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(#` The Bells argue that they should be free to jointly market video programming and telephone services.(tABell Comments at 30.( However, "Congress directed that OVS operators should be prevented from using their marketing activities to discriminate against competitors."J.mATCI Comments at 9, citing 47 U.S.C.  573(b)(1)(E).J Moreover, LECs operating OVS facilities are in a unique position to market numerous services to residents, at a substantial discount.?ASee Time Warner Cable Comments at 17.? At minimum, therefore, until telephone service is fully competitive, a LEC representative who advises a customer or potential customer about additional services such as video or long distance should be required to mention alternative providers of such services such as the local cable operator.5 ASee NCTA Comments at 2425.5 The Commission should monitor this procedure. Alternatively, OVS operators should be required to conduct inbound telemarketing or referrals of their video services on the same terms, conditions and prices to all video programming providers, and must provide the names, on a rotating basis, of video programmers and cable operators that request such a listing service.r\ATCI Comments at 10. The Commenters also endorse additional proposals put forth in this area, including outbound telemarketing restrictions. See id. at 1011.  B.` ` !The Commission Must Take Swift, Concrete Steps Regarding Cost Allocation. (#` The Telcos also argue that the Commission should not impose any conditions regarding cost allocation in the OVS certification process.K} ASee Bell Comments at 31; US West Comments at 78.K However, since the Title II} ,))JJ safeguards normally available will not apply to OVS, there is even more need to establish cost allocation procedures under Part 64.VASee General Services Administration ("GSA") Comments at 34.V Such procedures are necessary to ensure that regulated telecommunications service costs are segregated from the costs of unregulated services su ch as OVS, thereby rendering crosssubsidization more difficult. The Commenters thus agree with parties who stressed the need for the Commission to adopt cost allocation regulations before entertaining requests for OVS certification.~mASee, e.g., NCTA Comments at 22; Pennsylvania PUC Comments at 8; California PUC Comments at 12.~ As the Pennsylvania Public Utility Commission stated, "[r]eliance upon LEC provided ad hoc or ex post facto separations studies by state regulators obligated to regulate LEC rates and tariffs would both impose an intolerable burden, and create a likely risk of interjurisdictional separations disputes.9APennsylvania PUC Comments at 8.9 The Commission states that it will address cost allocation in a separate proceeding to be initiated "shortly.")ANotice at n.82.) The Commenters join others, including US West, in supporting the Commission's efforts in this area, 9ASee, e.g., State of New York Dept. of Public Service Comments at 5, 8; US West Comments at 910; GSA Comments at 4. Ġ but urge the Commission to act swiftly and decisively to conclude such proceeding. Adelphia, in particular, urges the Commission not to repeat the process that took place regarding cost allocation for Bell Atlantic's video dialtone ("VDT") facility in Dover Township, New Jersey, where Adelphia operates a cable system.r! ANew Jersey Bell Telephone Company, Order and Authorization, 9 FCC Rcd 3677 (1994).r The Telecommunications Act of 1996 repealed the Commission's VDT rules = !,))JJ and policies, but grandfathered VDT operations, such as Bell Atlantic's Dover system, that had already been authorized.k"ATelecommunications Act of 1996, Pub. L. 104104, 110 Stat. 56 (1996) at  302(b)(1).k The Commission never resolved the VDT cost allocation issue. Accordingly, Bell Atlantic's VDT system is not subject to any cost allocation rules or oversight. Bell Atlantic is thus in a position to crosssubsidize its VDT service with local telephone ratepayer revenue.2#mASee GSA Comments at 45.2 This situation must not be allowed to recur in the OVS context. The promise of a separate cost allocation proceeding must not be used to back burner or completely avoid crucial cost allocation issues.  C.` ` !The Commission Should Require Separate Subsidiaries for BOCs and TierI LECs. (#` The Commenters also agree with NCTA and others that the Commission should require Bell Operating Companies and other incumbent Tier I LECs to offer video programming directly to subscribers over OVS through a structurally separate subsidiary.a$!ASee, e.g., NCTA Comments at 25; Time Warner Cable Comments at 10.a Otherwise, "the incumbent LEC has strong incentives to" crosssubsidize its OVS service by misallocating "costs associated with OVS to telephone services."(%ANCTA Comments at 26.( As a result, the LEC could price its OVS service at an artificially low level, at which unaffiliated programmers could not compete, while simultaneously charging higher rates to its telephone ratepayers.&\ANARUC Comments at 6. As NARUC states, adequate cost allocation procedures are also necessary to make such crosssubsidization more difficult. A separate subsidiary requirement is the only way to ensure that such crosssubsidization does not occur.?'} ASee Time Warner Cable Comments at 10.? } ',))JJԌ III.XCONGRESS INTENDED TO PROMOTE COMPETITION AMONG ALL VIDEO DELIVERY SYSTEMS (#  A.` ` !The Act Does Not Prohibit Any Party From Qualifying Either as an OVS Operator or Programmer. (#` The Notice asks whether the Commission should allow cable operators to become OVS operators or provide programming using OVS capacity, and tentatively concludes that "there may be significant benefits to permitting cable operators and others to become open video system operators.",(9 ANotice at  64., The Act also authorizes cable operators to operate OVS facilities, consistent with the public interest.-) mA47 U.S.C.  573(a)(1).- While the Telcos agree that cable operators should be able "to convert to open video systems,"*ABell Comments at 29; US West Comments at 2 ("a cable company should be permitted to operate an open video system.") the Telcos state that OVS operators should be able to refuse capacity to cable system operators and other multichannel video programming providers.G+!ABell Comments at 12, 15; US West comments at 1213.G These entities incorrectly seek to define these proceedings and the underlying statutory provision as a battle simply between themselves and incumbent cable operators, and then request numerous regulatory advantages over cable operators who remain significantly regulated under the Act. In so doing, the Telcos seek to eliminate the "open" requirement of OVS, and offer what amounts to unregulated cable service. This is not what the Act intended. Rather, the Commission cited among Congress' goals "diversity of programming choices . . . and increased consumer choice.",}9ANotice at  4, citing H.R. Conference Rep. No. 458, 104th Cong., 2nd Sess. (1996), Comments at 172, 177178. Furthermore, as previously explained, the Act clearly prohibits OVS operators from discriminating with regard to7 ,,))JJ carriage of programmers.0-A47 U.S.C.  573(b)(1)(A).0 The Act thus intended truly "open" video systems, where all competitors have more options to compete, maximizing choices and reducing prices for consumers. The only way to achieve these goals is to ensure that the regulatory advantages accorded OVS operators and programmers are available to all parties, including cable operators. Accordingly, under the Act, telephone companies may provide video programming as (i) franchised cable operators, (ii) OVS operators and/or programmers, (iii) wireless cable operators, or (iv) radiobased system operators.-. mAId. at  571(a).- Thus, it is anticompetitive for the Telcos and US West to try to limit cable operators' options in providing video programming. Such a result would tilt the playing field even further in the telephone companies' favor. The Act does not prohibit cable operators from transforming their operations into an OVS facility or from utilizing capacity on their own or another's OVS facility. The Act's goals of increased programming and consumer choice will be furthered by giving consumers access to more programming and providers, including cable operators and their programming, over OVS facilities.  .,))JJ IV.XCONCLUSION (# The Telcos argue for de facto unregulated cable operator status and other unfair advantages against OVS programmers with whom they will compete. The Commission must not permit the "fox to guard the henhouse" without clear limits and safeguards regarding OVS operator channel allocation and operation.  X` hp x (#%'0*,.8135@8: TABLE OF CONTENTS `!(#yPage ă    XSUMMARY pj"(#z i XI.THE ONETHIRD CHANNEL CAPACITY LIMIT IS A MAXIMUM, NOT A MINIMUM REQUIREMENT p>"(#z 2 XX` ` !A.` ` !The Bells' Proposals Would Destroy Incentives to Expand OVS Capacity. ` p>"(#z 3 XX` ` !B.` ` !Under the Telcos' Proposals, the "Fox Would Guard the Henhouse." ` p>"(#z 3 XX` ` !C.` ` !The Telcos' Positions Would Eliminate the "Open" Requirement of OVS. ` p>"(#z 5 XII.THE COMMISSION MUST IMPOSE ADEQUATE SAFEGUARDS AGAINST ANTICOMPETITIVE BEHAVIOR p>"(#z 7 XX` ` !A.` ` !Joint Marketing Must be Regulated. ` p>"(#z 8 XX` ` !B.` ` !The Commission Must Take Swift, Concrete Steps Regarding Cost Allocation. ` p>"(#z 8 XX` ` !C.` ` !The Commission Should Require Separate Subsidiaries for BOCs and TierI LECs. ` p"(#z 10 III.XCONGRESS INTENDED TO PROMOTE COMPETITION AMONG ALL VIDEO DELIVERY SYSTEMS(#p"(#z 11 XX` ` !A.` ` !The Act Does Not Prohibit Any Party From Qualifying Either as an OVS Operator or Programmer. ` p"(#z 11 IV.XCONCLUSION(#p"(#z 14