******************************************************** NOTICE ******************************************************** This document was converted from WordPerfect to ASCII Text format. Content from the original version of the document such as headers, footers, footnotes, endnotes, graphics, and page numbers will not show up in this text version. All text attributes such as bold, italic, underlining, etc. from the original document will not show up in this text version. Features of the original document layout such as columns, tables, line and letter spacing, pagination, and margins will not be preserved in the text version. 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 re Petition of ) ) Frank J. Vitale, d/b/a ) FAL-COMM COMMUNICATIONS ) ) vs. ) CSR-5117-L ) TCI CABLEVISION OF WOODHAVEN, INC. ) ) For Leased Access Channels ) MEMORANDUM OPINION AND ORDER Adopted: February 2, 1998 Released: February 5, 1998 By the Deputy Chief, Cable Services Bureau: INTRODUCTION 1. Frank J. Vitale d/b/a Fal-Comm Communications ("Fal-Comm") filed the above-captioned petition pursuant to 47 C.F.R. 76.975 alleging violations of the Commission's leased access rules by TCI Cablevision of Woodhaven, Inc. ("TCI Cablevision"), operator of a cable system serving Canton, Northville, and Plymouth, Michigan. TCI Cablevision filed a response to the petition. BACKGROUND 2. The 1984 Cable Act imposed on cable operators a commercial leased access requirements designed to assure access to cable systems by unaffiliated third parties who have a desire to distribute video programming free of editorial control of cable operators. Channel set aside requirements were established proportionate to a system's total activated channel capacity. The 1992 Cable Act revised the leased access requirements and directed the Commission to implement rules to govern this system of channel leasing. In its 1993 Report and Order and Further Notice of Proposed Rule Making ("Rate Order"), the Commission adopted new rules for leased access addressing maximum reasonable rates, reasonable terms and conditions of use, minority and educational programming, and procedures for resolution of disputes. The Commission recently modified some of its leased access rules in the Second Report and Order and Second Order on Reconsideration of the First Report and Order ("Second Order"). In the Second Order, the Commission, among other things, confirmed that its regulations regarding reasonable terms and conditions of use for commercial leased access do not deny cable operators the right to require reasonable liability insurance coverage for leased access programming. ALLEGATIONS AND ARGUMENT 3. Fal-Comm, an independent producer of video programming, contends that, as a condition for continued provision of leased access channel capacity, TCI Cablevision demands that Fal-Comm obtain and maintain commercial general liability insurance and media perils insurance, with a policy liability limit of $1,000,000 per occurrence and with TCI Cablevision listed as an additional insured party. In Fal-Comm Communications v. TCI Cablevision of Woodhaven, Inc., DA 97-1499, (Cable Serv. Bur., released July 17, 1997), 1997 WL 398666, ("Bureau Order"), TCI Cablevision's requirement for being named as an additional insured party on Fal-Comm's general liability insurance policy was held to be reasonable. Fal-Comm now requests that we "re-visit" the Bureau Order and make a further determination of whether TCI Cablevision's insurance requirement is reasonable in relation to the objective of the requirement. Fal-Comm notes in this connection that the Commission in the Second Order placed the burden on cable operators to establish the reasonableness of insurance requirements imposed on leased access programmers. 4. Fal-Comm states that following release of the Bureau Order it obtained a meeting with TCI Cablevision to discuss the reasonableness of the insurance coverage requirements, consistent with the requirements of the Commission's Second Order. Fal-Comm states that at the meeting TCI Cablevision refused to discuss a list of factors relevant to the insurance requirement issue which it presented at the meeting, causing the meeting to be a costly waste of time. Fal-Comm states that TCI Cablevision subsequently submitted a written response to the list that failed to meet the requirements of the Second Order for justification of the insurance demand. Fal-Comm claims that this failure, together with the delays experienced in getting a meeting with TCI Cablevision in the first place, provides evidence of an "anti-commercial leased access attitude and culture" toward small independent leased access program producers on the part of TCI Cablevision in particular and the cable industry in general. Fal-Comm claims the insurance requirement represents a significant barrier to small independent programmers and that TCI Cablevision is imposing the insurance requirement as a means of discouraging such programmers from seeking leased access channels. Fal-Comm requests the issuance of additional guidelines, rulings, fines or penalties that will encourage cable operators to reform their current attitude and culture with respect to small independent leased access program producers. 5. TCI Cablevision opposes the petition first on procedural grounds, contending that the thirty days allowed under Commission rules for filing a petition for reconsideration or application for review of the Bureau Order passed well before the petition was filed, and that therefore time for revisiting the Bureau Order has expired. TCI Cablevision defends the insurance requirement on the merits by stating that its Standard Form Affiliation Agreement requires all cable programming networks to obtain commercial liability insurance at limits of not less than $1,000,000 and media perils insurance (also known as broadcaster's liability/errors and omission insurance) at limits of not less that $3,000,000. TCI Cablevision notes that the policy limit required of leased access programmers is only $1,000,000 and contends that its insurance requirements for leased access programmers is comparable to the requirements for non-leased programmers. TCI Cablevision claims also that the nature of Fal-Comm's programming, which consists of advertisements for topless bars, poses increased liability risks, and that Fal-Comm's limited financial resources, made evident by its apparent inability to afford $165 per year for insurance premiums, further supports the need for insurance protection. TCI Cablevision further contends that it responded courteously and promptly to Fal-Comm's leased access requests, including providing a written response to the twelve factors presented for the first time by Fal-Comm at the meeting with its local representative to discuss insurance matters. DISCUSSION AND ANALYSIS 6. A cable operator's right to require reasonable liability insurance coverage for leased access programming was initially discussed in Anthony Giannotti v. Cablevision Systems Corporation. In that case, we noted that the programmer had not shown that the cost of the required insurance coverage was either prohibitive or imposed an unreasonable cost of doing business as an independent program producer. The Commission's Second Order confirmed that the regulations concerning reasonable terms and conditions of use for commercial leased access do not deny cable operators the right to require reasonable liability insurance coverage for leased access programming. Noting that the costs and expenses attributable to defending a prosecution for carriage of an allegedly obscene program may be covered by such insurance, the Commission previously stated, "this is a reasonable term or condition relating to use of leased access channel capacity in light of the removal by Congress in amended [S]ection 638 of cable operator immunity for carriage of obscene programming." Specific conditions or limits regarding the amount of coverage or the type of insurance policy that operators may require were not adopted in the Second Order, on the grounds that "a specific restriction might not be appropriate for all situations." Instead, the Commission stated that insurance requirements must be reasonable in relation to the objective of the requirement. The Commission further stated that determinations of a "reasonable" insurance requirement will be based on the operator's practices with respect to insurance requirements imposed on non-leased access programmers, the likelihood that the leased access programming will pose a liability risk for the operator, previous instances of litigation arising from the leased access programming, and any other relevant factors. The burden of proof in establishing reasonableness was placed on cable operators. 7. We find that TCI Cablevision established the reasonableness of the insurance requirement in this particular case. First, the $165 per year premium for the required insurance coverage does not appear unreasonable on its face. Second, the record shows that TCI Cablevision's Standard Form Affiliation Agreement requires all cable programming networks to obtain commercial liability insurance at limits of not less than $1,000,000 and media perils insurance (also known as broadcaster's liability/errors and omission insurance) at limits of not less that $3,000,000. In these respects, TCI Cablevision's requirement for insurance in this instance is not substantially different from that required of non-leased access programmers. Indeed, the overall liability limit is lower for leased access programmers. Third, while TCI Cablevision's representative declined to address the factors presented by Fal-Comm during a meeting, a written response delivered after the meeting addressed each of the factors Fal-Comm presented for discussion. Among other things, TCI Cablevision's written response explained that, although Fal-Comm's half hour of programming is carried only twice monthly, subscribers may be offended, obscenity may be aired, or a third party's protected rights may be violated as easily in a half hour as in 24 hours. TCI Cablevision also pointed out that such offense may come from a taped program as well as from a live program, or from programming scripted and edited by Fal-Comm as well as by some one else. TCI Cablevision further noted that Fal-Comm's programming involves advertising of topless bars and that such programming is considered highly controversial in the community served by its cable system. Additionally, TCI Cablevision noted that the need for broadcasters liability insurance, which covers much more than copyright infringement, is not eliminated merely because Fal- Comm's programming and music is original. TCI Cablevision noted further that, except for obscenity or indecency, cable operators may not exercise any control over content of leased access programming and therefore have no ability to restrain a leased access programmer from libeling someone, violating someone's privacy or copyright, or otherwise causing someone actionable harm. TCI Cablevision also suggested that, with respect to a programmer for whom the required insurance premiums (approximately $165 per year) are prohibitive because of limited financial resources, reliance on an indemnification clause for liability protection is impractical. We find that TCI Cablevision met the Commission's requirements to justify the reasonableness of the insurance requested of this particular leased access programmer. 8. We also reject as unsupported the claim that TCI Cablevision's conduct during negotiations or its present request for insurance coverage demonstrates the existence of a "culture and attitude of anti-commercial lease access" on the part of TCI Cablevision in particular or of the cable industry in general. Such was not reflected by TCI Cablevision's representative at the meeting with Fal- Comm. The record shows that the representative did not feel prepared address the twelve items which Fal-Comm then presented for the first time, in part because some of them included legal issues and because he deemed it better to address them in writing, which he did promptly thereafter. The representative stated that he remained available to discuss insurance generally, but that Mr. Vitale declined to discuss any other matters and left the meeting abruptly. The record also shows that TCI Cablevision's representative made himself available for the meeting requested by Fal-Comm as promptly as permitted by his vacation schedule and as soon as a date for the meeting could be arranged by an exchange of phone calls. Accordingly, Fal-Comm's request for other relief, including assessment of fines and penalties, will be denied. ORDERING CLAUSES 9. For the foregoing reasons, the petition for relief of Fal-Comm Communications in File No. CSR 5117-L IS DENIED. 10. This action is taken pursuant to authority delegated by Section 0.321 of the Commission's rules, 47 C.F.R.  0.321. FEDERAL COMMUNICATIONS COMMISSION William H. Johnson Deputy Chief, Cable Services Bureau