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OMB Rejects FCC Leased Access Rules

Washington—The Federal Communications Commission has run into more trouble with its new cable leased access rules.

On Wednesday, the Office of Management and Budget ruled that the FCC's policies were inconsistent with the Paperwork Reduction Act, a law designed to minimize the burden of bureaucratic red tape on unregulated industries.

OMB repeatedly faulted the agency for failing to take into account the additional costs, additional staffing, and risks to proprietary information that the rules would impose on cable operators.

The action by OMB was setback for leased access programmers that have been seeking better terms and conditions from cable operators.

“I fail to understand where there is any proprietary and confidential information they will be required to disclose that isn't already available,” said Charlie Stogner (pictured), president of the Leased Access Programmers Association.

OMB's decision was a rare event for the FCC, especially because the FCC and OMB are key departments run by appointees of President Bush. An FCC spokesman did not have an immediate comment.

According to a cable attorney, the FCC has the authority to vote to overturn OMB's action, but such a move is considered unlikely because a federal appeals court in Cincinnati stayed all the rules in May. Comcast, Time Warner Cable, American Cable Association were among the cable entities that petitioned OMB for relief.

An FCC spokesman said Thursday: “No decision has been made regarding the next steps the [FCC] could take.”

Thursday afternoon, the ACA weighed in on the OMB ruling.

“The majority of ACA’s members are small systems serving small towns of fewer than 5,000 subscribers,” ACA president Matthew Polka said in a statement. “These men and women are quintessential small business owners trying to deploy advanced video, internet and phone to their customers and their communities with finite resources and precious time to spare.”

“Increasing the amount of time, money, and energy required to comply with disproportionate, burdensome information collection requirements hinders the ability of our member companies to deploy these important services,” he continued. “This order ran contrary to the FCC’s continued efforts to reduce small business reporting burdens, and the OMB was right to reject it.”

Under federal law, large-capacity cable operators have to set aside 15 percent of their channels for lease by commercial programmers. The FCC regulates the lease rates. The court stay came after the cable industry complained that the FCC had cut lease rates to the bone, producing zero revenue in some examples, and violated the law in doing so.

OMB, for example, invalidated the FCC's decision to reduce from 15 days to 3 days the amount of time the cable operators have to provide terms and conditions to would-be programmers.

It also faulted the FCC for failing to demonstrate:

-- “[It had] taken reasonable steps to minimize the burden on [cable], ... who will be required to hire new staff in order to maintain the capacity to comply with the reduced deadline for leased access requests.”

-- “There are reasonable mechanisms in place to protect proprietary and confidential information respondents will be required to provide potential programmers, regardless of the legitimacy of the request .."

-- “[It had] taken reasonable steps to minimize the burden on respondents, who due to reduced pricing, will be required to hire new staff in order to maintain the capacity to respond to an increased number of inquiries ...”