Belorc the FHIJERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554

In the Matter of

Tmplementation ofthe ) Consumer Protection and Competition ) Act of 1992 ) CS Docket No. 01-290 ) ) Development ofCompetition and Diversity) In Video Programming Distribution: ) Section 628(c) ofthe ComIlllmications Act: ) ) Sunset ofExclusive Contract Prohibition )

REPLY COMMENTS OF ALTRIO COMMUNICATIONS, INC

Altrio Commlmicalions, Inc., Los Angeles 18 a competitive

telecommunications provider that in Dect:mber of 2001 began offering analog and digital video,

high-speed Internet and voice services to residential subscribers in the Los Angeles market.

Altrio is offering such services in the City ofArcadia and will be soon providing such services in

Pasadena and Monrovia (encompassing approximately 100,000 homes). AUrio has franchise

applications pending ill Burbank, Glendale, Sierra Madre, and La Cal1ada Flintridge and portions

of the City and County of Los Angeles. As such it has a vital interest in the preservation uf the

program exclusivity ban set forth in Section 628 (c)(2)(D) ofthe Cable Consumer Protection Acl of 1992. 1. INTRODUCTION.

As a preliminary matter, Altrio notes that it has participated in filing initial

cornment(s) along with a consortium of other parties in the initial round of comments for

this docket.] Reply comments are also being filed today which reflect the collective

views of the Altrio and its fellow commentcrs. Altrio's purpose in 1iling today is not to

repeat the arguments reflected in those pleadings, but to relate some specific instances of

conduct by the incumbent cable television operators that suppOli continuation of the ban

on exclusive contracts by vertically integrated program providers.

2. HISTORY OF ALTRIO.

Altrio is perhaps the newest telecommunications services operator in the country.

It was founded in mid 2000 with the specific purpose of providing service in the greater

Los Angeles market. Tn contrast to a number of other competitive providers, Altrio has

focused on using its committed finances (which now exceed 180 million dollars) and an

experienced management team to provide voice, video and data in a single market. Altrio

is not only pursuing local authorizations for cable television franchises, but has been

authorized in Pasadena and Monrovia to operate Open Video System(s) (OVS). Tt has

OVS applications pending in Sierra Madre and La Canada Flintridge. Cable television franchise applications are pending in the rcmainingjurisdiclions noted above. Altrio also holds a Certificate of Public Convenience and Necessity from the California Public

IAltrio participated in [he Juint Comments and Joint Reply Comments filed by Wilkinson Barker Knauer,

H LLP, along with Bell SOLlth Entertainment, LLC; the Independent Multi.Family Communications Council ("[MCC ); Qwest Oroadband Services, Inc, ("QwC'st"); and The Wireless Communications Association International, Inc, ("WCA"). Altrio bas joined as a member ofthe Broadbllnd Service Providers Association ("BSPA") in filing Page 2 of 9 Utility Commission to provide telephone service.

3. EXCLUSIVITY IN PROGRAMMING.

Exhibit 1 is a copy of Alliio's current video servlce offering in Arcadia. In

addition, a summary of Altrio's Internet and telephony services with sample pricing lor

all of its services are attached as Exhibit 2. A number of the largest multiple system

operators ("MSOs") have, as noted in the Joint Reply Comments, made much of the

decrease in the number of vertically owned programming networks from 1992 (when the

sunset provision was adopted) to the present. It is clear from Exhibit 1 that some

nineteen analog channels out of eighty television and other video channels (about 25%),

and an additional fourteen channels on the digital tier are controlled by vel1ically

integrated programmers, such as Cox Cable, Cablevision, and AOL Time Wamer Inc.

An additional thirty-one premium channels are similarly owned. This constitutes an

important part ofthe programming offered hy Altrio, WitllOut which it could not compete with the incumbent cable operators in Los Angeles.2 Any decrease in thc level of vertical integration is attributable most likely to the sale by Viacom ofits cable television systems and the AT&T spin off of Liberty, which in tum holds an attributable ownership interest in Fox. It is not simply the number of channels but their unique nature - such as CNN, the premium cable television news and information channel, and tlle vast number of premium HBO and Cincmax channels as well as In Demand, Ahtio's primary pay-per­ view provider, which illustrate the value of these channels.

wmmcnts.

Page30f9 It is disingenuous for the MSOs to argue that the denial of this important

progranlming would allow a terrestrial competitor sueh as Altrio to compete with the

incumbent monopolists. For the same MSOs to argue that competition is now mature and

robust based solely on the succcss of Direct TV and EchoStar is again without

foundation. The two sets of joint reply comments noted above, deal more fully with

these arguments.

The real world situation that AHrio faces is put into sharper focus by the direct

attempts by MSOs to use their market power to deny Altrio programming. The following

two examples clearly demonstrate the dangers faced by Albia in this regard. Prior to the

signing of an agreement with Fox, and while Fox was still subject to the prohibition

against exclusive program agreements, Fox representatives urged Altrio to sign

agreements for Fox Sports Atlantic, .Fox Sports Central and Fox Sports Pacific

immediately. These three vital digital sports channels were heing sought by Charter

Communications, a direct competitor of Altrio in Pasadena, Burbank and Glendale, on an

exclusive basis. Such a deal with Charter would have been possible once the Liberty

spin-off took place and Fox was no longer prohibited from signing an exclusive

ab'Tccmcnt. Altrio acted quickly to sign an agreement in the summer of2001, ensurmg access under the current contract telTIl to this very popular local programming. As other commenters have mentioned, sports programming stands high on the list of valuable

, The incumhents include Charter Communications, AOL Time Warner Inc., Adelphia CommunicatIOns and AT&T Uroadband. Page4of9 services for which powerful MSOs will pressure programmers to provide on an exclusive

basis, ,md without which Altrio cannot compete with the incumbent.

The second concrete example involves the negotiations between AUria and

AHClDisney involving retransmission rights to the local ABC owned and operated

station in Los Angeles (KABC). One ofthe initial demands for compensation related to a

demand for carriage of the Soap Network, and that demand was made on a number of

occasIOns. As discussions continued on the actual temlS of the retransmission

agreement, Altrio was informed that it would no longer be permitted to carry Soap

Network because the network had negotiated an exclusive agreement for certain areas

(denoted hy zip codes) in the Los Angeles market. While we were never lold with whom

the agreement was reached, the zip codes do correspond to areas served by Charier

Communications and include the cities ofPasadena, Glendale and Burbank, which AItno

will serve. The Commission is aware that ABC/Disney is not a vertically integrated

programmer and thus could enter into such an agreement. The point Altrio wishes to

make is that incumbent MSOs can and will seek such agreements as a means of stilling

competition as they try to take hold in the Los Angeles market. ABC network programming is about as essential a program network as one can imagine and this kind of conduct, if penllitted, will make it extremely difficult for a terrestrial competitor to succeed.

While nol necessarily germane to this proceeding, Adelphia, one of the other principal video competitors in this market, has engaged in selective price cutting in

Arcadia and Monrovia where Altrio has begun to compete. The new prices are

Page 5 of 9 approximately one half of the existing video prices in Adelphia's other nearby cable

communities and came just six months after a substantial price increase of $4 (a 12%

increase). At the same time, Adelphia added extensively to its 811alog and digital lineup,

obviously incurring substantial programming cost increases. Such conduct is again a

clear indication that incumbent MSOs have the market power and resources to engage in

aggressive competitive conduct of all types. Having the ability to deny important

programs to competitors would be an additional, powerful weapon.

4. IMPACT ON THE TELECOMMUNICATIONS ACT OF 1996.

Altrio also wishes to point out that it is not simply a cutting edge video provider

of analog and digital services and video on demand - it provides the public with

residential, facility based competition in the telephony arena and Internet data services at

speeds unavailable in almost any market in the United States (sec .Exhibit 2). Tt is

precisely this kind of facility based competition that the Telecommunications Act of 1996

sought to promote. The provision of all three services is essential to enable Altno and

other similarly situated competitors to spend the billions of dollars necessary to bui ld

their state of the art telecommunications networks. While the revenue from all three

services is important, video programming is the most important clement that enables

Altrio to convince consumers to switch providers. Of course, without a full array of

programming, in most cases the consumer will not consider a change of video providers.

Consumers will not switch if their favorite sports, news and information and premium

channels are not made available by a competitor.

Page6of9 5. CONCLUSION.

For all ofthe reasons noted above and the points made in the Joint Comments and

Reply Commenls noted above, AItrio supports the Commission's continuation of the

program exclusivity ban as set forth in Section 628(c)(2)(D). The ban has proven to be a

positive factor in the development afDBS competition and is essential to development of

terrestrial competition, not only in the video arena but for residential telephony and high

speed data.

Respectively submitted,

lsi

Stephen R. Ross Senior Vice-President and General Counsel Altria Communications, Inc.

Page7of9 Exhibit 1

Altrio's Arcadia Line-up

Page 8 of 9 Altrio Communications, Inc. Exhibit 1 Vertically Vertically Arcadia BoxSeat • Analog Owned BoxSeat Plus· Digital Basic Owned ~ s.rm ~ GENERAL ENTERTAINMENT GENERAL ENTERTAINMENT 2 KCBS Channel 2 102 Altrio In Demand Movie Previews X 3 KeET Channel 28 103 Great American Country 4 KNBC Channel 4 104 VH1 Country 5 KTLA Channel 5 105 VH1 Classic 6 Arcadia Community Television 106 MTV2 7 KABC Cllarmel 7 107 MTV X 8 KPXN Channel 30 108 BET On Jazz 9 KCAL Channel 9 109 EI STYLE X 10 KDQC Channel 56 110 Lifetime Real Women 11 KTTV Channel 11 111 X 12 KMEX Channel 34 112 B-Movie Mania 13 KCOP Channel 13 113 The Sundance Channel X 14 KTBN Channel 40 114 Trio 15 KXLA Clmnnel 44 115 Ovation 16 Arcadia School DistrIct 116 BSC America 17 CSPAN 2 18 KSCI Channel 18 19 KLCS Channel 58 KIDS 20 TV Guide Channel 131 Boomerang X 21 KVEA Channel 52 132 Nick Too 22 KWHY Channel 22 133 Noggin 23 KRCA Ch::mnel 62 134 Discovery Kids X 24 KJLA Channel 57 135 Nick Games & Sports 25 Galavision 136 Family Network 26 KHSC Channel 46 SPORTS 27 ESPN NEWS & INFORMATION 28 ESPN 2 150 History International 29 Fox Sports West 151 Court TV X 30 Fox Sports West 2 152 Biography Channel 31 Speedvision X 153 Discovery Health X 32 The Golf Channel X 154 Discovery Civilization X NEWS & INFORMATION 155 Discovery Home &. Leisure X 33 The Weather Channel 156 Do It Yourself Network 34 CSPAN 157 Discovery Science X 35 Reserved 158 Discovery Wings X 36 Reserved 159 CNBC Digital 37 CNN Headline News X 160 Bloomberg TV 38 Fox News 161 CNN Money X 39 eNN X 40 CNBC 41 MSNBC SPORTS 42 Tech TV 170 Fox Sports Digital Atlantic 43 National Geographic Channel 171 Fox Sports Digital Central 44 The History Channel 172 Fox Sports Digital Pacific 45 Discovery Channel X 173 ESPN Extra 46 The Learning Channel X 174 NBA.COM 47 Animal PlanAt X 175 Fox Sports World 48 Arts & Entertainment 176 ESPN Classic 49 Bravo X 177 Outdoor Life Network 50 The Travel Channel X 178 ESPN News 51 Home & Garden TV 179 CNN Sports Illustrated X 52 ave X 180 TVG 53 Food Network X 54 E! Entertainment TV X Foreign Language FAMILY 190 CTN 55 Game Show Network 191 CCTV 56 Fox Family 192 International Channel 57 Lifetime 56 Womens Entertainment X 801 ·845 Music Choice 59 Oxygen 60 Lifetime Movie Network

Altrio Communications, Inc. Exhibit 1 Vertically ArcadIa BoxSeat - Analog (Continued) Owned FAMIl.Y 61 Cartoon Network X 62 Nickelodeon 63 Toon Disney 64 Disney 65 TV Land GENERAL ENTERTAINMENT 66 Comedy Central X 67 TNT X 08 FX 63 TBS X 70 USA 71 Sci-Fi Channel 72 WGN 73 TNN 74 Fox Movies 75 AMe X 76 Independent Film Channel X 77 eMT 96 VH1 97 Shop NBC 98 BET " MTV Altrio Communications, Inc. Exhibit 1 Vertically VQrtically Arcadia Premium Networks Owned Foreign 1.anguage Premiums Owned ! ENCORE SUPER PAK 420 TV Asia 300 STARZ! 421 ZEE TV 301 STARZ! East 302 STARZI 2 303 STARZ 2 E 425 TV 5 304 STARZ! Family 305 STARZI Family E 306 STARZI Cinema 430 The Filipino Channel 307 STARZ! Cinema E 308 Black STARZI 30Q Black STARZ! E 435 RAI 310 Encore 311 Encore E 312 Encore Love Stories 440 ART 313 Encore Love Stories E 314 Encore Westerns 315 Encore Westerns E 450 TV Russia 316 Encore Mystery 317 Encore Mystery E 318 Encore True Stories 455 TV JAPAN 319 Encore True Stories E 320 Encore Action 321 Encore Action E Altrio in Demand Pay-Per-View X 500 Altrio in Demand Preview C~lannel X HBD The Works X 501 534 In Demand 1-34 330 HBO X 331 HBO East X 332 HBD Plus X Adult Hot Networks 333 HBO Plus E X 600 Spice Hot Network 334 HBO Signature X 601 Saice Hot Zone 335 HBD Signature E X 602 Vivid TV 336 HBD Comedy X 610 Playboy TV 337 HBO Comedy E X 611 Spice Platinum Live 338 HBD Zone X 339 HBD Zone E X 340 HBO Latino X Sports Packages 341 HBD Latino E X 700 - 707 ESPN SPORTS PACKAGE

Mu/tiMAX from X NBA SPORTS 350 Cinemax X 710 NBA.COM (Barker) 351 Cinemax East X 711-715 NBA Sports Package 1 352 More Max X 716-721 NBA Sports Package 2 353 More Mox E X 354 W Max X 355 @Max X 730 - 737 Game 1 8 MLB & NHL 350 5 Star Max X 357 Outer Max X 358 Action Max X Video On Demand 359 Action Max E X 900 Altrio Intertainer 360 Thriller Max X 301 Thriller Max E X Altrio Communications, Inc. Exhibit 1 VertIcally Arcadia Premium Networks (Continued) Owned SHOWTfME UNLIMITED 370 Showtime 371 Showtime East 372 Showtime 2 373 Showtime 2 E 374 Showtime 3 375 Showtime 3 E 376 Showtime Extreme 377 showtlme Extreme E 378 Showtime Beyond 379 Showtime Beyond E 380 Showtime Women 381 Showtime Next 382 Sundance Channel 383 384 The Movie Channel E 385 The Movie Channel 2 386 The Movie Channel 2 E 387 Flix 388 Flix E

ALTRIO EN ESPANOL 400 CNN en Espcmol X 401 Internacional 402 Fox Sports World Espanol 403 Discovery Espanol X 404 MTV En Espanol 405 VHUno 406 Cine. Latino 407 Toon Disney Espanol X 408 Canal Sur 409 Lotin TV 410 Puma TV 411 TV Chile 412 MUN2 413 Hispanic TV Ne.twork Exhibit 2

Service & Rate Information

Page 9 of 9 BoxSeat" Price Per Monlh

BoxSeat $39.95 80 TV Channels BoxSeat·Plus $47.95 Includij~: So;:Seill, Digilal Recefi!jjt& Digital BasicSewroo First Premium Ch. $12.00 Your c1lOice 01 STARZI Encore Super Pak will124 channels, HBO The Worns with 14 channels, MllltiMAX from Cinemax with 12 channel~, Showtime Unlimited with 20 channels, Allrio en EspanoJ with 15 Spanish language channels, TV Asia with ZEE TV, TV 5, The Filipino Channel, RAI, ART, or TV Hu~sia Each Add. Premium Ch. $5.00 TV JAPAN $25.00 Additional Digital·Receiver $6.95 Mirror dig;lal services on addi~oh!lJTV's

Video-On-Demand Pnca £ach Ch.900 $.99-$4.95 Altrio Intertainer Video-Dn-Demand Ch.900 $9.95 Adult Video,On-Demand

Pay-Per.View f'me Each Ch.501·534 $3.95 Altrio InDemand Pay-Per-View Ch.600 $6.95 Spree Hot Network Ch.601 $6.95 Spice Hot Zone Ch.602 $8.95 Vivid TV Ch.610 $6.95 Playboy TV

ProSpeed" A la Carte A la Carle Per Monlh Per Month Connection Only ProSpeed 500 $49.95 $29.95 ProSpeed1500 $99.95 $79.95 ProSpeed 3000 $129.95 $109.95

TrueTel'" PriCC Per Month Telephone Service $17.25 TelepMne'w/BoXSeat $10.30 Local Toll $O.05/min Residential Long Distance $O.07/min LD Access $3.95 Call Waiting Pac~age $4.95 Call WaiUng, Call Wailillll Cancel, 3·WayCaliing, Call FWD, CaJl. FWD euily& Cilil fWD 000'1 Ans. Caller ID Package $8.00 Callar 10, Caller 10 BlOCking, Calling Name So Calling Name Blodling Voice Mali $7.50 Famiiy Voice Mail $9.95 4 Mem!:lers Calling Card $1.00

Money Saving Packages Per Monlh The Need For Speed Pkg$140.00 BoxSeat Plus, including STARll Encore Super Pak or your choice of ally other premium network, ProSpood 1500, TrueTel service, with 3·way callillg, call waiUng, caillolWurd and vui~e mail The Trlpie PlayPkg $120.00 Bo:<8eat Plus, With STARZI,EI:ICOreSuper"F;~ckand your ChO,ipEl,llIJI'II),lilherpremiumrrstworks, ProSpoocH500 high-~p:eedlnlerfl9l$aiViGe:TfuoTel sl)rviijijiiiiiB'kl'way Galling, call waiting, call foiWardand volceifiail The Great Escape Pkg $99.00 BoxSeat Plus, wilh STARZ! Encom Super Pak and your choice 01 two olher premium networks, ProSpaed 500 high·speed Internet service

The You're CoveredP~g $98.00 EkixSeat Plus, Pro$peed 5OOhigh'sjJeed Inlernei'service, TrueTel service with 3·way calling, call waiting andtalilorwurding

The Premium View Pkg $74.95 BoxSeat Pbs, with STARZl Encore Super Pak and your dJoice of three premium nelworks The See and SUIT Pkg $69.95 BoxSaat, ProSpeed 500 high'spll4Id Inlemal seIVic", The Viewer's Delight Pkg $59.95 BoxSeat Plus with the STARZ! ElICore Super Pak or any 1 01 ollr olher premium networks Service ProvIded Description Price

BoxSeat'" Full Service Installation Initial installation - VCR and/or stereo hook-up $45.00 ProSpeed'" Installation Initial installation of one PC $45.00 TrueTel'"lnstaJlation Installation of phone service to existing phone jacks $45.00 Install service on up to 3 PC's (single visit) ProSpeed Network installation $99.00 Install Same Trip (oddilion~1 outlet) Installation of additional outlet for BoxSeat Service, telephone jack for TrueTel Service or additional PC _ During initial installation $30.00 Addltlonal·Qutletlnstallatron Installation of ad~ilional oullet tor BaxSeatSeriice, telephone jac/dor TrueJeJServiceor additional PC • Separate Trip $45.00 VCR Hook-up VCR Hook-up - Separate Trip $45.00 Stereo Hook-up Stereo.Hook;up -.$eparate Trip $45.00 Service Call Free when servicing Allrio equipment FREE Service Charge· Customer Equipmenl Service Charge - Due·lb Customer;equipihenl $45.00 Non-Pay Reconnect Non-Pay Reconnect $45.00 Service Suspension SeasonalService Suspension $30.00 Transfer of Service Transfer Service - Installation 01 up to 2 outlets when transferring current service $30.00 Electronic Service·Charge Electronic Upgrade Service Charge $5.00 Service Charge Customer instaiIation I service work first 15 min $45.00 every 30 min thereafter charged at 30 min increments $30.00

For updated TV network line-ups, current listings, service updates and special offers visit the On The Wire section at www.altrio.net

If you have any questions piease call one of our friendly and knowledgeable customer service agents at 866.801.1122

~Altrio ONE CONNECTION. INFINITE POSSIBIliTIES. ?702 Media Center Drive, Los Angeles. CA 90065, ©2001 Altrio Communir.a!io~s. All Rights Reserved. Prices and packages suhjeet to ch.mge, Prices do not include taxes and looollr~nchise fees. PC mu~1 meet minimum requirements for PI1JSpeed" service. Speeds quoted are downstream and actual sp&eds may vary,