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Id. at (c)(4). XP\  P6Q x`  "",>(>(ZZ"ԌXx   x"Satellite cable programming" is "video programming which is transmitted via satellite and which is  S( xjprimarily intended for the direct receipt by cable operators for their retransmission to cable subscribers.")D&footnote reference)#footnote reference#F "3 yOa(footnote text C\  P6QQw  ` X` hp x (#%'0*,.8135@8:footnote reference)#footnote reference#  3 yO(footnote text C\  P6QQw $ footnote text$#footnote reference#ۍ) footnote reference) Complaint at 2; Bresnan Answer at 9; TELEVISION & CABLE FACTBOOK, Volume 66 (Warren Pub. 1998).  DTI has a nonexclusive license to  S ( xdistribute Midwest SportsChannel ( MSC) on its Minnesota systems in these communities.)7Afootnote reference)#footnote reference#c  3 yO(footnote text C\  P6QQw # footnote reference#   C\  P6QQw э)w  footnote reference) Complaint at 2; Bresnan Answer at 9. c In addition,  xVDTI has obtained a nonexclusive franchise from the community of Marshall, Minnesota to provide cable  S ( xtelevision services.)Cfootnote reference)#footnote reference#= * 3 yO9(footnote text C\  P6QQw # footnote reference# C\  P6QQw э)w  footnote reference) Complaint at 2. = DTI sought to obtain a nonexclusive license for MSC in the Marshall franchise area,  xbut CBS refused the request. Bresnan has had an exclusive license for MSC programming in Marshall,  S0( x(Minnesota since 1990.)Ffootnote reference)#footnote reference#N0 3 yOy(footnote text C\  P6QQw # footnote reference# C\  P6QQw э)w  footnote reference) Complaint at 2; Bresnan Answer at 2 and 5. N DTI then attempted to sublicense MSC through Bresnan. Bresnan refused DTIs  xhrequest. In a letter dated August 6, 1998, the general manager of Bresnan stated that Bresnan  xCommunications did not desire to sublicense MSC to DTI. After providing Defendants with the requisite  xznotice of its intent to file a program access complaint, DTI filed the instant action alleging that MSCs  xand Bresnans exclusive contract for MSC violates the program access provisions of the Communications  Sh(Act.)AIfootnote reference)#footnote reference#ihJ 3 {OA!(footnote text C\  P6QQw # footnote reference# C\  P6QQw э)w  footnote reference) 47 U.S.C.  548(b); see 47 C.F.R.  76.1003(a). i  S(5.` ` MSC is a 24hour regional sports network whollyowned by CBS.)`Mfootnote reference)#footnote reference#>3 yO$(footnote text C\  P6QQw # footnote reference# C\  P6QQw э)w  footnote reference) Bresnan Answer at 2 and 8. > MSCs satellite cable  xLprogramming is distributed to cable and satellite subscribers throughout Minnesota, North Dakota, South  xDakota, Iowa and Wisconsin. MSCs programming consists primarily of live coverage of regional college"l,>(>(ZZ&"  S( x.and professional sporting events and sports commentary.)Ofootnote reference)#footnote reference#83 yO(footnote text C\  P6QQw # footnote reference# C\  P6QQw э)w  footnote reference) Bresnan Answer at 8. 8 Bresnan is a multiple system operator based  xin Marshall, Minnesota. Bresnan operates cable television systems in 540 communities throughout the  xbupper Midwest, including Minnesota, and provides cable television services to more than 658,000  x`subscribers. Bresnan provides fiftyfour channels of programming to approximately 5,000 subscribers in  S`(the Marshall, Minnesota franchise area.)Sfootnote reference)#footnote reference#` 3 yO(footnote text C\  P6QQw #footnote reference# C\  P6QQw э)wfootnote reference) Bresnan Answer at 8, TELEVISION AND CABLE FACTBOOK, Volume 67 (Warren Pub. 1999).   S( IV.THE PLEADINGS  S( ` 6.` ` DTI argues that the exclusive contract for MSC provides Bresnan an unfair competitive  S( xadvantage in the Marshall cable television service market.)Vfootnote reference)#footnote reference#`3 yO (footnote text C\  P6QQw #footnote reference# C\  P6QQw э)wfootnote reference) Complaint at Exhibit H (Notice of Intent to File Complaint). ` DTI contends that access to MSC  Sp( xprogramming is extremely important to Minnesota consumers. DTI asserts that lack of access to MSC  SH ( xprogramming will create a significant and unnecessary competitive disadvantage to DTI.)Yfootnote reference)#footnote reference#XH @3 yO(footnote text C\  P6QQw #footnote reference# C\  P6QQw э)wfootnote reference) Complaint at 2; Complaint at Exhibit D (Affidavit of Douglas English, VicePresident of Marketing, Dakota Telecommunications Group, Inc.).  DTI argues  xthat the exclusive arrangement for MSC programming is an unfair method of competition, the effect of  xwhich is to hinder significantly DTI from providing MSC programming to subscribers or consumers in  S ( xcompetition with Bresnan.)\footnote reference)#footnote reference#/ 3 yO(footnote text C\  P6QQw #footnote reference# C\  P6QQw э)wfootnote reference) Reply at 1. / DTI maintains that the exclusive license held by Bresnan for MSC  xprogramming violates the program access provisions of Section 628(b) and Section 76.1001 of the  S (Commissions rules.)_footnote reference)#footnote reference#p ( 3 yO7(footnote text C\  P6QQw #footnote reference# C\  P6QQw э)wfootnote reference) Complaint at 2; Complaint at Exhibit H (Notice of Intent to File Complaint). p  S0( ` 7.` ` In their answers, Defendants assert that their conduct violates neither Section 628(b) nor  S( xL(c) of the Communications Act.)bfootnote reference)#footnote reference#J 3 yOO(footnote text C\  P6QQw #footnote reference# C\  P6QQw э)wfootnote reference) Bresnan Answer at 10; CBS Answer at 2. J Defendants contend that exclusive agreements between nonvertically  xintegrated programming vendors and cable operators are permitted under Section 628(c) of the  S( xHCommunications Act.)@efootnote reference)#footnote reference#-H 3 {O(footnote text C\  P6QQw #footnote reference# C\  P6QQw э)wfootnote reference) Id. - Defendants argue that the Commissions program access rules apply only to  xsatellite programming vendors in which a cable operator has an attributable interest, satellite broadcast  Sh( xprogramming vendors and cable operators.)gfootnote reference)#footnote reference#5h3 yO"(footnote text C\  P6QQw #footnote reference# C\  P6QQw э)wfootnote reference) CBS Answer at 2. 5 Defendants maintain that neither CBS nor MSC is a satellite  x8cable programming vendor in which a cable operator has an attributable interest, and neither is a satellite"@j,>(>(ZZ"  S( xbroadcast programming vendor or cable operator. Thus, MSC and CBS argue that Section 628(c) does  S(not prohibit MSC from entering into an exclusive agreement with Bresnan or any other cable operator.)jfootnote reference)#footnote reference#-3 {O(footnote text C\  P6QQw #footnote reference# C\  P6QQw э)wfootnote reference) Id. -  S( ` j8.` ` Defendants assert that DTI has failed to state a claim under Section 628(b).)7nfootnote reference)#footnote reference#Z"3 yO9(footnote text C\  P6QQw #footnote reference# C\  P6QQw э)wfootnote reference) Bresnan Answer at 2 and 3; CBS Answer at 2. Z Bresnan  xargues that pursuant to Section 628(b) the burden is on the complainant to allege facts demonstrating that  xthe defendant has: (1) engaged in deceptive or unfair acts or practices; and (2) the purpose or effect of  xdefendants actions are to significantly impede or prevent a competitor from providing programming to  S( xsubscribers.)`pfootnote reference)#footnote reference#W3 yO) (footnote text C\  P6QQw #footnote reference# C\  P6QQw э)wfootnote reference) Bresnan Answer at 17, citing 47 U.S.C.  548(b). W Defendants argue that DTI failed to allege facts demonstrating that Bresnan and MSC acted  xVunfairly. Bresnan argues that Congress, in adopting Section 628, recognized that exclusive programming  S( xagreements may be in the public interest and standing alone do not constitute unfair competition.)sfootnote reference)#footnote reference#9B3 yOi(footnote text C\  P6QQw #footnote reference# C\  P6QQw э)wfootnote reference) Bresnan Answer at 17. 9  xBresnan contends that the exclusive programming agreement furthered its legitimate business interests and  SH ( xthat DTI failed to establish that the exclusive programming agreement constituted an unreasonable refusal  xto deal, an exercise of monopoly power in the distribution market, a violation of the antitrust laws, or that  S ( x$the agreement was otherwise anticompetitive.)wfootnote reference)#footnote reference#7 3 {OY(footnote text C\  P6QQw #footnote reference# C\  P6QQw э)wfootnote reference) Id. at 1720. 7 Bresnan also contends that DTI has not shown that its  xinability to carry MSC will significantly impede or prevent DTI from providing programming to  S (subscribers.)zfootnote reference)#footnote reference#4  d 3 {O(footnote text C\  P6QQw #footnote reference# C\  P6QQw э)wfootnote reference) Id. at 20. 4 Bresnan asserts that DTI has failed to demonstrate that MSC is essential to DTIs survival.)}footnote reference)#footnote reference#-! 3 {O-(footnote text C\  P6QQw #footnote reference# C\  P6QQw э)wfootnote reference) Id. -  SX( ` 9.` ` Defendants further argue that Section 628(b) may not be used to preclude programming  S0( xpractices clearly sanctioned under more specific provisions of Section 628(c).)#footnote reference)#footnote reference#9"0 3 yOG(footnote text C\  P6QQw #footnote reference# C\  P6QQw э)wfootnote reference) Bresnan Answer at 11. 9 Defendants argue that  xBresnans agreement with CBS for the exclusive distribution of MSC in Marshall is permitted under the  xprovisions of the Communications Act dealing specifically with exclusive programming agreements.  xDefendants state that Section 628(c)(2)(D) of the Communications Act restricts a cable operator from  xentering into an agreement with a satellite cable programming network in which one or more cable  Sh( xoperators have an attributable interest.)Áfootnote reference)#footnote reference#u#h3 yO"(footnote text C\  P6QQw #footnote reference# C\  P6QQw э)wfootnote reference) Bresnan Answer at 11 and 12, citing 47 U.S.C. 548 (c)(2)(C); CBS Answer at 2. u Defendants assert that Section 628(c) does not restrict a cable  xoperators ability to enter into an exclusive agreement with a nonvertically integrated programming  S( xnetwork.)footnote reference)#footnote reference#l$3 yOO%(footnote text C\  P6QQw #footnote reference# C\  P6QQw э)wfootnote reference) Bresnan Answer at 12, citing 47 C.F.R.  76.1002(c); CBS Answer at 2. l Defendants conclude that where the specific provisions of Section 628(c) permit nonvertically"8$,>(>(ZZx"  xLintegrated programming vendors to enter into exclusive contracts, the general language of Section 628(b)  X2may not be construed to prohibit the same XP\  P6Q .)footnote reference)#footnote reference#J%> yO(footnote text C\  P6QQw #footnote reference# C\  P6QQw э)wfootnote reference) Bresnan Answer 1115; CBS Answer at 2. J  S( &J\  P6Qr   S( ` 10.` ` Defendants argue that the legislative history and the text of the Communications Act reveal  x &V that Congress was concerned that vertically integrated program suppliers have the incentive and ability  xto favor their affiliated cable operators over nonaffiliated cable operators and programming distributors  S!( x$using other technologies.)ًfootnote reference)#footnote reference#s&"! 3 {O(footnote text C\  P6QQw #footnote reference# C\  P6QQw э)wfootnote reference) Id., citing 1992 Cable Act, Pub. L. No. 102385,  2(a)(5), 106 Stat. 1460 (1992). S. Rep. No. 10292, at 2728 (1991) (scope of program access rules limited to vertically integrated programmers); H.R. Rep. No. 102628, at 41 (1992) (expressly limits application of program access rules to vertically integrated programmers). s Defendants contend that Congress intended to omit nonvertically integrated  S( xprogrammers from the exclusivity restrictions of the Communications Act.)footnote reference)#footnote reference#4'"B3 {O (footnote text C\  P6QQw #footnote reference# C\  P6QQw э)wfootnote reference) Bresnan Answer at 12, citing Foxgord v. Hischemoeller, 820 F.2d 1030, 1035 (9th Cir.), cert. denied, 484 U.S. 986 (1987) (holding that where Congress includes particular entities in a proscription and omits others, such omission is presumed intentional). 4 Defendants cite Congress  xand the Commissions repeated rejection of attempts to expand coverage of the program access rules to  S(include nonvertically integrated programming networks.)Ofootnote reference)#footnote reference#3(d 3 {O(footnote text C\  P6QQw #footnote reference# C\  P6QQw э)wfootnote reference) Id at 15. 3  SY ( ` z11.` ` Accordingly, Defendants maintain that Congress expressed this concern through the  xprogram access rules which prohibit exclusive distribution contracts for satellite cable or broadcast  S ( xprogramming between vertically integrated cable operators and programmers.)footnote reference)#footnote reference#)\ 3 {O(footnote text C\  P6QQw #footnote reference# C\  P6QQw э)wfootnote reference) Annual Assessment of the Status of Competition in Markets for the Delivery of Video Programming, CS Dkt.  {OX(No. 97141, Fourth Annual Report ( 1998 Report), 13 FCC Rcd 1034, 1126 (1998).  Defendants assert that,  xVconsistent with its concerns, Congress did not apply the program access rules to nonvertically integrated  X 2programmers XP\  P6Q .)footnote reference)#footnote reference#9* R > yO(footnote text C\  P6QQw #footnote reference# C\  P6QQw э)wfootnote reference) Bresnan Answer at 12. 9  S ( &J\  P6Qr   Sz( ` 12.` ` Bresnan argues that the Commissions narrow interpretation of the exclusivity restrictions  XR2 xmay be found in numerous decisions resolving program access complaints XP\  P6Q .)_footnote reference)#footnote reference#+ZR> {O(footnote text C\  P6QQw #footnote reference# C\  P6QQw э)wfootnote reference) Bresnan Answer at 14, citing American Cable Co. v. TeleCable of Columbus, Inc., 11 FCC Rcd 10090, at 55 (1996).  C &J\  P6Qr iting  XP\  P6Q American Cable  X=2 xHCo. v. TeleCable of Columbus, Bresnan maintains  &J\  P6Qr that the Commission has specifically rejected  xattempts to use Section 628(b) to strike down exclusive programming agreements permitted under Section  S(628(c).)jfootnote reference)#footnote reference#,<3 {O#(footnote text C\  P6QQw #footnote reference# C\  P6QQw э)wfootnote reference) American Cable Co. v. TeleCable of Columbus, Inc., 11 FCC Rcd 10090, 101145 (1996).   S( ` $13.` ` CBS contends that since neither it nor MSC is a satellite cable programming vendor in  xwhich a cable operator has an attributable interest and neither is a satellite broadcast programming vendor",,>(>(ZZ"  X2 xor cable operator, the Commissions program access rules do not apply to CBS or MSC XP\  P6Q .)footnote reference)#footnote reference#4-> yO)(footnote text C\  P6QQw #footnote reference# C\  P6QQw э)wfootnote reference) CBS Answer at 2. 4 &J\  P6Qr  Moreover,  xCBS asserts that the rules do not prohibit MSC from entering into an exclusive agreement with Bresnan  S( xor any other cable operator.)footnote reference)#footnote reference#e. 3 {Op(footnote text C\  P6QQw #footnote reference# C\  P6QQw э)wfootnote reference) Id., citing 47 U.S.C. 548; 47 C.F.R. 76.1001, 1002. e Accordingly, CBS argues that the Complaint should be dismissed for failing  S(to state a claim on which relief can be granted.)}footnote reference)#footnote reference#5/3 yO(footnote text C\  P6QQw #footnote reference# C\  P6QQw э)wfootnote reference) CBS Answer at 2. 5  SI( ` P14.` ` Bresnan argues that the Commission should impose sanctions on DTI for filing a frivolous  S!( xprogram access complaint.)footnote reference)#footnote reference#40!B3 {O (footnote text C\  P6QQw #footnote reference# C\  P6QQw э)wfootnote reference) Id. at 25. 4 Bresnan contends that: (1) the complaint is based upon arguments which  xhave been specifically rejected by the Commission in other proceedings; (2) DTI should have known that  xexclusive agreements permitted under Section 628(c) do not violate Section 628(b); (3) both Congress and  x$the Commission have rejected attempts to expand the scope of the program access rules to include non xvertically integrated programming agreements; and (4) DTI failed to put forth any credible arguments that  SY (its ability to compete is threatened by the exclusive agreement.)nfootnote reference)#footnote reference#:1Y 3 yO(footnote text C\  P6QQw #footnote reference# C\  P6QQw э)wfootnote reference) Bresnan Answer at 26. :  S (Xx V.DISCUSSION (#  S (  S ( ` \15.` ` The facts underlying DTIs complaint are not disputed. DTI and Bresnan are each  x`franchised to provide cable service to Marshall, Minnesota. DTI sought carriage of MSC from CBS and  xwas refused based on its prior agreement to provide exclusive carriage to Bresnan. DTI sought subdistribution from Bresnan and was refused. MSC is not a vertically integrated programmer.   S( ` x16.` ` DTI does not allege that MSCs and Bresnans actions violate Section 628(c) of the  xCommunications Act, which prohibits certain types of exclusive contracts. Instead, DTI asserts that MSC  xand Bresnans exclusive contract combined with both parties refusal to provide MSCs programming to DTI constitutes an unfair practice under Section 628(b) of the Communications Act.  1. 1. 1. a.(1)(a) i) a) 1. 1. 1. 1. 1. 1. 1. 1.XX` ` Section 628(c)(2)(D) provides that:(#`  S(  vXwith respect to distribution to persons in areas served by a cable operator, [the Commissions rules   shall] prohibit exclusive contracts for satellite cable programming or satellite broadcast   Xprogramming between a cable operator and a satellite cable programming vendor in which a cable   operator has an attributable interest or a satellite broadcast programming vendor in which a cable  S9(operator has an attributable interest8)footnote reference)#footnote reference#y29d 3 X,$2#footnote reference# O` X` hp x (#%'0*,.8135@8:(>(ZZ"Ԍ  In the instant case, a nonvertically integrated programming vendor entered into an exclusive  xagreement with a cable system operator. Exclusive agreements between cable operators and nonvertically  xintegrated programming vendors are not prohibited by Section 628(c) of the Communications Act. Section  x628(c) of the Communications Act only restricts a cable operator from entering into an agreement with  S`( x~a satellite cable programming network in which one or more cable operators has an attributable interest.)footnote reference)#footnote reference#3X`3 yO(footnote text C\  P6QQw #(footnote reference# C\  P6QQw э)w((footnote reference) 47 U.S.C.  548(c)(2)(C) & (D); 47 C.F.R.  76.1000(b)(2) (attributable interest in program access is five percent or more voting, or nonvoting stock or limited partnership equity interest).  XX` ` DTI argues that exclusive agreement between the Defendants violates Section 628(b) of the(#` Communications Act, which provides that:   rXIt 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  X 2consumers XP\  P6Q .)>footnote reference)#footnote reference#:4 > yOQ(footnote text C\  P6QQw #(footnote reference# C\  P6QQw э)w((footnote reference) 47 U.S.C.  548(b). :(#  X X` hp x (#%'0*,.8135@8:effect of hindering significantly or preventing a MVPD from providing satellite cable programming to subscribers or consumers.  X ` hp x(#` hp x (#%  S( ` n X ` hp x (#%` hp x(#20.` ` The facts alleged by DTI do not constitute a Section 628(b) violation. As the Commission  xhas stated, Section 628(b) remains "a clear repository of Commission jurisdiction to adopt additional rules  x8or to take additional action to accomplish statutory objectives should additional types of conduct emerge  xNas barriers to competition and obstacles to the broader distribution of satellite cable and broadcast  S( xprogramming.")footnote reference)#footnote reference#g5x {O(footnote text C\  P6QQw  ` ` hp x(#` hp x (#%' x$(footnote text$#footnote reference#ۍ))footnote reference) Program Access Report and Order, 8 FCC Rcd at 3374. g However, Section 628(b) cannot be converted into a tool that, on a per se basis,  S(precludes cable operators from exercising competitive choices that Congress deemed legitimate.)footnote reference)#footnote reference#q6  {On(#footnote reference#   C\  P6QQw э)(footnote reference) Echostar Communications Corp. v. Comcast Corp., DA 990235 at 29 (CSB rel. January 22, 1999).  X8 2 XP\  P6Q q  X ` hp x(#` hp x (#%  S( ` t X ` hp x (#%` hp x(#21.` ` The unfair practices provision of Section 628(b) cannot be read in isolation and must  xpbe interpreted in light of the more specific provisions of the Communications Act permitting exclusive  S5( xBcontracts with nonvertically integrated programming vendors.)footnote reference)#footnote reference#r75 {O$(footnote text C\  P6QQw #(footnote reference# C\  P6QQw э)w((footnote reference) American Cable Co., v. Telecable of Columbus, Inc., 11 FCC Rcd at 10114. r As the Commission stated in American  S( xzCable v. Telecable, a practice permitted under the Communications Act and the Commissions rules"O 7,>(>(ZZ"  S( xcannot, without more, form the basis of a claim of unfair competition.)footnote reference)#footnote reference#=8 {O(footnote text C\  P6QQw #(footnote reference# C\  P6QQw э)w((footnote reference) Id. at 10117. = Section 628(b) may not be used to preclude programming practices clearly permitted under the more specific provisions of Section 628(c).  X ` hp x(#` hp x (#%  S( `  X ` hp x (#%` hp x!(#22.` ` Bresnans exclusive contract with CBS to distribute MSC is permitted by the  xNCommunications Act. Given Congress clear intent and language with respect to cable operators  xexclusive contracts in the 1992 Cable Act, an exclusive contract represents a practice that Congress  x$examined and did not consider anticompetitive. A central element of a claim based on Section 628(b) is  xthat the conduct must be unfair or deceptive. Based on the Communications Acts treatment of exclusive  xVcontracts, we cannot consider such contracts a new or additional type of conduct that may emerge as  S( x a barrier to competition that the Commission may prohibit through Section 628(b).) footnote reference)#footnote reference#R9" {OI (footnote text C\  P6QQw #(footnote reference# C\  P6QQw э)w((footnote reference) Program Access Order, 8 FCC Rcd at 3374. R Bresnans insistence  xon its exclusive rights, therefore, cannot be considered an unfair or deceptive practice in violation of Section 628(b).  X ` hp x!(#` hp x (#%  S ( ` jBody Text 2` hp x (#%` hp x(# &J\  P6Qr  X 23.` ` Defendants request that the Commission impose sanctions on DTI for filing a frivolous  xpclaim. While we deny DTIs program access complaint, we believe that it was filed in good faith and  xwithout knowing disregard to the Commissions rules and decisions. Accordingly, Defendants request for sanctions is denied.  SX("Body Text 2"` hp x(#` hp x !!"(#  S0(` hp x !!"(#` hp x (#VI.ORDERING CLAUSES  S( ` ` hp x (#` hp x(#24.` ` Accordingly, IT IS ORDERED , that the complaint filed in CSR 5381P by Dakota  S(Telecommunications, Inc. IS DENIED . ` hp x(#` hp x (#  Sh( ` 25. ` ` IT IS FURTHER ORDERED , that CBS Broadcasting Inc.s and Bresnan  S@(Communications Corporation's Motion for Sanctions IS DENIED.  S( ` <26.` ` This action is taken pursuant to authority delegated by Section 0.321 of the Commission's  X2rules.)footnote reference)#footnote reference#: yO (#footnote reference# C\  P6QQw э)(footnote reference) 47 C.F.R.  0.321.  X2 XP\  P6Q  XP\  P6Q   &J\  P6Qr  ` `  ,hhhFEDERAL COMMUNICATIONS COMMISSION ` `  ,hhhDeborah A. Lathen ` `  ,hhhChief, Cable Services Bureau