Interesting People mailing list archives
1994-01-25 White Paper on Communications Act Reforms
From: David Farber <farber () central cis upenn edu>
Date: Thu, 27 Jan 1994 19:58:17 -0500
lieu of cash payments. H.R. 3636 has no comparable provisions. VI. Cable-Telephone Crossownership Although the existing cable-telephone company crossownership restriction of the 1984 Cable Act may have been appropriate when enacted, today it is an unnecessary and artificial barrier to competition in the delivery of video programming to American consumers and to investment in advanced local infrastructure. The Administration's proposal to remove the current restriction, coupled with its proposals to promote competition in local telephone service, will allow telephone companies and cable operators to compete in providing a full range of video, voice, and data services to the public. Such competition can promote investment that expands consumer choices and services. To ensure that cable firms and telephone companies do not harm consumers or competition in providing these services, the Administration proposes several safeguards specified below, most notably requirements that most telephone companies and cable operators make transmission capacity available to unaffiliated video providers on a nondiscriminatory basis. In doing so, the Administration also seeks to protect diversity and competition in the flow of ideas, and to ensure that similarly situated firms are regulated similarly. The Administration supports the general approach of H.R. 3636 to allow LECs to provide video programming in their telephone service areas, subject to certain conditions and safeguards. The Administration would propose somewhat different conditions and safeguards, which, however, are also designed to protect consumers and competition and prevent undue control of information content and conduit by any one firm. Structural Separation: * The Administration supports the approach in H.R. 3636 of requiring LECs to provide video programming through a separate affiliate, in order to prevent improper cross- subsidization and discrimination by the LEC. * H.R. 3636 specifies many of the details of the separation requirements. The Administration proposes modifying this approach to charge the FCC with specifying the required degree of separation, subject to two basic requirements from H.R. 3636: A LEC's video programming affiliate must have separate books, records, and accounts; and Any contract or agreement between a LEC and its affiliate (1) must be pursuant to regulations adopted by the FCC, (2) must be on a fully compensatory and auditable basis, (3) must be without cost to the LEC's telephone service ratepayers, (4) must be filed with the FCC, and (5) must adhere with rules that will enable the FCC to assess the compliance of any transaction with its rules. * The Administration supports the approach of H.R. 3636 in permitting the FCC to modify separation requirements for small and rural LECs at any time. H.R. 3636 would allow the FCC to modify separation requirements for other LECs beginning 5 years after enactment. The Administration proposes reducing that waiting period to 2 years, to provide greater regulatory flexibility in the face of changing conditions. Nondiscriminatory Access Obligations: * In order to promote competition and diversity in the flow of ideas, H.R. 3636 would require a LEC that provides video programming to subscribers in its service area to establish a "video platform," based on the FCC's current "video dialtone" rules, and make it available to unaffiliated programmers on nondiscriminatory terms. The Administration supports this general approach, with some modifications. * H.R. 3636, by its terms, would require that the rates for the platform be nondiscriminatory. The Administration proposes specifying that LEC provision of the video platform will be subject to all requirements of Title II of the Communications Act. * H.R. 3636 appears to require a LEC to afford nondiscriminatory access to its video platforms only when it carries "affiliated" video programming (i.e., programming in which the LEC has an ownership interest). The Administration proposes requiring a LEC to afford unaffiliated programmers nondiscriminatory access to its video platform whenever the LEC carries video programming. * H.R. 3636 would require the FCC to limit the number of channels on a LEC's video platform that can be occupied by its video programming affiliate (that limit can be no lower than 25% of the platform's capacity). The Administration proposes to authorize the FCC to impose such a limit and give the FCC discretion in selecting what the limit should be. * The Administration proposes to permit the FCC to modify any of the foregoing requirements for small and rural LECs. H.R. 3636 contains no similar provision for small, non-"rural" LECs. * The Administration supports allowing the FCC to modify the definition of "video platform" beginning 1 year after enactment. H.R. 3636 contains no such provision. * The Administration proposes to direct the FCC to adopt regulations, within 1 year of enactment, that would require cable operators to offer nondiscriminatory access to channel capacity on their systems for unaffiliated programmers, except when technology, costs, and market conditions would make such offering inappropriate. H.R. 3636 requires that the FCC study whether to impose such obligations and report to Congress within 2 years after enactment. Anti-Buyout Provisions: * To protect competition in the provision of communications and information services and to further the flow of ideas, the Administration supports limiting a LEC's ability to enter the video services market via acquisition of cable systems operating in its telephone service area. The Administration proposes to limit cable companies' ability to acquire LECs providing local telephone service in the cable companies' franchise areas. * The Administration supports the provisions of H.R.3636 permitting in-region acquisitions occurring in rural areas and for joint LEC/cable operator use of the cable "drop wire." The Administration proposes eliminating the provision of H.R. 3636 that would permit a LEC/cable acquisition if the number of households served by the cable systems acquired constituted less than 10% of all households in the telephone service areas of the acquiring LEC and its affiliates. * H.R. 3636 would also authorize the FCC to waive the anti-buyout policy at any time under certain conditions. The Administration proposes authorizing the FCC to change the policy by rule, or to grant waivers on a case-by-case basis, beginning 5 years after enactment, if it determines that such action would be in the public interest. Such acquisitions would, however, remain subject to the antitrust laws. Franchise Obligations: * The Administration supports the general approach in H.R. 3636 of removing some requirements of the Cable Act for the LEC's video programming affiliate and any other user of the LEC's video platform, while maintaining others, such as must carry, retransmission consent, the provision of public, educational, and governmental channels, and others designed to protect consumers. * To promote symmetric regulation of similarly-situated firms, the Administration proposes to authorize the FCC to remove some Cable Act requirements (most notably, the requirement to have a cable franchise) for cable systems that offer nondiscriminatory access substantially similar to that required of LECs by the bill, while maintaining the overall Cable Act regulatory structure. H.R. 3636 has no comparable provision. Rural Exemption: * H.R. 3636 states that provisions concerning the video programming affiliate, the video platform, provision of affiliated programming, and the ban on acquisitions do not apply to LECs offering video programming in rural areas. The Administration proposes to authorize the FCC to modify those provisions for such LECs. VII. Regulation of Two-Way, Broadband Transmission Services (Title VII) The Administration proposes adding a new Title VII to the Communications Act to apply, on an elective basis, to providers of two-way, broadband, digital transmission services, offered on a switched basis to end users. The Administration would emphasize these services because, well into the 21st century, they will connect and empower the American public by providing them with a variety of voice, data, video services, and other information that will enhance our nation's economic competitiveness and the quality of life of our citizens. A new Title VII would provide a unified, symmetric treatment of providers of two-way broadband services, in contrast to the present disparate treatment of common carriers and cable operators under Titles II and VI of the Act. It also would provide important incentives to promote private sector development of this part of the NII and spur availability of advanced services on a widespread basis. The Administration recognizes that communications services are developing in a rapidly changing technical and marketplace environment. A new Title VII would create a regulatory regime that should stand the test of time by providing the FCC with the flexibility to adapt its regulatory approach in light of changes in market and technological conditions. Eligibility and Certification * Under the Administration's proposal, firms could elect Title VII regulation of the two-way broadband, interactive, switched, digital transmission services they provide to end users ("Title VII broadband services"), if they offer such services to at least twenty percent of their subscribers in a state. The FCC would be authorized to define Title VII broadband services in greater detail and to modify the subscriber threshold. * If a firm were to certify to the FCC that it meets the threshold in one or more states and the FCC does not disallow the election, the FCC would apply streamlined Title VII regulation to the firm's Title VII broadband services and the other services that share broadband facilities in those states. Regulatory Framework for Title VII * Title VII would impose the following broad requirements (to be implemented by the FCC) to apply to Title VII broadband services and the services that share broadband facilities with them: Open access obligations (including access for the disabled) to enable all persons to send information over the firms' broadband facilities; Universal service requirements consistent with those under other parts of the Communications Act; and Interconnection and interoperability requirements * Title VII would promote regulatory flexibility by providing that the FCC shall: Regulate rates only for Title VII services that are offered by firms the FCC finds have market power in the provision of such services; and Establish procedures to resolve any complaints expeditiously. * Title VII would also authorize the FCC adopt rules, as needed, to: Address public interest concerns, such as those currently addressed in Sections 223 through 228 of the Communications Act (dealing with: obscene and harassing communications; regulation of pole attachments; services for hearing and speech-impaired individuals; telephone operator services; use of telephone equipment; and carrier provision of pay-per-call services, respectively). Ensure that delivery of video programming directly to subscribers over broadband facilities is consistent with certain principles now applicable to cable services (e.g., Sections 325(b), 611, 614, 615, and 632 of the Act, dealing with: retransmission consent; public, educational, and governmental access; must carry; and protection of subscriber privacy). * If a Title VII firm also provides communications services that do not share broadband facilities with Title VII broadband services, those other services would remain subject to regulation under Title II or Title VI, as appropriate. Relations with State and Local Regulators * Consistent with the Administration's general approach to relations with state and local regulatory authorities, federal authority over the rates, terms, and conditions under which communications services are provided would predominate only when needed to ensure that national goals of promoting competition and liberal interconnection and access require it. * Title VII would preempt state and local authorities from regulating rates of Title VII services if the FCC determines that the providing firm lacks market power. * States would continue to regulate rates for the intrastate components of Title VII services provided by firms with market power: for Title VII broadband services, in accordance with models and guidelines adopted by the FCC in consultation with the states; for other services delivered over the facilities used to furnish Title VII broadband services, in the discretion of the states, subject only to a reserved right of Federal preemption that could be exercised to the extent necessary to avoid conflicts between state regulatory actions and the policies of Title VII.
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