CORRECTION 
                            (to include Docket No.)
     
     Report No. DC 95-73ACTION IN DOCKET CASE               May 16, 1995
     
     FCC ADOPTS PROPOSAL THAT IT HAS LEGAL AUTHORITY TO GRANT 
           WAIVERS OF THE CABLE-TELCO CROSS-OWNERSHIP BAN TO               
                TELEPHONE COMPANIES SEEKING TO PROVIDE VIDEO              
                PROGRAMMING IN THEIR TELEPHONE SERVICE AREAS
                             (CC Docket No. 87-266)
     
         In its Third Report and Order in CC Docket No. 87-266, the FCC adopted its
     tentative conclusion set forth in the Fourth Further Notice of Proposed Rulemaking
     that it has the legal authority to waive Section 613(b) of the Communications Act,  the
     "cable-telco cross-ownership" ban, to grant waivers allowing telephone companies that
     abide by certain conditions to provide video programming directly to subscribers in
     their service areas.  In particular, in response to recent decisions by the United States
     Courts of Appeals for the Fourth and Ninth Circuits, the FCC concluded that under
     the statute's waiver provision, it has the authority to grant waivers allowing telephone
     companies to provide video programming in their telephone service areas pursuant to
     our video dialtone rules.  The waiver provision provides that upon a showing of "good
     cause" the Commission may waive the cable-telco cross ownership restriction where a
     waiver is "justified by the particular circumstances ..., taking into account the policy"
     of Section 613(b). 
     
         Congress enacted Section 613(b) to promote competition, specifically by
     preventing telephone companies from using their monopoly power to preempt the
     market for cable service by excluding others from entry.  Given that technological
     advances and other circumstances have changed the multi-channel video programming
     marketplace significantly since the Commission adopted the cross-ownership restriction
     in 1970 and Congress codified it in 1984, the Order concludes that "good cause"
     within the meaning of Section 613(b)(4) exists to allow telephone companies to
     provide video programming in their telephone service areas.  The Order also
     concludes that allowing telephone companies to provide programming to their
     subscribers pursuant to the FCC's video dialtone rules constitutes "particular
     circumstances ..., taking into account the policy" of Section 613(b) because the
     conditions the Commission has and will establish will promote competition in the
     multi-channel video programming market.  
                                        
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         In Chesapeake and Potomac Tel. Co. v. United States, 42 F.3d 191 (4th Cir.
     1994), the the Fourth Circuit held that the cable-telco cross-ownership restriction is
     unconstitutional because it "burden[s] substantially more speech than is necessary" to
     promote the government's interest in a competitive multi-channel video programming
     market; citing to the Commission's 1992 video dialtone order, the court found that a
     "less burdensome alternative" to the ban existed.  In US West, Inc. v. United States,
     48 F.3d 1092 (9th Cir. 1995), the Ninth Circuit also pointed to the Commission's
     1992 video dialtone order, which it described as a "more speech-friendly plan" than
     the ban that is in place absent a waiver.  Construing Section 613(b) as giving the
     Commission legal authority to grant waivers to allow telephone companies to offer
     video programming in their service areas over video dialtone networks in effect makes
     available the "less burdensome alternative" to the ban identified by the Fourth Circuit
     and implements the "more speech-friendly plan" referenced by the Ninth Circuit.  This
     order thus obviates the constitutional difficulties identified by the courts of appeals.
     
         Action by the Commission May 16, 1995 by Third Report and Order (FCC 95-
     203).  Chairman Hundt, Commissioners Quello, Barrett, Ness and Chong.
     
                                    - FCC -
     
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