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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: ) ) CABLEVISION OF BOSTON, INC., ) A-R CABLE SERVICES, INC., ) A-R CABLE PARTNERS, and ) CABLEVISION OF FRAMINGHAM, INC. ) ) Petition for Determination pursuant ) to Section 76.1503(c)(2)(v)(B) ) of the Commission's rules ) MEMORANDUM OPINION AND ORDER Adopted: September 28, 1998 Released: September 30, 1998 By the Chief, Cable Services Bureau: I. INTRODUCTION 1. In the above-captioned proceeding, Cablevision of Boston, Inc., A-R Cable Services, Inc., A-R Cable Partners, and Cablevision of Framingham, Inc. (collectively "Cablevision") seek an expedited determination pursuant to Section 76.1503(c)(2)(v)(B) of the Commission's rules that it is entitled to become a video programming provider on the open video system operated by RCN-BECoCom, LLC ("RCN-BECoCom") in Boston, Massachusetts and 47 surrounding communities. In the alternative, Cablevision requests a waiver pursuant to Section 1.3 of the Commission's rules of the provisions of Section 76.1503(c)(2)(v)(B) finding that Cablevision may obtain carriage on RCN-BECoCom's open video system. The Commission gave public notice of Cablevision's petition seeking comment thereon. Comments were filed by the Alliance for Community Media ("Alliance"), the Town of Sudbury, Massachusetts ("Sudbury"), Thomas Magee, and Bell Atlantic and NYNEX filing jointly ("Bell Atlantic"). RCN-BECoCom filed an opposition to Cablevision's petition. Reply comments were filed by Cablevision and RCN-BECoCom, and a Supplemental Reply was filed by RCN-BECoCom. II. BACKGROUND 2. The Telecommunications Act of 1996 (the "1996 Act") added Section 653 to the Communications Act of 1934, as amended ("Communications Act"). Section 653 of the Communications Act establishes a new framework for entry into the video programming delivery marketplace -- the open video system. In Implementation of Section 302 of the Telecommunications Act of 1996 Open Video Systems, the Commission stated that, as designed by Congress, the open video system framework provides an option for the distribution of video programming in addition to operation as a cable system fully subject to the provisions of Title VI of the Communications Act. By agreeing to permit carriage of unaffiliated video programming providers on just, reasonable and non-discriminatory rates and terms, an entity can be certified as an open video system operator subject to streamlined regulation under Title VI of the Communications Act. 3. The Commission concluded that Section 653 generally does not permit an open video system operator to discriminate among video programming providers based on their identities. The Commission determined that the public interest, convenience and necessity would be served by permitting open video system operators to limit the ability of competing, in-region cable operators to become video programming providers. The Commission did not establish an outright prohibition on such carriage. Instead the Commission permitted open video system operators to allow competing, in-region cable operators to become video programming providers based upon the open video system operator's business discretion. In addition, if the open video system operator refused to grant carriage to the competing, in- region cable operator's programming, the cable operator could petition the Commission to require an open video system operator to carry the cable operator's programming provided that the cable operator demonstrates that carriage of its programming would not impede facilities-based competition. 4. Pursuant to Section 653(a)(1) of the Communications Act, RCN-BECoCom filed to obtain certification to operate an open video system in Boston and certain surrounding communities. On February 27, 1997, the Commission issued an order certifying RCN-BECoCom to operate an open video system. Consistent with the Commission's open video system rules, RCN-BECoCom then filed its Notice of Intent to Establish an Open Video System to which the Commission gave public notice. On April 29, 1997, Cablevision requested that RCN-BECoCom provide information it deems necessary in order for it to determine whether or not to become a video programming provider on RCN-BECoCom's open video system. Cablevision also requested that RCN-BECoCom treat Cablevision's information request as a "preliminary enrollment request." By letter dated May 2, 1997, RCN-BECoCom informed Cablevision that, as a competing, in-region cable operator, RCN-BECoCom was not required to provide information, or grant access as a video programming provider to Cablevision. III. THE PLEADINGS A. Cablevision's Petition 5. In its Petition, Cablevision asks the Commission for a ruling that it is authorized to obtain all relevant information regarding the availability of programming capacity on RCN-BECoCom's open video system in Boston and 47 surrounding communities and is entitled to become a video program provider on the RCN-BECoCom open video system platform. In the alternative, Cablevision requests a waiver, pursuant to Part 1.3 of the Commission's rules to allow it access as a video programming provider on the RCN-BECoCom open video system. Cablevision asserts that allowing it access to RCN- BECoCom's open video system platform is in the public interest and will enhance video competition and consumer choice in the video marketplace. 6. Of the 330 available channels of capacity, Cablevision notes that RCN-BECoCom plans to set aside 129 channels for itself and its affiliates, leaving 201 channels available for interested unaffiliated programming providers. Cablevision states that it currently offers cable television services in some of the communities that RCN-BECoCom proposes to serve with its open video system platform. Cablevision asserts that allowing it to obtain channel capacity on RCN-BECoCom's open video system would enable it to provide a wider-range of targeted, unique services by providing new and tailored program packages. Cablevision argues that allowing it to offer additional services on the open video system platform will promote consumer choice and diversity in video programming and enhance the viability of open video systems as a competitive alternative. Cablevision requests that the Commission require RCN-BECoCom to provide full information regarding its open video system platform, including technical and cost information and permit Cablevision to become a video programmer on RCN- BECoCom's system. 7. In support of its Petition, Cablevision asserts that allowing it access to RCN-BECoCom's open video system platform is in the public interest. Cablevision asserts that the digital technology needed for it to provide consumers with the specialized services it proposes to offer subscribers is not yet available, thus necessitating Cablevision's exploration of the use of excess capacity on RCN-BECoCom's system. Cablevision also notes that the potential inter-programmer rivalry generated by its participation on RCN-BECoCom's open video system platform will "likely translate into greater choice and lower prices for consumers" in Massachusetts in furtherance of the Commission's goals of promoting competition. Finally, Cablevision argues that its presence on RCN-BECoCom's system will significantly enhance, not impede, competition for video programming in the relevant communities in Massachusetts and that allowing its participation on RCN-BECoCom's system will not negatively impact the development of RCN-BECoCom's system. B. RCN-BECoCom's Opposition 8. In its Opposition to Cablevision's Petition, RCN-BECoCom argues that Cablevision fails to demonstrate pursuant to Section 76.1503(c)(2)(v)(B) of the Commission's rules that facilities-based competition will not be significantly impeded if the Commission were to grant Cablevision access to RCN- BECoCom's open video system. RCN-BECoCom also argues that Cablevision fails to show good cause for a waiver of the Commission's rules. RCN-BECoCom notes that throughout its Petition, Cablevision consistently omits the words "facilities-based" from its description of the Section 76.1503(c)(2)(v)(B) standard and instead focuses narrowly on the general impact that permitting Cablevision access to RCN- BECoCom's system would have on competition for video programming. RCN-BECoCom asserts that Cablevision's motives run counter to the Commission's desire that cable operators upgrade their facilities and argues that Cablevision provides no evidence in its Petition that its network cannot be upgraded. RCN-BECoCom notes that if Cablevision were legitimately interested in promoting competition in the video programming market, it would have expanded its network and services years ago. 9. In response to Cablevision's request for information regarding RCN-BECoCom's open video system, RCN-BECoCom responds that the release of such information has potential anticompetitive consequences. RCN-BECoCom asserts that the release of such information will seriously undermine RCN-BECoCom's ability to compete against Cablevision. RCN-BECoCom also references several program access complaints that have been filed against Cablevision and its programming affiliates as evidence of Cablevision's refusal to provide new entrants with access to critical programming. C. Comments 10. In its comments, the Alliance takes no official position regarding Cablevision's request for carriage on RCN-BECoCom's open video system. The Alliance expresses its concern that, regardless of the Commission's decision, both RCN-BECoCom and Cablevision must comply with the public, educational, and governmental ("PEG") access requirements of Section 76.1505(b) of the Commission's rules. In addition, the Alliance submits that Cablevision has provided no evidence demonstrating that it is entitled to the exception for in-region cable operators who serve less than 17,000 subscribers in the open video systems service area. Rather, according to the Alliance, Cablevision's Boston system alone serves more than 132,000 subscribers, which the Alliance asserts precludes access to RCN-BECoCom's open video system. 11. Sudbury urges the Commission to grant Cablevision permission to use RCN-BECoCom's open video system on a limited basis. Sudbury believes that its community will best be served by limiting Cablevision's usage of RCN-BECoCom's open video system to programming, such as special business community programming, culturally diverse programming and new local programming. 12. Thomas Magee, a resident of Brookline, Massachusetts, in comments filed with Commission, urges the Commission to grant Cablevision's Petition. Mr. Magee submits that unclaimed capacity on RCN-BECoCom's open video system could be utilized to offer a range of specialized programming services, including special business community programming, culturally diverse programming, and educational channels. 13. Bell Atlantic argues that Cablevision's Petition should be denied. Bell Atlantic asserts that the open video systems model was intended to provide an alternative to incumbent cable operators and that Congress did not intend to allow subversion of that design to shield incumbent cable operators from competition. Bell Atlantic disputes Cablevision's claim that allowing them to occupy capacity on RCN- BECoCom's open video system will add an additional programming voice in Massachusetts, based on the fact that Cablevision, by virtue of its status as an incumbent cable operator, is already an established programming voice in Massachusetts. To the contrary, Bell Atlantic argues that allowing Cablevision to occupy capacity on RCN-BECoCom's open video system will potentially reduce the number of unrepresented programming voices that have an opportunity to reach consumers. Finally, Bell Atlantic argues that forcing RCN-BECoCom to offer Cablevision capacity on its open video system and provide it with competitively sensitive material would decrease the opportunity for independent programmers to reach consumers, undermine Congress' goal of encouraging investment in new technologies, and harm facilities-based competition between new entrants and incumbent cable operators. D. Reply Comments 14. In its Reply, Cablevision submits that denying the only unaffiliated video programmer who has expressed interest in carriage on RCN-BECoCom's open video system would deprive Massachusetts consumers of the benefits of competitive diversity and would allow RCN-BECoCom to continue operating as a cable operator, rather than an open video system operator, without complying with a cable operator's numerous statutory obligations under Title VI of the Communications Act. Cablevision argues that RCN-BECoCom is using its open video system certification as a "regulatory stalking horse" in its ongoing attempts to provide video service through other means. Cablevision argues that if RCN-BECoCom is unwilling to operate an open platform, it should be de-certified by the Commission, and, at a minimum, the Commission should investigate RCN-BECoCom's operations. Cablevision submits that neither RCN- BECoCom nor any commenter has demonstrated that allowing Cablevision to provide programming on RCN-BECoCom's facility would "significantly impede" the development of facilities-based competition. Cablevision also alleges that RCN-BECoCom is not providing, and has no intention of complying with the statutory and regulatory obligations of an open video system. Cablevision alleges that RCN- BECoCom has used its open video system certification as leverage in negotiations with local franchising authorities in communities in which it is certified as an open video system. Cablevision observes that once RCN-BECoCom obtains a cable franchise, it will abandon its open video system status and points to RCN-BECoCom's indications that it will most likely seek a cable franchise within one year. Cablevision also references a pending Show Cause Order issued by the Massachusetts Cable Television Commission regarding Residential Communications Network of Massachusetts, Inc.'s, a corporate affiliate of RCN-BECoCom, status as an unfranchised cable operator. 15. In its Reply, Cablevision references the June 2, 1997 one year Interim Open Video Systems Agreement between RCN-BECoCom and the City of Boston and argues that no prospective video programmer is likely to request channel capacity on an open video system that will likely convert to a franchised cable system within 12 to 24 months. Cablevision also complains that RCN-BECoCom has impermissibly truncated the enrollment period for video program providers requesting open video system carriage in violation of the Commission's rules. 16. In its Reply, RCN-BECoCom notes that commenters agree with RCN-BECoCom that, not only did Cablevision fail to demonstrate that facilities-based competition will not be significantly impeded if the Commission were to grant Cablevision access to RCN-BECoCom's open video system, Cablevision failed to even address the correct standard established by the Commission's rules. RCN-BECoCom argues that Cablevision clearly fails to demonstrate that "facilities-based competition will not be significantly impeded" by permitting it access to RCN-BECoCom's open video system. In its Reply, RCN-BECoCom notes that although Cablevision claims that upgrading its existing network is technically infeasible, Bell Atlantic currently operates such a system. RCN-BECoCom agrees with Bell Atlantic that allowing Cablevision to occupy capacity on RCN-BECoCom's open video system could potentially reduce the number of additional programming voices that reach customers. IV. DISCUSSION 17. The provision of the Commission's rules applicable to Cablevision's petition, Section 76.1503(c)(2)(v), provides in pertinent part: Notwithstanding the general prohibition on an open video system operator's discrimination among video programming providers contained in paragraph (a) of this section, a competing, in region cable operator or its affiliate(s) that offers cable service to subscribers located in the service area of an open video system shall not be entitled to obtain capacity on such open video system, except . . . (B) Where a showing is made that facilities-based competition will not be significantly impeded. It is not disputed by the parties that Cablevision is a competing, in-region cable operator offering cable service to subscribers in RCN-BeCoCom's open video system service area. Accordingly, to prevail in its petition, Cablevision bears the burden of showing that carriage of its programming on RCN- BeCoCom's open video system will not significantly impede facilities-based competition. 18. In adopting the requirement that competing, in-region cable operators may obtain carriage on an open video system only where facilities-based competition will not be significantly impeded, the Commission reasoned that this approach served the public interest because a competing, in-region cable operator should generally be encouraged to develop and upgrade its own system, rather than occupy capacity on a competitor's system that could be used by another video programming provider. The Commission found this approach to be consistent with Congress' intent to "encourage common carriers to deploy open video systems and introduce vigorous competition in entertainment and information markets." By promoting facilities-based competition in this manner, the Commission recognized that in most cases an open video system will be a new entrant into video markets where a dominant, incumbent cable operator will be present. 19. Cablevision devotes a substantial portion of its petition to explaining how carriage of its programming on RCN-BECoCom's will benefit subscribers in the communities served by RCN- BECoCom. Cablevision also argues that carriage of its programming will benefit RCN-BECoCom by demonstrating its financial and technical viability. We note that RCN-BECoCom has already refused to carry voluntarily Cablevision's programming. In the absence of a clear showing that carriage of Cablevision's programming on RCN-BECoCom's system will not significantly impede facilities-based competition, we will not substitute Cablevision's business judgement for that of RCN-BECoCom regarding carriage of Cablevision's programming. Cablevision expends little effort in demonstrating how carriage of its programming on RCN-BECoCom's system will not significantly impede facilities-based competition in the Boston area. In this regard, Cablevision merely asserts in its Reply that Cablevision's: presence will in no way undermine either facilities-based competition or inter- programmer competition -- a key aspect of [open video systems]. * * * As a basis for its opposition, RCN-BECoCom merely asserts, but does not explain, how [Cablevision's] participation as a video programming provider will impede competition. RCN-BECoCom's repetitive discussion of "facilities-based competition" does not constitute an explanation. Put simply, if RCN-BECoCom has capacity available on its [open video] systems, and [Cablevision is] willing to pay for carriage of their programming services, facilities-based competition will be advanced. First, it is Cablevision's burden to demonstrate that carriage of its programming will not impede facilities- based competition. Contrary to Cablevision's implication, it is not RCN-BECoCom's task to demonstrate that carriage of Cablevision's programming will impede facilities-based competition. Second, Cablevision's mere assertion that carriage of its programming will not impede facilities-based competition, without evidence to support such assertion, does not persuade us that the grant of Cablevision's petition is consistent with the Commission's rules. Cablevision provides no information and makes no representation regarding plans for its facilities. 20. Cablevision's arguments regarding enhanced competition for the delivery of video programming, increased video programming options to subscribers, and the increased viability of RCN- BECoCom's open video system (and open video systems in general) are inapposite. The standard established by the Commission for carriage of the programming of a competing, in-region cable operator on an open video system is whether such carriage will significantly impede facilities-based competition. Cablevision has failed to provide evidence as to how it satisfies this standard. Cablevision's petition pursuant to Section 76.1503(c)(2)(v)(B) of the Commission's rules is denied. Because we conclude that Cablevision has not demonstrated that it is eligible for carriage on RCN-BECoCom's open video system, it is also not entitled to the information it requested relating to carriage on RCN-BECoCom's open video system. 21. We also deny Cablevision's request pursuant to Section 1.3 of the Commission's rules for a waiver of Section 76.1503(c)(2)(v)(B) requiring RCN-BECoCom to provide carriage of Cablevision's programming for good cause shown. In this regard, Section 76.1503(c)(2)(v)(B) is essentially a waiver provision relating to the Commission's conclusion that competing, in-region cable operators should generally not be granted carriage on open video systems. As discussed, Cablevision has failed to satisfy its burden under the Section 76.1503(c)(2)(v)(B) waiver standard. Cablevision's general assertions as to enhanced competition and subscriber choice do not overcome the Commission's express conclusion that the statutory premise of open video systems would best be served by limiting a competing, in-region cable operator's access to open video systems. We decline Cablevision's request that we waive the requirements of Section 76.1503(C)(2)(v)(B) and require RCN-BECoCom to provide carriage of Cablevision's programming. 22. Cablevision argues at length, and submits extensive supporting information, that RCN- BECoCom is not complying with its obligations as an open video system operator. These represent serious allegations. Cablevision's petition to obtain carriage on RCN-BECoCom's system, however, is not the appropriate forum to address these issues. Section 76.1513 of the Commission's rules provides that "[a]ny party aggrieved by conduct that it alleges to constitute a violation of the regulations set forth in this part or in Section 653 of the Communications Act . . . may commence an adjudicatory proceeding at the Commission. The Commission shall resolve any such dispute within 180 days after the filing of a complaint." Any party believing that RCN-BECoCom is not satisfying its obligations as an open video system operator may bring a complaint for the Commission's review and adjudication. V. ORDERING CLAUSES 23. Accordingly, IT IS ORDERED that the petition of Cablevision of Boston, Inc., A-R Cable Services, Inc., A-R Cable Partners, and Cablevision of Framingham, Inc. for a determination pursuant to Section 76.1503(c)(2)(v)(B) of the Commission's rules IS DENIED. 24. IT IS FURTHER ORDERED that Cablevision of Boston, Inc., A-R Cable Services, Inc., A-R Cable Partners, and Cablevision of Framingham, Inc.'s request pursuant to Section 1.3 of the Commission's rules for a waiver of Section 76.1503(c)(2)(v)(B) of the Commission's rules IS DENIED. 25. This action is taken pursuant to delegated authority under Section 0.321 of the Commission's rules, as amended. FEDERAL COMMUNICATIONS COMMISSION Deborah A. Lathen Chief, Cable Services Bureau