NEWSReport No. DC 96-25    ACTION IN DOCKET CASE             March 21, 1996

                COMMISSION ADOPTS ORDER AND FURTHER NOTICE
                  OF PROPOSED RULEMAKING REGARDING RULES
               FOR CABLE TELEVISION LEASED COMMERCIAL ACCESS
              (MM Docket No. 92-266 and CS Docket No. 96-60)

     The Commission has adopted an Order on Reconsideration and a Further Notice of
Proposed Rulemaking (FCC 96-122) regarding the Commission's cable television commercial
leased access channel rules.

     Section 612 of the Communications Act, as amended by the 1992 Cable Act,
establishes a of cable channel leasing scheme to assure access to cable system program
distribution capacity by parties unaffiliated with the cable operator.  This "commercial leased
access" requirement imposes channel set-aside requirements to promote competition in the
delivery of video programming and to provide that the widest possible diversity of
information sources are made available to the public.  

     Pursuant to the 1992 Cable Act, the Commission adopted requirements setting the
maximum reasonable rates for leased access, and based these rates on a comparison with the
fees that non-leased access program providers implicitly pay for distribution.  This "highest
implicit fee" rate is equal to the price per channel each subscriber pays the operator minus the
amount per subscriber the operator pays the programmer.  At that time, the Commission also
adopted requirements concerning other leased access issues and stated that these rules were a
starting point that would be refined through the rulemaking process and as issues were
addressed on a case-by-case basis.  

     This reconsideration decision and further notice of proposed rulemaking addresses
many issues concerning leased access.  With respect to these rate issues, the Commission
tentatively concludes that the existing highest implicit fee rate formula overcompensates cable
operators in most instances because it allows double recovery of certain costs by the operator,
once from the subscriber (included in a tier charge) and again from the leased access
programmer (included in the leased channel fee). The Commission has developed an approach
regarding leased access rates that it believes will better promote the goals of leased access
and seeks comment on this alternative.  

     Under the proposed approach, when an operator's set-aside capacity is not fully leased,
the maximum rate that could be charged to the programmer would be based on the operator's
costs that are not typically being funded through subscriber payments.  Since subscriber
payments typically cover the costs of constructing and operating the channels involved, the
leasing party would pay the additional costs specific to adding the leased channel, including,
for example, any advertising revenues and direct sales commissions that the operator would
forego by using the channel space for leased access, instead of its own programming.  Any
programming fees, that the system operator would no longer be paying, would be subtracted
from the additional costs incurred in providing leased access channels.  When the operator
satisfies its set-aside requirement, the maximum rate would be established by marketplace
competition among leased access providers for the limited available channel capacity.  The
Commission believes that this cost/market rate formula complies with the goals of Section
612 of the Communications Act by encouraging the operator to accommodate leased access
without imposing an unreasonable financial burden on the operator.

     The Commission also addressed a number of other matters in this decision including:

Rates for part-time channel use.

     The Commission confirms that cable operators are allowed to charge part-time leased
     access programmers different time of day rates, provided that the total of the rates for
     a day's schedule (i.e., a 24 hour block) does not exceed the maximum rate that could
     be charged for a full-time channel lessee for one day.

Not-for-profit programmers.

     The Commission requests comment on whether operators should be required to reserve
     a portion of their leased access channel capacity for not-for-profit programmers and/or
     establish special preferential rates for such programmers.

Requirements for placing leased access on particular tiers or channels.

     The Commission tentatively concludes that leased access programmers have a right to
     be placed on a tier that most subscribers actually use.

Requiring operators to accommodate part-time leased access requests.

     The Commission affirms that operators are required to accommodate both full and
     part-time leases, but clarifies that operators are not required to honor requests for less
     than one-half hour.

Provison of rate information

     The Commission amends its rules to clarify that operators must provide certain leased
     access and channel availability information prospective leased access programmers
     within seven business days of such programmer's request.

     Action by the Commission by Order on Reconsideration and Further Notice of
Proposed Rulemaking (FCC 96-122), Chairman Hundt, Commissioners Quello, Barrett, Ness
and Chong


     News Media Contact: Morgan Broman at (202) 416-0852
     Cable Services Bureau Contact: Lynn Crakes at (202) 416-0800