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W The Commission agreed to reopen the issue, but was careful not to guarantee a reduction in rates,  W |stating that "as long as the maximum leased access rate is reasonable, we believe that minimal  X3 W Huse of leased access channels would not indicate that the rate should be lowered." Id. at 16944.  W However, the Commission "tentatively" concluded that the highest implicit fee formula might  X3 W overcompensate cable operators. Id. at 16937. It proposed replacing the implicit fee-based rate  W with a cost-based rate formula that it hoped would cure deficiencies in the highest implicit fee  X3 W formula, and thus "better promote the goals of leased access." Id. Under the cost-based  W approach, cable operators that had not filled their quota of leased access channels could charge  Xw3 W no more than "reasonable costs," which would include a reasonable profit. Id. at 16960. "wP0*0*0*"  W 7Although the Commission hoped the new formula would promote leased access, it warned that  X3the "purpose of the cost formula is not, however, to lower leased access rates." Id. at 16938.  ppAfter considering comments filed by cable operators and programmers, the Commission  X3 W lissued an order rejecting the cost-based formula in favor of an implicit fee-based rate. See  W YImplementation of Sections of the Cable Television Consumer Protection and Competition Act of  W 1992: Leased Commercial Access"Second Report and Order and Second Order on  Xc3 W Reconsideration of the First Report and Order ("Final Rate Order"), 12 F.C.C.R. 5267 (1997).  W |The Commission explained that its cost-based rate proposal was flawed because it "does not  W account for negative effects that leased access programming might have on subscriber revenue  X 3 W (i.e., lost subscriber revenue caused by subscribers dropping the tier or by requiring a lower price  X 3due to a devaluation of the tier)." Id. at 5279.  ppRather than reinstating its original highest implicit fee formula, the Commission reduced  W Kthe rate to the "average implicit fee," which is essentially the average amount full-time  X 3 W programmers implicitly "pay" the cable operator for carriage. See id. at 5283. The Commission  W also made a number of changes to the terms and conditions of leased access favoring leased  W Zaccess programmers. Such programmers were given the right to demand access to a tier with  Xn3 W kmore than 50 percent subscriber penetration, see id. at 5290, thus preventing operators from  W relegating leased access to the least watched tiers. The Commission rejected the cable operators'  XB3 W &challenge to a rule requiring operators to lease time in half-hour increments, see id. at 5298, and  X-3 W mrequired operators to prorate the full-time rate for part-time use. See id. at 5302. The  W Commission also allowed leased access programmers to resell part of their time to other  X3unaffiliated programmers. See id. at 5305.  ppPetitioner Community Broadcasters Association is a trade association for low-power  W %television broadcast stations. Petitioner ValueVision International, Inc., is engaged in the business  W 8of producing television home shopping programs for distribution over cable systems. Their  X3 W Hchallenges to the Commission's Final Rate Order, although framed in different ways, boil down  W to a contention that the Commission showed too much concern for the financial health of cable operators and too little concern for the ability of programmers to afford leased access.  p9pIntervenors Center for Media Education, Alliance for Community Media, Association of  W Independent Video and Film-makers, Consumer Federation of America, United States Catholic  W Conference, and People for the American Way (hereinafter referred to as "Media Education")  W Yjointly filed a brief supporting petitioners. We address their claims separately only where they differ from petitioners'.  X"3; I ă  ppSection 532(a) sets out the competing goals of the 1992 Act: "The purpose of this section  W is to promote competition in the delivery of diverse sources of video programming and to assure  W that the widest possible diversity of information sources are made available to the public from  W cable systems in a manner consistent with growth and development of cable systems." 47 U.S.C.  W  532(a). In setting rates for leased access, the Commission was to "assure that [cable channel  W leasing] will not adversely affect the operation, financial condition, or market development of the" )0*0*0*,"  X3cable system." Id.  532(c)(1).  ppThe Commission reads the statute to require "balancing the interests of leased access  X3 W Zprogrammers with those of cable operators." Final Rate Order, 12 F.C.C.R. at 5278. In the  W YCommission's view, diversity is to be encouraged, but only in ways that do not impose adverse  W }financial effects on cable operators, because "Congress did not intend that cable operators  Xz3 W subsidize leased access programmers." Id. at 5279. The Commission therefore designed rates  W to compensate cable operators fully for lost operational and opportunity costs resulting from the displacement of operator-selected channels with leased access programming.  p[pThis interpretation, Community Broadcasters tells us, is contrary to the clear language of  W Ithe statute and in any event is unreasonable because it fails to achieve the statute's "primary  W objective" of promoting diversity in programming. The objective of ensuring that cable systems  W Iwill not be adversely affected financially was, according to this petitioner, merely a "caveat"  W designed to prevent the "destruction" of the cable industry. The Commission therefore should  X 3not have given equal weight to the interests of cable operators.  X&3ԍ We do not consider Community Broadcasters' argument that the Commission erred in focusing on economic harm to cable channels, when it should have limited its analysis to economic harm to the cable system. No party raised this distinction before the Commission, and the Commission never addressed it. Under 47 U.S.C.  405(a), the question is therefore not properly before us.  pmpThe statutory language permits the Commission's construction. The Act instructs the  Xh3 W Commission to set rates sufficient to "assure that [leased access] will not adversely affect the  W operation, financial condition, or market development of the cable system." 47 U.S.C.   W {532(c)(1) (emphasis added). This provision serves as more than a mere "caveat" to the ultimate  W goals of promoting leased access. The rates, terms and conditions of leased access must be set  W Hwithin its limits. The Commission's choice of the average implicit fee formula was a reasonable means of accomplishing the statute's purposes.  plpMedia Education thinks  532 embodies three goals"promoting leased access, protecting  X3 W the cable industry, and assuring that the public has access to diverse sources of programming.  W According to Media Education, the Commission erred by considering only the first two in setting  W a maximum rate for leased access. We do not see how Media Education's interpretation of  532  W alters the outcome. The Commission was faced with reconciling the statute's purposes of  W promoting diversity through leased access without financially burdening cable operators. To the  W extent that its rate cap makes leased access more affordable, the public arguably will benefit from  W the resulting "diversity of information sources." 47 U.S.C.  532(a). But the public's interest  W Gin diversity does not outweigh the statute's mandate that leased access rates not "adversely affect" cable operators, any more than promoting leased access programming does.  ppThe legislative history also supports the Commission's interpretation. True, Congress  W jhoped that granting ratemaking authority to the Commission would promote competition in the  W programming market and increase the diversity of programming sources. But Congress never""0*0*0*%"  W intended to ensure financial success for leased access programmers. In fact, the Senate Report  W |frankly acknowledged that leased access might not be economically viable. Outside of leased  W {access, cable operators pay for the programs they select, offsetting the high costs of production  W &borne by programmers. Yet under even the most generous formula, leased access programmers  W would be required to pay some fee to operators for access. Cable operators informed the Senate  W during oversight hearings that most programmers simply cannot afford to pay for access. The  W Senate Report conceded that the "cable industry has a sound argument in claiming that the  X_3economics of leased access are not conducive to its use." S. Rep. No. 10292, at 31 (1991).  X139 II ă  ppIn its 1990 Report to Congress, the Commission identified the underutilization of leased  W access as a problem Congress should address, and Congress responded by transferring the  W obligation to set leased access rates from cable operators to the Commission. In implementing  W the 1992 Act, the Commission stated that its only obligation was to set a reasonable rate cap,  X 3 W {regardless of its effect on demand for leased access. See Final Rate Order, 12 F.C.C.R. at 5278 W 79. The Commission erred, according to both petitioners, by focusing on the financial condition  W Hof the cable operators rather than the financial capabilities of leased access programmers. They  Xd3 W Hrely on Motor Vehicle Manufacturers Ass'n v. State Farm Mutual Auto Insurance Co., 463 U.S.  W z29, 43 (1983), for the proposition that the Commission's "fail[ure] to consider an important aspect  W of the problem" that it had previously recognized"namely, whether its rates created a viable market for leasing cable channels"was arbitrary and capricious.  pJpThe trouble with petitioners' argument is in its premise. It is not accurate to say that the  W Commission ignored the fact that its chosen rate formula might not increase use of leased access.  W 7The Commission did no such thing. It recognized this possible consequence, but thought it did  W not justify requiring cable operators to subsidize leased access programmers. When an agency  W considers a particular factor and rationally concludes that it should not affect its decision, the agency is not acting arbitrarily. It is exercising the judgment Congress entrusted to it.  ppThe Commission did not completely disregard the 1992 Act's goal of promoting leased  W access, as petitioners suppose. Many of the changes to its initial rulemaking were designed to  W 8improve conditions for leased access. It reduced the rate from the highest implicit fee to the  X 3 W average implicit fee in an attempt to bring leased access within programmers' reach. See Final  X3 W Rate Order, 12 F.C.C.R. at 5282. It altered the terms of leased access to benefit programmers  W 7by permitting part-time leases, resale of leased access slots, and by requiring cable operators to  X 3 W |place leased access channels on tiers with 50 percent subscriber penetration. See id. at 5298,  W &5305, 5308. Community Broadcasters and ValueVision dismiss these changes in the terms and  W conditions of leased access as unhelpful to those who cannot afford the rates. Yet they cannot  W Ydeny that the Commission's rulemaking included a number of changes favorable to leased access  W programmers. These changes belie petitioners' contention that the Commission ignored the interests of leased access programmers.  ppValueVision argues that the Commission's average implicit fee formula suffers from the  W same flaws as the previous highest implicit fee rate"flaws that motivated the Commission to  X(3 W engage in a new round of notice and comment rulemaking. The Final Rate Order cannot stand,"(0*0*0*,"  W HValueVision continues, because the Commission failed to give "reasoned analysis" for its return to the very rate formula that it had earlier rejected.  ppIn the first place, it is worth noting that the Commission never "rejected" its original  X3 W }implicit fee approach. The concerns it articulated in its Reconsideration Order were only  X3 W "tentative." Reconsideration Order, 11 F.C.C.R. at 16937. The Commission solicited additional  W comments precisely because it was unsure whether its doubts were justified, and whether the cost-based approach would solve old problems or merely create new ones.  ppIn the second place, the Commission did furnish a "reasoned analysis" for its reaffirmation  X 3 W of the implicit fee approach. In its Final Rate Order, the Commission explained that it was  X 3 W returning to an implicit fee formula because the concerns it had raised in its Reconsideration  X 3 W Order had proven unfounded. The Commission had worried that the implicit fee approach  W Hresulted in "double recovery" for cable operators, who were paid once in the form of subscriber  X 3 W fees and then again by leased access programmers. See Reconsideration Order, 11 F.C.C.R. at  W 16937. But after considering numerous comments submitted by operators and programmers, the  W Commission concluded that its "double recovery" hypothesis was based on the erroneous  W assumption that operators would be able to charge subscribers the same amount for leased access  Xn3 W programming that they charge for other programming on the same tier. See Final Rate Order,  W 12 F.C.C.R. at 5289. This was unlikely, the Commission realized, because subscribers could find  W &leased access programming less attractive than the programming selected by the cable operator,  W 'reducing not only the fee the operator could charge for that channel, but also the fee it could  X3charge for an entire tier of channels in which the leased access channel was placed.  X3ԍ ValueVision's comments to the Commission reveal that it also recognized the possibility of subscriber loss, although it thought the problem less significant than did the  X_3Commission. See id. at 5287.  See id. at  W 528687. When cable operators choose their programming, they may take into account the  W programs they currently offer, tailoring their selections to appeal to current subscribers and to  W Hattract new subscribers. Cable operators have no such control over leased access programming.  X3 W GAlthough the Commission acknowledged the possibility that some leased access programming will  W be attractive to subscribers, it concluded that on average leased access programming is less  X3 W ldesirable to customers than the programming offered by the operator. See id. at 528789.  W Because subscribers might place no value on leased access programming, the lease fee is the only  W payment the operator receives, and therefore the operator does not "double recover" for those channels.  ppEven if a leased access channel generates subscriber revenue, the Commission recognized  W that it may not be enough to offset the lost revenues from the channel it displaced. Leased access  W programming can be less valuable to operators for reasons aside from its lack of desirability to  W Jsubscribers. In accepting a leased access channel, the cable operator may lose advertising  W revenues because leased access programmers generally do not provide advertising slots to the  X"3 W cable operator. See id. at 5289. And leased access programming creates additional administrative  X#3 W &costs. See id. For all of these reasons, the Commission concluded that the implicit fee formula  W would not result in a double recovery for cable operators as it had originally feared, but would"$M0*0*0*'"  W merely compensate the operator for the potential decrease in overall system value resulting from the replacement of the operator-selected channels with leased access channels.  X3 p}pIn its Reconsideration Order, the Commission expressed concern that the highest implicit  W fee overcompensated operators, who were willing to accept a lower fee for some of their  X3 W programming. See Reconsideration Order, 11 F.C.C.R. at 16937. The Commission explained  Xz3 W in the Final Rate Order that its decision to replace the highest implicit fee with the average  Xe3 W implicit fee "mitigates" this problem. Final Rate Order, 12 F.C.C.R. at 5290. ValueVision is  W not satisfied. The average implicit fee still overcompensates operators, ValueVision believes,  W because operators will bump the chan-nels with the lowest implicit fee if forced to make room  W jfor leased access channels, thereby earning a better return off the leased access channels. But as  W the Commission explained, it is impossible to calculate a particular program's implicit fee with  X 3 W Zcertainty because viewers purchase most channels in multi-channel tiers. See id. at 528990.  W Operators know what they pay for each channel, but they cannot be sure of the value of any  X 3 W single channel to subscribers. See id. Indeed, some subscribers may place little to no value on  W a channel that others highly value. Moreover, the implicit fee bears no relation to the popularity  W of a particular channel, and therefore no relation to the value of that channel to the operator. For  W jexample, it can be assumed that subscribers are willing to pay dearly for very popular channels,  W 7but those channels also cost operators the most to purchase, and therefore will often have very  W low implicit fees. The lowest implicit fee may actually be negative, and therefore is unsuitable  W as the rate-base for leased access. The Commission concluded that the average implicit fee is the  W most suitable basis from which to calculate leased access rates, since it would not regularly over-  W or undercompensate cable operators for bumping operator-selected channels for leased access  X3programming. See id.  p}pFinally, the Commission concluded that it had been wrong to think its cost-based formula  W would more accurately reflect the costs of leased access. The Commission realized that the  W cost-based rate did not account for the fact that leased access programming could diminish the  W value of the entire tier on which it was placed. Operators deserved to recover lost subscriber fees  W Yresulting from leased access. The implicit fee was therefore a more accurate measure of the true  X\3 W (costs of leased access. See id. at 5290. Although the average implicit fee is not a perfect  W ]measure of the costs of leased access programming, it falls well within the "zone of  X03 W reasonableness" required to survive judicial review. Nader v. FCC, 520 F.2d 182, 192 (D.C. Cir.  X31975) (citing Permian Basin Area Rate Cases, 390 U.S. 747, 767 (1968)).  X3z6 III ă  ppValueVision complains that the Commission refused to give "any real consideration" to  W 7its market-based explicit fee proposal. ValueVision wanted the Commission to base its fees on  W the rates paid by an unusual class of non-leased cable channels where the programmers pay  W operators a certain amount per subscriber, just as leased access programmers do. According to  W kValueVision, this "real world" explicit fee approach provides a better estimate of the amount cable opera-tors should be compensated for carrying leased access programming.  X (3 ppAs the Commission explained in its Final Rate Order, ValueVision's "explicit fee"  X )3 W approach was one of many flat rate proposals. Final Rate Order, 12 F.C.C.R. at 5294. " ) 0*0*0*,"  W ValueVision proposed a rate of 10 cents per subscriber per month. Other suggested flat rates  W ranged from a penny to 90 cents. Presented with a wide array of estimated "real world"  W rates"and no method of choosing among them"the Commission explained that it was rejecting  W &them all for failure to provide "sufficient empirical evidence demonstrating how their proposed  X3flat rate would promote the statutory objectives...." Id. We find this explanation to be sufficient.  Xx3~7 IV ă  ppCommunity Broadcasters invokes  604 of the Regulatory Enforcement Act, 5 U.S.C.   W 604 (as amended by the Small Business Regulatory Enforcement and Fairness Act of 1996), and  W  257 of the Communications Act of 1934, 47 U.S.C.  257(a), as additional reasons why the  W Commission improperly failed to consider the interests of leased access programmers. The  W Regulatory Flexibility Act provides that an agency shall accompany the promulgation of new  W rules with a "final regulatory flexibility analysis" assessing the negative impact of the rules on  W Jsmall businesses. 5 U.S.C.  604. The Communications Act requires the Commission to  W promote diversity of media voices and to identify and eliminate barriers to market entry for small  X3 W Zbusinesses in telecommunications. See 47 U.S.C.  257(a) & (b). Although the Commission  W performed the analysis required by these statutes, Community Broadcasters nevertheless alleges  W jthat the Commission's analysis was insufficient because it focused on the effect the rules would  W have on those cable operators qualifying as small businesses and because it did not give adequate  W consideration to the negative impact of the rules on leased access programmers, most of whom are also small businesses.  ppThe Commission argues that 47 U.S.C.  405(a) bars Community Broadcasters from  W raising issues regarding the Regulatory Flexibility Act on appeal because it failed to argue this  W point below. Under  405(a), a party must file a petition for reconsideration before the  W 6Commission unless the Commission has had an "opportunity to pass" on the issue. Although the  X3 W 7Commission issued an Initial Regulatory Flexibility Analysis in its Reconsideration Order, and  W Xthen sought written comments, Community Broadcasters never complained that the Commission's  W analysis had granted too much attention to small cable operators and too little to small leased  W access programmers. Arguably, however, the fact that the Commission addressed the effect of  W %its rules on small leased access programmers in its Final Regulatory Flexibility Analysis preserves the question whether its discussion was sufficient.  ppIn any event, we find that the Commission fulfilled its obligations under the Regulatory  W lFlexibility Act. Understandably, the Commission's primary focus was on the small cable  X 3 W operators, who were directly subject to the new rule. See Final Rate Order, 12 F.C.C.R. at 5337 W 45. But the Commission did not fail to consider the impact of the rules on cable programmers.  W HIt concluded that the revised rules would have only a "positive" effect on programmers because  W |they lowered the maximum rates for leased access service, permitted resale, granted access to  Xp$3 W highly penetrated tiers, and required part-time rates to be pro-rated. See id. at 5345. This analysis is sufficient to satisfy the obligations of the Regulatory Flexibility Act.  ppNor do we find that the Commission erred in its market entry analysis. As  257 of the  W Communications Act requires, the Commission analyzed barriers to market entry for  X(3 W entrepreneurs and other small businesses in telecommunications created by its new rules. See 12"( 0*0*0*,"  W F.C.C.R. at 5336. The Commission stated that it had established rates, terms and conditions for  X3 W 6leased access intended to promote diversity and competition. See id. It noted that its "provisions  W for part-time leased access are especially suited to allow small or entrepreneurial leased access  X3 W programmers to enter the telecommunications programming marketplace." Id. That Community  W &Broadcasters disagrees with this analysis does not mean that the Commission failed to meet its obligations to examine and discuss the issue.  Xc39 V ă  ppMedia Education challenges the Commission's decision not to grant preferential rates for  W nnonprofit programmers. Leased access is intended for "commercial use," which the  W {Communications Act defines as including both for-profit and not-for-profit video programming.  W 47 U.S.C.  532(b)(5). The Commission viewed this provision as an indication that Congress  X 3 W intended nonprofit users to compete on equal footing for leased access. See Final Rate Order,  W H12 F.C.C.R. at 5313. In addition, the Commission noted that mandatory preferential treatment  W &for nonprofit programmers would not necessarily promote diversity since there is no reason to  W think nonprofits are "inherently more diverse than unaffiliated forprofit programming sources."  X3 W Id. The Commission was also concerned that a preference might "adversely affect the operation,  W jfinancial condition, or market development of the cable system" in contradiction to the statute's  XS3 W mandate. Id. at 531314. We find the Commission's interpretation of the statute to be  W &reasonable, and conclude that the statute's purpose of promoting diversity did not require such a mandatory preference. `(#b$P!The petitions for judicial review are denied.$P! ԃ