise of editorial control of leased access programming by cable operators found in Section 612(c)(2) controls in the circumstances obtaining here. Consequently, Cablevision may not prohibit the sale of political advertising on leased access channels C. Charges for Technical Services 9. The Firm states that Cablevision demands a $25 per program insertion fee that will total $3,000 during the twelve week run of programming under contract. The firm further asserts that Cablevision previously carried similar programming provided by an advertising agency but did not impose any program insertion fee for that programming. The Firm contends the imposition of the insertion fee is in violation of Commission rules governing the imposition of technical support fees adopted in the Second Report. Cablevision states in response that insertion of the Firm's programming tapes must be accomplished manually on a program by program basis because of the vagaries of scheduling that affect part-time leased access channels. It contends, on the other hand, that it controls the scheduling of non- leased access programming, which permits such programming to be transferred to master tapes for future play during schedules covering periods of a week or more on an automated basis. Therefore, according to Cablevision, non-leased access programming does not require manual insertion or the attendant costs associated with the manual insertion of leased access programming. 10. The Commission considered the level of technical support that cable operators are required to provide in the Rate Order. There the Commission noted that technical cooperation between the cable operator and the leased access programmer is likely to be necessary for the programming to be delivered over a cable system The Commission stated that operators will be required to provide programmers with "the minimal amount of technical support, whether it be equipment, technology or other miscellaneous support, which would be necessary for the programmer to present its material on the air." The Commission further explained this requirement by adding that a cable operator must offer to leased access programmers "the same services as would be offered to comparable programming services that use the operator's non-leased access channel capacity." 11. In the Second Report the Commission further clarified these requirements and made it clear that the leased access rate determined under Section 76.970 includes the cost of technical support ordinarily provided in common to other programmers. 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) require the leased access user to purchase the equipment or (2) purchase the equipment for itself and lease it to the programmer at a reasonable rate. Thus, we have indicated that a cable operator 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 a leased access programmer only if that equipment and technical support is not also provided with other non-leased access programming. 12. The record shows that Cablevision provides non-leased access programmers with program insertions on an automated basis, and that due to the unpredictable nature of leased access programming manual insertion of leased access programming is required, involving costs not associated with the automated handling of non-leased access programming. We find that Cablevision is providing a service to the Firm, manual insertion of programming, that it does not provide to non-leased access programmers, and Cablevision may charge the Firm for the reasonable cost of such services. However, Cablevision provided no information demonstrating that the reasonable cost of manual program insertion exceeds the cost of automatic program insertion by $25 per program. Accordingly, we will disallow this $25 per program insertion fee and direct Cablevision to refund all amounts collected for such fee pursuant to the contract with the Firm for the twelve week run of programming. D. Prepayment of Leased Access Services 13. As noted earlier, the Firm contracted with Cablevision for a twelve week run of its programming, in order to assure the availability of leased access channel capacity during the desired run of this programming. However, the Firm objects to Cablevision's requirement for prepayment of half of the cost of the run of this contract, contending that under the Commission's regulations of security deposits for charges for leased access services Cablevision may demand prepayment of charges only on a monthly basis. The Firm alleges that Cablevision's billing term for an advertising agency providing similar programming is for only one month, and that Cablevision's prepayment demand places an unfair burden on leased access programming inconsistent with the requirements of Section 76.971(d), which precludes collection of security deposits when payment is made in advance. Cablevision on the other hand argues that Section 76.971(d) entitles it to require a security deposit or other assurance of payment for the approximately three months of leased access time reserved by the Firm. It contends that allowing prepayment for only one month would leave it exposed in the event the Firm is unable to satisfy the terms of the contract beyond one month. Cablevision argues that the Firm had the discretion to elect a contract term of one month but determined, for its own business reasons, that booking for a twelve week run would be more beneficial. Cablevision argues that in these circumstances requiring prepayment of half of the cost of the twelve week run of the contract is reasonable. 14. Section 76.971(d) provides, in relevant part, "Cable operators may require reasonable security deposits or other assurances from users who are unable to prepay in full for access to leased commercial channels." The record shows that the Firm obtained a twelve week commitment from Cablevision in order to assure the availability of leased access channel capacity during the desired run of this programming. We find that Cablevision's requirement for prepayment of half of the cost of the twelve week run is consistent with the requirements of Section 76.971(d). Finally, Cablevision demonstrated that several differences exist between the business arrangements with the advertising agency supplying non-leased access programming and its provision of leased access capacity to the Firm, including substantially shorter contract terms for advertising, different scheduling problems, and longstanding business relationships with the advertising agencies.. ORDERING CLAUSES 15. For the foregoing reasons, IT IS ORDERED that Cablevision of Monmouth, Inc. (a) shall not enforce clause 3. j. of its Leased Access Channel Rules pertaining to programming of candidates for public office and other related matters, (b) shall cease charging the Firm a $25 per program insertion fee and (c) shall, within thirty days from the release date of this order, refund to the Firm all amounts collected from the Firm in payment of the program insertion fee. 16. IT IS FURTHER ORDERED that Cablevision of Monmouth, Inc. shall, within thirty days from the release date of this order, provide the Firm with the percentage of subscribers to Cablevision's system reached by channels carrying leased access programming. 17. IT IS FURTHER ORDERED, that in all other respects, the petition for relief filed by Lorilei Communications, Inc. in File Number CSR 5119-L IS DISMISSED. 18. 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 Deborah A. Lathen Chief, Cable Services Bureau