Sec. 76.505  Prohibition on buy outs.

    (a) 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 interest, or any management interest, in any 
cable operator providing cable service within the local exchange 
carrier's telephone service area.
    (b) No cable operator or affiliate of a cable operator that is owned 
by, operated by, controlled by, or under common ownership with such 
cable operator may purchase or otherwise acquire, directly or 
indirectly, more than a 10 percent financial interest, or any management 
interest, in any local exchange carrier providing telephone exchange 
service within such cable operator's franchise area.
    (c) 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 subscribers or to provide 
telecommunications services within such market.
    (d) Exceptions:
    (1) Notwithstanding paragraphs (a), (b), and (c) of this section, a 
local exchange carrier (with respect to a cable system located in its 
telephone 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:
    (i) Such system or facilities only serve incorporated or 
unincorporated :
    (A) Places or territories that have fewer than 35,000 inhabitants; 
and
    (B) Are outside an urbanized area, as defined by the Bureau of the 
Census; and
    (ii) 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) Notwithstanding paragraph (c) of this section, a local exchange 
carrier may obtain, with the concurrence 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 reasonably limited in 
scope and duration, as determined by the Commission.
    (3) Notwithstanding paragraphs (a) and (c) of this section, a local 
exchange carrier may obtain a controlling interest in, or form a joint 
venture or other partnership with, or provide financing to, a cable 
system (hereinafter in this paragraph referred to as ``the subject cable 
system'') if:
    (i) 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;
    (ii) 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 municipality in the television 
market and the boundaries of such franchises were identical on such 
date;
    (iii) 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
    (iv) 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

[[Page 547]]

cable system operators as such operators existed on May 1, 1995.
    (4) Paragraph (a) of this section does not apply to any cable system 
if:
    (i) 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;
    (ii) 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
    (iii) The cable system operates in a television market that was not 
in the top 100 television markets as of June 1, 1995.
    (5) Notwithstanding paragraphs (a) and (c) of this section, a local 
exchange carrier with less than $100,000,000 in annual operating 
revenues (or any affiliate of such carrier owned by, operated by, 
controlled by, or under common control with such carrier) may purchase 
or otherwise acquire more than a 10 percent financial interest in, or 
any management interest in, or 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) The Commission may waive the restrictions of paragraphs (a), 
(b), or (c) of this section only if:
    (i) The Commission determines that, because of the nature of the 
market served by the affected cable system or facilities used to provide 
telephone exchange service:
    (A) The affected cable operator or local exchange carrier would be 
subjected to undue economic distress by the enforcement of such 
provisions;
    (B) The system or facilities would not be economically viable if 
such provisions were enforced; or
    (C) The anticompetitive effects of the proposed transaction are 
clearly outweighed in the public interest by the probable effect of the 
transaction in meeting the convenience and needs of the community to be 
served; and
    (ii) The local franchising authority approves of such waiver.
    (e) For purposes of this section, the term ``telephone service 
area'' when used in connection with a common carrier subject in whole or 
in part to title II of the Communications Act means the area within 
which such carrier provided telephone exchange service as of January 1, 
1993, but if any common carrier after such date transfers its telephone 
exchange service facilities to another 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.

[ 61 FR 18977 , Apr. 30, 1996]

                     Subpart K--Technical Standards