[Federal Register Volume 64, Number 249 (Wednesday, December 29, 1999)]
[Proposed Rules]
[Pages 72985-72992]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-33764]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 76
[CS Docket No. 99-363; FCC 99-406]
Implementation of the Satellite Home Viewer Improvement Act of
1999: Retransmission Consent Issues.
AGENCY: Federal Communications Commission.
ACTION: Proposed rule.
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SUMMARY: This document proposes to implement certain aspects of the
[[Page 72986]]
Satellite Home Viewer Improvement Act of 1999, which was enacted on
November 29, 1999. Among other things, the new legislation requires
broadcasters, until the year 2006, to negotiate in good faith with
satellite carriers and other multichannel video programming
distributors (``MVPDs'') with respect to their retransmission of the
broadcasters'' signals, and prohibits broadcasters from entering into
exclusive retransmission agreements. We seek comment on these issues.
This document also seeks comment on the adoption of implementing
regulations relating to the exercise by television broadcast stations
of the right to grant retransmission consent to satellite carriers and
other MVPDs.
DATES: Comments by the public on the Exclusivity and Good Faith
Negotiation Sections are due January 12, 2000; reply comments are due
January 19, 2000. Comments on Retransmission Consent Election Process
and Administrative Matters are due February 1, 2000; reply comments are
due February 20, 2000. Written comments by the public on the proposed
information collections relating to the entire Notice are due February
1, 2000. Written comments must be submitted by the Office of Management
and Budget (OMB) on the proposed information collection(s) on or before
February 28, 2000.
ADDRESSES: Federal Communications Commission, 445 12th Street, SW,
Washington, DC 20554. In addition to filing comments with the
Secretary, a copy of any comments on the information collections
contained herein should be submitted to Judy Boley, Federal
Communications Commission, 445 12th Street, SW, Washington, DC 20554,
or via the Internet to jboley@fcc.gov, and to Virginia Huth, OMB Desk
Officer, 10236 NEOB, 725--17th Street, N.W., Washington, DC 20503 or
via the Internet to vhuth@omb.eop.gov.
FOR FURTHER INFORMATION CONTACT: Steve Broeckaert at (202) 418-7200 or
via internet at sbroecka@fcc.gov. For additional information concerning
the information collection(s) contained in this document, contact Judy
Boley at 202-418-0214, or via the Internet at jboley@fcc.gov.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Notice
of Proposed Rulemaking (``NPRM''), FCC 99-406, adopted December 21,
1999; released December 22, 1999. The full text of the Commission's
NPRM is available for inspection and copying during normal business
hours in the FCC Reference Center (Room CY-A257) at its headquarters,
445 12th Street, SW Washington, D.C. 20554, or may be purchased from
the Commission's copy contractor, International Transcription Service,
Inc., (202) 857-3800, 1231 20th Street, NW, Washington, D.C. 20036, or
may be reviewed via internet at http://www.fcc.gov/csb/
Synopsis of the Notice of Proposed Rulemaking
I. Introduction
1. In this Notice of Proposed Rulemaking (``Notice''), we seek
comment on our implementation of certain aspects of the Satellite Home
Viewer Improvement Act of 1999 (``1999 SHVIA''), which was enacted on
November 29, 1999. This act authorizes satellite carriers to add more
local and national broadcast programming to their offerings, and to
make that programming available to subscribers who previously have been
prohibited from receiving broadcast fare via satellite under compulsory
licensing provisions of the copyright law. The legislation generally
seeks to place satellite carriers on an equal footing with local cable
operators when it comes to the availability of broadcast programming,
and thus give consumers more and better choices in selecting a
multichannel video program distributor (``MVPD''). We intend to
implement the 1999 SHVIA aggressively to ensure that the pro-
competitive goals underlying this important legislation are realized.
2. Among other things, the new legislation requires broadcasters,
until 2006, to negotiate in good faith with satellite carriers and
other MVPDs with respect to their retransmission of the broadcasters'
signals, and prohibits broadcasters from entering into exclusive
retransmission agreements. We are initiating, and plan to conclude,
this rulemaking well ahead of our statutory deadlines for doing so
because of the vital importance of these provisions of the 1999 SHVIA.
Strict adherence by broadcasters to the good faith requirement is
crucial if the statutory objectives are to be fulfilled. This Notice
also seeks comment on the adoption of implementing regulations relating
to the exercise by television broadcast stations of the right to grant
retransmission consent. Retransmission consent is the process whereby
television broadcasters negotiate and consent to carriage of their
signals by MVPDs such as cable television operators and satellite
carriers.
II. Retransmission Consent
3. The Commission, in Implementation of the Cable Television
Consumer Protection and Competition Act of 1992, Broadcast Signal
Carriage Issues (``Broadcast Signal Carriage Order'') (58 FR 17350),
implemented the retransmission consent provisions of the Cable
Television Consumer Protection and Competition Act of 1992 (``1992
Cable Act''). The 1992 Cable Act amended section 325 of the
Communications Act of 1934 by adding provisions governing
retransmission of broadcast signals by cable systems and other MVPDs.
Section 325 of the 1992 Cable Act provided that television broadcast
stations were required to make an election every three years whether to
proceed under the mandatory cable signal carriage rules or to govern
their relationship with cable operators or other MVPDs by electing
retransmission consent. Congress indicated that the retransmission
consent and must-carry rule election provisions adopted pursuant to the
1992 Cable Act provide a model for implementation of the retransmission
consent election provisions of the 1999 SHVIA.
Retransmission Consent and the Election Process
4. Section 1009 of the 1999 SHVIA amends section 325(b)(1) and
provides that no cable system or other MVPD shall transmit the signal
of a broadcasting station, or any part thereof, except: (A) with the
express authority of the originating station; (B) pursuant to section
614, in the case of a station electing to assert the right to carriage
by a cable operator; or (C) pursuant to section 338, in the case of a
station electing to assert the right to carriage by a satellite
carrier. Thereafter, the 1999 SHVIA provides that every three years
television stations covered by 325(b) are required to elect
retransmission consent pursuant to section 325 or must-carry pursuant
to sections 614 or 338.
5. Amended section 325(b)(2) provides five exceptions to the
retransmission consent requirement of section 325(b)(1). The amendment
provides that the retransmission consent requirement does not apply to:
(1) noncommercial television broadcast stations; (2) retransmission, in
certain circumstances, of the signal of a superstation outside the
station's local market by a satellite carrier; (3) until December 31,
2004, retransmission of signals of network stations directly to a home
satellite antenna, if the subscriber receiving the signal is located in
an area outside the local market of such station and resides in an
unserved household; (4) retransmission, in certain circumstances, by a
cable operator or other MVPD other than a satellite carrier of the
signal of a superstation outside the station's local market; and (5)
during
[[Page 72987]]
the six month period following the date of enactment of the 1999 SHVIA,
the retransmission of the signal of a television broadcast station
within the station's local market by a satellite carrier directly to
its subscribers. In other words, subject to the limitations set forth
therein, MVPDs, including satellite carriers, may freely transmit the
signals of any of the broadcasters satisfying the criteria set forth in
section 325(b)(2) without obtaining retransmission consent from such
broadcasters.
6. Section 325(b)(3)(C) directs the Commission, within 45 days
after the date of enactment of the 1999 SHVIA, to commence a rulemaking
to administer the limitations contained in section 325(b)(2). At the
outset, we note that this Notice relates to retransmission consent
only. The exercise of must carry rights by broadcasters with regard to
satellite carriers does not commence until January 1, 2002 and will be
addressed in a subsequent Notice and Rulemaking proceeding. As part of
that proceeding, we will seek comment on any necessary or prudent
revisions to our retransmission consent rules as a result of the
initiation of satellite must carry.
7. The Commission was directed by Congress to undertake a
rulemaking to implement a substantially similar provision of the 1992
Cable Act. In the Broadcast Signal Carriage Order, the Commission
adopted such regulations. The rules implementing this provision are
codified at 47 CFR 76.64. We seek comment on the appropriate manner to
implement the provisions of amended section 325(b)(2). In particular,
we seek comment on whether the amended provisions should be
incorporated into existing 47 CFR 76.64, or whether some other
regulatory framework or procedures would more appropriately implement
amended section 325(b)(2). We also seek comment on any other issues
relevant to the implementation of section 325(b)(2). In addition, we
note that, although the statute is entitled the Satellite Home Viewer
Improvement Act, some of the amendments Congress enacted to section 325
appear to have general impact upon the retransmission consent
provisions as applied to all MVPDs. We tentatively conclude that such
was Congress' intent and seek comment on this tentative conclusion.
8. Congress also amended section 325(b) by adding new paragraph
(3)(C)(i), which requires the Commission to adopt regulations which
shall ``establish election time periods that correspond with those
regulations adopted under subparagraph (B) of this paragraph. * * *''
Commission adopted the required regulations in the Broadcast Signal
Carriage Order. The regulations are codified in 47 CFR 76.64.
9. We seek comment on the appropriate manner to implement section
325(b)(3)(C)(i). In particular we seek comment on whether, following an
initial election period applicable only to satellite carriers, the
Commission should merely incorporate the satellite carrier must carry-
retransmission consent election cycle into the Commission's
regulations, employing the same rules and procedures the Commission
adopted in response to the 1992 Cable Act. In the alternative, we seek
comment on whether a different election cycle with different procedures
is required to appropriately implement section 325(b)(3)(C)(i) and what
the effect would be of having different procedures in the cable and
satellite contexts. In this regard, we seek comment on any statutory,
regulatory or technical differences between satellite carriers and
other MVPDs that would justify a different election scheme. 47 CFR
76.64(g) requires that broadcasters make consistent must carry-
retransmission consent elections where the franchise areas of cable
systems overlap. We seek comment on the consistent election requirement
and how it would be implemented, if at all, in the context of any
election cycle in which satellite carriers participate. We also seek
comment on any other issues relevant to the implementation of section
325(b)(3)(C)(i).
III. Exclusivity and Good Faith Negotiation
A. Good Faith Negotiation Requirement
10. Congress further amended section 325(b) of the Communications
Act, requiring the Commission to adopt regulations that shall:
* * * until January 1, 2006, prohibit a television broadcast
station that provides retransmission consent from * * * failing to
negotiate in good faith, and it shall not be a failure to negotiate
in good faith if the television broadcast station enters into
retransmission consent agreements containing different terms and
conditions, including price terms, with different multichannel video
programming distributors if such different terms and conditions are
based on competitive marketplace considerations.
The Joint Explanatory Statement of the Committee of Conference
(``Conference Report'') does not explain or clarify the statutory
language and merely states that:
The regulations would, until January 1, 2006, prohibit a
television broadcast station from * * * refusing to negotiate in
good faith regarding retransmission consent agreements. A television
station may generally offer different retransmission consent terms
or conditions, including price terms, to different distributors. The
[Commission] may determine that such different terms represent a
failure to negotiate in good faith only if they are not based on
competitive marketplace considerations.
Accordingly, we seek comment on the good faith negotiation
requirement of section 325(b)(3)(C).
11. Congress did not expressly define the term ``good faith'' in
the statutory language or the legislative history other than to
instruct that retransmission consent agreements containing different
terms and conditions, including price terms, with different video
programming distributors do not reflect a failure to negotiate in good
faith on behalf of the television broadcast station if such different
terms and conditions are based on competitive marketplace conditions.
While Congress did not expressly define what constitutes good faith
under section 325(b)(3)(C), Congress has signaled its intention to
impose some heightened duty of negotiation on broadcasters in the
retransmission consent process. We seek to fulfill Congress' intent by
adopting substantive and procedural rules that are clear and subject to
swift and effective enforcement. We therefore seek comment on the
criteria that should be employed to define ``good faith.'' We also seek
comment on whether the duty of good faith negotiation applies equally
to the MVPD negotiating a retransmission consent agreement. We seek
comment on whether we need to explicitly define what constitutes good
faith under section 325(b)(3)(C). The Uniform Commercial Code (``UCC'')
defines the term ``good faith'' as ``honesty in fact in the conduct of
the transaction concerned.'' In addition, Black's Law Dictionary
defines good faith as ``an intangible and abstract quality with no
technical meaning or statutory definition, and it encompasses, among
other things, an honest belief, the absence of malice, and the absence
of design to defraud or to seek an unconscionable advantage * * *'' We
seek comment on whether to adopt either of these definitions, or some
other explicit definition of the term good faith.
12. We note that, in other contexts within both the Communications
Act and other Federal laws, Congress has imposed a good faith
negotiation requirement upon parties subject to a federal statutory
scheme. For example, section 8(d) of the Taft-Hartley Act details the
collective bargaining duty of
[[Page 72988]]
both employers and employees, providing that:
To bargain collectively is the performance of the mutual
obligation of the employer and the representative of the employees
to meet at reasonable times and confer in good faith with respect to
wages, hours, and other terms and conditions of employment * * * but
such obligation does not compel either party to agree to a proposal
or require the making of a concession.
In determining good faith under section 8(d), the National Labor
Relations Board (``NLRB'') and the courts apply two independent
tests to see whether a party has acted in good faith during
collective bargaining. In one test, the NLRB applies an objective
set of criteria to determine whether a party has violated one or
more enumerated per se violations of the duty to negotiate in good
faith. In the second test, the NLRB subjectively examines the
``totality of the circumstances'' evidencing a party's behavior
during negotiations to determine whether the duty to negotiate in
good faith has been violated. The objective test allows the NLRB to
single out specific recurring or particularly damaging behavior. On
the other hand, the subjective test allows the NLRB to punish
behavior that would not by itself constitute a per se violation, but
when examined along with other suspect behavior constitutes a
violation of the duty to negotiate in good faith.
13. Congress imposed a good faith negotiation requirement upon
common carriers as part of the Telecommunications Act of 1996 (``1996
Act''). Section 251(c)(1) of the Communications Act imposes on
incumbent local exchange carriers (``ILECs''):
The duty to negotiate in good faith in accordance with section
252 the particular terms and conditions of agreements to fulfill the
duties described in paragraphs (1) through (5) of subsection (b) and
this subsection. The requesting telecommunications carrier also has
the duty to negotiate in good faith the terms and conditions of such
agreements.
In implementing section 251(c)(1), the Commission adopted a two-
part test to determine good faith similar to that used by the NLRB.
Reasoning that it would be futile to try to determine in advance every
possible action that might be inconsistent with the duty to negotiate
in good faith, the Commission found that it was appropriate to identify
factors or practices that may be evidence of failure to negotiate in
good faith, but that need to be considered in light of all relevant
circumstances. The Commission adopted a list of eight specific actions
or practices that, among other unenumerated actions or practices to be
determined on a case-by-case basis, violate the section 251(c)(1) duty
to negotiate in good faith.
14. We seek comment on whether to adopt a two-part objective-
subjective test for good faith similar to that embraced by the NLRB and
by the Commission pursuant to section 251 of the Communications Act. In
this regard, we seek comment on specific actions or practices which
would constitute a per se violation of the duty to negotiate in good
faith in accordance with section 325(b)(3)(C). Establishing a specific
list of per se requirements or prohibitions would lend clarity to, and
thus expedite, the negotiation process and would do likewise with
respect to our enforcement mechanism, where enforcement became
necessary. In addition to any other actions or practices, we ask
commenters to address whether it would be appropriate to include in any
such list provisions similar to the per se violations set forth in 47
CFR 51.301. Although the 47 CFR 51.301 process provides a basis for
comment in this proceeding, we emphasize that the good faith standard
of SHVIA is different in significant respects. We also seek comment on
any other specific legal precedent upon which we should rely and any
other regulatory approach that might appropriately implement the good
faith negotiation requirement of section 325(b)(3)(C) of the
Communications Act.
15. Section 325(b)(3)(C) permits television broadcast stations to
negotiate in good faith retransmission consent agreements with
different MVPDs with different terms and conditions, including price
terms, provided that such different terms and conditions are based upon
``competitive marketplace considerations.'' We seek comment on what
constitutes a competitive marketplace consideration. We seek to define
the term as specifically as possible in this rulemaking, rather than to
adopt a general standard to be fleshed out in subsequent adjudication.
While we will resolve each case on its own merits, adding specification
to our rules should add certainty to the negotiation process and reduce
the number of cases presented to the Commission for adjudication. We
note that the Commission has adopted non-discrimination standards in
both the program access and open video system contexts. We seek comment
on the relevance, if any, of these standards to what constitutes a
``competitive marketplace consideration.'' We seek comment on the scope
of the relevant marketplace to which Congress refers. In addition, we
seek comment on any other factors or approaches to determining what
constitutes competitive marketplace considerations under section
325(b)(3)(C). In this regard, we note that the Commission has recently
relaxed the television broadcast ownership rules, in certain
circumstances, permitting companies to own two television broadcast
stations within a given market. We seek comment on this development and
its impact upon a broadcaster's duty to negotiate in good faith. For
example, can companies with two broadcast stations within the same
market negotiate a joint retransmission consent agreement or should
they be required to negotiate separate arms-length retransmission
consent agreements on behalf of each station?
16. The Commission is aware that direct broadcast satellite
providers have entered into retransmission consent agreements with
television broadcast stations that predate enactment of section
325(b)(3)(C). In addition, we note that we are also aware of agreements
that have been executed since the enactment of the 1999 SHVIA. We seek
comment on the impact on these agreements of the duty to negotiate in
good faith.
B. Prohibition of Exclusive Retransmission Consent
17. Section 325(b) of the Communications Act also directs the
Commission to commence a rulemaking proceeding that shall:
until January 1, 2006, prohibit a television broadcast station that
provides retransmission consent from engaging in exclusive contracts
* * *
The accompanying Conference Report contains no language to clarify
or explain the prohibition, stating only:
The regulations would, until January 1, 2006, prohibit a
television broadcast station from entering into an exclusive
retransmission consent agreement with a multichannel video
programming distributor * * *
18. The Commission established a similar prohibition in rulemakings
following passage of the 1992 Cable Act. The 1992 Cable Act called upon
the Commission to ``establish regulations to govern the exercise by
television broadcast stations of the right to grant retransmission
consent * * *'' In the Broadcast Signal Carriage Order, the Commission
recognized that ``exclusivity can be an efficient form of distribution,
but, in view of the concerns that led Congress to regulate program
access and signal carriage arrangements, we believe that it is
appropriate to extend the same nonexclusivity safeguards to non-cable
multichannel distributors with respect to television broadcast signals,
at least initially.'' The Commission established
[[Page 72989]]
the following prohibition on exclusive retransmission contracts:
Exclusive retransmission consent agreements are prohibited. No
television broadcast station shall make an agreement with one
multichannel distributor for carriage, to the exclusion of other
multichannel distributors.
19. Section 325(b)(3)(C)(ii) requires us to ``until January 1,
2006, prohibit a television broadcast station that provides
retransmission consent from engaging in exclusive contracts.'' We seek
comment on what activities would constitute ``engaging in'' exclusive
retransmission agreements. We note that section 325(b)(3)(C)(ii)
prohibits a broadcaster from ``engaging in'' exclusive retransmission
consent agreements, while the Conference Report describes the
prohibition of ``entering into'' exclusive retransmission consent
agreements. While the phrase ``engaging in'' could be interpreted to
suggest a currently effective exclusive relationship, it would appear
to allow television broadcast stations to negotiate future exclusive
contracts that would take effect on or after January 1, 2006. We seek
comment on whether the statute allows negotiation and execution of such
agreements before January 1, 2006. We also note the distinction between
the phrases ``engaging in'' and ``entering into.'' While the statutory
phrase ``engaging in'' seems to indicate not only the act of entering
into a contract, but also the acts necessary to performance of a
contract, the phrase ``entering into'' seems to indicate only the
process of negotiating and formalizing a contract. We seek comment on
the significance, if any, of the Conference Report's use of the phrase
``entering into.''
20. The Conference Report states that the prohibition applies to
``an exclusive retransmission consent agreement with a multichannel
video programming distributor'' until January 1, 2006. On its face,
this provision would seem to sunset any prohibition on exclusive
retransmission consent contracts for all multichannel video program
distributors. Under this reading of the statute, the Commission's rule
prohibiting exclusive retransmission consent agreements for cable
operators would be deemed abrogated as of January 1, 2006. We seek
comment on whether this was Congress' intent in enacting section
325(b)(3)(C)(ii). In addition, we seek comment regarding what public
interest concerns are involved in such a sunset. Section
325(b)(3)(C)(ii) appears to have immediate effect. We seek comment on
the existence of exclusive satellite carrier retransmission consent
agreements that either predate the enactment of the 1999 SHVIA or under
the Commission's rules implementing section 325(b)(3)(C)(ii). Assuming
any such agreements exist, we seek comment on what, if anything, the
Commission should do about them.
21. We seek comment on what evidence should be required to
demonstrate the existence of an exclusive contract in violation of
section 325(b)(3)(C)(ii). Presumably, if companies are engaged in an
exclusive contractual relationship, they are in violation of the
statute's prohibitions. However, there is no mechanism for determining
whether such exclusive contracts exist. As such, it may be difficult
for a MVPD not party to an exclusive retransmission consent agreement
to determine whether one exists. We seek comment on approaches to
establishing the existence of an exclusive retransmission consent
agreement.
C. Procedural Issues
22. In directing the Commission to adopt regulations which, until
January 1, 2006, prohibit exclusive carriage agreements and require
good faith negotiation of retransmission consent agreements, Congress
did not indicate what procedures the Commission should employ to
enforce these provisions. We seek comment on what procedures the
Commission should employ to enforce the provisions adopted pursuant to
section 325(b)(3)(C). Our goal is swift and certain enforcement of the
rules that Congress has directed us to adopt to further the pro-
competitive goals of the 1999 SHVIA. Commenters should state whether
the same set of enforcement procedures should apply to both the
exclusivity prohibition and the good faith negotiation requirement, or
whether the Commission should adopt different procedures tailored to
each prohibition. We seek comment regarding whether special relief
procedures of the type found in 47 CFR 76.7 which provides an
appropriate framework for addressing issues arising under section
325(b)(3)(C). We seek comment on whether expedited procedures are
necessary to the appropriate resolution of either exclusivity or good
faith proceedings. We seek comment on whether there are circumstances
in which the use of alternative dispute resolution services would
assist in determining whether a television broadcast station negotiated
in good faith as defined by section 325(b)(3)(C)(ii) and the
Commission's rules adopted thereunder.
23. We also seek comment on how the burden of proof should be
allocated. In this regard, we seek comment on whether the burden should
rest with the complaining party until it has made a prima facie showing
and then shift to the defending party. Under this approach, we seek
comment on what would constitute a prima facie showing sufficient to
shift the burden to the defending party.
24. Section 325(b)(3)(C) directs that the regulations adopted by
the Commission prohibit exclusive carriage agreements and require good
faith negotiation of retransmission consent agreements ``until January
1, 2006.'' We seek comment on whether the Commission's rules regarding
exclusive carriage agreements and good faith negotiation should
automatically sunset on this date. We seek comment on whether any
sunset of regulations should apply to television broadcast stations
negotiations with all MVPDs or solely to negotiations with satellite
programming distributors. We also seek comment on what, if anything, is
the Commission's role with regard to these issues after January 1,
2006.
IV. Administrative Matters
A. Initial Regulatory Flexibility Act Statement
25. The initial regulatory flexibility analysis is attached to this
order as Appendix A.
B. Ex Parte Rules
26. This proceeding will be treated as a ``permit-but-disclose''
proceeding subject to the ``permit-but-disclose'' requirements under 47
CFR 1.1206(b) of the rules. 47 CFR 1.1206(b), as revised. Ex parte
presentations are permissible if disclosed in accordance with
Commission rules, except during the Sunshine Agenda period when
presentations, ex parte or otherwise, are generally prohibited. Persons
making oral ex parte presentations are reminded that a memorandum
summarizing a presentation must contain a summary of the substance of
the presentation and not merely a listing of the subjects discussed.
More than a one or two sentence description of the views and arguments
presented is generally required. See 47 CFR 1.1206(b)(2), as revised.
Additional rules pertaining to oral and written presentations are set
forth in 47 CFR 1.1206(b).
C. Filing of Comments and Reply Comments
27. Comments may be filed using the Commission's Electronic Comment
Filing System (``ECFS'') or by filing
[[Page 72990]]
paper copies. Comments filed through the ECFS can be sent as an
electronic file via the Internet to http://www.fcc/e-file/ecfs.html>.
Generally, only one copy of an electronic submission must be filed. If
multiple docket or rulemaking numbers appear in the caption of this
proceeding, however, commenters must transmit one electronic copy of
the comments to each docket or rulemaking number referenced in the
caption. In completing the transmittal screen, commenters should
include their full name, Postal service mailing address, and the
applicable docket or rulemaking number. Parties may also submit an
electronic comment by Internet e-mail. To get filing instructions for
e-mail comments, commenters should send an e-mail to ecfs@fcc.gov, and
should include the following words in the body of the message, ``get
form[email protected] and to
Virginia Huth, OMB Desk Officer, 10236 NEOB, 725 17th Street, N.W.,
Washington, DC 20503 or via the Internet to vhuth@omb.eop.gov.
29. Parties who choose to file by paper must file an original and
four copies of each filing. If participants want each Commissioner to
receive a personal copy of their comments, an original plus nine copies
must be filed. If more than one docket or rulemaking number appears in
the caption of this proceeding commenters must submit two additional
copies for each additional docket or rulemaking number. All filings
must be sent to the Commission's Secretary, Magalie Roman Salas, Office
of the Secretary, Federal Communications Commission, 445 12th Street,
S.W., Washington, D.C. 20554. The Cable Services Bureau contact for
this proceeding is Steven Broeckaert at (202) 418-7200, TTY (202) 418-
7172, or at sbroecka@fcc.gov.
30. Parties who choose to file by paper should also submit their
comments on diskette. Parties should submit diskettes to Steven
Broeckaert, Cable Services Bureau, 445 12th Street N.W., Room 4-A802,
Washington, D.C. 20554. Such a submission should be on a 3.5-inch
diskette formatted in an IBM compatible form using MS DOS 5.0 and
Microsoft Word, or compatible software. The diskette should be
accompanied by a cover letter and should be submitted in ``read only''
mode. The diskette should be clearly labeled with the party's name,
proceeding (including the lead docket number in this case [CS Docket
No. 99-363]), type of pleading (comments or reply comments), date of
submission, and the name of the electronic file on the diskette. The
label should also include the following phrase ``Disk Copy--Not an
Original.'' Each diskette should contain only one party's pleadings,
referable in a single electronic file. In addition, commenters must
send diskette copies to the Commission's copy contractor, International
Transcription Service, 1231 20th Street, N.W., Washington, D.C. 20036.
Paperwork Reduction Act
This NPRM contains a proposed information collection. The
Commission, as part of its continuing effort to reduce paperwork
burdens, invites the general public and the Office of Management and
Budget (OMB) to comment on the information collection(s) contained in
this NPRM, as required by the Paperwork Reduction Act of 1995, Public
Law 104-13. OMB notification of action is due 60 days from date of
publication of this NPRM in the Federal Register. Comments should
address: (a) whether the proposed collection of information is
necessary for the proper performance of the functions of the
Commission, including whether the information shall have practical
utility; (b) the accuracy of the Commission's burden estimates; (c)
ways to enhance the quality, utility, and clarity of the information
collected; and (d) ways to minimize the burden of the collection of
information on the respondents, including the use of automated
collection techniques or other forms of information technology.
OMB Control Number: 3060-xxxx.
Title: Implementation of the Satellite Home Viewer Improvement Act
of 1999: Retransmission Consent Issues.
Type of Review: New collection or revision of existing collection.
Respondents: Business or other for-profit entities.
Number of Respondents: Television broadcast licensees and MVPDs--
11,588.
Estimated Time Per Response: 11.196 hours.
Total Annual Burden: 1,297,492.
Cost to Respondents: $13,000.
Needs and Uses: Congress directed the Commission to adopt
regulations related to retransmission consent pursuant to the changes
outlined in the Satellite Home Viewer Improvement Act of 1999.
Retransmission consent is the process whereby television broadcasters
negotiate and consent to carriage of their signals by MVPDs. Television
broadcasters will be required to make an election and make status
information available for public review. The availability of such
information will serve the purpose of informing the public of the
method of broadcast signal carriage.
Federal Communications Commission.
William F. Caton,
Deputy Secretary.
Appendix A
Initial Regulatory Flexibility Act Analysis
1. As required by the Regulatory Flexibility Act (``RFA''), the
Commission has prepared this Initial Regulatory Flexibility Analysis
(``IRFA'') of the possible significant economic impact on small
entities by the possible policies and rules that would result from
this Notice of Proposed Rulemaking (``Notice''). Written public
comments are requested on this IRFA. Comments must be identified as
responses to the IRFA and must be filed by the deadlines for
comments on the Notice provided above in paragraph 31. The
Commission will send a copy of the Notice, including this IRFA, to
the Chief Counsel for Advocacy of the Small Business Administration.
In addition, the Notice and IRFA (or summaries thereof) will be
published in the Federal Register.
2. Need for, and Objectives of, the Proposed Rules. Section
325(b)(3)(C), of the Communications Act of 1934, as amended
(``Act''), 47 U.S.C. Sec. 325, directed the Commission, within 45
days of enactment of the Satellite Home Viewer Improvement Act of
1999, ``to commence a rulemaking proceeding to revise the
regulations governing the exercise by television broadcast stations
of the right to grant retransmission consent.'' These provisions
concern retransmission consent in connection with transmission of
television broadcast station signals by multichannel video
programming distributors (``MVPDs'').
3. Legal Basis. The authority for the action proposed in this
rulemaking is contained in sections 1, 4(i) and (j), 325, 338, and
614 of the Communications Act of 1934, as amended, 47 U.S.C.
Secs. 151, 154(i) and (j), 325, 338, and 534.
4. Description and Estimate of the Number of Small Entities to
Which the Proposed Rules Will Apply. The IRFA directs the Commission
to provide a description of and, where feasible, an estimate of the
number of small entities that will be affected by the proposed
rules. The IRFA defines the term ``small entity'' as having the same
meaning as the terms ``small business,'' ``small organization,'' and
``small business concern'' under section 3 of the Small Business
Act.
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Under the Small Business Act, a small business concern is one which:
(1) is independently owned and operated; (2) is not dominant in its
field of operation; and (3) satisfies any additional criteria
established by the Small Business Administration (``SBA''). The
rules we may adopt as a result of the Notice will affect television
station licensees, cable operators, and other MVPDs.
5. Television Stations. The proposed rules and policies will
apply to television broadcasting licensees. The Small Business
Administration defines a television broadcasting station that has no
more than $10.5 million in annual receipts as a small business.
Television broadcasting stations consist of establishments primarily
engaged in broadcasting visual programs by television to the public,
except cable and other pay television services. Included in this
industry are commercial, religious, educational, and other
television stations. Also included are establishments primarily
engaged in television broadcasting and which produce taped
television program materials. Separate establishments primarily
engaged in producing taped television program materials are
classified under another SIC number. There were 1,509 television
stations operating in the Nation in 1992. That number has remained
fairly constant as indicated by the approximately 1,579 operating
full power television broadcasting stations in the Nation as of May
31, 1998.
6. Thus, the proposed rules will affect many of the
approximately 1,579 television stations; approximately 1,200 of
those stations are considered small businesses. These estimates may
overstate the number of small entities since the revenue figures on
which they are based do not include or aggregate revenues from non-
television affiliated companies.
7. In addition to owners of operating television stations, any
entity that seeks or desires to obtain a television broadcast
license may be affected by the proposals contained in this item. The
number of entities that may seek to obtain a television broadcast
license is unknown. We invite comment as to such number.
8. Small MVPDs: SBA has developed a definition of small entities
for cable and other pay television services, which includes all such
companies generating $11 million or less in annual receipts. This
definition includes cable system operators, direct broadcast
satellite services, multipoint distribution systems, satellite
master antenna systems and subscription television services.
According to the Census Bureau data from 1992, there were 1,758
total cable and other pay television services and 1,423 had less
than $11 million in revenue. We address below services individually
to provide a more precise estimate of small entities.
9. Cable Systems: The Commission has developed, with SBA's
approval, our own definition of a small cable system operator for
the purposes of rate regulation. Under the Commission's rules, a
``small cable company'' is one serving fewer than 400,000
subscribers nationwide. Based on our most recent information, we
estimate that there were 1439 cable operators that qualified as
small cable companies at the end of 1995. Since then, some of those
companies may have grown to serve over 400,000 subscribers, and
others may have been involved in transactions that caused them to be
combined with other cable operators. Consequently, we estimate that
there are fewer than 1439 small entity cable system operators that
may be affected by the decisions and rules emanating out of the
Notice.
10. The Communications Act also contains a definition of a small
cable system operator, which is ``a cable operator that, directly or
through an affiliate, serves in the aggregate fewer than 1% of all
subscribers in the United States and is not affiliated with any
entity or entities whose gross annual revenues in the aggregate
exceed $250,000,000.'' The Commission has determined that there are
61,700,000 subscribers in the United States. Therefore, an operator
serving fewer than 617,000 subscribers shall be deemed a small
operator, if its annual revenues, when combined with the total
annual revenues of all of its affiliates, do not exceed $250 million
in the aggregate. Based on available data, we find that the number
of cable operators serving 617,000 subscribers or less totals
approximately 1450. Although it seems certain that some of these
cable system operators are affiliated with entities whose gross
annual revenues exceed $250,000,000, we are unable at this time to
estimate with greater precision the number of cable system operators
that would qualify as small cable operators under the definition in
the Communications Act. It should be further noted that recent
industry estimates project that there will be a total 64,000,000
subscribers and we have based our fee revenue estimates on that
figure.
11. Open Video System (``OVS''): The Commission has certified
eleven OVS operators. Of these eleven, only two are providing
service. Affiliates of Residential Communications Network, Inc.
(``RCN'') received approval to operate OVS systems in New York City,
Boston, Washington, D.C. and other areas. RCN has sufficient
revenues to assure us that they do not qualify as small business
entities. Little financial information is available for the other
entities authorized to provide OVS that are not yet operational.
Given that other entities have been authorized to provide OVS
service but have not yet begun to generate revenues, we conclude
that at least some of the OVS operators qualify as small entities.
12. Multichannel Multipoint Distribution Service (``MMDS''): The
Commission refined the definition of ``small entity'' for the
auction of MMDS as an entity that together with its affiliates has
average gross annual revenues that are not more than $40 million for
the proceeding three calendar years. This definition of a small
entity in the context of the Commission's Report and Order
concerning MMDS auctions that has been approved by the SBA.
13. The Commission completed its MMDS auction in March, 1996 for
authorizations in 493 basic trading areas (``BTAs''). Of 67 winning
bidders, 61 qualified as small entities. Five bidders indicated that
they were minority-owned and four winners indicated that they were
women-owned businesses. MMDS is an especially competitive service,
with approximately 1,573 previously authorized and proposed MMDS
facilities. Information available to us indicates that no MDS
facility generates revenue in excess of $11 million annually. We
tentatively conclude that for purposes of this IRFA, there are
approximately 1,634 small MMDS providers as defined by the SBA and
the Commission's auction rules.
14. DBS: There are four licenses of DBS services under Part 100
of the Commission's Rules. Three of those licensees are currently
operational. Two of the licensees which are operational have annual
revenues which may be in excess of the threshold for a small
business. The Commission, however, does not collect annual revenue
data for DBS and, therefore, is unable to ascertain the number of
small DBS licensees that could be impacted by these proposed rules.
DBS service requires a great investment of capital for operation,
and we acknowledge that there are entrants in this field that may
not yet have generated $11 million in annual receipts, and therefore
may be categorized as a small business, if independently owned and
operated.
15. HSD: The market for HSD service is difficult to quantify.
Indeed, the service itself bears little resemblance to other MVPDs.
HSD owners have access to more than 265 channels of programming
placed on C-band satellites by programmers for receipt and
distribution by MVPDs, of which 115 channels are scrambled and
approximately 150 are unscrambled. HSD owners can watch unscrambled
channels without paying a subscription fee. To receive scrambled
channels, however, an HSD owner must purchase an integrated
receiver-decoder from an equipment dealer and pay a subscription fee
to an HSD programming package. Thus, HSD users include: (1) Viewers
who subscribe to a packaged programming service, which affords them
access to most of the same programming provided to subscribers of
other MVPDs; (2) viewers who receive only non-subscription
programming; and (3) viewers who receive satellite programming
services illegally without subscribing. Because scrambled packages
of programming are most specifically intended for retail consumers,
these are the services most relevant to this discussion.
16. According to the most recently available information, there
are approximately 30 program packages nationwide offering packages
of scrambled programming to retail consumers. These program packages
provide subscriptions to approximately 2,314,900 subscribers
nationwide. This is an average of about 77,163 subscribers per
program package. This is substantially smaller than the 400,000
subscribers used in the commission's definition of a small MSO.
Furthermore, because this is an average, it is likely that some
program packages may be substantially smaller.
17. SMATVs: Industry sources estimate that approximately 5,200
SMATV operators were providing service as of December, 1995. Other
estimates indicate that SMATV operators serve approximately 1.05
million
[[Page 72992]]
residential subscribers as of September, 1996. The ten largest SMATV
operators together pass 815,740 units. If we assume that these SMATV
operators serve 50% of the units passed, the ten largest SMATV
operators serve approximately 40% of the total number of SMATV
subscribers. Because these operators are not rate regulated, they
are not required to file financial data with the Commission.
Furthermore, we are not aware of any privately published financial
information regarding these operators. Based on the estimated number
of operators and the estimated number of units served by the largest
ten SMATVs, we tentatively conclude that a substantial number of
SMATV operators qualify as small entities.
18. Description of Projected Reporting, Recordkeeping and other
Compliance Requirements. In order to implement the Satellite Home
Viewer Improvement Act of 1999, the Commission has proposed to add
new rules and modify others. We have yet to determine whether to
amend existing provisions of the Commission's rules, or to adopt
some other regulatory framework or procedures concerning
retransmission consent. There are certain compliance requirements
involving the retransmission consent agreement process. Foremost is
that entities most likely will have to participate in a negotiation
process. There may be costs relating to the time and effort involved
in discussions, in crafting, and possibly in achieving an agreement.
In certain circumstances, there may be costs associated with hiring
accounting or engineering personnel, as there may be instances where
entities may have to provide detailed information relating to such
aspects of their particular operations. Conversely, research may
have to be conducted and information may have to be obtained on
other entities' operations. All such data may be key to a
negotiation and a retransmission consent agreement.
19. In terms of recordkeeping, entities most likely will have to
keep a record of their election status and entities may be required
to maintain such information within their business environment and
may also have to file such information with the Commission. As
discussed in the Notice, however, it is unclear what records or
recordkeeping would be required of entities relating to the good
faith negotiation and exclusive carriage aspects of a retransmission
consent agreement. At this time, small businesses might not be
impacted differently, but we seek comment on these and the above
matters.
20. Steps Taken To Minimize Significant Impact on Small
Entities, and Significant Alternatives Considered. The RFA requires
an agency to describe any significant alternatives that it has
considered in reaching its proposed approach, which may include the
following four alternatives: (1) The establishment of differing
compliance or reporting requirements or timetables that take into
account the resources available to small entities; (2) the
clarification, consolidation, or simplification of compliance or
reporting requirements under the rule for small entities; (3) the
use of performance, rather than design, standards; and (4) an
exemption from coverage of the rule, or any part thereof, for small
entities.
21. As indicated above, the Notice proposes to implement certain
aspects of the Satellite Home Viewer Improvement Act of 1999. Among
other things, the new legislation requires television broadcasters,
until 2006, to negotiate in good faith with satellite carriers and
other multichannel video programming distributors (``MVPDs'') with
respect to their retransmission of the broadcasters' signals, and
prohibits broadcasters from entering into exclusive retransmission
agreements. This document also discusses implementing regulations
relating to the exercise by television broadcast stations of the
right to grant retransmission consent to satellite carriers and
other MVPDs.
22. This legislation applies to small entities and large
entities equally. However, in terms of the election process, in the
Notice we specifically ask whether there are any statutory,
regulatory, or technical differences between any of the MVPDs that
would justify different election schemes. The Commission
acknowledges that consideration should be given to possible
differences in services. There may be established a different
election process timetable or compliance requirement, and also
possibly a different filing requirement, among the different MVPDs.
In the Notice, however, the possible distinction in treatment was
not related to the size of the entity. At this time, small entities
are not treated differently and might not be impacted differently,
but we seek comment.
23. Federal Rules Which Duplicate, Overlap, or Conflict with the
Commission's Proposals. None.
[FR Doc. 99-33764 Filed 12-28-99; 8:45 am]
BILLING CODE 6712-01-P
