§  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 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.

   (f) For purposes of this section, 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.

   (g) Attributable interest shall be defined by reference to the criteria
   set forth in Notes 1 through 5 to § 76.501.

   [ 61 FR 18977 , Apr. 30, 1996, as amended at  64 FR 67196 , Dec. 1, 1999]

Subpart K—Technical Standards