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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: ) ) Implementation of the Cable ) CS Docket No. 97-248 Television Consumer Protection ) and Competition Act of 1992 ) RM No. 9097 ) Petition for Rulemaking of ) Ameritech New Media, Inc. ) Regarding Development of Competition) and Diversity in Video Programming) Distribution and Carriage ) REPORT AND ORDER Adopted: August 6, 1998 Released: August 10, 1998 By the Commission: Commissioner Furchtgott-Roth dissenting in part and issuing a statement; Commissioner Powell issuing a statement. TABLE OF CONTENTS Paragraph Nos. I. INTRODUCTION . . . . . . . . . . . . . . . . . . 1 II. BACKGROUND . . . . . . . . . . . . . . . . . . . 2 III. SUMMARY . . . . . . . . . . . . . . . . . . . . 5 IV. DISCUSSION . . . . . . . . . . . . . . . . . . . 6 A. Sanctions . . . . . . . . . . . . . . . . . 6 1. Adequacy and Interaction of Forfeitures . . .. .. . . 6 2. Damages for Program Access Violations . . . .. .. . . 10 a. Statutory Authority . . . . . . . . .. . 12 b. Need for a Damages Remedy . . . . . . .. .. . . 16 c. Punitive Damages. . . . . . . . . . .. . 20 3. Procedural Considerations . . . . . . . . .. .. . . 22 4. Damages Accrual Date . . . . . . . . . . .. .. . . 32 B. Timing Issues . . . . . . . . . . . . . . .. . 34 1. Time Limits for the Resolution of Program Access Cases.. . .. . . 34 2. Pleading Cycle . . . . . . . . . . . . .. . 43 C. Discovery . . . . . . . . . . . . . . . . .. . 47 1. Discovery Rights. . . . . . . . . . . . .. . 47 2. Standardized Protective Order . . . . . . .. .. . . 57 D. Terrestrial-Delivery of Programming . . . . . .. .. . .. . .63 E. Buying Groups: Joint and Several Liability . . .. .. . .. . .72 F. Miscellaneous Issues . . . . . . . . . . . . .. .. . . 79 V. REGULATORY FLEXIBILITY ANALYSIS AND PAPERWORK REDUCTION ACT OF 1995 ANALYSIS . . . . . . .. .80 VI. PROCEDURAL PROVISIONS . . . . . . . . . . . . . . 82 VII. ORDERING CLAUSES . . . . . . . . . . . . . . . . 83 APPENDIX A APPENDIX B APPENDIX C I. INTRODUCTION A. In this Report and Order ("Order") we adopt rules amending certain of our regulations promulgated pursuant to Section 628 of the Communications Act of 1934, as amended ("Communications Act"). The purpose of Section 628 and the amended rules we adopt is to promote the public interest, convenience, and necessity by increasing competition and diversity in the multichannel video programming market, to increase the availability of satellite cable programming and satellite broadcast programming to persons in rural and other areas not currently able to receive such programming, and to spur the development of communications technologies. II. BACKGROUND B. Section 628 of the Communications Act prohibits unfair or discriminatory practices in the sale of satellite cable and satellite broadcast programming. Section 628 is intended to increase competition and diversity in the multichannel video programming market, as well as to foster the development of competition to traditional cable systems, by prescribing regulations that govern the access by competing multichannel systems to cable programming services. Section 628(b) provides that: it shall be unlawful for a cable operator, a satellite cable programming vendor in which a cable operator has an attributable interest, or a satellite broadcast programming vendor to engage in unfair methods of competition or unfair or deceptive acts or practices, the purpose or effect of which is to hinder significantly or to prevent any multichannel video programming distributor from providing satellite cable programming or satellite broadcast programming to subscribers or consumers. Section 628(c) instructs the Commission to adopt regulations to identify particular conduct that is prohibited by Section 628(b). The Communications Act provides parties aggrieved by conduct alleged to violate the program access provisions the right to commence an adjudicatory proceeding before the Commission. In addition, as part of the Telecommunications Act of 1996(" Act"), Congress expanded program access protection to include common carriers and their affiliates that provide video programming by any means directly to subscribers, and to satellite cable programming vendors in which a common carrier has an attributable interest. C. In Implementation of Sections 12 and 19 of the Cable Television Consumer Protection and Competition Act of 1992: Development of Competition and Diversity in Video Programming Distribution and Carriage, First Report and Order ("First Report and Order"), the Commission promulgated regulations implementing the Communication Act's program access provisions. The Commission determined that a program access complaint process derived from the Section 208 common carrier and Section 315(b) lowest unit charge complaint processes, modified to limit discovery procedures, would provide the most flexible and expeditious means of enforcing the anti-discrimination program access provisions through the adjudication process. In Implementation of Sections 12 and 19 of the Cable Television Consumer Protection and Competition Act of 1992: Development of Competition and Diversity in Video Programming Distribution and Carriage, Memorandum Opinion and Order on Reconsideration of the First Report and Order ("Order on Reconsideration"), the Commission resolved petitions for reconsideration of the First Report and Order. D. In Implementation of the Cable Television Consumer Protection and Competition Act of 1992: Petition for Rulemaking of Ameritech New Media, Inc. Regarding Development of Competition and Diversity in Video Programming Distribution and Carriage, the Commission addressed Ameritech New Media, Inc.'s ("Ameritech") petition for rulemaking requesting that the Commission amend our program access rules. Ameritech requested that the Commission amend its rules in three specific ways: (i) to provide time limits for the resolution of program access complaints; (ii) to provide program access litigants discovery as-of- right; and (iii) to impose damages for adjudicated program access viola tions. The Commission sought comment on two additional issues: (i) whether to expand program access protections to cover certain satellite-delivered programming that is converted to terrestrially delivered programming; and (ii) whether the Commission should amend the joint and several liability requirement relating to cooperative buying groups. The Commission also asked commenters to address whether such proposed rule changes are consistent with the procedures established by the Commission in Implementation of the Telecommunications Act of 1996: Amendment of Rules Governing Procedures to be Followed When Formal Complaints are Filed Against Common Carriers ("Formal Complaint Order"). III. SUMMARY A. This Order adopts rules and policies amending our program access rules promulgated pursuant to Section 628 of the Communications Act. The decisions made in this Order may be summarized as follows:  The Commission finds that its existing statutory forfeiture authority can be used in appropriate circumstances as an enforcement mechanism for program access violations. Forfeitures can be an effective deterrent to anti-competitive conduct.  The Commission affirms its statutory authority to impose damages for program access violations and finds that the imposition of damages at this time is an appropriate next step in the implementation of our program access rules. The Commission recognizes that the law of program access continues to be refined, and it is not appropriate in all instances to impose damages for program access violations. Where there are circumstances through either rulemaking or adjudicatory proceedings, such that a program access defendant knew, or should have known, that it was engaging in conduct violative of Section 628, damages are appropriate and may be awarded.  The Commission believes that damages can best be calculated on a case-by-case basis and that the most efficient method for determining damage claims in the program access area is to adopt procedures similar to those used by the Commission in adjudicating common carrier formal complaints modified to reflect the program access context.  The Commission finds that the adoption of time limits for program access disputes serves the public interest. The Order finds that denial of programming cases (unreasonable refusal to sell, petitions for exclusivity, and exclusivity complaints) should be resolved within five months of the submission of the complaint to the Commission. All other program access complaints, including price discrimination cases, should be resolved within nine months of the submission of the complaint to the Commission.  The Commission finds that the adoption of time limits makes it necessary to impose a more streamlined pleading cycle. Program access defendants must file an answer within 20 days of service of the complaint, unless otherwise directed by the Commission. Program access complainants must file a reply within 15 days of service of the answer, unless otherwise directed by the Commission.  The Commission retains the current system of Commission-controlled discovery. The Order clarifies our rules to provide that, to the extent that a defendant expressly references and relies upon a document or documents within its control in defending a program access claim, the defendant must attach that document or documents to its answer. The Order adopts, with minor revisions, the standardized protective order for program access matters that was attached to the NPRM.  The Commission finds that the record fails to establish that the movement of programming from satellite to terrestrial delivery to avoid the program access rules is significant and causing demonstrative competitive harm at this time. The Order indicates that the Commission will continue to monitor this issue and its impact on competition in the video marketplace.  The Commission finds that the record justifies adopting an alternative method to joint and several liability that buying groups can satisfy which ensures that programming distributors are adequately protected from excessive financial risk. The Order requires that, in lieu of joint and several liability, buying groups maintain liquid cash or credit reserves equal to cover the cost of one month's programming for all of the buying group's members. IV. DISCUSSION A. Sanctions 1. Adequacy and Interaction of Forfeitures B. Background. The Commission has existing authority under Title V to impose forfeitures for violations of the program access rules. The Communications Act establishes a baseline forfeiture of up to $10,000.00 per day for violation of the program access rules not to exceed a total of $75,000.00. The Commission requested comment on this amount. We also sought comment on the adequacy and clarity of the forfeiture procedures and guidelines set forth in Section 503 of the Communications Act, the Commission's rules, and case law. We sought comment on the relation, if any, between damages and the Commission's existing Title V authority. C. Several commenters argue that the existence of forfeiture authority alone is insufficient to curb anti-competitive activity relating to program access. Bell Atlantic argues that forfeitures alone are insufficient because they do not reflect the full economic and competitive damage accruing from unlawful behavior. Most cable commenters believe that the existing forfeiture amounts and procedures are adequate. Several commenters assert that, in cases which demonstrate repeated and willful violation of the program access rules, the imposition of both damages and forfeitures is justified. Ameritech argues that "[t]he key distinction is that forfeitures strictly redress offenses to the governmental interest in protecting consumers and promoting competition, while damages uniquely redress the concomitant injuries to the complaining party which forfeitures alone would neglect." D. Ameritech asserts that the current forfeiture amount of $7,500 per day, without a cap on the total amount which may be assessed over the course of the violation, is an adequate forfeiture amount. Consumers Union asserts that the Commission's existing forfeiture amounts are insufficient to deter anti- competitive activity and proposes raising the forfeiture amount for program access violations from $7,500 to $25,000 per day for each single cable television system or franchise. Noting that the forfeiture daily penalty of $7,500 is equal to approximately one millionth of TCI Communications, Inc.'s annual revenue, RCN argues that the current forfeiture amount should be raised to $27,500 per day. E. We believe that the Commission's existing statutory forfeiture authority can be used in appropriate circumstances as an enforcement mechanism for program access violations. Forfeitures can be an effective deterrent to anti-competitive conduct. We intend to make greater use of this authority to sanction unlawful conduct. While statutory changes to the Commission's forfeiture authority could add additional tools for the Commission to use in the enforcement of these statutory provisions, we believe that the Commission's existing forfeiture authority provides an appropriate remedial measure for program access violations. As discussed below, we intend to use damages to further enhance our enforcement efforts. The Commission has the authority to assess forfeitures and damages separately and in combination depending upon the circumstances of a given case. The Commission also retains the authority to issue entirely prospective relief as it has in previous decisions. 2. Damages for Program Access Violations F. Background. The Communications Act provides that the Commission shall have the power to order "appropriate remedies, including, if necessary, the power to establish prices, terms, and conditions of sale of programming." In its Order on Reconsideration, the Commission stated that this authority "is broad enough to include any remedy the Commission reasonably deems appropriate, including damages." In the Order on Reconsideration, the Commission declined, however, to exercise its authority to award damages at that time, but reserved the right to revisit the issue in the future. In response to Ameritech's petition, the Commission sought comment on whether an additional check on anti-competitive conduct such as the imposition of damages for violations of Section 628 of the Communications Act may now be appropriate and in the public interest. G. Discussion. Many commenters favor the imposition of damages for program access violations. Other commenters argue that, in light of the fact that there have been relatively few program access complainants most of which have been dismissed or denied, there is no need for the Commission to impose damages for violations of the program access rules. After consideration of the record in this proceeding, we believe that the Commission should impose damages for violations of Section 628 where necessary to remedy the harm stemming from a programmer's anti-competitive conduct. As discussed below, the damages remedy will operate in concert with our existing forfeiture authority which the Commission will enforce in appropriate cases. a. Statutory Authority H. Several commenters argue that the Commission lacks statutory authority to impose damages for program access violations. Liberty argues that, if the Commission's expansive interpretation of the term "appropriate remedies" contained in Section 628(e)(1) were correct, then Congress would not have needed to add Section 628(e)(2) to inform the Commission that the remedies provided for in subsection (e)(1) were in addition to other remedies available under the Communications Act. Liberty contends that the only way to give effect to the Commission's reading of Section 628(e) is to render Section 628(e)(2) inoperative or superfluous, which the Commission is prohibited from doing. Liberty argues that this interpretation is reinforced by the "if necessary" and "including" qualifiers set forth in Section 628(e)(1). According to Liberty, the "if necessary" language modifies the phrase "the power to" thus indicating that the Commission has the power to order a remedy under subsection (e)(1) only if such remedy is necessary. Liberty argues that the record in this proceeding indicates that a damages remedy is not necessary. In addition, Liberty argues that the doctrine of ejusdem generis means that the "including" qualifier reinforces that subsection (e)(1) is limited to specific, prospective remedies. By specifying that the general term "appropriate remedies" includes the power to establish "prices, terms, and conditions," Liberty argues that Congress further indicated that the class of remedies available under Section 628(e)(1) was limited to prospective, injunctive relief. Liberty also argues that the fact that the Federal Trade Commission has determined that it does not have authority to impose damages under Section 5 of the Federal Trade Commission Act ("FTCA"), a provision related to unfair methods of competition, serves as further evidence that Congress did not intend for the Commission to award damages under Section 628. I. Consumers Union argues that the cable commenters interpretation of Section 628(e) as prohibiting the imposition of damages for program access violations is incorrect. Consumers Union asserts that Sections 628(e)(1) and (e)(2) work in conjunction -- Section 628(e)(1) gives the Commission power to order appropriate remedies, while Section 628(e)(2) clarifies that any such remedy the Commission might impose for program access violations is not limited to those otherwise enumerated in the Communications Act. With regard to the argument that Congress intended to limit the broad language "appropriate remedies" with the language relating to the "power to establish prices, terms and conditions," Consumers Union argues that the language of Section 628(e)(2) which permits the Commission to adopt remedies "in addition to" those specifically enumerated elsewhere in the Communications Act demonstrates that Congress intended the Commission to have remedial powers that extended far beyond forfeitures and prospective injunctive relief. Ameritech also notes that the word "including" is generally interpreted as a term of enlargement and not of limitation. WCA states that, as the Commission recognized in a program access decision relating to exclusive programming contracts in the direct broadcast satellite ("DBS") industry, the use of the term "including" in another program access provision "indicates that the specified list . . that follows is illustrative, not exclusive." Two commenters also cite the Commission's broad authority to fashion appropriate remedies under Section 4(i) of the Communications Act. J. We disagree with those commenters that argue that the Commission lacks statutory authority to impose damages for program access violations. Section 628(e) of the Communications Act provides: (1) Remedies Authorized. -- Upon completion of such adjudicatory proceeding, the Commission shall have the power to order appropriate remedies, including, if necessary, the power to establish prices, terms, and conditions of sale of programming to the aggrieved multichannel video programming distributor. (2) Additional Remedies. -- The remedies provided in paragraph (1) are in addition to and not in lieu of the remedies available under title V or any other provision of the Act. The Commission has interpreted its authority under Section 628(e) as "broad enough to include any remedy the Commission reasonably deems appropriate, including damages." We reject Liberty's confined interpretation of Section 628(e), and do not agree that determining damages to be an appropriate remedy thereunder renders subsection (e)(2) superfluous. The Commission's interpretation of Section 628(e) is that subsection (e)(1) authorizes the Commission to order appropriate remedies, including damages, while subsection (e)(2) clarifies that the remedies authorized under subsection (e)(1) complement, and may be exercised in tandem with, other remedies permitted under the Communications Act, including forfeitures. With regard to Liberty's ejusdem generis argument, we agree with Ameritech and WCA that the appropriate interpretation of the term "including" in Section 628(e)(1) indicates that the phrase relating to prices, terms and conditions is illustrative, rather than exclusive. K. We disagree with Liberty's analogy between the program access provisions of the Communications Act and Section 5 of the FTCA. Section 5(a) of the FTCA provides that "[u]nfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce, are hereby declared unlawful." Upon a finding that an entity has engaged in an unfair method of competition or an unfair or deceptive act or practice, Section 5(b) empowers the Federal Trade Commission to issue an order requiring that the entity ". . . cease and desist from using such method of competition or act or practice." The Federal Trade Commission has conceded that Section 5 of the FTCA does not grant it the power to order damages for violations of Section 5(a). That Section 5 of the FTCA and Section 628 have certain facial similarities is not a basis to conclude that Section 628 remedies are similarly limited to the remedies under the FTCA. Indeed, the similarities remain facial. By its terms, Section 5(b) limits the Federal Trade Commission to prospective injunctive relief in the form of cease and desist orders. In contrast, Section 628(e) grants the Commission "the power to order appropriate remedies." In scope and statutory language, we find Liberty's analogy between the two provisions to be unpersuasive. Accordingly, we reaffirm our statutory authority to impose damages in redressing violations of Section 628. b. Need for a Damages Remedy L. Several commenters argue that the Commission should continue to refrain from imposing damages, even if it has authority to do so. Fox states that there is no evidence contained in the comments filed in response to the NPRM, or elsewhere, to base a finding that existing remedies have not been sufficient to accomplish the goals of Section 628 or that a damages remedy is particularly necessary. Numerous commenters note that the Commission has never exercised its authority to impose forfeitures for violations of the program access rules. NCTA states that the intent of Section 628 is to promote competition among multichannel video programming distributors ("MVPDs") and that there is no indication that the Commission's existing remedies have been inadequate to enable complaining MVPDs to compete on fair terms in the video marketplace. Other commenters argue that a damages remedy will reduce the efficiency of the program access provisions by imposing significant delays and additional costs on the resolution of program access cases. HBO argues that damages are particularly inappropriate in the area of program access where the law is nascent and provides little guidance on actions that will or will not result in a program access violation. Cablevision argues that the imposition of damages will cause programmers to cease negotiating contracts based on legitimate price differentials because the programmer faces a significant risk that the Commission will simply disagree with its economic analysis and order a rate reduction. M. When the Commission determined in the Order on Reconsideration that it had the authority to impose damages but would, at that time, refrain from doing so, the Commission had no experience in enforcing the program access provisions of the Communications Act. In the interim, the Commission and the multichannel video programming industry have had almost six years of experience under Section 628, and the Commission believes that sufficient understanding of the parameters of program access exist. It is appropriate to take a logical next step -- the compensation of victims of clear-cut anti-competitive conduct which violates the program access rules. Restitution in the form of damages is an appropriate remedy to return improper gains obtained by vertically-integrated programmers to unjustly injured MVPDs. N. We also recognize, as argued by HBO, that the law of program access continues to be refined, and it is not appropriate in all instances to impose damages for program access violations. We believe Section 628 permits the Commission to exercise discretion in this area. Section 628(e)(1) authorizes the Commission to order "appropriate" remedies. Where a program access defendant relies upon a good faith interpretation of an ambiguous aspect of the program access provisions for which there is no guidance, we do not believe it would promote competition, or otherwise benefit the video marketplace, to require damages from a programming provider in such circumstances. Where, however, there are circumstances through either rulemaking or adjudicatory proceedings, such that a program access defendant knew, or should have known, that it was engaging in conduct violative of Section 628, damages are appropriate and will be imposed. Since the enactment of the program access rules, the Commission has encountered several program access complaints involving repeated conduct involving the same or substantially the same conduct by programming providers. Where encountered in the future, the Commission may impose damages, if appropriate, in such instances. O. Echostar argues that the Commission should apply any damages remedy adopted in this proceeding to all pending program access cases. Fox opposes Echostar's proposal as against established precedent that the rules adopted by an agency in notice and comment rulemaking have prospective effect. We believe that it would be fairer to apply the rules adopted herein only to conduct violative of Section 628 that occurs on or after the effective date of the rules. c. Punitive Damages P. Background. We tentatively concluded in the NPRM that punitive damages should not be imposed in program access cases and sought comment on this tentative conclusion. Q. Discussion. Bell Atlantic advocates that the Commission refrain from adopting a blanket rule that punitive damages will not be awarded in program access cases. Commenters failed to establish a record regarding the need for the imposition of punitive damages in program access cases. We adopt our tentative conclusion that punitive damages should not be imposed in program access cases at this time. 3. Procedural Considerations R. Background. The Commission sought comment regarding the correct procedures to implement damages or forfeitures in the context of specific program access proceedings. In addition we sought comment on Americast's proposal that, in some cases, the most efficient manner of processing program access cases would be to bifurcate the program access violation determination from the damages or forfeiture determination. We also sought comment on the calculation of damages, if assessed. We requested that commenters consider whether the Commission should determine damages on a case-by-case basis, or whether there should be a standard calculation for damages in program access matters. Those arguing that damages should be based on a standard calculation were asked to comment on how the Commission should determine such standard calculation. S. We also sought comment on whether we should adopt the requirement, contained in the Formal Complaint Order, that a complainant seeking damages must file with its complaint or supplemental complaint either a detailed computation of damages or a detailed explanation of why such a computation is not possible at the time of filing. Commenters advocating the adoption of such a requirement were advised to address whether the explanatory standards adopted in the Formal Complaint Order should be adopted, or whether some other explanation standard should apply. T. Discussion. Several commenters argue that no definitive damages calculation be adopted and that damages be tailored to the specific circumstances of each proceeding and calculated on a case-by-case basis. Similarly, several commenters favor adopting the case-by-case approach to calculating damages established by the Commission in the Formal Complaint Order. OpTel supports a procedure whereby successful program access complainants be permitted to demonstrate the actual damages attributable to the violation. In addition, many commenters favor the bifurcation of the violation determination from the damages portion of the proceeding. HBO argues however that bifurcation of the violation determination from the damages portion of the proceeding will not alleviate the problem that the imposition and calculation of damages will needlessly mire the Commission in complex damages assessment procedures. U. Consumers Union proposes that the Commission adopt a dual approach to calculating damages. For price discrimination cases, Consumers Union suggests that the Commission impose damages based upon the price differential between what the complainant was paying and should have paid for the programming. In denial of programming cases, where assessment of damages may be more difficult, Consumers Union advocates standardized damages based on what the programmer charges competing MVPDs for the particular programming at issue. V. SCBA suggests a liquidated damages approach to the calculation of damages requiring the programmer violating the Commission's rules to provide the disputed programming to the successful complainant at a discounted rate for two years. Under SCBA's proposal, the Commission would calculate the discounted price as the lower of: (i) 80% of the price charged at the time the complaint was filed; or (ii) 80% of the price charged at the date of the Commission's decision. Echostar proposes that denial of programming damages be calculated by statistical studies on the percentage of MVPD subscribers who did not purchase the aggrieved MVPD's service based on the inability to provide the denied programming. WSN asserts that damages should be the higher of: (i) the complainant's loss; or (ii) the programmer's gain, together with attorney's fees and expenses for a prevailing petitioner. RCN proposes that the Commission adopt a series of escalating penalties which increase throughout the duration of the violation and that are tied to a defendant-specific indicator, such as a percentage of revenue. Ameritech favors calculating damages on established antitrust principles through which a successful plaintiff is required to demonstrate: (i) that its profits have been reduced due to the defendant's anti-competitive conduct; and (ii) the extent of the loss. W. The various proposals for calculating damages offered by commenters, while reflecting some merit in allowing a specific amount to be determined, fall short because they do not provide general guidance for all circumstances and also fail to present a format by which the actual damages experienced can be determined. We agree with those commenters that advocate the position that damages can best be calculated on a case-by-case basis. In particular, we believe the most efficient method for determining damage claims in the program access area is to adopt procedures similar to those used by the Commission in adjudicating common carrier formal complaints. As several commenters have stated, development of the Formal Complaint Order damages procedures involved extensive consideration of issues that are substantially similar to the issues that the Commission faces in this proceeding. Moreover, the record established in this proceeding does not indicate that the adoption of program access damages procedures that are fundamentally different from the Formal Complaint Order procedures better serves the public interest. We believe that the damages procedures set forth in the Formal Complaint Order, modified to reflect the program access context, provide the most fair and efficient procedure for determining damages. It also provides program access litigants with established procedures for complex damages determinations which the adoption of a wholly-new set of procedures would lack. In addition, adopting the damages procedures set forth in the Formal Complaint Order, modified to reflect the program access context, lends at least partial symmetry to the treatment of damages issues arising under the Communications Act that, while not statutorily required, adds further consistency to our regulations which better serves the public. If the Formal Complaint Order procedures prove to be insufficient or too cumbersome in certain respects when applied in the program access context, the Commission will revisit this issue and further modify our rules. X. We believe that the most efficient method by which to administer damages is to provide the Commission with discretion to bifurcate the violation determination from any damages adjudication. We require that a complainant seeking damages for a program access violation must file as part of its complaint either: a) A detailed computation of damages, including supporting documentation and materials; or b) An explanation of: (i) What information not in the possession of the complaining party is necessary to develop a detailed computation of damages; (ii) Why such information is unavailable to the complaining party; (iii) The factual basis the complainant has for believing that such evidence of damages exists; and (iv) A detailed outline of the methodology that would be used to create a computation of damages with such evidence. Where a violation is found, the Cable Services Bureau ("Bureau") will indicate in its order whether the violation is the type for which the Commission will impose damages or forfeitures. As with all program access orders, the parties may file an application for review of the Bureau's decision to the Commission. The burden of proof regarding damages rests with the complainant, who must demonstrate with specificity the damages arising from the program access violation. We note that, given the one year limitations period for bringing program access complaints, the Commission will not entertain damages claims asserting injury pre-dating the program access complaint by more than one year. The Commission cautions potential complainants that grossly overstating the amount of damages incurred will result in a Commission determination that the complainant has failed to meet its burden of proof. Y. As in the Formal Complaint Order, we believe this rule strikes the appropriate balance between the need for complainants to be diligent in establishing their claims and a recognition that, in certain instances, a complainant may not possess sufficient facts at the initial stages of a complaint proceeding to prepare a detailed computation of damages alleged. This rule is also consistent with the Commission's policy of encouraging complainants to have damages claims resolved separately from liability issues. Z. The Commission may adjudicate damages by determining the sufficiency of the damages calculation or computation methodology submitted by the complainant. Alternatively, the Commission may find the damages calculation or computation methodology submitted by the complainant unsatisfactory, or, in its discretion, modify such calculation or computation methodology or require the complainant to resubmit such calculation or computation methodology. Where the Commission issues a written order approving or modifying a damages calculation, the defendant shall recompense the complainant as directed in the Commission's order. Where the Commission issues a written order approving or modifying a damages computation methodology, the parties shall negotiate in good faith to reach an agreement on the exact amount of damages pursuant to the Commission-mandated methodology. To ensure that the parties are diligent in their negotiations to apply the approved methodology, we shall require that, within thirty days of the date the damages computation method is approved and released, the parties must file with the Commission a joint statement which will do one of the following: (1) detail the parties' agreement as to the amount of damages; (2) state that the parties are continuing to negotiate in good faith and request that the parties be given an extension of time to continue such negotiations, or (3) detail the bases for the continuing dispute and the reasons why no agreement can be reached. In this way, the Commission will monitor the parties' compliance with its directive to negotiate a resolution of the dispute in good faith using the mandated computation method. We also adopt a rule authorizing the Chief of the Cable Services Bureau to refer damages disputes to administrative law judges ("ALJ") for either decision following a finding of liability or, by agreement of the parties, mediation. In cases in which the parties cannot resolve the amount of damages within a reasonable time period, the Commission retains the right to determine the actual amount of damages on its own, or through referral to an ALJ. We also note that our rules require that program access complaints be filed within one year of an alleged violation. AA. This rule permits the Commission to avoid the detailed and time-consuming investigation of the facts necessary to establish an exact amount of damages where such investigation may reasonably be determined by the parties. At the same time, however, it provides a means for parties to return to the Commission for resolution of ongoing disputes if parties are unable to agree to a final amount of damages. This rule encourages good faith negotiation among the parties by requiring parties to provide detailed explanations if they fail to resolve their dispute. We emphasize that the Commission retains the right to determine the actual amount of damages in those cases where the establishment of damages does not lend itself to such a means of resolution. We also conclude that requiring parties to reach an agreement within a limited time addresses the concerns raised by some commenters that the parties would have no recourse if they are unable to apply a damages computation method successfully. Interest on the amount of damages awarded will accrue from either the date indicated in the Commission's written order or the date agreed upon by the parties as a result of their negotiations. Interest shall be computed at applicable rates published by the Internal Revenue Service for tax refunds. 4. Damages Accrual Date BB. Background. The Commission sought comment on the date from which damages should be levied for violations of Section 628. Specifically, we sought comment on whether the operative date should be the date of the notice of intent to file a program access complaint, or the date of filing of the program access complaint, or the date on which the violation first occurred. CC. Discussion. Commenters disagree regarding the date from which damages should accrue. Several commenters believe that damages should accrue from the date on which cable operators are given notice pursuant to Section 76.1003(a) of the Commission's rules that a complainant intends to file a program access complaint. Other commenters believe that appropriate date is the date on which the violation first occurred. Another group of commenters assert that damages should be measured from the date on which a complaint is filed with the Commission. We believe that the appropriate date from which damages should accrue is the date on which the violation first occurred. The burden is on the complainant to establish this date. Whether the complainant has been unfairly denied programming or charged an unfair price for programming received, the injury flows from the date on which the violation first occurred and the complainant should, in appropriate cases, be compensated accordingly. B. Timing Issues 1. Time Limits for the Resolution of Program Access Cases DD. Background. Although Congress did not enact specific time limits for Commission resolution of program access disputes, Congress did provide that "[t]he Commission's regulations shall . . . provide for an expedited review of any [program access] complaints. . . ." In initially implementing Section 628, the Commission did not impose time limits for the resolution of program access complaints. EE. In the NPRM, the Commission requested comment on appropriate time limits for the resolution of program access complaints: should the Commission adopt Ameritech's proposed time limits (90 days for cases not involving discovery, and 150 days for cases in which discovery is conducted); should some other time period apply; or should the Commission not adopt time limits. In addition, we sought comment on whether the time limit, if any, should run from the time the complaint was filed, as proposed by Ameritech, or whether the time limit should run from some other point, such as the close of pleadings, or the close of discovery. Recognizing that one universally applicable time limit may not sufficiently take into account all of the circumstances faced by the Commission in resolving program access complaints, the Commission sought comment regarding whether one time limit should apply to all program access complaints, or whether one time limit should be established for cases involving denial of programming, with a longer time limit established for price discrimination cases, which generally involve issues of greater complexity. We also sought comment on any other reasonable distinction between program access cases which would impact the appropriate time limit, if any, for resolution of that type of program access proceeding. FF. Discussion. Most commenters favor, or do not oppose, the adoption of some form of time limit for the resolution of program access complaints. Ameritech argues that the absence of firm deadlines undermines the effectiveness of Section 628 as an instrument of competition. Commenters maintain that, from the perspective of injured competitors, "justice delayed is justice denied" and that expeditious resolution of such complaints will, at least partially, alleviate the harm and cost to complainants. Cable commenters generally oppose the adoption of time limits for the processing of program access complaints. Commenters point out that, while it established specific statutory time limits for processing numerous Commission actions in the Communications Act, Congress established no specific time limits for the resolution of program access disputes. These commenters argue that, to now adopt specific time deadlines, the Commission would establish an artificial priority to, and occupy scarce Commission resources for, program access cases which Congress did not intend. In addition, commenters argue that the establishment of specific time limits could prevent the Commission from giving adequate consideration to the facts and issues of particular cases increasing the likelihood of an erroneous decision. GG. Ameritech continues to propose that a Commission decision in Section 628 proceedings should be required within 90 days from the filing of the complaint in cases where there is no discovery and 150 days from the filing of a complaint in cases where discovery is conducted. Commenters argue that Ameritech's proposed deadlines are completely consistent with the various statutory deadlines (ranging from 90 to 150 days) for resolution of different types of common carrier disputes imposed by Congress in the 1996 Act. One commenter argues that any time limits adopted by the Commission must account for the complexities of program access disputes and allow the parties sufficient time to develop and present their positions. This commenter asserts that the Commission should be careful that any deadlines adopted not interfere with the opportunity for private settlement of such disputes by the parties. Two commenters assert that it would be unwise for the Commission to adopt different time limits based upon the type of program access complaint. Ameritech argues that shorter time periods for certain types of program access complaints might lead to the Commission refusing discovery in those cases. One commenter argues that running the time limit from the filing from the date of filing of the program access complaint may not allow the Commission sufficient time to review the record in such cases. HH. We believe that the adoption of time limits for the resolution of program access disputes can enhance competition in the video marketplace by providing certainty to program access litigants that their complaints will be timely resolved. Of course, we recognize that any time limits imposed must reflect the myriad circumstances and complexity inherent in the program access provisions. We recognize that the expeditious resolution of these complaints is dependent in many circumstances upon the actions of the parties. In this regard, by adopting appropriate time limits, which also impose responsibilities on the parties, the Commission will be afforded sufficient time to analyze fully each program access complaint. We disagree with those commenters that argue that we are artificially prioritizing program access complaints contrary to Congress' intent, as the law imposes the obligation to resolve complaints expeditiously. If the Commission can fully and fairly adjudicate program access complaints in the time frames discussed below, while also meeting its other statutory duties, we believe that Congress' overall structure for regulation and competition in the video marketplace is better served. II. In imposing time limits the Commission must ascertain what can be accomplished in all cases on a consistent basis. The specific time limit proposals suggested by certain commenters do not reflect the range of competing priorities faced by the Commission. Many of these competing priorities also serve important roles in promoting competition. We agree with those commenters that advocate assigning different time limits for different types of program access disputes. Our experience indicates that, while complex in themselves, denial of programming cases involving refusal to sell or issues of exclusivity can typically be processed more expeditiously than price discrimination cases, which often involve numerous issues requiring legal, economic and accounting expertise. We believe that a single time limit would require the Commission to adopt a longer time limit than would be necessary in many cases to account for the time involved in resolving price discrimination disputes. JJ. Many commenters argue that any time limits adopted by the Commission should run from the date of filing of a program access complaint. One commenter argues that any time limits which the Commission may adopt for the resolution of program access cases should run from the close of the pleading cycle (including any extensions granted by the Commission). Consistent with the Commission's other statutory deadlines discussed above, we believe that the time limits adopted herein should commence to run from the time a party submits its complaint to the Commission. KK. We believe that denial of programming cases (unreasonable refusal to sell, petitions for exclusivity, and exclusivity complaints) should be resolved within five months of the submission of the complaint to the Commission. All other program access complaints, including price discrimination cases, should be resolved within nine months of the submission of the complaint to the Commission. Where the Commission bifurcates the program access violation determination from a damages determination, the time limits adopted herein apply solely to the resolution of the program access violation. These dates reflect not what the Commission would select if afforded unlimited resources, but rather what we believe to be realistic goals that are achievable given the Commission's limited resources and overall statutory duties. These time limits contemplate resolution times applicable to most typical program access disputes which do not involve complex or repeated discovery, pleading extensions or extra pleadings based upon new information, or requests that the Commission stay proceedings pending settlement negotiations. Program access disputes involving these circumstances may impact the Commission's ability to resolve such disputes within the time limits discussed herein. We believe that this certainty, combined with the other actions approved in this Order, will provide further incentive for programming providers to avoid scrupulously program access violations, as well as expeditiously resolve program access disputes. LL. Commenters argued that any time limits imposed by the Commission must afford a meaningful opportunity to pursue settlement negotiations. We agree. As the Commission stated in the NPRM, "we encourage resolution of program access disputes through negotiated settlements in an effort to avoid time- consuming, complex adjudication. This policy favoring private settlement and alternative dispute resolution conserves Commission resources and is thus in the public interest." Where the parties to a program access dispute submit a motion to stay proceedings pending settlement discussions, the Commission will afford the parties the time necessary to determine whether a negotiated settlement is possible. If parties choose to pursue negotiations, an alternative that we think provides the most efficient and effective resolution of program access disputes, these time limits will be suspended. We think this properly places on the parties a commensurate responsibility that these matters be resolved expeditiously. We also think it avoids the confusion and delay that inevitably accompanies resetting time periods. 2. Pleading Cycle MM. Background. The Commission sought comment on Ameritech's proposal to shorten the answer (from 30 days to 20 days) and reply (from 20 days to 15 days) pleading periods applicable to program access complaints. We tentatively concluded that the pleading cycle should not be shortened. NN. Discussion. Several commenters favor the shortening of the pleading cycle for program access proceedings. Ameritech requests that a defendant file its answer to a complaint within 20 days after the receipt of service of the complaint. Commenters assert that the required 10-day notice preceding the filing of a program access complaint, and the discussions between the parties which inevitably ensue, also permit the narrowing of the issues, making 20 days from service of the complaint sufficient for filing an answer. Ameritech proposes that within 5 days of the service of the answer, the parties shall advise each other and the Commission whether they intend to seek discovery. If neither party seeks discovery, the complainant shall be permitted to file a reply within 20 days after service of the answer, as currently provided in Section 76.1003(e). OO. Several commenters strongly oppose Ameritech's proposal to shorten the pleading cycle for program access complaints arguing that the benefit of 15 days saved by Ameritech's proposal is outweighed by the need to provide sufficient time for parties to formulate the most effective arguments and evidence. Commenters assert that the complainant may take as long as necessary to develop and file their complaints (subject to the one year statute of limitations on program access complaints), while defendants currently have only 30 days to prepare an answer which may be the only substantive pleading permitted the defendant. One commenter notes that unlike civil lawsuits where abbreviated pleadings establish the basic elements of claims and defenses to be later proven at trial, in the case of program access actions the pleadings are the heart of the case and form the basis for the Commission's decision. One commenter also argues that comparisons between the program access complaint pleading cycle and the common carrier formal complaint process pleading cycle are ill advised because the shorter formal complaint pleading cycle is directly related to the considerable notice and issue clarification aspects of the new pre-filing procedures adopted in the Formal Complaint Order. This commenter observes that, in program access complaints, no formal pre-filing procedures exist and a complainant need only give prospective defendants 10 days' notice prior to filing a complaint. One commenter argues that such concerns can be alleviated by also adopting the Formal Complaint Order pre-filing procedures for program access complaints. In response, another commenter states that "[o]ther than to provide aesthetic symmetry, however, it is not evident why [the] wholly different rules and processes [of the Formal Complaint Order and program access] should be conformed." PP. We stated in the NPRM "[w]e believe that the benefit of the 15 days saved by Ameritech's proposal is outweighed by the need to provide sufficient time for the parties to best marshal their arguments and evidence." In light of our decision to impose time limits for the resolution of program access disputes, however, we believe that it is necessary to adopt a more streamlined pleading cycle. As discussed above, the adoption of time limits for the resolution of program access disputes requires that we impose additional responsibilities not just on the Commission, but on the parties as well. Program access defendants must file an answer within 20 days of service of the complaint, unless otherwise directed by the Commission. Program access complainants must file a reply within 15 days of service of the answer, unless otherwise directed by the Commission. We disagree with commenters who assert that defendants will be overly-burdened by having to file answers within 20 days of the date of service. The pre-filing notice will provide the defendant at least 10 days, and often more than 10 days, notice of the existence of a programming dispute, as well as alert the defendant of the basis of the dispute. We believe that the 10 day reduction in the answer period will not adversely impact a program access defendant's ability to establish and support its defense. Ameritech also proposes significant additional procedures related to status conferences, discovery, and briefing. We note that our existing regulations already encompass sufficiently each of these areas. C. Discovery 1. Discovery Rights QQ. Background. The Commission sought comment on several means of expediting the discovery process. While tentatively concluding that the Commission should retain its existing discovery procedures, we sought comment on whether it would speed the discovery process to have complainants submit proposed discovery requests with their program access complaints and require defendants to submit their proposed discovery requests and objections to complainants' discovery requests with their answer. Complainants would then submit their objections to defendants' discovery requests with their reply. The Commission also sought comment on any other change in the procedures applicable to program access complaints that would result in the necessary information disclosure in the most efficient, expeditious fashion possible. Specifically, we sought comment on whether different standards for discovery should be applied to different types of program access complaints, such as price discrimination, exclusivity, and denial of programming. RR. Discussion. Several commenters support the amendment of the Commission's program access rules to provide parties discovery as-of-right. These parties argue that an automatic right to discovery in a form that, at a minimum, ensures that program access plaintiffs have access to the programming contracts and agreements involved in the dispute is necessary to counteract the structural bias working against aggrieved parties under current Commission practice. Several commenters argue that granting a right of discovery will lead to fewer program access cases because vertically-integrated programmers facing a complainant with discovery rights will be far more likely than current programmers to negotiate a pre-complaint settlement to program access disputes. Numerous commenters also believe that it would speed the discovery process if the parties filed their discovery requests and objections as part of the pleading process. SS. Cable commenters generally agree with the Commission's tentative conclusion to retain Commission-controlled discovery and oppose expanding the program access discovery process arguing that doing so will only encumber and lengthen the process. These commenters assert that expanded discovery rights are unnecessary as the Commission-controlled discovery procedures currently provide complainants with the opportunity to obtain all relevant information to prove their claims. HBO asserts that discovery as-of- right would destroy a programmers ability to fashion individual agreements through good faith negotiations, arguing that "[t]he most advantageous term of each negotiated agreement would, if disclosed, become the lowest common denominator of the next negotiation with another party, whether warranted or not." Moreover, assert cable commenters, expanded discovery rights would lead to "fishing expeditions" for the purpose of: (i) obtaining confidential terms and conditions from competitor's agreements; (ii) harassing programmers into granting more favorable prices, terms, and conditions not required by the program access rules; and (iii) determining whether any of their affiliation agreements might conceivably be discriminatory under the program access rules. Liberty quotes the Formal Complaint Order in which the Commission decided not to adopt expanded discovery procedures for common carrier formal complaints, stating "[i]n our experience, discovery has been the most contentious and protracted component of the formal complaint process. . . . Discovery is inherently time-consuming and often fails to yield information that aids in the resolution of the complaint." TT. Echostar argues that the Commission should adopt the discovery as-of-right principles contained in the Federal Rules of Civil Procedure. Bell Atlantic argues that limited discovery should apply to denial of programming and exclusivity complaints, while discovery as-of-right should be afforded to price discrimination complaints. OpTel supports limited discovery, for example, 30 interrogatories and five requests for the production of documents. UU. BellSouth proposes that the Commission adopt a right of discovery limited to contracts and documentation concerning programming rates, and/or other terms and conditions of access. BellSouth asserts that the Commission should modify its rules to require that a program access complainant file with its complaint any discovery requests, limited to contracts or other documents that relate to programming rates, and/or other terms and conditions of access in dispute. VV. Ameritech now favors a limited form of discovery similar to that adopted in the Formal Complaint Order. Specifically, Ameritech proposes that the Commission amend its rules to provide that certain documents be appended to a defendant's answer, including: all documents that the defendant intends to rely on in establishing its defense; in exclusivity cases, the exclusive contract, or a statement that no such contract exists; in price discrimination cases, all contracts between the defendant and all competing MVPDs in all Designated Market Areas ("DMAs") the complainant serves or reasonably expects to serve; all other documents, such as side letters, affecting the prices, terms and conditions of such service and all relevant rate cards. Ameritech asserts that the production of documents with the defendants answer may not be sufficient, and complainants should be permitted, following a status conference, to request depositions or propound written interrogatories. Ameritech argues that the Commission should establish a presumption in favor of granting such requests. WCA also advocates a limited form of discovery requiring a complainant to submit its discovery requests with its complaint. GTE proposes that the complaint and discovery request be served on a designated Commission staff member who must within 10 business days permit the discovery if the complainant has made a prima facie case. WW. Liberty opposes Ameritech's limited discovery proposal because it institutionalizes a discovery process in every program access dispute regardless of its complexity. Moreover, Liberty complains that Ameritech's proposed procedures grant a right to discovery even before the Commission has determined that a complainant has established a prima facie case that a program access violation has occurred. XX. We affirm our tentative conclusion that the current system of Commission-controlled discovery be retained. We do not believe that discovery as-of-right, or expanded discovery, would improve the quality or efficiency of the Commission's resolution of program access complaints. We reiterate our belief first stated in the NPRM that, given the sensitive and proprietary nature of the information involved in program access matters, expanded discovery would inevitably devolve into Commission-controlled discovery. We do not believe that expanded discovery will necessarily lend greater focus to program access disputes. In this regard, the Bureau recently discussed the limitations of discovery in the program access context, stating that ". . . we are unsure that a broader and more extensive process to ascertain [certain] factors, with more information and analysis, would bring a more precise resolution, as we do not think the parties purposefully avoided providing more specific information." Later in its decision the Bureau also stated "[w]e have had to balance requests for additional information, and the burden these entail, against the need to bring this matter to resolution. This has proven to be a difficult process. The information received is not conducive to resolve this matter from a strictly cost-accounting perspective." We agree with commenters who assert that expanded discovery would be more likely to encumber and lengthen resolution times for program access proceedings, which directly contradicts commenters' views that program access cases should be resolved expeditiously. The record does not indicate that expanded discovery would enhance the process of substantively adjudicating these cases. We are not persuaded by any of the commenters that their proposals would be preferable to the current system of discovery. YY. We decline to adopt different standards of discovery for different types of program access complaints, such as limited discovery for unreasonable refusals to sell and exclusivity complaints, or discovery as-of-right for price discrimination matters. In many program access matters, the record is sufficient for the Commission to make a determination. In matters where the Commission determines that the record is not sufficient, the current rules allow the Commission to seek additional information. The Commission has ordered discovery in two price discrimination proceedings, and the Commission will continue to order parties to provide the information necessary to resolve complaints at issue. ZZ. We agree with Ameritech that it would be useful to adopt a procedure whereby defendants are required to attach certain documents to their pleadings similar to that adopted in the Formal Complaint Order. Our rules already provide that program access defendants must support any defense to program access allegations with written documentation. We clarify our rules to provide that, to the extent that a defendant expressly references and relies upon a document or documents within its control in responding to a program access complaint, the defendant must attach that document or documents to its answer. We decline, however, to adopt Ameritech's specific proposals regarding the type of documents which a defendant must attach to its answer for specific program access complaints. Our rules require that program access defendants defend each allegation contained in a prima facie program access complaint or face default judgement by the Commission. Once a prima facie complaint has been determined, the burden of proof is on the defendant to establish that it did not violate the program access provisions of the Communications Act. We leave to the discretion of the defendant how best to defend against such allegations, requiring only that any documents expressly referenced and relied upon in responding to a program access complaint be attached to the answer, or other responsive pleading permitted by the Commission. 2. Standardized Protective Order AAA. Background. The Commission sought comment on whether the issuance of a standardized protective order applicable to program access complaints would expedite the necessary information disclosure. BBB. Discussion. Numerous parties support the adoption of the standardized protective order for program access proceedings attached to the NPRM with little or no alteration. Ameritech proposes that the protective order permit an individual that may be involved with programming decisions and negotiations to have access to materials covered by the protective order where such individual's involvement is essential to the analysis of the defense. Ameritech asserts that such individuals, like all individuals subject to the protective order, must certify that they will use such information solely for purposes of resolving the program access complaint. Ameritech argues that aspiring competitors to cable often have small staffs with employees serving the company in multiple capacities. Ameritech asserts that, absent this amendment, complainants will be faced with the decision of involving key personnel in a program access dispute, and foregoing their abilities in the purchasing of future programming, or not involving the best-situated employees to analyze program access defenses. CCC. Encore also supports the adoption of the proposed standardized protective order with three amendments. First, Encore proposes that the Commission amend Section 0.457(d)(1) to include a specific reference to materials for which a party has requested that confidential treatment in a program access case be included among the types of materials for which it is unnecessary to submit a special request for confidentiality. Second, Encore proposes that the standardized protective order be clarified that consultants under contract to the Commission be granted access to confidential information only if they have executed the Declaration attached to the protective order. Third, Encore proposes that the protective order be clarified that at the termination of a proceeding all copies of confidential materials be returned to the submitting party, or destroyed by the reviewing party, at the discretion of the submitting party. Encore also asks that the Commission designate as part of the instant proceeding the appropriate sanctions to be imposed on individuals who violate the protective order. DDD. Cable commenters argue that the standardized protective order proposed by the Commission will not adequately protect programmers and it would be highly likely that any confidential business information revealed would ultimately be used in an improper manner unrelated to the program access dispute at issue. These commenters argue that the imposition of sanctions for breaching a protective order will provide little comfort for the programmers whose confidential information is divulged. In response to Ameritech's proposal to modify the proposed protective order to permit employees involved in programming negotiations access to confidential materials subject to a protective order, HBO states that "Ameritech does not and cannot offer any justification for why persons involved in negotiating programming contracts must have access to a programmer's confidential contracts in order for the Commission to resolve a program access dispute." EEE. We adopt the standardized protective order that was attached to the NPRM for program access matters with several minor revisions. The Commission has used the standardized protective order in other situations and we are confident that it affords adequate protection to all parties involved. We also believe that the adoption of a standardized protective order will facilitate the resolution of program access matters. In one recent program access petition, resolution was delayed when the parties had difficulty negotiating a satisfactory protective order. Had a standardized protective order been adopted for program access proceedings, we believe the petition would have been resolved in a more expeditious manner. FFF. We decline to adopt Encore's proposal that we establish blanket confidential treatment for all materials submitted as evidence in a program access proceeding. In the Commission's experience, a portion of such materials do not require confidential treatment, and the Commission's existing procedures for confidentiality have thus far sufficiently protected confidential materials submitted by program access litigants. We agree with Encore and clarify the protective order to reflect that, at the termination of the proceeding, all copies of confidential materials be returned to the submitting party, or destroyed by the reviewing party, at the discretion of the submitting party. We decline to adopt Ameritech's proposal that the protective order permit an individual that may be involved with programming decisions and negotiations to have access to materials covered by the protective order where such individual's involvement is essential to the analysis of the defense. We think that the circumstances to which Ameritech refer can best be considered, on a case-by-case basis, through waiver requests. D. Terrestrial-Delivery of Programming GGG. Background. Section 628 of the Communications Act is applicable to cable operators, satellite cable programming vendors where a cable operator has an attributable interest, and satellite broadcast programming vendors, and generally applies to the delivery of "satellite cable programming and satellite broadcast programming." In the NPRM the Commission stated that, on its face, Section 628 does not preclude a programmer from altering its distribution method from satellite-distribution to terrestrial- distribution. The NPRM sought comment on the statutory basis for Commission action if a vertically- integrated programmer moves from satellite-delivered programming to terrestrial-delivered programming for the purpose of evading the program access requirements. The NPRM also sought comment on the need for legislation to address such circumstances. Where commenters contend that Commission action is appropriate, the NPRM sought comment on what evidence a complainant may marshal to prevail on a claim against a programmer that has moved satellite-delivered programming to terrestrial delivery to evade the program access requirements. HHH. Discussion. Numerous commenters assert that the Commission has the statutory authority under Section 628 of the Communications Act to enforce remedial measures upon a vertically-integrated programmer that moves from satellite-delivered programming to terrestrial-delivered programming for the purpose of evading the program access requirements. Commenters state that the nation's largest cable operators have been clustering their systems so that terrestrial distribution of national or regional cable programming services has become a feasible option. Moreover, commenters describe the increasing importance of the availability of regional sports and other regional programming for alternative MVPDs to be able to compete for subscribers. These commenters maintain that as regional networks proliferate and consolidate, it is clear that the cable industry intends to use terrestrial distribution as a means to replicate the exclusive dealing practices that warranted intervention by Congress and the Commission in 1992. Cable commenters stress that non-cable MVPDs increasingly have their own exclusive access to a growing variety of sports and entertainment programming that is unavailable to incumbent cable operators. Cable commenters also assert that there is no evidence of restricted programming availability that would justify extending the scope of the program access rules to terrestrially-delivered programming. III. Several commenters argue that terrestrial-delivery for purposes of evading the program access rules is directly addressable under Section 628(b) of the Communications Act. In such circumstances, commenters argue that a cable operator or its affiliated programming provider would unfairly refuse to provide a competing MVPD nondiscriminatory access to programming that it has made available to other MVPDs and that the purpose or effect of such refusal hinders significantly or prevents that MVPD from providing satellite cable programming to its subscribers. One commenter asserts that the anti-competitive conduct arises not from the use of an exclusively terrestrial delivery method, but rather "from the intentional migration of satellite- delivered programming to terrestrial facilities (or purposeful bypass of satellite-delivery in the first instance) to deny MVPD competitors access to programming without any legitimate business justification." Commenters assert that a vertically-integrated programming provider that has converted its programming to terrestrial delivery is in no way exempted from Section 628(b)'s proscription against unfair practices if a cable operator has taken action that has the "purpose or effect" of denying or eliminating a competing MVPD's access to satellite delivered programming. Commenters also argue that the Commission can address terrestrial evasion under its authority pursuant to Sections 4(i) and 303(r) of the Communications Act. JJJ. Other commenters argue that the general prohibition contained in Section 628(b) by its express language applies only to satellite delivered service. These commenters argue that because Congress expressly opted to exclude terrestrial programming from the reach of the program access provisions, a programmer's decision to utilize terrestrial delivery cannot constitute an unfair method of competition or an unfair or deceptive act or practice. Commenters also argue that where a programming provider has legitimate reasons for switching to terrestrial delivery, there is no basis for treating the switch as an unfair method of competition or an unfair practice. Cable commenters argue that terrestrial delivery has become an efficient alternative to satellite delivery in certain circumstances, making it likely that such a switch has a legitimate business justification. KKK. NCTA argues that the fact that certain programmers cannot obtain access to some terrestrially delivered programming does not constitute a harm recognized by Section 628(b) of the Communications Act. NCTA asserts that the test is not whether the denial of a particular programming service to an MVPD significantly hinders or prevents the MVPD from providing that programming service. The test is whether the unavailability of a service has a significant adverse effect on the ability to compete in the provision of video programming to subscribers or consumers. NCTA states that it is extremely unlikely that the loss of any particular service that may switch from satellite to terrestrial delivery would inflict significant competitive harm on an MVPD. LLL. Several commenters argue that the legislative history of the 1992 Cable Act demonstrates that Congress specifically considered whether to extend the program access requirements to terrestrially-delivered programming and declined to do so. These commenters note that the Senate version of the program access provisions applied to all vertically-integrated national and regional programmers regardless of how they were distributed. Conversely, the House provisions applied only to satellite delivered programming. The program access provisions of the conference agreement which was enacted as the 1992 Cable Act adopted the narrower House version. Other commenters claim that there is no evidence that Congress made an affirmative determination to limit program access solely to satellite delivered programming, and that the use of the term "satellite-delivered" should not carry the dispositive weight that the cable industry ascribes to such term. Commenters argue that Congress selected the term "satellite delivered" because in 1992 virtually all cable programming, particularly the national and regional programming to which Congress was seeking to protect access, was delivered by satellite. MMM. Cable commenters maintain that, as a matter of policy, the Commission should not extend Section 628 to terrestrially-delivered cable programming. Such action would involve the Commission in lengthy, fact-intensive disputes concerning the motives underlying the programmer's decision thereby forcing the Commission to second-guess the business judgement exercised by programmers. The terrestrial delivery program access exception, argue commenters, strengthens incentives for cable operators to invest in the development of local and regional cable programming because it permits them to utilize the full range of programmer distribution strategies, including exclusivity. Some commenters argue that such programming is an essential means of increasing their local identity and differentiating themselves from other MVPDs. NNN. In response, certain commenters argue that the so called "bad policy" argument propounded by the cable operators cannot be sustained for the reason that the programming that has been, and will be, diverted from satellite to terrestrial delivery remains the very same programming that Congress in the 1992 Cable Act sought to make accessible to cable's competitors on a non-discriminatory basis. In addition, commenters assert that extending the program access requirements to terrestrial delivered programming will not discourage development of new local and regional programming. Ameritech argues that proving terrestrial delivery for purposes of evading the program access rules will be extremely difficult to prove. OOO. The record developed in this proceeding fails to establish that the conduct complained of, i.e., moving the transmission of programming from satellite to terrestrial delivery to avoid the program access rules, is significant and causing demonstrative competitive harm at this time. The Commission has received only two complaints against the same vertically-integrated programmer related to moving the transmission of programming from satellite to terrestrial delivery to avoid the program access rules. Where the record fails to indicate a significant competitive problem, we are reluctant to promulgate general rules prohibiting activity particularly where reasonable issues are raised regarding the scope of the statutory language. In circumstances where anti-competitive harm has not been demonstrated, we perceive no reason to impose detailed rules on the movement of programming from satellite delivery to terrestrial delivery that would unnecessarily inject the Commission into the day-to-day business decisions of vertically-integrated programmers. While the record does not indicate a significant anti-competitive impact necessitating Commission action at this time, we believe that the issue of terrestrial distribution of programming could eventually have substantial impact on the ability of alternative MVPDs to compete in the video marketplace. We note that Congress is considering legislation which, if enacted, would introduce important changes to the program access provisions, including clarification of the Commission's jurisdiction over terrestrially-delivered programming. The Commission will continue to monitor this issue and its impact on competition in the video marketplace. E. Buying Groups: Joint and Several Liability PPP. Background. In the First Report and Order, the Commission determined that members of buying groups must agree to joint and several liability for commitments of the group to require vertically- integrated programmers to negotiate collectively with the group. SCBA argued that there is no legal or practical need for joint and several liability if a buying group maintains sufficient financial reserves to ensure its ability to pay programmers. The NPRM sought comment on SCBA's proposal. Specifically, the NPRM sought comment on what type of financial assurances cooperative buying groups can provide to programming distributors such that joint and several liability is not necessary, while adequately protecting programming distributors from the financial risks associated with such arrangements. QQQ. Discussion. The majority of those commenting on this issue favor the elimination of joint and several liability for buying groups that provide adequate financial assurances to safeguard programming providers. HBO does not oppose the elimination of the joint and several liability requirement, but urges the Commission to protect vertically-integrated programmers ability to demand, to its satisfaction, sufficient assurances of creditworthiness and financial stability as required by the Commission's rules. The commenters differ on what requirements the Commission should impose, in lieu of the joint and several liability requirement. SCBA argues that the Commission should establish a dual requirement based upon buying group size and financial reserves. SCBA asserts that a buying group must have sufficient size in order to diversify the risk of individual member default. SCBA recommends that qualified buying groups serve an aggregate of at least 5 million subscribers. SCBA's second proposed requirement is that a buying group must have liquid cash or credit reserves (i.e., cash, cash equivalents, or letters or lines of credit) equal to cover the cost of one month's programming upon the default of the buying group's largest member. SCBA argues that its dual approach provides a simple and objective measure that avoids involving the Commission in subjective disputes regarding the creditworthiness of specific buying groups. RRR. Satellite Distributors argue that vertically-integrated programming providers should not be permitted to refuse to deal with a buying group provided that the members of the buying group each guarantees to the programming provider its individual, pro-rata share of the programming license fees. Satellite Distributors maintain that its approach ensures that the responsibility for payment of fees is no different than if the programming providers were dealing with the buying group members on an individual basis. SSS. WSN is the sole commenter to oppose the elimination of the joint and several liability requirement. WSN argues that SCBA's approach actually seeks a special exemption for the National Cable Television Cooperative ("NCTC"). Because it is a cooperative that will not assume the full responsibility for the obligations of its programming contracts, WSN argues that NCTC is undeserving of such special assistance from the Commission. WSN asserts that NCTC merely needs to assume full responsibility for its obligations as a programmer to eliminate the joint and several liability requirement. According to WSN, if NCTC becomes a buying group by allocating one month's programming fees as an adequate financial reserve, then all similarly situated MVPDs must be permitted to also limit their contractual liability to one month's programming fees. TTT. We believe that the record justifies adopting an alternative method to joint and several liability that buying groups can satisfy which ensures that programming distributors are adequately protected from excessive financial risk. We reject Satellite Distributors proposed approach because it does not adequately protect programming providers. The reason smaller MVPDs enter buying groups is to obtain programming at a discount resulting from the group's aggregate purchasing power. In return for this discount, programming providers are entitled to protection that dealing with such groups will not be exposed to excessive financial risk or excessive expense such as having to routinely collect delinquent programming fees from individual buying group members. While Satellite Distributors proposed approach affords buying groups the advantages of aggregate purchasing power, it affords the programming provider with no more protection or cost savings than if the programming provider had contracted individually with each buying group member. UUU. We also reject SCBA's dual approach as inconsistent with the Commission's objectives. First, SCBA's proposal that a qualifying buying group maintain at least 5 million subscribers is excessive and would limit the alternative financial assurances method to far too few buying groups. In addition, we believe the proposal that such group maintain liquid reserves equal to one month's programming fees for only the largest buying group member does not adequately protect programming providers from financial risk. VVV. We believe that the most reasonable approach is a modified combination of the approaches proposed by both SCBA and Satellite Distributors. To qualify for the alternative to joint and several liability, we will require that buying groups maintain liquid cash or credit reserves (i.e., cash, cash equivalents, or letters or lines of credit) equal to cover the cost of one month's programming for all of the buying groups members. In addition, each member of the buying group will remain liable to the programmer for its pro-rata share of the buying group's programming. Under this approach, the alternative financial assurances method is available to buying groups of all sizes. At the same time, programming providers are adequately protected from the catastrophic default by multiple members of a buying group. If multiple members of a particular buying group default on their obligations to the buying group, and the buying group is unable to meet its obligations with existing resources, the programming provider is ensured payment for all programming thus far provided. At such point, the programming provider would have the option of terminating its contract with the buying group, retaining the one month's programming fees, and contracting with buying group members on terms negotiated between the programmers and the individual MVPDs. Alternatively, the programming provider could retain only the portion of the one month's programming fees that were actually defaulted upon, continue providing programming to the buying group, and look to the individual member for the balance of its pro-rata share of the buying groups contractual obligations. We believe that this approach addresses WSN's concerns that the approach proposed by SCBA artificially caps the financial obligations of certain buying groups through government regulation. For those buying groups that cannot, or will not, satisfy the financial requirements of this alternative approach, we clarify that the options to provide joint and several liability, or separately negotiate financial assurances satisfactory to the programming provider, remain effective. F. Miscellaneous Issues WWW. Discussion. WSN argues that all vertically-integrated programmers should be required to promulgate a publicly available rate card. WSN also argues that the program access rules should be expressly amended to expressly prohibit discrimination based on the use of KU Band technology. WSN asserts that the five cent per subscriber price differential necessary to establish a prima facie price discrimination case should be eliminated. Several commenters argue that the Commission should support the expansion of the program access rules to non-vertically-integrated programmers. SCBA strongly urges the Commission to require vertically-integrated programmers to disclose program cost information that would facilitate private resolution of price discrimination complaints. We decline to adopt each of these proposals. The Commission did not seek comment on these issues in the NPRM. Accordingly, there is no record upon which to base any action regarding these proposals. V. REGULATORY FLEXIBILITY ANALYSIS AND PAPERWORK REDUCTION ACT OF 1995 ANALYSIS XXX. The regulatory flexibility analysis is attached to this order as Appendix C. The requirements adopted in this Report and Order have been analyzed with respect to the Paperwork Reduction Act of 1995 (the "1995 Act") and found to impose new or modified information collection requirements on the public. The Commission, as part of its continuing effort to reduce paperwork burdens, invites the general public to take this opportunity to comment on the information collection requirements contained in this Order, as required by the 1995 Act. Public comments are due 60 days from date of publication of this Order in the Federal Register. Comments should address: (a) whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; (b) the accuracy of the Commission's burden estimates; (c) ways to enhance the quality, utility, and clarity of the information collected; and (d) ways to minimize the burden of the collection of information on the respondents, including the use of automated collection techniques or other forms of information technology. YYY. Written comments by the public on the new or modified information collection requirements are due 60 days from date of publication of this Order in the Federal Register. Comments on the information collections contained herein should be submitted to Judy Boley, Federal Communications Commission, Room 234, 1919 M Street, N.W., Washington, DC 20554, or via the Internet to jboley@fcc.gov. For additional information on the information collection requirements, contact Judy Boley at 202-418-0214 or via the Internet at the above address. VI. PROCEDURAL PROVISIONS ZZZ. Effective Date. Upon approval by the Office of Management and Budget ("OMB"), the rules adopted in this Order shall become effective. The Commission will publish a notice in the Federal Register announcing the effective date. VII. ORDERING CLAUSES AAAA. IT IS ORDERED that, pursuant to authority found in Sections 4(i), 303(r) and 628 of the Communications Act of 1934, as amended, 47 U.S.C.  154(i), 303(r) and 548, the Commission's rules ARE HEREBY AMENDED as set forth in Appendix A. BBBB. IT IS FURTHER ORDERED that the rules as amended in Appendix A shall become effective upon approval by the Office of Management and Budget. CCCC. IT IS FURTHER ORDERED that the Commission's Office of Public Affairs, Reference Operations Division, shall send a copy of this Report and Order, including the Final Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business Administration. FEDERAL COMMUNICATIONS COMMISSION Magalie Roman Salas Secretary Appendix A Part 76 of Title 47 of the Code of Federal Regulations is amended as follows: PART 76 -- MULTICHANNEL VIDEO AND CABLE TELEVISION SERVICE 1. The authority citation for Part 76 continues to read as follows: AUTHORITY: 47 U.S.C. 151, 152, 153, 154, 301, 302, 303, 303a, 307, 308, 309, 312, 315, 317, 325, 503, 521, 522, 531, 532, 533, 534, 535, 536, 537, 543, 544, 544a, 545, 548, 549, 552, 554, 556, 558, 560, 561, 571, 572, 573. 2. Section 76.1003 is amended by adding paragraph (c)(5) and amending paragraphs (d), (e) and (s) as follows:  76.1003 Adjudicatory proceedings. ***** (c) *** (5) Damages requests. (i) In a case where recovery of damages is sought, the complaint shall contain a clear and unequivocal request for damages and appropriate allegations in support of such claim in accordance with the requirements of subpart (iii) of this section. (ii) Damages will not be awarded upon a complaint unless specifically requested. Damages may be awarded if the complaint complies fully with the requirement of subpart (iii) of this section where the defendant knew, or should have known that it was engaging in conduct violative of Section 628. (iii) In all cases in which recovery of damages is sought, the complainant shall include within, or as an attachment to, the complaint, either: (A) A computation of each and every category of damages for which recovery is sought, along with an identification of all relevant documents and materials or such other evidence to be used by the complainant to determine the amount of such damages; or (B) An explanation of: (1) The information not in the possession of the complaining party that is necessary to develop a detailed computation of damages; (2) The reason such information is unavailable to the complaining party; (3) The factual basis the complainant has for believing that such evidence of damages exists; and (4) A detailed outline of the methodology that would be used to create a computation of damages when such evidence is available. ***** (d) Answer. (1) Any cable operator, satellite cable programming vendor or satellite broadcast programming vendor upon which a program access complaint is served under this section shall answer within twenty (20) days of service of the complaint, unless otherwise directed by the Commission. (2) The answer shall advise the parties and the Commission fully and completely of the nature of any and all defenses, and shall respond specifically to all material allegations of the complaint. To the extent that a cable operator, satellite cable programming vendor or satellite broadcast programming vendor expressly references and relies upon a document or documents within its control in asserting a defense or responding to a material allegation, such document or documents shall be included as part of the answer. Collateral or immaterial issues shall be avoided in answers and every effort should be made to narrow the issues. Any defendant failing to file and serve an answer within the time and in the manner prescribed by these rules may be deemed in default and an order may be entered against defendant in accordance with the allegations contained in the complaint. ***** (e) Reply. Within fifteen (15) days after service of an answer, unless otherwise directed by the Commission, the complainant may file and serve a reply which shall be responsive to matters contained in the answer and shall not contain new matters. Failure to reply will not be deemed an admission of any allegations contained in the answer, except with respect to any affirmative defense set forth therein. Replies containing information claimed by defendant to be proprietary under paragraph (h) of this section shall be submitted to the Commission in confidence pursuant to the requirements of  0.459 of this chapter and clearly marked "Not for Public Inspection." An edited version removing all proprietary data shall be filed with the Commission for inclusion in the public file within five (5) days from the date the unedited reply is submitted, and shall be served on the defendant. ***** (s) Remedies for violations -- (1) Remedies authorized. Upon completion of such adjudicatory proceeding, the Commission shall order appropriate remedies, including, if necessary, (i) the imposition of damages, and/or (ii) the establishment of prices, terms, and conditions for the sale of programming to the aggrieved multichannel video programming distributor. Such order shall set forth a timetable for compliance, and shall become effective upon release. (2) Additional sanctions. The remedies provided in paragraph (s)(1) of this section are in addition to and not in lieu of the sanctions available under title V or any other provision of the Communications Act. (3) Imposition of Damages. (i) Bifurcation. In all cases in which damages are requested, the Commission may bifurcate the program access violation determination from any damage adjudication. (ii) Burden of Proof. The burden of proof regarding damages rests with the complainant, who must demonstrate with specificity the damages arising from the program access violation. Requests for damages that grossly overstate the amount of damages may result in a Commission determination that the complainant failed to satisfy its burden of proof to demonstrate with specificity the damages arising from the program access violation. (iii) Damages Adjudication. (A) The Commission may, in its discretion, end adjudication of damages with a written order determining the sufficiency of the damages computation submitted in accordance with subpart (c)(5)(iii)(A) or the damages computation methodology submitted in accordance with subpart (c)(5)(iii)(B)(4), modifying such computation or methodology, or requiring the complainant to resubmit such computation or methodology. (1) Where the Commission issues a written order approving or modifying a damages computation submitted in accordance with subpart (c)(5)(iii)(A), the defendant shall recompense the complainant as directed therein. (2) Where the Commission issues a written order approving or modifying a damages computation methodology submitted in accordance with subpart (c)(5)(iii)(B)(4), the parties shall negotiate in good faith to reach an agreement on the exact amount of damages pursuant to the Commission-mandated methodology. (B) Within thirty days of the issuance of a subpart (c)(5)(iii)(B)(4) damages methodology order, the parties shall submit jointly to the Commission either: (1) A statement detailing the parties' agreement as to the amount of damages; (2) A statement that the parties are continuing to negotiate in good faith and a request that the parties be given an extension of time to continue negotiations; or (3) A statement detailing the bases for the continuing dispute and the reasons why no agreement can be reached. (C) (1) In cases in which the parties cannot resolve the amount of damages within a reasonable time period, the Commission retains the right to determine the actual amount of damages on its own, or through the procedures described in subpart (s)(3)(iii)(C)(2) of this section. (2) Issues concerning the amount of damages may be designated by the Chief, Cable Services Bureau for hearing before, or, if the parties agree, submitted for mediation to, a Commission Administrative Law Judge. (D) Interest on the amount of damages awarded will accrue from either the date indicated in the Commission's written order issued pursuant to subpart (s)(3)(iii)(A)(1) or the date agreed upon by the parties as a result of their negotiations pursuant to subpart (s)(3)(iii)(A)(2). Interest shall be computed at applicable rates published by the Internal Revenue Service for tax refunds. Appendix B STANDARD PROTECTIVE ORDER AND DECLARATION FOR USE INSECTION 628 PROGRAM ACCESS PROCEEDINGS Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of ) ) [Name of Proceeding] ) ) ) ) PROTECTIVE ORDER This Protective Order is intended to facilitate and expedite the review of documents containing trade secrets and commercial or financial information obtained from a person and privileged or confidential. It reflects the manner in which "Confidential Information," as that term is defined herein, is to be treated. The Order is not intended to constitute a resolution of the merits concerning whether any Confidential Information would be released publicly by the Commission upon a proper request under the Freedom of Information Act or other applicable law or regulation, including 47 C.F.R.  0.442. 1. Definitions. a. Authorized Representative. "Authorized Representative" shall have the meaning set forth in Paragraph seven. b. Commission. "Commission" means the Federal Communications Commission or any arm of the Commission acting pursuant to delegated authority. c. Confidential Information. "Confidential Information" means (i) information submitted to the Commission by the Submitting Party that has been so designated by the Submitting Party and which the Submitting Party has determined in good faith constitutes trade secrets and commercial or financial information which is privileged or confidential within the meaning of Exemption 4 of the Freedom of Information Act, 5 U.S.C.  552(b)(4) and (ii) information submitted to the Commission by the Submitting Party that has been so designated by the Submitting Party and which the Submitting Party has determined in good faith falls within the terms of Commission orders designating the items for treatment as Confidential Information. Confidential Information includes additional copies of, notes, and information derived from Confidential Information. d. Declaration. "Declaration" means Attachment A to this Protective Order. e. Reviewing Party. "Reviewing Party" means a person or entity participating in this proceeding or considering in good faith filing a document in this proceeding. f. Submitting Party. "Submitting Party" means a person or entity that seeks confidential treatment of Confidential Information pursuant to this Protective Order. 2. Claim of Confidentiality. The Submitting Party may designate information as "Confidential Information" consistent with the definition of that term in Paragraph 1 of this Protective Order. The Commission may, sua sponte or upon petition, pursuant to 47 C.F.R  0.459 & 0.461, determine that all or part of the information claimed as "Confidential Information" is not entitled to such treatment. 3. Procedures for Claiming Information is Confidential. Confidential Information submitted to the Commission shall be filed under seal and shall bear on the front page in bold print, "CONTAINS PRIVILEGED AND CONFIDENTIAL INFORMATION - DO NOT RELEASE." Confidential Information shall be segregated by the Submitting Party from all non-confidential information submitted to the Commission. To the extent a document contains both Confidential Information and non-confidential information, the Submitting Party shall designate the specific portions of the document claimed to contain Confidential Information and shall, where feasible, also submit a redacted version not containing Confidential Information. 4. Storage of Confidential Information at the Commission. The Secretary of the Commission or other Commission staff to whom Confidential Information is submitted shall place the Confidential Information in a non-public file. Confidential Information shall be segregated in the files of the Commission, and shall be withheld from inspection by any person not bound by the terms of this Protective Order, unless such Confidential Information is released from the restrictions of this Order either through agreement of the parties, or pursuant to the order of the Commission or a court having jurisdiction. 5. Access to Confidential Information. Confidential Information shall only be made available to Commission staff, Commission consultants and to counsel to the Reviewing Parties, or if a Reviewing Party has no counsel, to a person designated by the Reviewing Party. Before counsel to a Reviewing Party or such other designated person designated by the Reviewing Party may obtain access to Confidential Information, counsel or such other designated person must execute the attached Declaration. Consultants under contract to the Commission may obtain access to Confidential Information only if they have signed, as part of their employment contract, a non-disclosure agreement the scope of which includes the Confidential Information, or if they execute the attached Declaration. 6. Counsel to a Reviewing Party or such other person designated pursuant to Paragraph 5 may disclose Confidential Information to other Authorized Representatives to whom disclosure is permitted under the terms of paragraph 7 of this Protective Order only after advising such Authorized Representatives of the terms and obligations of the Order. In addition, before Authorized Representatives may obtain access to Confidential Information, each Authorized Representative must execute the attached Declaration. 7. Authorized Representatives shall be limited to: a. Counsel for the Reviewing Parties to this proceeding including in-house counsel actively engaged in the conduct of this proceeding and their associated attorneys, paralegals, clerical staff and other employees, to the extent reasonably necessary to render professional services in this proceeding; b. Specified persons, including employees of the Reviewing Parties, requested by counsel to furnish technical or other expert advice or service, or otherwise engaged to prepare material for the express purpose of formulating filings in this proceeding, except that disclosure to persons in a position to use this information for competitive commercial or business purposes shall be prohibited; c. Any person designated by the Commission in the public interest, upon such terms as the Commission may deem proper. 8. Inspection of Confidential Information. Confidential Information shall be maintained by a Submitting Party for inspection at two or more locations, at least one of which shall be in Washington, D.C. Inspection shall be carried out by Authorized Representatives upon reasonable notice not to exceed one business day during normal business hours. 9. Copies of Confidential Information. The Submitting Party shall provide a copy of the Confidential Material to Authorized Representatives upon request and may charge a reasonable copying fee not to exceed twenty five cents per page. Authorized Representatives may make additional copies of Confidential Information but only to the extent required and solely for the preparation and use in this proceeding. Authorized Representatives must maintain a written record of any additional copies made and provide this record to the Submitting Party upon reasonable request. The original copy and all other copies of the Confidential Information shall remain in the care and control of Authorized Representatives at all times. Authorized Representatives having custody of any Confidential Information shall keep the documents properly secured at all times. 10. Filing of Declaration. Counsel for Reviewing Parties shall provide to the Submitting Party and the Commission a copy of the attached Declaration for each Authorized Representative within five (5) business days after the attached Declaration is executed, or by any other deadline that may be prescribed by the Commission. 11. Use of Confidential Information. Confidential Information shall not be used by any person granted access under this Protective Order for any purpose other than for use in this proceeding (including any subsequent administrative or judicial review), shall not be used for competitive business purposes, and shall not be used or disclosed except in accordance with this Order. This shall not preclude the use of any material or information that is in the public domain or has been developed independently by any other person who has not had access to the Confidential Information nor otherwise learned of its contents. 12. Pleadings Using Confidential Information. Submitting Parties and Reviewing Parties may, in any pleadings that they file in this proceeding, reference the Confidential Information, but only if they comply with the following procedures: a. Any portions of the pleadings that contain or disclose Confidential Information must be physically segregated from the remainder of the pleadings and filed under seal; b. The portions containing or disclosing Confidential Information must be covered by a separate letter referencing this Protective Order; c. Each page of any Party's filing that contains or discloses Confidential Information subject to this Order must be clearly marked: "Confidential Information included pursuant to Protective Order, [cite proceeding];" and d. The confidential portion(s) of the pleading, to the extent they are required to be served, shall be served upon the Secretary of the Commission, the Submitting Party, and those Reviewing Parties that have signed the attached Declaration. Such confidential portions shall be served under seal, and shall not be placed in the Commission's Public File unless the Commission directs otherwise (with notice to the Submitting Party and an opportunity to comment on such proposed disclosure). A Submitting Party or a Reviewing Party filing a pleading containing Confidential Information shall also file a redacted copy of the pleading containing no Confidential Information, which copy shall be placed in the Commission's public files. A Submitting Party or a Reviewing Party may provide courtesy copies of pleadings containing Confidential Information to Commission staff so long as the notation required by subsection c. of this paragraph is not removed. 13. Violations of Protective Order. Should a Reviewing Party that has properly obtained access to Confidential Information under this Protective Order violate any of its terms, it shall immediately convey that fact to the Commission and to the Submitting Party. Further, should such violation consist of improper disclosure or use of Confidential Information, the violating party shall take all necessary steps to remedy the improper disclosure or use. The Violating Party shall also immediately notify the Commission and the Submitting Party, in writing, of the identity of each party known or reasonably suspected to have obtained the Confidential Information through any such disclosure. The Commission retains its full authority to fashion appropriate sanctions for violations of this Protective Order, including but not limited to suspension or disbarment of attorneys from practice before the Commission, forfeitures, cease and desist orders, and denial of further access to Confidential Information in this or any other Commission proceeding. Nothing in this Protective Order shall limit any other rights and remedies available to the Submitting Party at law or equity against any party using Confidential Information in a manner not authorized by this Protective Order. 14. Termination of Proceeding. Within two weeks after final resolution of this proceeding (which includes any administrative or judicial appeals), Authorized Representatives of Reviewing Parties shall, at the direction of the Submitting Party, destroy or return to the Submitting Party all Confidential Information as well as all copies and derivative materials made, and shall certify in a writing served on the Commission and the Submitting Party that no material whatsoever derived from such Confidential Information has been retained by any person having access thereto, except that counsel to a Reviewing Party may retain two copies of pleadings submitted on behalf of the Reviewing Party. Any confidential information contained in any copies of pleadings retained by counsel to a Reviewing Party or in materials that have been destroyed pursuant to this paragraph shall be protected from disclosure or use indefinitely in accordance with paragraphs 9 and 11 of this Protective Order unless such Confidential Information is released from the restrictions of this Order either through agreement of the parties, or pursuant to the order of the Commission or a court having jurisdiction. 15. No Waiver of Confidentiality. Disclosure of Confidential Information as provided herein shall not be deemed a waiver by the Submitting Party of any privilege or entitlement to confidential treatment of such Confidential Information. Reviewing Parties, by viewing these materials: (a) agree not to assert any such waiver; (b) agree not to use information derived from any confidential materials to seek disclosure in any other proceeding; and (c) agree that accidental disclosure of Confidential Information shall not be deemed a waiver of the privilege. 16. Additional Rights Preserved. The entry of this Protective Order is without prejudice to the rights of the Submitting Party to apply for additional or different protection where it is deemed necessary or to the rights of Reviewing Parties to request further or renewed disclosure of Confidential Information. 17. Effect of Protective Order. This Protective Order constitutes an Order of the Commission and an agreement between the Reviewing Party, executing the attached Declaration, and the Submitting Party. 18. Authority. This Protective Order is issued pursuant to Sections 4(i) and 4(j) of the Communications Act as amended, 47 U.S.C.  154(i), (j) and 47 C.F.R.  0.457(d). Attachment A to Standard Protective Order DECLARATION In the Matter of ) ) [Name of Proceeding] ) ) ) ) I, ______________________________, hereby declare under penalty of perjury that I have read the Protective Order that has been entered by the Commission in this proceeding, and that I agree to be bound by its terms pertaining to the treatment of Confidential Information submitted by parties to this proceeding. I understand that the Confidential Information shall not be disclosed to anyone except in accordance with the terms of the Protective Order and shall be used only for purposes of the proceedings in this matter. I acknowledge that a violation of the Protective Order is a violation of an order of the Federal Communications Commission. I acknowledge that this Protective Order is also a binding agreement with the Submitting Party. (signed) _______________________________ (printed name) __________________________ (representing) ___________________________ (title) __________________________________ (employer) _____________________________ (address) _______________________________ _______________________________ (phone) ________________________________ (date) __________________________________ Appendix C FINAL REGULATORY FLEXIBILITY ANALYSIS A. Background 1. As required by the Regulatory Flexibility Act (RFA), an Initial Regulatory Flexibility Analysis ("IRFA") was incorporated into the Notice of Proposed Rule Making ("NPRM") in this proceeding. The Commission sought written public comment on the possible impact of the proposed policies and rules on small entities in the NPRM, including comments on the IRFA. This Final Regulatory Flexibility Analysis ("FRFA") in this Report and Order ("Order") conforms to the RFA. B. Need for Action and Objectives of the Rules 2. Section 628 of the Communications Act prohibits unfair or discriminatory practices in the sale of satellite cable and satellite broadcast programming and is intended to increase competition and diversity in the multichannel video programming market, as well as to foster the development of competition to traditional cable systems, by prescribing regulations that govern the access by competing multichannel systems to cable programming services. Pursuant to Congress's mandate in the 1992 Cable Act, the Commission promulgated regulations implementing the Communication Act's program access provisions. In 1997, Ameritech New Media, Inc. filed a petition for rulemaking requesting that the Commission amend our program access rules. The Commission issued a NPRM seeking comment on amendments to our program access rules. After reviewing the comments filed in this proceeding, we conclude that the public interest in increased competition and diversity in the multichannel video programming and the development of competition to traditional cable systems is further enhanced by amending our program access rules as described in the Order. C. Summary of Significant Issues Raised by the Public Comments in Response to the IRFA 3. No comments were filed specifically in response to the IRFA. We have, however, considered the economic impact on small entities through consideration of comments that pertain to issues of concern to MVPDs and programming producers and distributors. In particular, the Small Cable Business Association ("SCBA") filed comments addressing a number of issues. One of the rule changes adopted in the Order is intended to assist program buying cooperatives, many members of which are small entities, in gaining access to vertically-integrated cable programming at competitive rates. D. Description and Estimate of the Number of Small Entities to Which the Rules Will Apply 4. The RFA directs the Commission to provide a description of and, where feasible, an estimate of the number of small entities that might be affected by the rules here adopted. The RFA defines the term "small entity" as having the same meaning as the terms "small business," "small organization," and "small governmental jurisdiction." In addition, the term "small business" has the same meaning as the term "small business concern" under the Small Business Act. Under the Small Business Act, a small business concern is one which: (a) is independently owned and operated; (b) is not dominant in its field of operation; and (c) satisfies any additional criteria established by the SBA. The rules we adopt in this Report and Order will affect cable systems, multipoint multichannel distribution systems, direct broadcast satellites, home satellite dish manufacturers, satellite master antenna television, open video systems, local multipoint distribution systems, and program producers and distributors. Below, we set forth the general SBA and FCC cable small size standards, and then address each service individually to provides a more precise estimate of small entities. We also describe program producers and distributors. 5. SBA Definitions for Cable and Other Pay Television Services: The SBA has developed a definition of small entities for cable and other pay television services, which includes all such companies generating $11 million or less in annual receipts. This definition includes cable system operators, closed circuit television services, direct broadcast satellite services, multipoint distribution systems, satellite master antenna systems and subscription television services. According to the Census Bureau data from 1992, there were approximately 1,758 total cable and other pay television services and 1,423 had less than $11 million in revenue. 6. Additional Cable System Definitions: In addition, the Commission has developed, with SBA's approval, our own definition of a small cable system operator for the purposes of rate regulation. Under the Commission's rules, a "small cable company" is one serving no more than 400,000 subscribers nationwide. Based on recent information, we estimate that there were 1439 cable operators that qualified as small cable companies at the end of 1995. Since then, some of those companies may have grown to serve over 400,000 subscribers, and others may have been involved in transactions that caused them to be combined with other cable operators. Consequently, we estimate that there are fewer than 1439 small entity cable system operators that may be affected by the decisions and rules we are adopting. We conclude that only a small percentage of these entities currently provide qualifying "telecommunications services" as required by the Communications Act and, therefore, estimate that the number of such entities are significantly fewer than noted. 7. The Communications Act also contains a definition of a small cable system operator, which is "a cable operator that, directly or through an affiliate, serves in the aggregate fewer than 1% of all subscribers in the United States and is not affiliated with any entity or entities whose gross annual revenues in the aggregate exceed $250,000,000." The Commission has determined that there are 61,700,000 cable subscribers in the United States. Therefore, we found that an operator serving fewer than 617,000 subscribers shall be deemed a small operator, if its annual revenues, when combined with the total annual revenues of all of its affiliates, do not exceed $250 million in the aggregate. Based on available data, we find that the number of cable operators serving 617,000 subscribers or less totals 1450. Although it seems certain that some of these cable system operators are affiliated with entities whose gross annual revenues exceed $250,000,000, we are unable at this time to estimate with greater precision the number of cable system operators that would qualify as small cable operators under the definition in the Communications Act. 8. Multipoint Multichannel Distribution Systems ("MMDS"): The Commission refined its definition of "small entity" for the auction of MMDS as an entity that together with its affiliates has average gross annual revenues that are not more than $40 million for the preceding three calendar years. This definition of a small entity in the context of MMDS auctions has been approved by the SBA. 9. The Commission completed its MMDS auction in March 1996 for authorizations in 493 basic trading areas ("BTAs"). Of 67 winning bidders, 61 qualified as small entities. Five bidders indicated that they were minority-owned and four winners indicated that they were women-owned businesses. MMDS is an especially competitive service, with approximately 1573 previously authorized and proposed MMDS facilities. Information available to us indicates that no MMDS facility generates revenue in excess of $11 million annually. We conclude that, for purposes of this FRFA, there are approximately 1634 small MMDS providers as defined by the SBA and the Commission's auction rules. 10. ITFS: There are presently 2032 ITFS licensees. All but 100 of these licenses are held by educational institutions. Educational institutions are included in the definition of a small business. However, we do not collect annual revenue data for ITFS licensees and are not able to ascertain how many of the 100 non-educational licensees would be categorized as small under the SBA definition. No commenters address these non-educational licensees. Accordingly, we conclude that there may be as many as 2032 licensees that are small businesses. 11. Direct Broadcast Satellite ("DBS"): Because DBS provides subscription services, DBS falls within the SBA definition of cable and other pay television services (SIC 4841). As of December 1996, there were eight DBS licensees. However, the Commission does not collect annual revenue data for DBS and, therefore, is unable to ascertain the number of small DBS licensees that could be affected by these proposed rules. Although DBS service requires a great investment of capital for operation, in the NPRM, we acknowledged that there are several new entrants in this field that may not yet have generated $11 million in annual receipts, and therefore may be categorized as a small business, if independently owned and operated. Since the publication of the NPRM, however, more information has become available. In light of the 1997 gross revenue figures for the various DBS operators, we conclude that no DBS operator qualifies as a small entity. 12. Home Satellite Dish ("HSD"): The market for HSD service is difficult to quantify. Indeed, the service itself bears little resemblance to other MVPDs. HSD owners have access to more than 500 channels of programming placed on C-band satellites by programmers for receipt and distribution by MVPDs, of which 350 channels are scrambled and approximately 150 are unscrambled. HSD owners can watch unscrambled channels without paying a subscription fee. To receive scrambled channels, however, an HSD owner must purchase an integrated receiver-decoder from an equipment dealer and pay a subscription fee to an HSD programming packager. Thus, HSD users include: (1) viewers who subscribe to a packaged programming service, which affords them access to most of the same programming provided to subscribers of other MVPDs; (2) viewers who receive only non-subscription programming; and (3) viewers who receive satellite programming services illegally without subscribing. 13. According to the most recently available information, there are approximately 20 to 25 program packagers nationwide offering packages of scrambled programming to retail consumers. These program packagers provide subscriptions to approximately 2,184,470 subscribers nationwide. This is an average of about 77,163 subscribers per program packager. This is substantially smaller than the 400,000 subscribers used in the Commission's definition of a small multiple system operator ("MSO"). 14. Satellite Master Antenna Television ("SMATVs"): Industry sources estimate that approximately 5200 SMATV operators were providing service as of December 1995. Other estimates indicate that SMATV operators serve approximately 1.162 million residential subscribers as of June 30, 1997. The ten largest SMATV operators together pass 848,450 units. If we assume that these SMATV operators serve 50% of the units passed, the ten largest SMATV operators serve approximately 40% of the total number of SMATV subscribers. Because these operators are not rate regulated, they are not required to file financial data with the Commission. Furthermore, we are not aware of any privately published financial information regarding these operators. Based on the estimated number of operators and the estimated number of units served by the largest ten SMATVs, we conclude that a substantial number of SMATV operators qualify as small entities. 15. Local Multipoint Distribution System ("LMDS"): Unlike the above pay television services, LMDS technology and spectrum allocation will allow licensees to provide wireless telephony, data, and/or video services. A LMDS provider is not limited in the number of potential applications that will be available for this service. Therefore, the definition of a small LMDS entity may be applicable to both cable and other pay television (SIC 4841) and/or radiotelephone communications companies (SIC 4812). The SBA approved definition for cable and other pay services that qualify as a small business is defined in paragraphs 5-6, supra. A small radiotelephone entity is one with 1500 employees or fewer. However, for the purposes of this Report and Order on navigation devices, we include only an estimate of LMDS video service providers. 16. An auction for licenses to operate LMDS systems was recently completed by the Commission. The vast majority of the LMDS license auction winners were small businesses under the SBA's definition of cable and pay television (SIC 4841). In the Second R&O, we adopted a small business definition for entities bidding for LMDS licenses as an entity that, together with affiliates and controlling principles, has average gross revenues not exceeding $40 million for each of the three preceding years. We have not yet received approval by the SBA for this definition. 17. There is only one company, CellularVision, that is currently providing LMDS video services. In the IRFA, we assumed that CellularVision was a small business under both the SBA definition and our auction rules. No commenters addressed the tentative conclusions we reached in the NPRM. Accordingly, we affirm our tentative conclusion that a majority of the potential LMDS licensees will be small entities, as that term is defined by the SBA. 18. Open Video System ("OVS"): The Commission has certified 15 OVS operators. Of these nine, only two are providing service. On October 17, 1996, Bell Atlantic received approval for its certification to convert its Dover, New Jersey Video Dialtone ("VDT") system to OVS. Bell Atlantic subsequently purchased the division of Futurevision which had been the only operating program package provider on the Dover system, and has begun offering programming on this system using these resources. Metropolitan Fiber Systems was granted certifications on December 9, 1996, for the operation of OVS systems in Boston and New York, both of which are being used to provide programming. Bell Atlantic and Metropolitan Fiber Systems have sufficient revenues to assure us that they do not qualify as small business entities. Little financial information is available for the other entities authorized to provide OVS that are not yet operational. We believe that one OVS licensee may qualify as a small business concern. Given that other entities have been authorized to provide OVS service but have not yet begun to generate revenues, we conclude that at least some of the OVS operators qualify as small entities. 19. Program Producers and Distributors: The Commission has not developed a definition of small entities applicable to producers or distributors of television programs. Therefore, we will utilize the SBA classifications of Motion Picture and Video Tape Production (SIC 7812), Motion Picture and Video Tape Distribution (SIC 7822), and Theatrical Producers (Except Motion Pictures) and Miscellaneous Theatrical Services (SIC 7922). These SBA definitions provide that a small entity in the television programming industry is an entity with $21.5 million or less in annual receipts for SIC 7812 and 7822, and $5 million or less in annual receipts for SIC 7922. The 1992 Bureau of the Census data indicate the following: (1) there were 7265 U.S. firms classified as Motion Picture and Video Production (SIC 7812), and that 6987 of these firms had $16,999 million or less in annual receipts and 7002 of these firms had $24,999 million or less in annual receipts; (2) there were 1139 U.S. firms classified as Motion Picture and Tape Distribution (SIC 7822), and that 1007 of these firms had $16,999 million or less in annual receipts and 1013 of these firms had $24,999 million or less in annual receipts; and (3) there were 5671 U.S. firms classified as Theatrical Producers and Services (SIC 7922), and that 5627 of these firms had less than $5 million in annual receipts. 20. Each of these SIC categories is very broad and includes firms that may be engaged in various industries including television. Specific figures are not available as to how many of these firms exclusively produce and/or distribute programming for television or how many are independently owned and operated. Consequently, we conclude that there are approximately 6987 small entities that produce and distribute taped television programs, 1013 small entities primarily engaged in the distribution of taped television programs, and 5627 small producers of live television programs that may be affected by the rules adopted in this Report and Order. E. Description of Reporting, Recordkeeping and Other Compliance Requirements 21. This analysis examines the costs and administrative burdens associated with our rules and requirements. To the extent expressly relied upon in responding to a program access complaint, the rules we adopt require program access defendants to attach documents within their control to their answer or other responsive pleading permitted by the Commission. In addition, the rules we adopt, in certain situations, require program access complainants and defendants to negotiate in good faith regarding the amount of damages based upon a Commission-approved computation methodology. The Commission believes, however, that this requirement would not necessitate significant additional costs or skills beyond those already utilized in the ordinary course of business by MVPDs and program producers and distributors. F. Steps Taken to Minimize Significant Economic Impact On Small Entities and Significant Alternatives Considered 22. We believe that our amended rules relating to program access will have a positive impact on small entities. The purpose of the program access provisions is to prohibit unfair or discriminatory practices in the sale of satellite cable and satellite broadcast programming and increase competition and diversity in the multichannel video programming market. Small entities play an important role in effectuating this purpose. The rules we adopt will enable small entities to more fairly and expeditiously obtain programming and compensate such entities, in appropriate circumstances, when such programming is denied or obtained through unfair rates, terms or conditions. G. Report to Congress 23. The Commission will send a copy of the Report and Order, including this FRFA, in a report to Congress pursuant to the Small Business Regulatory Enforcement Fairness Act of 1996, 5 U.S.C.  801(a)(1)(A). The Report and Order and this FRFA (or summaries thereof) will also be published in the Federal Register, see 5 U.S.C.  604(b), and will be sent to the Chief Counsel for Advocacy of the Small Business Administration. SEPARATE STATEMENT OF COMM. HAROLD W. FURCHTGOTT-ROTH DISSENTING IN PART In re: Petition for Rulemaking of Ameritech New Media, Inc., Regarding Development of Competition and Diversity in Video Programming Distribution and Carriage Although I support the bulk of this Report & Order and commend the Cable Services Bureau for its fine work, I disagree with the Commission's decision in Part III.A to impose damages for violations of the program access rules. I also write to express my view that we possess no clear statutory authority to extend these rules to govern terrestrially-delivered programming. I. In my opinion, damages are neither necessary nor advisable. Moreover, they may undermine the Communication Act's statutory caps on forfeiture limits. For these reasons, I would not create such a remedy. As an initial matter, I note that a simple finding of liability carries with it a great deal of costs for the program access violator. The "black mark" on the company's regulatory record affects its dealings here at the Commission and may also make it a riskier candidate, from the point of view of the capital markets, for investments and loans. Such a finding also encourages other would-be complainants to come forward and initiate program access proceedings against the company, in itself another substantial effect on the company. There is no real evidence that the current penalty scheme for program access lacks a sufficient deterrent effect. Since the passage of the program access statute, the Commission has hardly been overrun with complaints pursuant to that provision. In fact, over the last 5 years, only 34 program access complaints have been filed at the Commission, and of that number, in only 3 cases has the Commission ruled in favor of the complainant. Accordingly, the Commission has on several occasions declined to expand the program access rules on the ground that they seemed to be achieving their intended purpose. See Program Access First Reconsideration, 10 FCC Rcd at 1911; 1996 Video Competition Report, Annual Assessment of the Status of Competition in Markets for the Delivery of Video Programming, Third Annual Report, 12 FCC Rcd. 4358 (1997) at paras. 149-64. Subsequent to those decisions, there has been no discernible upward trend in program access violations that would indicate inadequate deterrents, so today's movement towards strengthened regulations seems hard to explain on the basis of need. And from a general perspective, there is no shortage of "leverage," for better or worse, that this Commission can exercise over regulated entities for violation of our rules and regulations; in the end, we have power over their licenses and thus their livelihoods. Why damages would as a general matter pose any greater deterrent effect than forfeitures, which we are clearly authorized by statute to impose, is also unanswered by the record before us. As a matter of fact, the Commission has never exercised its forfeiture power; it is thus hard to see how we could know such a penalty to be ineffective. I do not think it makes for good public policy for the Commission to go out of its way to create an entirely new set of regulations on industry without a showing that existing rules are not working. Taxpayers should not fund, and private companies should not expend resources commenting on, rulemakings that produce regulations that are not clearly necessary. Unfortunately, this item increases the layers of regulation to which certain multichannel video programming providers are subject without the antecedent conclusion that the underlying rules are inadequate to the task at hand. The creation of a damages remedy is also inadvisable as a practical matter. Much of the point of this item is to expedite the adjudication of program access complaints. But a bifurcated proceeding in which we must determine damages will only prolong and complicate these adjudications. I fear that the Cable Services Bureau will expend as much, if not more time, assessing damages in these cases as on the basic question of liability. How does one determine what position a programmer would have occupied if they had had access to certain programming? How many more subscribers would they have gained, how much more could they have earned in advertising revenue? The difficulty that we will have in defining these essentially speculative issues (not to mention the production and review of the mountain of documents theoretically relevant documents) is almost certain to bog down the process. In this regard, it is telling that even in this item the Commission is unable to define with any precision the outlines for calculating damages for program access violations. And to the extent the Commission sidesteps this problem by moving toward "standardized" damages, as some have suggested, then we would simply be replicating forfeitures under another name. Finally, I find it relevant that the imposition of unlimited damages may be an end-run around the statutory caps on forfeitures contained in sections 503(b)(2)(A) and (C) of the Communications Act. Those sections provide that forfeitures against cable television operators "shall not exceed $25,000 for each violation or each day of a continuing violation, except that the amount assessed for any continuing violation shall not exceed a total of $250,000 for any single act" and that in any other case, such as one involving a vertically integrated programmer, "the amount of any forfeiture penalty . . . shall not exceed $10,000 for each violation or each day of a continuing violation, except that the amount assessed for any continuing violation shall not exceed a total of $75,000 for any single act." These sections thus express a clear Congressional intent to limit the monetary liability of regulated entities. If the Commission is creating a damages remedy merely to avoid these limits on liability, I am unsure about the legal propriety of such an approach. The real problem here seems not that forfeitures per se are ineffective but that the limits on forfeiture amounts are, in the eyes of those who advocate damages, too low. See Reply Comments of Ameritech at 16 ("The incentive for violating the rules is even greater in light of the woefully inadequate statutory caps on forfeitures for cable operators and affiliated programmers. Ameritech . . . [believes] that the statutory maximum for violations of the Commission's rules by cable companies -- $250,000 -- is far too low to deter anticompetitive behavior by incumbent cable operators. Moreover, the statutory cap on forfeitures for vertically integrated programmers is only $75,000. These amounts are incredibly low when compared to the sizable economic benefits realized by incumbents when they violate the rules."). But if that is the case, the answer lies with Congress, which has the power to revise these limits. In fact, that is precisely what Congress has done in the common carrier context, raising the forfeiture limit for those entities to an aggregate of $100,000,000. If Congress wanted to raise the limits for cable operators and vertically integrated programmers too, they surely could do so. They have not amended those limits, however, and we should not take backdoor measures to undermine them. In closing, I would observe that the most important thing in program access proceedings -- as in all other Commission proceedings -- is a timely resolution of complaints. For that reason, I am pleased that we have established clear time limits for program access proceedings. If we do not make accurate but prompt findings in these reviews, regulated industries will simply find private mechanisms for resolving compensation questions and bypass the administrative process altogether. II. As I noted in the Notice of Proposed Rulemaking in this proceeding, section 628 of the Communications Act, the statutory basis for our existing program-access scheme, by its terms governs the provision of "satellite cable programming" and "satellite broadcast programming." I have not been persuaded by those who urge us to extend our regulations to cover terrestrially-delivered programming that the import of this plain language can be overcome. Accordingly, while I agree entirely with the rationale given in the item for declining to extend program access rules to terrestrially-delivered programming, i.e., that the issue appears to be a nonproblem at this point in time, I also believe that we lack statutory authority to make such rules in any event. Congress, rather than this Commission, is the appropriate governmental entity to redress any competitive issues that may exist with respect to programming that is not transmitted (or retransmitted) by satellite. In fact, legislation was recently introduced by Congressmen Tauzin and Markey that would extend the program access rules to govern terrestrially-delivered programming. To my mind, the introduction of this legislation is a further indication that current statute does not cover such programming. We should, at the very least, stay our hand while Congress debates the matter. SEPARATE STATEMENT OF COMMISSIONER MICHAEL POWELL Re: In re: Petition for Rulemaking of Ameritech New Media, Inc., Regarding Development of Competition and Diversity in Video Programming Distribution and Carriage, CS Docket No. 97-248, RM No. 9097 Among the many responsibilities Congress gave the FCC in the 1992 Cable Act, is a duty to implement the program access provisions of Section 628 of the Communications Act. After six years of experience with program access complaints we have decided that some changes are needed to our program. The changes we implement today are intended to speed our handling of these complaints and put some additional teeth into the program. I am pleased to support these changes because I believe they are necessary and appropriate to implement the will of the Congress. I write separately to emphasize one point. We make clear in this item that we intend to make greater use of our forfeiture authority to address program access violations. I believe that this authority should be our first line of defense to curb program access abuses. Our authority to impose such forfeitures is clear and, unlike damages, the imposition of a forfeiture does not require a lengthy, resource intensive proceeding. Forfeitures are most likely to provide an efficient and effective deterrent. If the amounts permitted under the forfeiture provisions prove to be an inadequate deterrent to unlawful conduct, I would urge Congress to consider raising those caps to more serious levels as needed. It is my hope that we will use our forfeiture authority as our primary tool of enforcement and only resort to damages proceedings in the most extreme of cases.