Amendment to the Commission's Rules Concerning Effective Competition; Implementation of Section 111 of the STELA Reauthorization Act, 14894-14904 [2015-06541]

Agencies

• FEDERAL COMMUNICATIONS COMMISSION

[Federal Register Volume 80, Number 54 (Friday, March 20, 2015)]
[Proposed Rules]
[Pages 14894-14904]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-06541]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 76

[MB Docket No. 15-53; FCC 15-30]


Amendment to the Commission's Rules Concerning Effective 
Competition; Implementation of Section 111 of the STELA Reauthorization 
Act

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: In this document, the Commission asks whether it should adopt 
a rebuttable presumption that cable operators are subject to effective 
competition. A franchising authority is permitted to regulate basic 
cable rates only if the cable system is not subject to effective 
competition. This proceeding will also implement section 111 of the 
STELA Reauthorization Act of 2014, which directs the Commission to 
adopt a streamlined effective competition process for small cable 
operators.

DATES: Comments are due on or before April 9, 2015; reply comments are 
due on or before April 20, 2015. Written comments on the Paperwork 
Reduction Act proposed information collection requirements must be 
submitted by the public, Office of Management and Budget (OMB), and 
other interested parties on or before May 19, 2015.

ADDRESSES: You may submit comments, identified by MB Docket No. 15-53, 
by any of the following methods:
     Federal eRulemaking Portal: https://www.regulations.gov. 
Follow the instructions for submitting comments.
     Federal Communications Commission's Web site: https://fjallfoss.fcc.gov/ecfs2/. Follow the instructions for submitting 
comments.
     Mail: Filings can be sent by hand or messenger delivery, 
by commercial overnight courier, or by first-class or overnight U.S. 
Postal Service mail. All filings must be addressed to the Commission's 
Secretary, Office of the Secretary, Federal Communications Commission.

[[Page 14895]]

     People with Disabilities: Contact the FCC to request 
reasonable accommodations (accessible format documents, sign language 
interpreters, CART, etc.) by email: FCC504@fcc.gov or phone: (202) 418-
0530 or TTY: (202) 418-0432.
    In addition to filing comments with the Secretary, a copy of any 
comments on the Paperwork Reduction Act proposed information collection 
requirements contained herein should be submitted to the Federal 
Communications Commission via email to PRA@fcc.gov and to Nicholas A. 
Fraser, Office of Management and Budget, via email to 
Nicholas_A._Fraser@omb.eop.gov or via fax at (202) 395-5167. For 
detailed instructions for submitting comments and additional 
information on the rulemaking process, see the SUPPLEMENTARY 
INFORMATION section of this document.

FOR FURTHER INFORMATION CONTACT: For additional information on this 
proceeding, contact Diana Sokolow, Diana.Sokolow@fcc.gov, of the Policy 
Division, Media Bureau, (202) 418-2120. For additional information 
concerning the Paperwork Reduction Act information collection 
requirements contained in this document, send an email to PRA@fcc.gov 
or contact Cathy Williams at (202) 418-2918.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Notice 
of Proposed Rulemaking, FCC 15-30, adopted and released on March 16, 
2015. The full text is available for public inspection and copying 
during regular business hours in the FCC Reference Center, Federal 
Communications Commission, 445 12th Street SW., Room CY-A257, 
Washington, DC 20554. This document will also be available via ECFS at 
https://fjallfoss.fcc.gov/ecfs/. Documents will be available 
electronically in ASCII, Microsoft Word, and/or Adobe Acrobat. The 
complete text may be purchased from the Commission's copy contractor, 
445 12th Street SW., Room CY-B402, Washington, DC 20554. Alternative 
formats are available for people with disabilities (Braille, large 
print, electronic files, audio format), by sending an email to 
fcc504@fcc.gov or calling the Commission's Consumer and Governmental 
Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432 (TTY).
    This document contains proposed information collection 
requirements. The Commission, as part of its continuing effort to 
reduce paperwork burdens, invites the general public and the Office of 
Management and Budget (OMB) to comment on the information collection 
requirements contained in this document, as required by the Paperwork 
Reduction Act of 1995, Public Law 104-13. Public and agency comments 
are due May 19, 2015.
    Comments should address: (a) Whether the proposed collection of 
information is necessary for the proper performance of the functions of 
the Commission, including whether the information shall have practical 
utility; (b) the accuracy of the Commission's burden estimates; (c) 
ways to enhance the quality, utility, and clarity of the information 
collected; (d) ways to minimize the burden of the collection of 
information on the respondents, including the use of automated 
collection techniques or other forms of information technology; and (e) 
ways to further reduce the information collection burden on small 
business concerns with fewer than 25 employees. In addition, pursuant 
to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, 
see 44 U.S.C. 3506(c)(4), we seek specific comment on how we might 
further reduce the information collection burden for small business 
concerns with fewer than 25 employees.
    To view or obtain a copy of this information collection request 
(ICR) submitted to OMB: (1) Go to this OMB/GSA Web page: https://www.reginfo.gov/public/do/PRAMain, (2) look for the section of the Web 
page called ``Currently Under Review,'' (3) click on the downward-
pointing arrow in the ``Select Agency'' box below the ``Currently Under 
Review'' heading, (4) select ``Federal Communications Commission'' from 
the list of agencies presented in the ``Select Agency'' box, (5) click 
the ``Submit'' button to the right of the ``Select Agency'' box, and 
(6) when the list of FCC ICRs currently under review appears, look for 
the OMB control number of this ICR as shown in the Supplementary 
Information section below (or its title if there is no OMB control 
number) and then click on the ICR Reference Number. A copy of the FCC 
submission to OMB will be displayed.
    OMB Control Number: 3060-0550.
    Title: Local Franchising Authority Certification, FCC Form 328; 
Section 76.910, Franchising Authority Certification.
    Form No.: FCC Form 328.
    Type of Review: Revision of a currently approved collection.
    Respondents: State, local or tribal governments; Businesses or 
other for-profit entities.
    Number of Respondents and Responses: 7 respondents; 13 responses.
    Estimated Time per Response: 2 hours.
    Frequency of Response: One-time reporting requirement; Third party 
disclosure requirement.
    Obligation to Respond: Required to obtain or retain benefits. The 
statutory authority for this collection of information is contained in 
sections 4(i) and 623 of the Communications Act of 1934, as amended.
    Total Annual Burden: 26 hours.
    Total Annual Cost: None.
    Privacy Act Impact Assessment: No impact(s).
    Nature and Extent of Confidentiality: There is no need for 
confidentiality with this collection of information.
    Needs and Uses: On March 16, 2015, the Commission released a Notice 
of Proposed Rulemaking, MB Docket No. 15-53; FCC 15-30. The Notice of 
Proposed Rulemaking sought comment on whether the Commission should 
adopt a rebuttable presumption that cable operators are subject to 
effective competition.
    The proposed information collection requirements consist of: FCC 
Form 328. Pursuant to section 76.910, a franchising authority must be 
certified by the Commission to regulate the basic service tier and 
associated equipment of a cable system within its jurisdiction. To 
obtain this certification, the franchising authority must prepare and 
submit FCC Form 328. The NPRM seeks comment on revising section 76.910 
to require a franchising authority filing Form 328 to submit specific 
evidence demonstrating its rebuttal of the proposed presumption in 
section 76.906 that the cable operator is subject to competing provider 
effective competition pursuant to section 76.905(b)(2). The franchising 
authority would bear the burden of rebutting the presumption that 
effective competition exists with evidence that effective competition, 
as defined in section 76.905(b)(2), does not exist in the franchise 
area. Unless a franchising authority has actual knowledge to the 
contrary, it may continue to presume that the cable operator is not 
subject to one of the other three types of effective competition.
    Evidence establishing lack of effective competition. If the 
evidence establishing the lack of effective competition is not 
otherwise available, the proposed note to section 76.910(b)(4) as set 
forth in Appendix A of the NPRM provides that franchising authorities 
may request from a multichannel video programming distributor 
(``MVPD'') information regarding the MVPD's reach and number of 
subscribers. An MVPD must respond to such request within 15 days. Such

[[Page 14896]]

responses may be limited to numerical totals.
    Franchising authority's obligations if certified. Section 76.910(e) 
of the Commission's rules currently provides that, unless the 
Commission notifies the franchising authority otherwise, the 
certification will become effective 30 days after the date filed, 
provided, however, that the franchising authority may not regulate the 
rates of a cable system unless it: (1) Adopts regulations (i) 
consistent with the Commission's regulations governing the basic tier 
and (ii) providing a reasonable opportunity for consideration of the 
views of interested parties, within 120 days of the effective date of 
the certification; and (2) notifies the cable operator that the 
franchising authority has been certified and has adopted the required 
regulations.
    The Commission is seeking OMB approval for the proposed information 
collection requirements.
    OMB Control Number: 3060-0560.
    Title: Section 76.911, Petition for Reconsideration of 
Certification.
    Form No.: N/A.
    Type of Review: Revision of a currently approved collection.
    Respondents: State, local or tribal governments; Businesses or 
other for-profit entities.
    Number of Respondents and Responses: 15 respondents; 25 responses.
    Estimated Time per Response: 2-10 hours.
    Frequency of Response: On occasion reporting requirement; Third 
party disclosure requirement.
    Obligation to Respond: Required to obtain or retain benefits. The 
statutory authority for this collection of information is contained in 
sections 4(i) and 623 of the Communications Act of 1934, as amended.
    Total Annual Burden: 130 hours.
    Total Annual Cost: None.
    Privacy Act Impact Assessment: No impact(s).
    Nature and Extent of Confidentiality: There is no need for 
confidentiality with this collection of information.
    Needs and Uses: On March 16, 2015, the Commission released a Notice 
of Proposed Rulemaking, MB Docket No. 15-53; FCC 15-30. The Notice of 
Proposed Rulemaking sought comment on whether the Commission should 
adopt a rebuttable presumption that cable operators are subject to 
effective competition. Reversing the rebuttable presumption and 
adopting the procedures discussed in the NPRM could result in changes 
to the information collection burdens.
    The proposed information collection requirements consist of: 
petitions for reconsideration of certification, oppositions and replies 
thereto, cable operator requests to competitors for information 
regarding the competitor's reach and number of subscribers if evidence 
establishing effective competition is not otherwise available, and the 
competitors supplying this information.

Summary of the Notice of Proposed Rulemaking

I. Introduction

    1. In this Notice of Proposed Rulemaking (``NPRM''), we seek 
comment on how we should improve the effective competition process. 
Specifically, we ask whether we should adopt a rebuttable presumption 
that cable operators are subject to effective competition. Pursuant to 
the Communications Act of 1934, as amended (the ``Act''), a franchising 
authority is permitted to regulate basic cable rates only if the cable 
system is not subject to effective competition.\1\ As a result, where 
effective competition exists, basic cable rates are dictated by the 
marketplace and not by regulation. In 1993, the Commission adopted a 
presumption that cable operators are not subject to effective 
competition, absent a cable operator's demonstration to the 
contrary.\2\ Given the changes to the video marketplace that have 
occurred since 1993, including in particular the widespread 
availability of Direct Broadcast Satellite (``DBS'') service, we now 
seek comment on whether to reverse our presumption and instead presume 
that cable operators are subject to effective competition. Such an 
approach would reflect the fact that today, based on application of the 
effective competition test in the current market, the Commission grants 
nearly all requests for a finding of effective competition. If the 
Commission were to presume that cable operators are subject to 
effective competition, a franchising authority would be required to 
demonstrate to the Commission that one or more cable operators in its 
franchise area is not subject to effective competition if it wishes to 
regulate cable service rates. We intend to implement policies that are 
mindful of the evolving video marketplace.
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    \1\ See 47 U.S.C. 543(a)(2).
    \2\ See 47 CFR 76.906.
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    2. In initiating this proceeding, we are also implementing part of 
the STELA Reauthorization Act of 2014 (``STELAR''), enacted on December 
4, 2014. Specifically, section 111 of STELAR directs the Commission to 
adopt a streamlined effective competition petition process for small 
cable operators. Through this proceeding, we intend to fulfill 
Congress' goal that we ease the burden of the existing effective 
competition process on small cable operators, especially those that 
serve rural areas, through a rulemaking that shall be completed by June 
2, 2015. We seek comment on whether the adoption of a rebuttable 
presumption of effective competition would reflect the current 
multichannel video programming distributor (``MVPD'') marketplace and 
reduce regulatory burdens on all cable operators--large and small--and 
on their competitors, while more efficiently allocating the 
Commission's resources and amending outdated regulations.

II. Background on Effective Competition Rules

    3. In the Cable Television Consumer Protection and Competition Act 
of 1992 (``1992 Cable Act''), Congress adopted certain requirements for 
regulation of cable service rates. Specifically, section 623 of the Act 
indicates a ``preference for competition,'' pursuant to which a 
franchising authority may regulate basic cable service rates and 
equipment only if the Commission finds that the cable system is not 
subject to effective competition. Section 623(l)(1) of the Act defines 
``effective competition'' to mean that:
     Fewer than 30 percent of the households in the franchise 
area subscribe to the cable service of a cable system; \3\
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    \3\ This first type of effective competition is referred to as 
``low penetration effective competition.'' 47 U.S.C. 543(l)(1)(A).
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     the franchise area is (i) served by at least two 
unaffiliated [MVPDs] each of which offers comparable video programming 
to at least 50 percent of the households in the franchise area; and 
(ii) the number of households subscribing to programming services 
offered by [MVPDs] other than the largest [MVPD] exceeds 15 percent of 
the households in the franchise area; \4\
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    \4\ This second type of effective competition is referred to as 
``competing provider effective competition.'' Id. 543(l)(1)(B).
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     a[n MVPD] operated by the franchising authority for that 
franchise area offers video programming to at least 50 percent of the 
households in that franchise area; \5\ or
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    \5\ This third type of effective competition is referred to as 
``municipal provider effective competition.'' Id. 543(l)(1)(C).
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     a local exchange carrier or its affiliate (or any [MVPD] 
using the facilities of such carrier or its affiliate) offers video 
programming services directly to subscribers by any means

[[Page 14897]]

(other than direct-to-home satellite services) in the franchise area of 
an unaffiliated cable operator which is providing cable service in that 
franchise area, but only if the video programming services so offered 
in that area are comparable to the video programming services provided 
by the unaffiliated cable operator in that area.\6\ Section 623 of the 
Act does not permit franchising authority regulation of any cable 
service rates other than the basic service rate.
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    \6\ This fourth type of effective competition is referred to as 
``local exchange carrier,'' or ``LEC,'' effective competition.'' Id. 
543(l)(1)(D). In 1996 Congress added LEC effective competition to 
the statute.
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    4. In 1993, the Commission implemented the statute's effective 
competition provisions. The Commission adopted a presumption that cable 
systems are not subject to effective competition and it provided that a 
franchising authority that wanted to regulate a cable operator's basic 
rates must be certified by the Commission. To obtain such 
certification, a franchising authority files with the Commission FCC 
Form 328, in which it indicates its belief that the cable system at 
issue is not subject to effective competition in the franchise area. 
Unless the franchising authority has actual knowledge to the contrary, 
under the current rules, it may rely on the presumption of no effective 
competition. If a cable operator wishes to prevent the franchising 
authority from regulating its basic service rate, it may rebut the 
presumption and demonstrate that it is in fact subject to effective 
competition. In addition to foreclosing regulation of the cable 
operator's basic rates, a Commission finding that a cable operator is 
subject to effective competition also affects applicability of other 
Commission rules.\7\
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    \7\ See, e.g., id. 47 U.S.C. 543(d) (A cable operator shall have 
a rate structure, for the provision of cable service, that is 
uniform throughout the geographic area in which cable service is 
provided over its cable system. This subsection does not apply to a 
cable operator with respect to the provision of cable service over 
its cable system in any geographic area in which the video 
programming services offered by the operator in that area are 
subject to effective competition); 47 CFR 76.921(a) (No cable system 
operator, other than an operator subject to effective competition, 
may require the subscription to any tier other than the basic 
service tier as a condition of subscription to video programming 
offered on a per channel or per program charge basis).
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III. Changes in the Video Programming Landscape Since the 1992 Cable 
Act

    5. In 1993, when the Commission adopted its presumption that cable 
systems are not subject to effective competition, incumbent cable 
operators had approximately a 95 percent market share of MVPD 
subscribers. Only a single cable operator served the local franchise 
area in all but ``a few scattered areas of the country'' \8\ and those 
operators had ``substantial market power at the local distribution 
level.'' \9\ DBS service had yet to enter the market, and local 
exchange carriers (``LECs''), such as Verizon and AT&T, had yet to 
enter the MVPD business in any significant way.
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    \8\ Implementation of Section 19 of the Cable Television 
Consumer Protection & Competition Act of 1992, First Report, 9 FCC 
Rcd 7442, 7449, ] 15 (1994).
    \9\ Id. at 7449, ] 13.
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    6. Today's MVPD marketplace is markedly different, with cable 
operators facing dramatically increased competition. The Commission has 
determined that the number of subscribers to MVPD service has decreased 
from year-end 2012 to year-end 2013 (from 101.0 million to 100.9 
million) and this decrease is entirely due to cable MVPD 
subscribership, which fell from approximately 55.8 percent of MVPD 
video subscribers (56.4 million) to approximately 53.9 percent of MVPD 
video subscribers (54.4 million). In contrast, DBS's market share 
increased slightly from approximately 33.8 percent of MVPD video 
subscribers (34.1 million) to approximately 33.9 percent of MVPD video 
subscribers (34.2 million), and the market share for telephone MVPDs 
increased significantly from approximately 9.8 percent of MVPD video 
subscribers (9.9 million) to approximately 11.2 percent of MVPD video 
subscribers (11.3 million). DIRECTV provides local broadcast channels 
to 197 markets representing over 99 percent of U.S. homes, and DISH 
Network provides local broadcast channels to all 210 markets. According 
to published data, nearly 26 percent of American households in 2013 
subscribed to DBS service. Given the 15 percent threshold needed to 
constitute competing provider effective competition, on a national 
scale DBS alone has close to double the percentage of subscribers 
needed for competing provider effective competition. As of year-end 
2013, the two DBS MVPDs, DIRECTV and DISH Network, are the second and 
third largest MVPDs in the United States, respectively.
    7. The current state of competition in the MVPD marketplace is 
further evidenced by the outcomes of recent effective competition 
determinations. From the start of 2013 to the present, the Media Bureau 
granted in their entirety 224 petitions requesting findings of 
effective competition and granted four such petitions in part; the 
Commission did not deny any such requests in their entirety. In these 
decisions, the Commission determined that 1,433 communities (as 
identified by separate Community Unit Identification Numbers 
(``CUIDs'')) have effective competition,\10\ and for the vast majority 
of these communities (1,150, or over 80 percent) this decision was 
based on competing provider effective competition.\11\ Franchising 
authorities filed oppositions to only 18 (or less than 8 percent) of 
the 228 petitions. In the four instances in which the Commission 
partially granted a petition for a finding of effective competition, 
the Commission denied the request for a total of seven CUIDs, or less 
than half a percent of the total number of communities evaluated. The 
Commission has issued affirmative findings of effective competition in 
the country's largest cities, suburban areas, and rural areas where 
subscription to DBS is high. To date, the Media Bureau has granted 
petitions for a finding of effective competition affecting thousands of 
cable communities, but has found a lack of effective competition for 
less than half a percent of the communities evaluated since the start 
of 2013. Against that backdrop, we seek comment on procedures that 
could ensure the most efficient use of Commission resources and reduce 
unnecessary regulatory burdens on industry.
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    \10\ A CUID is a unique identification code that the Commission 
assigns a single cable operator within a community to represent an 
area that the cable operator services. A CUID often includes a 
single franchise area, but it sometimes includes a larger or smaller 
area. CUID data is the available data that most closely approximates 
franchise areas.
    \11\ Of the total number of CUIDs in which the Commission 
granted a request for a finding of effective competition during this 
timeframe, 229 (nearly 16 percent) were granted due to low 
penetration effective competition, and 54 (nearly 4 percent) were 
granted due to LEC effective competition. None of the requests 
granted during this timeframe were based on municipal provider 
effective competition. Where a finding of effective competition was 
based on one of the other types of effective competition besides 
competing provider effective competition, it does not mean that 
competing provider effective competition was not present. Rather, it 
means that the pleadings raised one of the other types of effective 
competition, and the Commission thus evaluated effective competition 
in the context of one or more of those other tests.
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IV. Discussion

A. Presumption That Cable Systems Are Subject to Effective Competition

    8. As noted above, at the time of its adoption, the presumption of 
no effective competition was eminently supportable. We seek comment on 
whether market changes over the intervening two decades have greatly

[[Page 14898]]

eroded, if not completely undercut, the basis for the presumption. 
Specifically, we ask whether we should adopt a presumption that cable 
systems are subject to competing provider effective competition, absent 
a franchising authority's demonstration to the contrary. Would such a 
presumption be consistent with current market realities, pursuant to 
which the Commission has found that there is effective competition in 
nearly all of the communities for which it was asked to make this 
determination since the start of 2013?
    9. As explained above, a finding of competing provider effective 
competition requires that (1) the franchise area is ``served by at 
least two unaffiliated [MVPDs] each of which offers comparable video 
programming to at least 50 percent of the households in the franchise 
area;'' and (2) ``the number of households subscribing to programming 
services offered by [MVPDs] other than the largest [MVPD] exceeds 15 
percent of the households in the franchise area.'' \12\ We seek comment 
on whether the facts that over 99.5 percent of effective competition 
requests are currently granted, that over 80 percent of those grants 
are based on competing provider effective competition, and that DBS has 
a ubiquitous presence demonstrate that the current state of competition 
in the MVPD marketplace supports a rebuttable presumption that the two-
part test is met. Is such a rebuttable presumption supported by the 
market changes since 1993, when the presumption of no effective 
competition was first adopted?
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    \12\ 47 U.S.C. 543(l)(1)(B).
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    10. With regard to the first prong of the test, we invite comment 
on whether we should presume that the ubiquitous nationwide presence of 
DBS providers, DIRECTV and DISH Network, satisfies the requirement that 
the franchise area be served by two unaffiliated MVPDs each of which 
offers comparable programming to at least 50 percent of the households 
in the franchise area. The Commission has held in hundreds of competing 
provider effective competition decisions that the presence of DIRECTV 
and DISH Network satisfies the first prong of the test. In fact, the 
Commission has never determined that the presence of DIRECTV and DISH 
Network failed to satisfy the first prong of the competing provider 
test. Moreover, nearly all homes in the U.S. have access to at least 
three MVPDs. And many areas have access to at least four MVPDs. With 
respect to the second prong of the competing provider test, we invite 
comment on whether we should presume that MVPDs other than the largest 
MVPD have captured more than 15 percent of the households in the 
franchise area, given that on a nationwide basis competitors to 
incumbent cable operators have captured approximately 34 percent of 
U.S. households, or more than twice the percentage needed to satisfy 
the second prong of the competing provider test.\13\ Although we 
recognize that not every franchise area has subscribership approaching 
34 percent for MVPDs other than the incumbent cable operator, data show 
that nationwide subscription to DBS service alone is nearly twice that 
required to satisfy the second prong of the competing provider test. 
Further, out of the 1,440 CUIDs for which the Commission has made an 
effective competition determination since the start of 2013, it found 
that 1,150 CUIDs (or nearly 80 percent of the CUIDs evaluated) have 
satisfied the competing provider test. Given these facts, would 
adopting a presumption of competing provider effective competition be 
consistent with the current state of the market? \14\
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    \13\ See supra ] 6 ((34.2 million DBS subscribers + 11.3 million 
telephone MVPD subscribers)/133.8 million U.S. households = 34%, or 
more than twice the 15% threshold).
    \14\ The market changes since the adoption of the original 
presumption do not appear to support a presumption that any of the 
other effective competition tests (low penetration, municipal 
provider, or LEC) are met. We seek comment on the accuracy of this 
observation.
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    11. Based on the analysis above, we seek comment on whether we 
should adopt a presumption that all cable operators are subject to 
competing provider effective competition. Is such a presumption 
warranted even though there may be some franchise areas that are not 
yet subject to effective competition? Based on market developments, is 
effective competition the norm throughout the United States today even 
though there still may be pockets of areas that may not be subject to 
effective competition? Is the most efficient process to establish a 
nationwide presumption that effective competition does exist, and to 
address these pocket areas on a case-by-case basis using the procedures 
we seek comment on below? We also seek comment on any proposals that we 
should consider in the alternative. For example, are there any areas in 
which DBS reception is so limited that the Commission should not 
presume DBS subscribership in excess of 15 percent of households? If 
there are any areas in which the Commission should not presume the 
existence of competing provider effective competition, what approach 
should the Commission take to the effective competition presumption in 
these areas? Should we retain in certain defined geographic areas the 
current presumption that cable operators are not subject to effective 
competition? If commenters support adoption of different rules in 
certain areas, we ask them to support such differentiated treatment 
with specific evidence and clear definitions for the areas in which the 
different rules would apply.
    12. We seek comment on whether reversing the presumption would 
appropriately implement section 111 of STELAR. In section 111, Congress 
directed the Commission ``to establish a streamlined process for filing 
of an effective competition petition pursuant to this section for small 
cable operators,'' and reversing the presumption would establish a 
streamlined process for all cable operators including small operators. 
Congress also stated that ``[n]othing in this subsection shall be 
construed to have any effect on the duty of a small cable operator to 
prove the existence of effective competition under this section.'' 
Would changing the presumption fulfill the Commission's 
responsibilities under section 111? Or, in light of the language in 
section 111 quoted above, would the Commission need to rely on other 
statutory authority to change the presumption and thus be required to 
take action beyond changing the presumption to implement section 111? 
Does section 111 alter or impose any additional duty on a small cable 
operator to prove the existence of effective competition? We note that, 
if this provision were read to restrict the Commission from changing 
the presumption for small operators, it could have the perverse effect 
of permitting the Commission, consistent with market realities, to 
reduce burdens on larger operators but not on smaller ones. We also 
note that section 111 does not by its own terms preclude the Commission 
from altering the burden of proof with respect to effective 
competition. Rather, it simply states that nothing in that particular 
statutory provision shall be construed as speaking to the issue with 
respect to small cable operators.
    13. If we find that adopting a presumption of effective competition 
would not implement STELAR's effective competition provision, then how 
should we implement section 111? Specifically, we invite comment on 
what streamlined procedures, if any, we should adopt for small cable 
operators. We note that STELAR directs us to define a ``small cable 
operator'' in this

[[Page 14899]]

context as ``a cable operator that, directly or through an affiliate, 
serves in the aggregate fewer than 1 percent of all subscribers in the 
United States and is not affiliated with any entity or entities whose 
gross annual revenues in the aggregate exceed $250,000,000.'' If we 
adopt any streamlined procedures for filing an effective competition 
petition, should those procedures apply to all cable operators 
regardless of size? Overall, how can we make the effective competition 
process more efficient and accessible, particularly for small cable 
operators?

B. Procedures and Rule Changes To Implement a New Presumption

    14. In this section, we invite comment on revised procedures and 
rule changes that would be necessary if we decide to implement a 
presumption of effective competition. At the outset, we note that many 
franchising authorities have certified to regulate basic service tier 
rates and equipment based on the existing presumption of no effective 
competition. We seek comment on the appropriate treatment of these 
certifications. If the presumption is ultimately reversed, should these 
certifications be administratively revoked on the effective date of the 
new presumption pursuant to sections 623(a)(1) and (2) because their 
reliance on the presumption of no effective competition would no longer 
be supportable? If such certifications are administratively revoked, 
the franchising authority would have to demonstrate that the cable 
operator is not subject to effective competition pursuant to the 
procedures we seek comment on below before it could regulate rates in a 
community. In such instances, we seek comment on whether -section 
76.913(a) of our rules, which otherwise directs the Commission to 
regulate rates upon revocation of a franchising authority's 
certification, would apply. In this regard, we note that section 
76.913(a) states that ``the Commission will regulate rates for cable 
services and associated equipment of a cable system not subject to 
effective competition,'' and here the revocation would be based on a 
presumption of effective competition. Would a finding that section 
76.913(a) does not apply in this context be consistent with section 
623(a)(6) of the Act, which requires the Commission to ``exercise the 
franchising authority's regulatory jurisdiction [over the rates for the 
provision of basic cable service]'' if the Commission either (1) 
disapproves a franchising authority's certification filing under 
section 623(a)(4) or (2) grants a petition requesting revocation of the 
franchising authority's jurisdiction to regulate rates under section 
623(a)(5)? We note that here we would be administratively revoking the 
franchising authority's jurisdiction under -sections 623(a)(1) and (2), 
rather than based on a determination described in section 623(a)(5). 
Would the one-time revocation of existing certifications following 
adoption of the order in this proceeding necessitate any revisions to 
section 76.913(a) or any other Commission rules? \15\
---------------------------------------------------------------------------

    \15\ See, e.g., 47 CFR 76.914(b).
---------------------------------------------------------------------------

    15. Alternatively, we seek comment on whether certifications should 
be revoked 90 days after the effective date of the new presumption. 
During this 90-day period, a franchising authority with an existing 
certification would have the opportunity to file a new certification 
demonstrating that effective competition does not exist in a particular 
franchise area. If a franchising authority did not file such a new 
certification, then rate regulation would end in that community at the 
conclusion of the 90-day period. If a franchising authority did file a 
new certification, we seek comment on whether that franchising 
authority should retain the authority to regulate rates until the 
Commission completes its review of that certification. We also seek 
comment on whether such a transition process would be consistent with -
section 76.913(a) of our rules and section 623(a)(6) of the Act and 
whether implementing it would require any revisions to section 
76.913(a).
    16. If we were to reverse the presumption, we seek comment on 
procedures by which a franchising authority may file a Form 328 
demonstrating that effective competition does not exist in a particular 
franchise area. We seek comment on whether it would be most 
administratively efficient for franchising authorities, cable 
operators, and the Commission to incorporate effective competition 
showings within the certification process, rather than requiring a 
separate filing. Specifically, when a franchising authority seeks 
certification to regulate a cable operator's basic service tier and 
associated equipment, should it continue to file FCC Form 328? Should 
we revise Question 6 of that form to state the new presumption that 
cable systems are subject to effective competition, and to require a 
supplement to Form 328 which contains evidence adequate to satisfy the 
franchising authority's burden of rebutting the presumption of 
competing provider effective competition with specific evidence that 
such effective competition does not exist in the franchise area in 
question? \16\ Unless a franchising authority has actual knowledge to 
the contrary, should we permit it to continue to presume that the cable 
operator is not subject to any other type of effective competition in 
the franchise area? Under such an approach, the franchising authority 
would not need to submit evidence rebutting the presence of effective 
competition under those other tests. Except as otherwise discussed 
herein, should we retain the existing provisions in section 76.910 of 
our rules, including that a certification will become effective 30 days 
after the date filed unless the Commission notifies the franchising 
authority that it has failed to meet one of the specified requirements? 
\17\ Would such an approach be consistent with a presumption of 
effective competition, and with STELAR's requirement that we streamline 
the effective competition process for small cable operators? We invite 
comment on appropriate procedures, and we welcome commenters to propose 
alternate procedures for the Commission's consideration. For example, 
we note that section 623(a)(4)(B) of the Act provides that a 
certification does not become effective if the Commission finds, after 
notice to the authority and a reasonable opportunity for the authority 
to comment, that ``the franchising authority does not have the legal 
authority to adopt, or the personnel to administer, such regulations.'' 
Based on a presumption of competing provider effective competition, 
should the Commission make such a finding of a lack of legal authority, 
and how could the Commission comply with the required notice and 
opportunity to comment as stated in the statute if it takes such an 
approach? Should we make any other changes to FCC Form 328, or to the 
rules or procedures that apply to franchising authority certifications? 
We note that

[[Page 14900]]

the Commission has authority to dismiss a pleading that fails on its 
face to satisfy applicable requirements, and thus, the Commission on 
its own motion could deny a certification based on failure to meet the 
applicable burden. Should the cable operator have an opportunity before 
the 30-day period expires to respond to the franchising authority's 
showing?
---------------------------------------------------------------------------

    \16\ The form's instructions for completing Question 6 would be 
revised accordingly. In addition, we note that instruction number 2 
to the form has not been updated to reference LEC effective 
competition, even though the form itself contains such an update. 
For accuracy and completeness, we propose to revise instruction 
number 2 to reference LEC effective competition, in addition to 
making any necessary changes to Question 6.
    \17\ See id. 76.910(e). In practice, it is the Media Bureau that 
evaluates certifications and related pleadings on behalf of the 
Commission, and the Media Bureau would continue to do so. This NPRM 
contains references to the Commission's role in the franchising 
authority certification process. Although our rules refer to the 
Commission having these responsibilities, the Media Bureau has 
delegated authority to act on certification matters under 47 CFR 
0.61.
---------------------------------------------------------------------------

    17. We seek comment on procedures by which a cable operator may 
oppose a certification. Should we permit a cable operator to file a 
petition for reconsideration pursuant to section 76.911 of our rules, 
demonstrating that it satisfies any of the four tests for effective 
competition? Should the procedures set forth in section 1.106 of our 
rules continue to govern responsive pleadings thereto? If a franchising 
authority successfully rebuts a presumption of competing provider 
effective competition, a cable operator seeking to demonstrate that low 
penetration, municipal provider, or LEC effective competition exists in 
the franchise area would bear the burden of demonstrating the presence 
of such effective competition, whereas we would presume the presence of 
competing provider effective competition absent a franchising 
authority's demonstration to the contrary. We ask commenters whether we 
should retain the requirement in section 76.911(b)(1) that the filing 
of a petition for reconsideration alleging that effective competition 
exists would automatically stay the imposition of rate regulation 
pending the outcome of the reconsideration proceeding. Should we make 
any revisions to existing section 76.911 of our rules? If the 
Commission does not act on a section 76.911 petition for 
reconsideration within six months, should the petition be deemed 
granted based on the same finding that would underlie a presumption of 
competing provider effective competition, i.e., that the ubiquitous 
nationwide presence of DBS providers has made effective competition the 
norm throughout the United States? We seek comment on whether a deemed 
granted process can be implemented consistent with the requirements of 
sections 623(a)(2) and/or 623(a)(4). As with any Commission action, the 
franchising authority would have the right to file a petition for 
reconsideration or an application for review to the full Commission of 
any certification denial or petition for reconsideration grant.\18\ We 
seek comment on any other changes to our rules that would best 
effectuate the process for certification of franchising authorities to 
regulate the basic service tier and petitions for reconsideration of 
such certifications.
---------------------------------------------------------------------------

    \18\ See 47 CFR 1.106 and 1.115. Cable operators would have the 
same recourse for certification grants.
---------------------------------------------------------------------------

    18. Our rules currently permit cable operators to request 
information from a competitor about the competitor's reach and number 
of subscribers, if the evidence establishing effective competition is 
not otherwise available. We invite comment on whether we should amend 
our rules to provide that if a franchising authority filing Form 328 
wishes to demonstrate a lack of effective competition and necessary 
evidence is not otherwise available, the franchising authority may 
request directly from an MVPD information regarding the MVPD's reach 
and number of subscribers in a particular franchise area. What would be 
the costs and benefits of such an approach? As currently required for 
such requests by cable operators, should we require the MVPD to respond 
to such a request within 15 days, and should we retain the requirement 
that such responses may be limited to numerical totals related to 
subscribership and reach? Existing section 76.907(c), which governs 
such requests in the context of petitions for a determination of 
effective competition and which also applies to petitions for 
reconsideration of certification pursuant to section 76.911(a)(1), 
would remain in effect.
    19. We ask commenters to indicate whether any other revisions to 
the rules would be necessary to implement a new effective competition 
framework in which we presume the existence of competing provider 
effective competition. In addition, we invite comment on whether the 
new rules and procedures for effective competition should go into 
effect once the Commission announces approval by the Office of 
Management and Budget (``OMB'') of the rules that require such 
approval.
    20. Similarly, if the Commission adopts an order implementing the 
presumption that cable operators are subject to effective competition, 
how should we address cable operator petitions seeking findings of 
effective competition that are pending as of the adoption date? Should 
any such petitions that are pending as of the effective date of the new 
rules be granted? Or should such petitions be adjudicated on the merits 
under the new presumption of competing provider effective competition? 
Should different procedures apply if a pending petition seeking a 
finding of effective competition was opposed? We also seek comment on 
any other appropriate manner in which we should dispose of these 
pending petitions.
    21. If the Commission adopts a new presumption, we invite comment 
on whether the new procedures we seek comment on above overall would be 
less burdensome for cable operators including small operators, and 
whether fewer effective competition determinations would require 
Commission adjudication. Approximately how many franchising authorities 
with current certifications will submit a new FCC Form 328, and for 
approximately how many CUIDs? We invite comment on whether we should 
retain section 76.907 of our rules, which governs petitions for a 
determination of effective competition. If a franchising authority is 
certified after a presumption of competing provider effective 
competition is adopted, a cable operator may at a later date wish to 
file a petition for a determination of effective competition 
demonstrating that circumstances have changed and one of the four types 
of effective competition exists. If we retain section 76.907 and adopt 
a presumption of competing provider effective competition, we would 
need to revise section 76.907(b) to reflect the new presumption.
    22. We invite comment on whether franchising authorities, including 
small franchising authorities, would face significant, unreasonable 
burdens in preparing revised Form 328, including the attachment 
rebutting a presumption of competing provider effective competition. 
Would any such burdens be justified given the prevalence of effective 
competition in the market today? Should we take any actions to mitigate 
the burdens on franchising authorities, particularly small franchising 
authorities, or do so few franchising authorities expend the resources 
needed to regulate basic cable rates that separate procedures are not 
needed? If commenters seek different rules applicable to small 
franchising authorities, what rules should we adopt and how should we 
define ``small franchising authority'' in this context? For example, 
the Regulatory Flexibility Act (``RFA'') defines ``small governmental 
jurisdictions'' as ``governments of cities, counties, towns, townships, 
villages, school districts, or special districts, with a population of 
less than fifty thousand.''
    23. What are the costs and benefits that would result from the 
adoption of a presumption of competing provider effective competition? 
Would such a presumption ease significant burdens that cable operators 
currently face in filing effective competition petitions

[[Page 14901]]

under the current presumption that is inconsistent with market 
realities? Would such a presumption also conserve Commission resources 
by significantly reducing the number of effective competition 
determinations that the Commission needs to adjudicate? While 
franchising authorities would face the costs of demonstrating a lack of 
competing provider effective competition, we invite comment on whether 
these costs would be modest given the small number of affected 
franchise areas due to the prevalence of effective competition 
throughout the nation, and whether they would be outweighed by the 
significant cost-saving benefits of a presumption that is consistent 
with today's marketplace. Finally, what would be the costs and benefits 
associated with streamlining the effective competition process for 
small cable operators?

V. Procedural Matters

A. Initial Regulatory Flexibility Act Analysis

    24. As required by the Regulatory Flexibility Act of 1980, as 
amended (``RFA''), see 5 U.S.C. 603, the Commission has prepared this 
present Initial Regulatory Flexibility Analysis (``IRFA'') concerning 
the possible significant economic impact on small entities by the 
policies and rules proposed in the Notice of Proposed Rulemaking 
(``NPRM''). Written public comments are requested on this IRFA. 
Comments must be identified as responses to the IRFA and must be filed 
by the deadlines for comments provided on the first page of the NPRM. 
The Commission will send a copy of the NPRM, including this IRFA, to 
the Chief Counsel for Advocacy of the Small Business Administration 
(``SBA''). See 5 U.S.C. 603(a). In addition, the NPRM and IRFA (or 
summaries thereof) will be published in the Federal Register.
1. Need for, and Objectives of, the Proposed Rules
    25. In the NPRM, the Commission seeks comment on how it should 
improve the effective competition process. Specifically, it asks 
whether it should adopt a rebuttable presumption that cable operators 
are subject to effective competition. Pursuant to the Communications 
Act of 1934, as amended (the ``Act''), a franchising authority is 
permitted to regulate basic cable rates only if the cable system is not 
subject to effective competition.\19\ As a result, where effective 
competition exists, basic cable rates are dictated by the marketplace 
and not by regulation. In 1993, the Commission adopted a presumption 
that cable operators are not subject to effective competition, absent a 
cable operator's demonstration to the contrary.\20\ Given the changes 
to the video marketplace that have occurred since 1993, including in 
particular the widespread availability of Direct Broadcast Satellite 
(``DBS'') service, we now seek comment on whether to reverse our 
presumption and instead presume that cable operators are subject to 
effective competition. Such an approach would reflect the fact that 
today, based on application of the effective competition test in the 
current market, the Commission grants nearly all requests for a finding 
of effective competition. If the Commission were to presume that cable 
operators are subject to effective competition, a franchising authority 
would be required to demonstrate to the Commission that one or more 
cable operators in its franchise area is not subject to effective 
competition if it wishes to regulate cable service rates. We intend to 
implement policies that are mindful of the evolving video marketplace.
---------------------------------------------------------------------------

    \19\ See 47 U.S.C. 543(a)(2).
    \20\ See 47 CFR 76.906.
---------------------------------------------------------------------------

    26. In initiating this proceeding, we are also implementing part of 
the STELA Reauthorization Act of 2014 (``STELAR''), enacted on December 
4, 2014. Specifically, section 111 of STELAR directs the Commission to 
adopt a streamlined effective competition petition process for small 
cable operators. Through this proceeding, we intend to fulfill 
Congress' goal that we ease the burden of the existing effective 
competition process on small cable operators, especially those that 
serve rural areas, through a rulemaking that shall be completed by June 
2, 2015. We seek comment on whether the adoption of a rebuttable 
presumption of effective competition would reflect the current 
multichannel video programming distributor (``MVPD'') marketplace and 
reduce regulatory burdens on all cable operators--large and small--and 
on their competitors, while more efficiently allocating the 
Commission's resources and amending outdated regulations.
2. Legal Basis
    27. The proposed action is authorized pursuant to sections 4(i), 
4(j), 303(r), and 623 of the Communications Act of 1934, as amended, 47 
U.S.C. 154(i), 154(j), 303(r), and 543, and section 111 of the STELA 
Reauthorization Act of 2014, Public Law 113-200, section 111, 128 Stat. 
2059 (2014).
3. Description and Estimate of the Number of Small Entities To Which 
the Proposed Rules Will Apply
    28. The RFA directs agencies to provide a description of, and where 
feasible, an estimate of the number of small entities that may be 
affected by the proposed rules, if adopted. The RFA generally defines 
the term ``small entity'' as having the same meaning as the terms 
``small business,'' ``small organization,'' and ``small governmental 
jurisdiction.'' In addition, the term ``small business'' has the same 
meaning as the term ``small business concern'' under the Small Business 
Act. A small business concern is one which: (1) Is independently owned 
and operated; (2) is not dominant in its field of operation; and (3) 
satisfies any additional criteria established by the SBA. Below, we 
provide a description of such small entities, as well as an estimate of 
the number of such small entities, where feasible.
    29. Small Governmental Jurisdictions. The term ``small governmental 
jurisdiction'' is defined generally as ``governments of cities, 
counties, towns, townships, villages, school districts, or special 
districts, with a population of less than fifty thousand.'' Census 
Bureau data for 2011 indicate that there were 89,476 local governmental 
jurisdictions in the United States. We estimate that, of this total, a 
substantial majority may qualify as ``small governmental 
jurisdictions.'' Thus, we estimate that most governmental jurisdictions 
are small.
    30. Wired Telecommunications Carriers. The 2007 North American 
Industry Classification System (``NAICS'') defines ``Wired 
Telecommunications Carriers'' as follows: ``This industry comprises 
establishments primarily engaged in operating and/or providing access 
to transmission facilities and infrastructure that they own and/or 
lease for the transmission of voice, data, text, sound, and video using 
wired telecommunications networks. Transmission facilities may be based 
on a single technology or a combination of technologies. Establishments 
in this industry use the wired telecommunications network facilities 
that they operate to provide a variety of services, such as wired 
telephony services, including VoIP services; wired (cable) audio and 
video programming distribution; and wired broadband Internet services. 
By exception, establishments providing satellite television 
distribution services using facilities and infrastructure that they 
operate are included in this industry.''

[[Page 14902]]

The SBA has developed a small business size standard for wireline firms 
within the broad economic census category, ``Wired Telecommunications 
Carriers.'' Under this category, the SBA deems a wireline business to 
be small if it has 1,500 or fewer employees. Census data for 2007 shows 
that there were 3,188 firms that operated for the entire year. Of this 
total, 2,940 firms had fewer than 100 employees, and 248 firms had 100 
or more employees. Therefore, under this size standard, we estimate 
that the majority of businesses can be considered small entities.
    31. Cable Companies and Systems. The Commission has developed its 
own small business size standards, for the purpose of cable rate 
regulation. Under the Commission's rate regulation rules, a ``small 
cable company'' is one serving 400,000 or fewer subscribers, 
nationwide. According to SNL Kagan, there are 1,258 cable operators. Of 
this total, all but 10 incumbent cable companies are small under this 
size standard. In addition, under the Commission's rules, a ``small 
system'' is a cable system serving 15,000 or fewer subscribers. Current 
Commission records show 4,584 cable systems nationwide. Of this total, 
4,012 cable systems have fewer than 20,000 subscribers, and 572 systems 
have 20,000 subscribers or more, based on the same records. Thus, under 
this standard, we estimate that most cable systems are small.
    32. Direct Broadcast Satellite (``DBS'') Service. DBS service is a 
nationally distributed subscription service that delivers video and 
audio programming via satellite to a small parabolic ``dish'' antenna 
at the subscriber's location. DBS, by exception, is now included in the 
SBA's broad economic census category, ``Wired Telecommunications 
Carriers,'' which was developed for small wireline firms. Under this 
category, the SBA deems a wireline business to be small if it has 1,500 
or fewer employees. Census data for 2007 shows that there were 3,188 
firms that operated for the entire year. Of this total, 2,940 firms had 
fewer than 100 employees, and 248 firms had 100 or more employees. 
Therefore, under this size standard, the majority of such businesses 
can be considered small. However, the data we have available as a basis 
for estimating the number of such small entities were gathered under a 
superseded SBA small business size standard formerly titled ``Cable and 
Other Program Distribution.'' The 2002 definition of Cable and Other 
Program Distribution provided that a small entity is one with $12.5 
million or less in annual receipts. Currently, only two entities 
provide DBS service, which requires a great investment of capital for 
operation: DIRECTV and DISH Network. Each currently offers subscription 
services. DIRECTV and DISH Network each report annual revenues that are 
in excess of the threshold for a small business. Because DBS service 
requires significant capital, we believe it is unlikely that a small 
entity as defined by the SBA would have the financial wherewithal to 
become a DBS service provider.
    33. Open Video Systems. The open video system (``OVS'') framework 
was established in 1996, and is one of four statutorily recognized 
options for the provision of video programming services by local 
exchange carriers. The OVS framework provides opportunities for the 
distribution of video programming other than through cable systems. 
Because OVS operators provide subscription services, OVS falls within 
the SBA small business size standard covering cable services, which is 
``Wired Telecommunications Carriers.'' The SBA has developed a small 
business size standard for this category, which is: all such firms 
having 1,500 or fewer employees. Census data for 2007 shows that there 
were 3,188 firms that operated for the entire year. Of this total, 
2,940 firms had fewer than 100 employees, and 248 firms had 100 or more 
employees. Therefore, under this size standard, the majority of such 
businesses can be considered small. In addition, we note that the 
Commission has certified some OVS operators, with some now providing 
service. Broadband service providers (``BSPs'') are currently the only 
significant holders of OVS certifications or local OVS franchises. The 
Commission does not have financial or employment information regarding 
the entities authorized to provide OVS, some of which may not yet be 
operational. Thus, at least some of the OVS operators may qualify as 
small entities.
    34. Small Incumbent Local Exchange Carriers. We have included small 
incumbent local exchange carriers in this present RFA analysis. A 
``small business'' under the RFA is one that, inter alia, meets the 
pertinent small business size standard (e.g., a telephone 
communications business having 1,500 or fewer employees), and ``is not 
dominant in its field of operation.'' The SBA's Office of Advocacy 
contends that, for RFA purposes, small incumbent local exchange 
carriers are not dominant in their field of operation because any such 
dominance is not ``national'' in scope. We have therefore included 
small incumbent local exchange carriers in this RFA analysis, although 
we emphasize that this RFA action has no effect on Commission analyses 
and determinations in other, non-RFA contexts.
    35. Incumbent Local Exchange Carriers (``ILECs''). Neither the 
Commission nor the SBA has developed a small business size standard 
specifically for incumbent local exchange services. The appropriate 
size standard under SBA rules is for the category Wired 
Telecommunications Carriers. Under that size standard, such a business 
is small if it has 1,500 or fewer employees. Census data for 2007 shows 
that there were 3,188 firms that operated for the entire year. Of this 
total, 2,940 firms had fewer than 100 employees, and 248 firms had 100 
or more employees. Therefore, under this size standard, the majority of 
such businesses can be considered small entities.
4. Description of Projected Reporting, Recordkeeping, and Other 
Compliance Requirements
    36. The NPRM invites comment on whether the Commission should 
presume that cable operators are subject to competing provider 
effective competition, with the burden of rebutting this presumption 
falling on the franchising authority. If such an approach is adopted, a 
franchising authority seeking certification to regulate a cable 
system's basic service would file FCC Form 328, including a 
demonstration that the franchising authority has met its burden. 
Franchising authorities are already required to file FCC Form 328 to 
obtain certification to regulate a cable system's basic service, but 
the demonstration rebutting a presumption of competing provider 
effective competition would be a new requirement. Cable operators, 
including small cable operators, would retain the burden of 
demonstrating the presence of any other type of effective competition, 
which a cable operator may seek to demonstrate if a franchising 
authority rebuts the presumption of competing provider effective 
competition. A cable operator opposing a certification would be 
permitted to file a petition for reconsideration pursuant to section 
76.911 of our rules, as is currently the case, demonstrating that it 
satisfies any of the four tests for effective competition. The 
procedures set forth in section 1.106 of our rules would continue to 
govern responsive pleadings thereto. While a certification would become 
effective 30 days after the date filed unless the Commission notifies 
the franchising authority otherwise, the filing of a petition for 
reconsideration based on the presence

[[Page 14903]]

of effective competition would automatically stay the imposition of 
rate regulation pending the outcome of the reconsideration proceeding.
    37. Some franchising authorities have current certifications that 
will be in place as of the effective date of the new rules. The NPRM 
asks whether, if the presumption is ultimately reversed, these 
certifications should be administratively revoked on the effective date 
of the new presumption. The NPRM also asks how the Commission should 
address cable operator petitions seeking findings of effective 
competition that are pending as of the adoption date of a presumption 
of competing provider effective competition, including whether the 
Commission should grant any such petitions.
5. Steps Taken To Minimize Significant Economic Impact on Small 
Entities and Significant Alternatives Considered
    38. The RFA requires an agency to describe any significant 
alternatives that it has considered in reaching its proposed approach, 
which may include the following four alternatives (among others): ``(1) 
The establishment of differing compliance or reporting requirements or 
timetables that take into account the resources available to small 
entities; (2) the clarification, consolidation, or simplification of 
compliance and reporting requirements under the rule for such small 
entities; (3) the use of performance, rather than design standards; and 
(4) an exemption from coverage of the rule, or any part thereof, for 
small entities.''
    39. Overall, the Commission seeks to adopt an approach that will 
more closely correspond to the current marketplace, and it aims to 
lessen the number of effective competition determinations addressed by 
the Commission and thus to reduce regulatory burdens on cable operators 
and their competitors, and to more efficiently allocate the 
Commission's resources and amend outdated regulations. In paragraphs 
21-23 of the NPRM, the Commission considers the impact of procedures 
implementing a presumption of competing provider effective competition 
on all entities, including small entities. The Commission invites 
comment on whether the new procedures it seeks comment on overall would 
be less burdensome for cable operators, including small operators, and 
whether fewer effective competition determinations would require 
Commission adjudication. The NPRM asks whether franchising authorities, 
including small franchising authorities, would face significant, 
unreasonable burdens in preparing revised Form 328, including the 
attachment rebutting a presumption of competing provider effective 
competition. The NPRM asks whether any such burdens would be justified 
given the prevalence of effective competition in the market today, and 
whether the Commission should take any actions to mitigate the burdens 
on franchising authorities, particularly small franchising authorities. 
If commenters seek different rules applicable to small franchising 
authorities, the Commission asks what rules it should adopt and how it 
should define ``small franchising authority'' in this context. Overall, 
the Commission solicits alternative proposals, and it will welcome 
those that would alleviate any burdens on small entities. The 
Commission will consider alternatives to minimize the regulatory impact 
on small entities. For example, the NPRM seeks comment on any proposals 
that it should consider in the alternative, including whether there are 
any areas in which DBS reception is so limited that the Commission 
should not presume DBS subscribership in excess of 15 percent of 
households. Additionally, the NPRM asks whether the Commission should 
implement an alternate approach of presuming that the franchising 
authority lacks legal authority to adopt rate regulations, based on a 
presumption of competing provider effective competition.
6. Federal Rules That May Duplicate, Overlap, or Conflict With the 
Proposed Rule
    40. None.

B. Initial Paperwork Reduction Act Analysis

    41. This document contains proposed new or revised information 
collection requirements, including the processes that would apply if 
the Commission adopts a rebuttable presumption of effective 
competition. The Commission, as part of its continuing effort to reduce 
paperwork burdens, invites the general public and the Office of 
Management and Budget (``OMB'') to comment on the information 
collection requirements contained in this document, as required by the 
Paperwork Reduction Act of 1995, Public Law 104-13 (44 U.S.C. 3501-
3520). In addition, pursuant to the Small Business Paperwork Relief Act 
of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4), the Commission 
seeks specific comment on how it might ``further reduce the information 
collection burden for small business concerns with fewer than 25 
employees.''

C. Ex Parte Rules

    42. Permit-But-Disclose. This proceeding shall be treated as a 
``permit-but-disclose'' proceeding in accordance with the Commission's 
ex parte rules. 47 CFR 1.1200 et seq. Persons making ex parte 
presentations must file a copy of any written presentation or a 
memorandum summarizing any oral presentation within two business days 
after the presentation (unless a different deadline applicable to the 
Sunshine period applies). Persons making oral ex parte presentations 
are reminded that memoranda summarizing the presentation must (1) list 
all persons attending or otherwise participating in the meeting at 
which the ex parte presentation was made, and (2) summarize all data 
presented and arguments made during the presentation. If the 
presentation consisted in whole or in part of the presentation of data 
or arguments already reflected in the presenter's written comments, 
memoranda or other filings in the proceeding, the presenter may provide 
citations to such data or arguments in his or her prior comments, 
memoranda, or other filings (specifying the relevant page and/or 
paragraph numbers where such data or arguments can be found) in lieu of 
summarizing them in the memorandum. Documents shown or given to 
Commission staff during ex parte meetings are deemed to be written ex 
parte presentations and must be filed consistent with rule 1.1206(b). 
In proceedings governed by rule 1.49(f) or for which the Commission has 
made available a method of electronic filing, written ex parte 
presentations and memoranda summarizing oral ex parte presentations, 
and all attachments thereto, must be filed through the electronic 
comment filing system available for that proceeding, and must be filed 
in their native format (e.g., .doc, .xml, .ppt, searchable .pdf). 
Participants in this proceeding should familiarize themselves with the 
Commission's ex parte rules.

D. Filing Requirements

    43. Comments and Replies. Pursuant to sections 1.415 and 1.419 of 
the Commission's rules, 47 CFR 1.415, 1.419, interested parties may 
file comments and reply comments on or before the dates indicated on 
the first page of this document. Comments may be filed using the 
Commission's Electronic Comment Filing System (ECFS). See Electronic 
Filing of Documents in Rulemaking Proceedings, 63 FR 24121 (1998).

[[Page 14904]]

     Electronic Filers: Comments may be filed electronically 
using the Internet by accessing the ECFS: https://fjallfoss.fcc.gov/ecfs2/.
     Paper Filers: Parties who choose to file by paper must 
file an original and one copy of each filing. If more than one docket 
or rulemaking number appears in the caption of this proceeding, filers 
must submit two additional copies for each additional docket or 
rulemaking number.
    Filings can be sent by hand or messenger delivery, by commercial 
overnight courier, or by first-class or overnight U.S. Postal Service 
mail. All filings must be addressed to the Commission's Secretary, 
Office of the Secretary, Federal Communications Commission.
     All hand-delivered or messenger-delivered paper filings 
for the Commission's Secretary must be delivered to FCC Headquarters at 
445 12th St. SW., Room TW-A325, Washington, DC 20554. The filing hours 
are 8:00 a.m. to 7:00 p.m. All hand deliveries must be held together 
with rubber bands or fasteners. Any envelopes and boxes must be 
disposed of before entering the building.
     Commercial overnight mail (other than U.S. Postal Service 
Express Mail and Priority Mail) must be sent to 9300 East Hampton 
Drive, Capitol Heights, MD 20743.
     U.S. Postal Service first-class, Express, and Priority 
mail must be addressed to 445 12th Street SW., Washington, DC 20554.
    44. Availability of Documents. Comments, reply comments, and ex 
parte submissions will be available for public inspection during 
regular business hours in the FCC Reference Center, Federal 
Communications Commission, 445 12th Street SW., CY-A257, Washington, DC 
20554. These documents will also be available via ECFS. Documents will 
be available electronically in ASCII, Microsoft Word, and/or Adobe 
Acrobat.
    45. People with Disabilities. To request materials in accessible 
formats for people with disabilities (Braille, large print, electronic 
files, audio format), send an email to fcc504@fcc.gov or call the FCC's 
Consumer and Governmental Affairs Bureau at (202) 418-0530 (voice), 
(202) 418-0432 (TTY).

E. Additional Information

    46. For additional information on this proceeding, contact Diana 
Sokolow, Diana.Sokolow@fcc.gov, of the Policy Division, Media Bureau, 
(202) 418-2120.

VI. Ordering Clauses

    47. Accordingly, it is ordered that, pursuant to the authority 
found in sections 4(i), 4(j), 303(r), and 623 of the Communications Act 
of 1934, as amended, 47 U.S.C. 154(i), 154(j), 303(r), and 543, and 
section 111 of the STELA Reauthorization Act of 2014, this Notice of 
Proposed Rulemaking is adopted.
    48. It is further ordered that, the Commission's Consumer and 
Governmental Affairs Bureau, Reference Information Center, shall send a 
copy of this Notice of Proposed Rulemaking, including the Initial 
Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of 
the Small Business Administration.

List of Subjects in 47 CFR Part 76

    Administrative practice and procedure, Cable television, Reporting 
and recordkeeping requirements.

Federal Communications Commission.
Marlene H. Dortch,
Secretary.

Proposed Rules

    For the reasons discussed in the preamble, the Federal 
Communications Commission proposes to amend 47 CFR part 76 as follows:

PART 76--MULTICHANNEL VIDEO AND CABLE TELEVISION SERVICE

0
1. The authority citation for part 76 continues to read as follows:

    Authority: 47 U.S.C. 151, 152, 153, 154, 301, 302, 302a, 303, 
303a, 307, 308, 309, 312, 315, 317, 325, 339, 340, 341, 503, 521, 
522, 531, 532, 534, 535, 536, 537, 543, 544, 544a, 545, 548, 549, 
552, 554, 556, 558, 560, 561, 571, 572, 573.

0
2. Revise Sec.  76.906 to read as follows:


Sec.  76.906  Presumption of effective competition.

    In the absence of a demonstration to the contrary, cable systems 
are presumed to be subject to effective competition pursuant to Sec.  
76.905(b)(2).
0
3. Amend Sec.  76.907 by revising paragraph (b) to read as follows:


Sec.  76.907  Petition for a determination of effective competition.

* * * * *
    (b) If the cable operator seeks to demonstrate that effective 
competition as defined in Sec.  76.905(b)(1), (3) or (4) exists in the 
franchise area, it bears the burden of demonstrating the presence of 
such effective competition. Effective competition as defined in Sec.  
76.905(b)(2) is governed by the presumption in Sec.  76.906.

    Note to paragraph (b): The criteria for determining effective 
competition pursuant to Sec.  76.905(b)(4) are described in 
Implementation of Cable Act Reform Provisions of the 
Telecommunications Act of 1996, Report and Order in CS Docket No. 
96-85, FCC 99-57 (released March 29, 1999).

* * * * *
0
4. Amend Sec.  76.910 by revising paragraph (b)(4) to read as follows:


Sec.  76.910  Franchising authority certification.

* * * * *
    (b) * * *
    (4) The cable system in question is not subject to effective 
competition. The franchising authority must submit specific evidence 
demonstrating its rebuttal of the presumption in Sec.  76.906 that the 
cable operator is subject to effective competition pursuant to Sec.  
76.905(b)(2). Unless a franchising authority has actual knowledge to 
the contrary, the franchising authority may presume that the cable 
operator is not subject to effective competition pursuant to Sec.  
76.905(b)(1), (3) or (4).

    Note to paragraph (b)(4): The franchising authority bears the 
burden of rebutting the presumption that effective competition 
exists with evidence that effective competition, as defined in Sec.  
76.905(b)(2), does not exist in the franchise area. If the evidence 
establishing the lack of effective competition is not otherwise 
available, franchising authorities may request from a multichannel 
video programming distributor information regarding the multichannel 
video programming distributor's reach and number of subscribers. A 
multichannel video programming distributor must respond to such 
request within 15 days. Such responses may be limited to numerical 
totals.

* * * * *
[FR Doc. 2015-06541 Filed 3-19-15; 8:45 am]
BILLING CODE 6712-01-P