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File how2ftp (.txt & .wp) is in directory \pub\Public_Notices\Miscellaneous. ***************************************************************** ******** $//Section 214 Authorization DA 95-376$// $/63.09 provisions for projects under rural exemption$/ $/63.58 rural exemption to cable/telco cross-ownership ban$/ Before the FEDERAL COMMUNICATIONS COMMISSION DA 95-376 Washington, D.C. 20554 In re the Application of ) ) NEW ULM TELECOM, INC. ) File No. W-P-C-6877 ) For authority to construct and operate,) through an affiliate, cable television ) facilities in Sanborn, Minnesota which ) is within its affiliate's telephone ) service area. ) MEMORANDUM, OPINION AND ORDER Adopted: February 28, 1995 Released: March 6, 1995 By the Chief, Common Carrier Bureau: I. Introduction 1. On August 2, 1993, New Ulm Telecom, Inc. (New Ulm) filed an application for authority to construct and operate cable television facilities through its wholly owned subsidiary, Western Telephone Company (WTC), for the City of Sanborn, Minnesota, which lies within WTC's telephone service area. Although the Communications Act of 1934, as amended ("Act") generally prohibits telephone companies from owning and operating cable facilities within their local service areas, the statute creates an exception from the general prohibition for telephone companies serving rural areas. In its application, New Ulm asserted that the proposed cable system would fall within the rural exception. 2. New Ulm also filed a Request for Special Temporary Authority (STA), in accordance with Section 63.04 of the Commission's rules, 47 C.F.R.  63.04, to commence construction of its proposed cable facilities during the pendency of its Section 214 application. The Chief of the Domestic Facilities Division of the Common Carrier Bureau granted the STA without prejudice to future Commission action on New Ulm's Section 214 application. 3. Mark Twain Cablevision, L.P., (Mark Twain) filed a petition to deny the Section 214 application and a request for revocation of the STA. New Ulm filed oppositions to both these pleadings. Mark Twain filed a reply to the opposition to its petition to deny the Section 214 application. New Ulm subsequently amended its application to include a copy of a cable franchise, which was granted to WTC on September 28, 1993, by the City of Sanborn. II. Contentions 4. In its Section 214 application, New Ulm certified that the City of Sanborn was a "rural area," as defined by Section 63.58 of the Commission's Rules, 47 C.F.R.  63.58. New Ulm claimed, therefore, that it was exempt from the cable-telephone cross-ownership restrictions of Section 613 of the Act, 47 U.S.C.  553, and Section 63.54 of the Commission's Rules, 47 C.F.R.  63.54. New Ulm further asserted that it is entitled to simplified Section 214 consideration of its application under Section 63.09 of the Commission's Rules, 47 C.F.R.  63.09. New Ulm acknowledged that, as of the date it filed its Section 214 application, WTC had not been franchised to provide cable service, as required by 47 C.F.R.  63.09. New Ulm stated, however, that the City of Sanborn had indicated that it would approve a franchise for WTC at the City Council's August 3, 1993 meeting. New Ulm stated its intention to provide the Commission with evidence of the franchise agreement after the Council acted. 5. In its petition to deny New Ulm's Section 214 application, Mark Twain contends that, without the franchise agreement in hand, New Ulm's application fails to satisfy the express requirements of Section 63.09(5) of the Commission's Rules and that construction of cable facilities without a franchise violates Section 621(b)(1) of the Act. Furthermore, Mark Twain states that New Ulm had no reasonable basis for predicting that it would be granted a franchise on August 3 and, therefore, has "misstated material facts" in its application in violation of Section 1.17 of the Commission's Rules, 47 C.F.R.  1.17. Mark Twain alleges further that although New Ulm must have known that the franchise in fact was not approved at the August 3 meeting, New Ulm failed to inform the Commission that the franchise had not been granted, contrary to Section 1.65 of the Commission's Rules, 47 C.F.R.  1.65. This section requires applicants to correct inaccurate information contained in applications promptly. Mark Twain argues that, under Commission precedent, the need to deter such violations justifies denial of New Ulm's Section 214 application. Mark Twain proffers these same arguments in support of its request to revoke New Ulm's STA. 6. New Ulm replies that during the Sanborn City Council meeting held on July 13, 1993, the Council did give New Ulm a reasonable basis for believing that it would approve New Ulm's franchise at the August 3, 1993 meeting. Moreover, New Ulm argues that a franchise may be a precondition to providing cable services under Section 621(b)(1) of the Act, but it is not a precondition to construction of cable facilities in anticipation of providing cable services under that section. New Ulm, therefore, denies that its STA under Section 214 violates Section 621(b)(1). New Ulm acknowledges that a franchise is required for construction, under the terms of 47 C.F.R.  63.09, but asserts that, under 47 C.F.R.  63.50, it may amend its application as a matter of right prior to the date the Commission takes final action on that application. New Ulm further asserts that Mark Twain has no standing to challenge its STA because the STA does not harm Mark Twain's position as a provider of cable service in Sanborn, and because the Commission rule providing for the granting of a STA, 47 C.F.R.  63.04, makes no provision for comment or opposition from the public. Finally, New Ulm certifies that it was franchised on September 28, 1993 to provide cable service in the City of Sanborn. III. Discussion 7. Mark Twain has provided no basis for denying New Ulm's application for Section 214 authority. Section 214 of the Act governs construction of interstate lines by carriers. The implementing regulations for that Section, which appear in Part 63 of the Commission's rules, require that a carrier seeking construction authorization for a cable system under the rural exemption certify that it is franchised to provide cable service pursuant to Title VI of the Act. A separate provision within Section 214 empowers the Commission to authorize, on a special temporary basis, the supplementing of facilities without regard to the Section's other provisions. On August 5, 1993, the Domestic Facilities Division of the Common Carrier Bureau granted New Ulm a STA to begin construction of its cable system. New Ulm's STA was not conditioned on New Ulm receiving a franchise on a date certain. The prospective franchise date specified by New Ulm in its application was not mentioned in the STA authorization. Any further question as to the validity of the STA, in the absence of a franchise agreement, is mooted here by the fact that New Ulm entered into a franchise agreement on September 28, 1993, a few weeks later than New Ulm had originally anticipated. 8. We have not been persuaded that carrier construction of a cable system under the rural exemption and pursuant to Special Temporary Authority prior to the obtaining of a franchise violates the franchise requirements of Section 621(b) of the Act if there was no provision of service at the time. Mark Twain cites In re Competition in support of this proposition. Specifically, Mark Twain points to the Commission's statement that a "firm seeking to construct and operate a cable television system must first obtain a franchise...." The question of whether a franchise is required prior to construction was not at issue in the cited case, which was, in fact, a Notice of Inquiry, not an adjudication. Moreover, the cited statement would have to include a disjunction ("construct or operate") to require the interpretation given to it by Mark Twain. Finally, Section 621(b) prohibits on its face only provision of cable service prior to receiving a franchise, and there is no allegation that New Ulm was providing service prior to September 28, 1993. This finding is not inconsistent with the proposition that franchising authorities retain jurisdiction to award franchises. 9. The question remains whether New Ulm violated the Commission's Rules by initially misrepresenting and subsequently failing to correct material statements of fact in its Section 214 application and whether such misrepresentation warrants denial of the application. New Ulm clearly indicated in its application that it did not have a franchise to operate in Sanborn. It stated its intention to amend its application by forwarding to the Commission a copy of the franchise agreement when one was obtained. At no time did New Ulm misinform the Commission about the absence of a franchise. We find that New Ulm's somewhat optimistic prediction as to the date on which the Sanborn City Council would approve a franchise does not constitute significant misrepresentation. At no point was the Commission misinformed as to the existence of a franchise. Furthermore, there is no indication of deceptive intent. Rather, the evidence shows that New Ulm did have reason to think the franchise would be approved in August, and the franchise was, in fact, granted in September. Nor is there any pattern of repeated violations or other circumstances reflecting significant carelessness on the part of New Ulm. The Commission will not reject an application for trivial reporting failures. IV. Conclusion 10. For the reasons stated above, we find that New Ulm's amended application meets the requirements of Sections 63.09 and 63.58 of the Commission's Rules, 47 C.F.R.  63.09 and 63.58. New Ulm has now provided all necessary information and has complied with all procedures required under the special application provisions of Section 63.09. New Ulm has correctly certified that it has been awarded a franchise by the City of Sanborn and that the City of Sanborn is a "rural area" according to the Census Bureau. We further find that granting New Ulm authority to construct and operate its proposed cable system will serve the public convenience and necessity by promoting the growth and development of cable systems and competition in cable communications in conformity with the purposes of Title VI of the Communications Act. New Ulm is therefore entitled, under the provisions of Section 214 of the Act, 47 U.S.C.  214, to construct and operate, through its affiliate, WTC, cable television facilities in the City of Sanborn, Minnesota. We also find that Mark Twain's Informal Request to Revoke Special Temporary Authority is moot. V. Ordering Clauses 11. Accordingly, IT IS ORDERED that the application of New Ulm Telecom, Inc. under Section 214 of the Communications Act of 1934, as amended, to construct and operate cable television facilities in the City of Sanborn, Minnesota, IS GRANTED. 12. IT IS FURTHER ORDERED that, pursuant to 47 C.F.R.  1.103(a), this order is effective upon adoption. 13. New Ulm Telecom, Inc. is granted thirty-one days from the release date of this order to decline this authorization. Failure to respond within that period will constitute formal acceptance of this authorization. FEDERAL COMMUNICATIONS COMMISSION Kathleen M.H. Wallman Chief, Common Carrier Bureau