[Federal Register Volume 63, Number 152 (Friday, August 7, 1998)]
[Proposed Rules]
[Pages 42330-42348]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-21085]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 76
[CS Docket No. 98-120; FCC 98-153]
Carriage of the Transmissions of Digital Television Broadcast
Stations
AGENCY: Federal Communications Commission.
ACTION: Proposed rule.
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SUMMARY: The Notice of Proposed Rulemaking (``NPRM'') addresses the
carriage of digital broadcast television signals by cable operators. It
seeks comment of the issues surrounding the interoperability of the
digital television broadcast system, the cable system, and the digital
receiver. It seeks comment on whether to amend the cable television
broadcast signal carriage rules to accommodate the carriage of digital
broadcast television signals. It also seeks comment on changes in other
parts of the cable television rules that may be required because of the
carriage of digital television signals.
DATES: Comments on the NPRM are due on or before September 17, 1998.
Reply comments on the NPRM are due on or before October 30, 1998.
Written comments by the public on the proposed information collection
requirements contained should be submitted on or before September 17,
1998. If you anticipate that you will be submitting comments on the
proposed information collection requirements, but find it difficult to
do so within the period of time allowed by this NPRM, you should advise
the contact listed below as soon as possible.
ADDRESSES: A copy of any comments on the proposed information
collection requirements contained herein should be submitted to Judy
Boley, Federal Communications, Room 234, 1919 M St., N.W., Washington,
DC 20554 or via internet to jboley@fcc.gov and to Timothy Fain, Office
of Management and Budget, Room 10236 NEOB, Washington, DC 20503, (202)
395-3561 or via internet at fain__t@al.eop.gov.
FOR FURTHER INFORMATION CONTACT: For additional information concerning
the NPRM contact Ben Golant at (202) 418-7111 or via internet at
bgolant@fcc.gov. For additional information concerning the proposed
information collection requirements contained in this NPRM contact Judy
Boley at 202-418-0214 or via internet at jboley@fcc.gov.
PAPERWORK REDUCTION ACT: The requirements proposed in this NPRM have
been analyzed with respect to the Paperwork Reduction Act of 1995 (the
``1995 Act'') and would impose new information collection requirements
on the public. The Commission, as part of its continuing effort to
reduce paperwork burdens, invites the general public to take this
opportunity to comment on the proposed information collection
requirements contained in this NPRM, as required by the 1995 Act.
Public comments are due on October 6,
[[Page 42331]]
1998. Written comments must be submitted by the OMB on the proposed
information collection requirements on or before October 6, 1998.
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 Approval Number: 3060-XXXX (new collection).
Title: Carriage of the Transmissions of Digital Television
Broadcast Stations.
Type of Review: New collection.
Respondents: Businesses or other for-profit entities.
Number of Respondents: 12,600.
Estimated Time Per Response: 30 minutes to 40 hours, dependent upon
the specific information collection requirement addressed in this
collection.
Frequency of Response: On occasion.
Total Annual Burden to Respondents: 92,349 hours.
Total Annual Cost to Respondents: $2,355,122.
Needs and Uses: The proposed information collection requirements
contained in this proceeding, if adopted, will be used by a variety of
respondents to serve the following purposes. The purpose of the
tentative digital must-carry/retransmission consent election process,
market modification process, and digital must-carry complaint process
is to enable broadcast licensees to exercise their possible must-carry/
retransmission consent rights in an effective manner. The purpose of
the various broadcast licensee notification obligations contained in
the Commission's program exclusivity rules is to protect the exclusive
distribution rights afforded to such broadcast licensees. The purpose
of the subscriber notification requirements placed upon cable operators
is to protect subscribers' consumer rights by ensuring that cable
operators notify them when new digital channels have been added to
their channel line-ups and ensuring that cable operators notify them
when cable systems carry channels that cannot be viewed via cable
without a converter box.
Synopsis
I. Introduction
1. The statutory provision triggering this rulemaking is found in
Section 614(b)(4)(B) of the Act. This section requires that: ``At such
time as the Commission prescribes modifications of the standards for
television broadcast signals, the Commission shall initiate a
proceeding to establish any changes in the signal carriage requirements
of cable television systems necessary to ensure cable carriage of such
broadcast signals of local commercial television stations which have
been changed to conform with such modified standards.'' In our Fourth
Further Notice of Proposed Rule Making in MM Docket 87-268, 60 FR 42130
(August 15, 1995), we sought and received comments addressing digital
broadcast television carriage issues. The Commission, however,
indicated its intention to update the record and seek further comment
on these issues. We issue this NPRM to seek additional comments to
reflect our recent prescription of the modification of the standards
for television broadcast signals in a digital broadcast format; to
recognize the Commission's adoption of additional digital broadcast
television policies and rules; to address advances in digital
television technology in the last two years; to take into consideration
recent legislative developments regarding the digital broadcast
television buildout schedule as well as Congress' pronouncement that
ancillary and supplementary digital television services do not have
must carry status; and to recognize the Supreme Court's decision
upholding the constitutionality of the existing analog must carry
provisions. In addition, we are broadening this proceeding to consider
technical compatibility issues and other changes in the Commission's
rules, such as those concerning retransmission consent, program
exclusivity and rate regulation, that may also be required to recognize
the conversion of the existing broadcasting system to the new digital
format and to a new table of allotments.
II. Legal Context
2. Section 614(b)(4)(B) was adopted as part of a larger must carry/
retransmission consent scheme set forth in the Cable Television
Consumer Protection and Competition Act of 1992. This statute amended
the Act to provide television stations with certain carriage rights on
local market cable television systems. Sections 614 and 615 of the Act
contain the cable television ``must carry'' requirements. Section 325
contains revised ``retransmission consent'' requirements pursuant to
which cable operators may be obligated to obtain the consent of
broadcasters before retransmitting their signals. Within local market
areas, presently defined as Arbitron's Area of Dominant Influence
(``ADI''), commercial television stations may elect cable carriage
under either the retransmission consent or mandatory carriage
requirements. Noncommercial television stations may only elect must
carry under the Act. In addition, pursuant to Sections 653(c)(1)(B) and
(c)(2) of the Act, adopted as part of the Telecommunications Act of
1996, open video system operators are also subject to broadcast signal
carriage requirements.
3. With regard to the mandatory cable carriage provisions, Congress
believed that laws were required to ensure: (1) the continued
availability of free over-the-air television broadcast service; (2) the
benefits derived from the local origination of programming from
television stations; and (3) as it relates to noncommercial television
stations, the continued distribution of unique, noncommercial,
educational programming services. Congress reasoned that without
mandatory carriage provisions in place, the economic viability of local
broadcast television and its ability to originate quality local
programming would be jeopardized. Congress also believed that because
cable systems and broadcast stations compete for local advertising
revenue and because cable operators have an interest in favoring their
affiliated programmers, cable operators have an incentive to delete,
reposition, or refuse to carry local television broadcast stations.
These conclusions, and the carriage provisions themselves, were
premised on findings made by Congress at the beginning of this decade
that most subscribers to cable television systems do not or cannot
maintain antennas to receive broadcast television services, do not have
input selector switches to convert from a cable to an antenna reception
system, or cannot otherwise receive broadcast television services. The
retransmission consent provision was predicated on the finding that
cable systems obtain ``great benefits from local broadcast signals,''
in the form of subscribership and increased audience for cable
programming services, which they have previously been able to obtain
without the consent of the broadcaster or any copyright liability.
4. Under the mandatory carriage provisions, cable operators,
subject to certain capacity based limitations, are generally required
to carry local television stations on their cable
[[Page 42332]]
systems. The Act states that systems with more than 12 usable activated
channels must carry local commercial television stations, ``up to one-
third of the aggregate number of usable activated channels of such
system[s].'' Beyond this requirement, the carriage of additional
broadcast television stations is at the discretion of the cable
operator. In addition, cable systems are obliged to carry local
noncommercial educational television stations according to a different
formula and based upon a cable system's number of usable activated
channels. Low power television stations may request carriage if they
meet six statutory criteria. A cable operator, however, cannot carry a
low power station in lieu of a full power station.
5. Cable operators are required to carry local television stations
on a tier of service provided to every subscriber and on certain
channel positions designated in the Act. Cable operators are prohibited
from degrading the television station's signal but are not required to
carry duplicative signals or video that is not considered primary.
Television stations may file complaints with the Commission against
cable operators for non-compliance with section 614 and section 615. In
addition, both cable operators and television stations may file
petitions with the Commission to either expand or contract a commercial
television stations' market for broadcast signal carriage purposes.
These statutory requirements were implemented by the Commission in
1993, and are reflected in Secs. 76.56-64 of the Commission's rules.
6. Section 336 of the Act, added as part of the Telecommunications
Act of 1996, provides that if the Commission determines to issue
additional licenses for advanced television services, the Commission
should ``allow the holders of such licenses to offer such ancillary or
supplementary services . . . as may be consistent with the public
interest, convenience, and necessity.'' It then further provides that
``no ancillary or supplementary service shall have any right to
carriage under section 614 or 615.'' In the legislative history of this
provision, Congress stated that it did not intend to ``confer must
carry status on advanced television or other video services offered on
designated frequencies'' adding that the ``issue is to be the subject
of a Commission proceeding under section 614(b)(4)(B) of the
Communications Act.''
7. The Commission recently adopted rules establishing a
transitional process for the conversion from an analog to a digital
form of transmission. In broad outline, the rules and policies adopted
make each existing analog television licensee or permittee eligible to
apply to construct or operate a new digital station with a roughly
comparable service area using 6 MHz of spectrum. The new digital
station will transmit a signal consistent with the standards adopted in
the Fourth Report and Order in MM Docket No. 87-268, 62 FR 14006 (March
25, 1997), giving stations the flexibility to broadcast in a high
definition mode, in a multiple program standard definition mode, or a
mixture of both. During a transitional period, both the analog and
digital television signals will be broadcast. At the end of the
transition, the licensee will cease broadcasting an analog signal and
will return to the government 6 MHz of spectrum. There are no federal
digital cable transition requirements. Cable operators are
transitioning to digital on a voluntary basis and in some instances,
cable franchising agreements may require operators to upgrade their
physical plant and offer digital services. Thus, as the transition to
digital occurs, a significant level of complexity will arise due to the
different time schedules followed by the nearly 1,600 television
licensees and the approximately 11,000 U.S. cable systems with respect
to the implementation of digital transmissions.
8. The rules governing the transition from analog to digital
broadcasting are found in the Fifth Report and Order in MM Docket No.
87-268, 62 FR 26966 (May 16, 1997). This Order set forth a staggered
implementation schedule for the introduction of digital broadcast
television. Construction requirements vary depending on the size of the
television market and other factors. In the first category, all
stations in the top ten television markets that are affiliated with
NBC, CBS, Fox, or ABC will have until May 1, 1999, to construct their
digital facilities. In the second category, all stations in the top 30
television markets not included above that are affiliated with NBC,
CBS, Fox, or ABC will have until November 1, 1999, to construct their
digital facilities. In the third category, all other commercial
stations will have until May 1, 2002, to construct their digital
broadcast television facilities. All noncommercial stations will have
until May 1, 2003, to construct their digital broadcast television
facilities. We note that 24 television station licensees have expressed
to the Commission their intention to voluntarily expedite their
schedules and complete construction and begin broadcasting by November,
1998.
9. Commencing April 1, 2003, digital broadcast television licensees
and permittees must simulcast at least 50% of the video programming
transmitted on their analog channel; commencing April 1, 2004, there
will be a 75% simulcasting requirement; commencing April 1, 2005, there
will be a 100% simulcasting requirement until the analog channel is
terminated and returned to the Commission.
10. Congress, in the Balanced Budget Act of 1997 (``BBA''),
codified certain exceptions to the return of spectrum by the 2006
target date established by the Commission. That statute established
conditions under which the return may be extended beyond December 31,
2006, upon the request of a television station. To retain its analog
channel beyond that date, a television station will have to demonstrate
that: ``(i) one or more of the stations in the relevant television
market that are licensed to, or affiliated with, one of the four
largest national television networks, is not broadcasting a digital
television service signal, and the Commission finds that such station
has exercised due diligence and satisfies the conditions for an
extension of the Commission's applicable construction deadlines for
digital television service in that market; (ii) digital-to-analog
converter technology is not generally available in such market; or
(iii) in any market in which an extension is not available under clause
(i) or (ii), 15 percent or more of the television households in such
market--(I) do not subscribe to a multichannel video programming
distributor (as defined in section 602) that carries one of the digital
television service programming channels of each of the television
stations broadcasting such a channel in such market; and (II) do not
have either--(a) at least one television receiver capable of receiving
the digital television service signals of the television stations
licensed in such market; or (b) at least one television receiver of
analog television service signals equipped with digital-to-analog
converter technology capable of receiving the digital television
service signals of the television stations licensed in such market.''
As the statutory language indicates, the return of the analog spectrum
is in part dependent on the carriage of digital television stations by
cable operators and other multichannel video programming distributors
(``MVPDs''). In the BBA's legislative history, Congress stated that it
was ``not attempting to define the scope of any MVPD's `must carry'
obligation for digital television signals'' and that the digital
broadcast television must carry
[[Page 42333]]
decision is ``for the Commission to make at some point in the future.''
11. We read Section 614(b)(4)(B) of the 1992 Cable Act and Section
309(j) of the Balanced Budget Act, along with their respective
legislative histories, to give us broad authority to define the scope
of a cable operator's signal carriage requirements during the period of
change from analog to digital broadcasting. Given this intent, and
noting the significant changes that are taking place in the broadcast
and cable television industries, as well as in the development of
television reception devices, we tentatively conclude that the
Commission should have, and does have, the ability to develop rules to
facilitate the transition process and to take into account the
technical changes involved. We seek comment on this tentative
conclusion.
12. While we believe Congress has given the Commission discretion
in exploring and deciding the complex issues involved in this
proceeding, we take as our starting point the general framework
governing the carriage of television stations currently found in
Section 614, 615, and 325 of the Act. Section 614(b)(4)(B), and its
legislative history, appears to support this approach as Congress
intended that the Commission establish technical standards for the
carriage of digital television signals. Based on the legislative
history and the existing carriage provisions, we believe that the
participation by the cable industry during the transition period is
likely to be essential to the successful introduction of digital
broadcast television and the rapid return of the analog spectrum to the
Commission.
13. We also realize, given the history of the must carry provisions
and the litigation relating to them, that any rules adopted by the
Commission must be carefully crafted to permit them to be sustained in
the face of a constitutional challenge. Such rules must be consistent
with the judicial decisions regarding the constitutional limitations
applicable in this area and in particular with the Supreme Court's
holding in Turner Broadcasting System v. FCC, 117 S.Ct. 1174 (1997)
(``Turner II''). As the Supreme Court has noted in a previous decision
reviewing the must carry provisions, ``[w]hen the Government defends a
regulation on speech as a means to redress past harms or prevent
anticipated harms, it must do more than simply `posit the existence of
the disease sought to be cured.' . . . The government must demonstrate
that the recited harms are real, not merely conjectural, and that the
regulation will in fact alleviate these harms in a direct and material
way.'' Turner Broadcasting System v. FCC, 512 U.S. at 664 (1995)
(``Turner I''). In Turner II, the Supreme Court found the must carry
provisions of the 1992 Cable Act to be content neutral regulations
subject to intermediate First Amendment scrutiny. The Court emphasized
that preserving the benefits of free, over-the-air broadcast
television, promoting the widespread dissemination of information from
a multiplicity of sources, and promoting fair competition in the market
for television programming, were important governmental interests. The
court noted that there was substantial evidence before Congress
supporting the predictive judgment that local broadcasters denied
carriage ``would suffer financial harm and possible ruin'' in the
absence of carriage rules and the Government's assertion that ``the
economic health of local broadcasting is in genuine jeopardy and in
need of the protections afforded by must-carry'' was found to be
reasonable and supported by the evidence. In addressing the question of
whether the requirements ``burden substantially more speech that is
necessary'' to further the governmental interest involved, the Court
indicated that ``the actual effects are modest'' and that
``[s]ignificant evidence indicates the vast majority of cable operators
have not been affected in a significant manner by must-carry.'' The
Court concluded that the requirements were not invalid based on a
challenge that they are ``substantially broader than necessary to
achieve the government's interest. Noting that Turner II did not
address the mandatory carriage of the broadcaster's digital television
signal, we ask how the Court's reasoning and conclusions would apply in
the context of this proceeding.
14. Given this background, we find it essential to build a record
relating to the interests to be served by any digital broadcast signal
carriage rules, the factual predicate on which they would be based, the
harms to be prevented, and the burdens they would impose. Having an
updated record is particularly important because of the many legal and
technical developments that have taken place since the analog must
carry provisions were enacted in 1992, and to take into account the
differences brought about by the conversion to digital broadcasting and
the parallel conversion to digital cable operations. For example,
television reception via antennas has been made easier and more
convenient than was the case earlier this decade. Legal barriers to
over-the-air reception of broadcast signals, caused by restrictions on
antenna placement, have been reduced because of the over the air
reception device preemption provisions of the Telecommunications Act of
1996. Input selector (``A/B'') switches, which allow the subscriber to
switch between cable and an antenna, may now be built into television
receivers and can be easily controlled from a TV remote control device.
Some of the reception problems that made it difficult for certain
consumers to receive over-the-air broadcast signals may be eliminated
by the conversion to digital. Broadcasting may not be the only source
of local programming as cable operators have developed local news
channels and public, educational, and governmental access channels,
which provide highly localized content, have multiplied in the past six
years. We seek to develop through this proceeding, the facts and data
necessary for a complete record and ask for the assistance of all
parties in developing that record.
III. Digital Compatibility
15. In this section, we address the compatibility issues
recognizing that the introduction of DTV, and any carriage rules we may
implement, will be most successful if all the components of the
transmission path work together. Furthermore, an understanding how the
different technical elements fit together is essential to a discussion
of the core digital broadcast signal carriage issues. Here, we explain
how digital transmission systems function and the means of transporting
the DTV signal through the cable system to the subscriber. This
discussion is particularly important in understanding the cable system
channel capacity, channel position, and technical standards issues that
are addressed at length throughout the document. Possible technical
impediments preventing the reception of the DTV signal are raised,
including matters that are integral to the discussion of material
degradation in Section IV of the text.
16. Cable carriage of television broadcast signals in the existing
analog environment involves the need to coordinate multiple technical
systems--a television broadcast station transmission, a cable
television distribution system, and a television receiver. All three
are standardized by regulation or custom to transmit, distribute, and
display analog NTSC television pictures. Although issues sometimes
arise as to how these parts fit together from a technical perspective,
the basic elements are relatively standard and well known. In the new
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digital environment, however, neither law nor regulation standardizes
every element. How the multiple technical systems will function in a
digital environment remains to be seen. We note that the various
technical elements involved in digital broadcast signal carriage are
constantly in flux as technology advances. We set forth our basic
current understanding of the applicable technical context and seek
comment and updated information relating to this review.
17. The digital television transmission system and related
standards were established by the Advanced Television Systems Committee
(``ATSC''). The components, or comprising layers, are the video/audio
layer, compression layer, transport layer, and the transmission layer.
At the top of the ATSC hierarchy is the uncompressed digital signal in
one of the various video/audio formats. Under the ATSC's highly
flexible standard, it is possible to transmit high definition pictures
and high quality sound, multiple standard definition pictures, and
other ancillary related or unrelated communications, with the mix of
services changing dynamically from second to second. The video content
may be transmitted in the progressive scan or in the interlaced
transmission format. Pictures may be transmitted in a standard
definition format, such as 480 progressive, or in a high definition
format, such as 720 progressive or 1080 interlaced. The bitstream that
corresponds with the video/audio layer is known as the elementary
stream.
18. At the next level down in the hierarchy is the compression
layer. The purpose of this layer is to take the elementary stream from
the layer above and compress it into a bitstream with a lower data
rate. In the ATSC standard, MPEG-2 compression is used for the video
and the Dolby AC-3 compression is used for the audio. The amount of
compression depends upon the compression format chosen. Additional
compression lowers the data rate, but at the possible loss of some
video/audio quality.
19. The compressed bitstream, in turn, may be packetized and
multiplexed with other bitstreams into a higher data rate digital
bitstream. This is done in what is referred to as the transport layer.
This multiplexed bitstream may include multiple programs and/or
multiple data signals. The ATSC standard uses the MPEG-2 transport
protocol for this purpose.
20. The lowest layer in the hierarchy is referred to as the
transmission layer. Here, the multiplexed bitstream from the transport
layer is modulated onto a radio frequency (``RF'') carrier. The ATSC
set forth standards for two modulation modes using vestigial sideband
modulation (``VSB''): a terrestrial broadcast mode (8 VSB) and a high
data rate mode (16 VSB), which is said to be capable of reliably
delivering approximately twice the data throughput in a 6 MHz cable
television channel as the 8 VSB mode (38 Mbps as compared to 19 Mbps).
The 8 VSB standard has been optimized for terrestrial broadcast
television delivery where transmission errors and data loss are likely.
The Commission has adopted VSB as part of the digital broadcast
standard. The Commission, however, has not adopted a digital cable
standard nor has the industry embraced the use of 16 VSB. Instead,
cable operators plan to transmit digital communications, from the
headend to the subscriber, using quadrature amplitude modulation
(``QAM''), either 64 QAM or 256 QAM (which is closer to 16 VSB in terms
of its data rate). Both 64 and 256 QAM likely will provide cable
operators with a greater degree of operating efficiency than does 8
VSB, and permits the carriage of a higher data rate, with less bits
devoted to error correction, when compared with the digital broadcast
system.
21. The above description of the four layer hierarchy is based upon
a sequence of events at the transmitting end of a digital television
system. That is, it started with the elementary digital stream which is
compressed in the compression layer, multiplexed in the transport layer
and modulated onto an RF carrier in the transmission layer. The signal
progresses from layer-to-layer down the protocol stack. At the
receiving end, the process is reversed.
22. While the conversion of television stations to a digital
transmission mode is generally associated with greatly improved sound
and picture quality in the high definition mode and with better and
more flexible reception in the standard definition mode, the practical
definition of ``digital'' in the cable context may vary from system to
system. The fact that a portion of a cable system capacity is digital
may mean only that more channels are offered with no fundamental
enhancements in sound and picture quality. For example, a cable system
making use of TCI's Headend in the Sky or ``HITS,'' would be
distributing various packages of digitally compressed satellite-based
programming to subscribers with an associated set top box. Current HITS
technology allows for at least twelve digitally compressed channels to
fit onto one analog cable channel. The programming content is
compressed and bundled into discrete groups of programming services at
TCI's satellite uplink so that it can be passed through by the system
operator essentially without additional processing. However, there are
cable operators that will be offering digital cable using QAM on an
upgraded cable system. For example, in the case of a 750 MHz system,
the 54 MHz to 550 MHz region of the cable system may be reserved for
analog signals, while the 550 to 750 MHz area will carry dozens of
digital signals. A critical distinction between the two is that systems
subscribing to HITS may not necessarily have excess capacity to carry
digital television stations while a 750 MHz QAM system may, in fact,
have such capacity.
23. A critical aspect of the digital television transmission path
involves the digital cable set top boxes. Significant issues arise as
to how set top boxes will interact with the distribution of both
digital cable and digital broadcast signals. Digital cable set top
boxes perform digital signal processing, decompression, and
demultiplexing functions. The receiving device demodulates the carrier,
i.e., it extracts the multiplexed bitstream from the carrier, in the
transmission layer. The multiplexed bitstream is passed up to the
transport layer where it is demultiplexed into its component
bitstreams. The individual streams are, in turn, passed up to the
compression layer where they are decompressed and passed up into the
video/audio layer for decoding and display. The set top box also
controls access to prevent theft of the service and makes compressed
digital cable services available for reception on analog NTSC
television receivers. In an entirely digital environment, the set top
box and the digital receiver may work in tandem by trading off the
digital processing function. For example, a set top box that lacks
sufficient processing power and memory to uncompress a high definition
signal could nevertheless deliver the compressed data stream to the
receiver where it would be uncompressed. A variety of concerns have
been raised regarding the set top box's ability to ``pass through'' the
signals of digital broadcast stations, including in particular, high
definition signals. The concern stems from three separate, but related,
developments: (1) the possibility of shared functions between set top
boxes and receivers; (2) the possible lack of processing power and
memory in some set top boxes; and (3) the possibility of broadcast
signals being passed directly through to
[[Page 42335]]
receivers without any processing by the set top box.
24. ``Pass through,'' in one scenario, means that the signals in
the VSB format would be passed through the set top box, without being
processed, and sent directly into the receiver for display. If the
signal was sent through the system in the proper format and the
receiver was capable of displaying that signal, the set top box would
create no obstacle since it was bypassed in the distribution chain.
Under another scenario, the set top box would play a partial processing
function by detecting, demodulating and demultiplexing the signal, but
leave it compressed. The signal would then be passed to the receiver
which would uncompress it. The reasons a box might be designed to
function in this fashion is that extra memory and processing power are
required to uncompress certain of the high definition formats and thus
a less expensive box could be designed if the circuitry in the
television receiver could be shared and used to address the compression
issue.
25. Another scenario is where the set top box converts the digital
signal for display on NTSC television receivers. Conversion will allow
cable subscribers to view digital television on their current analog
television receivers. However, to process high definition video
programs, the set top box would need sufficient memory and computing
power, which would add to the cost of the equipment. Regardless of
which techniques are used, electronic program guides and other
interactive set top features may not work with signals that are not
processed by the set top box. We seek comment updating and informing us
on the current state of set top box technology as it relates to the
carriage, pass through, and/or conversion of digital broadcast signals.
26. It has been suggested that some of the digital broadcast-set
top box processing issues could be addressed through the use of a
digital bus, exemplified by a standard interface known as IEEE-1394.
This interface could allow a digital set-top box to share some of the
resources of other devices in terms of the processing of digital
signals, such as the MPEG decoder in a digital television receiver.
Thus, high definition signals can be processed and displayed on the
digital television receiver through the bus even though the digital set
top box could not perform the processing function. This interface is
also important in the context of digital broadcast signal carriage
because it may be needed to ensure that on-screen graphics and program
guide capabilities are enabled for the digital broadcast signals that
are being carried. We seek comment on whether a bus standard could in
fact address some of the set top box interface issues raised above. We
are aware that the relevant industries are developing an interface
standard and we fully expect that they will move quickly to adopt this
standard. Given this, we thus far have concluded that the goal of an
effective interface can be met without regulatory action. Nonetheless,
because of the importance of this issue and because of recent reports
that the development of a standard may not be proceeding as
expeditiously as previously thought, we ask if the Commission should
consider rules, or other appropriate action, e.g., establishment of a
deadline, to ensure that both the set top box and the digital receiver
are 1394-compatible. If not, are there other devices or attachments on
the market or being developed that would provide a simplified or more
desirable interconnection between the set top and the digital receiver?
27. It is difficult as this point in time to determine the
technical abilities of the different digital set top boxes already
distributed and in production, and how different cable operators will
engage set top boxes in their business plans. At least one major system
operator, TCI, has indicated that the set top boxes it will employ will
ultimately be capable of passing through digital broadcast
transmissions to the cable subscriber. This may involve simply
providing a direct connection through the digital set top box to the
digital television receiver. Although we do not want to impose
unnecessary requirements, we seek comment on whether a mandate that set
top boxes be designed to process all types of digital broadcast
television formats is needed, and if so, what additional cost (to cable
operators and at retail to consumers) would be involved. What effect
would such a requirement have on the commercial availability of set top
boxes? Would the remote control units used with the digital set top box
also work with all digital receivers?
28. Digital cable set top boxes may also perform certain other
operations that may need to be considered, such as functions that are
intended to assist program suppliers providing ``copy protection'' to
their programming. The copy protection concern is that parties having
access to the basic content of digital programming can make copies that
are virtually as good as the original thus creating commercial
incentives to withhold or delay the distribution of certain programming
product. In February, 1998, five members of the ad hoc Copy Protection
Technical Working Group presented a proposal aimed at protecting
digital video and audio content riding on and between personal
computers, digital receivers, set-tops, digital video cassette
recorders and digital video disk players. Work is continuing on this
effort. In this instance, we ask whether copy protection is a matter
that the Commission should explore in further detail in this
proceeding, in terms of the general issue of equipment compatibility.
29. Receiver manufacturers are in the process of designing digital
television sets. Their features are not standardized and the Commission
has, to date, specifically declined to adopt digital television
receiver standards. Moreover, the ATSC DTV standard does not specify
requirements for a compliant receiver. In essence, DTV receiver designs
are to be based on the specifications of the signal contained in the
other portions of the standard. It appears, however, that all digital
television receivers will be built to receive VSB transmissions and to
process all 18 ATSC formats. Whether they will be capable of receiving
QAM transmissions, and be built with a standard interface such as IEEE
1394, is less certain. Regardless of how the digital television set is
configured, it appears likely that there will be a considerable market
for digital converter boxes that mediate between analog television
receivers and digital transmission systems to lower the cost of digital
reception. In this area, we seek comment on whether television
receivers will be digital cable (QAM)-ready, or 1394 ready, and when
such sets would be available to the public. Should the Commission take
action to encourage the production of cable-ready receivers to
facilitate the introduction of digital broadcast television? We also
seek comment on whether the matters at issue in this proceeding suggest
the need for an industry receiver standard. Is this the right
proceeding to address these matters?
IV. Carriage and Retransmission Consent Issues
30. Section 325 contains the Act's retransmission consent
provisions. The law governing retransmission consent generally
prohibits cable operators and other multichannel video programming
distributors from retransmitting the signal of a commercial television
station, radio station or low power station without the prior consent
of the station whose signal is being transmitted, unless the
broadcaster has chosen must carry. Every three years, commercial
television stations must elect between pursuing their mandatory
[[Page 42336]]
carriage rights or their retransmission consent rights. Noncommercial
television stations do not have retransmission consent rights.
31. It has been estimated that approximately 80 percent of
commercial television broadcasters elected retransmission consent on
some cable systems, rather than must carry, during the 1993-1996
election cycle. Thus, assuming this information is accurate, the
question arises as to whether the general pattern will be repeated with
respect to digital broadcast television stations during the transition
period. There are reasons to believe it might not be because few cable
subscribers will have digital receivers, at least initially. If it is
repeated, however, it is possible that many of the transitional issues
involved in this proceeding will be resolved through retransmission
consent negotiations. Also, if the general retransmission consent
pattern is repeated, the digital television stations scheduled to begin
broadcasting in November 1998, May 1999, and November 1999, are most
likely to exercise retransmission consent for the third election cycle
currently scheduled to commence on January 1, 2000, even if there were
digital must carry requirements in place. Television stations not
affiliated with the four major networks and commercial television
stations in smaller markets are those broadcasters most likely to
exercise the must carry option, but a number of these stations will not
commence digital operations until the year 2002, when they are required
to do so under the Commission's rules. We seek comment on these general
estimates and what effect these market factors would have on the need
to implement must carry rules immediately. Moreover, what effect would
not setting rules have on television stations, not affiliated with the
top four networks, that want to build out earlier than 2002? We also
seek comment on how retransmission consent, rather than must carry,
will speed the transition to digital television. For example, a cable
operator could agree to carry a broadcaster's ancillary and
supplementary digital services, that are not subject to a must carry
requirement, and the carriage of such services could spur consumers to
purchase digital receivers.
32. The advent of digital broadcast television raises certain
potential retransmission consent procedural issues that need to be
addressed. The Broadcasters had previously commented that the
retransmission consent process should apply separately to the analog
and digital broadcast signal. They argue that separate must carry/
retransmission consent elections should be allowed for each
transmission mode. In this context, we first seek comment on whether
analog and digital broadcasts constitute separate ``broadcasting
stations'' for purposes of retransmission consent and digital broadcast
signal carriage. Would the Broadcaster's approach be desirable because
it permits the separation of two possibly unrelated issues? Conversely,
we ask whether the Broadcasters' proposal would unbalance the
negotiation process by divorcing decisions made by a single licensee
during the transition to digital television.
33. We further inquire as to whether a common retransmission/must
carry election is required for the broadcaster's entire transmission or
may the broadcaster select which of its channels or programming streams
is deemed a must carry program stream and which is a retransmission
consent program stream. We note that the Commission has stated in the
analog context that ``any broadcast station that is eligible for must-
carry status, although it may be carried pursuant to a retransmission
consent agreement must . . . be carried in the entirety, unless
carriage of specific programming is prohibited . . . pursuant to our
rules.'' Nonetheless, it may be desirable to allow partial carriage
pursuant to the retransmission consent process if that is what the
parties agree to. We seek comment on what countervailing policy would
suggest a requirement for all of a station's digital broadcast output
and whether changes in the policy described above are warranted.
34. As stated previously, the Act requires local commercial
television stations to elect either must carry or retransmission
consent on a triennial basis. The first election cycle ended on
December 31, 1996, and the second election cycle ends on December 31,
1999. Assuming that there was some form of mandatory digital broadcast
signal carriage rules in place during the transition period, we ask
whether the current must carry/retransmission consent cycle should be
shortened or otherwise changed to further accommodate the introduction
of digital broadcast television? Are changes in the election cycle
permitted under the Act? We note that new television stations can make
their initial election anytime between 60 days prior to commencing
broadcast and 30 days after commencing broadcast with the initial
election taking effect 90 days after they are made. Instead of revising
the election cycle, should we instead apply the current ``new station''
rule to digital broadcast television signals when they sign on-the-air?
Alternatively, if there were no mandatory digital broadcast signal
carriage rules in place, we seek comment on the procedural mechanisms
necessary for digital television stations to enforce their
retransmission consent rights against cable operators.
35. Section 325(b)(2)(D) exempts cable operators from the
obligation to obtain retransmission consent from superstations whose
signals were available by a satellite or common carrier on May 1, 1991.
The legislative history behind this provision states that an exemption
from retransmission consent was necessary ``to avoid sudden disruption
to established relationships'' between superstations and satellite
carriers. United Video, in comments filed in response to the Fourth
Further Notice in MM Docket No. 87-268, 60 FR 42130 (August 15, 1995),
explains that the exemption permits it to continue to uplink
superstations signals and transmit them to cable operators and other
facilities-based multichannel video providers. We seek comment on
whether the digital replacement stations for these analog superstations
should be treated as new stations for purposes of the retransmission
consent provisions or whether they should have the same status as the
ones they replace.
36. In the Must Carry Report and Order, MM Docket No. 92-259, 58 FR
17350 (April 2, 1993), we specifically prohibited exclusive
retransmission consent agreements between television broadcast stations
and cable operators. This policy forbids a television station from
making an agreement with one MVPD for carriage exclusive of other
MVPDs. The Commission, however, indicated that while this restriction
was desirable at least initially, it would reconsider the need for such
a prohibition. We now seek comment on the continuing desirability of
this prohibition. We ask what impact the introduction of digital
television has on this policy and how the Commission's decision in this
regard would hasten or slow down the transition period.
37. We recognize that the most difficult issues arise during the
transition because there will exist, for a temporary period,
approximately twice as many stations as are now in operation or will be
in operation after the transition and the return of the analog station
licenses. Toward the end of the period, there will be an increasing
redundancy of basic content between the analog and digital stations as
the Commission's simulcasting requirements become applicable. These two
developments have broad
[[Page 42337]]
implications for the cable industry. To the extent that the Commission
imposes a digital must carry requirement, cable operators could be
required to carry double the amount of television stations, that will
eventually carry identical content, while having to drop various and
varied cable programming services where channel capacity is limited.
The central question addressed in this section is how must carry should
be initiated during the transition to digital television.
38. In previous comments, the cable industry, as well as cable
equipment manufacturers, have argued that operators should not be
required to carry both the analog television station and digital
television station during the transition period. They assert that
system and equipment requirements to meet an all channel carriage
obligation would be prohibitively expensive. On the other hand, groups
such as the Broadcasters and Electronics Industry Association (``EIA'')
argue that a cable operator's must carry obligations extend to both the
digital broadcast television transmission and the analog signal during
the transition period. EIA argues that simultaneous retransmission will
allow consumers to experience the qualitative difference between the
two formats and promote digital broadcast television deployment. Some
parties argued that mandatory carriage of additional digital television
broadcast stations would also be contrary to the public interest
because it may harm other video programmers. Viacom asserts that
digital broadcast television must carry requirements should not operate
in such a way as to preempt the carriage of some broadcast station
transmissions in favor of one broadcast station's multiplexed program
services. It refers to those situations where a cable operator's one-
third channel capacity signal carriage requirement may be met through
the carriage of certain analog and digital stations, while another
broadcaster in the market, with a right of carriage, does not get
carried. The Alliance for Community Media argues that public,
educational, and governmental access channels, as well as noncommercial
television stations, be given preference over additional channels
incumbent broadcasters may want carried, in order to maintain a diverse
range of noncommercial voices on cable television. Below, we seek
comment on several carriage options that address the needs of the
broadcasters and the concerns of the cable operators as well as the
timing of mandatory digital broadcast signal carriage rules. For each
of these options, we seek comment on how they comport with the existing
language in the statute. We also ask whether there are any other
options that would serve the public interest and also be consistent
with the statute.
39. The Immediate Carriage Proposal. This first option would
require all cable systems, regardless of channel capacity constraints,
to carry, in addition to the existing analog television stations, all
digital commercial television stations up to the one-third capacity
limit and any additional digital noncommercial stations within the
limits currently found in the statute. This approach would provide
regulatory certainty to the television industry and provide assurance
that investment in digital technology and programming will be fully
realized. Moreover, digital broadcasters would be assured of reaching
the audience they are licensed to serve. This option may also
accelerate the transition period and thus, speed the recapture of the
analog spectrum for auction by the Commission. At the same time,
however, significant cable channel line-up disruptions may occur as
cable operators, whose systems are channel-locked, would have to drop
existing cable programming services to accommodate the carriage of
digital television signals. This option may also result in cable rate
increases, as explained more fully below, for digital broadcast
services that the majority of subscribers will be unable to view, at
least initially, because they did not make the significant investment
in digital television sets necessary to receive such signals. We seek
comment on this first proposal. Are there additional arguments for or
against this option? For example, will broadcaster reliance on
mandatory cable carriage discourage the development of antenna
technology? Furthermore, would program diversity be adversely affected?
How will this proposal, if implemented, alter retransmission consent
negotiations? Would this approach discourage operators from investing
in system upgrades? What effect would such a proposal have on
television stations that have yet to build out their digital
facilities? We also ask whether there should be exceptions to this
proposal, perhaps for operators in large television markets where a
high number of new digital television stations will commence operations
at the same time.
40. If this option is adopted, we ask when the digital broadcast
television must carry requirement should take effect. There are several
possible triggering events that are based on either the digital
broadcast television buildout schedule, by rule, or through the
enforcement process: (1) when the first digital television station is
broadcasting in a given television market; (2) when the majority of
stations in a given television market are broadcasting in a digital
mode; (3) in tandem with the buildout schedule as set forth in the 5th
Report and Order in MM Docket No. 87-268, 62 FR 26966 (May 16, 1997);
(4) at the inception of the third must carry/retransmission consent
election cycle on January 1, 2000; or (5) upon the Commission grant of
a must carry complaint filed by the digital television broadcast
station. We seek comment on which of these scenarios, or any other
option, best reconciles the governmental interest in the rapid
availability of digital broadcast television to cable subscribers with
the other interests involved in this proceeding.
41. In addition, we seek comment on whether this proposal, as well
as others that include a mandatory carriage requirement, is consistent
with Congressional intent. As previously noted, the continued
availability of free over-the-air television broadcast service was one
of the primary reasons Congress required mandatory cable carriage.
Similarly, one Congressional goal cited in the discussion of the
transition to digital broadcasting was the future competitiveness of
free over-the-air broadcasting. If the mandatory carriage provisions
and the transition to digital television share a common purpose--the
continued availability of free over-the-air television broadcast
service--should some form of must carry be required during the
transition to digital television in order to satisfy the common purpose
of the mandatory carriage and digital television provisions?
42. The System Upgrade Proposal. An alternative proposal would
require only higher channel capacity cable systems to add new digital
television stations as they commence operations and initiate their
digital over-the-air service during the transition period. As systems
reach 750 MHz (approximately 120 analog six MHz channels), considerable
flexibility will exist to add new television stations. For cable
systems that are in the process of increasing their channel capacity
through transmission plant upgrades, we would propose that new digital
broadcast television stations must be carried by cable operators as
they come on the air. We seek comment on this option in line with the
questions delineated in the immediate carriage proposal, above. We are
specifically interested in the impact this proposal would have on a
cable operator's incentive to upgrade facilities and on facilities
already upgraded. We seek
[[Page 42338]]
comment on the extent to which upgraded cable systems have no
additional capacity to add new services.
43. To provide a concise response to the above proposal, we seek
comment on whether 750 MHz is the proper cutoff for defining an
upgraded system or should a lower number, such as 450 MHz (54
channels), be used instead. We note that approximately 19 percent of
the current analog cable systems in the nation have 54 or more channels
while the majority of cable systems, about 64 percent, have between 30-
53 channels. According to one report, some two-thirds of cable systems
are currently channel-locked, meaning that they cannot add additional
services without deleting another service or through technical system
enhancements. However, this situation may change in the future as cable
systems upgrade their physical plant and add new channel capacity.
Thus, we also ask commenters to provide information on the expected
growth rate for cable channel capacity between now and 2003, when all
digital television stations are required to commence operation. In
addition, we seek comment about cable programmer plans to convert to
digital and what additional carriage needs these programmers would have
in the future.
44. The Phase-In Proposal. For cable systems that are not adding
channel capacity or have only a limited ability to add channels and
have no unoccupied channel capacity, a requirement to immediately
commence carriage of all digital broadcast television stations when
they come on-the-air would possibly be highly disruptive to cable
subscribers, especially in those markets where a substantial number of
stations are mandated to complete station construction by the same
date. For example, stations affiliated with the top four networks in
the top 30 markets are scheduled to have construction complete by
November 1, 1999. The ten largest market have an average of 17 stations
each with two markets having 22 stations. There are 43 markets that
have ten or more stations. Under this option, we would require that all
cable systems commence some carriage of digital broadcast stations as
they come on-the-air, but that some limit on the number that must be
added be included in the transitional rules to avoid substantial
channel line-up disruptions. If this option is adopted, we would
propose that three to five channels be added each year until all
digital television stations are carried. These could be either must
carry or retransmission consent stations. We seek comment on this
schedule and its effects on the transition. We seek comment on whether
there is another phase-in approach, such as adding three to five
channels every six months, that would also further the rapid
introduction of digital broadcast television while reducing, to the
extent feasible, possible disruptions to the cable system's channel
line-up. We also ask how we would determine which digital television
stations have carriage priority on the cable system in cases where the
quota has been satisfied.
45. The Either-Or Proposal. Another proposal would be to require
broadcasters to choose mandatory carriage for either the analog signal
or the digital transmission, but not both, during the early years of
the transition period. In the year 2005, when the 100 percent simulcast
rule goes into effect, the mandatory carriage option will default to
the digital transmission. This option would avoid causing channel line-
up disruptions but may have an adverse effect on the speed of the
transition process. We seek comment on this approach and ask whether
this proposal may be combined with any other transition option
discussed. We also ask what effect this proposal would have on the
economic viability of digital broadcasters, investment in digital
broadcast technology, and on the sale of digital television receivers.
46. The Equipment Penetration Proposal. Under this option, we ask
whether a carriage obligation should be triggered before any
significant number of consumers have receivers or digital-to-analog
converter boxes that give them the ability to access digital
transmissions. For example, should carriage obligations commence when
some percentage of the public, e.g., 5 percent or 10 percent, have
invested in receiving equipment? Such a requirement would recognize
that in the cable context, the addition of new digital broadcast
television transmissions will likely result in the deletion or absence
of carriage of other services. The possibility of such a substitution
is inherent in the whole mandatory carriage policy, but the general
assumption under the existing analog rules is that at least all
subscribers will have access to the new transmission in question and
not just those who have invested in additional equipment.
47. The Deferral Proposal. The sixth option is to defer the
implementation of mandatory digital broadcast signal carriage rules for
a certain period of time. One possible deferral date would be May 1,
2002. This would coincide with the date that stations not affiliated
with ABC, CBS, NBC, and Fox as well as digital commercial television
stations in markets 31-212, are required to initiate service. Waiting
to issue regulations until this time has certain advantages. For
example, it would allow cable operators and broadcasters to find a
successful business model for digital television. A deferral would also
allow time for voluntary negotiations on cable carriage issues between
the broadcasting and cable industries to settle some of the matters
involved. It would allow time for technology to progress and for
digital television receivers to come down in price. We seek comment on
this proposal and its advantages and disadvantages as well as its
impact on the transition period.
48. The No Must Carry Proposal. The last option is that must carry
does not apply at all for digital television stations during the
transition period. Section 614(b)(4)(B) states that ``the Commission
shall initiate a proceeding to establish any changes in the signal
carriage requirements of cable television systems necessary to ensure
cable carriage of such broadcast signals of local commercial television
stations which have been changed to conform with such modified
standards'' (emphasis added). NCTA argues that the phrase ``have been
changed'' means that the television station's analog signal has ceased
broadcasting and the station's digital signal has replaced it as the
over the air service. Under this reading, digital broadcasters would
not have must carry rights until the transition period is over. If this
were the case, we would propose the following. For commercial
television stations, retransmission consent would still apply. With
regard to those commercial television stations that do not enforce
their retransmission consent rights, or noncommercial television
stations that lack retransmission consent rights, they are free to
enter into voluntary carriage negotiations with cable operators. These
broadcasters would be similarly situated with competing cable
programming services in that they could pay to be placed on the cable
system or negotiate other mutual beneficial arrangements with cable
operators. We seek comment on this approach. We ask how this proposal
would affect the economic viability of digital television stations as
well as the rapid transition to DTV. Moreover, should we recommend to
Congress that noncommercial television stations be vested with
retransmission consent and program exclusivity rights in order to
provide such entities with greater bargaining power vis-a-vis cable
operators?
[[Page 42339]]
49. With regard to those options where a must carry requirement is
suggested, we note that the one-third capacity limit set forth in
Section 614(b)(1)(B), is still applicable. When the one-third capacity
limit has been reached, Section 614(b)(2) provides that ``the cable
operator shall have discretion in selecting which such stations shall
be carried on its cable system.'' We believe that this statutory
directive would continue to apply in the digital context, if we
conclude that mandatory digital signal carriage is necessary. We seek
comment on this interpretation. In the alternative, we ask whether it
would be desirable to adopt carriage priority rules. Would it be useful
to accord priority to stations based on when they commence digital
television broadcasting as a way of encouraging stations to speed up
the transition process? Should carriage priority be given to stations
geographically closer to the operator's principal headend to support
the principal of localism? Alternatively, should priority be given to
television stations that are not affiliated with the top four networks
as these were the stations most likely to have chosen the must carry
option in the analog context and also have less bargaining power
relative to cable operators?
50. We seek comment on whether digital broadcast television
carriage requirements, during the transition and afterward, will impose
unique burdens on small cable systems or small cable operators that
warrant special consideration in the development of new digital
broadcast signal carriage rules. The Broadcasters recognize that small
cable systems may find it difficult to accommodate digital broadcast
television signals. Therefore, they suggest that the Commission may
consider adopting phase-in rules or policies for cable carriage of
digital broadcast television signals but that such rules or policies
should recognize cable's role in working with broadcasters to avail the
public of the benefits of digital technology. Although small cable
operators may be able to pass through a digital broadcast signal to
subscribers, there still may be significant equipment costs and channel
capacity loss involved in order for a cable operator to deliver digital
broadcast television. Small cable operators may not be able to upgrade
their systems, or invest in digital compression technology, due to
financial constraints and thus, may delay their transition to digital.
As such, these entities, that have been accorded special regulatory
status by Congress and the Commission in other areas, such as rate
regulation, may be the subjects of special treatment when it comes to
the carriage of digital broadcast television transmissions.
51. We seek comment on how to define small systems and small cable
operators in the context of digital must carry. We see alternative
definitions to choose from: those found in the must carry provisions of
the Act and those found in the rate regulation context. We seek comment
on which definition furthers the transition to digital broadcast
television while, at the same time, recognizes the unique circumstances
of the small cable operator. Are there other definitions that we have
not considered? As for relief, we ask, for example, whether the
Commission should decide that as long as the small system or small
operator carries all of the local analog television signals, it need
not carry the digital television transmissions as well. Alternatively,
we ask whether the Commission should allow small cable operators to
file petitions for special relief requesting a waiver of any digital
broadcast television carriage rule if financial hardship is
demonstrated. With regard to retransmission consent and its effect on
small cable operators, we seek comment on whether the Commission should
prohibit tying arrangements where an operator must carry the
broadcaster's digital signal as a precondition for carriage of the
analog signal. We seek comment on the scope of our statutory authority
to redefine small cable operators and small systems and provide them
with special relief.
52. Section 653(c)(1) of the Act provides that any provision that
applies to cable operators under Sections 614, 615 and 325, shall apply
to open video system operators certified by the Commission. Section
653(c)(2)(A) provides that, in applying these provisions to open video
system operators, the Commission ``shall, to the extent possible,
impose obligations that are no greater or lesser'' than the obligations
imposed on cable operators. The Commission, in implementing the
statutory language, held that there are no public policy reasons to
justify treating an open video system operator differently from a cable
operator in the same local market for purposes of broadcast signal
carriage. Thus, OVS operators generally have the same requirements for
the carriage of local television stations as do cable operators except
that these entities are under no obligation to place television
stations on a basic service tier. OVS operators are also obligated to
abide by Section 325 and the Commission's rules implementing
retransmission consent. We seek comment on the impact digital must
carry and retransmission consent will have on OVS operators and whether
and how rules for these entities should be different than the rules for
cable operators.
53. Sections 614 (a) and (h), and 615 (a) and (l) establish the
qualifications for cable carriage eligibility as it pertains to full
power commercial television stations (market based eligibility
standards), low power commercial television stations (six statutory
qualifications), and noncommercial television stations (mileage and
technical based standards). At this time, we see no need to deviate
from the existing eligibility requirements for these three categories
of stations. We seek comment on this tentative conclusion.
54. The issue of over-the-air signal reception quality at the
headend of the cable system is also involved in this discussion as it
defines which digital television stations, from a technical
perspective, are eligible for carriage. Section 614(h)(1)(B)(iii)
states that a television station that does not deliver a good quality
signal to the cable operator's headend, and does not agree to pay for
the equipment necessary to improve the signal, is not qualified to
assert its must carry rights. Under the current regime, television
broadcast stations must deliver either a signal level of -45dBm for UHF
signals or -49dBm for VHF signals at the input terminals of the signal
processing equipment, to be considered eligible for carriage. We seek
comment on how the Act's signal quality exception test applies to
digital transmissions. We have previously stated that, in order to ease
the transition, and to be considered to have complied with the
construction schedule, a broadcaster only initially needs to emit a
digital transmission strong enough to encompass its community of
license. We ask how this policy may affect the carriage of the digital
television transmission. We seek comment on whether the Commission's
analog signal strength standards are relevant to digital broadcast
television or new good quality signal parameters, which include normal
system processing degradations and account for bit rate error, are
necessary.
55. The language of Section 614(b)(4)(B) states that the Commission
should initiate a proceeding to establish any changes in the signal
carriage requirements of cable television systems are necessary ``to
ensure cable carriage of such broadcast signals of local commercial
television stations. . . .'' (emphasis added). The question here is
[[Page 42340]]
the nature and existence of carriage rights for noncommercial digital
television stations, since they are not explicitly discussed in this
section. We note that Section 615(a) of the Act states that ``each
cable operator shall carry on the cable system of that cable operator,
any qualified local noncommercial educational television station
requesting carriage.'' APTS argues that this provision is broad enough
to require cable operators to carry both the analog and digital signals
of public television stations. We seek comment on the statutory
language and on APTS' interpretation.
56. Section 614(b)(1)(B) provides that a cable operator, with more
than 12 usable activated channels, shall not have to devote more than
``one-third of the aggregate number of usable activated channels'' to
local commercial broadcast signal carriage purposes. Determining a
cable operator's capacity when digital content is involved and
therefore how many commercial television station signals must be
carried, is thus an issue in this proceeding. The cable industry has
commented that operators lack capacity to accommodate both the analog
signal and digital transmission. Broadcasters, on the other hand, have
asserted that cable operators are technically capable of fulfilling any
digital broadcast television must carry requirement and that lack of
capacity is a misleading argument. They state that one 6 MHz digital
cable channel could carry at least 8 digitally compressed analog NTSC
signals or two HDTV channels, or a compressed NTSC channel and 4
multicast SDTV channels. Thus, while the Act provides that a cable
operator should not have to devote more than ``one-third of aggregate
number of usable activated channels'' to local broadcast signal
carriage purposes, there is some dispute as to how capacity should be
defined in a digital environment.
57. Accordingly, we solicit comments on the definition of ``usable
activated channels'' in the context of digital broadcast television
carriage. Many cable operators now have, or soon will have, the
technical ability to fit several analog programming services onto one 6
MHz channel. Thus, in answering this question, we ask how advances in
signal compression technology affect the definition of capacity. We
also ask whether the one-third channel capacity requirement for digital
broadcast television carriage purposes means one-third of a cable
operator's digital channel capacity or one-third of all 6 MHz blocks,
including both the analog and digital channels.
58. We see three possible options in determining capacity: (1) each
programming service counts as one channel; (2) each 6 MHz block of
spectrum counts as one channel; or (3) the digital capacity should be
by data throughput, i.e. bits per second of digital data. We seek
comment on the benefits and drawbacks on each of these options. We also
ask whether the Act permits the Commission to redefine the meaning of
capacity in this context. We note, as discussed above, that the ability
of cable operators to carry more than a single digital broadcast
television signal in a 6 MHz channel is dependent on whether the
transmission is carried in its original format or whether changes in
format may be permitted, and ask commenters to address this distinction
in discussing the capacity issue.
59. We seek quantified estimates and forecasts of usable channel
capacity. Are there differences in channel capacity that are based on
franchise requirements, patterns of ownership, geographic location, or
other factors? What is the average number of channels dedicated to
various categories of programming, such as pay-per-view, leased access,
local and non-local broadcast channels, and others that would assist us
in understanding the degree to which capacity is, and will be,
available over the next two, five, eight years, or beyond? What methods
are appropriate to forecast the comparison between usable channel
capacity and potential broadcast needs, nationally, during the
transition (or other appropriate timeframe)?
60. Section 614(b)(4)(A) of the Act, discussing the cable system's
treatment and processing of analog broadcast station signals, provides
that: ``The signals of local commercial television stations that a
cable operator carries shall be carried without material degradation.
The Commission shall adopt carriage standards to ensure that, to the
extent technically feasible, the quality of the signal processing and
carriage provided by a cable system for the carriage of local
commercial television stations will be no less than that provided by
the system for carriage of any other type of signal.''
61. In the context of digital broadcast signal carriage, this
raises two quite distinct questions. First, to what extent should this
preclude cable operators from altering the digital format of digital
broadcast television signal when the transmission is processed at the
system headend or in customer premises equipment, such as the set top
box, that is part of the cable system or is attached to it? And second,
regardless of the transmission format, what standards and measurement
tools are available to address disputes relating to the quality of the
digital broadcast television signal?
62. The first issue essentially has to do with tradeoffs between
different modulation methods and transport specifications that may be
optimized for different media and the savings involved in having a
common receiver for signals or bitstreams received from different
transmission paths. As described above, broadcasters are using 8 VSB
while the cable industry has favored 64 or 256 QAM. The cable
operators' selection of a transmission methodology other than 8 VSB
reflect their ability to carry a higher data rate, and make more use of
their capacity, than they would if they used the broadcast system.
63. In comments in the previous phase of this proceeding, the
broadcasters argue that the material degradation mandate should be
strictly applied so that each cable system must carry the digital
broadcast television signal in its original over-the-air format so that
the public can receive the full extent of the station's capabilities,
including the station's full high definition capabilities.
64. The cable industry's concern in this area is that operators
should be allowed to demodulate and repack the digital broadcast
television signal into a higher bit-rate package because it would
result in a more efficient use of cable network capacity than any
broadcaster proposed engineering plan to merely pass-through the
bitstream on an equivalent basis, i.e., a 6 MHz broadcast signal on a 6
MHz cable channel.
65. We recognize one important action that may constitute material
degradation. It involves the cable operator's conversion of the
broadcaster's digital transmission into another digital format, perhaps
one with lower picture resolution. We seek comment on this possibility
and whether such a conversion should be prohibited. Are there other
degradation possibilities that we have not considered? Additionally,
does the term ``material'' in the statute suggest that some ``de
minimis'' amount of degradation is permissible?
66. Aside from the matters discussed above, questions arise as to
what standards and measurement techniques the Commission should employ
where specific disputes as to digital broadcast signal quality develop.
Picture and sound quality issues in a digital environment implicate
standards and measurement techniques that are quite different than
those that arise in the analog environment. In the analog
[[Page 42341]]
situation, issues involving signal strength, signal to noise ratios,
and ghosting are the focus of concern. In the digital situation,
picture resolution is still a concern but bit error rates and data
throughput are also relevant. Moreover, the technical standards that
are employed to evaluate cable analog picture quality were adopted and
refined over the course of many decades. We tentatively conclude that
it would be premature to attempt to replicate parallel digital
standards before digital broadcasting has even commenced. In this
regard, we seek suggestions for any standards that may be used in
addressing signal degradation issues. How, and where, should
degradation be measured? For example, should it be measured before the
signal is processed by the set top box, if such a device is involved,
or should it be measured at the input of the digital receiver? We
recognize that, under the Act, the signal quality of a local commercial
television station carried by a cable system will be no less than that
provided by the system for carriage of any other type of signal. Does
this mean that if an operator carried a cable programming service, such
as HBO, in the 1080i HDTV format, then it must carry, without material
degradation, all local commercial television stations that also provide
1080i HDTV signals? Would such a channel comparison test be a viable
degradation measurement technique, at least for HDTV picture quality?
Alternatively, we ask whether degradation should be gauged through the
use of bit error rate and signal-to-noise ratio measurements. In other
words, it may be that as long as the bit error rate is minimal, then
any conversion process cannot be said to materially degrade the signal.
67. Section 614(b)(5) of the Communications Act provides that ``a
cable operator shall not be required to carry the signal of any local
commercial television station that substantially duplicates the signal
of another local television station which is carried on the cable
system * * *.'' Parallel provisions also apply to the carriage of
noncommercial stations. Congress stated that these provisions were
intended to preserve the cable operator's editorial discretion while
ensuring that the public has access to diverse local signals. Because
it is likely, and indeed mandated, that at some point in the transition
process there be a duplication of program content between analog and
digital broadcast transmissions, an integral part of the overall
carriage question is the issue of how to treat duplicative programming.
68. We see alternative approaches to defining ``duplication'' in
the digital age. The first option would be modeled after the current
approach for analog signal duplication and focus on the stations'
program content so that the nonduplication provision would apply even
though the signals were transmitted in different formats. In the analog
signal context, the Commission has determined that two commercial
television stations will be considered to substantially duplicate each
other ``if they simultaneously broadcast identical programming for more
than 50 percent of the broadcast week.'' Thus, if a broadcaster aired
substantially the same material over its digital station, as it does
over its analog station, the operator would not be obligated to carry
both. Second, because they each use different transmission formats, the
analog signal and digital bitstream could be considered not duplicative
even if they contain identical program content. This would be most
clearly the case where one of the broadcasts was in a high definition
format and the other was not. Third, the substantial duplication
requirement may not apply in the digital world because Congress may
have intended that the provision be used where there were two different
television stations involved, not the same licensee transmitting
programming in both an analog and digital format. We seek comment on
each of these possibilities. In answering this inquiry, we seek comment
on the meaning of the term ``duplicative'' when applied to digital
broadcast television signals. For example, should a multiplexed
broadcast signal that includes cable programming that is already
carried by the operator, be considered duplicative? Moreover, how
should the term ``station'' be defined in this context? Does the term
``another'' in the statute suggest that the signals in question must
come from two different stations, not the same one? We also seek
comment on whether a definition that requires carriage of identical
analog and digital signals would result in other commercial broadcast
programming not being carried because the one-third channel capacity
has been reached.
69. Section 614(b)(3)(A) of the Act requires cable operators to
carry the ``primary video'' of each of the local commercial television
stations carried on the cable system. A parallel provision exists for
noncommercial educational television stations. The general question
here is how to define ``primary video'' during the transition period
when both an analog and digital signal will be broadcast. Could the
analog signal be considered primary but not the digital signal since
the former can be received by all cable subscribers with analog
television sets? Moreover, broadcasters, under the digital television
rules, have flexibility in choosing to broadcast either high definition
or multiple standard definition television transmissions, or a mixture
of both, over the course of a broadcast day. Thus, how should ``primary
video'' be defined in the context of a digital service that broadcasts
multiple streams of video programming. If the primary video includes
less than all of the streams of programming broadcast, we seek comment
on which video programming services provided by a licensee should be
considered primary and should be entitled to carriage. Should the
definition be flexible, allowing the broadcaster to alternate which of
its transmissions would be considered primary over time? How do the
answers to these questions reflect on the development of both digital
broadcasting and on the services provided and rates charged by cable
operators?
70. Section 336 of the Act provides that ``no ancillary or
supplementary service shall have any right to carriage under section
614 or 615.'' Section 614(b)(3) of the Act requires cable operators to
carry ``to the extent technically feasible, program-related material
carried in the vertical blanking interval or on subcarriers'' but
states that ``[r]etransmission of other material in the vertical
blanking interval or other nonprogram-related material (including
teletext and other subscription and advertiser-supported information
services) shall be at the discretion of the cable operator.'' Our task
here is to define what ``ancillary or supplementary'' mean in the
context of digital broadcast television carriage. We seek comment on
possible definitions that are consistent with the language of Section
614(b)(3).
71. We note that Section 336 of the 1996 Act also states that ``no
ancillary or supplementary service shall * * * be deemed a multichannel
video programming distributor for purposes of section 628.'' Section
628 contains the program access requirements pursuant to which
multichannel video programming distributors have rights to demand
access to certain satellite delivered cable programming in which a
cable operator has an attributable interest. We seek comment on whether
the Act's language provides any insight as to the ancillary or
supplementary service definition.
[[Page 42342]]
72. Section 615(d) and 614(c)(2) of the Act provides that a cable
operator required to add the signals of qualified local noncommercial
educational stations and qualified low power television stations,
respectively, may do so by placing such additional stations on unused
public, educational or governmental (``PEG'') channels not in use for
their designated purposes, subject to the approval of franchising
authorities. Pursuant to Section 611 of the Act, the franchising
authority determines how much of a cable operator's channel capacity,
if any, will be set aside for PEG use. The Commission, when
implementing the analog must carry rules, declined to adopt stringent
requirements regarding the use of PEG channels for must carry purposes
because we believed that these matters are more appropriately resolved
by individual franchising authorities. We seek comment on whether the
DTV signals of NCE stations and LPTV stations should be allowed on PEG
channels under the same framework accorded analog television signals.
73. Section 614(b)(7) provides that all commercial must-carry
signals shall be provided to every subscriber of a cable system and
shall be viewable on all television receivers of subscribers that are
connected by the cable operator or for which the cable operator
provides a connection. Section 615(h) provides that noncommercial
educational stations, that are entitled to carriage, shall be
``available to every subscriber as part of the cable system's lowest
price service tier that includes the retransmission of local commercial
television broadcast signals.'' We seek comment on whether the operator
must place the broadcaster's digital transmissions on the same basic
tier where the analog channels are found or whether a separate digital
basic service tier could be established that would be available only to
subscribers with the capacity to view the contents of the digital
broadcast signals.
74. During the transition period, there may be situations where the
carriage of digital broadcast signals could properly be associated with
the carriage of digital cable channels because of their similar digital
picture or interactive characteristics, or may otherwise be provided
only to subscribers capable of using digital video. By associating the
digital broadcast and cable channels in terms of tier placement,
subscribers that are equipped to receive digital signals will be
assured of receiving digital broadcast signals and subscribers not so
equipped would not be obliged to subscribe to services that they are
not equipped to receive. We seek comment on this general concept or on
other means whereby subscribers' reception capabilities could be
matched with the tier package they are required by regulation to
receive. Do we have the authority to implement such a proposal?
Moreover, should there be parallel tier placement rules, one for analog
cable systems that do not offer digital services, and one for cable
systems that do offer digital services? We also seek comment on the
legal issues that might be associated with having more than a single
basic tier in order to accommodate the carriage of digital broadcast
signals. Once the transition period ends, our tentative view is that
the basic service tier would be required to include, at a minimum,
digital broadcast signals and public, educational, and governmental
access channels. This will satisfy the statute's directive of assuring
that all cable subscribers are able to view broadcast material on the
lowest priced tier available.
75. Also pursuant to Section 614(b)(7), if a cable operator
authorizes subscribers to install additional receiver connections, but
does not provide the subscriber with such connections, the operator
shall notify such subscribers of all broadcast stations carried on the
cable system which cannot be viewed via cable without a converter box.
In such cases, the cable operator shall offer to sell or lease a
converter box to such subscribers at rates in accordance with the
standards established by the Commission pursuant to Section 623(b)(3).
We seek comment on the application of this provision to the carriage of
digital broadcast television stations. We specifically ask whether this
provision would require cable operators to offer converter boxes to
every subscriber if digital broadcast television stations cannot be
received without some set-top device facilitating reception of the
stations' transmissions.
76. In addition to tier position requirements, we also need to
determine the specific channel rights digital broadcast television
stations should have. Section 614(b)(6) provides for four channel
positioning options for commercial television stations: (1) The channel
number on which the station broadcasts over-the-air; (2) the channel on
which the station was carried on July 19, 1985; (3) the channel on
which it was carried on January 1, 1992; and (4) any other channel
number as is mutually agreed upon by the station and the cable
operator. Noncommercial television stations have three channel
positioning options under Section 615(g)(5): (1) the channel number on
which the station is broadcast over-the-air; (2) the channel on which
the station was carried on July 19, 1985; and (3) any other channel
number as is mutually agreed upon by the station and the cable
operator. We seek comment on which of the statutory options remain
applicable in a digital environment. Commenters should also focus their
attention on the carriage of multiple SDTV programming streams and
describe how channel positioning should vest in this situation.
77. In earlier comments, the Broadcasters maintain that television
stations should have the option of electing the channel on which the
digital broadcast television signal is carried, so that each station
would be able to retain its channel identity from cable system to cable
system, and so that the analog and digital channels be found together
on the cable system. They also maintain that the Congressional intent
behind the Act's channel positioning mandate, i.e., to prevent the
anticompetitive conduct of the cable operator placing the television
station on an undesirable, higher cable channel, remains valid. We seek
comment on this proposal.
78. The new digital broadcast television table of allotments
typically does not correspond to a television station's analog channel
number but the advent of advanced programming retrieval systems and
other channel selection devices may alleviate the need for specific
channel positioning requirements as subscribers will be able to locate
a television station with little degree of difficulty. Additionally,
channel mapping protocols (``PSIP'') have been developed that will
technically link the digital channel number with that assigned to the
analog channel. Given these developments, we ask whether the Commission
should refrain from promulgating new channel positioning requirements
and allow technology, as discussed above, to resolve the matter. We
seek comment on the extent to which PSIP is the subject of voluntary
standards setting processes in the cable, broadcast, and consumer
electronics industries and what the timing and outcome of such
voluntary processes are likely to be. Moreover, recognizing that
channel positioning is important to ensure the successful introduction
of an individual digital television station on a cable system with
dozens of other channels, we ask whether deference to technology to
resolve the positioning issues here will be the appropriate solution.
We also seek comment on whether this option would be consistent with
the statutory channel positioning requirements.
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79. Another alternative would be to allow the operator to place the
digital television transmission on any cable channel of its choice,
subject to certain conditions, such as: (1) That the digital channel
identification or PSIP information be clearly available for use by the
subscriber's receiver; (2) that all analog and digital channel
placement decisions must comply with tier placement requirements; and
(3) once a station has been assigned a channel position, the cable
operator may not move it from that position for at least three years
except where a move is authorized by the broadcaster. These general
requirements would give the operator greater leeway in configuring its
channel line-up. We seek comment on this particular proposal and ask
commenters to focus on the legal, technical, and economic issues
involved.
80. We also seek comment on whether advanced programming retrieval
systems and other channel selection devices provided by cable operators
which, in effect, filter and prioritize programming, present another
series of challenges similar to those that gave rise to Congress'
channel positioning requirements. If so, we ask whether any rules are
necessary to ensure fair competition between electronic programming
guides controlled by cable operators and those that are controlled by
broadcasters.
81. Television stations have carriage rights throughout the market
to which they are assigned. Pursuant to Section 614(h)(1)(C), at the
request of either a broadcaster or a cable operator, the Commission
may, with respect to a particular television broadcast station, include
additional communities within its television market or exclude
communities from such station's television market to better effectuate
the purposes of the Act's must carry provisions. The Commission's
inclusion of additional communities within a station's ADI imposes new
must carry requirements on cable operators subject to the modification
request while the grant to exclude communities from a station's ADI
removes a cable operator's obligation to carry a certain station's
signal. In considering market modification requests, the Act provides
that the Commission shall afford particular attention ``to the value of
localism'' by taking into account such factors as--(1) Whether the
station, or other stations located in the same area, have been
historically carried on the cable system or systems within such
community; (2) whether the television station provides coverage or
other local service to such community; (3) whether any other television
station that is eligible to be carried by a cable system in such
community in fulfillment of the requirements of this section provides
news coverage of issues of concern to such community or provides
carriage or coverage of sporting and other events of interest to the
community; and (4) evidence of viewing patterns in cable and noncable
households within the areas served by the cable system or systems in
such community. We seek comment on whether any change to the market
modification process is warranted to accommodate the difference between
analog and digital broadcasting and the fact that the signals in
question have neither a history of carriage nor measured audience. We
also seek comment on whether there are alternative means to resolve
market structure issues for new digital broadcast television stations.
82. We also inquire as to whether changes in signal strength and
Grade B contour coverage, because of new digital television station
channel assignments and power limits, will result in different carriage
obligations for cable operators. We focus on those instances where the
Commission has redefined an analog station's television market based,
in part, on Grade B contour coverage and has either granted or denied a
must carry complaint based on a analog station's signal strength
measurements. Should the digital television station's technical
characteristics have any bearing on the analog television station's
market area, or vice versa?
83. We previously held that television markets for must carry
eligibility purposes are to be determined by Arbitron's ADIs through
December 31, 1999, the end of the second must carry/retransmission
consent election cycle, and by Nielsen's DMAs for all election cycles
thereafter. Television markets for digital allocation purposes,
however, are currently defined by DMAs rather than ADIs. Noting that
digital broadcast television service in certain markets is to be
introduced months earlier than the switch to DMAs, the situation now
exists where carriage obligations commence under one set of standards
(ADIs) and shortly thereafter shift to a new set of market definitions
(DMAs). This two-step carriage process is likely to cause channel line-
up disruptions and subscriber confusion. We seek comment on this
situation and the steps the Commission should take to lessen the
possibility of channel line-up disruptions.
84. Under current Commission rules, whenever a television station
believes that a cable operator has failed to meet its must carry
obligations, the station may file a complaint with the Commission.
Section 614(d)(3) requires the Commission to adjudicate a must carry
complaint within 120 days from the date it is filed. The Commission may
grant the complaint and order the cable operator to carry the station
or it may dismiss the complaint if it is determined that the cable
operator has fully met its must carry obligations with regard to that
station. We seek comment on whether the complaint process now set forth
in part 76 is appropriate in the context of digital broadcasting
stations. We specifically ask whether the Commission's rules need to be
modified to recognize the broadcaster's transmission of programming
streams rather than entire channels. We welcome any suggestions for
streamlining the complaint process that would expedite the Commission's
adjudication of the requested action.
85. Various means of providing cable subscribers access to over-
the-air broadcast signals have been explored in years past. One
recognized option was to require cable operators to provide subscribers
with an input selector switch (commonly referred to as an A/B switch)
that switches television receiver inputs from cable to an over-the-air
antenna and to require cable system operators to educate subscribers as
to the use of this device. Congress, however, subsequently abolished
the Commission's A/B switch requirements when it passed the Cable Act
of 1992, stating affirmatively that no cable operator should be
required to provide or make available such a switch. It stated that an
A/B switch is not an enduring or feasible method for the reception of
television signals. In light of Section 614(b)(4)(B), and Congressional
statements about the Commission's broad role in examining the digital
broadcast television carriage issue, we ask whether we have the
authority to address A/B switch issues, notwithstanding the existing
prohibition.
86. The availability of an input selector switch, in conjunction
with television antennas, could be a means of increasing cable
subscriber access to DTV signals, including ancillary and supplementary
services that are not entitled to cable carriage. That does not
necessarily mean that a regulatory requirement mandating the inclusion
of such a device is needed. The basic hardware involved is readily
available from retail outlets. Moreover, a switch mechanism is now
incorporated into many television receivers (as well as into videotape
recorders and DBS receivers) and new digital television receivers may
have multiple input
[[Page 42344]]
possibilities fully selectable from remote control devices. We seek
comment on these views and specifically ask whether A/B switches have
evolved, from a technical perspective, in the last six years. Are they
easier to use than they were when Congress made its findings for the
1992 Cable Act? For example, has widespread use of remote control
technology rather than manual operation made the use of A/B switches
more effective? Are there widely accepted industry practices with
regard to the manufacturing and inclusion of A/B switches? What plans,
if any, do manufacturers have to incorporate electronic or diode-based
A/B switches into television receivers and other devices? We also ask
whether there are any actions that the Commission needs to take to make
sure that subscribers have access to digital television signals that
are not carried. Are there situations where regulatory intervention
would be useful either to facilitate access as a technical matter or to
overcome any residual ``gatekeeper'' control that cable system
operators may retain with respect to such devices? Is the restriction
in Section 614(b)(4)(B) on requirements applicable to cable operators
equally applicable to requirements imposed on receiver manufacturers?
Could the Commission, for example, require that all digital television
equipment, not supplied by the cable operator, be manufactured with an
A/B switch? We also seek comment on whether improvements in A/B switch
technology and its availability undercut the need for mandatory digital
broadcast signal carriage, if the justification for such a rule is to
preserve free over the air broadcast television.
87. As the above discussion indicates, the use and usefulness of
antennas, both roof-top and indoor, is central to this proceeding. It
appears likely that antennas will play a significant role in the
reception of DTV. In this context, many questions arise about the
efficacy of antennas for over-the-air reception of DTV and their use by
cable and non-cable homes, alike. For example, do indoor antennas work
better with digital television receivers than with analog receivers?
How do weather conditions affect DTV television reception when an
antenna is used? Are roof top antennas an economically efficient
alternative to cable for the reception of DTV signals? Should the
Commission encourage antenna technology in order to enhance the use of
the valuable spectrum broadcasters use? How does the availability of
better antennas affect the necessity of mandatory digital broadcast
signal carriage rules?
V. Impact on Other Rules
88. Digital broadcast signal carriage also has potential
consequences for the cable television rate regulation process. Both
jurisdictional and substantive rate level issues are involved. One of
the issues addressed in this proceeding has to do with where, in terms
of tier location, digital broadcast television signals would be placed
on the cable systems involved. The answer to this question has
jurisdictional consequences for the rate regulation process and
substantive consequences in terms of the rate levels permitted by the
Commission's rules. With respect to the jurisdictional question, rates
for the basic service tier (``BST'') are subject to local franchise
authority regulation and upper tier or cable programming service tiers
(``CPST'') are subject to Commission regulation on a complaint basis.
89. With respect to the substance of rate regulation, under the
benchmark rate rules, once initial rates are established, cable
operators are permitted to adjust their rates for changes in the number
of regulated channels. Cable operators seeking to adjust regulated
rates to reflect these changes had to be prepared to justify rate
increases using the applicable forms. In justifying rate adjustments,
operators use a channel adjustment methodology provided for under the
rules. The rules also provide an adjustment process when channels are
dropped and when channels are moved between tiers. An alternative
``cost of service'' rate regulation process also is available to cable
system operators that believe the benchmark process fails to adequately
account for their costs. There are also cost pass-through mechanisms
for defined categories of ``external'' costs, including franchise fees;
certain local franchise costs; programming; retransmission consent; and
copyright fees. Costs associated with compliance with mandatory
broadcast signal carriage rules are not now included as external costs.
Customer equipment that is used to receive the basic service tier, and
any other service received with the same equipment, is subject to
franchise authority jurisdiction under a separate set of rules.
Additionally, subject to a number of conditions, cable operators may
establish a category of cable programming service tiers, referred to as
a ``new product tiers,'' that may be offered at prices they elect. New
product tiers consist of programming not previously carried by the
operator that is optional to subscribers and that is available without
subscribing to any other cable programming service tier. It appears
that most cable system operators that are adding separate tiers of
digital cable programming may be doing so under the ``new product
tier'' provisions of the rules.
90. In our effort to establish a complete record in this area, and
make an informed policy decision with regard to rate regulation, we
seek comment on what, if any, changes in these rules may be necessary
or desirable. We specifically seek comment on the processes and costs
of delivering digital broadcast television to cable subscribers. This
part of the inquiry is important because some operators, such as
Intermedia, have said that mandating carriage of all digital broadcast
television transmissions ``will financially devastate many cable
operators.'' Broadcasters acknowledge that the transition to digital
will be expensive for all parties involved. We note that the
broadcaster is currently required to pay for the costs of delivering
its analog signal to the cable operator's headend. Cable subscribers
also have an interest given that rates may change if digital broadcast
television stations must be carried by cable systems, and the
Commission has a statutory responsibility to ensure reasonable rates to
these subscribers. We also seek comment on whether existing rate levels
already allow operators to recover the costs involved in any upgrading
of their systems necessary for digital broadcast signal carriage.
91. The ``costs of carriage'' issue has been generally addressed in
prior comments. The broadcasters, for example, assert that they should
not have to pay for cable upgrades in return for mandatory carriage.
They state that cable operators will know what technical compatibility
issues lie ahead and thus, any expenses incurred to ensure
compatibility should be borne by those systems. The cable operators, on
the other hand, argue that if they are required to carry any digital
broadcast services before a cable system has become digital-capable,
the cost to transmit such services should be borne by the broadcast
station. We ask that commenters refresh the record on the specific
technical modifications needed to enable cable systems to deliver
digital broadcast television to subscribers. We ask what the costs will
be for such modifications, particularly for new headend equipment and
the delivery and installation of new digital set top boxes, if they are
needed to comply with any carriage requirement. We also ask about the
costs related to cable tower modifications as it may be necessary to
[[Page 42345]]
add additional digital broadcast television receiving antennas at the
headend. To what extent should these additional costs be the
responsibility of the broadcaster seeking carriage? We also seek
comment on whether digital cable programming services are paying, or
plan to pay, cable operator digital equipment costs as one way of
obtaining carriage on the cable system. We ask if the advent of digital
compression technology has, or will, lessen the cable operator's costs
in bringing digital broadcast television signals into the home.
92. Cable operators are required to notify subscribers of any
changes in rates, programming services or channel positions. When the
change involves the addition or deletion of channels, each channel
added or deleted must be separately identified. We seek comment on how
any new digital broadcast television carriage requirements will affect
the notification provisions described above. For example, if an
existing broadcaster switches to an HDTV format, would the cable
operator be required to notify subscribers of the change? Moreover, if
a television broadcasts multiple streams of programming, must the cable
operator explain the broadcaster's offerings on each of these streams?
We tentatively conclude that a cable operator would be required to
notify subscribers whenever a new digital television transmission is
added to the operator's channel line-up because these digital broadcast
television substitutions could be considered new services affecting
subscribers equipment and subscription choices. We also tentatively
conclude that while the operator should state that multiple programming
streams are available, it would be under no obligation to explain to
subscribers the material found in each and every SDTV programming
stream, if such material is carried, as such detail is not required by
either the Act or our rules.
93. The Commission's program exclusivity rules, as implemented in
Secs. 76.92 and 76.151, protect exclusive distribution rights afforded
to network programming and syndicated programming. Television broadcast
station licensees are entitled to protect those kinds of programs for
which they have contracted in a particular market by exercising
blackout rights against distant television broadcast stations carried
on cable systems that serve more than 1000 subscribers. Stations may
assert their rights regardless of whether their signals are carried on
the cable system in question.
94. We seek comment on how the transition to digital television may
affect these rules. We specifically ask how SDTV multiplexing impacts
these rules and whether the cable operator will be able to accommodate
such black-out requests on various programming streams. Finally, we ask
whether these rules are applicable in the digital age, with or without
must carry, and whether it would be possible to repeal these rules and
instead rely on the retransmission consent provisions of Section 325 of
the Act to protect the rights in question. Section 325 generally
provides that distant stations may not be carried without the
permission of the station involved. To the extent digital broadcast
television stations will need to make new arrangements for programming,
it may be possible for the rights now protected by the rules to be
protected through private contractual relationships. A broadcaster, for
example, could require a cable operator to blackout certain programming
and monetary penalties could arise if the operator does not comply with
the terms of the contract. This may be a more effective method of
enforcing blackout rights than relying on the Commission's current
complaint process. The rules in question, we note, were adopted prior
to the changes in Section 325 that include the retransmission consent
requirement.
95. The Commission's cable television broadcast signals carriage
rules and the copyright laws, through reference to the Commission's
rules, contain a number of distinctions in their application based on
whether a broadcast signal is ``local'' to the cable community. One
measure of whether a station's signal is ``local'' involves using
actual over-the-air viewership in the community as the standard. This
``significantly viewed'' concept is defined in Sec. 76.5(i) of the
rules and is applied in the contexts of syndicated exclusivity, sports
broadcast, network nonduplication, and, through incorporation by
reference, to the compulsory copyright licensing process. The
significant viewing standard supplements the other ``local'' station
definitions by permitting stations to be considered local both within
their Grade B contours and outside of their Grade B contours and
outside of their ADI or DMA-defined economic market areas based on
viewing surveys that directly demonstrate that over-the-air viewers
have access to the signals in question.
96. Because digital broadcast television stations will not, in the
early stages of their deployment, have significant over-the-air
audience, we seek comment on methods to address the kinds of issues
that the significant viewing standard addresses in the analog
environment. Should, for example, a new measure be developed that
measures viewing in places that are equipped with digital receivers? Or
should the ``significant viewing'' status of analog stations be
transferred to their digital replacements. It is our initial view that
such transfer of rights may be the most efficient and equitable way to
proceed based on the costs and problems associated with taking new
measurements.
97. We recognize that cable operators are frequently dependent on
cable television relay service (``CARS'') stations to relay broadcast
television signals. CARS stations distribute signals to microwave hubs
where it may be physically impossible or too expensive to run actual
cable wire. CARS stations are not used to distribute programming
directly to subscribers. We seek comment on whether the introduction of
digital broadcast television impacts CARS, and, if so, how.
VI. Procedural Matters
98. Ex Parte Rules. This proceeding will be treated as a ``permit-
but-disclose'' proceeding subject to the ``permit-but-disclose''
requirements under 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
1.1206(b).
99. Filing of Comments and Reply Comments. Pursuant to applicable
procedures set forth in 47 CFR 1.415 and 1.419, interested parties may
file comments on or before September 17, 1998 and reply comments on or
before October 30, 1998. To file formally in this proceeding, you must
file an original plus four copies of all comments and reply comments.
If you want each Commissioner to receive a personal copy of your
comments and reply comments, you must file an original plus nine
copies. You should send comments and reply comments to Office of the
Secretary, Federal Communications Commission, 1919 M Street, N.W.,
Washington, D.C. 20554. Comments and reply comments will be available
for public inspection during regular business hours in the FCC
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Reference Center, Room 239, Federal Communications Commission, 1919 M
Street N.W., Washington D.C. 20554. The Cable Services Bureau contact
for this proceeding is Ben Golant at 202-418-7111 or bgolant@fcc.gov.
100. Written comments must be submitted by the Office of Management
and Budget (``OMB'') on the proposed information collections on or
before September 17, 1998. 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, Room 234, 1919 M Street, N.W., Washington,
DC 20554, or via the Internet to jboley@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.
101. Parties are also asked to submit comments and reply comments
on diskette, where possible. Such diskette submissions would be in
addition to, and not a substitute for, the formal filing requirements
addressed above. Parties submitting diskettes should submit them to Ben
Golant of the Cable Services Bureau, 2033 M Street N.W., Room 703B,
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
WordPerfect 5.1 software. The diskette should be submitted in ``read
only'' mode. The diskette should be clearly labelled with the party's
name, proceeding, type of pleading (comments or reply comments), and
date of submission. The diskette should be accompanied by a cover
letter.
102. Initial Regulatory Flexibility Act Analysis. As required by
the Regulatory Flexibility Act (``RFA''), the Commission has prepared
this present Initial Regulatory Flexibility Analysis (``IRFA'') of the
possible significant economic impact on small entities by the policies
and rules proposed in this NPRM. 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 NPRM provided above.
The Commission will send a copy of the NPRM, including this IRFA, to
the Chief Counsel for Advocacy of the Small Business Administration.
103. Need for, and Objectives of, the Proposed Rule Changes. This
NPRM seeks comment on several issues relating to the carriage of
digital television broadcast stations. The objective of the NPRM is to
propose broadcast signal carriage policy alternatives during the
transition period, examine the changes in the Commission's current
broadcast signal carriage rules that may be necessary in the digital
age, and to ensure compatibility between digital broadcast television,
cable systems, and related equipment.
104. Legal Basis. The authority for the action proposed in this
rulemaking is contained in Sections 1, 4(i) and (j), 325, 336, 614, and
615 of the Communications Act of 1934, as amended, 47 U.S.C. 151,
154(i) and (j), 325, 336, 534, and 535.
105. Description and Estimate of the Number of Small Entities
Impacted. 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. 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 propose in this NPRM will affect
cable operators, OVS operators, cable programmers, and television
station licensees.
106. 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, closed circuit television
services, 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 each service individually
to provide a more precise estimate of small entities.
107. 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 proposed in this NPRM.
108. 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.
109. Open Video System (``OVS''). The Commission has certified
eleven OVS operators. Of these eleven, only two are providing service.
Bell Atlantic received approval for its certification to convert its
Dover, New Jersey Video Dialtone (``VDT'') system to OVS. Affiliates of
Residential Communications Network, Inc. (``RCN'') received approval to
operate OVS systems in New York City and the Boston area. Bell Atlantic
and RCN have 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. We believe that one OVS licensee may qualify as a small
business concern. 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.
110. Program Producers and Distributors. The Commission has not
developed a definition of small entities applicable to producers or
distributors of cable television programs. Therefore, we will use the
SBA classifications of
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Motion Picture and Video Tape Production (SIC 7812), Motion Picture and
Video Tape Distribution (SIC 7822), and Theatrical Producers (Except
Motion Pictures) and Miscellaneous Theatrical Services (SIC 7922).
These SBA definitions provide that a small entity in the cable
television programming industry is an entity with $21.5 million or less
in annual receipts for SIC 7812 and SIC 7822, and $5 million or less in
annual receipts for SIC 7922. Census Bureau data indicate the
following: (a) there were 7,265 firms in the United States classified
as Motion Picture and Video Production (SIC 7812), and that 6,987 of
these firms had $16.999 million or less in annual receipts and 7,002 of
these firms had $24.999 million or less in annual receipts; (b) there
were 1,139 firms classified as Motion Picture and Video Tape
Distribution (SIC 7822), and 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 (c) there were 5,671 firms in the United
States classified as Theatrical Producers and Services (SIC 7922), and
5627 of these firms had $4.999 million or less in annual receipts.
111. Each of these SIC categories is very broad and includes firms
that may be engaged in various industries, including cable programming.
Specific figures are not available regarding how many of these firms
exclusively produce and/or distribute programming for cable television
or how many are independently owned and operated. Thus, we estimate
that our rules may affect approximately 6,987 small entities primarily
engaged in the production and distribution of taped cable television
programs and 5,627 small producers of live programs that may be
affected by the rules adopted in this proceeding.
112. Television Stations. The proposed rules and policies will
apply to television broadcasting licensees, and potential licensees of
television service. 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. In addition, as of October 31, 1997 , there were 1,880
LPTV stations that may also be affected by our rules. For 1992 the
number of television stations that produced less than $10.0 million in
revenue was 1,155 establishments.
113. 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.
114. In addition to owners of operating television stations, any
entity who 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.
115. Small Manufacturers. The SBA has developed definitions of
small entity for manufacturers of household audio and video equipment
(SIC 3651) and for radio and television broadcasting and communications
equipment (SIC 3663). In each case, the definition includes all such
companies employing 750 or fewer employees. Census Bureau data
indicates that there are 858 U.S. firms that manufacture radio and
television broadcasting and communications equipment, and that 778 of
these firms have fewer than 750 employees and would be classified as
small entities.
116. Electronic Equipment Manufacturers. The Commission has not
developed a definition of small entities applicable to manufacturers of
electronic equipment. Therefore, we will use the SBA definition of
manufacturers of Radio and Television Broadcasting and Communications
Equipment. According to the SBA's regulations, a TV equipment
manufacturer must have 750 or fewer employees in order to qualify as a
small business concern. The Census Bureau category is very broad, and
specific figures are not available as to how many of these firms are
exclusive manufacturers of television equipment or how many are
independently owned and operated. We conclude that there are
approximately 778 small manufacturers of radio and television
equipment.
117. Electronic Household/Consumer Equipment. The Commission has
not developed a definition of small entities applicable to
manufacturers of electronic equipment used by consumers, as compared to
industrial use by television licensees and related businesses.
Therefore, we will use the SBA definition applicable to manufacturers
of Household Audio and Visual Equipment. According to the SBA's
regulations, a household audio and visual equipment manufacturer must
have 750 or fewer employees in order to qualify as a small business
concern. Census Bureau data indicates that there are 410 U.S. firms
that manufacture radio and television broadcasting and communications
equipment, and that 386 of these firms have fewer than 500 employees
and would be classified as small entities. The remaining 24 firms have
500 or more employees; however, we are unable to determine how many of
those have fewer than 750 employees and therefore, also qualify as
small entities under the SBA definition. Furthermore, the Census Bureau
category is very broad, and specific figures are not available as to
how many of these firms are exclusive manufacturers of television
equipment for consumers or how many are independently owned and
operated. We conclude that there are approximately 386 small
manufacturers of television equipment for consumer/household use.
118. Computer Manufacturers. The Commission has not developed a
definition of small entities applicable to computer manufacturers.
Therefore, we will utilize the SBA definition of Electronic Computers.
According to SBA regulations, a computer manufacturer must have 1,000
or fewer employees in order to qualify as a small entity. Census Bureau
data indicates that there are 716 firms that manufacture electronic
computers and of those, 659 have fewer than 500 employees and qualify
as small entities. The remaining 57 firms have 500 or more employees;
however, we are unable to determine how many of those have fewer than
1,000 employees and therefore also qualify as small entities under the
SBA definition. We conclude that there are approximately 659 small
computer manufacturers.
119. Compliance Requirements. There may be compliance requirements
for cable operators and OVS operators, in the form of mandatory digital
broadcast television carriage requirements, if any of the options set
forth in this NPRM are
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ultimately adopted by the Commission. An attempt has been made to
streamline compliance requirements. For example, we have sought comment
on streamlining the must carry complaint process for digital television
station carriage.
120. Federal Rules Which Duplicate, Overlap, or Conflict with the
Commission's Proposals. None.
121. Report to Congress. The Commission will send a copy of the
NPRM, including this IRFA, in a report to be sent to Congress pursuant
to the Small Business Regulatory Enforcement Fairness Act of 1996. In
addition, the Commission will send a copy of the NPRM, including IRFA,
to the Chief Counsel for Advocacy of the Small Business Administration.
122. It is ordered that, pursuant to Sections 1, 4 (i) and (j),
325, 336, 614, and 615 of the Communications Act of 1934, as amended,
47 U.S.C. 151, 154 (i) and (j), 325, 336, 534, and 535, notice is
hereby given of proposed amendments to part 76, in accordance with the
proposals, discussions and statements of issues in this NPRM, and that
comment is sought regarding such proposals, discussions and statements
of issues.
123. It is further ordered that the Commission's Office of Public
Affairs, Reference Operations Division, shall send a copy of this NPRM,
including the Initial Regulatory Flexibility Analysis, to the Chief
Counsel for Advocacy of the Small Business Administration.
List of Subjects in 47 CFR Part 76
Cable television.
Federal Communications Commission.
Magalie Roman Salas,
Secretary.
[FR Doc. 98-21085 Filed 8-6-98; 8:45 am]
BILLING CODE 6712-10-U
