[Federal Register Volume 62, Number 22 (Monday, February 3, 1997)]
[Proposed Rules]
[Pages 4959-4965]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-2535]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Parts 25, 26, 73, 76 and 100
[MM Docket No. 95-176; FCC 97-4]
Closed Captioning of Video Programming
AGENCY: Federal Communications Commission.
ACTION: Proposed rule.
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SUMMARY: The Telecommunications Act of 1996, Public Law 104-104, 110
Stat. 56 (1996), added a new provision, Section 713, to the
Communications Act of 1934, as amended, which requires the Commission
to prescribe, by August 8, 1997, rules and implementation schedules for
captioning of video programming. The Commission requests comment on
proposed rules and timetables for mandatory closed captioning of video
programming, as outlined in the Notice of Proposed Rulemaking
(``NPRM''). The intended effect of this NPRM is to promote the
accessibility of video programming to persons with hearing
disabilities. Our proposals are based on comments and information
submitted in response to a Notice of Inquiry (``NOI'') in this
proceeding and additional data gathered by the Commission for our
Report to Congress on video accessibility that was issued on July 29,
1996.
DATES: Comments are due on or before February 28, 1997, and reply
comments are due on or before March 24, 1997. Written comments by the
public on the proposed information collections are due on or before
February 28, 1997. Written comments must be submitted by the Office of
Management and Budget (OMB) on the proposed collections on or before
April 4, 1997.
ADDRESSES: Federal Communications Commission, Washington, D.C. 20554.
In addition to filing comments with the Secretary, a copy of any
comments on the information collections contained herein should be
submitted to Dorothy Conway, Federal Communications Commission, Room
234, 1919 M Street, N.W., Washington, D.C. 20554, or via the Internet
to dconway@fcc.gov, and to Timothy Fain, OMB Desk Officer, 10236 NEOB,
725--17th Street, N.W., Washington, DC 20503 or via the Internet to
fain__t@al.eop.gov.
FOR FURTHER INFORMATION CONTACT: Marcia Glauberman, John Adams or
Alexis Johns, Cable Services Bureau, (202) 418-7200, TTY (202) 418-
7172. For additional information concerning the information collections
contained in this NPRM, contact Dorothy Conway at 202-418-0217, or via
the Internet at dconway@fcc.gov.
SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's
Notice of Proposed Rulemaking, MM Docket No. 95-176, FCC 97-4, adopted
January 9, 1997, and released January 17, 1997. The full text of this
decision is available for inspection and copying during normal business
hours in the FCC Reference Center (room 239), 1919 M Street, NW,
Washington, D.C. 20554, and may be purchased from the Commission's copy
contractor, International Transcription Service, (202) 857-3800, TTY
(202) 293-8810, 1919 M Street, N.W., Washington, D.C. 20554. For copies
in alternative formats, such as braille, audio cassette, or large
print, please contact Sheila Ray at International Transcription
Service.
Paperwork Reduction Act
This NPRM contains proposed information collections. 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 collections contained in
this NPRM, as required by the Paperwork Reduction Act of 1995. Public
and agency comments are due at the same time as other comments on this
NPRM; 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 collections of information are
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 collections of
information on the respondents, including the use of automated
collection techniques or other forms of information technology.
OMB Approval Number: 3060-XXXX Approval number to be assigned.
Title: Closed Captioning of Video Programming.
Type of Review: New collection.
Respondents: Individuals or households; businesses and other for-
profit entities.
Number of Respondents: 23,342. (3,000 complainants + 20,342 program
providers)
Estimated Time Per Response: 1-10 hours estimated as follows: We
estimate that program providers will initiate 100 waivers/petitions
each year requesting exemption from closed captioning requirements. At
this time, we estimate
[[Page 4960]]
that the average burden to complete each waiver/petition process will
be 5 hours. We estimate that 50% of program providers will use in-house
assistance. We estimate that 50% of program providers will use outside
legal assistance to complete waivers/petitions. These program providers
will undergo an average burden of 2 hours for each waiver/petition to
coordinate information with outside legal assistance. 50 (50% of
program providers using in-house assistance) x 5 hours=250 hours. 50
(50% of program providers using outside legal assistance) x 2
hours=100 hours.
Estimated annual burden to complainants and program providers for
the complaint process: We estimate there will be 3,000 annual
complaints filed by viewers at the local level. The average burden for
each complaint and response is estimated to be 1 hour per complainant
and 1 hour per program provider. 3,000 viewer complaints x 1 hour and
3,000 program provider responses x 1 hour=6,000 hours.
We estimate that the majority of complaints will be resolved at the
local level and assume that approximately 600 (20% of 3,000) will go
unresolved, resulting in complaints and responses being filed with the
Commission. The average burden for each complaint and response in this
instance is estimated to be 2 hours per complainant and 4 hours per
program provider. 600 viewer complaints x 2 hours and 600 program
provider responses x 4 hours=3,600 hours. We estimate the average
annual burden for recordkeeping and making information available upon
request to viewers will be 10 hours for each program provider. The
estimated number of program providers is 20,342 as follows: 11,200
cable television systems, 1,532 commercial and non-commercial
television stations, 137 national cable video networks, 3 open video
system (``OVS'') operators, 8 direct broadcast satellite (``DBS'')
operators, 30 home satellite dish (``HSD'') program packagers, 5,200
satellite master antenna television systems (``SMATVs''), 200 wireless
cable operators, and 2,032 instructional television fixed service
(``ITFS'') providers. 20,342 x 10=203,420 hours.
Total Annual Burden: 213,370 hours. (250+100+6,000+ 3,600+203,420)
Estimated Costs for Respondents: $90,684 estimated as follows:
Program providers will use outside legal assistance paid at $150 per
hour to complete approximately 50 waivers/petitions. 50 waivers x 5
hours per waiver x $150 per hour=$37,500. Postage and stationery
costs for waivers are estimated at an average of $5 per waiver. 100
waivers x $5=$500. Postage and stationary costs for filing complaints
is estimated as follows: 3,000 viewer complaints filed at the local
level x $1=$3,000. 3,000 program provider responses x $1=$3,000.
600 viewer complaints filed at the Commission x $5 per complaint
(increased postage for mailing video logs or tapes)=$3,000. 600 program
provider responses x $5=$3,000. Postage and stationery costs for
recordkeeping and making records available upon request are estimated
at an average of $2 per program provider. 20,342 x $2=$40,684. Total
costs=$37,500+ $500+$3,000
+$3,000+$3,000+$3,000
+$40,684=$90,684.
Needs and Uses: This NPRM is adopted pursuant to Section 713 of the
Communications Act of 1934, as amended. The requirements set forth in
Section 713 are intended to further Congress' goal to ``ensure that all
Americans ultimately have access to video services and programs,
particularly as video programming becomes an increasingly important
part of the home, school and workplace.'' The requirements will be used
to ensure that video programming is accessible to individuals with
hearing disabilities through closed captioning, regardless of the
delivery mechanism used to reach consumers.
Synopsis of the Notice of Proposed Rulemaking
1. Closed captioning is an assistive technology designed to provide
access to television for persons with hearing disabilities. Closed
captioning is similar to subtitles. Captions also identify speakers,
sound effects, music and laughter. Currently, programming accessible to
persons with hearing disabilities through closed captioning is the
result of the voluntary efforts of program producers and providers,
although the Commission has encouraged these efforts in several
previous actions.
2. Section 305 of the Telecommunications Act of 1996 (``1996
Act''), Public Law 104-104, 110 Stat. 56 (1996), added a new Section
713, Video Programming Accessibility, to the Communications Act of
1934, as amended (``Communications Act''), 47 U.S.C. 613. Section 713
requires the Commission to prescribe, by August 8, 1997, rules and
implementation schedules for captioning of video programming. In this
NPRM, the Commission discusses and seeks comment on proposals intended
to maximize the amount of closed captioned programming, with
appropriate exemptions and implementation schedules that take into
account the relevant technical and costs issues involved. Our proposals
are based on comments and information submitted in response to the NOI
in this proceeding, summarized at 60 FR 65052 (December 18, 1995), and
additional data gathered by the Commission for our Report to Congress
on video accessibility that was issued on July 29, 1996, summarized at
61 FR 42249 (August 14, 1996), pursuant to the requirements of Section
713(a).
3. At the outset, we note that the provisions of Section 713 apply
to all types of video programming delivered electronically to
consumers, regardless of the entity that provides the programming or
the category of programming. We consider over-the-air broadcast
television service (both commercial and noncommercial), and all
multichannel video programming distributors (``MVPDs''), including:
cable television, direct-to-home (``DTH'') satellite services,
including DBS and HSD services; wireless cable systems using the
multichannel multipoint distribution service (``MMDS''), ITFS, or local
multipoint distribution (``LMDS''); SMATV systems; and OVS. Also, as
required by Section 713, we consider all sources of video programming
distributed by these technologies, including programming from
commercial and noncommercial broadcast television networks, basic and
premium cable networks, syndicated programming, and locally or
regionally produced broadcast and cable programming.
4. Throughout this NPRM, we seek comment on our proposed closed
captioning requirements. We also invite commenters to provide
alternative proposals that will fulfill the congressional mandate to
ensure video accessibility to individuals with hearing disabilities.
5. Responsibility for Compliance with Captioning Requirements. In
order to implement any closed captioning requirements that we may
adopt, we must determine where the responsibility lies for ensuring
that video programming is closed captioned, and which parties shall be
required to comply with those requirements. Section 713(b)(1) focuses
on the result that new programming be closed captioned, rather than who
is responsible for accomplishing this goal, while Section 713(b)(2)
refers to both video programming providers and program owners as being
responsible for captioning of library programming. Our tentative
proposal is to require those entities that deliver video programming
[[Page 4961]]
directly to consumers (i.e., television broadcasters and MVPDs) to be
ultimately responsible for the rules we adopt. Although we propose to
place the compliance obligations on video programming providers, we
recognize, from a practical standpoint, that captioning is most
efficient at the production stage. Thus, we believe that producers
generally will have the responsibility for captioning programming,
regardless of who has the obligation to comply with our rules.
6. Transition Rules for New Programming. Section 713(b)(1) requires
the Commission to adopt rules to ensure that all non-exempt video
programming first published or exhibited after the effective date of
the our closed captioning rules (``new programming'') is fully
accessible through the provision of closed captions. Section 713(c)
further requires that the Commission's rules include an appropriate
schedule of deadlines by which non-exempt video programming must be
closed captioned. We propose to require that all non-exempt, new
programming be closed captioned within eight years. We propose to phase
in this captioning requirement by increasing the amount of required
captioning by 25% every two years. Thus, we would require 25% of such
programming to be captioned at the end of the second year, 50% at the
end of the fourth year, 75% at the end of the sixth year, and to have
all non-exempt, new programming captioned at the end of the eighth
year. Alternatively, we seek comment on a ten year period, with 25% of
new programming captioned after three years, 50% after five years, 75%
after seven years, and 100% after ten years. With respect to MVPDs, we
propose to apply the percentages of programming that must be captioned
on a system-wide basis. However, we also solicit comment on whether the
percentages of programming that must be captioned should apply to each
program service or channel transmitted by an MVPD. We ask whether the
determination that a percentage requirement has been met should be
based on the amount of programming with captioning that has been shown
over a month, a week, or some other period of time. We seek comment on
what the period of time should be if we apply the percentages on a
system-wide basis, and what it should be if we apply the percentages on
a per-channel basis.
7. Transition Rules For Library Programming. With respect to
programming that was first published or exhibited before the effective
date of our rules (``library programming''), Section 713(b)(2) requires
that our rules ensure that video programming providers or owners
maximize the accessibility of such programming through closed
captioning. In considering closed captioning requirements for library
programming, we do not believe that the statute requires that all such
programming be captioned, given the distinction between new programming
(``fully accessible'') and library programming (``maximize
accessibility'') evident in the statutory language of Sections 713
(b)(1) and (b)(2). We ask whether we should require that a percentage
of library programming (e.g., 75%) ultimately be captioned. We also
seek comment on what deadline should apply to captioning of library
programming and what the relevant time frames for the transition period
should be. Some commenters assert that captioning of previously
published programming is increasing, and thus it may be unnecessary to
require completion of closed captioned video libraries by a date
certain. We ask that commenters who support this approach indicate how
the Commission would ensure that video programming providers or owners
``maximize the accessibility'' of previously published programming, as
required by Section 713(b)(2).
8. Exemptions Based on Economic Burden. Section 713(d)(1) provides
for the exemption of classes of video programming or video providers
where the requirement to close caption programming would be
economically burdensome. While Section 713 and its legislative history
do not define the term ``economic burden,'' we interpret this provision
to permit us to exempt those classes of programming where the economic
burden of captioning these programming types outweighs the benefits to
be derived from captioning and, in some cases, the complexity of adding
the captions. We seek to establish a general classification or a number
of general classifications of programming for which captioning would be
economically burdensome. Thus, we need to determine when a closed
captioning requirement would be economically burdensome, and we seek
comment on whether a definition of economic burden should be based on
relative market size, degree of distribution, audience ratings or
share, relative programming budgets or revenue base, lack of repeat
value, or a combination of factors. We specifically discuss whether the
following types of programming should be included in our own general
exemptions: foreign language programs; programs which are primarily
textual; cable access programs; instructional programs; advertising;
home shopping; interstitials and promotional advertisements; political
advertising; noncommercial broadcasters' fundraising activities; music
programs; weather programs; and sports programs.
9. While the statute also allows us to exempt classes of video
providers, we believe that a blanket exemption even for very small
providers is unnecessary, because the various providers distribute the
same types of programming to consumers, and all classes of providers
appear to have the technical capability to deliver closed captioning to
viewers intact.
10. Exemptions Based on Existing Contracts. Section 713(d)(2)
exempts programming from any closed captioning requirements we may
adopt, if applying such requirements would be ``inconsistent'' with a
contract in existence as of February 8, 1996, the enactment date of the
1996 Act. We tentatively conclude that contracts which affirmatively
prohibit closed captioning would fall within this exemption and we seek
comment on this conclusion. Such contracts do not appear to be typical
but may be entered into when the program creator wishes to maintain
total creative control over the product involved. However, we recognize
that it is possible that contracts may contain more general language,
not explicitly mentioning closed captioning, that might nonetheless be
inconsistent with captioning. We seek comment on the types of
provisions that might be contained in programming contracts that would
be inconsistent with a captioning requirement.
11. Exemptions Based on Undue Burden. Section 713(d)(3) provides
for a program owner or provider of video programming to petition the
Commission for an exemption from the closed captioning requirements
based on a showing of undue burden. In determining whether closed
captioning requirements would be an undue burden, the statute indicates
that the factors the Commission must consider include: (1) the nature
and cost of the closed captions for the programming; (2) the impact on
the operation of the provider or program owner; (3) the financial
resources of the provider or program owner; and (4) the type of
operations of the provider or program owner. The Commission seeks
comment on how to apply these factors and whether there are any other
factors which should be considered when determining that closed
captioning would result in an undue burden for an individual
programming provider.
[[Page 4962]]
Commenters are also asked to address whether or not we should require
parties to provide specific facts or meet objective tests to prove an
undue burden or whether petitioners should have wider discretion in
demonstrating that under their specific circumstances, the closed
captioning requirements would constitute an undue burden. We also seek
comment on what specific information petitioners should provide in
order to demonstrate the factors needed to prove an undue burden. In
addition, we request comment on a proposal to use standard ``special
relief'' or waiver-type procedures for these types of requests.
12. Standards for Quality and Accuracy. Section 713 does not
require the Commission to adopt rules or standards for the accuracy or
quality of closed captioning. However, in the NOI, we sought comment on
these issues based on reported problems with existing closed captions.
We propose to extend to other programming providers the rule (47 CFR
76.606) that requires cable operators to deliver existing closed
captions intact. However, we tentatively conclude that we should not
adopt standards for the non-technical aspects of captioning, including
accuracy of transcription, spelling, placement and style, at the start
of our phase in period for closed captioning. We propose to monitor the
closed captioning that results from our requirements and, if necessary,
revisit this issue at a later date. We also do not propose to establish
minimum credentials for captioners or to place any limits on the method
used to create captions.
13. The Enforcement Process. We propose to rely on complaints as a
primary enforcement mechanism for the rules we adopt. Further, all
complaints would initially be directed to the program provider in an
attempt to resolve problems privately within a specified time period in
order to minimize administrative resources devoted to matters that are
better resolved through informal processes. We also seek comment on
other methods or information needed to verify compliance, such as a
requirement that each entity responsible for compliance with the rules
retain in its files, or have available upon appropriate request,
records sufficient to verify compliance.
Initial Regulatory Flexibility Analysis
14. Pursuant to Section 603 of the Regulatory Flexibility Act
(``RFA''), 5 U.S.C. 603, as amended, the Commission has prepared the
following initial regulatory flexibility analysis (``IRFA'') of the
expected impact of these proposed policies and rules on small entities.
Written public comments are requested on the IRFA. These comments must
be filed in accordance with the same filing deadlines as comments on
the rest of the NPRM but they must have a separate and distinct heading
designating them as responses to the IRFA. The Secretary shall cause a
copy of this NPRM to be sent to the Chief Counsel for Advocacy of the
Small Business Administration (``SBA'') in accordance with Section
603(a) of the RFA, 5 U.S.C. 603(a).
15. Reason for Action and Objectives of the Proposed Rule. The 1996
Act requires the Commission to promulgate rules designed to maximize
the availability of closed captioned programming. 47 U.S.C. 613. The
Commission is issuing this NPRM to seek comment on proposed rules
intended to implement this provision of the 1996 Act.
16. Legal Basis. This NPRM is adopted pursuant to Sections 4(i),
4(j) and 713 of the Communications Act of 1934, as amended, 47 U.S.C.
154(i), 154(j), 613.
17. Description and Number of Small Entities Affected. The
Regulatory Flexibility Act 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, 5 U.S.C. 601(3). 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 SBA. 15 U.S.C. 632.
18. Small MVPDs. SBA has developed a definition of a small entity
for cable and other pay television services, which includes all such
companies generating $11 million or less in annual receipts, 13 CFR
121.201 (SIC 4841). This definition includes cable system operators,
closed circuit television services, DBS services, MMDS systems, SMATV
systems and subscription television services. According to the Bureau
of the Census, there were 1423 such cable and other pay television
services generating less than $11 million in revenue that were in
operation for at least one year at the end of 1992. We will address
each service individually to provide a more succinct estimate of small
entities. We seek comment on the tentative conclusions below.
19. Cable Systems. The Commission has developed its own definition
of a small cable company for the purposes of rate regulation. Under the
Commission's rules, a ``small cable company,'' is one serving fewer
than 400,000 subscribers nationwide. 47 CFR 76.901(e). Based on our
most recent information, we estimate that there were 1,439 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 1,439 small entity
cable system operators that may be affected by the decisions and rules
proposed in this NPRM.
20. 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.'' 47 U.S.C. 543(m)(2). The Commission has determined that
there are 61,700,000 subscribers in the United States. Therefore, we
found that 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. 47 CFR 76.1403(b). Based on available data,
we find that the number of cable operators serving 617,000 subscribers
or less totals 1,450. 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.
21. 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 preceding three calendar years. 47 CFR 21.961(b)(1). This
definition of a small entity in the context of the Commission's Report
and Order, summarized at 60 FR 36524 (July 17, 1995), concerning MMDS
auctions that has been approved by the SBA.
22. 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
[[Page 4963]]
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 1634 small MMDS providers as defined by
the SBA and the Commission's auction rules.
23. ITFS. There are presently 2,032 ITFS licensees. All but one
hundred of these licenses are held by educational institutions.
Educational institutions are included in the definition of a small
business. 5 U.S.C. 601(5). However, we do not collect annual revenue
data for ITFS licensees, and are not able to ascertain how many of the
100 non-educational licensees would be categorized as small under the
SBA definition. Thus, we tentatively conclude that at least 1932
licensees are small businesses.
24. DBS. As of December 1996, there were eight DBS licensees.
However, the Commission 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. Although DBS
service requires a great investment of capital for operation, we
acknowledge that there are several new 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.
25. 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 packager. 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.
26. According to the most recently available information, there are
approximately 30 program packagers nationwide offering packages of
scrambled programming to retail consumers. These program packagers
provide subscriptions to approximately 2,314,900 subscribers
nationwide. This is an average of about 77,163 subscribers per program
packager. This is substantially smaller than the 400,000 subscribers
used in the Commission's definition of a small MSO. Furthermore,
because this an average, it is likely that some program packagers may
be substantially smaller. We seek comment on these tentative
conclusions.
27. OVS. The Commission has certified three OVS operators. On
October 17, 1996, Bell Atlantic received approval for its certification
to convert its Dover, New Jersey Video Dialtone (``VDT'') system to
OVS. Bell Atlantic subsequently purchased the division of Futurevision
which had been the only operating program package provider on the Dover
system, and has begun offering programming on this system using these
resources. Metropolitan Fiber Systems was granted certifications on
December 9, 1996, for the operation of OVS systems in Boston and New
York, both of which are being used to provide programming. On October
10, 1996, Digital Broadcasting Open Video Systems received approval to
offer OVS service in southern California. Because these services have
been introduced so recently, little financial information is available.
Bell Atlantic and Metropolitan Fiber Systems have sufficient revenues
to assure us that they do not qualify as small business entities.
Digital Broadcasting Open Video Systems however is a general
partnership just beginning operations. Accordingly, we tentatively
conclude that one OVS licensee qualifies as a small business concern.
28. SMATVs. Industry sources estimate that approximately 5200 SMATV
operators were providing service as of December 1995. Other estimates
indicate that SMATV operators serve approximately 1.05 million
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.
29. LMDS. Unlike the above pay television services, LMDS technology
and spectrum allocation will allow licensees to provide wireless
telephony, data, and/or video services. A LMDS provider is not limited
in the number of potential applications that will be available for this
service. Therefore, the definition of a small LMDS entity may be
applicable to both cable and other pay television (SIC 4841) and/or
radiotelephone communications companies (SIC 4812). The SBA definition
for cable and other pay services is defined above. A small
radiotelephone entity is one with 1,500 employees or less. 13 CFR
Sec. 121.201. However, for the purposes of this NPRM on closed
captioning, we include only an estimate of LMDS video service
providers.
30. LMDS is a service that is expected to be auctioned by the FCC
in 1997. The vast majority of LMDS entities providing video
distribution could be small businesses under the SBA's definition of
cable and pay television (SIC 4841). However, in the Third NPRM, CC
Docket No. 92-297, summarized at 60 FR 43740 (July 23, 1995), we
proposed to define a small LMDS provider as an entity that, together
with affiliates and attributable investors, has average gross revenues
for the three preceding calendar years of less than $40 million. We
have not yet received approval by the SBA for this definition.
31. There is only one company, CellularVision, that is currently
providing LMDS video services. Although the Commission does not collect
data on annual receipts, we assume that CellularVision is a small
business under both the SBA definition and our proposed auction rules.
We tentatively conclude that a majority of the potential LMDS licensees
will be small entities, as that term is defined by the SBA.
32. Small Broadcast Stations. The SBA defines small television
broadcasting stations as television broadcasting stations with $10.5
million or less in annual receipts. 13 CFR 121.201.
33. Estimates Based on Census and BIA Data. According to the Bureau
of the Census, in 1992, 1155 out of 1478 operating television stations
reported revenues of less than $10 million for 1992. This represents
78% of all television stations, including noncommercial stations. The
Bureau of
[[Page 4964]]
the Census does not separate the revenue data by commercial and
noncommercial stations in this report. Neither does it allow us to
determine the number of stations with a maximum of 10.5 million dollars
in annual receipts. Census data also indicates that 81% of operating
firms (that owned at least one television station) had revenues of less
than $10 million.
34. We also have performed a separate study based on the data
contained in the BIA Publications, Inc. Master Access Television
Analyzer Database, which lists a total of 1141 full power commercial
television stations. It should be noted that, using the SBA definition
of small business concern, the percentage figures derived from the BIA
database may be underinclusive because the database does not list
revenue estimates for noncommercial educational stations, and these
therefore are excluded from our calculations based on the database. The
BIA data indicate that, based on 1995 revenue estimates, 440 full power
commercial television stations had an estimated revenue of $10.5
million or less. That represents 54% of full power commercial
television stations with revenue estimates listed in the BIA program.
The database does not list estimated revenues for 331 stations. Using a
worst case scenario, if those 331 stations for which no revenue is
listed are counted as small stations, there would be a total of 771
stations with an estimated revenue of 10.5 million dollars or less,
representing approximately 68% of the 1141 full power commercial
television stations listed in the BIA data base.
35. Alternatively, if we look at owners of commercial television
stations as listed in the BIA database, there are a total of 488
owners. The database lists estimated revenues for 60% of these owners,
or 295. Of these 295 owners, 156 or 53% had annual revenues of less
than $10.5 million. Using a worst case scenario, if the 193 owners for
which revenue is not listed are assumed to be small, of small entities
would constitute 72% of the total number of owners.
36. In summary, based on the foregoing worst case analysis using
Bureau of the Census data, we estimate that our rules will apply to as
many as 1150 commercial and noncommercial television stations (78% of
all stations) that could be classified as small entities. Using a worst
case analysis based on the data in the BIA data base, we estimate that
as many as approximately 771 commercial television stations (about 68%
of all commercial televisions stations) could be classified as small
entities. As we noted above, these estimates are based on a definition
that we tentatively believe greatly overstates the number of television
broadcasters that are small businesses. Further, it should be noted
that under the SBA's definitions, revenues of affiliates that are not
television stations should be aggregated with the television station
revenues in determining whether a concern is small. The estimates
overstate the number of small entities since the revenue figures on
which they are based do not include or aggregate such revenues from
nontelevision affiliated companies.
37. Program Producers and Distributors. The Commission has not
developed a definition of small entities applicable to producers or
distributors of television programs. Therefore, we will utilize the SBA
classifications of Motion Picture and Video Tape Production (SIC 7812--
``Establishments primarily engaged in the production of theatrical and
nontheatrical motion pictures and video tapes for exhibition or sale,''
including ``establishments engaged in both production and
distribution''), Motion Picture and Video Tape Distribution (SIC 7822--
``Establishments primarily engaged in the distribution * * * of
theatrical and nontheatrical motion picture films or in the
distribution of video tapes and disks, except to the general public''),
and Theatrical Producers (Except Motion Pictures) and Miscellaneous
Theatrical Services (SIC 7922--``Establishments primarily engaged in
providing live theatrical presentations,'' including ``producers of * *
* live television programs.''). These SBA definitions provide that a
small entity in the television programming industry is an entity with
$21.5 million or less in annual receipts for SIC 7812 and 7822, and $5
million or less in annual receipts for SIC 7922. 13 CFR Sec. 121.201.
The 1992 Bureau of the Census data indicates the following: (1) there
were 7265 U.S. firms classified as Motion Picture and Video Production
(SIC 7812), and that 6987 of these firms had $16,999 million or less in
annual receipts and 7002 of these firms had $24,999 million or less in
annual receipts; (2) there were 1139 U.S. firms classified as Motion
Picture and Tape Distribution (SIC 7822), and that 1007 of these firms
had $16,999 million or less in annual receipts and 1013 of these firms
had $24,999 million or less in annual receipts; and (3) there were 5671
U.S. firms classified as Theatrical Producers and Services (SIC 7922),
and that 5627 of these firms had less than $5 million in annual
receipts. The Census data does not include a category for $21.5
million; therefore, we have reported the closest increment below and
above the $21.5 million threshold.
38. Each of these SIC categories are very broad and includes firms
that may be engaged in various industries including television. We
tentatively conclude that cable networks that are essentially program
distributors are included in this category. Specific figures are not
available as to how many of these firms exclusively produce and/or
distribute programming for television or how many are independently
owned and operated. Consequently, we tentatively conclude that there
are approximately 6987 small entities that produce and distribute taped
television programs, 1013 small entities primarily engaged in the
distribution of taped television programs, and 5627 small producers of
live television programs that may be affected by the proposed rules in
this NPRM.
39. Reporting, Recordkeeping and Compliance Requirements. The NPRM
tentatively proposes requiring video programming providers (including
broadcast licensees and MVPDs) to substantially increase the volume of
closed captioned video programming carried over a period of time.
Virtually all future programming and a gradually increasing volume of
previously released programming is expected to be captioned over time.
If this proposal is adopted, video programming providers may be choose
to maintain records of the volume of closed captioned programming
carried in order to resolve any disputes which may arise regarding
compliance.
40. In addition to seeking comment on a complaint process, the
Commission invites comments regarding alternative enforcement
procedures including a requirement that video programming providers
their compliance with by placing information regarding the amount of
closed captioning they distribute in a public file. The Commission
invites commenters to address the possible effectiveness of this
alternative enforcement mechanisms and how it might be implemented.
41. Federal Rules Which Overlap, Duplicate or Conflict With the
Commission's Proposal. None.
42. Any Significant Alternatives Minimizing the Impact On Small
Entities and Consistent With the Stated Objectives. The statutory
language provides for exemptions from any closed captioning
requirements the Commission may adopt, when imposing those requirements
would create an economic burden. 47 U.S.C. 613(e). Consistent with this
directive, the NPRM seeks comment on several
[[Page 4965]]
mechanisms which would allow small entities to be exempt in whole or in
part from the closed captioning requirements. These measures are
intended, in part, to minimize the regulatory impact on small entities.
43. Section 713(d)(1) provides that the Commission may exempt
classes of video programming or video providers where closed captioning
would be economically burdensome. Pursuant to this provision, the
Commission proposes to establish a general classification or a number
of classifications of programming for which captioning would be
economically burdensome. Thus, the Commission seeks comment on whether
a definition of economic burden should be based on relative size,
degree of distribution, audience ratings or share, relative programming
budgets or revenue base, lack of repeat value, or a combination of
factors.
44. Section 713(d)(3) permits video programming providers or
program owners to petition the Commission for an exemption where our
video captioning requirements would constitute an undue burden. 47
U.S.C. 613(d)(3). Section 713(d)(3) further provides specific factors
to be considered when resolving such petitions. Accordingly, the
Commission seeks comment on how to apply these factors and whether
there are any factors which should be considered when determining if a
requirement for closed captioning results in an undue burden for an
individual video programming provider or program owner.
Ex Parte
45. Ex parte Rules--Non-Restricted Proceeding. This is a non-
restricted notice and comment rulemaking proceeding. Ex parte
presentations are permitted, except during the Sunshine Agenda period,
provided that they are disclosed as provided in the Commission's rules.
See generally, 47 CFR 1.1202, 1.1203, and 1.1206(a).
Comment Dates
46. Pursuant to applicable procedures set forth in Sections 1.415
and 1.419 of the Commission's rules, interested parties may file
comments on or before February 28, 1997, and reply comments on or
before March 24, 1997. To file formally in this proceeding, you must
file an original plus six copies of all comments, reply comments, and
supporting comments. If you would like each Commissioner to receive a
personal copy of your comments and reply comments, you must file an
original plus 11 copies. You should send comments and reply comments to
the Office of the Secretary, Federal Communications Commission, 1919 M
Street, NW., Washington, DC 20554. Comments and reply comments will be
available for public inspection during regular business hours in the
FCC Reference Center, Room 239, Federal Communications Commission, 1919
M Street, NW., Washington, DC 20554.
Ordering Clauses
47. Authority for this proposed rulemaking is contained in Sections
4(i), 4(j), and 713 of the Communications Act of 1934, as amended, 47
U.S.C. 154(i), 154(j) and 613.
48. It is ordered that the Secretary shall send a copy of the
Notice of Proposed Rulemaking, including the Regulatory Flexibility
Analysis, to the Chief Counsel for Advocacy of the Small Business
Administration, in accordance with paragraph 603(a) of the Regulatory
Flexibility Act, Public Law No. 96-354, 94 Stat. 1164, 5 U.S.C. 601 et
seq. (1981).
List of Subjects
47 CFR Part 25
Communications common carriers, Reporting and recordkeeping
requirements, Satellites.
47 CFR Part 26
Communications common carriers, Reporting and recordkeeping
requirements, Satellites.
47 CFR Part 73
Education, Political candidates, Reporting and recordkeeping
requirements, Television.
47 CFR Part 76
Cable television, Political candidates, Reporting and recordkeeping
requirements.
47 CFR Part 100
Satellites.
Federal Communications Commission.
William F. Caton,
Acting Secretary.
[FR Doc. 97-2535 Filed 1-31-97; 8:45 am]
BILLING CODE 6712-01-P
