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U.S. Code as of:
01/19/04
Section 572. Prohibition on buy outs
(a) Acquisitions by carriers
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) Acquisitions by cable operators
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) Joint ventures
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) Rural systems
Notwithstanding subsections (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 -
(A) such system or facilities only serve incorporated or
unincorporated -
(i) places or territories that have fewer than 35,000
inhabitants; and
(ii) are outside an urbanized area, as defined by the
Bureau of the Census; and
(B) 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) Joint use
Notwithstanding subsection (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) Acquisitions in competitive markets
Notwithstanding subsections (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 -
(A) 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;
(B) 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;
(C) 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
(D) 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) Exempt cable systems
Subsection (a) of this section does not apply to any cable
system if -
(A) 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;
(B) 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
(C) the cable system operates in a television market that was
not in the top 100 television markets as of June 1, 1995.
(5) Small cable systems in nonurban areas
Notwithstanding subsections (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) Waivers
The Commission may waive the restrictions of subsections (!1)
(a), (b), or (c) of this section only if -
(A) 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 -
(i) the affected cable operator or local exchange carrier
would be subjected to undue economic distress by the
enforcement of such provisions;
(ii) the system or facilities would not be economically
viable if such provisions were enforced; or
(iii) 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
(B) the local franchising authority approves of such waiver.
(e) "Telephone service area" defined
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 subchapter II of this chapter 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.
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