NEWSReport No. DC-95-14 ACTION IN DOCKET CASE January 12, 1995 COMMISSION ADOPTS FOURTH FURTHER NOTICE IN VIDEO DIALTONE RULEMAKING PROCEEDING TO EXAMINE TELEPHONE COMPANIES PROVISION OF VIDEO PROGRAMMING (CC DOCKET 87-266) The Commission today commenced a proceeding to consider the adoption of rules governing telephone companies' provision of video programming directly to their subscribers. The Commission took this action in response to recent court decisions holding that the cross- ownership ban established by the Cable Communications Policy Act of 1984 violates the First Amendment rights of telephone companies because the ban is not "narrowly tailored to serve a significant government interest." This provision prohibits telephone companies from providing video programming directly to subscribers in their telephone service areas. Over the past few years, the Commission has adopted a series of orders to permit telephone companies to play a broader role in the video marketplace. The "video dialtone" framework outlined in these orders was designed to be consistent with the 1984 Cable Act's cross-ownership prohibition. It allowed local telephone companies to offer a basic common carrier video delivery service for use by multiple video programmers, but consistent with the statutory cross-ownership ban, it did not permit the telephone companies themselves to use their video dialtone systems to provide video programming directly to subscribers. In October 1994, the Commission affirmed its basic video dialtone framework, while modifying its specific video dialtone rules and policies in various respects. It also affirmed and reiterated its recommendation that Congress repeal the cross-ownership provisions of the 1984 Cable Act. The Commission said that given the enormous growth of the cable industry during the past decade, the risk of telephone companies preemptively eliminating competition in the video marketplace has lessened significantly. It noted that, while there remained some risk of anticompetitive behavior by telephone companies, this risk could and should be addressed through the video dialtone framework and other appropriate regulatory safeguards. In the Fourth Further Notice of Proposed Rulemaking (NPRM) adopted today, the Commission is considering the extent to which Title II and Title VI of the Communications Act, which govern common carrier and cable services, respectively, should apply to telephone companies in their provision of video programming to subscribers over their own video dialtone systems. (over) - 2 - Concerning Title VI, the Commission seeks comment on whether a telephone company's provision of video programming over its own video dialtone system is subject in whole or in part to regulation as a Title VI cable system. The NPRM also asks whether, in the event Title VI does not apply in these circumstances, the Commission should incorporate any elements of Title VI into the video dialtone regulatory framework. The Commission also seeks comment on the potential impact of the determinations in this proceeding on existing grants by state and local authorities of public rights-of-way. In today's NPRM, the Commission seeks comment on a tentative conclusion that telephone companies that are no longer subject to the cross-ownership ban should be allowed to become video programmers on their own video dialtone platforms, subject to appropriate safeguards. These safeguards would be designed to protect consumers as well as unaffiliated video information providers competing with telephone companies. The Commission tentatively concluded that, in light of the public interest benefits of video dialtone, it should not ban telephone companies from providing their own video programming over their own video dialtone platforms. The Commission also seeks comment on whether it has authority to require telephone companies that wish to provide video programming directly to subscribers in their own service areas to do so over a video dialtone system and not over a traditional cable television facility. The Commission is also considering whether it should adopt additional safeguards against anticompetitive conduct or cross-subsidization, now that telephone companies may be able to become programmers on their own video dialtone systems. The NPRM seeks comment, among other issues, on whether telephone companies should be limited to using some specific percentage of the capacity of their own video dialtone platforms for their own programming. The Commission asks parties to address the application of existing nonstructural safeguards, including cost allocation rules and customer proprietary network information (CPNI) requirements, to video programming activities of telephone companies. The Commission also seeks comment on whether it should require structural separation for such activities. Action by the Commission January 12, 1995, by Fourth Further Notice of Proposed Rulemaking (FCC 95-20). Chairman Hundt, Commissioners Quello, Barrett, Ness and Chong, with Commissioners Barrett, Ness and Chong issuing separate statements. -FCC- News Media contact: Susan Lewis Sallet at (202) 418-0500. Common Carrier Bureau contact: James D. Schlichting and John S. Morabito at (202) 418-1580. Cable Services Bureau contact: Larry Walke, (202) 416-0800.