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                            Before the
                Federal Communications Commission
                      Washington, D.C. 20554

In the Matter of:               )
                                )
WORLD SATELLITE NETWORK, INC.   )
                                )
          v.                    )
                                )
TELE-COMMUNICATIONS, INC.,      )       CSR-5287-P
                                )
SATELLITE SERVICES, INC., AND   )
                                )
NETLINK USA d/b/a NETLINK       )
INTERNATIONAL                   )
                                )
Program Access Complaint        )

                                 
                  MEMORANDUM OPINION AND ORDER

        Adopted:  August 9, 1999            Released:  August 11, 1999  

By the Chief, Cable Services Bureau:

I.   INTRODUCTION

     1.   World Satellite Network, Inc. ("WSNet") has filed a program access complaint against Tele-
Communications, Inc. ("TCI"), Satellite Services, Inc. ("SSI") and Netlink USA d/b/a Netlink International
("Netlink") alleging that TCI, SSI and Netlink are in violation of Section 628(b) of the Communications Act
of 1934, as amended ("Communications Act"), and Section 76.1001 of the Commission's rules because they
have engaged in unfair methods of competition and unfair or deceptive acts or practices by SSI's refusal to sell
SSI programming to WSNet and Netlink's sale of SSI programming at a price that is at or below WSNet's cost
for the same programming.  WSNet also alleges that SSI is in violation of Section 628(c)(2)(B) of the
Communications Act and Section 76.1002(b) of the Commission's rules because SSI has discriminated
against WSNet and in favor of Netlink and the TCI cable systems by refusing to distribute or sell any SSI
programming to WSNet. 

     2.   In addition, WSNet alleges that TCI, SSI and Netlink are in violation of Section 628(c)(2)(C)
and (D) of the Communications Act and Section 76.1002(c)(1) and (2) of the Commission's rules because
they have engaged in practices or activities tantamount to exclusivity with respect to SSI programming. 
Finally, WSNet alleges that TCI, through SSI and Netlink, has violated the cable/SMATV cross ownership
prohibition set forth in Section 613(a)(2) of the Communications Act and Section 76.501(e)(2) of the
Commission's rules.

     3.   TCI and SSI filed a consolidated answer and motion to dismiss arguing that WSNet does not
have standing to bring a program access complaint and that both TCI and SSI are not proper parties to this
proceeding.  Netlink filed an answer and request for dismissal and sanctions also asserting that WSNet does
not have standing to file a complaint and arguing further that WSNet has failed to state a claim against Netlink. 
WSNet filed a reply pleading.  TCI and SSI filed a joint surreply and a motion for leave to file that pleading. 
WSNet filed an opposition to that motion and TCI and SSI filed a joint reply to WSNet's opposition, along with
Netlink filing its own reply.  

II.  BACKGROUND

     4.   Congress enacted the Cable Television Consumer Protection and Competition Act of 1992
("1992 Cable Act") to promote competition, with the view that regulation would be transitional until the video
programming distribution market becomes competitive.  By enacting the program access provisions, which
are codified in Section 628 of the Communications Act, Congress sought to minimize the incentive and ability
of vertically integrated programming suppliers to favor affiliated cable operators over nonaffiliated cable
operators or other multichannel video programming distributors ("MVPDs") in the sale of satellite cable and
satellite broadcast programming.   

     5.    In Section 628(b) of the Communications Act, Congress states 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.      

          In Section 628(c)(2), Congress instructed the Commission to promulgate regulations that:

          (A) establish effective safeguards to prevent a cable operator which has an attributable
     interest in a satellite cable programming vendor or a satellite broadcast programming vendor
     from unduly or improperly influencing the decision of such vendor to sell, or the prices, terms,
     and conditions of sale of, satellite cable programming or satellite broadcast programming to
     any unaffiliated multichannel video programming distributor; [and]

          (B) prohibit discrimination by a satellite cable programming vendor in which a cable operator
     has an attributable interest or by a satellite broadcast programming vendor in the prices, terms
     and conditions of sale or delivery of satellite cable programming or satellite broadcast
     programming among or between cable systems, cable operators, or other MVPDs or their
     agents or buying groups . . . .   

     6.   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, Report and Order, MM Docket No. 92-265 (Program Access Order), the Commission
concluded that non-price discrimination is included within the prohibition against discrimination set forth in
Section 628(c)(2)(B).  While the Commission did not attempt to identify all types of non-price discrimination
that could occur, the Commission stated that "one form of non-price discrimination could occur through a
vendor's `unreasonable refusal to sell,' or refusing to initiate discussions with a particular distributor when the
vendor has sold its programming to that distributor's competitor."  The Commission cautioned, however that
"`unreasonable' refusals to sell" should be distinguished from "certain legitimate reasons that could prevent a
contract between a vendor and a particular distributor."  Such legitimate reasons would include:

          (i) the possibility of parties reaching an impasse on particular terms, (ii) the distributor's
     history of defaulting on other programming contracts, or (iii) the vendor's preference not to
     sell a program package in a particular area for reasons unrelated to an existing exclusive
     arrangement or a specific distributor.

     7.   The term "satellite cable programming" is video programming which is transmitted via satellite
and which is primarily intended for the direct receipt by cable operators for their retransmission to cable
subscribers.  The term "satellite broadcast programming" is broadcast programming when such programming
is retransmitted by satellite and the entity retransmitting such programming is not the broadcaster or an entity
performing such retransmission on behalf of and with the specific consent of the broadcaster.   

III. THE PARTIES

     8.   WSNet states that it is a corporation engaged in the acquisition and distribution of satellite
television programming services (the "WSNet programming").  WSNet states that it competes with TCI cable
systems that sell satellite television programming to SMATV companies and bulk buyers.   WSNet states that
it purchases programming directly from vendors and sells it to Satellite Master Antenna Television ("SMATV")
companies who then sell the WSNet programming to consumers.  WSNet also sells the WSNet programming
in bulk directly to the owners and managers of multiple dwelling units ("MDUs"), mobile home parks, planned
unit developments ("PUDs"), recreational vehicle ("RV") parks, nursing/retirement homes, prisons and college
dormitories ("bulk buyers").  WSNet states that bulk buyers own or manage the facilities where consumers
of satellite television programming reside and bulk buyers also own and operate the satellite television reception
equipment used to provide the programming to the residents of those facilities.  WSNet notes that bulk buyers
are not engaged in the business of selling satellite television programming to consumers, but rather acquire and
provide the programming to residents as an amenity and without direct payment by residents of a separate
subscription fee for programming.

     9.   According to WSNet, it delivers WSNet programming to over 4,200 satellite headend sites
throughout the United States.  WSNet also states that the SMATV companies and the bulk buyers that it does
business with pass an estimated two million homes nationwide.  Thus, WSNet states that it is the largest
buying group in the country for SMATV companies and bulk buyers.

     10.  TCI is a cable operator that is engaged in the production, acquisition and distribution of
multichannel video programming services.  SSI is a wholly owned subsidiary of TCI through TCI
Communications, Inc. and TCI Development.  TCI and SSI state that SSI's function is to purchase
programming from programmers on behalf of TCI and TCI affiliates.  Thus, SSI is described as TCI's way
of centrally purchasing programming, which TCI and SSI state is the same way other multiple system operators 
("MSOs") buy programming.  Netlink is a satellite cable programming vendor in which TCI has an
attributable interest.  Netlink states that it obtains through SSI the right to purchase distribution rights for
all of the programming services which it is entitled to sell.  Netlink states that it obtains access to the
programming rights negotiated by SSI because it qualifies as an affiliate of TCI.

IV.  THE PLEADINGS

     11.  WSNet argues that SSI and Netlink have engaged in unfair acts and methods of competition
in violation of Section 76.1001 of the Commission's rules because SSI refuses to sell SSI programming to
WSNet and because Netlink sells SSI programming at a price that is at or below WSNet's cost for the same
programming.  WSNet also contends that these same practices on the part of SSI and Netlink are tantamount
to prohibited exclusivity agreements in violation of Section 76.1002(c)(1) and (2) of the Commission's rules. 
In addition, WSNet asserts that SSI has discriminated against WSNet because it has refused to deal with
WSNet in violation of Section 76.1002(b) of the Commission's rules.  WSNet also argues that TCI has,
through SSI and Netlink, been using SMATV companies and bulk buyers to offer SSI programming for sale
to consumers in TCI franchise areas in a manner other than pursuant to the terms of the applicable franchise
agreements in the TCI franchise areas in violation of Section 76.501(e)(2) of the Commission's rules.   

     12.  TCI, SSI and Netlink all respond by arguing that WSNet does not have standing to bring a
program access complaint because WSNet is not an MVPD and WSNet's resale of programming to SMATVs
and bulk buyers does not make it a buying group or agent under the program access rules.  TCI, SSI and
Netlink contend that in order for WSNet to be an MVPD, WSNet must be an entity that makes available for
purchase multiple channels of video programming to subscribers or customers. According to TCI, SSI and
Netlink, neither SMATVs nor bulk buyers qualify as subscribers or customers under the Commission's rules. 
The parties argue that the Commission has made clear that an MVPD is an entity which offers programming
directly to end users, not to other MVPDs which then provide programming to end users, i.e., subscribers or
customers.

     13.  TCI, SSI and Netlink contend that WSNet is neither an agent nor a buying group as defined
by the Commission's rules, but instead is a commercial entity that purchases programming for the purpose of
making a profit by then selling it to SMATVs or bulk buyers.  The parties argue that WSNet does not act as
an agent or representative of its "members" or MVPD constituency as required by the Commission's rules.
Netlink also argues that WSNet does not fit the description of a buying group because it does not impose
uniform billing or standard contract terms and conditions upon the entities that it represents.  Netlink asserts
that although WSNet may begin with a standardized form of agreement, it negotiates contractual terms and
conditions as well as price, just as any programmer or wholesaler would do when conducting business.  The
parties contend that the relationship between WSNet and its MVPD clients cannot be characterized as anything
more than a sales relationship in which WSNet is a middleman or broker that buys program distribution rights
from vendors and resells them, at differing rates, to SMATV operators and bulk buyers.

     14.  In response to WSNet's allegations, TCI and SSI argue that SSI is not a satellite cable
programming vendor and therefore is not subject to the program access rules.  The parties argue that while
Netlink and the TCI cable systems sell programming, SSI does not engage in the wholesale distribution for sale
of programming, but merely purchases programming on behalf of TCI and its affiliates.  TCI and SSI also
argue that SSI's refusal to engage in the business of making programming generally available for sale to third
parties does not constitute a refusal to deal under the program access rules.  TCI and SSI assert that the
Communications Act's exclusivity provision is designed to restrict a vertically integrated satellite programmer
from selling to only one MVPD and refusing to sell to other MVPDs on the basis of exclusivity.  TCI and SSI
assert that the exclusivity provision is not intended to involve an entity such as SSI that sells no programming
at all.  Netlink argues that WSNet can purchase distribution rights for the programming services offered by
Netlink either from Netlink itself or directly from programmers, thus WSNet cannot state a claim against
Netlink based on program exclusivity.
     
     15.  With regard to the alleged cable/SMATV cross ownership violation, TCI and SSI argue that
WSNet misunderstands and misapplies the cable/SMATV rule.  TCI and SSI note that the cable/SMATV
rule prohibits a cable operator or affiliate from offering service through SMATV facilities within the cable
operator's franchise area, unless such service is offered in accordance with the terms and conditions of a cable
franchise agreement.  TCI and SSI argue that this restriction applies only where TCI or an affiliate offers
service through SMATV facilities to subscribers.  TCI and SSI note that WSNet accuses TCI, "through SSI
and Netlink," of using SMATV companies and bulk buyers to offer the SSI programming for sale to
consumers; however, neither SSI nor Netlink offers service through SMATV facilities to subscribers.  TCI
and SSI assert that SSI is only a purchasing agent for programming for TCI and its affiliates, and does not
engage in the sale of programming.  While Netlink does sell programming to SMATVS, TCI and SSI argue
that Netlink does not provide service through SMATV facilities to subscribers.  TCI notes that in any of its
cable franchise areas where it offers service through a SMATV facility to subscribers, it does so in accordance
with the terms and conditions of its cable franchise agreements.

     16.  In response, WSNet argues that it is an MVPD with standing to file this program access
complaint because it makes available multiple channels of video programming to its customers.  WSNet
contends that it treats the SMATV operators to whom it sells programming as its customers.  WSNet argues
that there is no support in the legislative history of the 1992 Cable Act for the assertion made by TCI, SSI and
Netlink that WSNet fails to qualify as an MVPD because its customers are not end users of video
programming.  WSNet argues, however, that the Commission has already held, in the context of
retransmission consent, that one MVPD can serve another MVPD as a customer.

     17.  WSNet also contends that the terms subscribers, end users and customers cannot be considered
as having one and the same meaning.  WSNet argues that a customer is not the same as a subscriber. 
WSNet states that Section 76.5(e) of the Commission's rules expressly defines a subscriber as someone served
by a cable system.  According to WSNet, because a SMATV system is not a cable system, a SMATV
operator does not serve subscribers.  WSNet contends therefore that an MDU resident served by a SMATV
system is a customer.  However, WSNet argues that unlike a subscriber, a customer is not limited to an end
user in the MVPD definition because the Commission has already determined, in the context of the
retransmission consent, that one MVPD can be the customer of another MVPD.

     18.  In addition, WSNet asserts that there are distinctions between SMATV systems, SMATV
operators and MVPDs.  WSNet states that "SMATV systems are facilities that provide video programming
to the residents of MDUs without using public rights of way."  In turn, WSNet points out that "SMATV
operators are persons who own and operate SMATV systems."  WSNet states that "MVPDs include SMATV
operators but not all SMATV operators are MVPDs."  Excluded from the MVPD definition, states WSNet,
are "all SMATV operators who provide programming as an amenity" to MDU residents.  WSNet states that
this "class of SMATV operator" is known as a "bulk buyer."  For purposes of the Commission's
retransmission consent requirement, WSNet notes these bulk buyers are not considered MVPDs.  For
purposes of the program access rules, WSNet argues that if the Commission determines that MVPDs can only
serve end users as customers, then the vast number of MDU residents who obtain their programming from bulk
buyers will be denied the protection of the these rules.  WSNet therefore argues that the Commission must
recognize that bulk buyers themselves are customers in order to afford them the protection of the program
access rules.

     19.  WSNet also argues that WSNet functions as a buying group as opposed to a broker or a
middleman.  In support of its argument, WSNet asserts that its method of doing business is the same as that
of the National Satellite Programming Network, Inc. ("NSPN"), which WSNet states was the first company
to pioneer the program buying group concept.  WSNet argues further that it has been in business for fifteen
years and that all of the programming vendors in the country, including those owned by TCI, have always
recognized WSNet as a buying group.  Moreover, WSNet asserts that if the Commission finds that WSNet
is not a buying group, there will be no buying groups at all in the SMATV industry and SMATV operators
will have to buy programming either directly from programmers or a DBS company or indirectly through
Netlink.

     20.  In addition, WSNet asserts that it represents the entities that its does business with as 
"members" of its buying group.  According to WSNet, the only express requirement for anyone to become a
"member" of a buying group is to agree to uniform billing and standardized contract provisions with the buying
group.  WSNet contends that members decide for themselves the terms and conditions under which they join
a buying group and how the buying group represents their interests in dealing with programmers.  WSNet
argues that members of a buying group have a choice with regard to how much financial responsibility to the
programming vendor they will assume as participants in the buying group.  According to WSNet, members
can accept joint and several liability to the programmers for the financial obligations of all group members;
or, members can decide to assume no liability to the programming vendor provided the buying group alone
commits to pay for the programming.  WSNet asserts that the latter option necessarily requires the buying
group to buy from the vendor on its own behalf and resell the programming to its members.  WSNet states
that when the entities that it does business with become WSNet members by executing WSNet's affiliate
agreement, they know that WSNet has a contract with the programming vendor to which they are not a party
and for which they assume no liability.

     21.  WSNet also argues that a buying group may charge different rates to those entities to whom
it sells programming and still be considered to be providing uniform billing and contract provisions as required
by Section 76.1000(c)(2).  WSNet argues that being able to set different rates for those entities is essential
to its business and that even vertically integrated programmers are permitted, under certain circumstances, to
charge different rates to different customers and that there are no limitations on non-vertically integrated
programming vendors.  WSNet further argues that the presence of price differentials among and between
those entities that WSNet sells programming to does not affect WSNet's status as a buying group because such
differentials have no effect on the convenience and security of the programming vendor in dealing with WSNet
as a single purchaser.   

V.   DISCUSSION

     22.  For the reasons discussed below, we dismiss WSNet's program access complaint against TCI,
SSI and Netlink because WSNet lacks standing to file the complaint.  TCI, SSI and Netlink allege that WSNet
lacks standing to file this program access complaint against them because WSNet is not an MVPD and
WSNet's resale of programming to SMATVs and bulk buyers does not qualify it as a buying group or agent
under the program access rules.  Section 76.1000(e) of the Commission's rules defines a multichannel video
programming distributor ("MVPD") as:

          [A]n entity engaged in the business of making available for purchase, by subscribers or
     customers, multiple channels of video programming.  Such entities include, but are not limited
     to, a cable operator, a multichannel multipoint distribution service, a direct broadcast satellite
     service, a television receive-only satellite program distributor, and a satellite master antenna
     television system operator, as well as buying groups or agents of all such entities. 

     23.  An MVPD must be an entity that makes available for purchase multiple channels of video
programming to subscribers or customers.  Because neither SMATVs nor bulk buyers qualify as subscribers
or customers under our rules, WSNet is not an MVPD and therefore lacks standing to bring a program access
complaint.  By its own admission, WSNet does not makes video programming available to end users, but
instead sells programming to other MVPDs who then make the programming available to its subscribers or
customers.

     24.  WSNet argues that the term "customers" in the definition of MVPD encompasses WSNet's
SMATV and bulk buyer clients, which qualifies WSNet as an MVPD.  We believe, however, that there is
support in the legislative history of the 1992 Cable Act to support the view that the term "customers," along
with the term "subscribers," means "end users."  In the Senate version of the 1992 Cable Act, the Senate used
the term "available to a household" or "available to a home" when referring to an MVPD.  Specifically, the
Senate version stated:

          The term "available to a household" or "available to a home" when used in reference to a
     multichannel video programming distributor means a particular household which is a
     subscriber or customer of the distributor or a particular household which is actively and
     currently sought as a subscriber or customer by a multichannel video programming distributor
     and which is capable of receiving the service offered by the multichannel video programming
     distributor.

     25.  Thus, in adopting the program access provisions, we believe that Congress meant to promote
competition among MVPDs at the retail level so that subscribers or customers could receive the benefits of that
competition through more programming choices at lower prices.  We do not believe that Congress intended to
extend the program access rules to wholesale level relationships such as those that exist between a program
purchaser, such as WSNet, and MVPDs such as the SMATV and bulk buyer  clients served by WSNet.

     26.  In support of its argument that one MVPD can serve another MVPD as a customer, WSNet
relies on the Commission's decision in Implementation of the Cable Television Consumer Protection and
Competition Act of 1992, Broadcast Carriage Issues ("Must Carry Order").  We disagree with WSNet's
interpretation of the Commission's Must Carry Order.  In discussing retransmission consent, the Commission
noted that while satellite carriers themselves sell retransmitted broadcast signals directly to home satellite dish
("HSD") households, i.e., end users, they also license a variety of agents, e.g., program packagers, equipment
distributors, and satellite equipment retailers, to sell the signals on their behalf.  The Commission stated that,
in order to avoid any ambiguity regarding responsibility for securing retransmission consent with respect to
HSD sales, the satellite carrier is the MVPD and must secure retransmission consent.  The Commission did
not suggest, expressly or by inference, that the carrier's agents, such as the program packagers that the satellite
carrier licenses to sell signals on its behalf, should be considered as MVPDs for purposes of retransmission
consent.  

     27.  Also citing the Must Carry Order, WSNet contends that bulk buyers are not MVPDS and if
the Commission determines that WSNet is not an MVPD, then the Commission will deny the protection of the
program access rules to the MDU residents who obtain their programming from bulk buyers.  We note that,
in the Must Carry Order, the Commission does not exempt from the definition of MVPD either bulk buyers
or other entities that provide multiple channels of programming to MDU residents for purchase.  Instead,
the Commission clarifies that master antenna TV ("MATV") facilities or VHF/UHF antennas on individual
dwellings situated within the station's broadcast service area are not subject to retransmission consent, provided
that these signals are available without charge at the residents' option.  We agree with TCI and SSI that
WSNet's bulk buyer clients are not covered by this particular exception because, unlike MATV systems, these
bulk buyers provide multiple channels of video programming, including satellite delivered programming, to
MDU residents for purchase through some form of increased rent or separate fee.  Thus,  while the Must
Carry Order does not specifically address whether bulk buyers are MVPDs, the Order cannot be interpreted
to hold that bulk buyers cannot be MVPDs.        
     
     28.  We also find that WSNet is neither an agent nor a buying group as defined by Section
76.1000(c)(1)-(3) of the Commission's rules, which states:

          The term "buying group" or "agent" for purposes of the definition of a multichannel video
     programming distributor set forth in paragraph (e) of this section, means an entity
     representing the interests of more than one entity distributing multichannel video programming
     that: 

          (1)  Agrees to be financially liable for any fees due pursuant to a satellite cable programming,
     or satellite broadcast programming, contract which it signs as a contracting party as a
     representative of its members or whose members, as contracting parties, agree to joint and
     several liability; and 

          (2)  Agrees to uniform billing and standardized contract provisions for individual members;
     and 

          (3)    Agrees either collectively or individually on reasonable technical quality standards for
     the individual members of the group.

     29.  We believe that there is a fundamental difference between an entity, such as WSNet, that buys
and resells programming to various and unrelated MVPDs at differing rates in order to maximize its own
profits and a group that represents the interests of a collective group of MVPDs with the established goal of
obtaining better programming rates and terms for its members.  WSNet has not adequately demonstrated that
the SMATVs and bulk buyers that it does business with actually qualified as members of a group formed for
the express purpose of representing their interests in order to secure better rates and terms from programming
vendors.  Instead, WSNet asserts that all its clients need to do in order to become a WSNet member is to enter
into a contract with WSNet to purchase the programming that WSNet obtains from vendors.

     30.  According to WSNet, the only express requirement for anyone to become a "member" of a
buying group is to agree to uniform billing and standardized contract provisions with the buying group. 
WSNet contends that members then decide for themselves the terms and conditions under which they join a
group and the members decide how the buying group best represents their interests in dealing with
programmers.  Thus, it appears that WSNet conducts business as any programmer or wholesaler is likely
to do, so that although WSNet may begin with a standard form of agreement it then negotiates contractual
terms and conditions, as well as price.   While we believe that entering into a contract with an entity such as
WSNet in order for various SMATVs and bulk buyers to obtain programming constitutes a legitimate business
practice, we do not believe that entering into such a commercial transaction to purchase programming then,
in turn, constitutes "membership" in a buying group for purposes of the program access rules.  We therefore
find that because WSNet is neither an MVPD nor a buying group or agent for MVPDs, it has no standing to
file the instant program access complaint.  Because we are deciding this matter on procedural grounds, we find
that there is no need to reach the merits of this proceeding.
     












VI.  ORDERING CLAUSES

     31.  Accordingly, IT IS ORDERED that the program access complaint filed by World Satellite
Network, Inc. against Tele-Communications, Inc., Satellite Services, Inc. and Netlink USA d/b/a Netlink
International IS DISMISSED WITH PREJUDICE.

     32.  This action is taken by the Chief, Cable Services Bureau, pursuant to authority delegated by
Section 0.321 of the Commission's rules.  


                         FEDERAL COMMUNICATIONS COMMISSION




                         Deborah A. Lathen
                         Chief, Cable Services Bureau