Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of: ) ) CSR-5369-M PAXSON HAWAII LICENSE, INC. ) ) Must-Carry Complaint Concerning ) Carriage of Television Station ) KPXO(TV), Kaneohe, Hawaii ) on Cable Systems Served by ) Oceanic Cable ) MEMORANDUM OPINION AND ORDER Adopted: June 7, 1999 Released: June 8, 1999 By the Chief, Consumer Protection and Competition Division, Cable Services Bureau: I. INTRODUCTION 1. Paxson Hawaii License, Inc. ("Paxson"), licensee of commercial television station KPXO(TV), Kaneohe, Hawaii ("KPXO"), has filed a mandatory carriage complaint requesting carriage of its signal KPXO on a uniform cable channel position throughout the cable systems operated by Oceanic Cable ("Oceanic") serving the communities of Honolulu, Hawaii (the "Communities"). Oceanic filed an opposition to which Paxson replied. II. BACKGROUND 2. Pursuant to Section 614 of the Communications Act and implementing rules adopted by the Commission in Implementation of the Cable Television Consumer Protection and Competition Act of 1992, Report and Order ("Must Carry Order"), commercial television broadcast stations are entitled to assert mandatory carriage rights on cable systems located within the station's market. A station's market for this purpose is its "area of dominant influence," or ADI, as defined by the Arbitron audience research organization. An ADI is a geographic market designation that defines each television market exclusive of others, based on measured viewing patterns. 3. With respect to the channel number on which stations asserting must carry rights are to be carried, Section 614 of the Act and Section 76.57 of the Commission's rules provide commercial television stations with three possible options. The station may elect to be carried on: (1) the channel number on which the station is broadcast over the air; (2) the channel number on which the station was carried on July 19, 1985; or (3) the channel number on which the station was carried on January 1, 1992. The Act and the rules also provide that a broadcast station may be carried on any other channel number mutually agreed upon by the station and the cable operator. The Commission has stated that a cable operator must comply with a channel positioning request absent a compelling technical reason supported by evidence clearly demonstrating that the request can not be met. III. ALLEGATIONS OF THE PARTIES 4. In support of its petition, Paxson states that KPXO is licensed to Kaneohe, Hawaii which is in the Honolulu, Hawaii Area of Dominant Influence ("ADI") and that Oceanic's cable systems serving the Communities are also located within the Honolulu ADI. Paxson argues that KPXO is entitled to mandatory carriage on Oceanic's cable systems serving the Communities in conformity with the channel position requirements of the Commission's rules. Paxson states that the Communications Act of 1934, as amended, requires cable operators to carry a broadcast television station entitled to mandatory carriage on a single channel, located on the basic service tier, that is uniformly viewed by the cable operator's subscribers. Paxson further states that the Commission has interpreted the statutory requirement to mean that a must-carry station "is entitled to be carried on one cable channel on [the cable operator's] basic tier." 5. Paxson maintains that Oceanic is carrying KPXO on Channel 66 - a channel which is not viewable by all subscribers residing in multi-dwelling units ("MDUs") located in the Communities. Paxson states that, by letter dated November 5, 1998, it informed Oceanic of its obligation pursuant to Commission requirements to carry KPXO on a mutually agreeable channel on Oceanic's basic tier. Paxson further states that, in response, Oceanic explained that Paxson had been misinformed and that KPXO was actually being carried on Oceanic's basic service tier. Paxson states, however, that Oceanic admitted in its response that subscribers in certain MDUs located in the Communities were unable to receive channels above channel number 60 - including KPXO which had been assigned to channel 66. 6. Oceanic, in opposition, states that KPXO is being carried, at its request, on Oceanic's over-the- air channel 66 which is part of Oceanic's basic service tier. Oceanic further states that its basic service tier is available to all subscribers with the exception of a de minimus number of subscribers residing in certain MDUs which do not have upgraded cable equipment. Oceanic maintains that it has engaged in a system-wide upgrade project to increase its channel capacity from 60 to 78 channels; however, some MDU owners have refused to grant entry authorization to Oceanic in order to install the necessary equipment. Oceanic states that there are approximately 11,000 cable subscribers residing in MDUs which have not been upgraded to 78 channel capacity. Oceanic further states that about 8000 of those subscribers will be able to receive 78 channels by the end of 1999. With respect to the remaining 3000 MDU subscribers, Oceanic maintains that their building owners have refused to provide Oceanic with the necessary authorizations. Oceanic estimates that KPXO is available to over 95 percent of Oceanic's 248,000 subscribers in the Communities and that that percentage will increase to over 98 percent by the end of 1999. Oceanic argues that, due to reasons beyond its control, a limited number of its subscribers are unable to receive KPXO and, as a result, grant of Paxson's petition is unwarranted. 7. Paxson replies that it has a statutory right to carriage on a uniformly viewable channel - a right that Paxson has not waived by Oceanic's carriage of KPXO on an over-the-air channel or its carriage of the signal to all but a de minimus number of subscribers. Paxson further replies that, consistent with the Commission's decision in Adell, Oceanic's obligation to carry KPXO on a channel which is available to all of its subscriber applies independently of the channel number selection process. IV. DISCUSSION 8. We grant Paxson's channel positioning complaint. As an initial matter, we find that KPXO's entitlement to mandatory carriage on Oceanic's cable systems serving the Honolulu ADI is not in dispute. Section 76.57(e) of the Commission's rules require that a station entitled to mandatory carriage must be carried on the cable operator's basic service tier. The Commission has found that cable operators must comply with channel positioning requirements of must-carry stations absent a compelling technical reason. If a cable operator claims that it cannot carry a must-carry station because of technical limitations, it must introduce evidence which clearly demonstrates that it cannot meet the mandatory carriage requirement. We find that Oceanic has not introduced evidence sufficient to show that, for technical reasons, it cannot comply with its obligation to carry KPXO. 9. In two similar cases, the Commission has found that the statutory rights of a station entitled to mandatory carriage cannot be delayed until a system rebuild is completed. In WLIG-TV, the television broadcast station claimed that, as a must-carry station, it was entitled to be carried on a channel that was available to all subscribers of the cable operator at issue, even though the station had been assigned to channel 37 and subscribers in non-upgraded areas could only receive 36 channels. The cable operator in WLIG-TV argued that all subscribers would be able to receive the signal once its rebuild was completed. The Commission held that because the television station had must-carry rights in the communities in question, it could not be required to wait for the completion of the rebuild in order to be properly carried. In this case, KPXO is being carried on channel 66 and Oceanic subscribers residing in certain MDUs cannot receive channels above channel 60. We find that because KPXO is entitled to mandatory carriage in the Honolulu ADI, it cannot be required to wait for Oceanic to complete its upgrade before the station is made available to all subscribers in the relevant communities. We believe that Oceanic's de minimus argument is without merit. The record indicates that KPXO's signal currently cannot be received by over 8000 subscribers. Accordingly, we order Oceanic to carry KPXO on any single, uniform, and mutually agreeable channel that can be received by all of Oceanic's subscribers in the Communities. V. ORDERING CLAUSES 10. Accordingly, IT IS ORDERED, pursuant to Section 614 of the Communications Act of 1924, as amended, 47 U.S.C. 534(d)(3), and Section 76.57 of the Commission's rules, 47 C.F.R.  76.57, the complaint filed by Paxson Hawaii License, Inc. against Oceanic Cable seeking carriage of KPXO(TV) on a single, uniform channel IS GRANTED. 11. IT IS FURTHER ORDERED that Oceanic Cable SHALL COMMENCE CARRIAGE of KPXO(TV) on any single, uniform channel on its basic service tier, viewable by all subscribers throughout the Honolulu system, within 60 days of the release of this Order. 12. This action is taken pursuant to authority delegated under Section 0.321 of the Commission's rules, 47 C.F.R.  0.321. FEDERAL COMMUNICATIONS COMMISSION Deborah E. Klein, Chief Consumer Protection and Competition Division Cable Services Bureau