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                            Before the
                Federal Communications Commission
                      Washington, D.C. 20554

                                )
In the Matter of                )
Petition for Special Relief of  )
                                )
Scott E. Jones d/b/a Community Cable,)
     Petitioner,                )
                                )
  vs.                             )CSR 4817-L
                                )
The Armstrong Group of Companies)
d/b/a Armstrong Cable Services, )
     Respondent                 )
                                )
For Leased Access Channels      )


                  MEMORANDUM OPINION AND ORDER

      Adopted:  July 18, 1997Released:  July 21, 1997

By the Chief, Cable Services Bureau:
                           INTRODUCTION

      1.Scott E. Jones, d/b/a Community Cable Channel, ("Jones") filed a petition for relief pursuant
to Section 76.975 of the Commission's rules alleging that Armstrong Group of Companies d/b/a Armstrong
Cable Services ("Armstrong") failed to comply with the Commission's leased access regulations.  Armstrong
filed a response to the petition contending that it is in full compliance with the Commission's leased access
regulations and requesting dismissal of the petition with prejudice.

                            BACKGROUND

      2.In 1984, Congress amended the Communications Act of 1934 by adding among other things
a commercial leased access requirement, pursuant to which cable operators with 36 or more activated
channels must set aside part of their channel capacity for use by video programmers that are not affiliated
with them.  The Cable Television Consumer Protection and Competition Act of 1992 (the "1992 Cable Act")
revisited the leased access requirement and directed the Commission to establish rules for determining
maximum reasonable rates for, and reasonable terms and conditions for the use of, commercial leased access
channels.  Pursuant to that Congressional directive, the Commission established regulations applicable to
leased access channels in its proceedings in Implementation of Sections of the Cable Television Consumer
Protection and Competition Act of 1992; Rate Regulation, MM Docket 92-266, (the Rate Order), 8 FCC Rcd
5631, 5956-5961 (1993). The Commission revisited these regulations in Implementation of Sections of the
Cable Television Consumer Protection and Competition Act of 1992, Leased Commercial Access, Second
Report and Order and Second Order on Reconsideration of the First Report and Order, CS Docket 96-90, 
FCC 97-27, released February 4, 1997 ("Second Report").    See also Order on Reconsideration of the First
Report and Order and Further Notice of Proposed Rulemaking, MM Docket 92-266 & CS Docket  96-60,
11 FCC Rcd 16933 (1996), 61 Fed. Reg. 16396 (April 15, 1996) ("Recon. Order").

                          THE PLEADINGS

      3.Jones states that he entered into a contract for the provision of certain leased access services
on Armstrong's cable system in Meadville, Pennsylvania in January of 1996 only after Armstrong reduced
a demand for liability indemnification insurance coverage in the amount of $1,000,000 to $250,000 and
dropped a demand for three minutes per hour of advertising time during his leased access programming. 
Jones states further that the contract requires him to insert the program tapes at the cable system headend
at a remote location and to physically start the tapes when programming is due to run.  Jones states that he
subsequently installed a remote system that eliminated the need for him to be physically present at the
headend when programs run.  Jones asserts that Channel 19, which carries his programming, is an inferior
channel because the band is shared with a local cellular phone and paging service.  He asserts that complaints
to Armstrong about the quality of the channel have resulted in no corrective action.

      4.Jones claims that Armstrong subsequently revoked the concessions made in the signed
contract by increasing the insurance coverage requirement to $1,000,000; offering a lower leased access rate,
but reasserting the demand for three minutes per hour of advertising time during leased access programming,
or an additional fee of $22 per minute for those spots if such spots are not provided; assessing an equipment
charge of $14.42 per hour of programming; and demanding payment thirty days in advance of programming. 
Jones claims that Armstrong accepted payment for his programming without mentioning that the additional
fees would be required.  Jones states that, despite these new demands, he continued marketing his
programming and expanded its scope from 40 hours to 140 hours per month.  He further contends that
Armstrong refused to identify the equipment used to provide his programming that required the $14.42
hourly fee.  He claims that Armstrong first identified this fee as a system charge and later as a technical
service fee.

      5.Jones asserts that Armstrong subsequently informed him that an additional $2,000 would
be required to air his programming.  Jones also contends that Armstrong has unused channel capacity and
could reassign his programming to a functional channel in lieu of inferior Channel 19.  Finally, Jones
contends that Armstrong attempted to exercise editorial control over his leased access programming "by
attempting to eliminate programming originating out of a drinking establishment in the city of Meadville."

      6.Jones asks for reimbursement of expenses incurred in filing the petition, for attorney's fees,
for ancillary damages caused by Armstrong's violations of statutory and regulatory provisions, for
consequential damages as a result of inability to fulfill contractual obligations, and for imposition of
monetary forfeitures on Armstrong as a deterrent to future violations.

      7.Armstrong contends in response that the matters about which Jones complains were covered
by terms and conditions of  two contracts for leased access services which Jones entered into with
Armstrong.  Armstrong states that the first contract, commencing on February 1, 1996 and running for six
months, provided Jones with access to a secure facility for play of his programming by means of equipment
to be provided by Jones; required liability insurance in the amount of $250,000; absolved Armstrong of
program degradation beyond its control; provided Jones with free access on Channel 19 from 11 p.m. to 7
a.m. and for $45 per hour from noon to 7 p.m.; provided for Jones to pay an equipment-related fee of $14.42
per hour and to provide Armstrong with three minutes per hour of advertising on the leased access
programming; and provided for thirty day prepayment of all charges.  Armstrong states that it waived for
the duration of this first contract both the three minute-per-hour advertising provision and the requirement
that Jones obtain indemnification insurance in order to assist Jones launch his leased access service.

      8.Armstrong contends further it subsequently notified Jones of its intentions to modify certain
provisions of the contract, which would take effect upon expiration of the initial six month contract.  These
modifications included a downward adjustment of the leased access charges but the $14.42 per hour
equipment charge waived in the expiring contract would apply in the new contract, the requirement for
insurance coverage would be increased to $1,000,000, and Jones would provide Armstrong three minutes
per hour of advertising time during leased access programming or, alternatively, pay a $22 per hour
additional charge if such advertising slots were not provided.  Armstrong states that Jones made no
objections to these changes, informed Armstrong that Jones had obtained the requisite insurance, signed the
new contract, and made an advanced payment for the first month of service (August 1996) under the new
contract.  Armstrong contends that Jones complained about the hourly equipment charge after receipt of his
first bill under the new contract, asserted that the charge constituted a denial of leased access capacity, but
paid the fees for September 1996.  Armstrong asserts that it will continue to provide leased access service
to Jones as long as all invoices are paid.

      9.Armstrong asserts that the requirement in the new contract for $1,000,000 of insurance
coverage is a reasonable condition, particularly in this case where the programmer has insufficient resources
to indemnify Armstrong against litigation concerning obscene or libelous programming.  Armstrong points
to its substantial investment in plant and equipment and asserts that clear and convincing evidence does not
exist showing that the cost of insurance prohibits Jones from providing leased access services.  Armstrong
also asserts that Jones has exhibited erratic behavior, including losing the keys to the secure headend facility
necessitating replacement of locks and keys.  Armstrong says Jones also allowed others into the headend
facility and stayed there overnight himself on occasions, both violations of provisions of the contract. 
Armstrong argues that, given this evidence of the instability of Jones' business, the requirement of
$1,000,000 liability policy is not unreasonable.

      10.Armstrong contends that Jones fails to provide any particular information establishing that
Armstrong tried to exercise editorial control of his programming, and argues that in the absence of clear and
convincing evidence this claim should be dismissed with prejudice.  Armstrong defends the thirty day
advance payment requirement on the grounds that this requirement, which it imposes in lieu of a security
deposit or full prepayment of the total amount of the lease, does not unreasonably tie up large amounts of
Jones' scarce capital that may better be devoted to meeting program costs and purchasing leased access time. 
Armstrong also points out that Jones has not shown that the advance payments preclude him from access to
the cable system.

      11.Armstrong states that Channel 19, which is reserved to leased access programmers, is in a
prime position on the Meadville cable system between other popular programs, a placement designed to
attract viewers.  It asserts further that there is no problem with signal quality on Channel 19, which meets
all Commission regulations concerning signal quality and leakage.  Armstrong acknowledges that a tower
for a paging system is near the system headend.  However, it asserts that any temporary fluctuations in signal
quality coming from that source effect only a few subscribers who live near the headend.  Armstrong also
claims it has not received complaints from subscribers about the quality of Jones's programming.

      12.Armstrong claims that it provides to Jones a cost effective, convenient and relatively non-
technical interface, which in its experience is preferred by leased access programmers.  It contends that the
$14.42 per hour charge for this interface is reasonable, in light of the costs that would be incurred if
Armstrong personnel collected the program tapes, travelled to the headend, activated the channel, played the
tapes, and returned with them after deactivating the channel.  Armstrong estimated that the personnel costs
alone would run between $52 and $70 per hour during non-business hours, and that those costs would have
to be passed on to Jones.

      13.Armstrong states that, like the cable industry in general, it generally obtains from all
unaffiliated advertiser supported cable programmers three minutes per hour of advertising which is sold in
the local market.  Armstrong notes that the Commission, in the Recon. Order excluded home shopping
revenue from the formula for determining the maximum reasonable rate.  It argues that advertising time
"given back" to the operator, like home shopping revenue, should not impact the maximum reasonable leased
access rate in this instance.  Armstrong argues that this "give back" provision of the contract with Jones is
not unreasonable in light of industry practice, because it effectively constitutes a payment by the programmer
to the operator in much the same way that operators obtain payments as a percentage of revenue from home
shopping networks.  Finally, Armstrong contends that Jones' request for reimbursement of litigation
expenses, monetary damages and assessment of forfeitures should be dismissed, on the grounds the
Commission lacks authority to grant such relief.

                     DISCUSSION AND ANALYSIS

     A.  Reasonableness of Insurance Requirement

      14.Cable operators have been given protection from leased access program liability as provided
by Section 638 of the Communications Act.  Section 638 provides program liability protection "unless the
program involves obscene material."  We are not aware, however, of any statutory provision that completely
protects cable operators from all possible program carriage liability, or from the filing of un-meritorious
actions against cable operators despite the provisions of Section 638.  Moreover, the Commission does not
deny cable operators the right to request indemnification from leased access programmers for the costs and
expenses attributable to defending a prosecution for carriage of an allegedly obscene program, stating, "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."  In
Anthony Giannotti v. Cablevision Systems Corporation, 11 FCC Rcd 10441 (CSB 1996) ("Giannotti"), an
operator's right to require reasonable liability insurance coverage for leased access programming was
confirmed.

      15.The Commission, however, recently clarified the insurance requirements in the Second
Report.  In the Second Report, the Commission declined to adopt specific conditions or limits regarding the
amount of coverage or the type of insurance policy that operators may require on the ground that "a specific
restriction might not be appropriate for all situations."  Instead, the Commission stated that it would require
that insurance requirements be reasonable in relation to the objective of the requirement and placed on cable
operators the burden of proof in establishing reasonableness.  The Commission further stated that
determinations of what is a "reasonable" insurance requirement will be based on the operator's practices with
respect to insurance requirements for non-leased access programming, the likelihood that the nature of 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.

      16.In its petition, Jones merely asserts that requirement for $1,000,000 in liability coverage is
unreasonable. In Giannotti the Commission concluded that cable operators could require reasonable
indemnification protection from leased access users.   Consequently based on the Commission's holding at
the time the petition was filed, which is set out in the Giannotti decision, we cannot find that Armstrong
acted unreasonably in requiring an indemnification policy.  As noted above, the Commission revisited this
area in its Second Report and placed the burden on the subject cable operator to show in the future that an
indemnification requirement is reasonable. Consequently, should Armstrong require an indemnification
policy from a potential leased access user in future leased access contracts, it must show the reasonableness
of that requirement consistent with the provision's of the Second Report.

     B.  Reasonableness of Technical Support Fees

      17.At the time Jones filed its petition, the leased access rules permitted cable operators to
charge leased access users for providing the minimal level of technical support necessary to present their
material on a cable system.  However, such charges were limited to the "reasonable cost of any technical
support that operators actually provide."  The Commission revisited the area of technical costs in its Second
Report. There, the Commission clarified that the leased access rates determined under Section 76.970 include
the cost of technical support ordinarily provided to other programmers. For that reason a cable operator may
not impose an additional charge for technical support ordinarily provided to other programmers.  Neither
Armstrong's contract with Jones nor any other information before us indicates what equipment or technical
support services were actually provided by Armstrong for which Jones is assessed the $14.42 per hour
equipment charge.  Indeed, the contract imposes on Jones the duty to provide and deliver the necessary
playback equipment and to insert all programming tapes for play.  Armstrong's opposition mentions only
the provision of an "interface," which is mentioned nowhere in the contract.  On these facts, it appears that
no technical support was actually provided by Armstrong to Jones.  It is also unclear whether this equipment
charge is imposed on other programmers or, if so, what equipment or technical services are covered by such
charges to other programmers.  Armstrong may not charge Jones a technical support fee if it does not charge
other programmers such a fee.  Accordingly, we conclude that Armstrong must eliminate the $14.42 per hour
equipment charge, since it appears that no actual services were provided.

     C.  Demand for 30 Day Advanced Payment of Monthly Charges

      18.Jones' allegation that the provision in Armstrong's contract requiring thirty day prepayment
of monthly charges is unreasonable will be rejected.  In the Rate Order, the Commission concluded that
cable operators should have the discretion to require reasonable security deposits or other assurances from
programmers that are unable to prepay in full for leased access channel capacity.  In the Recon. Order, the
Commission, while confirming that conclusion, declined to set specific guidelines in this area but stated that
the amount of any deposit should be sufficient to insure payment without discouraging leased access and that
the determination of what constitutes a "reasonable" security deposit will be made on a case by case basis,
taking into consideration the relevant circumstances.  The Commission made it clear, however, that cable
operators could not require payment of a security deposit by a programmer that paid a "full monthly rate"
in advance.  Armstrong's contract with Jones requires payment of charges thirty days prior to the
commencement of the calendar month in which programming is presented but does not require any security
deposit.  We find that this provision of Armstrong's contract, which does not require a deposit but requires
thirty days advance payment of each month's charges is not unreasonable or inconsistent with the
requirements of the Recon. Order.

     D.  Operator Advertising Time on Leased Access Channels

      19.Jones objects to the provision in the second leased access contract granting Armstrong three
minutes per hour of advertising time during leased access programming, or alternatively, payment of an
additional $22 per minute for those spots if those spots are not provided.  Armstrong argues that this
provision is not unreasonable in light of industry practices with respect to such "give backs."  It also suggests
that such practice effectively constitutes payment by the programmer to the operator in the same way that
home shopping networks provide compensation through percentages of sales revenues and should not impact
on the maximum reasonable leased access rate.  We note in this connection first that this "give back"
provision is contained in the second Jones-Armstrong leased access contract, and Jones conceded that
Armstrong revised its rate schedule "to reflect a more appropriate implicit rate."  In the Rate Order, the
Commission stated that the highest implicit rate fee in effect when the petition was filed would be the
maximum reasonable rate that a cable operator could charge a programmer.  The Commission emphasized
in the Second Report that cable operators are not required to charge the maximum rate established under our
regulations and that operators have the discretion to negotiate rates below the maximum rates.

      20.With this as background, we conclude that the statutory and regulatory provisions applicable
to leased access do not preclude Jones and Armstrong from negotiating leased access rate provisions that
include an advertising "give back," so long as the total monthly rate for the leased access channel, including
any charges associated with the "give back," does not exceed the maximum reasonable rate determined under
Section 76.970 of the rules.  The record before us contains no information on Armstrong's schedule of leased
access rates other than that associated with the "give back" provision.  For that reason, we are unable to make
a determination whether Armstrong's total monthly rate, including the $22 per minute charges associated
with the three minute per hour "give back" provision at issue here, exceeds the maximum rates determined
under Section 76.970.  However, to the extent that the maximum reasonable rate is exceeded, Armstrong
must make an appropriate reduction so that the total rate does not exceed the maximum reasonable rate.

     E.  Miscellaneous Issues

      21.Jones provided no evidence to support the allegation that Channel 19, which carries Jones'
programming, is an inferior channel.  Accordingly, this allegation will be denied.  Other than the unsupported
allegation that the channel is inferior, the only supporting evidence Jones presented consisted of a report of
a telephone conversation between a potential client of Jones and one of Armstrong's technicians.  Although
Armstrong admitted that a few subscribers near the system headend may experience temporary signal
fluctuations from a nearby paging tower, no relevant technical information of any sort was provided
regarding signal quality.  Moreover, Armstrong stated it had received no subscriber complaints about the
quality of Jones programming. 

      22.Jones also provided no evidence in support of the allegation that Armstrong attempted to
exercise editorial control over his leased access programming.  Accordingly, this allegation will also be
denied.   Jones' entire allegation on this point is a statement in the petition that Armstrong attempted to
exercise editorial control "by eliminating programming originating out of a drinking establishment in the city
of Meadville."  However, no other information concerning this matter is provided.  On the facts presented,
we decline to find that Armstrong attempted to exercise editorial control over Jones' programming.

      23.We will also deny Jones' allegation regarding an Armstrong  requirement for payment of an
additional $2,000 for airing his programs.  Again, no specific information is provided regarding the
circumstances giving rise to this allegation.  Jones does indicate that the scope of his programming was
increased from 40 hours per week to 140 hours per week.  Such an increased level of program production
would likely require a substantial increase in carriage fees.  Armstrong's opposition added no additional
information on this point.  Section 76.975(c) of the rules require that a petition for relief provide a concise
statement of the facts constituting the alleged violations of the statute or the Commission's rules.  Jones
petition for relief failed to comply with this requirement with respect of each of the miscellaneous issues
discussed in this portion of this Order.

     F.  Recovery of Litigation Expenses and Compensatory Damages

      24.Finally, Jones asks for reimbursement of expenses incurred in filing the petition, for
attorney's fees, for ancillary damages caused by Armstrong's violations of statutory and regulatory
provisions, for consequential damages as a result of inability to fulfill contractual obligations, and for
imposition of monetary forfeitures on Armstrong as a deterrent to future violations.  The Commission's rules
do not provide for recovery of litigation expenses or monetary damages for violations of the leased access
rules.  Also no case for imposition of monetary forfeitures has been established.  Accordingly, Jones' request
for monetary damages and imposition of monetary forfeitures will be also denied.  

                         ORDERING CLAUSES

      25.Accordingly, IT IS ORDERED, pursuant to 47 C.F.R.  76.975(f) that the petition filed by
Scott E. Jones in File No. CSR 4917-L IS GRANTED to the extent indicated in paragraph 17 above and in
all other respects IS DENIED.

      26.This action is taken pursuant to authority delegated by 0.321 of the Commission's rules,
47 C.F.R. 0.321.

     FEDERAL COMMUNICATIONS COMMISSION



     Meredith J. Jones 
     Chief, Cable Services Bureau