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If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of ) Petition for Relief of ) ) ERWIN SCALA BROADCASTING CORP., ) Petitioner ) ) vs. ) CSR-4775-L ) COMCAST CABLEVISION COMPANY, ) Respondent ) MEMORANDUM OPINION AND ORDER Adopted: June 11, 1997 Released: June 13, 1997 By the Chief, Cable Services Bureau: INTRODUCTION 1. Erwin Scala Broadcasting Corporation ("Scala") has filed a petition for relief, pursuant to 76.975 of the Commission's rules against two California cable television systems owned by Comcast Cablevision ("Comcast"), alleging violations of 612 of the Communications Act of 1934, as amended. Comcast has not responded. 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 (the "Rate Order"), and clarified certain issues in Order on Reconsideration of the First Order and Further Notice of Proposed Rulemaking (the "Recon. Order"). The Commission revised, among other things, the formula used to calculate permissible commercial leased access rates 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 (the "Second Report"). In the Rate Order and the regulations promulgated thereunder, which were in effect at the time of this complaint, the Commission adopted the "highest implicit net fee" as the formula for determining the maximum reasonable rates for commercial leased access. PETITIONER'S ARGUMENTS 3. According to Scala, during its initial two week run, Comcast had no specifications concerning program content, and Comcast agreed to transmit Scala's four separate programs on Channel 22 from 8:30-9:00 pm on four separate days of the week: Monday, Wednesday, Thursday, and Friday for a standard rate of $22 per half hour (for Monday-Friday) and for $26 per half hour (for Saturday-Sunday). Comcast also agreed to receive Scala's program tapes at its Santa Maria location at 309 West Main Street and to allow Scala to pick them up at that location, which is about fifteen miles from Scala's location. 4. Now, however, Scala says that Comcast insists that the program tapes be delivered and picked up at Comcast's Lompoc location at 646 North H Street, which is about fifty-five miles from Scala's location. Scala adds that Comcast has also ". . . warned us about our factual comments during some of our programs regarding their cable company's performance or lack of performance of airing our programs to date." In addition, Comcast raised its rates 36% to $30 per half hour in a revised rate schedule dated June 13, 1996 ". . . without consideration of a change in subscriber households," and Comcast reserves the right to change channels at its discretion, without Scala's approval or any prior notice to it. Comcast also will no longer contract for transmission of Scala's programs on fixed days of the week, and it has informed Scala that it ". . . will not run more than one one-hour program tape per week for our company, even if that time is available." According to Scala, Comcast also did not run all of the programs as originally specified in its contract, and they did not notify Scala when its programs were either not run at all or only partially run. Now, Comcast has told Scala that ". . . they will not tell us, nor guarantee to us what time they will run the programs." Instead, Comcast has stated that, after a program is aired, it will issue a Certification of Run, but Comcast won't know ". . . if indeed the programs actually did run according to their certification." 5. Scala claims that all of its grievances result from the fact that its advertising rates for the commercials it runs in its leased access programs are less expensive than Comcast's advertising rates for its commercials. Scala seeks the following relief from the Commission: (1) that Scala be allowed to drop its tapes off at Comcast's Santa Maria location, and to pick them up there within one week after airing; (2) that Comcast adhere to program content approval according to FCC required standards and content rules; (3) that Comcast return to its original contract rates, or less; (4) that Comcast accept and run Scala's individual programs at individual times and dates; (5) that Comcast issue an immediate refund for all programs subject to a channel change, and that it notify Scala two weeks in advance should Comcast find it necessary to change Scala's channel location, so that Scala will be able to cancel its contract with Comcast at that time; (6) that, after the airing of programs, the Certificate of Run be accurate and true; and (7) that Comcast notify Scala within 24 hours if, for unforeseen circumstances, it does not air Scala's programs as per contract, either in whole or in part, and that Comcast immediately issue a full refund for any programs for which time was leased. DISCUSSION 6. The statutory commercial leased access requirements are intended to provide programmers with a "genuine outlet" for their programming. Scala objects to the discretion Comcast reserves to change channel placement without notice to Scala and without Scala's approval. The Commission has determined that cable operators will be allowed to place leased access programming on any reasonable channel location on any tier that has a subscriber penetration of more than 50%. Cable operators have a considerable degree of flexibility in deciding where to carry commercial leased access programming; they are not, however, authorized to repeatedly change the channel on which such programming is carried without good reason. We believe such actions do not allow for a "genuine outlet" for leased access programming. Furthermore, Comcast also reserves the right to replace Scala's programming on its designated channel with franchise required programming, such as City Council meetings. We believe that Comcast may not preempt leased access programming for nonleased access programming, such as carriage of City Council meetings, educational programming, or public access material, as provided by Comcast's revised rate schedule. On leased access channels, leased access programming has priority over all other types of programming. 7. Scala objects that Comcast will run no more than a one-hour program tape per week. Cable operators that have available leased access capacity sufficient to satisfy current leased access demand also are required to accommodate all leased access requests for programming that is not obscene or indecent as expeditiously as possible. Therefore, Scala is entitled to carriage of all its programming, assuming that Comcast has sufficient capacity. Since Comcast has not alleged that it has insufficient capacity, leased access programmers on the system, such as Scala, are entitled to continued access until such time as Comcast's set-aside requirement is met. Comcast is prohibited from limiting Scala, or any other leased access programmer to transmitting only one one-hour program tape per week where capacity is available. 8. With respect to the accuracy of Comcast's Certificates of Run and its obligation either to transmit Scala's programming as per contract or to issue refunds promptly for programming not run, the Commission has yet to adopt any provisions regarding these matters. We believe, therefore, that they are issues that are best left to negotiation between the parties. 9. In addition, Scala objects to Comcast's new requirement that Scala drop off and pick up its tapes at Comcast's Lompoc location, rather than at its Santa Maria location, which is about forty miles closer to Scala. In general, we believe in the principle that leased access users must be reasonably accommodated by cable operators, and that cable operators will not be permitted to create obstacles to leased access users' rights by imposing unreasonable delays to the airing of leased access programming on cable systems. In this case, Comcast has added forty miles to the trip Scala must make either to pick up or to drop off its tapes for no apparent reason. Therefore, we will require in the future that Comcast allow Scala to drop its tapes off and to pick them up at least at whichever location the tapes are played. 10. Another issue presented by Scala's complaint is whether or not Comcast's revised leased access rates exceed the maximum reasonable rates for part-time leased access channel capacity that may be established, consistent with the requirements of 76.970 of the rules in effect at the time of the filing of this petition. In its initial Rate Order, the Commission adopted a "highest implicit fee" formula as the method for setting maximum reasonable rates that a cable operator may charge any non-affiliated programmer for leased access. The Commission recently modified this methodology in the Second Order, adopting an "average implicit fee" formula. 11. Scala's complaint regarding the reasonableness of the revised leased access rate, is governed by the requirements of the Rate Order and by  76.970 et seq. of the Commission's rules promulgated thereunder. As noted above, in the Rate Order, the Commission adopted a "highest implicit net fee" formula as the method by which commercial leased access rates would be calculated and also adopted standards governing both leased access terms and conditions and dispute resolution. 12. The provisions of  76.970 of the Commission's regulations, which were in effect at the time relevant to Scala's complaint, provide that the maximum commercial leased access rate that may be charged by a cable operator is the "highest implicit net fee charged any nonaffiliated programmer (excluding leased access programmers) within the same category." Further,  76.970(c) provides that the highest implicit net fee is calculated by determining the price-per-channel each subscriber pays the operator minus the amount-per-subscriber the operator, in turn, pays the programmer. The resulting difference is then multiplied by the number of subscribers able to receive the unaffiliated programmer's service. The Commission determined that the highest implicit net fee for leased access may not include fees, stated or implied, for services other than the provision of channel capacity. Maximum commercial leased access rates for lease periods shorter than one month are calculated by prorating the monthly maximum rate. 13. The record in this matter fails to provide any of the data or other information necessary for making the rate calculations and provides none of the calculations required by 76.970 of the rules. Absent such a showing, we have no basis for a finding that the operator properly applied the methodology of our rules in effect when the petition was filed, or that the required methodology was properly applied to the appropriate data as required by the rules. For those reasons, we are unable to make any determination whether the systems' monthly rate for leased access channel capacity exceeds the maximum reasonable rate requirements of 76.970. Nor can we determine whether or not Comcast properly calculated the part time rates quoted by Scala. We cannot grant Scala's request for monetary damages since our rules only allow for refunds of payments made in excess of our leased access rates. 14. In light of the foregoing, we direct Comcast to recalculate the commercial leased access rate charged to Scala in accordance with the Commission's highest implicit net fee formula and to provide an accounting to Scala and to the Commission of all payments received from Scala and of all leased access channel services provided by Comcast from the period commencing June 13, 1996 until such accounting is completed. Specifically, the accounting should indicate: (1) the amounts properly billable for the services provided and the calculations made to derive those amounts consistent with  76.970; (2) the amounts collected from Scala from June 13, 1996 until such time as the accounting is completed; (3) the number of subscribers to the tier on which Scala's programming was placed and the method used to determine the number of subscribers; (4) any other relevant data, information and supporting calculations required by our rules in determining the maximum reasonable leased access rate; and (5) the amount of any refund due Scala as a result of monthly fees paid by Scala which were in excess of the amounts properly billable as calculated under the Commission's rules for the relevant period of time. ORDERING CLAUSES 15. Accordingly, IT IS ORDERED, that the petition (CSR-4775-L) filed July 2, 1996 by Erwin Scala Broadcasting Corporation, pursuant to  76.970 et seq.of the Commission's rules, 47 C.F.R.  76.790 et seq., IS GRANTED to the extent indicated above, and in all other respects, IS DISMISSED. 16. IT IS FURTHER ORDERED that pursuant to  76.975(e) and  76.975(f) of the Commission's rules, 47 C. F. R.  76.975(e), (f), Comcast Cablevision Company shall, within thirty (30) days of the release date of this Order, provide Erwin Scala Broadcasting Corp. the accounting described in paragraph fourteen of this Order. 17. IT IS FURTHER ORDERED that Erwin Scala Broadcasting Corp. will have fifteen (15) days from receipt of Comcast Cablevision Company's accounting to dispute its findings to which Comcast may reply within ten (10) days of its receipt of Erwin Scala Broadcasting Corp.'s response. 18. 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