§  76.970   Commercial leased access rates.

   (a) Cable operators shall designate channel capacity for commercial use
   by persons unaffiliated with the operator in accordance with the
   requirement of 47 U.S.C. 532. For purposes of 47 U.S.C. 532(b)(1)(A)
   and (B), only those channels that must be carried pursuant to 47 U.S.C.
   534 and 535 qualify as channels that are required for use by Federal
   law or regulation. For cable systems with 100 or fewer channels,
   channels that cannot be used due to technical and safety regulations of
   the Federal Government (e.g., aeronautical channels) shall be excluded
   when calculating the set-aside requirement.

   (b) In determining whether an entity is an “affiliate” for purposes of
   commercial leased access, entities are affiliated if either entity has
   an attributable interest in the other or if a third party has an
   attributable interest in both entities.

   (c) Attributable interest shall be defined by reference to the criteria
   set forth in Notes 1–5 to § 76.501 provided, however, that:

   (1) The limited partner and LLC/LLP/RLLP insulation provisions of Note
   2(f) shall not apply; and

   (2) The provisions of Note 2(a) regarding five (5) percent interests
   shall include all voting or nonvoting stock or limited partnership
   equity interests of five (5) percent or more.

   (d) The maximum commercial leased access rate that a cable operator may
   charge to programmers that predominantly transmit sales presentations
   or program length commercials for full-time channel placement on a tier
   exceeding a subscriber penetration of 50 percent is the average
   implicit fee for full-time channel placement on all such tier(s).

   (e) The average implicit fee identified in paragraph (d) of this
   section for a full-time channel on a tier with a subscriber penetration
   over 50 percent shall be calculated by first calculating the total
   amount the operator receives in subscriber revenue per month for the
   programming on all such tier(s), and then subtracting the total amount
   it pays in programming costs per month for such tier(s) (the “total
   implicit fee calculation”). A weighting scheme that accounts for
   differences in the number of subscribers and channels on all such
   tier(s) must be used to determine how much of the total implicit fee
   calculation will be recovered from any particular tier. The weighting
   scheme is determined in two steps. First, the number of subscribers is
   multiplied by the number of channels (the result is the number of
   “subscriber-channels”') on each tier with subscriber penetration over
   50 percent. For instance, a tier with 10 channels and 1,000 subscribers
   would have a total of 10,000 subscriber-channels. Second, the
   subscriber-channels on each of these tiers is divided by the total
   subscriber-channels on all such tiers. Given the percent of
   subscriber-channels for the particular tier, the implicit fee for the
   tier is computed by multiplying the subscriber-channel percentage for
   the tier by the total implicit fee calculation. Finally, to calculate
   the average implicit fee per channel, the implicit fee for the tier
   must be divided by the corresponding number of channels on the tier.
   The final result is the maximum rate per month that the operator may
   charge the leased access programmer for a full-time channel on that
   particular tier. The average implicit fee shall be calculated by using
   all channels carried on any tier exceeding 50 percent subscriber
   penetration (including channels devoted to affiliated programming,
   must-carry and public, educational and government access channels). In
   the event of an agreement to lease capacity on a tier with less than 50
   percent penetration, the average implicit fee should be determined on
   the basis of subscriber revenues and programming costs for that tier
   alone. The license fees for affiliated channels used in determining the
   average implicit fee shall reflect the prevailing company prices
   offered in the marketplace to third parties. If a prevailing company
   price does not exist, the license fee for that programming shall be
   priced at the programmer's cost or the fair market value, whichever is
   lower. The average implicit fee shall be based on contracts in effect
   in the previous calendar year. The implicit fee for a contracted
   service may not include fees, stated or implied, for services other
   than the provision of channel capacity (e.g., billing and collection,
   marketing, or studio services).

   (f) The maximum commercial leased access rate that a cable operator may
   charge for full-time channel placement as an a la carte service is the
   highest implicit fee on an aggregate basis for full-time channel
   placement as an a la carte service.

   (g) The highest implicit fee on an aggregate basis for full-time
   channel placement as an a la carte service shall be calculated by first
   determining the total amount received by the operator in subscriber
   revenue per month for each non-leased access a la carte channel on its
   system (including affiliated a la carte channels) and deducting the
   total amount paid by the operator in programming costs (including
   license and copyright fees) per month for programming on such
   individual channels. This calculation will result in implicit fees
   determined on an aggregate basis, and the highest of these implicit
   fees shall be the maximum rate per month that the operator may charge
   the leased access programmer for placement as a full-time a la carte
   channel. The license fees for affiliated channels used in determining
   the highest implicit fee shall reflect the prevailing company prices
   offered in the marketplace to third parties. If a prevailing company
   price does not exist, the license fee for that programming shall be
   priced at the programmer's cost or the fair market value, whichever is
   lower. The highest implicit fee shall be based on contracts in effect
   in the previous calendar year. The implicit fee for a contracted
   service may not include fees, stated or implied, for services other
   than the provision of channel capacity (e.g., billing and collection,
   marketing, or studio services). Any subscriber revenue received by a
   cable operator for an a la carte leased access service shall be passed
   through to the leased access programmer.

   (h) The maximum commercial leased access rate that a cable operator may
   charge for part-time channel placement shall be determined by either
   prorating the maximum full-time rate uniformly, or by developing a
   schedule of and applying different rates for different times of the
   day, provided that the total of the rates for a 24-hour period does not
   exceed the maximum daily leased access rate.

   (i) The maximum commercial leased access rate that a cable operator may
   charge for full-time channel placement, except to programmers that
   predominantly transmit sales presentations or program length
   commercials, is the lower of the marginal implicit fee for a full-time
   channel placement on the tier where the leased access programming will
   be placed or $0.10 per subscriber per month.

   (j)(1)(i) The marginal implicit fee identified in paragraph (i) of this
   section for a full-time channel shall be calculated by first
   determining the mark-up of the tier where the leased access programming
   will be placed. The mark-up is calculated by determining the total
   amount the operator receives in subscriber revenue per month for the
   tier, and dividing by the total amount it pays in affiliation fees for
   the channels located on the tier. The resulting figure is the mark-up.
   In cases where the cost and channels of one tier are implicitly
   incorporated into a larger tier, the larger tier price is equal to the
   larger tier price minus the smaller tier price and the channels on the
   larger tier are those that are not available on the smaller tier.

   (ii) The monthly gross subscriber revenue per channel is obtained by
   multiplying the monthly per subscriber affiliation fee for each channel
   by the mark-up for the tier. The net subscriber revenue per channel per
   month for each channel is the difference between the monthly gross
   subscriber revenue per channel and the monthly per subscriber
   affiliation fee paid for that channel by the cable operator. This value
   represents the implicit fee for the individual channel.

   (iii) To determine the marginal channels on the tier for systems with
   55 or more activated channels, multiply the number of non-mandated
   channels on the tier by 0.15 and round to the nearest number. To
   determine the marginal channels on the tier for systems with 54 or less
   activated channels, multiply the number of non-mandated channels on the
   tier by 0.10 and round to the nearest number. That is the number of
   marginal channels. Next identify the channels with the lowest implicit
   fee until that number is reached. These are the marginal channels.

   (iv) Finally, calculate the marginal implicit fee by taking the mean of
   the implicit fees of the marginal channels by summing the implicit fees
   of the marginal channels and dividing by the number of marginal
   channels. The result is the marginal implicit fee.

   (2) The affiliation fees for channels used in determining the marginal
   implicit fee are the contractual license fee or retransmission consent
   fee representing the compensation per subscriber per month paid to the
   programmer for the right to carry the programming. It excludes fees for
   services other than the provision of channel capacity, such as
   marketing, and excludes revenues. The affiliation fees for channels
   used in determining the marginal implicit fee shall reflect the
   prevailing affiliation fees offered in the marketplace to third
   parties. If a prevailing affiliation fee does not exist, the
   affiliation fee for that programming shall be priced at the
   programmer's cost or the fair market value, whichever is lower. The
   marginal implicit fee calculation shall be based on affiliation fees in
   contracts in effect in the previous calendar year. The implicit fee for
   a contracted service may not include fees, stated or implied, for
   services other than the provision of channel capacity (e.g., billing
   and collection, marketing, or studio services).

   (3) Operators shall maintain, for Commission inspection, sufficient
   supporting documentation to justify the scheduled rates, including
   supporting contracts, calculations of the implicit fees, and
   justifications for all adjustments.

   (4) Cable operators are permitted to negotiate rates below the maximum
   permitted rates.

   [ 73 FR 10690 , Feb. 28, 2008]

   Effective Date Note:   At  73 FR 10890 , Feb. 28, 2008, § 76.970 was
   revised. Paragraph (j)(3) of this section contains information
   collection and recordkeeping requirements and will not become effective
   until approval has been given by the Office of Management and Budget.