Sec.  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  Sec. 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,  Sec. 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.