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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 ) MEMORANDUM OPINION AND ORDER AND NOTICE OF PROPOSED RULEMAKING Adopted: December 18, 1997 Released: December 18, 1997 By the Commission: Commissioner Furchtgott-Roth issuing a statement. Comment Date: February 2, 1998 Reply Comment Date: February 23, 1998 TABLE OF CONTENTS Paragraph Nos. I. INTRODUCTION . . . . . . . . . . . . . . . . . . 1 II. BACKGROUND . . . . . . . . . . . . . . . . . . . 2 III. THE PLEADINGS . . . . . . . . . . . . . . . . . 5 A. Ameritech's Petition . . . . . . . . . . . . .. .. . .5 B. Comments In Favor Of Ameritech's Petition . . . .. .. . .. . .9 C. Comments Opposing Ameritech's Petition . . . . .. .. . .14 D. Reply Comments . . . . . . . . . . . . . . .. .19 E. Small Cable Business Association Comments . . . .. .. . .. . .29 IV. DISCUSSION AND NOTICE OF PROPOSED RULEMAKING . . . . . 33 A. Issues Upon Which We Do Not Seek Comment . . . . .. .. . . 35 B. Time Limits . . . . . . . . . . . . . . . .. .37 C. Discovery . . . . . . . . . . . . . . . . .. . 41 D. Damages . . . . . . . . . . . . . . . . . . 45 E. Terrestrial-Delivery of Programming . . . . . .. .. . .. . .50 F. Buying Groups: Joint and Several Liability . . .. .. . .. . .52 V. REGULATORY FLEXIBILITY ANALYSIS AND INITIAL PAPERWORK REDUCTION ACT OF 1995 ANALYSIS . . .. .54 VI. PROCEDURAL PROVISIONS . . . . . . . . . . . . . . 55 VII. ORDERING CLAUSES . . . . . . . . . . . . . . . . 58 APPENDIX A APPENDIX B I. INTRODUCTION 1. In this Memorandum Opinion and Order and Notice of Proposed Rulemaking, we grant the petition for rulemaking filed by Ameritech New Media, Inc. ("Ameritech") requesting that the Commission issue a notice of proposed rulemaking to amend its program access rules. Pursuant to Section 1.401 of the Commission's rules, on June 2, 1997, the Commission issued a public notice seeking comment on Ameritech's petition. Timely comments and oppositions were filed on July 2, 1997; reply comments were filed on July 17, 1997. As discussed herein, we are initiating a proceeding to consider the amendment of several aspects of the program access rules. II. BACKGROUND 2. Section 628 of the Communications Act of 1934, as amended ("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 the program access protections 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. 3. 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. The Commission stated that discovery will not be permitted as a matter of right in all cases, but only as needed on a case-by-case basis, as determined by Commission Staff. 4. With regard to the issue of damages, the statute 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." The Commission initially concluded that the Communications Act does not grant the Commission the authority to assess damages against programmers or cable operators that violate Section 628. 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 reversed this decision holding that because the Communications Act does not limit the Commission's authority to determine what is an appropriate remedy, and that damages are clearly a form of remedy, the plain language of Section 628 is consistent with a finding that the Commission has authority to afford relief in the form of damages. The Commission also determined that petitioners did not persuade the Commission that assessing damages for violations of the program access rules was necessary at that time. The Commission stated that, if future events demonstrate that the sanctions approved for program access violations are not adequate to discourage anticompetitive conduct, the Commission would revisit the issue. II. THE PLEADINGS A. Ameritech's Petition 5. In its petition, Ameritech requests that the Commission issue an NPRM to amend certain of the program access rules contained in Part 76 of its rules. Ameritech proposes that the Commission: (1) guarantee expedited review by imposing specific time deadlines for resolving program access cases; (2) institute a right of discovery to enable complainants to obtain information necessary to prove Section 628 violations; and (3) institute economic penalties in the form of fines or damages to create an economic disincentive discouraging Section 628 violations. 6. With respect to the issue of imposing specific time limits by which the Commission must resolve program access matters, Ameritech contends that delays in Commission decision-making have impeded the development of competition in the multichannel video programming distribution market. Therefore, Ameritech proposes that, in cases where the complainant has elected not to take discovery, the Commission amend its rules to require that a decision on a Section 628 complaint must be rendered within 90 days of the Commission's receipt of the complaint. Where a complainant opts to conduct discovery, Ameritech proposes that such proceeding be resolved within 150 days of the Commission's receipt of the complaint. In addition, Ameritech proposes that the Commission amend its rules so that answers to program access complaints be filed within 20 days after the service of the complaint, instead of the 30 day period currently permitted by the Commission's rules. Ameritech further proposes that, in cases where there is no discovery, the time for filing a reply be reduced from 20 days to 15 days, and that replies be eliminated in cases where discovery is conducted. In those matters where discovery is conducted, Ameritech proposes that the Commission convene a status conference within five days of the filing of the defendant's answer. 7. With respect to the issue of discovery, Ameritech argues that, because discovery is essential to a complainant's ability to make its case, especially in cases alleging price discrimination, complainants in Section 628 cases should be permitted discovery as of right similar to that provided for in the Federal Rules of Civil Procedure. Under this proposal, Ameritech acknowledges that the Commission's right to conduct discovery would remain unchanged. To ensure expedited review, Ameritech proposes that the Commission's rules require that all discovery be concluded within 45 days following the initial status conference. 8. With respect to damages, Ameritech argues that the Commission's rules should be amended to provide for the imposition of forfeitures and/or the award of damages against all entities determined to have committed Section 628 violations. Ameritech argues that Section 628 cannot act as an antidote for anticompetitive behavior by cable operators and programmers unless there is a significant economic disincentive provided for in the rules. Ameritech notes that in Order on Reconsideration, the Commission concluded that nothing in the statute limited the Commission's authority to impose remedies, including damages, for violations of Section 628. As further noted by Ameritech, the Commission declined to exercise its authority to award damages at that time and stated that it would revisit the issue should circumstances warrant. Ameritech submits that economic disincentives are now necessary to prevent further anticompetitive conduct. Ameritech supports the imposition of substantial monetary penalties retroactive to the date of the filing of the notice of intent to initiate a Section 628 proceeding. B. Comments In Favor of Ameritech's Petition 9. Several commenters support Ameritech's Petition. For example, the Media Access Project generally supports Ameritech's petition because "shortcomings in the Commission's rules may allow vertically- integrated cable operators to delay or avoid the prohibitions of Section 628 in contravention of Congress's intent to have programming disputes resolved quickly." Similarly, World Satellite Network, Inc. ("WSN"), a program purchasing cooperative for satellite master antenna television ("SMATV") and multichannel multipoint distribution service ("MMDS") operators, also supports Ameritech's petition and argues that the current program access rules do not effectively reflect the statutory mandate of fair and equal access to programming. 1. Time Limits 10. Americast supports the imposition of fixed time periods after the close of the pleading cycle within which a decision must be rendered. Americast suggests that a determination be released within 45 days of the close of the pleading cycle. DIRECTV argues that measures to expedite the resolution of program access complaints will result in the more rapid introduction of competition in the multichannel video programming distributor ("MVPD") marketplace. 2. Discovery 11. Several commenters urge the Commission to adopt a rule that would require limited document discovery as a matter of course as a means of fostering more meaningful and vigorous enforcement of Section 628. In the alternative, Americast supports Commission adoption of strict procedures for requiring discovery when Commission Staff has determined that a complainant has demonstrated a prima facie case. Americast proposes that the complainant serve the Commission and the defendant with a limited document discovery request, which must be granted or denied within 10 business days of the filing of the defendant's answer. If granted, the defendant would then have 10 business days to provide the relevant documents. The Wireless Cable Association ("WCA") asserts that alternative MVPDs (like satellite service providers) are denied a full opportunity to present their best case to the Commission if they are not given access to certain documents within the defendant's possession that would demonstrate whether a program access violation has occurred. WCA argues that, in price discrimination cases, absent access to such documents, it is virtually impossible to prove that a programmer has refused to deal on fair and equitable terms. WCA asserts that "by simply establishing blanket rules as to what documents must be produced in response to specific types of program access complaints, the Commission can effectively eliminate unnecessary layers of decision-making while ensuring that all relevant documents are made available to the complaining party as quickly as possible." WCA contends that this limited right of discovery would facilitate expeditious resolution of program access complaints and serve the public interest by minimizing the damage inflicted on alternative MVPDs through the delay tactics of defendants. 3. Damages 12. Several commenters support Ameritech's position that the Commission has the authority to impose damages and should amend its rules to make damages available as a remedy in program access cases. For example, commenters assert that the Commission has the statutory authority to award damages based on Section 628(e)(1)'s use of the phrase "appropriate remedies." Americast notes that in the Order on Reconsideration, the Commission stated that it would reconsider the issue of damages if the current process for resolving complaints was not preventing anticompetitive behavior. Americast urges the Commission to establish that monetary damages and forfeitures will be available for violations of Section 628 and asserts that the threat of damages is necessary to bring programmers into compliance with the Commission's rules. In addition, Americast argues that, if necessary, the issues of liability and damages can be bifurcated. WCA also asserts that under Section 4(i) of the Communications Act, the Commission enjoys significant discretion to choose from a range of reasonable remedies. WCA notes that the Administrative Procedure Act ("APA") grants federal agencies the authority to impose "sanctions" on entities subject to its jurisdiction, and that assessment of damages is specifically included in the APA's definition of "sanction." Commenters further assert that, in the absence of economic damages, a defendant has little incentive to negotiate with an aggrieved MVPD before a complaint is filed, nor does it have the incentive to resolve the matter in a timely manner after a complaint is filed. WCA asserts that the availability of damages in program access cases will alleviate the problems MVPDs face from evasive cable operators and programmers. DIRECTV agrees that providing for penalties or damages awards for proven violations would allow for more meaningful and vigorous enforcement of Section 628. 4. Other Issues 13. Americast argues that the Commission should also consider: (1) whether adjudicated anti- competitive behavior should be treated as raising serious questions of fitness to be a Commission licensee at the time of renewal of Commission licenses; and (2) whether the Commission has the authority to impose punitive damages in those limited and egregious cases of willful price discrimination, or denial of programming, in which exposure to economic damages may be an insufficient deterrent. DIRECTV supports a Commission proceeding to fine-tune the program access rules and argues it may be appropriate for the Commission to reconsider, and to develop a record on, whether the protections of the program access rules should be extended to cover terrestrially-delivered programming that technically may not fall within the definitions of "satellite cable programming" or "satellite broadcast programming" contained in Section 628. DIRECTV contends that the Commission could also examine under what circumstances the rules should be extended to encompass acts or practices by non-vertically integrated programmers whose purpose or effect is to deny MVPDs the fundamental access they need in order to provide viable competition to incumbent cable operators. C. Comments Opposing Ameritech's Petition 1. Time Limits 14. Several commenters oppose Ameritech's suggestion that the Commission adopt time deadlines for program access complaints and acknowledge that in Annual Assessment of the Status of Competition in the Market for the Delivery of Video Programming, Third Annual Report ("1996 Report"), the Commission considered and rejected suggestions to amend its program access rules to establish specific decision deadlines. Home Box Office ("HBO") notes that Ameritech's program access complaint was resolved in four months, significantly less than the 12 month average touted by Ameritech in its Petition. In addition, HBO contends that the program access cases that took longer than average to resolve were won by defendants and therefore complainants suffered no injury. HBO asserts that Ameritech's demand for discovery as of right is inconsistent with its request for short, firm resolution deadlines by lengthening the complaint process. In this regard, HBO argues that the Commission's November 1996 proposal to abolish or limit discovery in light of the new statutory deadlines for resolving common carrier complaints is persuasive evidence that Ameritech's time limit proposal should be denied. 15. NCTA asserts that Ameritech has failed to show the need for expedited deadlines for resolution of program access complaints, nor has it shown that it has been the victim of a program access violation. NCTA further notes that, despite the competitive conditions cited by Ameritech in its petition, Congress failed to impose a statutory deadline for program access matters in the 1996 Act. NCTA asserts that the rules already provide for expeditious resolution of program access complaints. NCTA argues that requiring an answer within 20 days, instead of the current 30 days, would not afford adequate time for gathering the necessary information to defend such claims. 16. Time Warner asserts that implicit in Ameritech's proposal is the suggestion that Commission staff have been less than diligent in their consideration of complaints. In defense thereof, Time Warner notes the 12 instances of settlement, as well as a variety of reasons why a program access case may remain open for an extended period of time. While the WCA favors expedited resolution of program access complaints, it is "aware that processing delays in the program access arena in many cases are attributable to chronic staff shortages within the Commission's Cable Services Bureau and, on occasion, requests for extensions of time filed by the complaining or defending parties. . . ." In lieu of imposing inflexible time limits on the resolution of program access complaints, WCA favors expediting action on program access matters by assigning more staff to the Cable Services Bureau. 2. Discovery 17. Opponents of Ameritech's petition contend that, rather than expediting program access case resolution, allowing discovery as of right would result in burdensome, time consuming fishing expeditions by complainants. One commenter asserts that a request for discovery under Ameritech's plan would necessitate at least five rounds of pleadings, as well as interrogatories, objections to interrogatories, and requests for written documents, and depositions. HBO argues that Ameritech's petition is unnecessary because discovery is available under the Commission's current procedures. HBO asserts that discovery complicates and delays complaint proceedings, and cites a 1996 Common Carrier Bureau Second Report and Order "authorizing staff to limit the scope of discovery because such limitation `could be an effective deterrent to attempts by parties to use discovery for purposes of delay or to gain tactical leverage for settlement purposes.'" HBO argues that discovery as of right encourages fishing expeditions, increases the potential for abuses by entities seeking to gain access to competitor's pricing information, and would provide minimal utility as most complainants receive relevant documents as part of the pleading cycle. Time Warner notes that in the 1996 Report, the Commission considered and rejected suggestions to amend its program access rules to permit discovery as of right, finding a uniform discovery process inefficient and inadvisable given the nature of the programming distribution marketplace. Commenters argue that the fact that litigants have the right to discovery in an antitrust action does not mean that a right of discovery should necessarily be available in this type of administrative proceeding. 3. Damages 18. Several commenters oppose the imposition of damages in program access matters. Commenters contend that the Commission's rules already permit forfeitures in program access cases under Title V and that proposals for the inclusion of damages were presented to and rejected by the Commission. Commenters assert that Ameritech has not demonstrated that the Commission's earlier decision was in error. In addition, Commenters assert that the agency lacks the authority to award such damages under Section 628. One commenter notes that a recent Common Carrier Bureau ("CCB") proceeding observed that the agency did not have the general authority to award punitive damages in complaint proceedings. In this regard, HBO contends that a damages remedy would require elaborate regulatory mechanisms in order to determine economic damages adding unnecessary complication and further delay to the resolution of most program access claims. Rainbow also asserts that Ameritech's petition provides no evidence that the existing program access rules are inadequate to implement the provisions of Section 628. D. Reply Comments 19. In its reply, Ameritech asserts that access to quality programming is indispensable to successful operation of a cable service. In response to Time Warner and NCTA's comments, Ameritech asserts that its securing of 45 cable franchises does not demonstrate that it is receiving access to quality programming, nor does it demonstrate the access it is receiving is at nondiscriminatory rates, terms and conditions. Ameritech contends that the Commission's previous consideration of the issues raised by its petition should not preclude the granting thereof. Rather, three principal reasons indicate that the Commission should reconsider the issues raised in this proceeding: (1) that the failure of widespread, meaningful competition to take root in the video marketplace is becoming increasingly evident with the passage of time; (2) that there are highly significant, new marketplace developments, such as the accelerating trend toward consolidation in the cable industry, which pose a threat to the protections afforded by Section 628; and (3) that future program access complaints are likely to focus increasingly on discriminatory pricing and practices. 20. Ameritech asserts that the availability of discovery as a matter of right would alter the mindset of cable programmers and operators, providing a disincentive to engage in dilatory activities. Ameritech argues that the increased complexity and difficulty of proving price discrimination cases requires that discovery as of right be available to complainants. Ameritech asserts that discovery as of right is less demanding on Commission Staff than the current structure of the rules which provides for direct Staff involvement in discovery. Ameritech challenges the assertion of other commenters that this new right would lead to expensive and costly fishing expeditions. To remedy any perceived problems with the provision of discovery as of right, Ameritech suggests that protective orders would safeguard against confidentiality breaches. 21. Ameritech cites Section 628(e) to support its assertion that the Commission has the authority to award damages. Ameritech asserts that the availability of damages would persuade cable programmers and operators to comply with the program access rules by providing a disincentive to engage in dilatory activities. In addition, Ameritech maintains that, if anticompetitive abuses decline as a consequence of these rule changes, the Commission will conserve resources because of the reduction in Section 628 complaints. 22. In its reply, Echostar agrees with Americast's comments that the proposed damages remedy would act as a deterrent to violators, and would encourage aboveboard behavior, fair settlements and competition. Echostar asserts that proof of violations of the program access rules are typically in the defendant's exclusive custody. Echostar states that the Commission's current rules allow the prospective plaintiff to request some information from the defendant, but that the defendant has little incentive to comply with such requests, since there is essentially no sanction for noncompliance. Echostar contends that discovery as of right can be narrowed to obtain only the material relevant to establishing a complainant's case, and that protective orders can allay confidentiality concerns. 23. Bell Atlantic/NYNEX argues that the Commission should establish penalties that will stop systematic violations of the Commission's rules, such as those allegedly committed by Rainbow Programming Holdings, Inc. Bell Atlantic/NYNEX asserts that without penalties, cable operators have little incentive to conform to the law and contend that penalties would lighten the Commission's burden as well. 24. OpTel asserts that the program access process is so time consuming that it denies practical relief to the complainant. OpTel argues that the relative paucity of program access cases is not due to increased competition but to complainants' unwillingness to be involved in a process that will yield the same result whether the case is settled or resolved by the Commission. OpTel argues that delays in the complaint process serve the interests of the dominant MVPDs by increasing barriers to new entrants and harming new entrants' subscribers by depriving them of desired programming. OpTel argues that without the threat of damages, there is no practical incentive for MVPDs to pursue a remedy through the Commission, nor is there an incentive for violators to comply with the rules. 25. In its reply, WCA supports DIRECTV's proposal to expand the scope of the program access rules to terrestrial-distribution of programming. WCA also urges the Commission to use the Ameritech Petition as an opportunity to develop a record as to whether the program access rules should encompass the activities of non-vertically integrated programmers. 26. In its Reply, Lifetime opposes efforts to expand the program access rules to cover non- vertically integrated programmers for two reasons. First, Lifetime argues that there is no need to expand the rules to a broader section of the marketplace than Congress intended. Lifetime notes that Congress did not expand the rules to non-vertically integrated programmers when, as part of the 1996 Act, it amended the section to cover common carriers. Lifetime also notes that the Commission rejected similar proposals in the 1996 Report. Second, Lifetime notes that expanded program access rules would put independent programmers at an even greater competitive disadvantage in the marketplace. Lifetime contends that being subject to program access rules would make less feasible future programming plans and ventures. 27. NCTA argues that the Commission lacks the authority to extend the program access rules to programmers other than vertically-integrated, satellite delivered cable program services. NCTA asserts that Section 628 applies only to programmers in which a cable operator has an attributable interest. NCTA states that the Commission examined this issue in the 1996 Report and found no evidence to warrant action. With respect to terrestrially-delivered service, NCTA notes that the Commission found no evidence that satellite programmers were switching to terrestrial delivery to evade the program access rules. NCTA also asserts that the Commission was not able to determine the effect that exclusive arrangements had on competition. 28. Viacom argues that the Commission lacks evidence, either empirical or anecdotal, justifying a recommendation to Congress regarding DIRECTV's proposals. Viacom asserts that the Commission lacks the legal authority to extend the program access rules to terrestrially-delivered transmissions, or to entities that are not vertically integrated cable operators or common carriers engaging in the delivery of video services directly to subscribers. Viacom also observes that the Commission has previously rejected attempts to expand the program access rules in this manner. Viacom suggests that such expansion would impede competition and constrain the entire programming industry by restricting the flow of capital to new and established programming services. E. Small Cable Business Association Comments 29. The Small Cable Business Association ("SCBA") filed comments in response to the Notice of Inquiry, In the Matter of Annual Assessment of the Status of Competition in Markets for the Delivery of Video Programming. Because portions of SCBA's comments bear directly on the subject matter of this proceeding, we see good cause to incorporate and to address them in this proceeding. 30. SCBA believes that the Commission should modify its program access rules to preserve small cable's ability to compete. SCBA argues that small cable faces substantial challenges in purchasing programming at fair rates from large media companies and incurs substantially higher programming costs than large multiple system operators ("MSO") when measured on a per subscriber basis. SCBA argues that small cable will bear the brunt of the continuing consolidation of direct broadcast satellite ("DBS") services and cable programming interests. SCBA argues that a large media company that operates DBS could deny small cable operators access to its programming because such programming is not "primarily intended for direct receipt by cable operators. . . ." 31. SCBA urges the Commission to recommend to Congress the need for legislation to broaden the program access rules to include programming provided to all MVPDs, rather than just cable operators. SCBA urges the Commission to expand the program access rules to all satellite delivered programming and asserts that several programming groups have refused to deal with the National Cable Television Cooperative ("NCTC"), a program buying cooperative through which numerous SCBA members purchase programming. 32. In addition, SCBA objects to the joint and several liability rules that some programmers assert relieve them of the obligation to sell programming to NCTC. SCBA asserts that certain programmers have refused to deal with NCTC because it does not require joint and several liability among its members. Rather, SCBA believes that there is no need for joint and several liability from a practical or legal perspective. SCBA submits that NCTC retains significant financial reserves to ensure its ability to pay programmers. IV. DISCUSSION AND NOTICE OF PROPOSED RULEMAKING 33. Ameritech argues that the Commission should issue an NPRM seeking comment on the issues of specific time limits for the resolution of program access proceedings, discovery as of right, and the imposition of damages for violations of the Commission's program access rules. We grant Ameritech's petition to issue an NPRM with regard to each of these issues. As further discussed below, we also grant DIRECTV's request that we seek comment on expanding program access protections to cover certain satellite-delivered programming that is converted to terrestrially-delivered programming. In addition, we seek comment on SCBA's proposal insofar as it requests that the Commission eliminate the joint and several liability requirement relating to cooperative buying groups. 34. We note that, as mandated by the 1996 Act, 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"), recently adopted amended rules applicable to the processing of formal complaints against common carriers. Where appropriate, we will discuss the pertinent aspects of that proceeding and their applicability to the program access rules upon which we seek comment herein. To the extent an amendment adopted in the Formal Complaint Order is not discussed herein, we invite parties advocating the adoption of such amendment in the program access context to comment thereon. A. Issues Upon Which We Do Not Seek Comment 35. We deny Americast's request that the Commission consider whether adjudicated anticompetitive behavior should impinge upon the fitness of a candidate in issuing or renewing a Commission license. The fitness of each candidate for issuance or renewal of a Commission license is properly analyzed on a case-by-case basis in the context of such proceeding, and, in doing so, the Commission can consider in connection with the issuance and renewal of broadcast licenses, any relevant anticompetitive behavior in accordance with its previously stated character policy and with the renewal standards set forth in Section 309 of the Communications Act. 36. DIRECTV and SCBA suggest that the Commission should examine under what circumstances the program access rules should be extended to encompass acts or practices by non-vertically integrated programmers whose purpose or effect is to deny MVPDs access to programming. The Commission discussed this issue in the 1996 Report, stating that: we recognize the concern raised by some parties that access to programming from non-vertically integrated programmers may inhibit competition in markets for the distribution of multichannel video programming. The evidence before us, however, is insufficient for us to make any determination concerning the effect, if any, that exclusive arrangements involving non-vertically integrated programmers may have on competition in local markets for the delivery of multichannel video programming. The Commission continues to monitor this issue. At this time, we do not have sufficient evidence of a problem to recommend the issuance of an NPRM on this issue. B. Time Limits 37. At the outset of our discussion, we note that Ameritech's assertion that it takes the Bureau over one year to resolve program access complaints is misleading because it includes geographic uniformity cases where program access concerns were raised only tangentially. In addition, in some of the proceedings used to calculate Ameritech's purported 12 month average processing time, the Bureau, at the request of counsel for complainants and defendants, stayed the matter due to ongoing settlement negotiations between the parties. Consequently, the resolution times involved in these proceedings were influenced by agreement and at the request of the parties. As the Commission has stated, 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." Moreover, if negotiated settlements and cases in which program access was raised as a tangential issue are deleted from Ameritech's calculation, the average processing time of program access cases is reduced to 8.1 months. In cases involving a complainant's inability to obtain programming (refusal to sell or exclusivity complaints), the average processing time is 6.5 months. 38. We seek comment on Ameritech's proposed time limits for the processing of program access complaints: 90 days after the filing of the complaint in cases not involving discovery and 150 days after the filing of the complaint in cases in which discovery is conducted. Specifically, we seek comment on appropriate time limits for the resolution of program access complaints: should the Commission adopt the 90-day and 150- day time periods proposed by Ameritech; should some other time period apply; or should the Commission not adopt time limits. In addition, we seek 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. 39. In addition, Ameritech's request for one universally applicable time limit may not sufficiently take into account the myriad circumstances faced by the Commission in resolving program access complaints. In a relatively simple program access complaint, such as a refusal to sell, the Commission could in most instances fully and fairly resolve such case within the time limits advocated by Ameritech. In the instance of a heavily contested price discrimination proceeding, however, full and fair resolution of such a case in the time limits advocated by Ameritech becomes more problematic and may, in fact, disadvantage the complainant. In addition, Ameritech's request for specific time limits may potentially work at cross purposes to Ameritech's request for discovery as of right. On the one hand, Ameritech advocates a 90-day time limit on resolution of program access complaints; however, Ameritech also advocates discovery practices which could significantly lengthen the time necessary to resolve program access complaints. Accordingly, we also seek comment regarding whether one universally applicable time limit should apply to all program access complaints, or whether one time limit should be established for cases involving denial of programming, with another longer time limit established for price discrimination cases, which generally involve issues of greater complexity. We also seek 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. 40. In addition, we seek comment on Ameritech's proposal to shorten the answer (30 days to 20 days) and reply (20 days to 15 days) pleading periods applicable to program access complaints. We tentatively conclude that the pleading cycle should not be shortened. We believe that the benefit of the 15 days saved by Ameritech's proposal is outweighed by the need to provide sufficient time for parties to best marshal their arguments and evidence. We believe that processing times for program access complaints will be shortened through the precise statement of issues and evidence allowed by a sufficient pleading cycle. This position is further supported by the possibility that the parties will not only be generating answers and replies during this 30-day and 20-day pleading periods, but will also be developing discovery requests and objections to discovery requests. C. Discovery 41. In promulgating the program access rules, the Commission addressed the issue of discovery, holding that: If the staff determines that the complaint has established a prima facie case, and further information is necessary to resolve the complaint . . . the staff will issue a ruling to that effect. The staff will then determine what additional information is necessary, and will develop a discovery process and timetable to resolve the dispute expeditiously. Given the nature of the programming distribution marketplace, and the wide range of sales practices, we do not believe that it would be efficient or advisable to mandate uniform discovery processes herein for Section 628 complaints. Instead, we will provide the staff with flexibility to assess each case and order discovery accordingly. * * * If the staff cannot readily identify what information is needed, it can direct the parties to submit discovery requests and supporting memoranda within a specified time period. The staff will then schedule a status conference to resolve discovery disputes and establish a timetable for compliance. After the conclusion of discovery, the staff will require the parties to submit briefs, together with proposed findings of fact, conclusions of law and proposed remedies at a specified date. 42. In response to Ameritech's petition, we seek comment on several means of expediting the discovery process. In this regard, we seek 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 submit their objections to defendants' discovery requests with their reply. 43. We seek 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. In this regard, we seek 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. We also seek comment on whether the issuance of a standardized protective order applicable to program access complaints would expedite the necessary information disclosure. We have attached for comment a draft standardized protective order. 44. We seek comment on Ameritech's proposal that complainants be entitled to discovery as of right particularly in light of our conclusion not to permit discovery as of right in common carrier formal complaint proceedings. We tentatively conclude, however, that Ameritech has not demonstrated that the current system of Commission-controlled discovery is inadequate, or that discovery as of right would improve the quality or efficiency of the Commission's resolution of program access complaints. In addition, we tentatively conclude that discovery as of right is inconsistent with the 1992 Act's, and Ameritech's, goal of expeditious disposition of program access matters. Given the sensitive and proprietary nature of the information involved in program access matters, we believe that, in any event, discovery as of right would almost inevitably devolve into Commission-controlled discovery. In two previous instances, both price discrimination complaints, Commission Staff has implemented discovery. Although we tentatively conclude that Commission-controlled discovery has worked adequately in these instances, and will continue to serve the public interest best, we seek comment on Ameritech's proposed discovery process. D. Damages 45. With regard to the issue of damages, 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." The Commission also has the existing authority under Title V to impose forfeitures for violations of the program access rules. In its Order on Reconsideration, the Commission stated that its 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. We believe that our initial determination that the sanctions available to the Commission pursuant to Title V, together with the program access complaint process, would act as a sufficient check on delaying conduct by cable operators and vertically integrated programmers was an appropriate first step. We seek comment on whether forfeitures alone are an adequate deterrent. We also seek comment on whether an additional check on anticompetitive 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. In this regard, we also seek comment on the appropriate interaction, if any, between damages and the Commission's existing forfeiture authority under Title V to impose forfeitures for violations of the program access rules. 46. We also seek comment regarding the correct procedures through which to implement damages or forfeitures in the context of specific program access proceedings. For example, we seek comment on the date from which damages should be levied for violations of Section 628. We seek comment on whether the operative date should be the date of the notice of intent to file a program access complaint, as Ameritech suggests, or the date of filing of the program access complaint, or the date on which the violation first occurred. Because the complainant has the ability to file a complaint at any time after the 10 day notice requirement set forth in Section 76.1003(a) of the Commission's rules, we seek comment on whether damages should be calculated from the date upon which the complainant filed its program access complaint with the Commission. We also seek 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. In addition we seek 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 seek comment on whether Commission Staff should be given the discretion to bifurcate the violation and sanction portions of program access proceedings and whether doing so would more efficiently process such cases. 47. We note that our forfeiture guidelines establish a baseline forfeiture of $7,500.00 per day for violation of the program access rules and seek comment on this amount. We also seek comment on the calculation of damages, if assessed. Commenters should 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 should comment on how the Commission should determine such standard calculation. We also seek comment on the basis on which damages, if assessed, should be calculated. For example, should damages be based on lost profit, the difference between the rate that the complainant was charged and the rate the complainant should have been charged, or some other legitimate basis. 48. The Formal Complaint Order adopts the requirement that a complainant seeking damages must file in 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. We seek comment on whether a similar requirement should be adopted as part of the program access pleading process. Commenters advocating the adoption of such a requirement should address whether the explanation standards adopted in the Formal Complaint Order should be adopted, or whether some other explanation standard should apply. 49. Finally, Americast requests that the Commission consider whether it has the authority to impose punitive damages in those limited and egregious cases of willful price discrimination or denial of programming. As stated in the Order on Reconsideration, "[b]ecause the statute does not limit the Commission's authority to determine what is an appropriate remedy, and damages are clearly a form of remedy, the plain language of this part of Section 628(e) is consistent with a finding that the Commission has authority to afford relief in the form of damages." Americast asserts that this analysis, in its broadest reading, could apply to the imposition of punitive damages in egregious cases. We observe, however, that Americast has not presented persuasive evidence suggesting that punitive damages should be imposed in program access cases. Accordingly, we tentatively conclude that punitive damages should not be imposed in program access cases. We seek comment on this tentative conclusion. E. Terrestrial-Delivery of Programming 50. Section 628 of the Communications Act is applicable to cable operators, satellite cable programming vendors in which 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." DIRECTV argues that the Commission should consider whether the program access rules should be extended to cover terrestrially-delivered programming that may not technically fall within the statutory definitions of "satellite cable programming" or "satellite broadcast programming." As the Commission stated in the 1996 Report: We recognize that improved technology and lower costs are improving the efficiency of terrestrial distribution of programming, particularly over fiber optic facilities. As a result, it appears that it may become possible for a vertically-integrated programmer to switch from satellite delivery to terrestrial delivery for the purpose of evading the Commission's rules concerning access to programming. If a trend of such conduct were to occur, we would have to consider an appropriate response to ensure continued access to programming. In the 1996 Report, the Commission also cited In Re Implementation of Section 302 of the Telecommunications Act of 1996 -- Open Video Systems, Second Report and Order ("Second Report and Order"), as holding "we do not foreclose a challenge under Section 628(b) to conduct that involves moving satellite delivered programming to terrestrial distribution in order to evade application of the program access rules and having to deal with competing MVPDs." 51. On its face, Section 628 does not preclude a programmer from altering its distribution method from satellite-distribution to terrestrial-distribution. DirectTV seems to suggest, however, that it contravenes the spirit, if not the letter, of Section 628 if a vertically-integrated programmer moves from satellite-delivered programming to terrestrial-delivered programming for the purpose of evading the program access requirements. Such an action could arguably constitute an "unfair method[ ] of competition or unfair or deceptive act[ ] or practice[ ], 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." We seek comment on appropriate ways to address such situations. As a threshold matter, we specifically ask commenters to address the statutory basis for any suggested remedial action, and whether legislation is needed. To the extent that commenters contend that Commission action is appropriate, we seek comment on what types of 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. We also seek comment on whether programming that has been moved from satellite to terrestrial delivery can or should be subject to program access requirements based on the effect, rather than the purpose, of the programmer's action. F. Buying Groups: Joint and Several Liability 52. In the First Report and Order, the Commission determined that: the regulations we adopt include requirements that a buying group seeking unitary treatment from a programming vendor must agree to be financially responsible for any fees due under a contract to which it is a party. Alternatively, if individual members are contracting parties, they must agree to joint and several liability for commitments of the group. In the Order on Reconsideration, the Commission upheld this determination, and clarified that: in those situations where a seller has reasonable doubts about the financial stability and responsibility of the buying group, it may insist on appropriate assurances of creditworthiness. Buying groups could satisfy this burden through various measures, such as requiring each individual member of the group to guarantee to the group its pro rata share of the fees due under a programming contract. 53. Despite these determinations, SCBA asserts that certain programmers refuse to deal with cooperative buying groups unless the members thereof agree to joint and several liability. Accordingly, SCBA proposes that the Commission should clarify its program access rules to provide that any cooperative buying group that maintains adequate financial reserves should not be required to provide joint and several liability. We seek comment on SCBA's proposal. Specifically, we seek comment on what 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. For example, we seek comment on whether buying groups that maintain a cash reserve equal to one month's programming fees would satisfy such a requirement. In addition, we seek comment on any other proposals that would result in the elimination of joint and several liability while maintaining adequate protection for programmers. V. REGULATORY FLEXIBILITY ANALYSIS AND INITIAL PAPERWORK REDUCTION ACT OF 1995 ANALYSIS 54. The regulatory flexibility analysis is attached to this order as Appendix B. This NPRM contains proposals that have been analyzed with respect to the Paperwork Reduction Act of 1995 and found to impose no new or modified information collection requirement on the public. VI. PROCEDURAL PROVISIONS 55. Ex parte Rules - Non-Restricted Proceeding. This is a permit but disclose notice and comment rulemaking proceeding. Ex parte presentations are permitted, except during the Sunshine Agenda period, provided that they are disclosed as provided in Commission's rules. 56. Pursuant to applicable procedures set forth in Sections 1.415 and 1.419 of the Commission's rules, interested parties may file comments on or before February 2, 1998 and reply comments on or before February 23, 1998. To file formally in this proceeding, you must file an original and six copies of all comments, reply comments, and supporting comments. Parties are also asked to submit, if possible, draft rules that reflect their positions. If you want each Commissioner to receive a personal copy of your comments, you must file an original and eleven copies. Comments and reply comments should be sent to Office of the Secretary, Federal Communications Commission, 1919 M Street, N.W., Room 222, Washington, D.C. 20554, with a copy to Deborah Klein of the Cable Services Bureau, 2033 M Street, N.W., 7th Floor, Washington, D.C. 20554. Parties should also file one copy of any documents filed in this docket with the Commission's copy contractor, International Transcription Services, Inc., 1231 20th Street, N.W., Washington, D.C. 20037. Comments and reply comments will be available for public inspection during regular business hours in the FCC Reference Center, 1919 M Street, N.W., Room 239, Washington, D.C. 20554. 57. Parties are also asked to submit comments and reply comments on diskette, where possible. Such diskette submissions would be in addition to and not a substitute for the formal filing requirements addressed above. Parties submitting diskettes should submit them to Deborah Klein of the Cable Services Bureau, 2033 M Street, N.W., 7th Floor, Washington, D.C. 20554. Such a submission must be on a 3.5 inch diskette formatted in an IBM compatible form using MS DOS 5.0 and WordPerfect 5.1 software. The diskette should be submitted in "read only" mode. The diskette should be clearly labelled with the party's name, proceeding, type of pleading (comment or reply comments) and date of submission. The diskette should be accompanied by a cover letter. VII. ORDERING CLAUSES 58. IT IS ORDERED that the petition for rulemaking filed by Ameritech New Media, Inc. is granted as described in this Memorandum Opinion and Order and Notice of Proposed Rulemaking, and in all other respects denied. 59. IT IS FURTHER ORDERED that pursuant to Section 628 of the Communications Act of 1934, as amended, NOTICE IS HEREBY GIVEN of the proposals described in this Notice of Proposed Rulemaking. 60. IT IS FURTHER ORDERED that the Secretary shall send a copy of this Memorandum Opinion and Order and Notice of Proposed Rulemaking, including the Initial Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business Administration in accordance the Regulatory Flexibility Act, 5 U.S.C.  603 (2). FEDERAL COMMUNICATIONS COMMISSION Magalie Roman Salas Secretary APPENDIX A: STANDARD PROTECTIVE ORDER AND DECLARATION FOR USE IN SECTION 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 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 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 B: REGULATORY FLEXIBILITY ANALYSIS Initial Regulatory Flexibility Act Analysis For the Notice of Proposed Rulemaking 1. As required by the Regulatory Flexibility Act of 1980 ("RFA"), the Commission has prepared an Initial Regulatory Flexibility Analysis ("IRFA") of the expected significant economic impact on small entities by the policies and rules proposed in this NPRM. Written public comments are requested in the IRFA. Comments must be identified as responses to the IRFA and must be filed by the deadlines established in paragraph [__] of the NPRM. The Secretary shall send a copy of this NPRM, including the IRFA, to the Chief Counsel for Advocacy of the Small Business Administration ("SBA") in accordance with the RFA. 2. Need for Action and Objectives of the Proposed Rule. In 1993, the Commission adopted its current rules intended to protect, pursuant to Section 628 of the Communications Act, the right of multichannel video programming providers to obtain access to specified types of video programming. Ameritech filed a petition for rulemaking proposing that certain aspects of the Commission's program access rules be amended to better ensure the Communication Act's program access requirements. In this NPRM, we seek comment as to whether certain aspects of the Commission's program access rules should be amended to better enforce the Communication Act's program access requirements. 3. Legal Basis. The authority for the action proposed for this rulemaking is contained in Sections 4(i), 303(r), and 628 of the Communications Act. 4. Description and Estimate of the Number of Small Entities Impacted. The RFA directs the Commission to provide a description of and, where feasible, an estimate of the number of small entities that will be affected by the proposed rules. The RFA defines the term "small entity" as having the same meaning as the terms "small business," "small organization," and "small business concern" under Section 3 of the Small Business Act. Under the Small Business Act, a small business concern is one which: (1) is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the SBA. 5. Small MVPDs: 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 Bureau of the Census, there were 1,758 total cable and other pay television services and 1,423 had less than $11 million in revenue. We address below each service individually to provide a more precise estimate of small entities. 6. Cable Systems: 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 fewer than 400,000 subscribers nationwide. Based on our most 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 believe 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 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 the 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. 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 Notice, 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 Notice, however, more information has become available. Estimates of 1996 revenues for various DBS operators are significantly greater than $11,000,000 and range from a low of $31,132,000 for Alphastar to a high of $1,100,000,000 for Primestar. Accordingly, we now conclude that no DBS operator qualifies as a small entity. 11. 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 265 channels of programming placed on C-band satellites by programmers for receipt and distribution by MVPDs, of which 115 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 nonsubscription programming; and (3) viewers who receive satellite programming services illegally without subscribing. 12. According to the most recently available information, there are approximately 30 program packagers nationwide offering packages of scrambled programming to retail consumers. These program packagers provide subscriptions to approximately 2,314,900 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"). Furthermore, because this an average, it is likely that some program packagers may be substantially smaller. 13. Open Video System ("OVS"): The Commission has certified nine 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. 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 1.05 million residential subscribers as of September 1996. The ten largest SMATV operators together pass 815,740 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 definition for cable and other pay services is defined in paragraph 59 supra. A small radiotelephone entity is one with 1500 employees or less. However, for the purposes of this Memorandum Opinion and Order and Notice of Proposed Rulemaking, we include only an estimate of LMDS video service providers. 16. LMDS is a service that is expected to be auctioned by the FCC in 1998. The vast majority of LMDS entities providing video distribution could be small businesses under the SBA's definition of cable and pay television (SIC 4841). However, in the Third NPRM, we proposed to define a small LMDS provider as an entity that, together with affiliates and attributable investors, has average gross revenues for the three preceding calendar years of less than $40 million. 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. Although the Commission does not collect data on annual receipts, we assume that CellularVision is a small business under both the SBA definition and our proposed auction rules. 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. 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. 19. 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. 20. Reporting, Recordkeeping, and other Compliance Requirements: The rules proposed in this Notice will not require a change in record keeping requirements. 21. Significant Alternatives Which Minimize the Impact on Small Entities and which are Consistent with Stated Objectives: The NPRM proposes various alternatives which may expand access to video programming by small entities. 22. Federal Rules which Overlap, Duplicate, or Conflict with the Commission's Proposal: None. SEPARATE STATEMENT OF COMMISSIONER HAROLD W. FURCHTGOTT ROTH In re: Ameritech New Media, Inc.: Memorandum Opinion and Order and Notice of Proposed Rulemaking In connection with the Notice of Proposed Rulemaking regarding the possible application of our program-access rules to certain kinds of terrestrially-delivered programming, I would like to emphasize that the Commission's duty in this area -- as in all areas -- is to faithfully implement the law that Congress passed and that the President signed. 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." Although we today seek comment on the propriety of extending program-access rules to terrestrially-delivered programming in some circumstances, in the end we may well conclude that we lack the statutory authority to do so and that 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.