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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 re Petition of ) ) Church of New Bedford ) ) vs. ) CSR-5091-L ) MediaOne ) ) For Leased Access Channels ) MEMORANDUM OPINION AND ORDER Adopted: February 2, 1998 Released: February 5, 1998 By the Chief, Cable Services Bureau: INTRODUCTION 1. Church of New Bedford ("New Bedford") filed the above-captioned petition pursuant to 47 C.F.R. 76.975 alleging violations of the Commission's leased access rules by MediaOne, operator of a cable system serving Fall River, Massachusetts. MediaOne 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. The Commission also amended its alternative dispute resolution procedures to require that a cable operator's maximum permitted rate be determined by an independent accountant prior to the submission to the Commission of a petition for relief alleging that the cable operator's leased access rate is unreasonable. DISCUSSION AND ANALYSIS 3. New Bedford contends that MediaOne is unfairly demanding carriage of broadcasters liability insurance and errors and omissions insurance with a minimum policy dollar limit of $1,000,000 per occurrence, as a condition for obtaining a requested leased access channel. New Bedford states a belief that MediaOne is not similarly requiring such insurance coverage from other leased access programmers on its cable system. 4. A cable operator's right to require reasonable liability insurance coverage for leased access programming was initially indicated in Anthony Giannotti v. Cablevision Systems Corporation. In that case, we noted that the programmer had not shown that the cost of insurance coverage is either prohibitive or imposes 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 preeviously 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. 5. The only statment offered by MediaOne in justification of its insurance requirement was that, "MediaOne's policy is to require broadcasters liability insurance and errors and omission insurance from leased access programmers at the minimum policy limit of one million ($1,000,000)." No further justification for the kinds of coverage or for the policy's dollar limits was provided to New Bedford or to the Commission in MediaOne's response to the petition. On this record we conclude that MediaOne failed to satisfy its burden of establishing the reasonableness of the insurance requirements demanded of the New Bedford as a condition for the provision of leased access service. Accordingly, we will require MediaOne to make leased access available to New Bedford without any insurance requirement, unless a reasonable justification of the required coverage and policy dollar limits has been provided to New Bedford. Such justification shall address 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 risk of liability for the operator, previous instances of litigation arising from the leased access programming, and any other relevant factors. 6. New Bedford also states that MediaOne quoted a leased access rate of $49 per hour for the leased access service requested. New Bedford contends that the quoted rate exceeds a $23.61 per hour rate which it calculated using information available to it. MediaOne stated in response that an unsuccessful attempt was made to obtain the cooperation of New Bedford in selecting an independent accountant for the purpose of determining its maximum leased access rate, as required by the new dispute resolution procedures adopted in the Second Order, and requested that New Bedford's petition for relief be dismissed for failure to obtain such determination. The dispute resolution procedures adopted in the Second Report require that a cable operator's maximum leased access rate be determined by an independent accountant prior to the filing with the Commission of a petition for relief alleging that a cable operator's leased access rate is unreasonable. In the event that the parties cannot agree on a mutually acceptable accountant, the rules require that the parties each select an independent accountant, who must then select a third independent accountant to perform the review. The record does not show that a determination of MediaOne's maximum leased access rate by an independent accountant was received prior to the filing of New Bedford's petition as required by the new dispute resolution procedures. The record shows instead that New Bedford declined to accept the independent accountant suggested by MediaOne and then filed the petition with the Commission without selecting an independent accountant and without following the further dispute resolution procedures required by our rules. Accordingly, New Bedford's complaint about the reasonableness of MediaOne's quoted leased access rate will be dismissed for failure to comply with the Commission's new dispute resolution procedures. ORDERING CLAUSES 7. For the foregoing reasons, the petition for relief of Church of New Bedford in File No. CSR 5091-L (a) IS GRANTED IN PART and MediaOne IS ORDERED pursuant to 47 C.F.R.  76.975(f) to make leased access available to Church of New Bedford without any insurance requirement, unless a reasonable justification of the required coverage and policy dollar limits of such insurance has been provided to Church of New Bedford, and (b) IS DISMISSED in all other respects. 8. 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 Meredith J. Jones Chief, Cable Services Bureau