Overview
Jurisdiction. Section 612 of the Communications Act of 1934, as amended, 47 U.S.C. § 532, and the Commission’s leased access rules, 47 CFR §§ 76.970 through 76.977, require a cable operator to set aside channel capacity for commercial use by unaffiliated video programmers. Commercial use means the provision of video programming, whether or not for profit. 47 U.S.C. § 532(b)(5). Video programming is defined as “programming provided by, or generally considered comparable to programming provided by, a television broadcast station.” 47 U.S.C. § 522(20).
Statutory Purpose. The statutory purpose for leased access regulation is “to promote competition in the delivery of diverse sources of video programming and to assure that the widest possible diversity of information sources are made available to the public from cable systems in a manner consistent with growth and development of cable systems.” 47 U.S.C. § 532(a).
Amount of Set Aside. Congress established leased access set-aside requirements in proportion to a system’s total activated channel capacity. Cable operators with fewer than 36 channels must set aside channels for commercial use only if required to do so by a franchise agreement in effect as of the enactment of section 612 (47 U.S.C. § 532). Operators with 36 to 54 activated channels must set aside 10 percent of those channels not otherwise required for use or prohibited from use by federal law or regulation. Operators with 55 to 100 activated channels must set aside 15 percent of those channels not otherwise required for use or prohibited from use by federal law or regulation. Operators with more than 100 activated channels must designate 15 percent of such channels for commercial use. Cable operators are not required to remove services that were being provided on July 1, 1984, in order to comply with the statute. 47 U.S.C. §§ 532(a), 532(b)(1). In the Commission’s 2019 leased access order, it eliminated the previous requirement that cable operators make leased access available on a part-time basis.
Other Uses. In accordance with the statute and the Commission’s rules, cable operators may use any unused channel capacity designated for leased access until an unaffiliated programmer obtains use of the channel capacity pursuant to a written agreement. 47 U.S.C. § 532(b)(4). Cable operators may use up to 33 percent of the channel capacity designated for leased access for qualified minority or educational programming sources, whether or not the source is affiliated with the cable operator. 47 CFR § 76.977.
Reasonable Conditions. Cable operators may impose reasonable insurance requirements and must provide the minimal level of technical support necessary for users to present their material on cable systems. 47 CFR § 76.971(c)-(d). Cable operators may not unreasonably refuse to cooperate with a leased access user in order to prevent that user from obtaining channel capacity. 47 CFR § 76.971(c). Section 76.970(h) of the Commission’s rules describes the process for requesting a commercial leased access channel.
Indecent Programming. A cable operator may adopt and enforce prospectively a written and published policy of prohibiting programming that, it reasonably believes, describes or depicts sexual or excretory activities or organs in a patently offensive manner as measured by contemporary community standards and may refuse to transmit any leased access program or portion of a leased access program that the operator reasonably believes contains obscenity, indecency or nudity. 47 CFR § 76.701.
Leased Access Rates. In 2020, the Commission adopted a tier-based leased access rate calculation. The “average implicit fee” reflects the maximum rate that a cable operator may charge a leased access programmer per month for a full-time channel. See 47 CFR § 76.970.
The current formula for calculating the average implicit fee is:
Formula:
A = (RT - KT) (1 / CT)
Where:
A = Maximum full-time rate per month
T = Elected tier
R = Total tier monthly subscriber revenue
K = Total tier monthly programming costs
C = Number of channels
In other words, the average implicit fee is calculated by:
(1) Determining the operator’s total subscriber revenue per month for programming on the tier where the leased access channel will be placed,
(2) Subtracting the total amount the operator pays in programming costs per month for that tier, and
(3) Dividing the resulting figure by the number of channels on that tier.
This tier-specific rate calculation is the same method used previously for channels placed on tiers with less than 50 percent subscriber penetration.
Example:
The elected tier has a subscriber count of 10,000 and a channel count of 20. Monthly subscriber revenue for the elected tier is $50,000 and monthly programming costs are $40,000.
($50,000 - $40,000) / 20 = $10,000 / 20 = $500 per month leased access fee for a full-time channel on the elected tier (or $0.05 per subscriber)
The license fees for affiliated channels used in determining the average implicit fee shall reflect the prevailing company prices offered in the marketplace to third parties. If a prevailing company price does not exist, the license fee for that programming shall be priced at the programmer's cost or the fair market value, whichever is lower. The average implicit fee shall be based on contracts in effect in the previous calendar year. The implicit fee for a contracted service may not include fees, stated or implied, for services other than the provision of channel capacity (e.g., billing and collection, marketing, or studio services).
Independent Accountant. Under the Commission’s rules, persons alleging that a cable operator's leased access rate is unreasonable must receive a determination of the cable operator's maximum permitted rate from an independent accountant prior to filing a petition for relief with the Commission. 47 CFR § 76.975(b)(1).
Leased Access Resources
Legislation.
Cable Communications Policy Act of 1984, Pub. L. No. 98-549, 98 Stat. 2779 (1984).
Cable Television Consumer Protection and Competition Act of 1992, Pub. L. No. 104-104, 110 Stat. 56 (1996).
Commission Rulemaking Orders.
Report and Order and Further Notice of Proposed Rule Making, 8 FCC Rcd 5631 (1993).
Order on Reconsideration of the First Report and Order and Further Notice of Rulemaking, 11 FCC Rcd 16933 (1996).
Second Report and Order and Second Order on Reconsideration of the First Report and Order, 12 FCC Rcd 5267 (1997).
Internet Ventures, Inc. Internet On-Ramp, Inc, Petition for Declaratory Ruling that Internet Service Providers are Entitled to Leased Access to Cable Facilities Under Section 612 of the Communications Act, 15 FCC Rcd 3247 (2000).
Report and Order and Second Further Notice of Proposed Rulemaking, 34 FCC Rcd 4934 (2019).
Second Report and Order, 35 FCC Rcd 7589 (2020).
Court Decisions.
Time Warner Entertainment Co., L.P. v. FCC, 93 F.3d 957, 969 (1996).
ValueVision, Inc. v. FCC, 149 F.3d 1204 (D.C. Cir. 1998).
For more information pertaining to the Policy Division, please call: (202) 418-2120.