******************************************************** NOTICE ******************************************************** This document was converted from WordPerfect to ASCII Text format. Content from the original version of the document such as headers, footers, footnotes, endnotes, graphics, and page numbers will not show up in this text version. All text attributes such as bold, italic, underlining, etc. from the original document will not show up in this text version. Features of the original document layout such as columns, tables, line and letter spacing, pagination, and margins will not be preserved in the text version. If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the Federal Communications Commission Washington, D.C. 20554 In re Petition of: ) ) Church of New Bedford ) ) v. ) CSR-5091-L ) MediaOne ) ) For Leased Access Channels ) ORDER ON RECONSIDERATION Adopted: February 9, 1999 Released: February 12, 1999 By the Chief, Cable Services Bureau: I. INTRODUCTION 1. Church of New Bedford ("New Bedford") has filed a petition for reconsideration of the Bureau's decision in Church of New Bedford v MediaOne ( "Bureau Order"). MediaOne, operator of a cable system serving Fall River, Massachusetts, filed an opposition to the petition for reconsideration. II. ALLEGATIONS OF THE PARTIES 2. New Bedford claimed in a petition for relief pursuant to 47 C.F.R.  76.975 that MediaOne requires it to obtain and maintain an insurance policy providing for errors and omissions coverage and naming MediaOne as an additional insured party, that the insurance requirement is unreasonable within the meaning of the Commission's regulations, and that MediaOne failed to justify the reasonableness of the insurance requirement. The Bureau Order granted in part New Bedford's petition for relief and ordered MediaOne to make leased access available to New Bedford without any insurance requirement, unless a reasonable justification of the required insurance coverage and policy dollar limits of such insurance has been provided to New Bedford. 3. New Bedford now contends that information provided to it by MediaOne in response to the Bureau Order fails to establish the reasonableness of MediaOne's insurance requirement. New Bedford asserts that MediaOne does not require insurance coverage for public access programming or for commercial advertisers appearing on its cable system. For that reason, it argues MediaOne's insurance requirement for leased access programming cannot be found reasonable under the standards established by the Commission. New Bedford also points to the religious nature of its programming as making MediaOne's insurance coverage requirement unreasonable. 4. MediaOne argues in opposition that the reasonableness of its insurance requirement is established by the information provided to New Bedford. In its response to New Bedford, MediaOne states a need for protection against risks associated with the transmission of all programming, including commercial leased access programming. MediaOne states that general liability and media perils insurance is required to protect the cable system from a number of liability risks including, among other things, libel, piracy and misappropriation of ideas, invasion of privacy, plagiarism, copyright and trademark infringement claims, product disparagement, infliction of emotional distress, unfair competition, obscenity allegations, and other content-based claims, as well as off-air related activities, whether such claims are meritorious or not. MediaOne lists several instances of involvement in litigation with respect to leased access programming carried on its cable systems. MediaOne also states that for a year and a half it has required all commercial programming networks on its systems to obtain broadcast liability insurance and name MediaOne as an additional insured party similar to the insurance coverage requested of New Bedford, and that similar insurance coverage is provided by all other leased access programmers on other cable systems affiliated with MediaOne. The clause requires media perils liability coverage of at least one million dollars, which MediaOne contends is reasonable considering the substantial risks associated with carriage of leased access programming over which it has no content control. MediaOne argues that an indemnification clause provides inadequate protection because leased access programmers often lack sufficient resources to cover potential indemnification obligations. MediaOne asserts that liability risks are present irrespective of the religious nature of New Bedford's programming. 5. MediaOne distinguishes the circumstances applicable to public access programming and commercial advertising carried on its system, services for which insurance is not required, from that applicable to leased access programming. MediaOne states that it takes an active role in the production and presentation of programming on public access channels and that its substantial involvement makes such channel similar to local origination channels. MediaOne contends that its substantial involvement and that of local franchising authorities and public access corporations in public access programming on its cable systems, including the Fall River system involved here, greatly reduces the risks associated with such programming. Commercial advertising is distinguished, according to MediaOne, by the substantially higher advertising rates in comparison with rates for comparable time periods for leased access, and by the fact that such higher rates include a premium for risks associated with commercial advertising time that is not accounted for in the Commission's leased access implicit fee formula. In this connection, MediaOne points to the substantially higher level of its local commercial advertiser rates of $55 for a thirty second spot, which it compares with the local leased access rate of $24.45 per half hour. III. DISCUSSION 6. A cable operator's right to require reasonable liability insurance coverage for leased access programming was initially discussed in Anthony Giannotti v. Cablevision Systems Corporation. Noting that the costs and expenses attributable to defending a prosecution for carriage of an allegedly obscene program may be covered by such insurance, the Commission stated, "this is a reasonable term or condition relating to use of leased access channel capacity in light of the removal by Congress in amended [S]ection 638 of cable operator immunity for carriage of obscene programming." Subsequently, the Commission in its Second Report and Order in Implementation of the Cable Television Consumer Protection and Competition Act of 1992 confirmed that the regulations concerning reasonable terms and conditions of use for commercial leased access do not deny cable operators the right to require reasonable liability insurance coverage for leased access programming. Specific conditions or limits regarding the amount of coverage or the type of insurance policy that operators may require were not adopted in the Second Report, on the grounds that "a specific restriction might not be appropriate for all situations." Instead, the Commission stated that insurance requirements must be reasonable in relation to the objective of the requirement. The Commission further stated that determinations of a "reasonable" insurance requirement will be based on the operator's practices with respect to insurance requirements imposed on non-leased access programmers, the likelihood that the leased access programming will pose a liability risk for the operator, previous instances of litigation arising from the leased access programming, and any other relevant factors. The burden of proof in establishing reasonableness was placed on cable operators. 7. We find, based on the record summarized above, that MediaOne has met the Commission's requirement to justify the reasonableness of the insurance coverage requested of New Bedford. MediaOne has satisfied its burden of showing that leased access programming poses a risk for the operator, that previous instances of litigation involving leased access programming have occurred, and that the insurance requirement at issue here appears to be substantially like that imposed by MediaOne on other leased access programmer leasing capacity on its other cable systems nationwide, as well as on other commercial programming networks. 8. According to New Bedford, the annual premium for the $1,000,000 liability limit insurance coverage required by MediaOne is about $1,500. We construe New Bedford's objection to MediaOne's insurance requirement as an implicit objection to the amount of the liability limit and/or premium in relation to any risk involved. However, we are unable to find either the liability limit or the premium unreasonable on the record before us. If leased access programmers believe that liability limits or premiums for lease access programming are excessive in relation to the risks involved with cable system carriage of such programming, it is incumbent upon them to make their case with insurance carriers who are better positioned to assess the risks involved than this Commission. In other words, we believe it best to permit the insurance industry, working together with leased access programmers and cable operators, to evaluate risks associated with carriage of commercial leased access programming on cable systems. 9. Finally, we find that cable system commercial advertising and the provision of commercial leased access are substantially different services that involve wholly different risks. Most importantly, the cable system has no control over any of the programming or advertising on a leased access channel. On the other hand, a cable system has control over advertising time provided on its system. In this regard, the cable operator has a general right of refusal of any advertising content presented for airing. Based on the above, we find reasonable MediaOne's business judgment that its cable system commercial advertising does not require insurance coverage. 10. In summary, we find that MediaOne has provided justification of the requirement that New Bedford obtain and maintain broadcaster's liability insurance with MediaOne named as an additional insured party. Accordingly, New Bedford's petition for reconsideration is denied. IV. ORDERING CLAUSES 11. For the foregoing reasons, the petition for reconsideration of Church of New Bedford in File No. CSR 5091-L IS DENIED. 12. This action is taken pursuant to authority delegated by Section 0.321 of the Commission's rules. FEDERAL COMMUNICATIONS COMMISSION Deborah A. Lathen Chief, Cable Services Bureau