47 U.S.C. § 572 — Prohibition on buy outs

Page 311 TITLE 47—TELECOMMUNICATIONS § 572 chapter II of this chapter, to make capacity available on a nondiscriminatory basis to any other person for the provision of cable service directly to subscribers. (c) Additional regulatory relief A common carrier shall not be required to ob- tain a certificate under section 214 of this title with respect to the establishment or operation of a system for the delivery of video program- ming. (June 19, 1934, ch. 652, title VI, § 651, as added Pub. L. 104–104, title III, § 302(a), Feb. 8, 1996, 110 Stat. 118.) § 572. Prohibition on buy outs (a) Acquisitions by carriers No local exchange carrier or any affiliate of such carrier owned by, operated by, controlled by, or under common control with such carrier may purchase or otherwise acquire directly or indirectly more than a 10 percent financial in- terest, or any management interest, in any cable operator providing cable service within the local exchange carrier’s telephone service area. (b) Acquisitions by cable operators No cable operator or affiliate of a cable oper- ator that is owned by, operated by, controlled by, or under common ownership with such cable operator may purchase or otherwise acquire, di- rectly or indirectly, more than a 10 percent fi- nancial interest, or any management interest, in any local exchange carrier providing tele- phone exchange service within such cable opera- tor’s franchise area. (c) Joint ventures A local exchange carrier and a cable operator whose telephone service area and cable franchise area, respectively, are in the same market may not enter into any joint venture or partnership to provide video programming directly to sub- scribers or to provide telecommunications serv- ices within such market. (d) Exceptions (1) Rural systems Notwithstanding subsections (a), (b), and (c) of this section, a local exchange carrier (with respect to a cable system located in its tele- phone service area) and a cable operator (with respect to the facilities of a local exchange carrier used to provide telephone exchange service in its cable franchise area) may obtain a controlling interest in, management interest in, or enter into a joint venture or partnership with the operator of such system or facilities for the use of such system or facilities to the extent that— (A) such system or facilities only serve in- corporated or unincorporated— (i) places or territories that have fewer than 35,000 inhabitants; and (ii) are outside an urbanized area, as de- fined by the Bureau of the Census; and (B) in the case of a local exchange carrier, such system, in the aggregate with any other system in which such carrier has an interest, serves less than 10 percent of the households in the telephone service area of such carrier. (2) Joint use Notwithstanding subsection (c), a local ex- change carrier may obtain, with the concur- rence of the cable operator on the rates, terms, and conditions, the use of that part of the transmission facilities of a cable system extending from the last multi-user terminal to the premises of the end user, if such use is rea- sonably limited in scope and duration, as de- termined by the Commission. (3) Acquisitions in competitive markets Notwithstanding subsections (a) and (c), a local exchange carrier may obtain a control- ling interest in, or form a joint venture or other partnership with, or provide financing to, a cable system (hereinafter in this para- graph referred to as ‘‘the subject cable sys- tem’’), if— (A) the subject cable system operates in a television market that is not in the top 25 markets, and such market has more than 1 cable system operator, and the subject cable system is not the cable system with the most subscribers in such television market; (B) the subject cable system and the cable system with the most subscribers in such television market held on May 1, 1995, cable television franchises from the largest mu- nicipality in the television market and the boundaries of such franchises were identical on such date; (C) the subject cable system is not owned by or under common ownership or control of any one of the 50 cable system operators with the most subscribers as such operators existed on May 1, 1995; and (D) the system with the most subscribers in the television market is owned by or under common ownership or control of any one of the 10 largest cable system operators as such operators existed on May 1, 1995. (4) Exempt cable systems Subsection (a) does not apply to any cable system if— (A) the cable system serves no more than 17,000 cable subscribers, of which no less than 8,000 live within an urban area, and no less than 6,000 live within a nonurbanized area as of June 1, 1995; (B) the cable system is not owned by, or under common ownership or control with, any of the 50 largest cable system operators in existence on June 1, 1995; and (C) the cable system operates in a tele- vision market that was not in the top 100 television markets as of June 1, 1995. (5) Small cable systems in nonurban areas Notwithstanding subsections (a) and (c), a local exchange carrier with less than $100,000,000 in annual operating revenues (or any affiliate of such carrier owned by, oper- ated by, controlled by, or under common con- trol with such carrier) may purchase or other- wise acquire more than a 10 percent financial interest in, or any management interest in, or Page 312 TITLE 47—TELECOMMUNICATIONS § 573 1 So in original. Probably should be ‘‘subsection’’. enter into a joint venture or partnership with, any cable system within the local exchange carrier’s telephone service area that serves no more than 20,000 cable subscribers, if no more than 12,000 of those subscribers live within an urbanized area, as defined by the Bureau of the Census. (6) Waivers The Commission may waive the restrictions of subsections 1 (a), (b), or (c) only if— (A) the Commission determines that, be- cause of the nature of the market served by the affected cable system or facilities used to provide telephone exchange service— (i) the affected cable operator or local exchange carrier would be subjected to undue economic distress by the enforce- ment of such provisions; (ii) the system or facilities would not be economically viable if such provisions were enforced; or (iii) the anticompetitive effects of the proposed transaction are clearly out- weighed in the public interest by the prob- able effect of the transaction in meeting the convenience and needs of the commu- nity to be served; and (B) the local franchising authority ap- proves of such waiver. (e) ‘‘Telephone service area’’ defined For purposes of this section, the term ‘‘tele- phone service area’’ when used in connection with a common carrier subject in whole or in part to subchapter II of this chapter means the area within which such carrier provided tele- phone exchange service as of January 1, 1993, but if any common carrier after such date transfers its telephone exchange service facilities to an- other common carrier, the area to which such facilities provide telephone exchange service shall be treated as part of the telephone service area of the acquiring common carrier and not of the selling common carrier. (June 19, 1934, ch. 652, title VI, § 652, as added Pub. L. 104–104, title III, § 302(a), Feb. 8, 1996, 110 Stat. 119.) § 573. Establishment of open video systems (a) Open video systems (1) Certificates of compliance A local exchange carrier may provide cable service to its cable service subscribers in its telephone service area through an open video system that complies with this section. To the extent permitted by such regulations as the Commission may prescribe consistent with the public interest, convenience, and necessity, an operator of a cable system or any other person may provide video programming through an open video system that complies with this sec- tion. An operator of an open video system shall qualify for reduced regulatory burdens under subsection (c) of this section if the oper- ator of such system certifies to the Commis- sion that such carrier complies with the Com- mission’s regulations under subsection (b) and the Commission approves such certification. The Commission shall publish notice of the re- ceipt of any such certification and shall act to approve or disapprove any such certification within 10 days after receipt of such certifi- cation. (2) Dispute resolution The Commission shall have the authority to resolve disputes under this section and the regulations prescribed thereunder. Any such dispute shall be resolved within 180 days after notice of such dispute is submitted to the Commission. At that time or subsequently in a separate damages proceeding, the Commis- sion may, in the case of any violation of this section, require carriage, award damages to any person denied carriage, or any combina- tion of such sanctions. Any aggrieved party may seek any other remedy available under this chapter. (b) Commission actions (1) Regulations required Within 6 months after February 8, 1996, the Commission shall complete all actions nec- essary (including any reconsideration) to pre- scribe regulations that— (A) except as required pursuant to section 531, 534, or 535 of this title, prohibit an oper- ator of an open video system from discrimi- nating among video programming providers with regard to carriage on its open video system, and ensure that the rates, terms, and conditions for such carriage are just and reasonable, and are not unjustly or unrea- sonably discriminatory; (B) if demand exceeds the channel capacity of the open video system, prohibit an oper- ator of an open video system and its affili- ates from selecting the video programming services for carriage on more than one-third of the activated channel capacity on such system, but nothing in this subparagraph shall be construed to limit the number of channels that the carrier and its affiliates may offer to provide directly to subscribers; (C) permit an operator of an open video system to carry on only one channel any video programming service that is offered by more than one video programming provider (including the local exchange carrier’s video programming affiliate): Provided, That sub- scribers have ready and immediate access to any such video programming service; (D) extend to the distribution of video pro- gramming over open video systems the Com- mission’s regulations concerning sports ex- clusivity (47 C.F.R. 76.67), network non- duplication (47 C.F.R. 76.92 et seq.), and syn- dicated exclusivity (47 C.F.R. 76.151 et seq.); and (E)(i) prohibit an operator of an open video system from unreasonably discriminating in favor of the operator or its affiliates with re- gard to material or information (including advertising) provided by the operator to sub- scribers for the purposes of selecting pro- gramming on the open video system, or in the way such material or information is pre- sented to subscribers;