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Report No. CS 97-25   CABLE SERVICES ACTION         September 19, 1997

     COMMISSION ISSUES DECLARATORY RULING IN DISPUTE BETWEEN
            TCI CABLEVISION AND CITY OF TROY, MICHIGAN

     The Commission has adopted an order (FCC 97-331) resolving, by declaratory ruling, the
dispute arising under Title VI of the Communications Act ("the Act") between the franchised
cable operator, TCI Cablevision of Oakland County, Inc. ("TCI") and the City of Troy, Michigan
("Troy").  The Commission declined to rule upon TCI's Title II preemption claims.  

     TCI's Petition challenged the actions of Troy with respect to several TCI cable
construction permits, and the authority of Troy under federal and Michigan law to impose a
telecommunications franchise requirement upon a franchised cable operator.  Troy sought to
include in cable construction permits, issued pursuant to its Title VI franchising authority, a
condition to the effect that the facilities constructed not be used  "for telecommunications
purposes."  TCI's request for preemption of the Troy Telecommunications Ordinance under
section 253(d) of the Act was based on TCI's claim that the Ordinance stood as a barrier to entry
that violates section 253(a), and exceeded the scope of Troy's authority to manage the public
rights-of-way and obtain compensation for its use under section 253(c). 

In issuing this declaratory ruling:

          The Commission found that Troy has violated section 621(b)(3)(B) of the Act by placing
     a telecommunications condition in its grant of cable construction permits.  By including
     these provisions in Title VI, Congress clearly intended to separate the functions of cable
     franchising from the regulation of telecommunications services. Troy may not place a
     condition related to a cable operator's provision of telecommunications services in a cable
     permit issued pursuant to its Title VI cable franchising authority. Troy's insistence on
     including its telecommunications condition in a cable permit impermissibly mixes these
     separate spheres.  

          The Commission did not agree with TCI's claim that the Troy's actions violate section
     621(b)(3)(A) of the Act which states that a cable operator shall not be required to obtain a
     franchise under Title VI to provide telecommunications service.  This provision applies
     only "[i]f a cable operator or affiliate thereof is engaged in the provision of
     telecommunications services."  By its own admission, TCI is not engaged in
     telecommunications services in Troy.  

          The Commission found that TCI failed to demonstrate a violation of the terms of section
     621(b)(3)(D), which precludes a cable franchising authority from requiring a cable
     operator to provide telecommunications services or facilities, other than institutional
     networks, as a condition of a franchise.  TCI did not allege or show that Troy had
     required TCI to provide telecommunications services. 

          The Commission also held that Troy has not violated section 624(e), as claimed by TCI. 
     That section precludes cable franchising authorities from prohibiting, conditioning or
     restricting a cable operator's choice of the subscriber equipment and transmission
     technology used in its cable system.  The Commission found that Troy  has not sought to
     restrict the discretion granted to TCI

     The Commission declined to resolve TCI's challenges under section 253 of the Act to 
particular provisions of the Troy Ordinance because its decision addressing TCI's claims under
section 621(b)(3)(B) resolves the actual controversy between the parties.  In light of this
circumstance and because TCI has stated that it has no present intention of entering the
telecommunications markets in Troy, the Troy Telecommunications Ordinance no longer directly
affects the operations of TCI within the City.  The Commission's decision under Title VI severs
any link between TCI's operations in Troy and the impact of the Telecommunications Ordinance.

     The Commission did note its concern that although Congress mandated a role for the
Commission and the States in the regulation of telecommunications carriers and services,  Troy
and other local governments may be creating an unnecessary "third tier" of telecommunications
regulation that extends far beyond the statutorily protected municipal interests in managing the
public rights-of-way and protecting public safety and welfare.  
In particular, the Commission noted how redundant and potentially inconsistent levels of
regulation of telecommunications services and service providers may deter or discourage
competition.  It reiterated the shared duty of all levels of government under the
Telecommunications Act of 1996 to encourage the development of competitive
telecommunications markets.

Action by the Commission, September 18, 1997, by Order (FCC 97-331).  Chairman Hundt,
Commissioners Quello, Ness and Chong.

                              -FCC-

News Media Contact: Morgan Broman at (202) 418-2358
Cable Services Bureau Contacts: Barbara Esbin at (202) 418-7200