f!("-'...,.\- '. -:- ORlC'(~,f"~L Before the '-' ., ; \:. \ FEDERAL COMMUNICATIONS COMMISSION Washington, DC
In the Matter of Implementation ) of sections of the Cable Television ) MM DOCke~ Consumer Protection and Competition ) Act of 1992 ) o.f\~ ) vI ... J D Rate Regulation ) FEDtR,d' 'X C().(IJUM '99."t.I OFFICEor t'AT~s REPLY COMMENTS OF BELLSOUTH IN RESPONSE TO~f~~[~~~~ THIRD NOTICE OF PROPOSED RULEMAKING '
BellSouth Telecommunications, Inc. ("BellSouth") will
limit its Reply Comments to one issue in this proceE~ding:
whether external treatment should be accorded to the cost of
cable system upgrades required by local franchise
authorities.
A number of cable commenters argue that any facility
upgrade required by a local franchising authority, E~ither
explicitly or implicitly, should qualify for external cost
treatment under the Commission's cable price cap
regulations, even if those upgrades are for the purpose of
providing non-cable services. I At least one cable operator
argues that facility upgrades merely agreed to but not
I For example, see Comments of TKR Cable Company arguing for external treatment of "costs of voluntary upgrade features if undertaken as part of the required upgrade" (p.S) and the cost of expanded channel capacity to provide "a broadband communications platform" that will "eventually allow delivery of a fully interactive service to all customers" (po 13). required by local franchising authorities should qualify for external cost treatment. 2
Such expansive and self-serving definitions of which upgrades should qualify for external cost treatment would undermine the efficacy of price cap regulation and lead to anti-competitive cost shifting; and, as such, would be contrary to the pUblic interest goals of Congress and the
Commission.
As is more fully explained by BellSouth in an earlier filing in this Docket,3 the Commission generally should reject requests for external (exogenous) treatment of capital costs of system improvements under its cable price cap regulations. Those regulations already accomodate the reasonable capital investment needs of most cable upgrades.
On the other hand, where specific upgrade costs associated with providing one-way cable services are mandated by local franchising authorities, it is appropriate to afford such costs external treatment to the extent they would not have been incurred otherwise and are not already reflected in the
Commission's cable price cap regulations. Indeed, BellSouth would expect the same exogenous treatment under the
Commission's price cap regulations for telephone companies
2 See, Comments of -Time Warner Entertainment Company, L.P. at p. 11.
3 See BellSouth Comments On Petitions For Reconsideration, filed July 21, 1993, pp. 3-8.
2 should upgrade requirements be imposed upon it by
regulators.
Notwithstanding the above, the Commission should not
allow cable operators to abuse this narrow exception by
interpreting it so broadly as to apply to upgrade costs
incurred to provide non-cable services (two-way interactive
video and telecommunications services) or those simply
agreed to by local franchising authorities. BellSouth joins
in the Comments of the Local Governments to the extent they
argue that cable operators should be prevented from seeking
to justify regulated rates above the benchmark based on
upgrades for non-cable services. 4 Such non-cable costs
include upgrades to provide two-way interactive services,
new personal communications and telephone services,
including the cost of related electronics (switches, file
servers, etc.) and support systems. The fact that a local franchise authority may agree to such investment is a
legally insufficient reason for requiring cable ratepayers to pay for it. Moreover, such services are not even subject to the jurisdiction of local franchising authorities.
Conclusion
For the above reasons, BellSouth urges the Commission to reject the self-serving arguments of those cable operators who seek to use the local franchise requirement
4 See Comments of the Local Government, p. 9.
3 argument •• a "bsck door" to cross-suosidize upqrades to provide non-oable service•. Respectfully submitted,
BELLSOUTH TELECO~ICATIONS, INC.
By:
October 7, 1993
4 I hereby certity that I have this 7th day or October, 1993 aerv1ceO all parties to this action with a copy of the foregoing REPLY COMMENTS OF 8ELLSOUTH IN RESPONSE TO THIRD NOTICE OF PROPOSED RULEMAKING by placing a true and correct copy of &lame in the United states mail, postaqe prepaid, addressed to the parties as ••t forth on the attached service list.
Gordana Coley SERVICE LIST MM 92-266 Dick Glass, CETar William J. Catto President Cities of Inverness, crystal Satellite Dealers Assoc. River, Dunnellon and McIntosh 602 N. Jackson 452 Pleasant Grove Road Greencastle, IN 46135 Inverness, FL 3445:2
Frank Smith Herb Longware Conroller Cable Communications of Media General Cabla of Willsboro Fairfax county, Inc. P.O. Box 625 14650 L.. Road Willsboro, NY 12996 Chantilly, VA 22021
Porter Arneill Rita K. B10011 Executive Director Cable Franchise Coordinator FUSE City ot Atlanta 2590 Walnut Street, Suite 5 68 Mitchell street, sw Boulder, CO 80302 suite 2500 Atlanta, GA 30335-0319
City of Denison Frederick E. Turnage City council Mayor P.O. Box 347 City of Rocky Mount Denison, TX 15021-0347 P.O. Box 1180 Rocky Mount, Ne 27802-1180
Kate Horsfield George Lonqmeyer Executive Director Village Manager Video Data Bank Village of Schaumburg 37 South Wabash Avenue 101 Schaumburg Court Chicaqo, IL 60603 Schaumbur9, IL 60193-1899
Robert J. Sachs William Lilley III Howard B. Homonoff Policy Communications, Inc. Continental Cablevision 1615 L street, N.W. The Pilot House suite 4550 Lewis Wharf Washington, D.C. 20036 Boston, MA 02110 Paul Glist Judy Rabeau steven J. Horvitz Public Information OtticQr Susan W. Westfall city of Commeroe Continental cableviaion 2535 Commerce Way 1919 pennsylvania, AV•. ~ N.W. Commerce, CA 90040 Suite 200 Washington, D.C. 20006
Gene KimmQlman Perry Daniel Bradley Stillman ElIily ZSrub4ker Consumer Federation of America John Risk 14~4 16th st., N.W. communications support Group suite 604 P.O. Box 10968 Washinqton, D.C. 20036 Santa Ana, CA 92711-0968
Suzanne M. Heaton Bruce A. Larkin Georg. A. Hanover Director, Department of Consumer Electronics Group Administrative Services Electronic Industries Assoc. City of For Lauderdale 2001 Pennsylvania Avenue, N.W. 100 N. Andrews Aveune Washington, D.C. 20006 Fort Lauderdale, FL 33301
Carole Stannard-Gabor Richard F Alteri, President Executive Director Charles B. Stockdale, Counsel Northwest Municipal Cable Television Assoc. ot NY cable Council 126 state street 112 N. Belmont Avenue Albany, NY 12207 Arlington Heights, lL 60004 Bruce Crest Martin T. McCUe AdIlinistrator USTA Metropolitan Area Communications 900 19th Street, N.W. Commiaaion suite 800 1815 NW 169th Place Waahington, D.C. 20006-2105 suite 6020 Beaverton, OR 98006-4886
Ivan C. Evilsizer Willie Wong Montana Public Service Mayor Commission City of Mesa P.O. Box 202601 P.O. Box 1466 Helena, NT 69620-2601 Mesel, AZ 85211
Norman E. Det~ra, Jr. Henry L. Baumann Township of Sprinq Benjamin F.P. Ivins The Berk.hire Jack N. Goodman P.O. Box 877 National Association of Readinq, PA 19603 Broadcasters 1771 N street, N.W. washinqton, D.C. 20036
John H. Midlen, Jr. Loui. A. Ieakoff MGB Associates, Inc. International Family 3238 Prospect street, N.W. Entertainment, Inc. washinqton, D.C. 2000, 1000 Centerville Turnpike Virqinia Beach, VA 23463
Riohard M. Kes.el Diane M. Bunk Exeoutive Director Cable Agent New York state Consumer city ot Fall River Protection Board One Government Center 99 washinqton Avenue Fall River, KA 02722 Albany, NY 12210 Edwin Peck John W. witt Town of North Redington 8each curti. M. Pitzpatrick 259 4th Avenue North Deborah L. Berqer S~. Petersburq, FL 33701 City of San oieqo 525 "B" street, Suite 2100 San Diego, CA 92101-4411
Thomas D. creighton, #1980X William M. Marticorena political Subdivision. ot League of california citi•• State of Minn••ota and the Associated Entities 1200 The Colonnade P.O. Box 1950 5500 Wayzata Boulevord Costa MeSA, CA 92628-19~O Minneapoli., MN 55416
St.ephen R. RolSS Patrick L. Willis Xathryn A. Hutton City of Manitowoc Intermedia Partners P.O. Box 1597 888 16th street, NW Manitowoc, WI 54221-1597 Suite 300 Washington, D.C. 20006
Riohard H. Berman Bruce D. Solder Karen Gartenberg Lisa w. Schoen~hal.r LeBoeut, Lamb, Leiby & MacRae Turner Broadcasting System 125 West 55th Street 701 Pennsylvania Ave., N.W. New York, NY 10019 Suite 900 Washington, D.C. 20004
Pre.ton Padden William J. Ray, P.E. Molly Pauker superintendent Fox Broadcasting Company Glasqow Electric Plant Board 5151 Wisconsin Avenue, N.W. P.O. Box 1809 Washington, D.C. 20016 Glasqow, Kentucky 42142-1809 Susan Rester Miles H. Russel Frisby, Jr. Citi•• of Minnesota Barbara L. Waite 4700 IDS Center Counsel tor Xayor an~ City of Minneapolis, MN 55402 council ot Baltimore 1201 New York Avenue, N.W. suite 1000 Washington, D.C. 20005
Robert A. Ginsburg Howard D. Friedman Metropolitan Dada county Dispute Resolution Group, Inc. Metro Dade Center S5 Park Street suite 2801 Montclair, NJ 01042 111 N.W. 1st street Miami, FL 33128-1993
Dr. Edward H. Salmon Riohard Blumenthal Jeremiah F. O'Conner Attorney General of state Carmen J. Armenti of Connecticut state of New Jersey Office of Attorney General Board of Regulatory commissioner S5 Elm Street Two Gateway Center Hartford, CT 06106 Newark, NJ 07102
Ernest D. Preate, Jr. Lorna Veraldi Thomas L. Welch Assistant Professor David R. weyl School of Journalism and Attorney General of pennsylvania Mass Communication 14th Floor, strawberry Square Florida International Univ. Harrisburg, PA 17120 North Miami Campus Academic Bldg. II, 130-A North Miami, PL 331.81
James A. Penney David J. Bruqger Northland communications corp. Marilyn Kohrman-Gillis 1201 Third Avenue America'S Public Television Suite 3600 stations Seattle, WA 98101 1350 connecticut Ave., N.W. Washington, D.C. 20036 Janice L. Lower Aaron I. Fleischman Michael R. Po.tar Charles S. Walsh MUnicipal Franchising Authorities Arthur H. Harding 1615 M street, N.W. Matthew D. Emmer suite 800 Adelphia Communications, ~ ~ washington, D.C. 20036 1400 sixteenth st., N.W. sixth Floor washington, D.C. 20036
Gary S. Smithwick Philip L. Verveer Arthur V. Belendiuk Sue D. Blumenfeld Robert W. Healy Laurence D. Atlas City of Bowinq Green, etc. Melissa Newman lQ90 M street, N.W. suite 600 Suite 510 1155 21st st., N.W. Washington, D.C. 20036 washington, D.C. 20036-3302
John L. Grow stuart F. Feldstein NY State Commission on R. Bruce Beckner Cable Television Nashoba Communications corninq Tower Bldg. 1400 Sixteenth street, N.W. Empire state Plaza Sixth ]l'100r Albany, NY 12223 Washington, D.C. 20036
William T. Hiller stephen R. Ros. Jonathan s. Liebowitz Kathryn R. Hutton Coalition of Municipal and Armstronq Utilities, Inc. Other Local Govern.ental 888 16th Street, N.W. Franchisinq Authorities Washington, D.C 20006 Suite 1400 1101 Fourteenth Street, N.W. Washington, D.C. 20005
Brenda L. Fox Terry G. Hahn Peter H. Feinberg Square D Company J.G. Harrinqton 601 13th street, N.W. Suite 500 5th Floor North 1255 23rd Street, N.W. Washlnqton, D.C. 20005 Washington, D.C. 20037 John I. Dav!. Ward w. wueste, Jr. HQE03J43 Donna C. GreqCJ Marcell F. Morrell, HQE03J35 Blade Communications, ~ ~ GTE Service corporation 1776 ~ Street, N.W. P.O. Box 152092 Washington, D.C. 20006 Irving, Tx 75015-2092
Henry M. Rivera Ja.n H. Suwinaki Ann Bavender Timothy J. Regan Liberty cable company Fiber Optics Division, 1250 connecticut Ave., N.W. Cable Infrastructure Committee Suite 800 suite 800 Washington, D.C. 20036 2001 Pennsylvania Avenue, N.W. Washington, D.C. 20006
W. James MacNaughton Gardner F. Gille8pie Liberty Cable Company Jacqueline P. Cleary 90 Woodbridge Center Coalition of Small Systems Suit. 610 Operators, Prime Cable Woodbridge, NJ 07095 555 13th street, N.W. waShington, D.C. 20004
Howard J. Barr John J. Sie caribbean Communications Corp. James E. Meyers 200 Montgomery Building Encore Media Corporation 177' K str••t, N.W. 5335 Wisconsin Avenue, N.W. suite 200 Suite 300 Washinqton, D.C. 20006 Wa8hinqton, D.C. 20015-2003
Dr. Ron D. Katznelson stephen R. Ettros Multichannel Communication Sciences James H. Bwalt 3550 Dunhill street Robert J. UnljJar San Diego, CA 92121 community Antenna Television Association, Inc. P.O. Box 1005 Yairtax, VA 22030-1005 Howard J. Symons Linda Shea Cia.alar Leslie S. Calandro competitive Cable Association Jennifer A. Johns 1400 Sixteenth st., N.W. Cablevison systems corporation Suite 501 701 Penn8ylvania Ave., N.W. WaDhinqton, D.C. 20036 Suite 900 washington, D.C. 20004
Matthew L. Leibowitz Paul J. SinaeDrand city of Miami Beaoh Dawn G. Alexander One S.E. Third Avenue Wirel... Cable Association Suite 1450 888 16th street, N.W. Miami, FL 33131 Washinqton, D.C. 20006-4~103
Paul -Rodger Mary KcDermott Charles D. Gray Shelley I. Harms James Bradford Ramsay NYNEX National Association of 120 Bloomingdale Road Regulatory utility commissioners White Plain&, NY 1060~ 1102 ICC Bldg. P.O. Box 684 washinqton, D.C. 2004
James P. Tuthill Fritz E. Attaway Lucille M. Mate. Frances Seqhers Pacific Telesis, Pacific Bell • Motion Picture Association Nevada Bell of America 140 New Montgomery Street 1600 Eye Street, N.W. Room 1526 Washinqton, D.C. 20006 San Francisco, CA 94105
Alan F. Ciamporcero wayne Coy, Jr. Pacific Telesis, Pacific Bell , Media Ganeral Cable of Fairfax Nevada Bell 1333 New Hampshire Ave., N.W. 1275 Pennsylvania Ave., N.W. Suite 600 Washington, D.C. 20004 Washington, D.C. 20036 John R. Wilner stephen A. Brenner Bryan cave USA Networks The Lenfest Group 1230 Avenue ot the Americas iOO Thirt.enth StrQQt, N.w. New York, NY 10020 Suite 600 Washington, D.C. 20006-3960
Douglas w. McCormick Ben M. McMakin Group Vice President City Manager Hearst/ABC-VIAOOM Entertainment City of Bandon 36-12 35th Avenue P.O. Box 67 Astoria, NY 11106 Bandon, OR 97411
Edwin M. Durso Daniel L. Brenner ESPN, Inc. Michael S. schooler 605 Third Avenue NTCA New York, NY 10152-0180 1724 Massachusetts Ave. NW washinqton, DC 20036
Robert J. Rlni Richard B. Wiley stephen E. Coran Philip V. Permut steven A. Lanoellotta 1776 K str.et, N.W. consortium of Small Cable Washington, D.C. 20006 System Operators 1350 Connecticut Avenue, N.W. Suite 900 Washington, D.C. 20036
Terry G. Mahn Robert Weisberg walter steimel, Jr. President MUltiplex Technology, Inc. Mountain Cablevis10n 601 Thirteenth, N.W. 145 E. 92 Street (PHA) 5th Floor North New York, NY 10128 washington, D.C. 20005 Ted Coombes Bruce A. Arm8tronq Direotor ot Government Relations Executive Vice President American Public Power Assoc. Simmons communications 2301 M street, N.W. One Landmark square, Suite 1400 Washington, D.C. 20037 stamford, CT 06901
Chistopher B. Fager Robert H. silber El Entertainment Television National Captioning Institute 5670 Wilshire BlVd. 5203 Leesburq Pike, 15th Floor Los Anqeles, Ca 90036 Falls Church, VA 2:2041
Donna Coleman Gregg Martin Firestone El Entertainment Television Monroe County, Florida 1776 K street, N.W 1212 Geor9ia street Washington, D.C. 20006 Key West, FL 33040
David Cosson Don Moler L. Marie Guillory League of Kansas Municipalities National Telephone cooperative 112 S.W. 7th ASsociation Topeka, KS 66603 2626 Pennaylvania Ava., N.W. washington, D.C. 20037
Jud Colley Gary M. Epstein President Karen Brinkllann Community Broadcaster. Association Direotv, Inc. P.O. Box 191229 Latham , Watkins Dallas, TX 75219 suite 1300 1001 pennsylvania Ave., N.W. Washinqton, D.C. 20004 Michael E. Glover Don Schroer Bell Atlantic Chairman 1710 H street, N.W. Alaska Public utilities Waahington, D.C. 20006 Commission 1016 Wa.t 6th Avenue suite 400 Anohoraqa, AX 99501-2963
Mark L. Evans Michelle Marchetta Kenyon Allan I. Horowitz Town of Moraga Anthony F. Shelley 999 Harrison street Bell Atlantic Suite 1300 xatropolitan Square Oakland, CA '4612 Suite 900 655 Fifteenth Street, N.W. Washinqton, D.C. 20005
Dr. Ron O. Katznelson Michael G. Oliva (P-29038) Multichannel Communication Bloominqdale Communieations Sciences, Inc. 232 s. capitol Avenue 3550 Dunhill street Suite 1000 San Dieqo, CA 92121 Lanalnq, MI 48933
Angela J. Campbell James F. Pitzgerald, Jr. Sharon L. Webber President Center for Media Education ~ ~ Total TV of California citizens communications Center 27-700 Avenida Belleza Institute for Public Representation Cathedral city, CA 92234 Ceorq8town University Law Center 600 New Jersey Avenue, N.W. washington, D.C. 20001
Edward W. Hummers, Jr. William B. Rauter Paul J. Feldman 103 Montqomery street Nationwide Communications Inc., etc. Raleigh, He 27607 Fletcher, Heald' Hildreth 11th Floor 1300 North 17 Street Ro••lyn, VA 22209 Robert L. Hoegle Jerry Parker Timothy J. Fitzqibbon Superstar Connection Liberty Media 3801 S. Sheridan Road Carter, Ledyard' Milburn Tulsa, OK 74145 1350 I street, N.W. suite 870 Washington, DC 20005
Ronald A. 5i8981 Eric E. Breisach ROy R. Russo Howard & Howard Attorney., P.C. J. Brian OeB010e suite 400 Wometco cable, st. al. 107 W. Michigan Avenue Cohn and Mark. Kalamazoo, MI 49007 1333 New Hampshire Ave., NW suite 600 Washington, DC 20036
3. Bruoe Irv!J:1CJ Judith L. Neuatadter Sur CorporatJ.on P.o. Box 2252 Bailey, Hunt, Jones' Busto Wailuku, Maui, HI 96793 Courvoisier centre, Suite 300 501 Brickell Rey Drive Miami, FL 33131-2623
David B. Gluck Dennis Nil•• Mark R. Boyes Paul, Johnson, Park & Niles Affiliated Regional P.O. Box 870 Communications Wailuku~ Maui, HI 96793 600 Las Colin•• Boulevard suite 2200 Irving, TX 75039
Michaolas P. Miller J. Roger Wollenberq Joseph Van Eaton William R. Richardson, Jr. Lisa S. Celb Chrietopher M. Heimann King County, WA, at. al. 2445 M street, N.W. Miller & Holbrook. washington, DC 20037-1420 1225 Nineteenth street, NW wa.hinq~on, DC 20036 David M. Silverman Diane Killory suite 200 Morrison & Foerster 1919 Pennsylvania Ave., N.W. su1te 5500 Wa.hin~on, DC 20006 2000 Pennsylvania Ave., N.W. Wa~hinqton, DC 20006
Roy A. Sheppard Fleishman & Walsh Cable Servic•• 1400 Sixteenth st., N.W. Box 608 Washington, DC 20036 3am••~own, NO 58.0~-0608
Norman M. sinel Brian Conboy Patrick J. Grant Sue Blumenfeld stephanie M. Phillips Francis Buono William E. Cook, Jr. 3 Lafayette center, 6th Floor 1200 New Hampshire Ave., N.W. 1155 21st st., N.W. Washington, DC 20036 washinqton, DC 20036
LeX J. Smith Spencer Rait21 Alan H. Blankenheimar Jerry Yanowitz Joel W. Nolllkin Jeffrey Sin.heimer Jodi 1(. Feuerhelm california Cable TV As~oc. Charles A. Blanchard 4341 Piedmont Ave. Shirley A. Kaufman Oakland, CA 94611 P.o. Box 400 Phoenix, AZ 85001-0400
Frederick Kuperberq Frank W. Lloyd Maureen Whalen Mintz, Levin, Cohn, Ferris, The Disney Channel Glovaky , Popeo, P.C. 3800 W. Alameda Ave. Suite 900 Burbank, CA 91505 701 Pennsylvania Ave., N.W. washington, DC 20004 Charlotte J. Robak Henry Solomon Apollo CableVision Inc. William Byrnes Suit.e 104 Haley, Bader' Potts 13100 Alondra Blvd. suite 900 cerritos, CA 90701 4350 N. Fairtax Dr. Arlinqton, VA 22203-1633
William Leventer Trudi McCollum Foushee President Crown Media, Inc. Video Data SystQms One Calleria Tower 653 Old Willets Path Suite 1650 Hauppauqe, NY 11788 13355 Noel Road Dallas, TX 75240
Peter Tannenwald Paul V. Enqle Xathleen L. Franco Engle 8roadcastinq Arent, Fox, Kintner, Plotkin' Rahn 104 Bellevue Ave. 1050 Connecticut Ave., N.W. Hammonton, NJ 08037 Wa.hinqton, DC 20036
Mark J. Palchick Larry Whitney Baraft, Koerner, Olender' HochhQrq Waa~ern Cabled systems suite 300 818 Douglas Ave. 5335 Wisconsin Ave., N.W. Redwood City, CA 94063 washinqton, DC 20015-2003 Paul J. Berman G. H. Ward Alane C. Weixel Sky cablevls1on, Ltd. Covington , Burling P.O. Box 65 P.o. Box 7566 Meridian, MS 39302 Washinqton, DC 20044
carolyn Burke DeCesare Patricia M. Ryan Office of the County Attorney 75 E. tanc~ster Ave. Suite 423 Ardmore, PA 19003 115 S. Andrews Ave. Fort Lauderdale, 'L 33301
John Glynn Richard W. Winegarden There.a Czarl5ki Coarsegold cablevis1on, Inc. MD Office of People's Counsel P.O. Box 870 9th Floor Murrieta, CA 92564-0870 231 E. Baltimore st. Bal~imore, MD 21202
Robin Portno1 G. W. xretchmae Dept. of the PUblic Advocate Medford cable TV P.O. Box 46005 724 west Cherokee Newark, NJ 07101 Medford, OK 73759
Jord~n Clark United Homeowners Assoc. Suite 345 1511 K st., N.W. W.shinqton, DC 20005 Samuel A. Simon suite 230 901 15th st., N.W. waahington, DC 20005-2301