Before the

Federal Communications Commission

Washington, D.C. 20554

In the Matter of: )

)

Carriage of Digital Television Broadcast ) CS Docket No. 98-120

Signals )

)

Amendments to Part 76 )

of the Commission\'s Rules )

)

Implementation of the Satellite Home )

Viewer Improvement Act of 1999: )

)

Local Broadcast Signal Carriage Issues ) CS Docket No. 00-96

)

Application of Network Non-Duplication, ) CS Docket No. 00-2

Syndicated Exclusivity and Sports Blackout )

Rules to Satellite Retransmission of )

Broadcast Signals )

**FIRST REPORT AND ORDER AND**

**FURTHER NOTICE OF PROPOSED RULE RULEMAKING**

**Adopted: January 18, 2001** **Released:** **January 23, 2001**[^1]

**Comment Date**: (45 days from the date of publication in the Federal
Register)

**Reply Comment Date**: (90 days from the date of publication in the
Federal Register)

By the Commission: Commissioners Ness and Furchtgott-Roth approving in
part, dissenting in part, and

issuing separate statements; Commissioner Powell issuing a statement;

Commissioner Tristani dissenting and issuing a statement.

**TABLE OF CONTENTS**

[Paragraph]{.underline}

I. INTRODUCTION 1

II. BACKGROUND 5

III. CARRIAGE DURING THE DTV TRANSTITION 8

> A. Commercial Television Stations 13
>
> B. Noncommercial Educational Television Stations 17

IV. RETRANSMISSION CONSENT ISSUES 24

V. DIGITAL BROADCAST SIGNAL CARRIAGE REQUIREMENTS 37

A. Channel Capacity 37 B. Signal Quality 44

C. Content of Signals Subject to Mandatory Carriage 47

D. Duplicative Signals 66

E. Material Degradation 70

F. Set Top Box Availability 77

G. Channel Location 81

> H. Market Modifications 84
>
> I. Digital Signal Carriage on PEG Channels 86

J. Complaints and Enforcement 87

VI\. CHANGES TO OTHER PART 76 REQUIREMENTS 88

A. Open Video Systems 88

B. Subscriber Notification 89 C. Cable Antenna Relay Service 90 D.
Program Exclusivity Rules 91

E. Tiers and Rates 101

VII\. FURTHER NOTICE OF PROPOSED RULEMAKING 112 A. Digital Television
Transition and Mandatory Carriage 117

B. Channel Capacity 123 C. Voluntary Carriage Agreements 128

D. Tier Placement 132

E. Per Channel Rate Adjustments 133

F. Satellite Home Viewer Improvement Act Issues 135

VIII\. PROCEDURAL MATTERS 138

Appendix A: Comments Filed in CS Dkt. No. 98-120

Appendix B: Final Regulatory Flexibility Act Analysis

Appendix C: Initial Regulatory Flexibility Act Analysis

Appendix D: Rule Changes

I.  **INTRODUCTION**

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1.  In the Notice of Proposed Rulemaking ("*Notice*") in this docket, we
    sought comment on a variety of issues relating to the carriage of
    digital television broadcast signals by cable television
    operators.[^2] With this First Report and Order and Further Notice
    of Proposed Rulemaking ("*Report and Order*" / "*FNPRM*"), we
    resolve a number of technical and legal issues related to the
    carriage of digital broadcast signals under Sections 325
    (retransmission consent), 336 (broadcast spectrum flexibility and
    ancillary and supplementary services), 614 (mandatory carriage of
    commercial television stations) and 615 (mandatory carriage of
    noncommercial educational television stations) of the Communications
    Act of 1934 ("Act").[^3] In addition, we clarify that a digital-only
    television station may assert its right to carriage. Specifically,
    new television stations that transmit only digital signals, and
    current television stations that return their analog spectrum
    allocation and convert to digital operations, must be carried.

2.  In this *Report and Order*, we resolve matters relating to
    retransmission consent, content-to-be-carried, channel capacity,
    channel placement, and a host of other operational issues. Our
    principal goal is to provide a framework for private resolution of
    the issues raised in the *Notice*, wherever possible, and to give
    guidance on technical issues relating to the carriage of digital
    television signals. Based on the record currently before us, we
    believe that the statute neither mandates nor precludes the
    mandatory simultaneous carriage of both a television station's
    digital and analog signals ("dual carriage").

3.  On this point, we tentatively conclude that, based on the existing
    record evidence, a dual carriage requirement appears to burden cable
    operators' First Amendment interests substantially more than is
    necessary to further the government's substantial interests of
    preserving the benefits of free over-the-air local broadcast
    television; promoting the widespread dissemination of information
    from a multiplicity of sources; and promoting fair competition in
    the market for television programming.[^4] However, in order to
    ensure that we have a sufficient body of evidence before us in which
    to evaluate this issue fully, so that we can ultimately resolve the
    issue of mandatory dual carriage, we find it necessary to issue a
    *Further Notice of Proposed Rulemaking* addressing several critical
    questions at the center of the carriage debate including, *inter
    alia*: (1) whether a cable operator will have the channel capacity
    to carry the digital television signal of a station, in addition to
    the analog signal of that same station, and without displacing other
    programming or services; (2) whether market forces, through
    retransmission consent, will provide cable subscribers access to
    digital television signals and television stations' access to
    carriage on cable systems; and (3) how the resolution of the
    carriage issues would impact the digital transition process. The
    responses to these and other inquiries will help determine the
    answer to the dual carriage issue.[^5] In the *Further Notice*, we
    also raise questions concerning the applicability of the rules and
    policies we adopt herein to satellite carriers under the Satellite
    Home Viewer Improvement Act of 1999 ("SHVIA").[^6] These and other
    matters will be addressed in the second phase of this proceeding.

4.  At the outset, we recognize a number of statutory and public policy
    goals inherent in Section 614 and 615, and other parts of the Act.
    These include: (1) maximizing incentives for inter-industry
    negotiation; (2) minimizing disruption to cable subscribers as well
    as the cable industry; (3) promoting efficiency and innovation in
    new technologies and services; (4) advancing multichannel video
    competition; (5) maximizing the introduction of digital broadcast
    television; and (6) maintaining the strength and competitiveness of
    broadcast television. Our goal is to facilitate an efficient
    market-oriented structure that implements the Act in a manner that,
    to the extent possible, permits private agreements to resolve
    issues. Based on the importance of cable television in the video
    programming marketplace, we believe that the cooperation and
    participation by the cable industry during the transition period
    would further the successful introduction of digital broadcast
    television.

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II. **BACKGROUND**

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5.  Pursuant to Section 614 of the Act, and the implementing rules
    adopted by the Commission in *Implementation of the Cable Television
    Consumer Protection and Competition Act of 1992, Broadcast Signal
    Carriage Issues Report and Order ("Must Carry Order"),*[^7] a
    commercial television broadcast station is entitled to request
    carriage on cable systems located within the station's market. A
    station's market for this purpose is its "designated market area,"
    or DMA, as defined by Nielsen Media Research.[^8] 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\[s\]."[^9] Beyond this requirement, the carriage of
    additional television stations is at the discretion of the cable
    operator. In addition, cable systems are obliged to carry local
    noncommercial educational television stations ("NCE stations")
    according to a different formula and based upon a cable system's
    number of usable activated channels.[^10] Low power television
    stations, including Class A stations, may request carriage if they
    meet six statutory criteria.[^11] A cable operator, however, cannot
    carry a low power television station in lieu of a full power
    television station.[^12]

6.  Cable operators are currently required to carry local television
    stations on a tier of service provided to every subscriber[^13] and
    on certain channel positions designated in the Act.[^14] Cable
    operators are prohibited from degrading a television station's
    signal,[^15] but are not required to carry duplicative signals[^16]
    or video that is not considered primary.[^17] Television stations
    may file complaints with the Commission against cable operators for
    non-compliance with Sections 614 and Section 615.[^18] In addition,
    both cable operators and television stations may file petitions with
    the Commission to either expand or contract a commercial television
    station's market for broadcast signal carriage purposes.[^19] These
    statutory requirements were implemented by the Commission in
    1993,[^20] and are reflected in Sections 76.56-64 of the
    Commission's rules.

7.  In a recent Memorandum Opinion and Order regarding band-clearing of
    the 700 MHz spectrum ("*700 MHz Order*"), the Commission reiterated
    that cable carriage can play an important role as an alternative
    distribution channel during the transition period by providing
    continued service to viewers who would otherwise be deprived of
    broadcast service.[^21] Although the Commission stated that it would
    be considering the scope and manner of cable carriage of digital
    broadcast signals in this proceeding, it discussed the cable
    industry's carriage obligations for future digital television
    signals in the *700 MHz Order*. First, the Commission clarified that
    cable systems are ultimately obligated to accord carriage rights to
    local broadcasters' digital signals.[^22] Specifically, the
    Commission stated that existing analog stations that return their
    analog spectrum allocation and convert to digital are entitled to
    mandatory carriage for their digital signals consistent with
    applicable statutory and regulatory provisions.[^23] The Commission
    also stated that to facilitate the continuing availability during
    the transition of the analog signal of a broadcaster who is party to
    a voluntary band clearing agreement with new 700 MHz licensees, such
    a broadcaster could, in this context and at its own expense, provide
    its broadcast digital signal in an analog format for carriage on
    cable systems.[^24] Specifically, the Commission stated that, in
    these circumstances, nothing prohibits the cable system from
    providing such signals in an analog format to subscribers, in
    addition to or in place of the broadcast digital signal, pursuant to
    an agreement with the broadcaster.[^25]

    **III. CARRIAGE DURING THE DTV TRANSITION**

8.  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.[^26]

9.  In the *Notice*, we recognized that, as a policy matter, the most
    difficult carriage issues arise during the transition because there
    will exist, for a temporary period, approximately twice as many
    television broadcast signals as are now on the air.[^27] We noted
    that toward the end of the transition period, there would be an
    increasing redundancy of basic content between the analog and
    digital signals as the Commission's simulcasting requirements are
    phased in.[^28] We recognized that, to the extent that the
    Commission imposes a dual carriage requirement, cable operators
    could be required to carry double the amount of television signals,
    that will eventually carry identical content, while having to drop
    various and varied cable programming services where channel capacity
    is limited.[^29] We sought 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.[^30] These proposals included a range of
    approaches from "immediate" or dual carriage, in which cable systems
    would be required to carry both analog and digital commercial
    television signals up to the one-third capacity limit;[^31] the
    "either-or" proposal, in which broadcasters could choose must carry
    for either their analog or digital signals during the transition
    years;[^32] and the "no must carry proposal," under which digital
    signals would not have mandatory carriage rights during the
    transition period, but only when the transition is over.

10. The broadcast industry generally urges the Commission to impose a
    dual carriage requirement during the transition period to ensure
    that viewers have continued access to all available local television
    programming.[^33] In contrast, NCTA and other cable industry
    participants contend that digital must carry will "dictate
    technological outcomes before the market is ready."[^34] Time Warner
    argues that if cable operators were required to carry digital
    broadcast signals during the transition, an operator's channel
    line-up would consist of blank screens because most consumers will
    not have digital television receivers or converters allowing them to
    display digital signals on their analog sets.[^35] Cable programmers
    oppose a dual carriage requirement because they fear being dropped
    or being unable to gain carriage due to the addition of digital
    television signals to a cable operators' channel line-up.[^36]

11. There was support for the "either-or" proposal, particularly from
    the public interest community. The United Church of Christ and other
    consumer advocates, filing jointly ("UCC"), believe that this
    middle-ground proposal, as it applies to commercial television
    stations, is the "most market friendly and statute friendly"
    solution.[^37] They state that as penetration of digital receivers
    increases, compatibility between digital television receivers and
    cable equipment improves, and broadcasters finalize business plans
    for their new digital signal, each broadcaster can decide which of
    its signals it would prefer to be carried.[^38] UCC believes this
    option will help speed the transition to digital, preserve local
    broadcasting, and avoid duplicative signals that reduce
    diversity.[^39]

12. After reviewing the extensive comments on the central issue of dual
    carriage during the transition period, we find it is unjustified for
    the Commission to act at this time in light of the constitutional
    questions the subject presents, including the related issues of
    economic impact.[^40] We need further information on a range of
    issues, including cable system channel capacity and digital
    retransmission consent agreements to build a substantial record upon
    which to develop the best policy for the various entities impacted
    in this area. Notwithstanding our decision to obtain further comment
    on these matters, it is important to clarify that broadcast stations
    operating only with digital signals are entitled to mandatory
    carriage under the Act. We find that the burden on a cable operator
    to carry such stations is *de minimis*, with regard to new
    digital-only stations, and is essentially a trade-off in the case of
    a station substituting its digital signal in the place of its analog
    signal. To implement this clarification, we amend Section 76.5, the
    definition of television broadcast station, and specifically include
    the digital television Table of Allotments found at Section 73.622
    of the Commission's rules.[^41]

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A.  **Commercial Television Stations**

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13. Section 614(a) of the Communications Act of 1934, as amended,
    provides:

    Carriage Obligations. -- Each cable operator shall carry, on the
    cable system of that operator, the signals of local commercial
    television stations and qualified low power stations as provided by
    this section. Carriage of additional broadcast television signals on
    such system shall be at the discretion of such operator, subject to
    section 325(b).[^42]

    This section requires carriage for local commercial stations subject
    to the other provisions of Section 614. This section does not
    distinguish between analog and digital signals and supports the
    argument that digital signals are entitled to mandatory
    carriage.[^43]

14. More specific to this proceeding, Section 614(b)(4)(B) provides 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."[^44] Commenters offer
    differing interpretations of this Section. NAB and other
    broadcasters argue that Section 614(b)(1)(B) neither distinguishes
    between digital and analog signals nor establishes a transition
    period. Therefore, they contend, both should be carried
    simultaneously and immediately.[^45] In contrast, NCTA and others in
    the cable industry argue that the phrase, "which have been changed,"
    means that cable operators should be required to carry digital
    signals only when analog signals have been changed to digital
    signals, i.e., when the broadcasters no longer have both.[^46] NCTA
    further argues that the Commission may not order mandatory carriage
    of both the DTV and analog signals during the transition period
    because the Commission is not expressly authorized to do so in the
    Act, and, based on Section 624(f), the Commission's authority may
    not be inferred.[^47] We do not accept the arguments of either those
    commenters who say that the statute forbids dual carriage; nor those
    who argue that the statute compels dual carriage.

15. With respect to carriage of digital-only signals, we do not agree
    with NCTA's interpretation to the extent that it is intended to
    suggest that this Section requires a television station to wait
    until the end of the transition period before seeking digital signal
    carriage. There is nothing in the plain language of the statute or
    the legislative history to require such a restrictive reading.
    Indeed, as we noted above, section 614(a), which imposes carriage
    obligations on cable systems, does not distinguish between digital
    and analog signals. Thus, when a television station seeks carriage,
    the cable system must oblige regardless of whether the signal is in
    an analog or digital format, and provided that the station satisfies
    all other provisions of the Act and the Commission's rules.

16. We also disagree with NCTA's argument that Section 624(f) of the Act
    prohibits us from requiring the carriage of digital television
    signals. This particular section forbids Federal agencies and others
    from requiring the content of cable services except as expressly
    provided for in Title VI. Given that Congress has spoken to the
    issue of digital broadcast signal carriage in Section 614(b)(4)(B),
    and given such carriage is not barred under another statutory
    provision, digital broadcast signal carriage fits within the express
    requirement of section 614(a) and thus is \'expressly authorized\'
    within the meaning of section 624(f). As such we do not believe that
    the Commission is outside the scope of its authority to impose such
    requirements simply because the signals in question are in a digital
    rather than in an analog format.

**B. Noncommercial Television Stations**

17. The importance of ensuring that noncommercial educational stations
    are accessible to the viewing public is consistently emphasized in
    the Act itself and its legislative history. Indeed, the Act mandates
    that cable operators devote additional channel capacity for the
    carriage of noncommercial educational television stations
    ("NCEs").[^48] Congress found "a substantial governmental and First
    Amendment interest in ensuring that cable subscribers have access to
    local noncommercial stations."[^49]

18. As stated above, Section 614(b)(4)(B) requires the Commission to
    initiate a proceeding to establish any changes in the signal
    carriage requirements of cable television systems that are necessary
    "to ensure cable carriage of such broadcast signals of local
    commercial television stations. . . ." (emphasis added).[^50] In the
    *Notice* we asked how, if at all, carriage rights for digital
    noncommercial educational stations are affected given that they are
    not explicitly discussed in this section.[^51]

19. The Association of America's Public Television Stations ("AAPTS"),
    on behalf of public broadcasters, states that the Commission has the
    authority to implement carriage requirements for all public
    television stations under Section 615 of the Act.[^52] It asserts
    that Congress has not prohibited the Commission from adopting
    digital signal carriage rules for NCE stations.[^53] It believes
    that the failure to include a provision in Section 615 that
    parallels Section 614(b)(4)(B) may have been an oversight, or it may
    have reflected the view that such a provision was unnecessary.[^54]
    AAPTS argues that cable operators have special incentives to deny
    carriage to public television stations because their programming is
    not aimed at mass audiences.[^55]

20. NCTA asserts that Section 615 applies only to "qualified"
    noncommercial television stations. The Act defines those stations to
    mean: "Any television broadcast station which . . . under the rules
    and regulations of the Commission in effect on March 29, 1990, is
    licensed by the Commission as a noncommercial educational television
    broadcast station and which is owned and operated by a public
    agency, nonprofit foundation, corporation, or association. . .
    "[^56] NCTA argues that the Commission's digital television rules
    were not in effect on March 29, 1990, and the rules lending public
    television stations an additional channel on which to transmit
    digital signals during the transition were not adopted until seven
    years later. Thus, according to NCTA, Congress did not intend for
    cable operators to carry an NCE station's digital and analog signals
    during the transition.[^57]

21. We believe that the government's interest in ensuring the
    availability of local noncommercial educational television on cable
    systems is manifest.[^58] Section 615(a) states that "\[E\]ach cable
    operator of a cable system shall carry the signals of qualified
    noncommercial educational television stations in accordance with the
    provisions of this section."[^59] Section 615(a) does not
    distinguish between digital and analog signals with regard to the
    \'signals\' that must be carried. The Act does not contain any words
    or provisions specifically excluding the carriage of NCE digital
    television signals. The legislative history of the Act is also void
    of any language suggesting that Congress intended to deny mandatory
    carriage to digital NCE station signals. In addition, there is an
    implication in Section 336 and its legislative history that Congress
    intended the Commission to address all must carry issues in the
    Section 614(b)(4)(B) proceeding, including those relating to
    noncommercial educational stations covered by Section 615. Section
    336 applies only to advanced (digital) television services; it has
    no application in the analog context. Section 336(b)(3) specifies
    that ancillary and supplementary services have no mandatory carriage
    rights under Section 614 or 615, which necessarily contemplates some
    consideration of must carry under Section 615 for noncommercial
    educational stations.[^60] The legislative history of the conference
    agreement for this section states: "With respect to (b)(3), the
    conferees do not intend this paragraph to confer must carry status
    on advanced \[digital\] television or other video services offered
    on designated frequencies. Under the 1992 Cable Act, that issue is
    to be the subject of a Commission proceeding under section
    614(b)(4)(B) of the Communications Act."[^61] The most logical
    inference is that Congress contemplated that the Commission would
    address the issue of must carry for digital signals in the
    proceeding authorized by Section 614(b)(4)(B), which would cover
    both local commercial and noncommercial television stations.[^62]

22. We therefore find that the digital signals of NCE stations are to be
    treated like their commercial counterparts for cable carriage
    purposes. Thus, NCE stations that broadcast only in digital are
    entitled to immediate carriage by cable systems, subject to the
    parameters set forth in Section 615 of the Act and the relevant
    Commission orders. And, like our decision with regard to commercial
    television stations, we decline to address the dual carriage issue
    for NCE stations in this phase of the proceeding.

23. AAPTS argues that the Commission should clarify the qualifying
    statutory term, "Grade B Service Contour." AAPTS asserts that this
    provision should be read to refer to a station for which either the
    Grade B service contour of the station or its digital coverage
    contour, whichever is larger, encompasses the principal headend of
    the cable system on which the station seeks carriage.[^63] Given
    that this matter is tied to the dual carriage issue, we decline to
    address the merits of AAPTS's Grade B argument at this juncture.

    **IV. RETRANSMISSION CONSENT ISSUES**

24. Section 325 contains the Act's retransmission consent
    provisions.[^64] The law governing retransmission consent generally
    prohibits cable operators and other multichannel video programming
    distributors from retransmitting the signal of a commercial
    television station unless the station whose signal is being
    transmitted consents or chooses mandatory carriage.[^65] Every three
    years, analog commercial television stations must elect to either
    grant retransmission consent or pursue their mandatory carriage
    rights.[^66]

25. The *Notice* raised numerous issues related to retransmission
    consent that can be resolved in this *Report and Order*. The issues
    are as follows: (1) whether separate retransmission consent/must
    carry elections are permitted for the analog and digital signals of
    a broadcast station;[^67] (2) whether the timing of the election
    cycle must be modified; (3) whether a broadcaster may agree to
    partial carriage of its digital signal;[^68] (4) whether the digital
    replacement signals for analog superstations should be treated as
    new signals for purposes of the retransmission consent provisions or
    should have the same status as the ones they replace;[^69] (5)
    whether to extend the prohibition on analog exclusive retransmission
    consent agreements to the digital context;[^70] (6) whether the
    Commission should prohibit analog-digital signal tying arrangements;
    and (7) the status of NCE stations under Section 325.

26. **Separate Analog and Digital Carriage Agreements.** Prior to the
    *Notice* in this docket, many broadcasters commented that the
    retransmission consent process should apply separately to the analog
    and digital broadcast signals. Commenters argued that separate must
    carry/retransmission consent elections should be allowed.[^71] In
    the *Notice*, we renewed this inquiry.[^72] NAB argues that a
    television station is entitled to separate elections because of the
    different level of bargaining power between the broadcaster and the
    cable operator with regard to each signal.[^73] NCTA asserts that a
    broadcaster's digital signal is not entitled to must carry rights
    during the transition: therefore, as long as a licensee is
    transmitting an analog signal, its digital signal can only be
    carried pursuant to retransmission consent. NCTA states that, in
    this respect, the digital signal is no different from any other
    signal, such as a distant television signal, that has no must carry
    rights; for those signals, as well as the transitional digital
    signal, the Act simply does not provide for a choice.[^74]

27. With regard to those stations that simultaneously broadcast analog
    and digital television signals, we conclude that a broadcaster is
    permitted to treat the two differently for carriage purposes. That
    is, a television station may choose must carry or retransmission
    consent for its analog signal and retransmission consent for its
    digital signal.[^75] This policy permits the same broadcaster to
    negotiate a retransmission consent agreement for some or all of its
    digital signal, if that is what it desires. Our decision here is
    intended to further the digital transition because we believe cable
    operators would be more willing to carry certain streams of digital
    content or ancillary or supplementary data if it is offered by a
    particular television station, even if that station chose must carry
    for its analog signal. We believe this scenario would be precluded
    if we were to prohibit a station from making such a selection.

28. We also find that DTV-only stations may choose either retransmission
    consent or mandatory carriage like their analog counterparts. The
    retransmission consent rules and regulations contained in Section
    76.64 would likewise apply to digital broadcast television signals.

29. **Modification of the Election Cycle** In the *Notice*, we indicated
    that the Act requires local commercial television stations to elect
    either must carry or retransmission consent on a triennial
    basis.[^76] We noted 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 it is made.[^77] We asked
    whether the existing cycle should be altered to accommodate the
    introduction of digital television or if we should apply the current
    "new station" rule to digital signals.[^78] Pappas submits that a
    station commencing digital operations during the middle of an
    election cycle should be treated as a new station and permitted to
    make its election for the DTV transmission at any time between the
    60^th^ day prior to commencement of such transmissions and the
    30^th^ day thereafter. We believe that the Commission's existing new
    station rules should be used in the digital carriage context. The
    existing requirements are non-controversial and both cable operators
    and broadcasters are well accustomed to their use. Thus, for
    television stations broadcasting only a digital signal, the current
    rules applicable to new analog signals would apply. Our holding here
    would also apply to new digital-only noncommercial television
    signals, even though they are not specifically covered by Section
    76.64 of the Commission's rules.

30. **Retransmission Consent Agreements for Partial Digital Signal
    Carriage.** In the *Notice*, we recognized that in the analog
    context "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."[^79] We stated, however, that it may be desirable to
    allow partial carriage of digital signals pursuant to the
    retransmission consent process if that is what the parties agree
    to.[^80] ALTV argues that permitting cable operators to negotiate
    for partial carriage of DTV signals would place broadcasters in an
    untenable position because cherry picking of programming would harm
    the underlying economics of free, over-the-air television.[^81]
    Morgan Murphy asserts that, in the event a broadcaster elects a
    multicasting format for its DTV signal, retransmission consent
    should apply to the entire digital signal not for each programming
    stream.[^82]

31. We conclude that for purposes of promoting the transition and
    encouraging voluntary cable carriage of broadcast digital signals
    when a television station chooses retransmission consent, the
    broadcaster and cable operator may negotiate for partial carriage of
    a local digital television signal.[^83] We believe that this policy,
    which applies to digital-only television stations and television
    stations with both analog and digital signals, will benefit both
    parties and help to accomplish the Congressional goal of
    transitioning to digital television. In this instance, the
    broadcaster gains access to cable subscribers for some part of its
    signal, and the cable operator can conserve channel capacity and
    carry that programming which it believes subscribers will want. We
    note that this policy is a departure from the Commission's analog
    carriage rules that require a cable operator to carry local
    television signals in their entirety.[^84] In interpreting the
    statute in 1994, the Commission noted that the statutory language
    would appear to permit broadcasters to negotiate with cable
    operators for retransmission consent for any part of their
    signal.[^85] The Commission found that some negotiated partial
    carriage was clearly permitted based upon the language in Section
    325 but concluded that, as a matter of policy, the statutory
    provisions should be read in concert to require carriage of
    "must-carry qualified stations" in their entirety even in the
    context of retransmission consent.[^86] We adopt a different
    approach here because the statute gives the Commission flexibility
    to devise new rules for digital carriage when necessary.[^87] We
    believe that in the case of digital signal carriage, the provisions
    should be read to permit the parties to freely negotiate for partial
    carriage in the context of retransmission consent. The goal of
    facilitating the transition to digital signals is furthered by this
    interpretation because cable operators are likely to negotiate
    retransmission consent agreements with more stations if carriage of
    something less than the full complement of a broadcaster's digital
    signal is permitted. This outcome may accelerate the digital
    transition in many markets. In arriving at this determination, we
    considered that prohibiting partial carriage in the context of
    retransmission consent would not only discourage voluntary carriage
    of programming subject to mandatory carriage, but would also be
    likely to preclude the carriage of desirable programming streams or
    data services that are not subject to mandatory carriage. We do not
    find "cherry picking" to be a major concern, as ALTV believes, as
    long as the cable operator has the broadcaster's permission to
    select which programming will be carried. We conclude that
    permitting partial carriage in the context of retransmission consent
    is appropriate at least for the duration of the transition. When the
    transition is completed or substantially underway, we can consider
    whether partial carriage continues to be necessary to facilitate
    carriage of digital signals over the long term.

32. **Retransmission Consent Exemption for Superstations.** Section
    325(b)(2)(D) exempts cable operators from the obligation to obtain
    retransmission consent from superstations[^88] whose "signals" were
    available by a satellite or common carrier on May 1, 1991.[^89] This
    provision's legislative history states that an exemption from
    retransmission consent was necessary "to avoid sudden disruption to
    established relationships" between superstations and satellite
    carriers.[^90] United Video has explained that the exemption permits
    it to continue to uplink superstations signals and transmit them to
    cable operators and other facilities-based multichannel video
    providers.[^91] We will treat the digital signals of superstations
    the same as their analog signals for retransmission consent
    purposes. If the analog signal was exempt from Section 325, it
    follows that the station's digital signal is also exempt. We believe
    that maintaining the status quo and tracking the Act's original
    intent will permit video program distributors to continue to uplink
    superstation signals and provide them to cable operators and their
    subscribers. This policy may speed the transition, and the purchase
    of digital television equipment, because cable operators may
    transmit digital superstations into markets where a full array of
    digital television services may be lacking.

33. **Prohibition on Exclusive Agreements.** In the *Must Carry Order*,
    we specifically prohibited exclusive retransmission consent
    agreements between television broadcast stations and cable
    operators.[^92] Congress recently codified the Commission's
    exclusive retransmission consent prohibition as one of the many
    amendments to Section 325 under the SHVIA.[^93] The Act now states
    that a broadcaster cannot enter into an exclusive retransmission
    consent arrangement with any MVPD until 2006.[^94] We have recently
    implemented the statutory ban on exclusive arrangements.[^95]
    Consistent with the new provision and rule, we apply the current
    prohibition on exclusive retransmission consent agreements to
    negotiations involving the carriage of digital television broadcast
    signals until January 1, 2006.

34. **Retransmission Consent Tying Arrangements.** With regard to
    retransmission consent and its effect on small cable operators, the
    *Notice* asked whether the Commission should prohibit "tying"
    arrangements, in which the broadcaster requires the operator to
    carry the broadcaster's digital signal as a precondition for
    carriage of the analog signal.[^96] The Small Cable Business
    Association ("SCBA") states that unregulated analog retransmission
    consent demands, and tying in particular, pose a major threat to
    small cable's financial viability.[^97] To remedy the situation,
    SCBA urges the Commission to prohibit broadcasters from tying analog
    carriage to digital carriage.[^98]

35. While we acknowledge the important concerns raised by SCBA, we will
    not adopt rules specifically prohibiting tying arrangements at this
    time. In coming to this conclusion, we recognize that substantial
    evidence must be presented to support a claim that a tying
    arrangement exists and that the operator suffers harm as a result.
    Without proof to support the case, it is difficult for the
    Commission to formulate an appropriate remedy. We also note that
    broadcasters now must bargain in good faith with small cable
    operators, or any other MVPD, under recent revisions to the
    retransmission consent rules pursuant to amendments promulgated
    under the SHVIA.[^99] One example of a bargaining proposal
    presumptively consistent with the good faith negotiation requirement
    is a proposal for carriage of the analog broadcast signal
    conditioned on carriage of any other broadcaster-owned programming
    stream, such as the digital signal.[^100] While such arrangements
    are now permitted, we will continue to monitor the situation with
    respect to potential anticompetitive conduct by broadcasters in this
    context. If, in the future, cable operators can demonstrate harm to
    themselves or their subscribers due to tying arrangements, we will
    be in a better position to consider appropriate courses of action.

36. **NCE Stations.** Section 325 of the Act expressly states that NCE
    stations do not have retransmission consent rights.[^101] As such,
    an NCE station cannot withhold its signal from being carried by any
    MVPD. An NCE station, however, is free to negotiate with cable
    systems and other MVPDs for voluntary carriage.[^102] In the digital
    context, an NCE station may multiplex its digital signal and air
    several video programming streams at once. In this regard, we note
    that an NCE station, because it is not covered by Section 325, may
    enter into an exclusive digital carriage arrangement for any service
    it may offer or any programming stream that is not subject to a
    mandatory carriage requirement under Section 615 and our findings
    herein. Against this backdrop, we expect cable operators and other
    MVPDs to participate in discussions with NCE stations concerning the
    voluntary carriage of their digital broadcast signals.

    **V. DIGITAL BROADCAST SIGNAL CARRIAGE REQUIREMENTS**

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A.  **Channel Capacity**

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37. **Definition.** 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"[^103] for the carriage of commercial television
    stations.[^104] Despite this language, there is some dispute as to
    how the terms "usable activated channels" and "cable system
    capacity" should be defined in the digital context.[^105] We
    requested comment on the definition of "usable activated channels"
    for digital television carriage purposes. We noted that many cable
    operators now have, or soon will have, the technical ability to fit
    several programming services into one 6 MHz cable channel. Thus, we
    asked how advances in signal compression technology should affect
    the definition of channel capacity.[^106] We also asked 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.[^107]

38. ALTV states that the Commission should consider the operator's total
    cable channel capacity for determining its carriage
    obligations.[^108] In contrast, Paxson and Sinclair urge that for
    purposes of defining the term "usable activated channels," each
    channel should be a 6 MHz block of spectrum.[^109] They also state
    that by defining the cable channel as a 6 MHz block and requiring
    such a channel to be made available to each local commercial
    station, the Commission will ensure the cable distribution of all
    DTV signals transmitted by the respective licensees. Golden Orange
    states that most broadcasters will likely engage in some form of
    multicasting and the requirement of a 6 MHz block will ensure the
    cable carriage of a diversity of signals.[^110] On a different
    track, Morgan Murphy and Pappas assert that the capacity of digital
    cable systems should be determined based on data throughput, *i.e.,*
    bits per second of useful digital data.[^111]

39. Under the Act, a cable operator must make available for signal
    carriage purposes up to one-third of its usable activated channels.
    Because of the development of digital signal processing and signal
    compression technologies, the number of video services carried on a
    cable system is no longer a simple calculation and may change
    dynamically over time depending on the amount of motion in the video
    content, the amount of compression that takes place, and whether the
    service in question is carried in a standard or high definition
    digital format. We have taken these developments into consideration
    in revising the channel capacity determination.

40. The channel capacity calculation can be made by taking the total
    usable activated channel capacity of the system in megahertz and
    dividing it by three.[^112] One third of this capacity, defined in
    megahertz, is the limit on the amount of system spectrum that a
    cable operator must make available for commercial broadcast signal
    carriage purposes. Carriage requests would then have to be
    accommodated to the extent of this limit in whatever format and by
    whatever technique is appropriate and is otherwise consistent with
    the rules. We believe, out of the options presented in the *Notice*,
    this is the easiest for the operator to calculate. While a
    calculation based on programming or bits may be possible, both are
    more difficult than the megahertz method to quantify cable capacity
    for purposes of the one-third statutory cap. In a digital
    environment, as cable operators reallocate spectrum from analog to
    digital, the digital programming and bit carrying capacity of the
    cable system changes.[^113] Therefore, neither programming nor bits
    provide a constant that can easily be applied to determine channel
    capacity. In contrast, the number of megahertz employed by a cable
    system stays constant and does not vary as the allocation of
    spectrum from analog to digital progresses.

41. To determine the one-third cap for broadcast signal carriage
    purposes, the first step is to determine the number of "usable
    activated channels" on the cable system. "Activated channels" would
    continue to be defined by Section 76.5(nn), per Section 602(1) of
    the Act, as those channels engineered at the headend of a cable
    system for the provision of services generally available to
    residential subscribers of the cable system, regardless of whether
    such services actually are provided, including any channel
    designated for public, educational or governmental use.[^114]
    "Usable activated channels," would continue to be defined by Section
    76.5(oo), per Section 602(19) of the Act, as those activated
    channels of a cable system, except those channels whose use for the
    distribution of broadcast signals would conflict with technical and
    safety regulations.[^115] Thus, this calculation includes but is not
    limited to the cable spectrum used for internet service,
    pay-per-view and video-on-demand, and telephony. Next, the number of
    usable activated channels is expressed in megahertz and then divided
    by three to determine the one third cap. For example, if a cable
    system's downstream operation begins at 54 MHz and continues through
    550 MHz, but 50 MHz is unactivated, the total amount of usable
    channels on a system-wide basis is 446 MHz (i.e. 550 MHz-54 MHz-50
    MHz). One-third of this figure, approximately 149 MHz in this
    example, is the maximum amount of megahertz to be used for the
    carriage of local commercial television signals for such a system. A
    cable operator must provide each local television station that is
    entitled to mandatory carriage with a sufficient amount of capacity
    to carry its primary digital video signal. The amount of capacity
    devoted to carriage purposes for each television station will change
    as an operator upgrades to a digital cable standard.[^116]

42. **Carriage Priority.** In the *Notice*, we recognized that 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."[^117] We
    tentatively concluded that this statutory directive would continue
    to apply in the digital context.[^118] In the alternative, we asked
    whether it would be desirable to adopt carriage priority
    rules.[^119] ALTV, Trinity, and Univision emphasize that if the
    one-third cap remains in place, a station's analog signal should not
    be displaced in order to accommodate a DTV signal.[^120] Sinclair
    asserts that in those instances in which carriage of all analog and
    DTV stations would occupy more than one-third of such cable systems'
    capacity, the Commission should forbear from applying this limit and
    require full carriage of these broadcast signals.[^121] We find that
    the Act provides a cable operator with discretion to choose which
    signals it will carry if it has met its carriage quota. Thus, a
    cable operator should be able to select which signals to carry above
    the one-third limit. Under the existing carriage structure,[^122]
    all local commercial television signals that are carried, whether
    they have chosen retransmission consent or must carry, are counted
    as part of the one-third cap calculation. This policy of counting
    retransmission consent stations will continue to apply in the
    digital carriage context.

43. **NCE Stations.** We recognize that the carriage of NCE stations is
    not included in the one-third statutory cap. Instead, a cable
    operator's carriage obligations are based on the number of channels
    on a particular cable system. Generally, cable systems with 12 or
    fewer activated channels shall carry 1 qualified NCE;[^123] cable
    systems with 13-36 channels shall carry up to 3 qualified NCEs; and
    cable systems with 36 or more activated channels shall carry 3 or
    more qualified NCEs.[^124] We see no reason to depart from the
    existing rules regarding NCE carriage. As such, cable systems with
    the capacity to carry 36 or more channels will be required to carry
    3 or more qualified NCE stations, subject to the other provisions of
    the Act and our rules.

**B. Signal Quality**

44. Section 614(h) of the Act specifies that, to qualify for carriage,
    stations must deliver a good quality signal to the principal headend
    of the cable system.[^125] For local commercial television stations,
    this is defined as a signal level of --45dBm for UHF signals and
    --49dBm for VHF signals.[^126] The Act delegated to the Commission
    the authority to establish good quality signal criteria for low
    power television stations[^127] and for qualified local
    noncommercial educational television stations.[^128] We held that
    the commercial television station definition of good quality signal
    be applied in the same manner to noncommercial and LPTV television
    stations under the UHF/VHF paradigm.[^129]

45. In the *Notice*, we asked whether the signal quality standards
    established for analog signals are relevant for digital signals or
    whether new parameters for good signal quality should be
    established.[^130] No commenters addressed this issue. Absent
    comment for or against either alternative, we undertook our own
    analysis relying on the digital engineering methods and expertise
    developed in other proceedings.[^131] We note that in adopting the
    digital television transmission standard, the Commission recognized
    the differences between analog and digital television signals. The
    analog NTSC transmission standard is engineered so that even when a
    station's signal strength slowly decreases, a television set is
    still able to display the video and audio components, albeit at a
    degraded level. On the other hand, under the DTV transmission
    standard, as the station's signal level decreases, the digital
    television set continues to display a good picture, but then may
    abruptly turn blue when the signal strength drops below a certain
    threshold.[^132] Against this backdrop, we believe it is necessary
    to develop a new reception standard aptly suited to the new digital
    technology used to transmit digital television signals.

46. We conclude that the signal level necessary to provide a good
    quality digital television signal at a cable system's principal
    headend is --61 dBm. We continue to believe that the principal
    headend[^133] should remain the location for signal quality testing
    purposes because that is the single location where all available
    signals can be uniformly measured and compared. We arrive at this
    minimum signal level by using the following planning factors:[^134]

Thermal Noise in 6 MHz bandwidth N~t~ -106.2 dBm

Receiver Noise Figure N~f~ 10.0 dB

Required Carrier to Noise Ratio C/N 15.2 dB

Propagation and implementation margin M 20.0 dB

Receiver input = (N~t~+N~f~+C/N+M)= -61 dBm

We believe that providing for a 20 dB propagation variability and signal
impairment margin ("margin") above the minimum signal-to-noise ratio is
sufficient to handle most over the air transmission disturbances
encountered by a DTV signal at a cable system headend. These
disturbances will likely include signal impairments such as multipath,
impulsive (manmade)[^135] noise, and co-channel and adjacent channel
interference. The video and audio quality of a digital television signal
remain good as long as the signal-to-noise ratio is in excess of the
minimum signal-to-noise ratio applicable to the transmission system
after consideration of the summation of all noise factors (such as
channel and manmade noise, noise generated by multipath cancellation,
receiver noise, and co-channel interference). The tradeoff table in
Section 73.623(c)(3)(ii) is an example of the relationship of signal
margin to one type of interference: analog signals on the same
frequency.[^136] The table shows that, as the margin increases, the
strength of the desired signal can be much less when compared to the
strength of the interfering signal, and still produce good quality video
and audio. The primary source of erosion of the signal margin will be
propagation variations of the received signal level with time. These
variations result in what is generally called signal fading. However, we
believe that these variations of the received signal level and the
amount of signal impairments cumulatively, should be significantly less
than the allowed 20 dB margin. We believe that when a signal level of
-61 dBm is delivered to the cable system headend, the signal will be of
sufficient strength that the cable operator can deliver a good quality
picture to its subscribers. A television station that does not agree to
be responsible for the costs of delivering to the cable system a signal
of good quality, under the revised standard, is not eligible for
carriage.[^137]

**C. Content of Signals Subject to Mandatory Carriage**

47. We now address the specific content of a digital television signal
    that is subject to the mandatory carriage obligation. We note that
    analog broadcast stations generally have one video broadcast
    product. That is, only a single program is broadcast at a time and
    that program is the main feature of the broadcast. Only a relatively
    minor amount of communications capacity is available apart from that
    program transmission. Some capacity is available in the vertical
    blanking interval ("VBI") for the transmission of communications
    that are separate from, but related to, the principal video output
    or are unrelated to that content. The related content is typically
    closed captioning and program rating information. The unrelated
    content would be typified by videotext or data-type communications.

48. Digital television stations will operate on a much more flexible
    basis. The system described in the ATSC DTV Standard includes
    discrete subsystem descriptions, or "layers," for video source
    coding and compression, audio source coding and compression, service
    multiplex and transport, and RF/transmission.[^138] In addition to
    being able to broadcast one, and under some circumstances two, high
    definition digital television programs, the standard allows for
    multiple streams, or "multicasting," of standard definition digital
    television programming at a visual quality better than the current
    NTSC analog standard. Multiple programming streams may be broadcast
    at the same time or with a variety of data streams accompanying the
    main video content. These data streams may be either associated with
    the video content in some manner or completely separate from
    it.[^139]

49. A critical component of digital broadcast television is the program
    and system information protocol ("PSIP").[^140] This is the standard
    protocol for transmission of the relevant data tables, describing
    system information and event descriptions, contained within digital
    packets carried in the digital broadcast transport stream multiplex.
    System information allows navigation of, and access to, each of the
    channels within the transport stream, whereas event descriptions
    give the user content information for browsing and selection. PSIP
    is composed of four main tables: (1) system time table; (2) ratings
    region table; (3) master guide table; and (4) virtual channel
    table.[^141] The latter table is of particular importance in the
    carriage context because it contains a list of all the channels that
    are or will be on-line, plus their attributes. Among the attributes
    are the channel name, navigation identifiers, and stream components
    and types. PSIP allows the broadcaster to customize information to
    guide viewers to channel numbers they are familiar with.

50. **Primary Video.** In the analog context it is clear that a cable
    operator subject to a mandatory carriage obligation is not required
    to carry all of the communications output of a television broadcast
    station. Three provisions of the Act provide the main focus of the
    arguments regarding this question in the context of digital
    broadcast signal carriage. First, Section 614(b)(3) of the Act
    entitled "Content to be Carried," states that a cable operator shall
    carry in its entirety the "primary video" of the station.[^142]
    Second, it requires carriage of the "accompanying audio" and "line
    21 closed caption transmission" of each station.[^143] Third, the
    operator must carry "to the extent technically feasible,
    program-related material carried in the vertical blanking interval
    or on subcarriers."[^144] The statute is specific that
    "Retransmission 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."[^145] Section 614 is
    applicable to the carriage of commercial stations. Largely parallel
    provisions are contained in Section 615 relating to the carriage of
    noncommercial stations.[^146] In addition to the provisions that are
    not specific to digital television broadcasting, Section 336(b)(3)
    of the Act which has specific applicability to "advanced television
    services" provides that "no ancillary or supplementary service shall
    have any right to carriage under section 614 or 615."[^147]

51. In the *Notice*, we asked how we should define "primary video" if a
    broadcaster chooses to broadcast multiple standard definition
    digital television streams, or a mixture of high definition and
    standard definition digital television streams, as is permitted
    under the rules.[^148] We sought input on which video programming
    services provided by a licensee should be considered primary and
    should be entitled to carriage if the primary video includes less
    than all of the streams of programming broadcast.[^149] We asked
    whether the definition should be flexible, allowing the broadcaster
    to choose which transmissions it considers being primary.[^150]

52. Many commenters argue for an expansive approach to the
    classification of primary video during the transition that would
    include much of a broadcaster's digital programming. ALTV argues
    that if a licensee broadcasts several channels of free over-the-air
    standard definition programs, all of these channels should be
    considered to be the primary video transmission of the station. NAB
    states that there can be no primary or main program since carriage
    of a full broadcast signal, including multiplexed program streams,
    will enable a viewer to switch between channels within a given
    program.[^151] AAPTS asserts that all "mission-related" programming
    streams transmitted by a public television station should be
    regarded as primary and subject to mandatory carriage.[^152]
    Ameritech argues to the contrary, that the statutory language
    limiting must carry to a broadcaster's primary video indicates that
    Congress did not intend to require cable operators to carry all the
    material a station transmits. Time Warner argues that a station's
    analog signal is the primary video during the transition and only
    when a broadcaster surrenders its analog frequency and engages
    exclusively in digital transmissions will its digital signal become
    the "primary video" transmission and thus eligible for any
    post-transition must carry requirements adopted by the
    Commission.[^153]

53. We recognize that the terms \'primary video\' as used in sections
    614(b)(3) and 615(g)(1) are susceptible to different
    interpretations. Because the terms are not expressly defined in the
    Act, to determine the meaning, we analyze the terms \'primary
    video\' within their statutory context, consider the legislative
    history, and examine the technological developments at the time the
    must carry provisions were enacted.

54. The term primary video, as found in Sections 614 and 615 of the Act,
    suggests that there is some video that is primary and some that is
    not.[^154] In this instance, we rely on the canon of statutory
    construction that effect must be given to every word of a statute
    and that no part of a provision will be read as superfluous.[^155]
    Here, we must give effect to the word "primary." The dictionary
    definitions of "primary" are "First or highest in rank, quality, or
    importance" and "Being or standing first in a list, series, or
    sequence."[^156] Based on the plain words of the Act, we conclude
    that, to the extent a television station is broadcasting more than a
    single video stream at a time, only one of such streams of each
    television station is considered "primary." The choice as to which,
    among several possible video programming streams, should be
    considered primary is a decision left to the broadcaster.

55. The legislative history does not definitively resolve the ambiguity
    regarding the intended application of the term \'primary video\' as
    used in this context. The legislative history does indicate,
    however, that the must carry provisions were not intended to cover
    all uses of a signal. Specifically, the legislative history provides
    that \'\[c\]arriage of other program-related material in the
    vertical blanking interval and on subcarriers or other enhancements
    of the primary video and the audio signal (such as teletext and
    other subscription and advertiser-supported information) is left to
    the discretion of the cable operator.\'[^157] The legislative
    history further states that the \'Committee does not intend that
    this \[must carry\] provision be used to require carriage of
    secondary uses of the broadcast transmission, including the lease or
    sale of time on subcarriers or the vertical blanking interval for
    the creation or distribution of material by persons or entities
    other than the broadcast licensee.\'[^158]

56. We note that the incorporation of the primary video construct into
    the Act in 1992 was reasonably contemporaneous with the gradual
    change in common understanding of the new television service from
    ATV (advanced television) and HDTV (high definition
    television)---which focused on improving the technical quality of
    traditional analog NTSC television---to DTV (digital television)
    with the ability to broadcast high definition television, SDTV
    (standard definition television) with multicasting possibilities, as
    well as the broadcast of non-video services.[^159] Although silent
    on the issue of multiplexing, the legislative history indicates that
    Congress understood that HDTV was "not limited to improved
    resolution clarity, and color parity in a television image, or large
    television sets." Rather, Congress recognized that "\[t\]his
    advanced technology has the potential to open new and expanded
    markets for the components of advanced television systems (such as
    semiconductors, fiber optics, and flat screen displays), and to
    enhance the integration of the television and computer
    industries."[^160]

57. Based on the record currently before us,, we conclude that "primary
    video" means a single programming stream and other program-related
    content. With the advent of digital television, broadcast stations
    now have the opportunity to include in their video service a panoply
    of program-related content. Indeed, far more video content is
    possible broadcasting a digital signal than broadcasting in an
    analog format. For example, a digital television broadcast of a
    sporting event could include multiple camera angles from which the
    viewer may select. The statute contemplates and our rules require
    that cable operators provide mandatory carriage for this
    program-related content. In contrast, if a digital broadcaster
    elects to divide its digital spectrum into several separate,
    independent and unrelated programming streams, only one of these
    streams is considered primary and entitled to mandatory carriage.
    The broadcaster must elect which programming stream is its primary
    video, and the cable operator is required to provide mandatory
    carriage to only such designated stream. While we do not believe
    that Congress specifically contemplated programming of the type
    described above (i.e., data or video that is separate from but
    associated with the primary video) in drafting Section 614(b)(3),
    the policies underlying this Section are consistent with our
    conclusion here in the context of digital signal carriage. Based on
    the language in 614(b)(3), Congress was concerned that mandatory
    carriage be limited to the broadcaster's primary program stream but
    also include related content as described here.[^161] In the FNPRM
    we seek comment on the appropriate parameters for "program-related"
    in the digital context.

58. **Ancillary and Supplementary Services**. Section 336 of the Act
    provides that "no ancillary or supplementary service shall have any
    right to carriage under section 614 or 615."[^162] Neither the Act
    nor the legislative history define the terms \'ancillary or
    supplementary.\' 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."[^163] We sought comment on
    possible ancillary and supplementary definitions that were
    consistent with the language of Section 614(b)(3). Paxson states
    that the Commission should limit the definition of ancillary or
    supplementary services to those for which viewers pay subscription
    fees or for which the broadcaster receives compensation from
    non-advertising third parties, thereby establishing mandatory
    carriage for free over-the-air local multicasting.[^164] On the
    other hand, Time Warner argues that all digital video programming,
    other than the "main" signal which the Commission requires the
    broadcaster to transmit, are ancillary and supplementary.

59. With respect to the definition of ancillary and supplementary
    services, the Commission's *DTV* *Fifth Report and Order* states
    that ancillary and supplementary services include "any service
    provided on the digital channel other than free, over-the-air
    services."[^165] Section 73.624(c) of the Commission's rules
    specifies that "any video broadcast signal provided at no direct
    charge to viewers shall not be considered ancillary or
    supplementary."[^166] While not defining the class exhaustively,
    Section 73.624(c) indicates that ancillary and supplementary
    services include, but are not limited to, "computer software
    distribution, data transmissions, teletext, interactive materials,
    aural messages, paging services, audio signals, \[and\] subscription
    video \[video programming for which the broadcaster charges a
    fee\]. . . ."[^167] Section 73.646 of the Commission's rules states
    that telecommunications services provided on the vertical blanking
    interval ("VBI") or in the visual signal, in either analog or
    digital mode, are ancillary.[^168] Based on the foregoing, we find
    that the services specified in Sections 73.624(c) and 73.646 are
    ancillary or supplementary in the context of digital cable carriage
    and are not entitled to mandatory carriage.

60. In addition, we believe there may be certain services associated
    with broadcast digital video programming, while not ancillary or
    supplementary, would still not entitled to mandatory carriage
    because they are not program related. Currently, in addition to a
    broadcaster's primary analog video programming, Section 614(b)(3)
    requires cable operators to carry "to the extent technically
    feasible, program-related material carried in the vertical blanking
    interval or on subcarriers . . ."[^169] However, "\[r\]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." In the analog context, we
    have specified certain factors for determining what material carried
    in the VBI is sufficiently program-related as to qualify for must
    carry rights.[^170] Due to the technical differences between digital
    and analog transmission, *e.g.*, there is no VBI in a digital
    signal, the foregoing concepts cannot transfer directly into a
    digital environment. What is anticipated is that a television
    station will provide internet-based services, such as e-commerce
    applications, to the public. While this type of business plan
    promises to enhance a television station's digital presence, the
    carriage of internet offerings by a cable operator likely would not
    be required under the must carry provisions unless the broadcaster
    can demonstrate that such material should be considered
    program-related.

61. In this vein, we note that there are certain over-the-air digital
    services sufficiently related to the broadcaster's primary digital
    video programming that are entitled to carriage. These include, but
    are not limited to, closed captioning information, program ratings
    data for use in conjunction with the V-chip functions of receivers,
    Source Identification Codes ("SID Codes") used by Nielsen Media
    Research in the preparation of program ratings, and the channel
    mapping and tuning protocols that are part of PSIP. These services
    provide useful information to viewers, broadcasters, and/or cable
    operators, and are intended for use in direct conjunction with the
    programming.[^171] In general, we will continue to use the same
    factors enumerated in *WGN*, that are used in the analog context to
    determine what material is considered program-related.[^172] The
    *WGN* court set out a three-part test for making a determination.
    First, the broadcaster must intend for the information in the VBI to
    be seen by the same viewers who are watching the video signal.
    Second, the VBI information must be available during the same
    interval of time as the video signal. Third, the VBI information
    must be an integral part of the program. The court in *WGN* held
    that if the information in the VBI is intended to be seen by the
    viewers who are watching the video signal, during the same interval
    of time as the video signal, and as an integral part of the program
    on the video signal, then the VBI and the video signal must both be
    carried if one is to be carried.[^173]

62. As noted, digital signals do not contain a VBI. The Commission's
    rule in Section 76.56(e) describes what cable systems may carry in
    the VBI. This subsection is revised to revise the reference to VBI
    to take account of digital technology.[^174]

63. **Program Guides**. We sought comment on the status of advanced
    programming retrieval systems and other digital channel selection
    devices that filter and prioritize video programs for viewers.[^175]
    To prevent anticompetitive conduct by cable operators, Gemstar urges
    the Commission to require the undisturbed pass-through of electronic
    program guide ("EPG") related information as part of the
    broadcaster's digital transmission.[^176] NCTA claims that Gemstar
    provides no evidence that Congress intended to force cable operators
    to deliver any non-programming information that might be transmitted
    along with a broadcaster's digital signal.[^177] Ameritech and
    BellSouth state that there is no legal basis for the Commission to
    give program guides any greater carriage rights than any other
    ancillary or supplementary service that must obtain carriage through
    private negotiations with individual cable operators.

64. We find that the carriage of program guide information is a matter
    to be addressed under Sections 614(b)(3) and 615(g)(1) of the Act.
    As stated earlier, all program-related broadcast material found in
    the analog signal's VBI must be carried, unless it is technically
    infeasible for the operator to do so.[^178] In the digital
    television context, there is no VBI for EPG information to be
    carried on, rather, the EPG data would be part of the PSIP. [^179]
    In this circumstance, we find that program guide data that are not
    specifically linked to the video content of the digital signal being
    shown cannot be considered program-related, and, therefore, are not
    subject to a carriage requirement.

65. **Program Access.** Section 336 of the Act 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 are entitled to purchase
    on nondiscriminatory rates, terms, and conditions
    satellite-delivered cable programming in which a cable operator has
    an attributable interest.[^180] In the *Notice*, we sought comment
    on the meaning of this language.[^181] We find that this provision
    was intended to prevent a digital broadcaster from asserting rights
    under the program access provisions contained in Section 628. This
    provision affords certain rights to MVPDs, which are defined as
    entities who make "available for purchase, by subscribers or
    customers, multiple channels of video programming."[^182] We hold
    that Section 336 precludes a digital television station offering
    video services for a fee from asserting MVPD status under our rules
    and claiming program access rights pursuant to Section 628.

**D. Duplicative Signals**

66. 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, or to carry the signals of more than one local
    commercial television station affiliated with a particular broadcast
    network . . ."[^183] A parallel rule applies to the carriage of NCE
    station signals.[^184] Congress enacted these provisions to preserve
    a cable operator's editorial discretion while ensuring that the
    public has access to a diversity of local television signals.[^185]

67. In the *Notice*, we recognized the import of the duplication
    provisions and sought comment on what approach the Commission should
    take with regard to this matter.[^186] In response, NCTA argues that
    in Section 614(b)(5), Congress intended that a cable operator not be
    compelled to carry duplicative signals.[^187] NCTA also notes that
    Section 614 defines a local station as a "television broadcast
    station. . . . licensed and operating on *a channel* regularly
    assigned to its community. . . ."[^188] Because the digital
    transmission takes place on a channel separate from the analog
    channel, NCTA asserts that two stations, not one, are in operation
    during the transition and that Section 614(b)(5) should apply to
    programming duplicated by a broadcaster on its digital signal. UCC,
    emphasizes that Congress enacted Section 614(b)(5) in order to
    "preserve the cable operator's discretion while ensuring access by
    the public to diverse local signals."[^189] UCC asserts that when a
    broadcaster's digital programming merely duplicates its analog
    programming, mandatory carriage of the duplicative digital
    programming reduces the diversity of local signals by forcing the
    cable operator to drop cable programming in order to free capacity,
    thereby undermining Congress' goals.[^190] The Broadcast Group,
    however, argues that identical program content transmitted in an
    analog and digital format constitutes two distinct program forms
    targeted at different audiences and that the Commission should not
    treat it as duplicative programming.[^191] Pappas maintains that the
    Commission should not construe the limitation on duplicative signals
    to refer to the content of a program transmitted by a signal, but
    rather to refer to the signal itself.

68. We recognize that reaching a conclusion on this matter is
    complicated by our requirements for the digital transition. The
    Commission established a staged implementation schedule for the
    introduction of digital television in the rules governing the
    transition. In the early stages of the transition, broadcasters have
    flexibility in selecting the digital programming they offer. The
    Commission refrained from imposing simulcasting requirements during
    this phase in order to afford broadcasters the freedom to experiment
    with program and service offerings.[^192] Thus, for example, a
    broadcaster's initial digital programming may be entirely original,
    it may simply duplicate a certain amount of its analog programming,
    or it may combine original digital content with analog content.
    Beginning April 1, 2003, the rules mandate an increasing level of
    duplication of program content between the analog and digital
    signals, eventually reaching a 100% simulcasting requirement which
    continues until a broadcaster's analog channel is terminated and
    returned to the Commission.[^193]

69. We will not revise the duplication definitions and requirements at
    this time. More information is needed on the digital programming
    currently made available by broadcasters before we act in this
    regard. Such information, which is solicited in the *FNPRM*, will
    enable us to determine the appropriate duplication definitions to
    apply during the transition period, when two signals of the same
    station are available over-the-air, and afterwards. In the meantime,
    we will continue to administer the duplication requirements set
    forth in the Act and the Commission's rules.[^194] That is, 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."[^195]
    For purposes of this definition, identical programming means the
    identical episode of the same program series.[^196] With regard to
    noncommercial television broadcasters, an NCE station does not
    substantially duplicate the programming of another NCE station if at
    least 50 percent of its typical weekly programming is distinct from
    programming on the other station either during prime time or during
    hours other than prime time.[^197] This rule is applicable to
    digital-only and analog noncommercial stations during the transition
    period as well.

    **E. Material Degradation**

70. Section 614(b)(4)(A) of the Act discusses the cable operator's
    treatment and processing of analog broadcast station signals and
    provides that the signals of local commercial television stations
    shall be carried without material degradation.[^198] The *Notice*
    asked to what extent this provision precludes cable operators from
    altering the digital format of digital broadcast television signals
    when the transmission is processed at the system headend or in
    customer premises equipment.[^199] Under the Act, the Commission's
    carriage standards must ensure that, "to the extent technically
    feasible, the quality of 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."[^200] To address this
    provision, the *Notice* sought comment on whether the Act requires
    an operator to carry all local commercial television stations that
    broadcast in a 1080I high definition format if it carries a cable
    programming service such as HBO in the 1080I HDTV format.[^201]

71. We note that the Advanced Television Systems Committee ("ATSC") DTV
    Standard adopted by the Commission was recommended by the Advisory
    Committee on Advanced Television Service ("ACATS") and developed by
    the Grand Alliance.[^202] It provides for 19.4 megabits per second
    ("mbps") for each 6 MHz channel over-the-air.[^203] The Commission
    neither adopted a single standard for high definition television nor
    imposed a HDTV requirement on broadcasters.[^204] Rather, the
    Commission drew the distinction between standard definition ("SDTV")
    and high definition ("HDTV") in the digital context. The electronics
    industry and ATSC define high definition television as having a
    vertical display resolution of 720p, 1080I, or higher; an aspect
    ratio capable of displaying a 16:9 image at the minimum resolution
    level; and receiving and reproducing Dolby digital audio.[^205] In
    contrast, standard definition digital displays resolution lower than
    high definition, requires no specific ratio, and produces "usable"
    audio and picture.[^206]

72. NAB argues that a digital signal would be materially degraded if it
    were not transmitted to the viewer in the format that the
    broadcaster intended.[^207] MSTV states that cable systems should
    not be permitted to block or delete any of the bits comprising the
    free over the air broadcast material.[^208] Granite adds that if
    cable operators are not required to pass through the entire digital
    signal, the ability of viewers to receive and experience higher
    quality television programming formats will be reduced.[^209] We
    believe that these arguments do not address the fundamental concern
    of the prohibition against material degradation. From our
    perspective, the issue of material degradation is about the picture
    quality the consumer receives and is capable of perceiving and not
    about the number of bits transmitted by the broadcaster if the
    difference is not really perceptible to the viewer. Such an
    interpretation is consistent with the language of the Act, which
    applies to *material* degradation, not merely technical changes in
    the signals.[^210] Moreover, as discussed above, the Act prohibits
    mandatory carriage for ancillary or supplementary services[^211] and
    our rules provide that material that is not program-related is not
    subject to the mandatory carriage requirement.[^212] If such
    bitstream material that is not subject to mandatory carriage is
    subtracted from the entire 6 MHz over-the-air digital signal, by
    necessity there will be fewer than 19.4 mbps to be carried on the
    cable system. Moreover, whenever a digital signal is remodulated for
    carriage on a cable system, fewer bits are needed than to transmit
    the signal over the air.[^213] Thus, it is inappropriate to use 19.4
    mbps, or any specific number of bits, to denote what constitutes a
    degraded signal. The number of bits appropriate for mandatory
    carriage will vary based on the programming and service choices of
    each broadcaster.

73. With regard to defining picture quality for digital carriage
    purposes, Microsoft advocates that the Commission should require
    only that cable operators not carry non-broadcast signals at a
    higher quality than broadcast signals.[^214] Pappas argues, however,
    that a subscriber watching a HDTV digital program on cable should
    see the same quality picture as a consumer watching a HDTV digital
    program over-the-air.[^215] Adelphia argues that as long as high
    definition broadcast signals are retransmitted in either the 1080I
    or 720p format, the alteration of the digital television signal's
    format does not constitute material degradation.[^216] We agree with
    Microsoft and find that language of the Act provides the answer to
    the material degradation question. Section 614(b)(4)(A) requires
    that cable operators shall provide the same "quality of signal
    processing and carriage" for broadcasters' signals as they provide
    for any other type of signal. Consequently, in the context of
    mandatory carriage of digital broadcast signals, a cable operator
    may not provide a digital broadcast signal in a lesser format or
    lower resolution than that afforded to any digital programmer (e.g.,
    non-broadcast cable programming, other broadcast digital program,
    etc.) carried on the cable system, provided, however, that a
    broadcast signal delivered in HDTV must be carried in HDTV.[^217]
    This result also protects the interests of cable subscribers by
    focussing on the comparable resolution of the picture, as visible to
    a consumer, rather than the number of lines or bits transmitted,
    which may not make a viewable difference on a consumer's equipment.

74. We also find that for purposes of supporting the ultimate conversion
    to digital signals and facilitating the return of the analog
    spectrum, a television station may demand that one of its HDTV or
    SDTV television signals be carried on the cable system for delivery
    to subscribers in an analog format. We do not believe the conversion
    of a digital signal to an analog format under these specific and
    temporary circumstances is precluded by the nondegradation
    requirement in sections 614(b)(4)(A) and 615(g)(2). Many cable
    subscribers do not yet have television sets capable of receiving or
    displaying digital signals in their fully advanced format. Thus, if
    we were to mandate digital-to-digital transmission at this stage of
    the transition period, cable subscribers would be unable to properly
    receive the signals. Obviously this was not the intended goal of the
    nondegradation requirement in sections 614(b)(4)(A) and 615(g)(2).
    Allowing digital-to-analog conversion for a limited time during a
    critical stage of the transition period will further the digital
    transition because a television station would be more willing to
    return its analog spectrum to the government, and convert to digital
    service, knowing that cable subscribers without digital equipment
    may still be able to view the relevant programming. We recognize,
    that permitting digital-to-analog conversion will not provide an
    impetus for cable subscribers to purchase digital television sets,
    but will allow new digital stations and stations that return their
    analog spectrum to continue to reach cable subscribers who have only
    analog receivers while commencing over-the-air service to attract
    and reach non-cable viewers who purchase digital television sets.
    With these points in mind, we will allow a television station to
    provide one of its digital signals to cable systems in an analog
    format only during the early stages of the transition period. We
    will revisit this policy after 2003 to ensure that this policy is
    fostering the conversion to digital television service and to
    determine when equipment is available so that broadcast signals can
    be delivered and carried in digital format.[^218] As the transition
    moves forward, television broadcast stations will be required to
    deliver their signals in digital format and cable operators will be
    required to carry them in digital format, as discussed above.

75. **Measurement.** The *Notice* asked what standards and measurement
    tools were available to address disputes relating to the quality of
    the digital broadcast television signal.[^219] We also asked how,
    and where, degradation should be measured. To determine if an
    operator is materially degrading a digital signal, the signal should
    be tested at the input terminal of either the television set or
    set-top box if the subscriber owns that piece of equipment. The
    signal should be tested at the output point of the set top box if
    the subscriber rents that equipment from the cable operator. We
    believe that this location, rather than the headend, will best
    capture the signal's strength and characteristics after being
    processed by the cable plant. Broadcasters and cable operators may
    use commercially available devices to detect signal degradation. We
    do not endorse any particular model, but stress that such equipment
    must meet sound engineering practices and good equipment
    specifications.

76. **Digital Modulation Techniques.** We are mindful that digital
    television signals are transmitted in the 8 VSB[^220] digital
    broadcast modulation technique while operators will use either 64 or
    256 QAM[^221] as the cable digital modulation technique. Both 64 and
    256 QAM likely will provide cable operators with a greater degree of
    operating efficiency than does 8 VSB, and also permits the carriage
    of a higher data rate, with less bits devoted to error correction,
    when compared with the digital broadcast system. Therefore, we will
    permit cable operators to remodulate digital broadcast signals from
    8 VSB to 64 or 256 QAM.[^222] We will not require cable operators to
    pass through 8 VSB. Notwithstanding this conclusion, we believe that
    cable pass-through of a digital broadcast signal without alteration
    is an option for allowing the first purchasers of digital television
    sets to receive digital signals from their cable systems. Under this
    scenario, the 8 VSB signal could pass through the cable system and
    the cable set- top box without change and connect to the digital
    television set, or the cable could bypass the set-top box and be
    connected to a cable coaxial connection on the digital television
    receiver. We believe that pass-through is an option for operators of
    certain cable systems[^223] that wish to offer subscribers digital
    broadcast channels, but recognize in the long term, that
    pass-through is not an effective solution for the majority of cable
    systems.

    **F. Set Top Box Availability**

77. In the *Notice*, we observed that the Act mandates that all
    commercial television signals shall be provided to every subscriber
    of a cable system and be viewable on all television receivers of
    subscribers that are connected by the cable operator or for which
    the cable operator provides a connection.[^224] In general, most
    cable subscribers are able to view analog broadcast stations on
    analog cable-ready television sets.[^225] In the case of the new
    digital television service, the Commission has recently adopted
    labeling requirements for digital television receivers. Based on an
    industry agreement on technical standards, any receiver labeled as
    "Digital Cable Ready" will be "capable of receiving analog basic,
    digital basic, and digital premium cable television programming by
    direct connection to a cable system providing digital programming. .
    . . A security card (or POD) provided by the cable operator is
    required to view encrypted programming." [^226] The digital cable
    ready receivers will include QAM demodulation capability. In the
    case of digital television receivers that do not meet the digital
    cable ready criteria, a subscriber may need a set top box to view
    broadcast digital signals delivered via cable.

78. In the *Notice*, we asked if the Act requires cable operators to
    offer set top boxes to every subscriber if digital television
    signals cannot be received without some device facilitating
    reception.[^227] We also asked about viewing digital television
    signals on analog equipment. MediaOne states that Congress did not
    intend for all cable subscribers to incur substantial additional
    costs in order to ensure that all digital broadcast programming is
    viewable on their televisions, especially when most of the digital
    programming would be duplicative of the broadcaster's analog
    feed.[^228] ALTV, on the other hand, believes that Section 614(b)(7)
    should be applied to digital signals in the same manner as it is
    applied to analog signals.[^229]

79. We will not require a cable operator to provide subscribers with a
    set top box capable of processing digital signals for display on
    analog sets. We recognize that if we were to impose such a
    requirement, all subscribers would be forced to pay for equipment
    that converts digital programming that may be identical in content
    to the analog programming to which they already have access without
    a set top box. The result would be that subscribers without the
    capability of viewing digital signals and who will receive duplicate
    analog programming when the Commission's simulcasting requirements
    commence in 2003,[^230] would be required to pay for a converter box
    to receive duplicate digital signals.[^231] We do not believe that
    this result is what Congress intended in enacting section 614(b)(7).

80. Furthermore, we believe that requiring cable operators to make
    available set top boxes capable of processing digital signals for
    display on analog sets might be inconsistent with section 629 of the
    Act. Section 629 was enacted to ensure the commercial availability
    of navigation devices, the equipment used to access video
    programming and other services from multichannel video programming
    systems.[^232] Pursuant to our statutory mandate, we adopted rules
    to expand opportunities to purchase such equipment from sources
    other than the service provider.[^233] Thus, to now require cable
    operators to make such equipment available to subscribers would
    impede the overarching goal of the Navigation Devices proceeding,
    that is to assure competition in the availability of set-top boxes
    and other customer premises equipment.[^234] Moreover, we believe
    that as the digital television transition moves forward, subscribers
    will have the ability to purchase or lease a converter to permit the
    digital signal to be displayed on their analog televisions. We also
    expect that a conversion function is one which manufacturers may
    consider adding to digital set-top boxes. We note that the
    Commission's navigation devices rules allow manufacturers the
    ability to incorporate additional features and functions in set-top
    boxes, and to sell those boxes at retail.[^235] As such, subscribers
    will be able to view both the analog and digital signals as the
    competitive market develops. Further, our decision ensures that the
    option to pay for a converter or digital set-top box with that
    function remains at the discretion of the cable subscriber and is
    not mandated through government regulation.

    **G. Channel Location**

81. Section 614(b)(6) generally provides that commercial television
    stations carried pursuant to the mandatory carriage provision are
    entitled to be carried on a cable system on the same channel number
    on which the station broadcasts over-the-air.[^236] Under Section
    615(g)(5) noncommercial television stations generally have the same
    right.[^237] The Act also permits commercial and noncommercial
    television stations to negotiate a mutually beneficial channel
    position with the cable operator.[^238] In seeking comment on the
    applicability of these types of requirements in the digital context,
    we noted that station licensees received new digital broadcast
    frequency assignments and channel numbers that are different from
    their analog channel numbers.[^239] We pointed out that the advent
    of advanced programming retrieval systems and other channel
    selection devices may alleviate the need for specific channel
    positioning requirements.[^240] In this regard, the ATSC established
    channel identification protocols, or PSIPs,[^241] that link the
    digital channel number with that assigned to the analog
    channel.[^242] Given these developments, we asked whether the
    Commission should refrain from promulgating digital channel
    positioning requirements and allow technology to resolve the
    matter.[^243]

82. Entravision and Granite submit that the analog channel positioning
    requirements should apply to DTV signals.[^244] ALTV proposes that a
    cable operator should carry DTV signals on contiguous
    channels.[^245] MSTV and NAB ask the Commission to rely on the ATSC
    PSIP standard.[^246] NBC states that PSIP information or other DTV
    navigation instructions must be carried by cable operators for a
    channel mapping system to work.[^247] Matsushita agrees and adds
    that should the Commission permit out-of-band methods to provide
    navigational information, the Commission should (1) require that
    cable systems transmit to the DTV set any and all the PSIP data
    contained in the digital broadcast signal without altering or
    limiting the effectiveness of that PSIP information and (2) mandate
    that PSIP be provided in an unscrambled, unencrypted form. In
    addition, the Commission should urge industry to adopt a single
    standard for out-of-band PSIP and other channel navigation
    information.[^248]

83. In the digital environment it is generally anticipated that
    broadcast signals will be identified and tuned to through the PSIP
    information process rather than by identification with the specific
    frequency on which the station is broadcasting. Given the new
    digital table of allotments, we find that there is no need to
    implement channel positioning requirements for digital television
    signals of the same type currently applicable to analog signals.
    Rather, as the majority of commenters have suggested, we find that
    the channel mapping protocols contained in the PSIP identification
    stream adequately address location issues consistent with Congress's
    concerns about nondiscriminatory treatment of television stations by
    cable operators. We believe this technology-based solution will
    resolve broadcaster concerns. PSIP assures that cable subscribers
    are able to locate a desired digital broadcast signal and ensures
    that digital television stations are able to fairly compete with
    cable programming services in the digital environment. Therefore, as
    stated in the content-to-be-carried section above, a cable operator
    will be required to pass-through channel mapping PSIP information as
    it is considered to be program-related to the primary digital video
    signal.[^249] We point out that questions related to the technical
    aspects of PSIP are being dealt with by the cable and consumer
    electronics industry as they proceed with establishing digital
    cable-consumer equipment compatibility standards. We note again that
    the Commission has asked for PSIP progress reports as part of the
    digital cable compatibility proceeding.[^250]

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H.  **Market Modifications**

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84. Commercial television stations have carriage rights throughout the
    market to which they are assigned by Nielsen Media Research.[^251]
    Pursuant to Section 614(h)(1)(c) of the Act, 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.[^252] In
    considering such 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.[^253] The inclusion of
    additional communities within a station's market imposes new must
    carry requirements on cable operators subject to the modification
    request while the grant to exclude communities from a station's
    market removes a cable operator's obligation to carry a certain
    station's signal on the relevant system. We sought comment on
    whether any change to the market modification process was warranted
    to accommodate the difference between analog and digital
    broadcasting.[^254]

85. We find that our current reliance on Nielsen's market designations,
    publications, and assignments for analog signal carriage issues
    should continue for digital signal carriage issues. The presumption,
    therefore, is that the market of the station's digital signal is
    coterminous with the station's market area for its analog signal
    during the transition period.[^255] In addition, we find that the
    statutory factors in Section 614(h), the current process for
    requesting market modifications, and the evidence needed to support
    such petitions, will be applicable to digital television cases
    during the transition period. We realize, of course, that the
    technical coverage area of a digital television signal may not
    exactly replicate the technical coverage area of the analog
    television signal. Therefore, in deciding DTV market modification
    cases, we will take into consideration changes in signal strength
    and Grade B contour coverage because of new digital television
    channel assignments and power limits. All other matters concerning
    the modification process for digital television signals will be
    decided on a case-by-case basis.

**I. Digital Signal Carriage on PEG Channels**

86. 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 local franchising
    authorities.[^256] Pursuant to Section 611 of the Act, the local
    franchising authority, in discussions with a cable operator,
    determines how much channel capacity, if any, will be set aside for
    PEG use.[^257] 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 it believed that
    these matters were more appropriately resolved by local franchising
    authorities.[^258] We sought comment on whether DTV signals of NCE
    stations and LPTV stations should be allowed on PEG channels under
    the same framework accorded analog television signals.[^259] We
    agree with comments submitted by CBA and Pappas that the carriage of
    digital LPTV and NCE stations on unused PEG channels should be
    permitted.[^260] We find that this approach will likely advance the
    digital transition by allowing another way for cable subscribers to
    access digital NCE signals. We also find that continuing this policy
    will promote program diversity by enabling LPTV analog signals and
    NCE analog and digital signals, that otherwise may not be afforded
    carriage, to reach their intended audience. To this end, we
    encourage local franchising authorities to engage digital public
    broadcasters and low power broadcasters in discussions concerning
    the carriage of their respective broadcast signals.

    **J. Complaints and Enforcement**

87. Under our current 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.[^261] Section
    614(d)(3) requires the Commission to adjudicate a must carry
    complaint within 120 days from the date it is filed.[^262] 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.[^263] We sought comment on
    whether the current procedures should apply to DTV must carry
    complaints.[^264] We agree with AAPTS that the current scheme is
    working and see no need to depart from it.[^265] Therefore, we will
    continue to use the existing must carry complaint process for
    digital television carriage disputes.

    **VI. CHANGES TO OTHER PART 76 REQUIREMENTS**

    **A. Open Video Systems**

88. 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.[^266] 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.[^267] 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.[^268] 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.[^269] OVS
    operators are also obligated to abide by Section 325 and the
    Commission\'s rules implementing retransmission consent.[^270] In
    the *Notice*, we asked whether digital carriage rules adopted for
    the cable industry should apply to OVS Operators,[^271] to which
    Paxson commented in the affirmative.[^272] Given the statutory
    directive to treat OVS operators like cable operators with regard to
    broadcast signal carriage, we find that OVS operators must carry
    digital-only television stations pursuant to this *Report and Order*
    and 76.1506 of the Commission's rules.

**B.** **Subscriber Notification**

89. Cable operators are required to notify subscribers of any changes in
    rates, programming services or channel positions.[^273] When the
    change involves the addition or deletion of channels, each channel
    added or deleted must be separately identified.[^274] We sought
    comment on how digital broadcast television carriage requirements
    will affect the notification provisions described above.[^275]
    Pappas believes that cable systems should be required to notify
    subscribers whenever a DTV signal is added or analog is withdrawn,
    as specified in the Commission\'s current rules for system
    notification to subscribers of channel additions or deletions.[^276]
    ALTV agrees, but adds that an operator should notify subscribers
    whenever an SDTV programming stream is available on the cable
    system.[^277] We will require a cable operator to notify its
    subscribers whenever a digital television signal is added to the
    cable channel line-up or whenever such a signal is moved to another
    channel location. We will not require an operator to notify
    subscribers of the actual programming available on each possible
    SDTV digital stream, if such is carried under retransmission
    consent, because the mix of programs and services may change
    frequently. We find it would be unnecessarily burdensome for
    operators to constantly notify their subscribers, especially in
    large television markets where there is a potential for dozens of
    possible programming streams. We also believe that EPGs, or other
    cable system generated guides, will provide subscribers with
    relevant and up-to-date information in a more convenient manner than
    if we were to require operators to provide separate notifications.
    Nevertheless, we encourage operators to alert subscribers to the
    possibility that a broadcaster may offer several programming
    alternatives over the course of the day, where applicable.

**C**. **Cable Antenna Relay Service**

90. In the *Notice*, we recognized that cable operators are frequently
    dependent on cable television relay service (\"CARS\") microwave
    stations to relay broadcast television signals to and within their
    cable systems.[^278] CARS stations distribute signals to microwave
    hubs where it may be physically impossible or too expensive to run
    actual cable wire. In many instances, a cable operator may not be
    able to string cable through an area because of geographic
    impediments such as rivers, mountains or superhighways or due to
    other restrictions, such as the inability or the expense of laying
    underground cable. Under such circumstances, the cable operator may
    be able to use CARS band microwave for point-to-point and
    point-to-multi-point locations to intra-connect the cable system.
    For example, a cable system may run cable up to a CARS transmitter
    site, convert all the radio frequency (RF) channels to microwave
    frequencies for transmission, receive the microwave at a receive
    location, downconvert back to the RF channels, and complete delivery
    of the channels via physical wiring to the subscribers. We sought
    comment on whether the introduction of digital broadcast television
    affects the CARS system, and, if so, how. We did not receive any
    comments on CARS and the transition to digital television. We have
    no reason to expect that digital television service will interfere
    with CARS, and we decline to revise our Part 78 rules at this time.
    However, if issues arise as the transition progresses, we will
    revisit the matter.[^279]

    **D. Program Exclusivity Rules**

91. The program exclusivity regulations, as implemented in Sections
    76.92 and 76.101 of the Commission\'s rules, protect exclusive
    distribution rights afforded to network and syndicated programming
    through private contractual arrangements.[^280] Television broadcast
    station licensees with exclusive programming rights are entitled to
    protect such programming by exercising blackout rights against local
    cable systems importing the same programming from distant television
    broadcast stations. Licensees may assert their rights regardless of
    whether their signals are actually carried on the cable system in
    question.

92. Currently, television stations are entitled to exercise network and
    syndicated blackout rights within certain geographic areas.[^281] In
    *Implementation of the Satellite Home Viewer Improvement Act of
    1999: Application of Network Non-duplication, Syndicated Exclusivity
    and Sports Blackout Rules to Satellite Retransmission of Broadcast
    Signals,* Report and Order, the Commission recently applied to
    satellite carriers' retransmission of nationally distributed
    superstations the network non-duplication, syndicated exclusivity
    and sports blackout requirements that currently apply to cable
    operators.[^282]

93. In general, a local television broadcast station may assert its
    exclusivity rights against cable systems located within 35 miles of
    the broadcaster\'s city of license. By exercising its rights, a
    local television broadcast station that has secured exclusive
    distribution rights to programming, can prohibit cable systems
    within 35 miles from importing that same programming from distant
    television stations. A cable operator, however, importing the same
    programming from an otherwise distant station, is not required to
    honor a blackout request from a local broadcaster if the distant
    station is \"significantly viewed\" in the cable community.[^283]
    The concept of significant viewing is defined in Section 76.5(i) of
    the Commission\'s rules.[^284] In addition to the Commission\'s
    network and syndicated exclusivity rules, significant viewing is
    also applicable to the Commission sports blackout rule,[^285] and,
    through incorporation by reference, to the compulsory copyright
    licensing process.[^286]

94. In the *Notice*, we sought comment on how the transition to digital
    television may affect these rules.[^287] We specifically asked how
    digital broadcast multiplexing impacts these rules and whether the
    cable operator will be able to accommodate such black-out requests
    on various programming streams.[^288] We also asked whether these
    rules were 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.[^289]

95. Commenters make a strong case for preserving the exclusivity rules
    during the transition to digital television. Indeed, there are no
    comments supporting repeal of the existing rules although NAB
    asserts that the question of repeal should be addressed in a
    separate docket.[^290] ALTV believes that the Commission should
    apply the existing network and syndicated exclusivity rules to a
    local station\'s TV signals because the economic rationale behind
    the rules is the same for digital and analog.[^291] NAB states that
    there is nothing inherent in the digital transition that should
    result in any changes to network nonduplication, syndicated
    exclusivity, or sports blackout; there are, in fact, stronger
    reasons to apply the rules in the digital context because the
    transition presents greater financial challenges to local
    stations.[^292] NAB also states that the Commission should use a
    station\'s analog status to determine exclusivity issues for a
    station\'s digital signal, at least throughout the transition.[^293]

96. MSTV states that it makes little sense for the Commission to
    allocate spectrum for all local stations and then fail to allow them
    to enforce contractual exclusivity rights, thereby undermining their
    competitiveness and financial viability.[^294] Without exclusivity
    rules, MSTV posits, broadcasters would be at a competitive
    disadvantage vis-a-vis cable operators who can enforce exclusive
    contracts while broadcasters who have negotiated for exclusivity
    face duplicative programming from distant signals imported by the
    local cable system, thus diverting audience and advertising
    revenue.[^295]

97. With regard to the effect of Section 325 on the need for exclusivity
    rules, MSTV stresses that a broadcaster\'s exclusivity rights cannot
    be protected through contractual relationships because: (1) Congress
    enacted retransmission consent intending that network nonduplication
    and syndicated exclusivity would apply and (2) relegating the
    exclusivity rules to contract terms would reinstate the competitive
    imbalance that the Commission sought to eliminate when it adopted
    the current rules.[^296] MSTV asserts that local stations will not
    have sufficient negotiating power to insist on exclusivity where the
    cable system wants to carry a distant television signal from a large
    market because Section 76.64(m) prohibits local television stations
    from entering into exclusive retransmission consent agreements with
    a cable system.[^297]

98. We find that there is an inadequate record in this proceeding upon
    which to base a change or repeal of the exclusivity rules. In
    addition, we note that the Act, as amended by the SHVIA, required
    the Commission to implement program exclusivity rules for satellite
    carriers that import certain defined superstations.[^298] Therefore,
    we agree with numerous commenters that the topic of changing the
    rules be addressed at a future date, where a more complete and
    focused record can be developed. Until that time occurs, we will
    maintain our existing exclusivity framework for digital television
    signals. In addition, we shall make the appropriate change to
    Section 76.5 as suggested by MSTV. With respect to how SDTV
    multiplexing impacts the exclusivity rules and whether the cable
    operator will be able to accommodate blackout requests on various
    programming streams, we believe that it is not necessary to resolve
    this issue here.

99. As we stated in the *SHVIA Non-Duplication, Syndicated Exclusivity
    and Sports Blackout Order,* only those exclusive contracts that
    provide for exclusivity vis a vis signals delivered by satellite
    carriers or are broad enough to encompass the delivery of
    duplicating programming by any delivery means entitle a station to
    assert exclusivity rights under the rules.[^299] Likewise, in the
    digital context, only those exclusive contracts that specifically
    cover digital signals entitle a station to assert exclusivity
    rights. We note also that, in the *SHVIA Non-Duplication, Syndicated
    Exclusivity and Sports Blackout Order*, we stated that we were
    disinclined, in the early stage of the DTV transition, to allow a
    broadcaster to use an exclusive contract for digital programming
    only to prevent a cable system or satellite carrier from providing
    that programming in analog form to its subscribers.[^300] Therefore,
    neither satellite carriers nor cable operators are permitted to
    carry the digital version of a program when the contract expressly
    provides exclusivity for both, any or all formats.

100. **Significantly Viewed.** In the *Notice*, we stated that the
     significant viewing standard supplements other \"local\" station
     definitions by permitting stations that would otherwise be
     considered \"distant,\" for program exclusivity purposes, to be
     considered local based on viewing surveys directly demonstrating
     that over-the-air viewers have access to the signals in
     question.[^301] Because digital broadcast television stations will
     not, in the early stages of their deployment, have a significant
     over-the-air audience, we sought comment on methods to address the
     kinds of issues that the significant viewing standard addresses in
     the analog environment.[^302] We asked, for example, whether a new
     method should be developed that measures viewing in places that are
     equipped with digital receivers.[^303] In the alternative, we asked
     whether the \"significant viewing\" status of analog stations
     should be transferred to their digital counterparts.[^304] With
     respect to these rules, we note that in adopting technical rules
     for the digital transmission of broadcast signals, the Commission
     attempted to insure that a station\'s digital over-the-air coverage
     area would replicate as closely as possible its current
     over-the-air analog coverage area. In view of this, and consistent
     with the comments received on this subject, we believe that the
     public interest is best served by according the digital signal of a
     television broadcast station the same significantly viewed status
     accorded the analog signal. We note, however, that DTV-only
     television stations must petition the Commission for significantly
     viewed status under the same requirements for analog stations in
     Section 76.54 of the Commission's rules.

**E.** **Tiers and** **Rates**

101. **Tier Placement.** Sections 614 and 615 are silent on the question
     of where signals subject to mandatory carriage must be placed, but
     Section 623(b)(7), one of the Act's rate regulation provisions,
     requires that "all signals carried in fulfillment of the
     requirements of section 614 and 615" must be provided to
     subscribers on a "separately available basic service tier to which
     subscription is required for access to any other tier of
     service."[^305] In the *Notice*, we sought comment on whether a
     cable operator must place a broadcaster\'s digital signal on the
     same basic tier where the analog signals are found or whether a
     separate digital basic service tier could be established that would
     be available only to subscribers capable of viewing digital
     broadcast signals.[^306] Adelphia argues that cable operators
     should be allowed to create a separate digital tier that could be
     purchased as an accompaniment to the analog basic tier for an extra
     fee.[^307] ALTV, on the other hand, submits that the Act applies to
     local television stations\' DTV signals just as it applies to
     analog signals; that is, DTV signals must be placed on the cable
     system\'s basic service tier and made available to every
     subscriber.[^308]

102. In the context of analog must carry, it has been the Commission's
     view that the Act contemplates there be one basic service
     tier.[^309] We believe that in the context of the new digital
     carriage requirements, it is consistent with the statutory language
     to require that a broadcaster\'s digital signal must be available
     on a basic tier such that all broadcast signals are available to
     all cable subscribers at the lowest priced tier of service, as
     Congress envisioned. The basic service tier, including any
     broadcast signals carried, will continue to be under the
     jurisdiction of the local franchising authority, and as such, will
     be rate regulated if the local franchising authority has been
     certified under Section 623 of the Act. [^310] We note, however,
     that if a cable system faces effective competition under one of the
     four statutory tests,[^311] and is deregulated pursuant to a
     Commission order, the cable operator is free to place a
     broadcaster\'s digital signal on upper tiers of service or on a
     separate digital service tier. This finding is based upon the
     belief that Section 623(b)(7) is one of those rate regulation
     requirements that sunsets once competition is present in a given
     franchise area. We believe that the decision in *Time Warner v.
     FCC* supports this interpretation.[^312]

103. **Rates.** As noted above, digital broadcast signal carriage also
     has potential consequences for the cable television rate regulation
     process. In communities where there has not been a finding of
     effective competition or where there is no local rate enforcement,
     rates for the basic service tier ("BST") are subject to regulation
     by local franchise authorities.[^313] Regulated cable systems have
     established initial regulated rates using either the \"benchmark\"
     or \"cost of service\" methodologies pursuant to the Commission\'s
     rules.[^314] Once initial rates are established, cable operators
     are permitted to adjust rates for changes in external costs and
     inflation. Regulated cable operators seeking to adjust their BST
     rates to reflect these changes must justify rate increases using
     the applicable forms.[^315] There are also cost pass-through
     mechanisms for defined categories of \"external\" costs, including
     franchise fees and certain local franchise costs, as well as fees
     paid for programming, retransmission consent, and copyright.[^316]
     Compliance costs associated with must carry are not covered by the
     definition of external costs.[^317]

104. The Commission is charged with adopting a rate regulation scheme
     appropriate for the BST.[^318] The present rate rules take into
     account, *inter alia*, \"the direct costs (if any) of obtaining,
     transmitting, and otherwise providing signals carried on the basic
     service tier . . . and changes in such costs.\"[^319] In the
     *Notice*, we sought comment on what, if any, changes in the
     Commission\'s rate rules may be necessary or desirable.[^320] We
     also asked parties to refresh the record on the specific technical
     modifications needed to enable cable systems to deliver digital
     broadcast television to subscribers.[^321] Relatively few parties
     addressed the rate regulation issues we raised or provided data on
     the anticipated costs of providing digital broadcast programming to
     subscribers. Therefore, it is difficult to specify how costs
     attributable to providing digital programming, if any, might be
     reflected in cable rates. Armstrong, a mid-size cable operator,
     states that the costs for digital conversion will include upgrading
     tower capacity, building or leasing additional tower space, and
     adding new digital antennas.[^322] SCBA estimates the cost for
     digital broadcast signal carriage will be at least \$2,000 per
     digital channel at the headend, which would amount to \$10,000 or
     more for the average television market with five local
     stations.[^323] In contrast, ALTV contends there is only a marginal
     cost to add a few additional DTV signals.[^324] As to the issue of
     whether the carriage costs could be passed along to subscribers,
     ALTV cautions that the Commission should not allow the cable
     industry to exploit fears of rate increases due to digital
     carriage.[^325] AAPTS asserts that even without must carry
     requirements, cable operators will be buying equipment to carry
     digital signals, so there is no basis to impose these costs on
     smaller broadcasters, especially noncommercial educational
     television stations.[^326]

105. With regard to the rate issues, we first note that there are costs
     for carrying digital television signals at different stages of the
     cable system transmission process. First, antennas and/or other
     equipment necessary to receive the broadcast signal at the cable
     headend are required. In the must carry context, these costs are
     the broadcasters' responsibility under the Act.[^327] In the
     retransmission consent context, the broadcaster and the cable
     operator may agree to any cost arrangement that is mutually
     agreeable. Then there are costs for processing the digital
     television signal in the cable headend and at other points in the
     cable system up to the point in which the cable is installed inside
     the cable subscribers' premises. The treatment of these kinds of
     costs is considered below. Finally, there are costs associated with
     providing subscribers with customer premises equipment, such as set
     top boxes. As explained below, we find no need to change the rules
     relating to such equipment. We also note that we are considering
     adopting a per channel adjustment methodology for those operators
     that add digital broadcast signals to their channel line-ups. This
     topic is discussed in the *FNPRM*.

106. In general, rate adjustments for channels added to the BST are
     limited to the recovery of external costs, including a 7.5% mark-up
     for new programming costs. \"External costs\" have been
     specifically limited to taxes, franchise fees, franchise compliance
     costs (including PEG), retransmission and copyright fees, other
     programming costs, and Commission regulatory fees.[^328] There are
     also rules and forms in place that address situations where cable
     systems are upgrading physical plant to provide digital programming
     to cable subscribers. Section 76.922(j)(1) of the Commission\'s
     rules states: "Cable operators that undertake significant network
     upgrades requiring added capital investment may justify an increase
     in rates for regulated services by demonstrating that the capital
     investment will benefit subscribers."[^329] FCC Form 1235 is an
     abbreviated cost of service filing used for network upgrades
     pursuant to Section 76.922(j). This form permits operators to
     adjust rates by reporting the cost of a system upgrade, which is
     added to a system\'s tier rate to generate a maximum permitted
     rate.[^330] The benchmark rates and price cap adjustments for
     inflation will generally allow systems to recover normal capital
     costs, but cable operators may use Form 1235 to recover costs for
     \"significant\" upgrades, such as expansion of bandwidth,
     conversion to fiber optics, or system rebuilds, without doing a
     cost of service analysis for the whole system.[^331] The original
     goals of the abbreviated cost-of-service showing for network
     upgrades, to \"promote the availability of diverse cable services
     and facilities \[and\] encourage economically justified upgrades,\"
     are as relevant now as they were in 1994.[^332]

107. For an operator to justify rate adjustments using the FCC Form
     1235, the Commission currently requires: (1) that the upgrade be
     'significant' and require added capital investment, such as
     expansion of bandwidth capacity, conversion to fiber optics or
     system rebuilds; (2) that the upgrade actually benefit subscribers
     through improvements in the regulated services subject to the rate
     increase; (3) that the upgrade rate increase not be assessed until
     the upgrade is complete and providing benefits to subscribers of
     regulated services; (4) that the operator demonstrate its net
     increase in costs, taking into account current depreciation
     expense, projected changes in maintenance and other expenses, and
     changes in other revenues; and (5) that the operator allocate its
     costs to ensure that only costs allocable to subscribers of
     regulated services are imposed upon them.[^333] Based on the lack
     of comment about the need for rate adjustments, we expect that many
     cable systems will be able to accommodate digital television
     signals through the normal improvements and expansions of service
     that are reflected in the rate adjustments allowed by FCC Forms
     1210 and 1240. However, some systems are also undertaking
     significant overall system upgrades, a part of which will include a
     digital buildout, and for which a Form 1235 upgrade rate adjustment
     would be appropriate.

108. There may also be systems, requiring significant technical
     improvements to carry digital signals, that do not necessarily
     qualify as an "upgrade" under FCC Form 1235. For these kinds of
     systems as well, we believe it will be appropriate for operators to
     use FCC Form 1235 for a rate adjustment. Allowing operators to
     pursue this option may hasten the digital transition as it will
     provide an incentive to add headend and other system equipment to
     accommodate the carriage of digital television signals.

109. The current instructions for Form 1235 require the cable operator
     to qualify for an upgrade rate adjustment by (1) certifying that
     the upgrade meets the Minimum Technical Specifications[^334] or (2)
     describing how the upgrade will be significant and will benefit
     subscribers. The instructions for the second option include, where
     applicable, the number of channels added to a tier and the level of
     improvement in picture quality.[^335] Thus, we find that Form 1235
     can be an appropriate vehicle for allowing a cable operator to
     adjust rates commensurate with their upgrade costs to the extent
     such upgrades are necessary to provide digital broadcast
     programming to its subscribers. We note, however, that an operator
     may file a Form 1235, even if it had done so before, if it can
     demonstrate new costs are not being recovered through the surcharge
     calculation on a previous Form 1235. Section 76.922(j) is amended
     to clarify that it is appropriate to use the network upgrade form
     in these circumstances.[^336]

110. While these upgrades will make digital broadcast programming
     available to all basic cable television subscribers, we believe the
     rate adjustments should only apply to those that purchase digital
     programming. We note that rate increases based on upgrades shall
     not be assessed on these subscribers until the upgrade is complete
     and the subscriber is receiving digital television signals.[^337]
     If the digital broadcast programming were offered on the BST, the
     basic tier rate would consist of the maximum permitted rate for the
     basic tier plus the FCC Form 1235 surcharge which represents the
     portion of the digital upgrade cost allocated to the basic tier. An
     operator could continue to allocate all of its digital upgrade
     costs to the CPST.

111. Finally, we note that regulated cable systems may charge
     subscribers for customer premises equipment, such as the set-top
     box, that may likely be necessary for digital subscribers.[^338] In
     communities where there has not been a finding of effective
     competition, these equipment rates are subject to regulation. Our
     rules permit cable operators to charge subscribers for set top
     boxes and other equipment provided the charges do not exceed actual
     costs.[^339] In addition, the Act provides that cable operators can
     aggregate their equipment costs on a franchise, system, regional,
     or company level and can aggregate the costs into broad categories,
     regardless of the varying levels of functionality of the equipment
     within these broad categories.[^340] As we find that the regulatory
     framework in place for cable subscriber premises equipment is
     adequate to account for the costs of adding digital television
     signals, there is no need to make rule adjustments here.

     **VII.** **FURTHER NOTICE OF PROPOSED RULEMAKING**

112. As noted above, after reviewing the comments submitted in this
     proceeding, we arrive at the tentative conclusion that, based on
     the current record, a dual carriage requirement may burden cable
     operators' First Amendment interests more than is necessary to
     further the important governmental interests they would promote.
     However, we seek to gather substantial evidence on this matter so
     that we may evaluate the issues on a complete and full record.
     Accordingly, we request further information on a number of matters,
     including, but not limited to: (1) the need for dual carriage for a
     successful transition to digital television and return of the
     analog spectrum; (2) cable system channel capacity; and (3) digital
     retransmission consent. Much has changed since we first opened this
     docket in July of 1998, and it is necessary to update the record to
     reflect events pertinent to the carriage issues being debated. In
     addition, we ask whether cable operators should be allowed to
     increase subscriber rates for each 6 MHz of capacity devoted to the
     carriage of digital broadcast signals.

113. To date in this proceeding, we have received comments arguing that
     the statute requires dual carriage or that the statute forbids it.
     It is our view, having deliberated extensively on this question,
     that neither of these views prevail. Based on the record currently
     before us, we believe that the statute neither compels dual
     carriage; nor prohibits it. It is precisely the ambiguity of the
     statute that has driven this policy debate. In order to weigh the
     constitutional questions inherent in a statutory construction that
     would permit dual carriage, we believe it is appropriate and
     necessary to more fully develop the record in this regard. Because
     any decision requiring dual carriage would likely be subject to a
     constitutional challenge, and because an administrative agency can
     consider potential constitutional infirmities in deciding between
     possible interpretations of a statute, we are compelled to further
     develop the record on the impact dual carriage would have on
     broadcast stations, cable operators and cable programmers, as well
     as consumers. We believe that more evidence is necessary because
     the Supreme Court sustained the Act\'s analog broadcast signal
     carriage requirements against a First Amendment challenge
     principally because Congress and the broadcasting industry built a
     substantial record of the harm to television stations in the
     absence of mandatory analog carriage rules.[^341] We are also
     mindful that the record must substantially reflect how Commission
     action in this proceeding will serve the three identified
     governmental interests supporting mandatory carriage in *Turner*,
     which are: (1) the preservation of the benefits of free
     over-the-air television; (2) the promotion of the widespread
     dissemination of information from a multiplicity of sources;
     and (3) the promotion of fair competition.[^342]

114. We also recognize that the intermediate scrutiny factors
     established in *U.S. v. O'Brien*[^343] and applied in the *Turner*
     cases, for determining whether a content-neutral rule or regulation
     violates the Constitution, must also be satisfied here. A
     content-neutral regulation will be upheld if: (1) it furthers an
     important or substantial government interest; (2) the government
     interest is unrelated to the suppression of free expression;
     and (3) the incidental restriction on alleged First Amendment
     freedoms is no greater than is essential to the furtherance of that
     interest.[^344] In sum, under the *O'Brien* test, a regulation must
     not burden substantially more speech than is necessary to further
     the government's legitimate interests. Thus, a dual carriage rule
     must satisfy the *Turner* factors and meet the *O'Brien* test. We
     invite commenters that support a dual carriage requirement to
     provide specific empirical information to demonstrate how mandatory
     dual carriage would satisfy the requirements of both *Turner* and
     *O'Brien.* We request that commenters that have previously
     submitted legal arguments on these points in response to the
     *Notice*, not repeat these arguments.

115. In the case of dual carriage, we believe that the record is
     insufficient to demonstrate the degree of harm broadcasters will
     suffer without the carriage of both signals. In addition, we must
     carefully consider the burden such a requirement would impose on
     the cable operator. We seek information on digital retransmission
     consent agreements to determine the degree to which cable operators
     are carrying digital signals on a voluntary basis. If broadcasters
     are being carried by agreement, then they may not be harmed in the
     absence of a digital carriage requirement. In addition, First
     Amendment precedent requires that we tailor the carriage
     requirement to avoid burdening more speech than necessary. In this
     regard, the impact of mandatory carriage on cable systems was
     relevant in *Turner*. We therefore seek substantive information to
     determine cable system channel capacity.

116. Concurrently with this *FNPRM*, we are sending out a survey to
     cable operators that asks specific questions concerning
     retransmission consent as well as cable system channel
     capacity.[^345] We believe that this form of inquiry is necessary
     because we need particularized system information that can only be
     obtained through a survey. The answers to this survey will be used
     to supplement the general responses we receive as a result of the
     questions we ask in the *FNPRM*. The cable operators' answers to
     the survey questions will be included in the record and available
     for public comment. We expect that the information provided by the
     cable operators will provide further insight regarding the
     constitutional questions inherent in the dual carriage discussion.

     **A. Digital Television Transition and Mandatory Carriage**

117. Both Congress and the Commission have worked to develop a digital
     television transition that accounts for the needs of the broadcast
     industry, while recognizing the government\'s interest in the
     prompt return of the analog broadcast spectrum. The Commission's
     stated expectation when the DTV rules were adopted was that analog
     television broadcasting would cease no later than the end of 2006.
     With passage of the *Balanced Budget Act of 1997*, Congress
     codified the December 31, 2006 analog television termination date,
     but also adopted certain exceptions to it.[^346] The *Notice* in
     this proceeding discussed must carry rules for possible application
     during a temporary transitional period prior to the cessation of
     analog broadcasting. Because of the nature of the exceptions set
     forth in the *Balanced Budget Act of 1997*, questions have arisen
     as to how long the transition period might last either with or
     without a dual carriage requirement. Some have expressed doubt that
     the return of the analog broadcast spectrum will be completed by
     the end of 2006, regardless of whether there is a digital carriage
     requirement.[^347] Others have argued that dual carriage is
     necessary to enable broadcasters to meet the statutory tests and
     complete the transition on time.[^348] None of the participants in
     this proceeding, however, have provided a concise plan for how and
     when the transition will be completed. As such, a number of
     questions concerning the transition have arisen. For example, under
     what circumstances and statutory interpretations will the statutory
     criteria for the auction of recaptured broadcast television
     spectrum be satisfied? Will the analog television license be
     returned when 85% or more of the television households in a market
     *either* subscribe to an MVPD that carries all of the digital
     broadcast stations in the market *or* have a DTV receiver or
     digital downconverter to receive the digital signal over the air?
     Or is there a different interpretation of the statutory exceptions?
     Will the spectrum be returned if some of the MVPD subscribers are
     unable to receive and view the DTV programming notwithstanding that
     it is carried by the MVPD because they do not have a digital
     receiver or converter? How does the growth of competitive non-cable
     MVPD's change the analysis? Alternatively, would the analog
     licenses be returned in a market in which 85% of the television
     households had a DTV receiver or digital‑to‑analog converter, but
     only 30% subscribed to a MVPD that carried all of the digital
     television stations in the market?

118. Understanding how the affected parties expect to complete the
     transition, and exactly how the law applies, substantially affects
     the Commission\'s policy approach to the digital television
     transition as well as to the overall issue of cable carriage. A
     mandatory dual carriage requirement, for example, would place a
     more significant and lasting burden on a cable operator\'s
     constitutional rights if in fact there will be a substantially
     extended transition to a digital‑only environment. We seek comment
     on these transition issues and ask for more specific comment on
     when the analog spectrum is likely to be returned under both
     mandatory and non- mandatory dual carriage scenarios. We also seek
     comment on whether and how the dual carriage burden on cable
     operators may be lessened by using a transitional approach limiting
     dual carriage to a specified period of time. For example, in this
     regard, how would a three year limit on dual carriage affect the
     constitutional question?

119. There are several other issues concerning the rollout of digital
     broadcast television that still remain. For example, a number of
     digital television licensees in markets 11-30, that were required
     to begin digital broadcasting on November 1, 1999 have asked for
     extensions of time to build out their facilities.[^349] Such
     petitions assert that these extensions may have been necessary
     because local zoning requirements have hindered the construction of
     digital broadcast towers or because there are construction and
     equipment delays. Whatever the case may be, it is difficult to
     proceed with the dual carriage question if it remains unclear how
     and when digital signals will become available in any particular
     market. Because an operator is only required to carry broadcast
     signals up to one-third of its channel capacity, to rule on the
     dual carriage issue now may result in on-air digital signals being
     carried, at the expense of those yet-to-air digital signals that
     may not be carried because the operator\'s one-third cap has been
     met and the operator is reluctant to disrupt viewers by changing
     signals carried. In this regard, we ask whether we should wait for
     all or a more significant number of broadcasters to build out their
     facilities before considering a dual carriage rule to avoid this
     potential disruption.

120. We also note that there appears to be a limited amount of original
     digital programming being broadcast. This calls into question the
     practicality of imposing a dual carriage rule at this time. Cable
     subscribers would not immediately benefit from a dual carriage rule
     if there is little to view but duplicative material. In addition,
     there is a risk that if carriage were mandated, cable subscribers
     would lose existing cable programming services that would be
     replaced on the channel line-up by digital television signals with
     less programming. It is difficult to decide definitional issues,
     such as what would be considered a \"duplicative signal\" without
     more information.[^350] We ask broadcasters to describe what part
     of their planned digital programming streams will be devoted to
     simulcast of their analog programming and what parts are, or will
     be used, for other programming.[^351] We ask broadcasters to
     provide us with information on the exact amount of digital
     programming, on a weekly basis, being aired in a high definition
     format and the exact amount of original digital programming. We
     also seek comment on the number of hours, in an average day, that a
     broadcaster currently airs digital television, and specifically
     high definition digital programming.

121. We also seek further comment on issues relevant to the carriage of
     digital signals by small operators. As described in the Order,
     above, the SCBA expressed concern that allowing broadcasters to tie
     analog and digital retransmission consent could have a negative
     financial effect on small cable operators.[^352] The current record
     does not contain adequate evidence on this point. We specifically
     request information on small cable operators' equipment costs to
     deliver digital signals to subscribers and experiences thus far
     with retransmission consent negotiations involving both analog and
     digital signals.

122. **Program-related.** In addition, as discussed above, cable
     operators are required to carry "program-related" material as part
     of the broadcaster's primary video.[^353] We seek comment on the
     proper scope of program-related in the digital context. As we note
     in the Order above, we believe that digital television offers the
     ability to enhance video programming in a number of ways. For
     example, a digital television broadcast of a sporting event could
     include multiple camera angles from which the viewer may select. In
     addition, a digital broadcast could enable viewers to select other
     embedded information such as sports statistics to complement a
     sports broadcast or detailed financial information to complement a
     financial news broadcast. We seek comment on whether such
     information or interactive enhancements like playing along with a
     game or chatting during a TV program should qualify as "program
     related." What are broadcasters' plans in this regard? What are the
     technical requirements for broadcasting, receiving and viewing this
     programming material? Would they be viewed on a screen
     simultaneously or is it necessary to change channels or select a
     different view on the same screen? What is the proper relationship
     between "program-related" and "ancillary or supplementary" in terms
     of the statutory objectives? To what extent, if any, is
     "program-related" limited by ancillary or supplementary? We also
     note that the statutory language that describes "program-related"
     in the context of NCE stations differs in some respects from the
     language regarding program-related content for commercial
     stations.[^354] Specifically, Section 615(g)(1), establishing the
     content of NCE stations to be carried by cable operators, tracks
     the language of Section 614(b)(3)(A), the provision for commercial
     broadcasters, except that the NCE provision goes on to include in
     the definition of "program related" material: "that may be
     necessary for receipt of programming by handicapped persons or for
     educational or language purposes."[^355] In light of the foregoing,
     we seek comment on how to define "program related" material for NCE
     stations. How, if at all, should it differ from "program-related"
     in the context of commercial stations? For example, some commenters
     have argued that if an NCE station multicasts programming for
     "educational" purposes the cable operator should carry all such
     program streams.[^356] We seek comment on whether these
     "educational" program streams should qualify as "program related"
     in the context of must carry, particularly in light of the language
     in 615(g)(1) noted above.

     **B. Channel Capacity**

123. In the *Notice*, we sought quantified estimates and forecasts of
     available usable channel capacity.[^357] We asked whether there
     were differences in channel capacity that are based on franchise
     requirements, patterns of ownership, geographic location, or other
     factors.[^358] We also inquired about 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
     several years.[^359] We sought system upgrade information.[^360]
     For example, we asked for comment on whether 750 MHz is the proper
     cutoff for defining an upgraded system or should a lower number,
     such as 450 MHz, be used instead.[^361] We also asked commenters to
     provide information on the expected growth rate for cable channel
     capacity between now and 2003.[^362] In addition, we sought comment
     about cable programmer plans to convert to digital and what
     additional carriage needs these programmers would have in the
     future.[^363] These questions were posed to generate a record on
     available channel capacity for digital carriage purposes and help
     the Commission determine the speech burden on cable operators under
     the First Amendment and the *Turne*r cases.

124. We received widely divergent information concerning cable channel
     capacity availability. For example, NAB asserts that current
     channel capacity is substantial and a significant number of
     channels are unutilized, particularly in large markets where the
     Commission has required the construction of the first DTV
     stations.[^364] NCTA disputes this claim and asserts that what
     matters is not whether a cable system has adequate capacity to add
     new digital must carry signals during the transition, but whether a
     significant number of actual systems serving a significant number
     of customers will be forced to remove services to accommodate both
     analog and digital must carry signals.[^365] We find the comments
     and analyses provided by the commenters are useful for establishing
     the framework for this inquiry. However, a number of the commenters
     rely on data sources that are either incomplete, or draw upon an
     unrepresentative sample of cable systems.[^366] Moreover, some of
     the data is outdated, for future channel capacity estimates. For
     all of these reasons, as well as the fact that accurate capacity
     information is essential for a well articulated and
     constitutionally sustainable dual carriage decision under *O'Brien*
     and *Turner*, we seek further information on current capacity and
     forecasts for capacity growth in the future.

125. We first reiterate the questions we posed in the *Notice*, as
     summarized in paragraph 121, above. We then note that the NCTA, on
     its website, has stated the following: \"It is estimated that 82%
     of all cable homes now are passed by at least 550 MHz plant---with
     65% of cable homes passed by systems with 750 MHz or higher,
     positioning cable to compete more effectively with DBS companies,
     who typically offer more than 100 channels.\"[^367] While this
     information is more recent than the data submitted by the NAB, it
     is still tabulated from reports in 1999. Thus, we ask for any
     information on system upgrades current through this month. We
     specifically seek comment on the number of cable systems
     nationwide, on a percentage basis, that are now, or soon will be,
     upgraded to 750 MHz. With regard to these kinds of systems, we ask
     how many channels are now, or soon will be available for video
     programming. We seek comment on whether it is possible for 750 MHz
     systems to be channel-locked and have no capacity to carry
     additional digital broadcast signals. We seek comment on cable
     industry plans to build systems of greater capacity in the future.

126. We also seek comment on techniques that conserve or recapture cable
     channel capacity. Data on this matter is important because it may
     belie the cable industry\'s claim that there is, or will be, no
     channel capacity to add more programming. For example, an operator
     that uses 256 QAM will have 40% more capacity than an operator that
     does not. With this noted, we ask how many cable systems are now,
     or soon will be, using 256 QAM. In addition, we ask if there are
     certain set top boxes or related software that can further increase
     capacity for systems using 256 QAM. Some operators are also using
     specialized techniques that can comb packages of digital cable
     programming sent by digital compression operations such as Headend
     in the Sky (\"HITS\") or other digital compression program delivery
     services.[^368] Using such filtering technology, an operator can
     select the digital cable programming it wants to carry and discard
     that programming it prefers not to carry. [^369] Through this
     process, an operator can save as much as 10 MHz of cable channel
     capacity.[^370] We seek comment on how many operators are currently
     using combing technology to recapture spectrum. A third technique
     used by some cable operators to save channel capacity is to shift
     certain services from an analog tier to a digital tier where such
     programming will be digitally compressed. By doing this, an
     operator could free up additional analog space for other uses. We
     seek comment on this technique and ask how many operators are now
     exercising this option.

127. In its comments, New World Paradigm ("NWP") states that the
     Commission should adopt digital carriage rules that allow or
     motivate cable operators to deliver services from video servers
     through the internet\'s channel addressing methodology. According
     to NWP, channel addressing uses existing capacity very efficiently
     and asserts that adoption of the internet\'s channel addressing
     method would serve the public interest because it expands cable
     channel capacity to accommodate an infinite amount of
     services.[^371] NWP believes that accessing programming residing in
     a video server, and then sending that specific programming to the
     subscriber, is a far more efficient way of using channel capacity
     than shipping all channels to the subscriber at the same
     time.[^372] NWP states that a channel should be defined as \"any
     internet addressable video service engineered for the
     electromagnetic spectrum carried solely in wired networks from the
     producer of the video service and delivered through a video server
     and made available for and to subscribers of a cable system."[^373]
     NWP argues that expanding the definition of "cable channel" would
     position cable to be a communications medium merging voice,
     internet and video services into a characterless digital data
     stream.[^374] We seek comment on NWP's proposal, in general, and
     ask whether it is technically feasible for cable operators to cache
     broadcast programming in this manner. We also ask what statutory or
     rule changes would be necessary to accomplish what NWP proposes.
     Finally, we ask what copyright issues may arise in this context,
     how this approach would affect the advertising rate structure for
     broadcasters, and whether cable operators are contractually or
     otherwise restricted from implementing a video server model of
     distributing local broadcast programming.

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C.  **Voluntary Carriage Agreements**

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128. In the *Notice*, we recognized that most commercial broadcast
     stations, at least 80% in 1993 for example, were carried by cable
     systems through retransmission consent and asked whether this
     general pattern would be repeated with respect to digital broadcast
     television signals during the transition period.[^375] We stated
     that the broadcasters that are most likely to elect must carry are
     those stations that are not affiliated with the four major
     networks. Many of these stations will not commence digital
     operations until 2002 when they are required to do so under the
     Commission\'s rules.[^376] We sought comment on these general
     suppositions and on the effect these market factors would have on
     the need to implement a digital carriage requirement.[^377] We also
     asked what effect not setting rules would have on television
     stations not affiliated with the top four networks that want to
     commence digital broadcasting before 2002.[^378] We sought comment
     on how retransmission consent, rather than mandatory carriage,
     could speed the transition to digital television.[^379]

129. According to the cable commenters, several digital retransmission
     consent agreements have been reached. For example, AT&T Broadband
     has arrangements with NBC and FOX to carry their owned and operated
     stations' digital signals for the next several years.[^380] Time
     Warner states it has digital carriage arrangements with all four
     major networks some network affiliate owners,[^381] as well as a
     group of public broadcasters.[^382] While we are encouraged that
     some broadcasters, such as those noted above, have been able to
     obtain cable carriage through retransmission consent agreements,
     outstanding questions remain concerning the scope and pace of the
     retransmission consent process. For example, MSTV reports that
     cable operators have negotiated digital carriage with network owned
     and operated stations but have refused to discuss digital
     retransmission consent with several network affiliated station
     groups.[^383] We seek comment on whether this statement is correct.
     If so, why haven't cable operators entered into negotiations with
     network affiliated broadcast groups?

130. With regard to the retransmission consent deals already concluded,
     we seek comment on the scope of such agreements. For example, while
     Time Warner has deals with CBS, ABC, NBC, FOX, and several PBS
     affiliates, we seek comment on how many digital television signals
     are now available for purchase by subscribers. Moreover, on what
     tier of service are these signals being carried? We also ask
     whether such signals are being carried in 8 VSB or in QAM. What
     television markets do these deals affect? And in those markets,
     what percentage of cable subscribers are served by a Time Warner
     system? And of those systems, do the deals apply only to upgraded
     750 MHz systems or all systems regardless of capacity? At first
     glance, Time Warner's efforts seem to satisfy our goal of providing
     cable subscribers\' access to digital television signals on a
     voluntary basis, but if the agreements only concern certain areas
     and certain systems, it would call into question the extent to
     which the marketplace is actually working. We pose the same set of
     questions and concerns to the other publicly announced arrangements
     involving other cable operators, such as AT&T and its respective
     broadcast station partners.

131. We also note that in August of 1999, the Commission adopted new
     ownership rules that affect the number of television stations in
     any given market that can be owned or controlled by a single
     broadcaster.[^384] We seek comment on the effect of these ownership
     changes on carriage of broadcast signals and ask how the potential
     changes in the broadcast industry will affect the retransmission
     consent process.

     **D. Tier Placement**

132. As discussed above, Section 623(b)(7)(A) of the Act requires that
     the basic tier on a rate regulated system include all signals
     carried to fulfill the must carry requirements of Sections 614 and
     615 and "any signal of any television broadcast station that is
     provided by the cable operator to any subscriber. . ."[^385] We
     believe that it would facilitate the digital transition to permit
     cable operators that are carrying a broadcast station's analog
     signal on the basic tier to carry that broadcast station's digital
     signal on a digital tier pursuant to retransmission consent. We
     seek comment on permitting such carriage and whether it would
     encourage more cable operators to voluntarily carry a broadcaster's
     digital signal. We believe that such an approach, which is
     necessarily limited to the duration of the transition in a given
     market, is consistent with the flexibility given the Commission by
     Section 614(b)(4)(B) to prescribe rules for the transition. We seek
     comment on this interpretation. We also seek comment on limiting
     this approach to those situations in which the digital programming
     is a simulcast of the analog programming available on the basic
     tier. We reiterate that, as discussed above, if a cable operator is
     carrying only the broadcaster's digital signal, and not the analog
     signal, the digital signal must be available to subscribers on a
     basic tier to which subscription is required for access to any
     other tier.

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E.  **Per Channel Rate Adjustments**

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133. We recognize that cable operators will be adding digital broadcast
     services to their channel line-ups in the years ahead. While the
     addition of such channels implicates our rate regulation rules, we
     received no comment on what impact this occurrence will have on our
     per channel rate adjustment methodology.[^386] Thus, in addition to
     providing for the direct recovery of costs associated with adding
     digital broadcast programming, as explained above, we now propose
     to permit cable operators to adjust BST rates to reflect the
     addition of channels of digital broadcast programming, if the
     operator decides to place such programming on that tier. When
     developing rate regulations pursuant to the 1992 Cable Act, the
     Commission recognized that pricing incentives were important to
     encouraging voluntary increases in the number of channels of
     programming offered to cable subscribers.[^387] The Commission also
     recognized that, even in a competitive environment, service
     increases would result in higher prices, just as service decreases
     should result in lower prices. The Commission developed a table of
     per channel rate adjustment factors based on an econometric model
     of the pricing behavior of systems facing competition.[^388] The
     amount of the permitted adjustment varied with the number of
     channels offered on the system, the permitted adjustment per
     channel decreasing as the number of channels increases.[^389] After
     gaining experience with rate regulation, the Commission concluded
     that optional additional incentives should be available to
     stimulate the addition of new services to the CPST or to the BST
     when it was the only tier of service offered.[^390] The Commission
     also recognized that the base cost for a tier should be adjusted
     under some circumstances to reflect the reallocation of system
     costs to programming tiers when channels are moved between
     tiers.[^391]

134. We believe that cable operators should have sufficient incentives
     to add digital television broadcast programming, particularly where
     operators carrying a broadcast station's analog signal during the
     transition period must assign spectrum to accommodate digital
     signals. Because the cable industry operates in an increasingly
     competitive environment, we tentatively conclude that subscribers
     who purchase digital programming, including digital broadcast
     programming, should bear a fair share of the overall system costs
     associated with the number of channels delivered on the tier
     relative to the system's overall capacity, and that subscriber
     rates be reasonable. Thus, we propose to allow cable operators
     adding digital broadcast signals to their channel line-ups, to
     increase rates for each 6 MHz of capacity devoted to carriage of
     such signals. We seek comment on this general policy and ask for
     comment on the proper adjustment methodology the Commission should
     adopt. For example, should the Commission revise Section 76.922(g),
     and the accompanying per channel adjustment table, for this
     purpose? Alternatively, is the Form 1235 process outlined above,
     adequate to account for such costs? We also seek comment on how
     channels should be counted in light of the sunset of CPST rate
     regulation. What methods are there for valuing cable channels? How
     would they work?

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F.  **Satellite Home Viewer Improvement Act of 1999**

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135. Section 338 of the Act, adopted as part of the SHVIA,[^392]
     requires satellite carriers, by January 1, 2002, "to carry upon
     request all local television broadcast stations' signals in local
     markets in which the satellite carriers carry at least one
     television broadcast station signal," subject to the other carriage
     provisions contained in the Act. Until January 1, 2002, satellite
     carriers, such as DirecTV and Echostar, are granted a royalty-free
     copyright license to retransmit television broadcast signals on a
     station-by-station basis, subject to obtaining a broadcaster's
     retransmission consent. This transition period is intended to
     provide the satellite industry with time to begin providing local
     television signals into local markets, otherwise known as
     "local-into-local" satellite service. We recently adopted rules to
     implement the satellite carriage provisions contained in Section
     338.[^393]

136. The rules we adopted in the satellite carriage proceeding
     specifically concerned the carriage of a television station's
     analog signal by a satellite carrier. While issues related to the
     carriage of a television station's digital signal were discussed,
     the Commission stated that the digital carriage requirements for
     satellite carriers should be addressed in the context of this
     docket.[^394] Herein, we have adopted policies governing the cable
     carriage of digital television signals. Given the SHVIA's general
     thrust that the Commission issue satellite carriage rules
     comparable to the cable carriage rules,[^395] we seek comment on
     how we should apply the digital cable carriage rules to satellite
     carriers. We note that satellite carriers provide video programming
     on a national basis through a space-based delivery facility while
     cable operators provide video service on a local franchise-area
     basis through a terrestrial delivery facility. Given these
     distinctions, we ask whether we should take into account the
     differences between the two technologies when implementing digital
     broadcast signal carriage rules for satellite carriers. Interested
     parties need not file additional comments on the constitutional or
     public policy aspects of satellite digital broadcast signal
     carriage, as we shall incorporate the relevant statements made in
     the satellite carriage proceeding into this docket.

137. Pursuant to the SHVIA, the Commission also adopted rules
     implementing Section 339(b) of the Act. This provision directs the
     Commission to apply the cable television network non-duplication,
     syndicated program exclusivity, and sports blackout requirements to
     satellite carriers.[^396] Congress directed the Commission to
     implement the new satellite rules so that they will be "as similar
     as possible" to the rules applicable to cable operators.[^397] In
     general, the new network non-duplication, syndicated program
     exclusivity, and sports blackout rules require a satellite carrier
     to delete programming when it retransmits a nationally distributed
     superstation to a household within the relevant zone of protection,
     and the nationally distributed superstation carries a program to
     which the local station or the rights holder to a sporting event
     has exclusive rights. In addition, the SHVIA requires that the
     Commission apply the sports blackout rule to satellite carriage of
     network stations. In all cases covered by the statute and the
     rules, the entity holding exclusive rights may require the
     satellite carrier to black out these particular programs for the
     satellite subscriber households within the protected zone. In the
     Report and Order implementing Section 339(b), the Commission noted
     that it would consider the application of the satellite exclusivity
     rules to digital broadcast signals in another proceeding.[^398] We
     now seek comment on the application of the Section 339(b)
     provisions, and our implementing rules, to the carriage of digital
     television signals by satellite carriers. We specifically seek
     comment on the application of the exclusivity requirements in light
     of the statements made above. The comments filed on this subject in
     CS Docket 00-2 will be incorporated by reference in this
     proceeding.

     **VIII.** **PROCEDURAL MATTERS**

**A.** **Paperwork Reduction Act of 1995 Analysis**

138. The requirements contained in this *Report and Order* *and Further
     Notice of Proposed Rulemaking* have been analyzed with respect to
     the Paperwork Reduction Act of 1995 (the \"1995 Act\") and would
     impose new and modified information collection requirements on the
     public. The Commission, as part of its continuing effort to reduce
     paperwork burdens, invites the general public and the Office of
     Management and Budget (OMB) to take this opportunity to comment on
     the proposed information collection requirements contained in this
     *Report and Order* *and Further Notice of Proposed Rulemaking*, as
     required by the 1995 Act. Public comments are due 60 days from date
     of publication of this *Report and Order* *and Further Notice of
     Proposed Rulemaking* in the Federal Register. Comments should
     address: (a) whether the proposed collection of information is
     necessary for the proper performance of the functions of the
     Commission, including whether the information would 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. Written comments by the public on the new and/or
     modified information collections are due on or before 60 days after
     the date of publication in the Federal Register. Any comments on
     the information collections contained herein should be submitted to
     Judy Boley, Federal Communications Commission, 445 12th St, S.W.,
     Room 1-0804, Washington, D.C. 20554, or via the Internet to
     jboley@fcc.gov. For additional information on the proposed
     information collection requirements, contact Judy Boley at
     202-418-0214 or via the Internet at the above address.

     **B. Ex Parte Rules**

139. This proceeding will be treated as a \"permit‑but‑disclose\"
     proceeding subject to the \"permit‑but‑disclose\" requirements
     under Section 1.1206(b) of the rules.[^399] *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.[^400]
     Additional rules pertaining to oral and written presentations are
     set forth in Section 1.1206(b).

     **C. Filing of Comments and Reply Comments**

140. Pursuant to applicable procedures set forth in Sections 1.415 and
     1.419 of the Commission\'s Rules, 47 C.F.R. §§ 1.415 and 1.419,
     interested parties may file comments on the *Notice* on or before
     the date 45 days from the date of publication in the Federal
     Register and reply comments on or before the date 90 days from the
     date of publication in the Federal Register. Comments may be filed
     using the Commission\'s Electronic Comment Filing System (\"ECFS\")
     or by filing paper copies.[^401] Comments filed through the ECFS
     can be sent as an electronic file via the Internet to
     \<http://www.fcc/e-file/ecfs.html\>. Generally, only one copy of an
     electronic submission must be filed. If multiple docket or
     rulemaking numbers appear in the caption of this proceeding,
     however, commenters must transmit one electronic copy of the
     comments to each docket or rulemaking number referenced in the
     caption. In completing the transmittal screen, commenters should
     include their full name, Postal service mailing address, and the
     applicable docket or rulemaking number. Parties may also submit an
     electronic comment by Internet e-mail. To get filing instructions
     for e-mail comments, commenters should send an e-mail to
     ecfs@fcc.gov, and should include the following words in the body of
     the message, \"get form\<your e-mail address.\" A sample form and
     directions will be sent in reply.

141. Parties who choose to file by paper must file an original and four
     copies of each filing. If participants want each Commissioner to
     receive a personal copy of their comments, an original plus nine
     copies must be filed. If more than one docket or rulemaking number
     appears in the caption of this proceeding commenters must submit
     two additional copies for each additional docket or rulemaking
     number. All filings must be sent to the Commission\'s Secretary,
     Magalie Roman Salas, Office of the Secretary, Federal
     Communications Commission, 445 12th Street, S.W., Washington,
     D.C. 20554. The Cable Services Bureau contact for this proceeding
     is Eloise Gore at (202) 418-7200, TTY (202) 418-7172, or at
     egore@fcc.gov .

142. Parties who choose to file by paper should also submit their
     comments on diskette. Parties should submit diskettes to Eloise
     Gore Cable Services Bureau, 445 12th Street N.W., Room 4-A803,
     Washington, D.C. 20554. Such a submission should be on a 3.5-inch
     diskette formatted in an IBM compatible form using MS DOS 5.0 and
     Microsoft Word, or compatible software. The diskette should be
     accompanied by a cover letter and should be submitted in \"read
     only\" mode. The diskette should be clearly labeled with the
     party\'s name, proceeding (including the lead docket number in this
     case \[CS Docket No. 98-120\]), type of pleading (comments or reply
     comments), date of submission, and the name of the electronic file
     on the diskette. The label should also include the following phrase
     \"Disk Copy - Not an Original.\" Each diskette should contain only
     one party\'s pleadings, referable in a single electronic file. In
     addition, commenters must send diskette copies to the Commission\'s
     copy contractor, International Transcription Service, 1231 20th
     Street, N.W., Washington, D.C. 20036

     **D. Final Regulatory Flexibility Act Analysis**

143. The Regulatory Flexibility Analysis for the *Report and Order* is
     found in Appendix B, attached.

**E.** **Initial Regulatory Flexibility Act Analysis**

144. The Regulatory Flexibility Analysis for the *FNPRM* is found in
     Appendix C, attached.

**F.** **Ordering Clauses**

145. Accordingly, **IT IS ORDERED** that, pursuant authority found in
     Sections 4(i) 4(j), 303(r), 325, 336, 614, and 615 of the
     Communications Act of 1934, as amended, 47 U.S.C. §§ 154(i),
     154(j), 303(r), 325, 336, 534, and 535, the Commission's rules
     **ARE HEREBY AMENDED** as set forth in Appendix D.

146. **IT IS FURTHER ORDERED** that the Consumer Information Bureau,
     Reference Information Center, **SHALL SEND** a copy of this *Report
     and Order and Further Notice of Proposed Rulemaking*, including the
     Final Regulatory Flexibility Analysis, to the Chief Counsel for
     Advocacy of the Small Business Administration.

147. **IT IS FURTHER ORDERED** that the Commission **WILL PUBLISH** a
     document in the Federal Register announcing the effective date of
     the revisions to Part 76 of the Commission\'s rules, as set forth
     in Appendix D, upon OMB approval of the information collection
     requirements contained in these revisions.

FEDERAL COMMUNICATIONS COMMISSION

Magalie Roman Salas

Secretary

**Appendix A**

**Comments Filed in CS 98-120**

A & E Television Networks (\"A&E\")

Adelphia et. al. (including Arizona Cable Television Ass\'n; Insight
Comm.; Suburban Cable; MediaCom; PrimeCo; and Telemedia)

America\'s Health Network et. al. (including Great American Country;
Knowledge TV;

Outdoor Life; Speedvision; the Golf Channel) (\"AHN\")

Ameritech New Media (\"Ameritech\")

Arkansas Broadcasters Ass\'n (\"ABA\")

Armstrong Holdings and Intermountain Cable Inc. (\"Armstrong\")

Association of America\'s Public Television Stations, the Public
Broadcasting System, and the Corporation for Public Broadcasting
(\"AAPTS\")

Association of Local Television Stations (\"ALTV\")

Atlanta Interfaith Broadcasters, Inc.

BellSouth Corp. and BellSouth Interactive Media Services (\"BellSouth\")

Black Entertainment Television (\"BET\")

Broadcast Group (includes Benedek; Chronicle; Draper; LIN; Midwest;
Paxton; Raycom; and Spartan)

Community Broadcasters Association (\"CBA\")

C-Span Networks

Citizen Comments (38 individual C-Span viewers)

Cable Telecommunications Ass\'n (\"CATA\")

Cablevision Systems Corp.

Capitol Broadcasting

Chris-Craft/United Group

Circuit City Stores

Congressionals (Letters from Congress supporting/opposing DTV Must
Carry)

Consumer Electronics Manufacturers Ass\'n (\"CEMA\")

Cordillera Comm.

Corporation for General Trade (\"CGT\")

Courtroom Television Network

Discovery Networks

Encore Media Group

Entravision Holdings

Gemstar/Starsight

General Instruments (\"GI\")

Golden Orange Broadcasting

Granite Broadcasting

GTE

Harris Corp.

Home Box Office and Turner Broadcasting System

Home and Garden Television (\"HGTV\") and TV Food

Hildreth Comments (including Pikes Peak Broadcasting Company; Jasas
Corp.; GRK Productions; Morris Network; Palazuelos; Thomas Broadcasting
Company; Guenter Marksteiner)

International Broadcasting Network

International Cable Channels Partnership

King World Productions

KSLS, Inc./KHLS, Inc.

Lifetime Entertainment Services (\"Lifetime\")

Lee Enterprises

Maranatha Broadcasting

Media Institute

MediaOne

Michigan Government Television

Microsoft

Mitsubishi

Morgan Murphy and Cosmo Broadcasting

Motion Picture Association of America (\"MPAA\")

MSTV (Association for Maximum Service Television)

National Ass\'n of Broadcasters (\"NAB\")

National Ass\'n for the Deaf

National Cable Television Ass\'n (\"NCTA\")

National Datacast

NBC

Network Affiliates Station Alliance (\"NASA\")

New World Paradigm

Ovation, Inc.

Pappas Telecasting

Paxson Comm. Corp.

Pegasus Comm. Corp.

Pellegrin Comments (on behalf of small cable systems)

Pennsylvania Cable Networks

Phillips Electronics North America Corp.

Polar Broadcasting

Retlaw Enterprises

Shwartz, Woods, and Miller Comments (representing 13 public broadcasting
entities) (\"Shwartz\")

Shockley Communications Corp.

Sinclair Broadcast Group

Small Cable Business Ass\'n (\"SCBA\")

Sony Electronics Inc.

State Broadcasters Associations (representing 26 separate associations)

Station Representatives Ass\'n

TCI (now AT&T Broadband)

Thompson Consumer Electronics

Time Warner Cable

Trinity Broadcasting Network

United Church of Christ (\"UCC\") et. al. (including Media Access
Project; Benton Foundation; Center for Media Education; and the Civil
Rights Forum)

UPN Affiliates Association

Weather Channel

Wireless Communications Association Int\'l (\"WCA\")

Wisdom Network

ZDTV

Zenith Electronics

5C (including Hitachi, Intel, Matsushita, Sony and Toshiba)

**Reply Comments filed in CS Docket 98-120**

A & E Television Networks

Adelphia et. al.

Ameritech New Media

American Chestnut Television

America\'s Voice

Armstrong Holdings and Intermountain Cable Inc.

AAPTS

ALTV

BellSouth

BET

Broadcast Group

C-Span Networks

CATA

Cablevision Systems Corp.

California Channel

Carolina Christian Broadcasting

Circuit City Stores

Consumer Electronics Manufacturers Ass\'n

Corday Media Group

Council of Organizational Representatives of National Issues Concerning
People Who are Deaf or Hard of Hearing

Discovery Networks

Gemstar/Starsight

General Instruments

Golden Orange Broadcasting

GRK Productions Joint Venture

GTE

Home Box Office and Turner Broadcasting System

International Cable Channels Partnership

LeSea Broadcasting

Lifetime

Lincoln Broadcasting Company

Maranatha Broadcasting

Matsushita

Michigan Gov\'t Television

Microsoft

Mitsubishi

Morgan Murphy and Cosmo Broadcasting

MSTV

NAB

National Association of Telecommunications Officers and Advisors
(\"NATOA\")

NCTA

National Datacast

New World Paradigm

Pappas Telecasting

Paxson Comm. Corp.

Phillips Electronics North America Corp.

Prevue Networks

Retlaw Enterprises

Sinclair Broadcasting

SCBA

Sony Electronics Inc.

Thompson Consumer Electronics

Time Warner Cable

UCC

Univision Communications, Inc.

Weather Channel

Wireless Communications Association Int\'l

Zenith Electronics

5C (including Hitachi, Intel, Matsushita, Sony and Toshiba)

**Appendix B**

**Final Regulatory Flexibility Act Analysis For the Report and Order**

1\. As required by the Regulatory Flexibility Act (\"RFA\"),[^402] the
Commission has prepared this Final Regulatory Flexibility Analysis
(\"FRFA\") of the possible significant economic impact on small entities
by the policies and rules found in this *Report and Order*. The *Report
and Order* and FRFA (or summaries thereof) will be published in the
Federal Register.[^403]

2\. *Need for, and Objectives of, the Proposed Rule Changes*. The
objective of the *Report and Order* is to make certain technical and
substantive rule changes that bear on the issue of carriage of digital
broadcast signals.

3\. *Summary of Significant Issues Raised by Public Comments in Response
to the IRFA.* The Small Cable Business Association ("SCBA," now known as
the American Cable Association, ACA) filed comments as described in the
*Report and Order, supra.* SCBA stated that unregulated analog
retransmission consent demands, and tying in particular, threatens small
cable operators' financial viability.[^404] To remedy the situation, the
SCBA urged the Commission to prohibit broadcasters from tying analog
carriage to digital carriage.[^405]

4\. *Description and Estimate of the Number of Small Entities To Which
the Proposed Rules Will Apply*. The FRFA 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.[^406] The
FRFA 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.[^407] 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\").[^408] The rules we adopt in
this *Report & Order* will affect cable operators and OVS operators.

5\. *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.[^409] 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.[^410] We address below each service
individually to provide a more precise estimate of small entities.

6\. *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.[^411] We last estimated that there were 1439 cable operators
that qualified as small cable companies.[^412] 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 adopted in this *Report and Order*.

7\. 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.\"[^413] 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.[^414] Based on available data, we find that the number of
cable operators serving 617,000 subscribers or less totals approximately
1450.[^415] 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.

8\. *Open Video System*s. The Commission has certified 31 OVS operators
with some now providing service. Affiliates of Residential
Communications Network, Inc. (\"RCN\") received approval to operate OVS
systems in New York City, Boston, Washington, D.C. and other areas. RCN
has sufficient revenues to assure us that they do not qualify as small
business entities. Little financial information is available for the
other entities authorized to provide OVS that are not yet operational.
Given that other entities have been authorized to provide OVS service
but have not yet begun to generate revenues, we conclude that at least
some of the OVS operators qualify as small entities.

9\. *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 Motion Picture and Video Tape Production (SIC
7812),[^416] Motion Picture and Video Tape Distribution (SIC
7822),[^417] and Theatrical Producers (Except Motion Pictures) and
Miscellaneous Theatrical Services (SIC 7922).[^418] 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.[^419] 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;[^420] (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.[^421]

10\. 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.

11\. *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.[^422] Television broadcasting
stations consist of establishments primarily engaged in broadcasting
visual programs by television to the public, except cable and other pay
television services.[^423] Included in this industry are commercial,
religious, educational, and other television stations.[^424] Also
included are establishments primarily engaged in television broadcasting
and which produce taped television program materials.[^425] Separate
establishments primarily engaged in producing taped television program
materials are classified under another SIC number.[^426]

12\. Pursuant to 5 U.S.C. § 601(3), the statutory definition of a small
business applies \"unless an agency after consultation with the Office
of Advocacy of the SBA and after opportunity for public comment,
establishes one or more definitions of such term which are appropriate
to the activities of the agency and publishes such definition(s) in the
Federal Register.\"

13\. An element of the definition of \"small business\" is that the
entity not be dominant in its field of operation. We are unable at this
time to define or quantify the criteria that would establish whether a
specific television station is dominant in its field of operation.
Accordingly, the estimates that follow of small businesses to which
rules may apply do not exclude any television station from the
definition of a small business on this basis and are therefore
overinclusive to that extent. An additional element of the definition of
\"small business\" is that the entity must be independently owned and
operated. As discussed further below, we could not fully apply this
criterion, and our estimates of small businesses to which rules may
apply may be overinclusive to this extent. The SBA\'s general size
standards are developed taking into account these two statutory
criteria. This does not preclude us from taking these factors into
account in making our estimates of the numbers of small entities.

14\. There were 1,509 television stations operating in the nation in
1992.[^427] That number has remained fairly constant as indicated by the
approximately 1,616 operating television broadcasting stations in the
nation as of September 30, 1999.[^428] For 1992, the number of
television stations that produced less than \$10.0 million in revenue
was 1,155 establishments.[^429] Thus, the new rules will affect
approximately 1,616 television stations; approximately 77%, of those
stations are considered small businesses.[^430] 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.

15\. *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.[^431]

16\. *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.[^432] 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.[^433] 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.

17\. *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.[^434] 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.[^435] 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.

18\. *Computer Manufacturers*. The Commission has not developed a
definition of small entities applicable to computer manufacturers.
Therefore, we will use 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.[^436] 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.[^437] 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.

19\. *Description of Projected Reporting, Record Keeping and other
Compliance Requirement*s. There are compliance requirements for cable
operators and OVS operators as a result of the *Report and Order*. An
attempt has been made to streamline compliance requirements. For
example, we have declined to adopt specific channel positioning
requirements for digital television signals.

20\. *Steps Taken to Minimize Significant Impact on Small Entities, and
Significant Alternatives Considered*. The RFA requires an agency to
describe any significant alternatives that it has considered in reaching
its proposed approach, which may include the following four
alternatives: (1) the establishment of differing compliance or reporting
requirements or timetables that take into account the resources
available to small entities; (2) the clarification, consolidation, or
simplification of compliance or reporting requirements under the rule
for small entities; (3) the use of performance, rather than design,
standards; and (4) an exemption from coverage of the rule, or any part
thereof, for small entities. The Small Cable Business Association
("SCBA," now known as the American Cable Association, ACA) filed
comments as described in the *Report and Order, supra.* SCBA stated that
unregulated analog retransmission consent demands, and tying in
particular, threatens small cable operators' financial viability.[^438]
To remedy the situation, the SCBA urged the Commission to prohibit
broadcasters from tying analog carriage to digital carriage.[^439]We
have deferred imposing a dual analog and digital broadcast signal
carriage requirement on cable operators, including small cable
operators, as well as OVS operators, at this time. However, we have
adopted several retransmission consent policies and digital-only
carriage requirements applicable to all cable operators and OVS
operators. Due to lack of sufficient evidence on the record, we have
decided not to prohibit retransmission consent tying arrangements, as
requested by the SCBA. However, we are seeking further comment on this
issue in the FNPRM. In the aggregate, we believe that there will be
minimal impact on small entities as a result of the *Report and Order*.
However, we are mindful of the concerns raised by small entities
throughout this proceeding and will carefully scrutinize our policy
determinations as we go forward.

21\. *Federal Rules Which Duplicate, Overlap, or Conflict with the
Commission\'s Proposals.* None.

22\. *Report to Congress*. The Commission will send a copy of the
*Report and Order*, including this FRFA, in a report to be sent to
Congress pursuant to the Small Business Regulatory Enforcement Fairness
Act of 1996.[^440] In addition, the Commission will send a copy of the
*Report and Order*, including FRFA, to the Chief Counsel for Advocacy of
the Small Business Administration. A copy of the *Report and Order* and
FRFA (or summaries thereof) will also be published in the Federal
Register.[^441]

**Appendix C**

**Initial Regulatory Flexibility Act Analysis For the Further Notice**

1\. As required by the Regulatory Flexibility Act (\"RFA\"),[^442] the
Commission has prepared this Initial Regulatory Flexibility Analysis
(\"IRFA\") of the possible significant economic impact on small entities
by the policies and rules referenced in this *Further Notice*. The
Commission will send a copy of the *Further Notice*, including this
IRFA, to the Chief Counsel for Advocacy of the Small Business
Administration.[^443] In addition, the IRFA (or summaries thereof) will
be published in the Federal Register.[^444]

2\. *Need for, and Objectives of, the Proposed Rule Changes*. The
objective of the *Further Notice* is to gather more information, and
build the necessary record, in order to implement a constitutionally
sustainable digital broadcast signal carriage policy.

3\. *Legal Basis*. The authority for the action proposed in this
rulemaking is contained in Sections 1, 4(i) and (j), 309(j), 325, 336,
614, and 615 of the Communications Act of 1934, as amended, 47 U.S.C.
§§151, 154(i) and (j), 309(j), 325, 336, 534, and 535.

4\. *Description and Estimate of the Number of Small Entities To Which
the Proposed Rules Will Apply*. The IRFA directs the Commission to
provide a description of and, where feasible, an estimate of the number
of small entities that will be affected by the proposed rules.[^445] 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.[^446] 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\").[^447] The rules we are
considering in this proceeding generally, will affect cable operators,
OVS operators, and television station licensees.

5\. *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.[^448] 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.[^449] We address below each service
individually to provide a more precise estimate of small entities.

6\. *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.[^450] We last estimated that there were 1439 cable operators
that qualified as small cable companies.[^451] 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 adopted in this *Report and Order*.

7\. 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.\"[^452] 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.[^453] Based on available data, we find that the number of
cable operators serving 617,000 subscribers or less totals approximately
1450.[^454] 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.

8\. *Open Video Systems*. The Commission has certified 31 OVS operators
with some now providing service. Affiliates of Residential
Communications Network, Inc. (\"RCN\") received approval to operate OVS
systems in New York City, Boston, Washington, D.C. and other areas. RCN
has sufficient revenues to assure us that they do not qualify as small
business entities. Little financial information is available for the
other entities authorized to provide OVS that are not yet operational.
Given that other entities have been authorized to provide OVS service
but have not yet begun to generate revenues, we conclude that at least
some of the OVS operators qualify as small entities.

9\. *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 Motion Picture and Video Tape Production (SIC
7812),[^455] Motion Picture and Video Tape Distribution (SIC
7822),[^456] and Theatrical Producers (Except Motion Pictures) and
Miscellaneous Theatrical Services (SIC 7922).[^457] 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.[^458] 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;[^459] (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.[^460]

10. 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.

11\. *DBS*: There are four licensees of DBS services under Part 100 of
the Commission\'s Rules. Three of those licensees are currently
operational. Two of the licensees that are operational have annual
revenues which may be in excess of the threshold for a small business.
The Commission, however, does not collect annual revenue data for DBS
and, therefore, is unable to ascertain the number of small DBS licensees
that could be impacted by these proposed rules. DBS service requires a
great investment of capital for operation, and we acknowledge that there
are entrants in this field that may not yet have generated \$11 million
in annual receipts, and therefore may be categorized as a small
business, if independently owned and operated.

12\. *HSD*: The market for HSD service is difficult to quantify. Indeed,
the service itself bears little resemblance to other MVPDs. HSD owners
have access to more than 265 channels of programming placed on C‑band
satellites by programmers for receipt and distribution by MVPDs, of
which 115 channels are scrambled and approximately 150 are
unscrambled.[^461] HSD owners can watch unscrambled channels without
paying a subscription fee. To receive scrambled channels, however, an
HSD owner must purchase an integrated receiver‑decoder from an equipment
dealer and pay a subscription fee to an HSD programming package. Thus,
HSD users include: (1) viewers who subscribe to a packaged programming
service, which affords them access to most of the same programming
provided to subscribers of other MVPDs; (2) viewers who receive only
non‑subscription programming; and (3) viewers who receive satellite
programming services illegally without subscribing. Because scrambled
packages of programming are most specifically intended for retail
consumers, these are the services most relevant to this
discussion.[^462]

13\. According to the most recently available information, there are
approximately 30 program packagers nationwide offering packages of
scrambled programming to retail consumers.[^463] These program packagers
provide subscriptions to approximately 2,314,900 subscribers
nationwide.[^464] This is an average of about 77,163 subscribers per
program package. This is substantially smaller than the 400,000
subscribers used in the commission\'s definition of a small MSO.
Furthermore, because this is an average, it is likely that some program
packagers may be substantially smaller.

14\. *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.[^465] Television broadcasting
stations consist of establishments primarily engaged in broadcasting
visual programs by television to the public, except cable and other pay
television services.[^466] Included in this industry are commercial,
religious, educational, and other television stations.[^467] Also
included are establishments primarily engaged in television broadcasting
and which produce taped television program materials.[^468] Separate
establishments primarily engaged in producing taped television program
materials are classified under another SIC number.[^469]

15\. Pursuant to 5 U.S.C. § 601(3), the statutory definition of a small
business applies \"unless an agency after consultation with the Office
of Advocacy of the SBA and after opportunity for public comment,
establishes one or more definitions of such term which are appropriate
to the activities of the agency and publishes such definition(s) in the
Federal Register.\"

16\. An element of the definition of \"small business\" is that the
entity not be dominant in its field of operation. We are unable at this
time to define or quantify the criteria that would establish whether a
specific television station is dominant in its field of operation.
Accordingly, the estimates that follow of small businesses to which
rules may apply do not exclude any television station from the
definition of a small business on this basis and are therefore
overinclusive to that extent. An additional element of the definition of
\"small business\" is that the entity must be independently owned and
operated. As discussed further below, we could not fully apply this
criterion, and our estimates of small businesses to which rules may
apply may be overinclusive to this extent. The SBA\'s general size
standards are developed taking into account these two statutory
criteria. This does not preclude us from taking these factors into
account in making our estimates of the numbers of small entities.

17\. There were 1,509 television stations operating in the nation in
1992.[^470] That number has remained fairly constant as indicated by the
approximately 1,616 operating television broadcasting stations in the
nation as of September 30, 1999.[^471] For 1992, the number of
television stations that produced less than \$10.0 million in revenue
was 1,155 establishments.[^472] Thus, the new rules will affect
approximately 1,616 television stations; approximately 77%, of those
stations are considered small businesses.[^473] 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.

18\. *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.[^474]

19\. *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.[^475] 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.[^476] 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.

20\. *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.[^477] 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.[^478] 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.

21\. *Description of Projected Reporting, Recordkeeping and other*
*Compliance Requirements*. There are compliance requirements for cable
operators and OVS operators. An attempt has been made to propose
streamlined compliance requirements, especially for small cable
operators, in this docket.

22\. *Steps Taken to Minimize Significant Impact on Small Entities, and
Significant Alternatives Considered*. The RFA requires an agency to
describe any significant alternatives that it has considered in reaching
its proposed approach, which may include the following four
alternatives: (1) the establishment of differing compliance or reporting
requirements or timetables that take into account the resources
available to small entities; (2) the clarification, consolidation, or
simplification of compliance or reporting requirements under the rule
for small entities; (3) the use of performance, rather than design,
standards; and (4) an exemption from coverage of the rule, or any part
thereof, for small entities. We have proposed streamlined rules for the
carriage of digital broadcast signals for small cable operators in this
proceeding. We will examine this alternative in more detail in the next
phase of this rulemaking.

23*. Federal Rules Which Duplicate, Overlap, or Conflict with the
Commission\'s Proposals*. None.

24. *Report to Congress*. The Commission will send a copy of the *Report
    and Order*, including this IRFA, in a report to be sent to Congress
    pursuant to the Small Business Regulatory Enforcement Fairness Act
    of 1996.[^479] In addition, the Commission will send a copy of the
    *Further Notice*, including IRFA, to the Chief Counsel for Advocacy
    of the Small Business Administration. A copy of the *Further Notice*
    and IRFA (or summaries thereof) will also be published in the
    Federal Register.[^480]

**Appendix D\--Rule Changes**

Part 76 of Title 47 of the Code of Federal Regulations is amended as
follows:

> Part 76 -- Multichannel Video and Cable Television Service

1.  The authority citation for Part 76 reads as follows:

AUTHORITY: 47 U.S.C. 151, 152, 153, 154, 301, 302, 303, 303a, 307, 308,
309, 312, 315, 317, 325, 336, 338, 339, 503, 521, 522, 531, 532, 533,
534, 535, 536, 537, 543, 544, 544a, 545, 548, 549, 552, 554, 556, 558,
560, 561, 571, 572, 573.

2\. Section 76.5 is amended as follows:

\(b\) Television station; television broadcast station. Any television
broadcast station operating on a channel regularly assigned to its
community by § 73.606 or 73.622 of this chapter, and any television
broadcast station licensed by a foreign government: Provided, however,
That a television broadcast station licensed by a foreign government
shall not be entitled to assert a claim to carriage, program
exclusivity, or retransmission consent authorization pursuant to subpart
D or F of this part, but may otherwise be carried if consistent with the
rules on any service tier. Further provided that a television broadcast
station operating on channels regularly assigned to its community by
both Sections 73.606 and 73.622 of this chapter may assert a claim for
carriage pursuant to subpart D of this part only for a channel assigned
pursuant to 73.606.

\*\*\* \*\*\* \*\*\* \*\*\* \*\*\* \*\*\*

3\. Section 76.56 is amended as follows:

\(f\) Carriage of additional broadcast television signals on such system
shall be at the discretion of the cable operator, subject to the
retransmission consent rules, § 76.64. A cable system may also carry any
ancillary or other transmission contained in the broadcast television
signal.

\*\*\* \*\*\* \*\*\* \*\*\* \*\*\* \*\*\*

4\. Section 76.57 is amended as follows:

A new subsection (c) is added, as follows, and subsections (c), (d), (e)
are renumbered (d), (e), and (f), respectively.

\(c\) With respect to digital signals of a television station carried in
fulfillment of the must-carry obligations, a cable operator shall carry
the information necessary to identify and tune to the broadcast
television signal.

\*\*\* \*\*\* \*\*\* \*\*\* \*\*\*

5\. Section 76.62 is amended as follows:

Subsection (b) is amended and a new subsection (g) is added, as follows:

\(b\) Each such television broadcast signal carried shall be carried
without material degradation, and, for analog signals, in compliance
with technical standards set forth in subpart K of this part.

\* \* \*

\(g\) With respect to carriage of digital signals, operators are not
required to carry ancillary or supplementary transmissions or
non-program related video material.

\*\*\* \*\*\* \*\*\* \*\*\* \*\*\*

6\. Section 76.64 is amended as follows:

**§ 76.64 Retransmission consent.**

\* \* \*

\(f\) Commercial television stations are required to make elections
between retransmission consent and must-carry status according to the
following schedule:

\* \* \*

(4)New television stations and stations that return their analog
spectrum allocation and broadcast in digital only shall make their
initial election any time between 60 days prior to commencing broadcast
and 30 days after commencing broadcast or commencing broadcasting in
digital only; such initial election shall take effect 90 days after it
is made.

\* \* \*

\(k\) Retransmission consent agreements between a broadcast station and
a multichannel video programming distributor shall be in writing and
shall specify the extent of the consent being granted, whether for the
entire signal or any portion of the signal. This rule applies for either
the analog or the digital signal of a television station.

\*\*\* \*\*\* \*\*\* \*\*\* \*\*\* \*\*\*

7\. Section 76.922(f) is amended as follows:

**§ 76.922(f) External Costs**

New sub-section is added.

**(vii) Headend equipment costs necessary for the carriage of digital
broadcast signals.**

\*\*\* \*\*\* \*\*\* \*\*\* \*\*\* \*\*\*

8\. Section 76.922(j) is amended as follows:

**§ 76.922 Rates for the basic service tier and cable programming
services tiers.**

\(j\) Network upgrade rate increase.

\(1\) Cable operators that undertake significant network upgrades
requiring added capital investment may justify an increase in rates for
regulated services by demonstrating that the capital investment will
benefit subscribers, including providing television broadcast
programming in a digital format.

\*\*\* \*\*\* \*\*\* \*\*\* \*\*\* \*\*\*

9\. Section 76.964 is amended as follows:

**§76.964 Written Notification of Changes in Rates and Services.**

\(a\) In addition to the requirement of §76.309(c)(3)(i)(B) regarding
advance notification to customers of any changes in rates, programming
services or channel positions, cable systems shall give 30 days written
notice to both subscribers and local franchising authorities before
implementing and rate or service change. Such notice shall state the
precise amount of any rate change and briefly explain in readily
understandable fashion the cause of the rate change (e.g., inflation,
change in external costs or the addition/deletion of channels). When the
change involves the addition or deletion of channels, each channel added
or deleted must be separately identified. For purposes of the carriage
of digital broadcast signals, the operator need only identify for
subscribers, the television signal added and not whether that signal may
be multiplexed during certain dayparts.

STATEMENT OF COMMISSIONER SUSAN NESS

APPROVING IN PART AND DISSENTING IN PART

Re: *Carriage of Digital Television Broadcast Signals, CS Docket Nos.
98-120, 00-96, 00-2*

After a long wait, we finally are addressing some of the issues
involving the carriage of digital broadcast signals on cable. I would
have hoped that this digital must carry proceeding would provide
finality and clarity for industry participants who need sufficient
lead-time to develop business plans. Unfortunately, it does not. While I
support the majority of decisions in this Order, along with the Further
Notice to establish a better record on the effect of a dual carriage
requirement, I dissent to the tentative conclusion regarding dual
carriage. I also write separately to emphasize the importance of our
Further Notice regarding "program related" material in the digital
context.

# Dual Carriage

I support the Further Notice to collect additional information regarding
cable operators' system capacity, the status of digital retransmission
negotiations, and the practical effects of a dual carriage requirement.
I dissent, however, from the Majority's "tentative conclusion" on a
matter of law, which in effect states that industry has failed to meet
its constitutional burden.[^481]

First, drawing such a tentative conclusion is gratuitous. The item
concedes that the record is insufficient to accurately discern the
impact on cable operators' speech posed by a dual carriage requirement.
Indeed, the Commission now asks for the very information \-- including
cable system channel capacity \-- that I have been asking the Commission
to collect for over two years. This information is significant
especially in light of the upgrades being executed by the major MSOs,
many pursuant to Social Contracts with this agency. Such system capacity
information is solely at the disposal of cable operators. We also
request important data on the status and scope of digital retransmission
consent agreements. To what extent are cable operators voluntarily
carrying digital broadcasts? The Majority should not form an opinion,
even a tentative one, without first considering such fundamental data.

Second, the tentative conclusion addresses only one aspect of the
intermediate scrutiny test. Specifically, the intermediate scrutiny
standard established under *U.S.* *v. O'Brien,* as applied in the
*Turner* decisions, requires that a content-neutral law affecting speech
further a substantial or important government interest.[^482] As the
item points out, that interest in the must carry context boils down to
(1) the preservation of free over-the-air television; (2) the promotion
of the widespread dissemination of information from many sources; and
(3) the promotion of fair competition.[^483] Would a dual carriage
requirement further that substantial government interest? The item is
silent on this point. Such willingness to put the ball in industry's
court while punting on the subject of our own legal burden is
emblematic, I believe, of the Commission's need to develop a clearer,
more visionary picture of its own role in the digital transition,
regardless of what we ultimately decide on the question of dual
carriage.

The government has a substantial interest in facilitating a successful
digital transition for the American public. As all communications media
go digital, broadcasting must follow suit or find its place in the
history books along with the Passenger Pigeon. A successful digital
transition thus would ensure that the public has access to free,
over-the-air broadcasting in the digital age and beyond. A successful
digital transition also would serve the government's interest in
promoting viewpoint diversity by providing a greater variety of
independent programming sources.

Finally, there is no need to state a "tentative conclusion" at this
time. The item states that the statute "neither compels dual carriage;
nor prohibits it" and that "in order to weigh the constitutional
questions inherent in a statutory construction that would permit dual
carriage, we believe it is appropriate and necessary to more fully
develop the record in this regard."[^484] I agree. I therefore believe
that it is unnecessary, and ill-timed, for the government to weigh in
with a premature assessment of the constitutionality of dual carriage
before we have collected and analyzed the evidence that would address
this question. Moreover, such a determination might prejudice the
outcome of any ongoing market-based carriage discussions. I also
seriously question whether a federal court would entertain review of
such a tentative conclusion, since it is not a final agency action.
Accordingly, I would have issued the Further Notice without drawing a
tentative conclusion on the issue of the burden to cable operators posed
by a dual carriage requirement.

I caution parties not to view my dissent as addressing, pro or con, the
merits of a dual carriage requirement. I have great sympathy for the
many independent cable networks whose efforts to obtain carriage may be
adversely affected by broadcast digital carriage. My preference,
therefore, has been and will continue to be the fostering of
market-based solutions. In that vein, over the past few years, I
repeatedly have urged broadcasters and cable operators at gatherings I
attend, both public and private, to negotiate in good faith on carriage
of digital broadcasts during this transition period. I also have argued
that as the carriage capacity of cable systems expands, with upgrades
and the addition of digital capabilities, the burden of carrying
broadcast programming diminishes accordingly.

# Primary Video

I reluctantly conclude that the best reading of the statutory term,
"primary video," refers to one programming stream. I believe that this
interpretation is the most easily defensible, but it is by no means the
only reasonable one.

A single-stream interpretation of "primary video" could have the odd
result of requiring broadcasters and cable operators to continuously
examine broadcasters' content to determine whether the signal is primary
video, program related, or something else. For example, if a broadcaster
in a tri-state area offers a main news program, and then breaks away to
three video streams to cover local news in each state, would the entire
news program be primary video, would the breakout streams be program
related, or neither? A cable operator would have to draw these
conclusions. In contrast, a definition of "primary video" that includes
all free, non-subscription video programming streams would be easier to
administer.

Ironically, a single stream interpretation of primary video results in
cable operators using less, not more, spectrum for broadcast must-carry
at the end of the digital transition than they do today. Each analog
signal requires 6 MHz of spectrum on the cable system. By contrast, with
digital compression, and if broadcasters offer multiple program streams,
it is possible that the "primary video" will require 2 MHz or less of
capacity, not six.

Of course, retransmission consent agreements might resolve these issues.
For example, the cable operator might agree voluntarily to carry the
entire free, over-the-air video programming signal. Absent a must-carry
requirement, a broadcaster might be more willing to enter into
retransmission consent arrangements to carry a portion of the digital
signal in addition to the full analog signal during the transition
period.

While I support the decision to limit the definition of primary video to
one digital programming stream based on the current state of the record,
I would entertain on reconsideration new or refined support for a
statutory construction that justifies the carriage of multiplexed free
video programming. Although the statute mandates that the primary video
be carried, and expressly excludes mandatory carriage of ancillary and
supplementary services, is there discretion under the statute for the
Commission to find it in the public interest (and not unduly burdensome)
for the cable operator to carry a station's multiplexed free video
channels? While the statute does not preclude carriage of multiplexed
programming streams, it is hard to find legislative support for a more
expansive mandatory carriage requirement.

Finally, I am particularly concerned about public broadcasters. As
reflected in the record, and cited briefly in the item,[^485] public
broadcasters have developed innovative digital strategies that rely
heavily on multicasting. These include "a 24-hour children's programming
channel; an educational channel devoted to instructional video and adult
education; a channel focused on local legislative and public interest
issues; and the award-winning national programming schedule distributed
by PBS."[^486] To what extent does our construction of the "primary
video" term allow for such multicasting, especially given the apparently
broader definition of "program related" for noncommercial, educational
broadcasters?[^487]

# Conclusion

Given the complexity and importance of these issues, the Commission must
proceed carefully and expeditiously. I intend to continue working with
broadcasters, cable operators, content producers, and consumer
electronics manufacturers, along with my colleagues on the Commission,
to facilitate a transition to digital broadcasting that works for the
American people.

**In re Carriage of Digital Television Broadcast Signals et. al.**

**Statement of Commissioner Harold W. Furchtgott-Roth,**

## Approving in Part and Dissenting in Part {#approving-in-part-and-dissenting-in-part .unnumbered}

I agree in part and dissent in part with the Commission's actions in
this proceeding. Were all issues finally resolved, and the next step
were for aggrieved parties to challenge the rules in court, I would feel
compelled to delineate precisely where the Order is faithful to the
statute, and where it is not. No finality is reached here; all issues
can and will be revisited; the line drawn in the sand by this item today
will doubtlessly have been washed away tomorrow.

This is not the Report and Order that I would have written. Were I the
scribe, I would have stated the statutory language in Sections 325, 614,
and 615; reviewed the comments; and reached conclusions on a proper
interpretation of those sections consistent both with current rules and
with any conceivable technology. Where possible, I would have written
simple, unambiguous, easily enforced rules that apply with equal
simplicity to any technology. There would be finality and closure; after
reconsideration, disappointed parties could have gone to court. Rather
than a line-by-line accounting of my views, let me note my three
greatest disappointments: (1) the failure to reach a final resolution
long after the pleading cycle had closed; (2) constitutional ruminations
to limit First Amendment protections; and (3) the interpretation of the
relevant statutory language as requiring special rules for digital
broadcasting.

# Final rules {#final-rules .unnumbered}

Decisiveness rather than indecisiveness, action rather than inaction,
are usually thought to be virtues. There are exceptions. It is
difficult, however, to find anything laudatory in the delay by this
Commission to resolve matters regarding digital television carriage
obligations under the current regulatory regime. The issues were
initially framed three years ago. While I have doubts about whether the
issues have ever been properly framed, I have even more doubts that
additional time alone will lead these issues to be properly framed, much
less resolved.

I see no need for a Further Notice, with the possible exception of
creating a record for the Satellite Home Viewer Improvement Act. We have
a substantial record for the must carry issues, and delay only
perpetuates uncertainty. Businesses do not reinvent themselves every
day; they have plans that stretch over years. Capital investments are
not children's toys that can be built in one moment on a whim, torn
apart the next moment on another whim, and reconstructed in a different
place tomorrow. In the business world, investments are made after
careful balancing of expectations of uncertain futures. The more
uncertain those futures are, the less likely investments are made.
Uncertainty about future government rules for Sections 325, 614, and 615
of the Communications Act doubtlessly dampens investment in both the
broadcast and cable industries.

The item today does little to limit uncertainty. Indeed, at times it
seems to send conflicting signals. For example, the Report and Order can
be read to limit the likelihood that the Commission will adopt dual
carriage requirements; the Further Notice can be read as a signal of
likely future adoption of dual carriage. These mixed signals only
aggravate uncertainty.

# Constitutional ruminations {#constitutional-ruminations .unnumbered}

As I have noted in many proceedings, the Commission should interpret the
Act so as to avoid conflicts with the Constitution. The Further Notice
seeks additional information so that the Commission can weigh whether a
dual carriage requirement is constitutional, without first resolving
whether such a requirement is mandated by the Act. Neither the Report
and Order nor the Further Notice squarely addresses the central issue of
precisely what form of must-carry obligations is mandated by the Act. If
the clearest reading of the Act leads to rules that do not raise
constitutional concerns, the Commission need not collect information to
evaluate hypothetical constitutional concerns.

After many years and the receipt of substantial information, we still
claim to be insufficiently informed. Yet we have no institutional, much
less personal, embarrassment in seeking yet more information. Moreover,
we seek comment on a variety of issues, few of which have a direct
bearing on whether dual carriage is or is not constitutional. The
Further Notice, whatever merit it may have, does not necessarily lead to
a final decision by the Commission. It simply promises to delay a
decision for another day, or another year, or another century.

Even if the Commission were to find that a dual carriage requirement is
permitted but not required by the Act, few if any parties can be
comforted by the prospect of the FCC engaging in a constitutional
balancing act. It is one matter, and even a troubling matter, for
Congress to balance competing interests and to write a law limiting
First Amendment protections. That is perhaps one of the lessons of
*Turner II*. It is, in my opinion, an even more troubling matter for the
FCC, without specific delegation of authority under specific law, to
ruminate about how to limit First Amendment interests of some parties
and balance them against other policy objectives. What possible
information can the FCC receive that would compel us to limit protected
speech? What are the rules, bases, and parameters of the balancing act
we undertake other than an implicit understanding that we will make them
up as we go along and that we will recognize the balance of conditions
under which we should limit First Amendment protections only when we see
it. Congress cannot delegate the discretion to the FCC to limit First
Amendment rights where the law can easily be interpreted in such a
manner as not to require any limitation of First Amendment protections.
Only if the Commission were to find that the statute inescapably
mandates a dual carriage requirement, and only if that dual carriage
requirement inescapably raised First Amendment concerns would the
Further Notice be necessitated. The Commission has yet to make either
finding.

# Technical neutrality {#technical-neutrality .unnumbered}

Sections 325, 614, and 615 of the Communications Act are not the most
transparent portions of the statute. Nonetheless, regardless of what
Congress meant at the time of drafting these sections, these sections
are not technology-specific; moreover, they were written at a time when
digital broadcasting was in its nascent stages of development from both
a technical and regulatory point of view. These sections have not been
relevantly amended since the advent of new digital technologies.
Consequently, the Commission must interpret Sections 325, 614, and 615
in a manner that applies with equal force whether broadcast transmission
is in analog, digital, Morse Code, or any other conceivable technology.

Simply stated, because Sections 325, 614, and 615 are technology
neutral, our rules interpreting those sections should be technology
neutral as well. Yet the proceeding before us has been framed in a
different manner. Throughout the document is the explicit and implicit
message that Sections 614 and 615 apply to an analog technology, and the
FCC must develop corresponding but different rules to apply to a digital
environment. Our job should not be to write *different* rules for
digital technologies, but to write rules that apply with *equal* force
to any technology.

# Conclusion {#conclusion-1 .unnumbered}

Many businesses, large and small, some broadcast and some cable, are
affected by the Commission's interpretation of Sections 325, 614, and
615. They have business plans that may depend on the final regulatory
interpretation of Sections 325, 614, and 615. Absent final rules, no
plans can be executed. Absent final rules, aggrieved parties cannot take
their complaints about our rules to court for resolution of disputes.
For businesses that depend on the FCC to provide regulatory certainty,
their worst nightmare is a Commission that refuses to make decisions,
good or bad. In this instance, those nightmares have come true.

#  {#section .unnumbered}

#   {#section-1 .unnumbered}

#  {#section-2 .unnumbered}

SEPARATE STATEMENT OF

**COMMISSIONER MICHAEL K. POWELL**

#  {#section-3 .unnumbered}

# Re: In the Matter of Carriage of Digital Television Broadcast Signals  {#re-in-the-matter-of-carriage-of-digital-television-broadcast-signals .unnumbered}

*(CS Docket No. 98-129); Amendments to Part 76 of the Commission's
Rules; Implementation of the Satellite Home Viewer Improvement Act of
1999; Local Broadcast Signal Carriage Issues (CS Docket No. 00-96);
Application of Network Non-Duplication, Syndicated Exclusivity and
Sports Blackout Rules to Satellite Retransmission of Broadcast Signals
(CS Docket No. 00-2)* FCC No. 01-22

I am pleased to support this item which I believe provides the clarity
that the cable and broadcast sectors have been anxiously awaiting from
the Commission. While this order does not put to rest all of the
fundamental issues integral to the transition to a digital world, we
have, I believe, eliminated some uncertainties in our posture. As such,
the order enhances our development of policy as we go forward to decide
the larger, more constitutionally complex issues.

I write separately, however, to address our decision on primary video
and its effect on those broadcasters that plan to multicast,
particularly public broadcasters. I believe our decision is compelled by
the language of the statute, leaving us little choice but to interpret
it faithfully. Regrettably, this may make it more difficult for digital
broadcasters to obtain cable carriage, though I sincerely hope cable
operators will negotiate fairly in an effort to accommodate creative
broadcast offerings, particularly the good works of public broadcasters
who have a unique public mission, and to help facilitate the transition
to digital television. If the Commission's construction of this statute
should negatively impact the development of digital television, recourse
to Congress for redress may be warranted, given that the statute clearly
did not contemplate must carry in a digital world.

In a related context, I question the interpretation of Section 615(g)(1)
suggested in the FNPRM as to "program related" content of noncommercial
educational programming that is required to be carried by cable
operators. As have others, I struggled with an appropriate
interpretation of the statute. Public broadcasters indicated in comments
on the record their plans to multicast a range of programming streams
delivering a variety of content for different audiences. Inasmuch as
these programming streams represent separate, distinct and multiple
transmissions, I am unable to defensibly conclude that they are entitled
to must carry as "program related" content. To do so would not comport
with what I derive to be the congressional directive: that a broadcaster
must select only one programming stream as primary and a cable operator
is required to provide mandatory carriage to only one such designated
stream. This is a question of statutory interpretation, and I might
accept a more flexible definition if it were a discretionary policy
judgement.

Finally, I urge continued flexibility on the part of broadcasters and
cable operators to bring these issues to a successful outcome. I am
pleased that we can bring to closure in this item those matters that we
truly suppose to be clear. We can all advance to the decisions we will
be called to make another day.

Dissenting Statement of Commissioner Gloria Tristani

**In the Matter of the Carriage of Digital Television Broadcast Signals
and**

**Related Matters**

**CS Docket Nos. 98-120; 00-96; 00-2.**

The transition from analog television to digital television poses
fundamental policy questions. Two issues are not open to question.
First, Congress has determined the public interest obligations of
broadcasters prevailing in the analog era will carry over to the digital
era.[^488] Second, this Commission must continue to ensure cable
communications systems "are responsive to the needs and interest of the
local community" and "are encouraged to provide the widest possible
diversity of information sources and services to the public."[^489] Yet
the majority today disposes of the question of the meaning of "primary
video" in the must-carry context without reference to these explicit
statutory purposes. In fact, there is no mention of the public interest
in this section of the Order at all. By prematurely deciding that
Congress intended to foreclose even public non-commercial stations from
using their digital spectrum to broadcast several channels of
programming with mandatory carriage on local cable systems, the
Commission harms every American.[^490]

While I do not question the majority's authority to settle on some
definition of the term "primary video," doing so without substantial
discussion of other applicable sections of the Communications Act or
related case-law determinations is untenable. As the Supreme Court noted
in [Turner Broadcasting System Inc., v. FCC]{.underline}, 520 U.S. 180,
189 (1994), must-carry provisions serve \"three interrelated interests:
(1) preserving the benefits of free, over-the-air local broadcast
television, (2) promoting the widespread dissemination of information
from a multiplicity of sources, and (3) promoting fair competition in
the market for television programming.\" As a result, our deliberation
should have explicitly considered these key concerns.

Moreover, the Communications Act subjects that portion of the broadcast
signal that is not "primary video" but nonetheless is "program related"
to the same must-carry requirements. Despite this requirement the
majority determined to put off a decision on the meaning of the term
"program related."[^491] Leaving aside the wisdom of defining only one
of two key terms, I fear today's attempt to state a bright-line
definition of "primary video" while leaving the related definition of
"program related" video open, will work more mischief than it avoids. As
a result, this Commission may soon face a torrent of content-related
disputes that we are ill-equipped to resolve.

One final point bears mentioning. Despite the length of time this docket
has been open, I believe we would have benefited from a more
deliberative approach than rushing the Order out the door at the end of
this administration. The affected parties and the staff did their best
to present and consider the merits of these issues, but the press of
business rendered the effort insufficient. I hope in any future
proceedings that reflective deliberation rather than student-like
cramming characterizes our processes. For the foregoing reasons, I
respectfully dissent.

[^1]: ^\*^ The final version of this *Report and Order and* *Further
    Notice of Proposed Rulemaking* was approved by the Commission on
    1/19/01.

[^2]: *Carriage of the Transmissions of Digital Television Broadcast
    Stations*, Notice of Proposed Rulemaking, 13 FCC Rcd. 15092 (1998)
    ("DTV Must Carry Notice").

[^3]: We first sought and received comments addressing digital broadcast
    television carriage issues in 1995 in another docket. *See Advanced
    Television Systems and Their Impact Upon the Existing Television
    Broadcast Service*, Fourth Further Notice of Proposed Rulemaking and
    Third Notice of Inquiry, 10 FCC Rcd. 10540 (1995) ("*DTV* *Fourth
    FNPRM"*). We will refer to all Orders in Mass Media Docket No.
    87-268, such as this one, as DTV Notices or Orders, depending upon
    the item.

    We note that matters concerning compatibility between digital cable
    operations and digital television reception equipment, which were
    once part of this docket, have been addressed by the Commission in a
    separate proceeding*. See Compatibility Between Cable Systems and
    Consumer Electronic Equipment*, Report and Order in PP Docket No.
    00-67 (rel. Sept. 15, 2000).

[^4]: *See Turner Broadcasting System, Inc. v. U.S..,* 520 U.S. 180
    (1997).

[^5]: We will be sending out a channel capacity and retransmission
    consent survey to 16 cable operators in a separately issued item
    ("Cable Survey")(see below for more information). The responses from
    the survey will be incorporated into the *Second Report and Order*
    in this proceeding.

[^6]: The Commission must apply the cable carriage rules in a comparable
    manner to satellite carriers. Satellite Home Viewer Improvement Act
    of 1999 ("SHVIA"), Pub.L. No. 106-113, 113 Stat. 1501, 1501A-526 to
    1501A-545 (Nov. 29, 1999); *See also* *Implementation of the
    Satellite Home Viewer Improvement Act of 1999: Broadcast Signal
    Carriage Issues*, Report and Order, FCC 00-417 (rel. November 30,
    2000). *See also* *Implementation of the Satellite Home Viewer
    Improvement Act of 1999: Application of Network Non-duplication,
    Syndicated Exclusivity and Sports Blackout Rules to Satellite
    Retransmission of Broadcast Signals,* Report and Order, FCC 00-388,
    (rel. November 2, 2000).

[^7]: *Broadcast Signal Carriage Issues*, 8 FCC Rcd 2965 (1993) (\"*Must
    Carry Order*\"); *See also*, *Broadcast Signal Carriage Issues*, MM
    Docket 92-259, 9 FCC Rcd 6723 (1994) (\"*Must Carry
    Reconsideration*\").

[^8]: A DMA is a geographic market designation that defines each
    television market exclusive of others, based on measured viewing
    patterns.

[^9]: 47 U.S.C. §534(b)(1)(B); 47 C.F.R. §76.56(b)(2). A cable operator
    of a cable system with 12 or fewer usable activated channels shall
    carry the signals of at least three local commercial television
    stations, except that if such a system has 300 or fewer subscribers,
    it shall not be subject to any requirements under this section so
    long as such system does not delete from carriage by that system any
    signal of a broadcast television station. 47 U.S.C. §534(b)(1)(A);
    47 C.F.R. §76.56(b)(1).

[^10]: Noncommercial television stations are considered qualified, and
    may request carriage if they: (1) are licensed to a community within
    fifty miles of the principal headend of the cable system; or (2)
    place a Grade B contour over the cable operator\'s principal
    headend. Cable systems with: (1) 12 or fewer usable activated
    channels are required to carry the signal of one qualified local
    noncommercial educational station; (2) 13-36 usable activated
    channels are required to carry no more than three qualified local
    noncommercial educational stations; and (3) more than 36 usable
    activated channels shall carry at least three qualified local
    noncommercial educational stations. *See* 47 U.S.C. §535(b) and (e);
    47 C.F.R. §76.56(a).

[^11]: *See* 47 U.S.C. §534(h)(2); 47 C.F.R. §76.55(d).

[^12]: 47 U.S.C. §§534(b)(1)(A) and (h)(2); 47 C.F.R. §76.56(b)(1) and
    (b)(4)(i).

[^13]: *See* 47 U.S.C. §534(b)(7); 47 U.S.C. §535(h).

[^14]: *See* 47 U.S.C. §534(b)(6); 47 U.S.C. §535(g)(5).

[^15]: *See* 47 U.S.C. §534(b)(4)(A); 47 U.S.C. §535(g)(2).

[^16]: *See* 47 U.S.C. §534(b)(5); 47 U.S.C. §535(b)(3)(C).

[^17]: *See* 47 U.S.C. §534(b)(3)(A); 47 U.S.C. §535(g).

[^18]: *See* 47 U.S.C. §§534(d) and 535(j). *See also* 47 C.F.R. §76.61.

[^19]: *See* 47 U.S.C. §534(h)(1)(C). *See also* 47 C.F.R. §76.59.

[^20]: *See Must Carry Order*, 8 FCC Rcd 2965.

[^21]: *See Service Rules for the 746-764 and 776-794 MHz Bands, and
    Revisions to Part 27 of the Commission's Rules*, Memorandum Opinion
    and Order and Further Notice of Proposed Rulemaking, FCC 00-224 at
    para. 65 (released June 30, 2000)("700 MHz Order").

[^22]: *See 700 MHz Order* at para. 65.

[^23]: *Id.*

[^24]: *Id.*

[^25]: *Id.*

[^26]: 47 U.S.C. §534(b)(4)(B). There is little discussion of this
    provision in the Act\'s legislative history. However, the relevant
    language states that \"when the FCC adopts new standards for
    broadcast television signals, such as the authorization of broadcast
    high definition television (HDTV), it shall conduct a proceeding to
    make any changes in the signal carriage requirements of cable
    systems needed to ensure that cable systems will carry television
    signals complying with such modified standards in accordance with
    the objectives of this section.\" H.R. Rep. No. 102-862, 102d Cong.,
    2d Sess. at 67 (1992); s*ee also* H.R. Rep. No. 102-628, 102d Cong.,
    2d Sess. at 94 (1992) ("The Committee recognizes that the Commission
    may, in the future, modify the technical standards applicable to
    television broadcast signals. In the event of such modifications,
    the Commission is instructed to initiate a proceeding to establish
    technical standards for cable carriage of such broadcast signals
    which have been changed to conform to such modified signals."). The
    Senate Committee Report describes the provision as providing that
    when the FCC adopts new standards for broadcast television signals,
    such as the authorization of broadcast HDTV, "it shall conduct a
    proceeding to make any changes in the signal carriage requirements
    of cable systems needed to ensure that cable systems will carry
    television signals complying with such modified standards in
    accordance with the objectives of new Section 614." *See* S. Rep.
    No. 102-92, 102d Cong., 1st Sess. at 85 (1991) ("*S. Rep. No.
    102-92*").

[^27]: *DTV Must Carry Notice,* 13 FCC Rcd at 15113.

[^28]: *Id.*

[^29]: *Id.*

[^30]: *Id.*

[^31]: *Id.*

[^32]: *Id.* at 15116. The Commission posited that the mandatory
    carriage option would default to the digital signal when the 100
    percent simulcast rule goes into effect in 2005. *Id.*

[^33]: *See* Granite Broadcasting Comments at 3; Retlaw Comments at 5;
    ALTV Comments at 22; MSTV Comments at 52-53; Morgan Murphy Comments
    at 13.

[^34]: NCTA Comments at 3 and 39-40; AHN et. al. Comments at 32.

[^35]: Time Warner Comments at 8.

[^36]: HGTV/TV Food, for example, states that they are cable programming
    services owned by the E.W. Scripps Company, the licensee of nine
    television broadcast stations. They state that while Scripps
    supported Congress\' analog must carry requirement, fundamental
    changes in the video programming marketplace, now force it to oppose
    a digital must carry requirement. HGTV/TV Food Comments at 2.

[^37]: UCC Comments at 11. UCC does advocate, however, that there should
    be a dual carriage requirement for non-duplicative noncommercial
    digital broadcast signals as those particular entities truly serve
    the public interest. *Id*. at 13-15.

[^38]: *Id.*

[^39]: UCC Reply Comments at 23. UCC, however, disagrees with the
    Commission proposal to the extent that it suggests that the carriage
    option should default to the digital signal in the year 2005 as
    digital receiver penetration will still be well below 50% at that
    time. UCC Comments at 11.

[^40]: Since the issue of dual carriage will be addressed in the next
    phase of this proceeding, we need not consider at this time whether
    we should adopt separate, specific carriage rules for small cable
    operators as requested by America's Cable Association (formerly
    known as the small cable business association or "SCBA") and others.
    *See* SCBA Comments at 9, 13, 14; Pellegrin Comments at 5. The
    findings below, therefore, shall apply with equal force to large and
    small cable systems.

[^41]: *See* Appendix D.

[^42]: 47 U.S.C. § 534(a). We note that we are addressing the issue of
    whether a digital-only television station has a right to carriage,
    under Section 614(a), in a companion proceeding. *See* WHDT-DT,
    Channel 59-Stuart, Florida, *Petition for Declaratory Ruling that
    Digital Broadcast Stations Have Mandatory Carriage Rights*, FCC No.
    01-23, (adopted Jan. 18, 2001).

[^43]: A similar provision, Section 615(a), requires carriage of
    noncommercial stations, as discussed more fully, *infra. See also*
    47 U.S.C. § 535(a).

[^44]: 47 U.S.C. §534(b)(4)(B).

[^45]: NAB Comments at 3. *See also* ALTV Comments at 7 and MSTV
    Comments at 17.

[^46]: NCTA Comments at 10-11*. See also* Time Warner Comments at 31 and
    BET Reply Comments at 3.

[^47]: ^?^NCTA Comments at 7. (The Commission\'s authority to enact
    regulations affecting cable operators is strictly limited by Section
    624(f) of the Act which provides: \"Any Federal agency, State or
    franchising authority may not impose requirements regarding the
    provision of or content of cable services, except as expressly
    provided in this title.\") 47 U.S.C. §544(f)(1).

[^48]: *See* 47 U.S.C. §535.

[^49]: H.R. Rep. No. 862, 102nd Congress, 2d Sess. at 56 (1992)

[^50]: 47 U.S.C. §534(b)(4)(B).

[^51]: *DTV Must Carry Notice*, 13 FCC Rcd at 15120.

[^52]: AAPTS Comments at 13-14.

[^53]: *Id.*

[^54]: *Id.*

[^55]: *Id.* at 18. UCC believes that the Commission has ample authority
    to mandate must carry of both the analog and digital signals of
    noncommercial stations. However, UCC contends that this must carry
    privilege should only be available to (1) non-duplicative, non-time
    shifting programming; and (2) programming that is not advertiser
    supported. UCC Comments at 11.

[^56]: *See* 47 U.S.C. §535(l)(1)(A)(ii).

[^57]: NCTA Reply Comments at 13.

[^58]: *See, e.g.*, 1992 Conference Report at 50, 53, and 56. *See
    also*, declaration of policy underlying establishment and public
    funding of the Corporation for Public Broadcasting, 47 U.S.C.
    §396(a) (*e.g.*, \"public television and radio stations and public
    telecommunications services constitute valuable local community
    resources for utilizing electronic media to address national
    concerns and solve local problems through community programs. . . it
    is in the public interest for the Federal Government to ensure that
    all citizens of the United States have access to public
    telecommunications services \[which includes noncommercial
    educational and cultural television programs\] through all
    appropriate available telecommunications distribution
    technologies\") 47 U.S.C.  §§ 396(a)(8) and (9); 397(14).

[^59]: 47 U.S.C. §535(a).

[^60]: 47 U.S.C. §336(b)(3).

[^61]: S. Rep. No. 230, 104th Congress, 2d Sess. at 161 (1996).

[^62]: *See also Ancillary and Supplementary Use of Digital Television
    Capacity by Noncommercial Licensees*, 14 FCC Rcd 537 (1998) (stating
    that § 336 \"does not distinguish between commercial and
    noncommercial DTV licensees, nor does the legislative history . .
    .\").

[^63]: AAPTS Comments at 51.

[^64]: 47 U.S.C. §325(b)(1).

[^65]: 47 U.S.C. §§325(b)(1)(A), (B).

[^66]: 47 U.S.C. §325(b)(3)(B).

[^67]: *DTV Must Carry Notice*, 13 FCC Rcd. at 15111.

[^68]: *Id.*

[^69]: *Id.* at 15112.

[^70]: *Id.*

[^71]: Broadcaster Comments to *Fourth FNPRM in MM Dkt. No. 87-268* at
    33.

[^72]: *DTV Must Carry* *Notice*, 13 FCC Rcd at 15111.

[^73]: NAB Comments at 41; *see also* ALTV Comments at 16.

[^74]: NCTA Reply Comments at 25.

[^75]: This policy approach is taken under Section 325(b)(1)(A) of the
    Act, rather than Section 325(b)(1)(B), because we do not resolve the
    dual carriage question as this time.

[^76]: *Digital Must Carry* *Notice*, 13 FCC Rcd. at 15111 (*citing* 47
    U.S.C. §325(b)(3)(B) (\". . . television stations, within one year
    after the date of enactment of the Cable Television Consumer
    Protection and Competition Act of 1992 and every three years
    thereafter, make an election between the right to grant
    retransmission consent under this section and the right to signal
    carriage under section 614 \[47 U.S.C. §534\].\"); and 47 C.F.R.
    §§76.64(f)(1) and (2) (providing that the first election must be
    made by June 17, 1993 and subsequent elections at three year
    intervals, the second by October 1, 1996 to take effect January 1,
    1997, the third by October 1, 1999 to take effect January 1, 2000,
    and so on)).

[^77]: *Id.* (*citing* 47 C.F.R. §76.64(f)(4)).

[^78]: *Id.*

[^79]: *Id. (citing* 47 C.F.R. §76.62(a)); *see also* *Must Carry
    Reconsideration*, 9 FCC Rcd. at 6745.

[^80]: *DTV Must Carry* *Notice*, 13 FCC Rcd. at 15111.

[^81]: ALTV Comments at 18.

[^82]: Morgan Murphy Comments at 16.

[^83]: "Partial" carriage may be considered in any number of ways,
    including hours, bits or programming streams.

[^84]: See 47 C.F.R. §76.62(a). In 1994, the Commission interpreted
    Section 325 to provide that broadcasters may bargain with cable
    operators for the right to carriage of any part of the broadcast
    signal only when such station is not eligible under the provisions
    of Section 614, either because it is not a local commercial
    broadcast signal or it does not qualify for mandatory carriage.
    *See* *Must Carry Reconsideration*, 9 FCC Rcd. at 6745.

[^85]: *Id.* (Comparing Section 325(b)(1) with Section 614(b)(3)(b)).

[^86]: *Id.*

[^87]: *See* 47 U.S.C. § 614(b)(4)(B) (requiring the Commission to
    establish changes in the signal carriage requirements to ensure
    cable carriage of digital broadcast signals). *See also* *Must Carry
    Reconsideration*, 9 FCC Rcd. at 6745 ("Congress recognized the
    interplay between \[Sections 325 and 614\] and gave the Commission
    authority to fill in the regulatory gaps.").

[^88]: A superstation is a television broadcast station other than a
    network station, licensed by the Commission that is secondarily
    transmitted by a satellite carrier. 47 C.F.R. §76.64(c)(2).

[^89]: 47 U.S.C. §325(b)(1).

[^90]: *S. Rep. No. 102-92* at 27.

[^91]: United Video Comments to *Fourth FNPRM in MM Dkt. No. 87-268* at
    5.

[^92]: *See Must Carry Order,* 8 FCC Rcd. at 3006. Section 76.64(m) of
    the Commission\'s rules provides that \"exclusive retransmission
    consent agreements are prohibited. No television broadcast station
    shall make an agreement with one multichannel distributor for
    carriage, to the exclusion of other multichannel distributors.\" 47
    C.F.R. §76.64(m).

[^93]: *See* 47 U.S.C. §325(b)(2)(C)(ii).

[^94]: *Id.*

[^95]: *See Implementation of the Satellite Home Viewer Improvement Act
    of 1999, Retransmission Consent Issues*, First Report and Order, 15
    FCC Rcd 5445 (2000) ("Retransmission Consent Order")

[^96]: *DTV Must Carry* *Notice*, 13 FCC Rcd. at 15118.

[^97]: SCBA Comments at 24. SCBA is now known as American Cable
    Association (\"ACA\").

[^98]: *Id.*; a*ccord* Pellegrin Comments at 6.

[^99]: *See Retransmission Consent Order*, 15 FCC Rcd at 5449-5473.

[^100]: *Id.* at 5469.

[^101]: 47 U.S.C. §325(b)(2)(A) ("The provisions of this subsection
    shall not apply to---retransmission of the signal of a noncommercial
    broadcasting station.")

[^102]: We note that Time Warner recently reached an agreement with
    AAPTS with regard to the carriage if digital television signals of
    certain NCE stations. *See* *Public Television and Time Warner Cable
    Agree to Digital Carriage*, Press Release, September 19, 2000.

[^103]: 47 U.S.C. §534(b)(1)(B); 47 C.F.R. §76.56(b)(1).

[^104]: In the *DTV Must Carry Notice*, we noted that the one-third
    capacity limit found in Section 614(b)(1)(B) applies in the digital
    context. 13 FCC Rcd. at 15117.

[^105]: *Id.* at 15120.

[^106]: *Id.*

[^107]: *Id.*

[^108]: ALTV Comments at 61.

[^109]: Paxson Comments at 28; Sinclair Comments at 6.

[^110]: Golden Orange Comments at 6.

[^111]: Morgan Murphy Comments at 12; Pappas Comments at 28.

[^112]: Megahertz (\"MHz\") is a unit of frequency denoting one million
    Hertz or one million cycles per second and is closely tied to
    bandwidth. The telecommunications bandwidth is typically measured in
    Hertz for analog communications. For example, an analog NTSC
    television channel occupies a bandwidth of 6 MHz. In digital
    communications, bandwidth is typically measured in bits per second
    identified by a specific method of encoding. For example, an HDTV
    channel encoded in 8 VSB, would occupy a digital bandwidth of about
    19.4 megabits per second (\"mbps\") which, in turn, would require a
    6 MHz bandwidth. In digital cable operations, where a 64 QAM
    encoding technique is used, that same 6 MHz bandwidth can provide up
    to 27 mbps of digital bandwidth. That would mean a 6 MHz bandwidth
    in such a cable system can carry a 19.4 mbps HDTV channel and still
    be able to provide other video or data services with the remaining
    7.6 megabits in that same 6 MHz bandwidth. *See* *also* *Newton\'s
    Telecom Dictionary*, 11th ed., July 1996.

[^113]: The concept of bits and bit rates is applicable to digital
    programming signals, but not to analog programming signals. Thus,
    there is no way to express the part of a cable system\'s capacity
    attributable to analog programming in terms of bits.

[^114]: 47 C.F.R. §76.5(nn); 47 U.S.C. §522(1).

[^115]: 47 C.F.R. §76.5(oo); 47 U.S.C. §522(19).

[^116]: For example, a cable operator with an analog-based cable system
    would devote 6 MHz of bandwidth to the carriage of a high definition
    television signal, but a cable operator using the 64 QAM digital
    format may only have to devote 4 MHz to the carriage of that same
    high definition signal.

[^117]: *DTV Must Carry* *Notice*, 13 FCC Rcd. at 15117 (*citing* 47
    U.S.C. §534(b)(2)).

[^118]: *Id.*

[^119]: *Id.*

[^120]: ALTV Comments at 49, n. 129; Trinity Comments at 8; and
    Univision Reply Comments at 10.

[^121]: Sinclair Comments at 7.

[^122]: *See* *Must Carry Order*, 8 FCC Rcd. at 3003.

[^123]: As stated earlier, a qualified NCE is one that places a Grade B
    contour over the principal headend of the cable system or the cable
    system's principal headend is within 50 miles of the NCE\'s city of
    license.

[^124]: 47 U.S.C. §§535(b)(2), (3); 47 U.S.C. §535(e).

[^125]: 47 U.S.C. §534(h)(1)(B)(iii).

[^126]: *Id.*

[^127]: 47 U.S.C. §534(h)(2)(D).

[^128]: 47 U.S.C. §535(g)(4).

[^129]: *Must Carry Order*, 8 FCC Rcd. at 2988.

[^130]: *DTV Must Carry* *Notice*, 13 FCC Rcd. at 15119-15120.

[^131]: *See, e.g., DTV Sixth Report and Order*, 12 FCC Rcd. 14588.

[^132]: This is known as the \"cliff effect.\" That is, if a signal is
    received, a good quality picture can be constructed at the
    television receiver; however, once the signal falls below a minimum
    signal level threshold, no picture can be reconstructed or displayed
    by the television receiver. There are, however, certain receiver
    implementation schemes which allow the receiver to display and hold
    the last picture received before the signal fell below the
    threshold.

[^133]: 47 C.F.R. §76.5(pp).

[^134]: *See DTV Sixth Report and Order*, 12 FCC Rcd. at Appendix A.

[^135]: Manmade noise includes all radio noise generated by noise
    sources located in the vicinity of the receiver, such as electrical
    transmission lines, automobile ignitions, and electrical motors.

[^136]: 47 C.F.R. §73.623(c)(3)(ii).

[^137]: *See* 47 U.S.C. §534(h)(1)(B)(iii) (stating the same for analog
    signals).

[^138]: *See* ATSC Digital Television Standard, Doc. A/53.

[^139]: Geocast, Iblast, and Dtcast are some of the companies planning
    to use a certain amount of digital television spectrum to provide
    high speed data broadcast services to personal computers. *See*,
    *e.g*., T. Butts, *Disney, GE invest in Dotcast*,
    [www.digitalbroadcasting.com](http://www.digitalbroadcasting.com/),
    November 8, 2000.

[^140]: PSIP is a requirement for broadcasters using the ATSC standard,
    however, it is not required by the Commission.

[^141]: For a more complete description of PSIP, *see* J. Whitaker and
    B. Benson, *The Standard Handbook of Video and Television
    Engineering*, 3^rd^ Ed., McGraw Hill.

[^142]: 47 U.S.C. §534(b)(3).

[^143]: *Id.*

[^144]: *Id.*

[^145]: *Id.*

[^146]: 47 U.S.C. §535(g)(1).

[^147]: 47 U.S.C. §336(b)(3). Section 336(a)(2) provides that the
    Commission shall allow the holders of licenses for advanced
    television service stations \"to offer such ancillary or
    supplementary services . . . as may be consistent with the public
    interest, convenience, and necessity.\"

[^148]: *See*, *e.g.*, *DTV* *Fifth Report and Order*, 12 FCC Rcd at
    12826.

[^149]: *DTV Must Carry* *Notice*, 13 FCC Rcd at 15125.

[^150]: *Id.*

[^151]: NAB Comments at 38.

[^152]: AAPTS Comments at 36.

[^153]: Time Warner Comments at 51; *see also* NCTA Comments at 14-15.

[^154]: 47 U.S.C. §§534(b)(3) and 535(g)(1).

[^155]: *See* Sutherland, Statutory Construction, Vol. 2A, at Section
    46.06 ("Each word given effect").

[^156]: *See* The American Heritage Dictionary of the English Language,
    Third Edition (1996); and Black\'s Law Dictionary (1983 edition)
    (Primary is defined as: \"First; principal; chief; leading. First in
    order of time, or development, or in intention.\"). We note that
    Time Warner also states that "primary" means "first in rank or
    importance" according to Webster's Third New International
    Dictionary. Time Warner Comments at 29. In response to some
    broadcasters' suggestions that two signals can simultaneously be
    "first in rank or importance, " Time Warner argues that such a
    stance is contemptuous of the clear text of the statute. *Id.*

[^157]: H.R.Rep.No. 102-628, 102nd Cong., 2nd Sess. 1992.

[^158]: *Id*.

[^159]: *See e.g., FCC Puts U.S. on Schedule For HDTV Broadcasting By
    2000*, Video Technology News, Sept. 28, 1992, Vol. 5, No. 20
    (quoting then FCC Commissioner Sherrie Marshall, \'I am becoming
    increasingly convinced that the real key to broadcasters\' continued
    competitiveness lies not so much in ATV as a crisp picture, but in
    its potential for spectrum-efficient multiplexing\'); *FCC and
    Broadcasters Battle Toward Flexible HDTV Conversion*, Broadcasting &
    Cable, Oct. 5, 1992 (according to then FCC Chairman Alfred Sikes,
    the drive toward digital TV is not based on \'just better pictures
    and improved sound.\' Such a \'flexible digital system \... will
    mean innovative video. For instance, the signal could carry multiple
    scenes and camera angles or multiple programs. Smart receivers would
    allow viewers to decide which to select\'); *Do Not Be Weak-Kneed,
    Sikes Tells Broadcasters At Conference On HDTV*, HDTV Report, Oct.
    14, 1992, Vol. 2, No. 21 (Fox Inc.\'s Executive Vice President noted
    during a panel discussion that his network views digital
    broadcasting as a \'real potential avenue for opportunities. Once
    you are able to transmit a digital signal \... and perform simulcast
    requirements, you can do pretty much whatever else you wish to do
    with that channel \... including additional programs\'); *Pay TV
    Grows Up After Two Decades, HBO is Still Pushing the Envelope on
    Cable TV*, Boston Herald, Dec. 20, 1992 (\'One idea HBO hopes will
    help it to compete is something called multiplexing. Instead of
    receiving just one HBO channel, multiplex subscribers can find the
    network\'s programming on additional channels - HBO2 and HBO3. The
    movies and specials are all the same, but the viewer has three
    different program options at once, much like a multiscreen
    theater\').

[^160]: H.R.Rep. 101-1026, 101st Cong., 2nd Sess. 1990 at 133-134.

[^161]: *See* revisions to Section 76.62 in Appendix D.

[^162]: 47 U.S.C. §336(b)(3). Section 336(a)(2) provides that the
    Commission shall allow the holders of licenses for advanced
    television service station \"to offer such ancillary or
    supplementary services . . . as may be consistent with the public
    interest, convenience, and necessity.\"

[^163]: *See* 47 U.S.C. §534(b)(3).

[^164]: Paxson Comments at 27.

[^165]: *DTV Fifth Report and Order*, 12 FCC Rcd at 12821 (establishing
    the DTV transition schedule and related requirements); *on
    reconsideration* 14 FCC Rcd 19931 (1999).

[^166]: 47 C.F.R. §73.624(c).

[^167]: *Id.*

[^168]: 47 C.F.R. §73.646; *see also DTV Fifth Report and Order*, 12 FCC
    Rcd at 12821, n. 54.

[^169]: 47 C.F.R. §76.62(f).

[^170]: *Must Carry Reconsideration*, 9 FCC Rcd. at 6734 (adopting in
    part factors set forth in *WGN Continental Broadcasting, Co. v.
    United Video, Inc.*, 693 F.2d 622 (7th Cir. 1982)) ("WGN").

[^171]: We note that independent of the \"program related\" and
    \"ancillary or supplementary\" concepts, cable operators are
    required to pass through closed captioning data contained in analog
    and digital video programming. 47 C.F.R. §§76.606, 79.1(c). We
    further note that while the Commission has refrained from
    promulgating regulations requiring delivery of the codes necessary
    for operation of the \"V-chip,\" it has done so based upon the
    voluntary assumption of this responsibility by video program
    distributors. *In the Matter of Technical Requirements to Enable
    Blocking of Video Programming based on Program Ratings, Report and
    Order*, 13 FCC Rcd 11248, 11259 (1998).

[^172]: 693 F.2d at 624-25. The Commission declined to further define
    \"program‑related,\" apart from the WGN analysis, noting that
    carriage of information in the VBI was rapidly evolving. *Must Carry
    Order*, 8 FCC Rcd at 2986.

[^173]: *Id.*

[^174]: *See* revised Section 76.56(e) in Appendix D.

[^175]: *DTV Must Carry* *Notice*, 13 FCC Rcd at 15129.

[^176]: Gemstar Comments at 10-14*.* The Broadcast Group agrees with
    Gemstar, but states that the Commission should impose a rule that
    (1) prohibits cable systems from excluding any local broadcast
    station from, or from otherwise discriminating against any local
    broadcast station in, any EPG or navigation device provided by the
    system; and (2) requires cable systems to provide an EPG that
    contains a non-discriminatory listing of all programming services
    available on the system. Broadcast Group Comments at 22.

[^177]: NCTA Reply Comments at 22. *See also* Time Warner Reply Comments
    at 34 (stating that the Act flatly precludes must carry rights for
    broadcasters\' EPGs because they are not program related.)

[^178]: *Must Carry Order*, 8 FCC Rcd at 2986.

[^179]: We note that in the analog carriage context, Gemstar has
    requested a ruling from the Commission that its electronic program
    guide is program-related and must be carried by cable operators.
    *See* Gemstar Int'l Group. Ltd. and Gemstar Development Corp.,
    *Petition for Special Relief Seeking Commission Order to Discontinue
    Stripping Information from Broadcast VBI*, Public Notice, DA 00-670
    (rel. March 24, 2000).

[^180]: 47 U.S.C. §548(a); 47 C.F.R. §§76.1000-1004.

[^181]: *DTV Must Carry* *Notice*, 13 FCC Rcd at 15125.

[^182]: 47 C.F.R. §76.1000(e).

[^183]: ^?^47 U.S.C. §534(b)(5).

[^184]: *See* 47 U.S.C. §535(b)(3)(C) and (e).

[^185]: S. Rep. No. 92, 102d Cong., 1st Sess. at 85 (1991).

[^186]: *DTV Must Carry* *Notice*, 13 FCC Rcd at 15123.

[^187]: NCTA Comments at 12-13.

[^188]: NCTA Reply Comments at 19 (quoting 47 U.S.C. § 534(h)(1)(A)).

[^189]: UCC Comments at 8 (citation omitted).

[^190]: *Id.*; *see also* NCTA Reply Comments at 16.

[^191]: Broadcast Group Comments at 10.

[^192]: *DTV Fifth Report and Order*, 12 FCC Rcd at 12832.

[^193]: *Id.* These simulcasting requirements are intended to minimize
    viewer disruption as the content of the analog signal is slowly
    replicated on the digital signal.

[^194]: We note that duplication in this context may encompass the
    following situations: (1) DTV-only station v. DTV-only station; (2)
    DTV-only station v. analog station; or (3) analog station v. analog
    station.

[^195]: *Must Carry Order*, 8 FCC Rcd at 2981.

[^196]: *Id.* at 2970.

[^197]: 47 C.F.R. §76.56(a)(1)(iii). *See also*, *Must Carry Order*, 8
    FCC Rcd at 2970. In the cable carriage context, the Commission
    treated the duplication provisions of Sections 615(b)(2) and Section
    614(b)(5) separately. The Commission noted that the two provisions
    were intended to accommodate different situations and are addressed
    separately in the statute and its legislative history. *Id.* at
    2980.

[^198]: 47 U.S.C. §534(b)(4)(A). *See also* 47 U.S.C. §535(g)(2) (\"A
    cable operator shall provide each qualified local noncommercial
    educational station whose signal is carried in accordance with this
    section with bandwidth and technical capacity equivalent to that
    provided to commercial television stations carried on the cable
    system and shall carry the signal of each qualified local
    noncommercial educational television station without material
    degradation\"); 47 C.F.R. §76.62(b)-(d).

[^199]: *DTV Must Carry* *Notice*, 13 FCC Rcd at 15122.

[^200]: *See* 47 U.S.C. §534(b)(4)(A). *See also* 47 U.S.C. §535(g)(2).

[^201]: *DTV Must Carry* *Notice*, 13 FCC Rcd at 15123.

[^202]: *DTV* *Fourth Report and Order*, 11 FCC Rcd at 17772-4. The
    Grand Alliance was consortia of equipment manufacturers, including
    AT&T and General Instruments, working together to develop DTV
    standards.

[^203]: *Id.* at 17789.

[^204]: *See* *DTV* *Fifth Report and Order*, 12 FCC Rcd at 12809,
    12826-27.

[^205]: **ATSC Restates Definitions for HDTV and SDTV Transmission
    Standards**, Press Release (Feb. 20, 1998) at
    [http://www.atsc.org/Presshtml/PR_Def.html]{.underline} (\"The
    Executive Committee of the Advanced Television Systems Committee has
    approved for release the following statement regarding the
    identification of the HDTV and SDTV transmission formats within the
    ATSC Digital Television Standard: \"There are six video formats in
    the ATSC DTV standard which are High Definition. They are the 1080
    line by 1920 pixel formats at all picture rates (24, 30 and 60
    pictures per second), and the 720 line by 1280 pixel formats at
    these same picture rates. All of these formats have a 16:9 aspect
    ratio.\"*;DTV Fifth Further Notice of Proposed Rule Making*, 11 FCC
    Rcd. 6235, 6237 (1996) ("DTV Fifth FNPRM") (Noting that 720‑line and
    1080‑line formats represent high resolution video). Both
    high‑resolution formats use a picture aspect ratio of 16 units
    horizontally by 9 units vertically. The choices of 1280 pixels per
    line for the 720‑line format and 1920 pixels per line for the
    1080‑line format result in square pixels for both formats, based on
    the 16:9 aspect ratio. \"I\" designates \"interlaced\" scanning and
    \"P\" designates \"progressive\" scanning. Progressive scanning
    lines are presented in succession from the top of the picture to the
    bottom, with a complete image sent in each frame as is commonly
    found in computer displays today. For interlaced scanning, which
    also is used in NTSC (analog) television, odd and even numbered
    lines of the picture are sent consecutively, as two separate fields.
    These two fields are superimposed to create one frame, or complete
    picture, at the receiver. The interlace picture rates can be 24, 30
    or 60 fields per second. *Id.* at 11 FCC Rcd at 6237-38. *See also*
    CEA Expands Definitions for DTV Products,
    [www.digitalbroadcasting.com](http://www.digitalbroadcasting.com/),
    September 6, 2000 (Definitions, which now allow for DTV to be
    defined in the 4:3 aspect ratio standard, are expected to be
    incorporated into new products in time for holiday buying season)

[^206]: http://www.dtvweb.org; and *DTV* *Fifth FNPRM*, at 11 FCC Rcd at
    6237.

[^207]: NAB Comments at 40.

[^208]: MSTV Comments at 30.

[^209]: Granite Broadcasting at 9.

[^210]: 47 U.S.C. §534(b)(4)(A). This interpretation is also consistent
    with the Act\'s general mandate of ensuring that cable operators do
    not favor their own cable programming video services over those
    video services provided by broadcasters.

[^211]: 47 U.S.C. §336(b)(3).

[^212]: *See* 47 C.F.R. §76.62(e).

[^213]: A broadcaster's over-the-air HDTV signal, for example, requires
    19.4 mbps, which accounts for both the programming or data, as well
    as an overhead data stream that includes error correction. When a
    cable system carries this HDTV signal using QAM modulation, it
    removes the broadcaster's overhead data stream and replaces it with
    the overheada stream appropriate for the specific cable system.
    Generally the resulting bit rate is somewhat less than 19.4. This
    reduction in bit rate does not affect picture quality and is not
    considered material degradation.

[^214]: Microsoft Comments at 24.

[^215]: Pappas Comments at 19-20.

[^216]: Adelphia et. al. Comments at 31.

[^217]: We recognize that it may be especially burdensome for small
    systems with limited channel capacity (such as systems with fewer
    than 330 MHz) to carry a HDTV signal if they are not otherwise
    providing any HDTV programming. In this regard, we note that
    mandatory carriage is limited to one-third of the cable system's
    capacity, as defined *infra*. We also recognize that carriage of a
    HDTV signal using 8 VSB pass-through may require the allocation of
    more than 6 MHz of bandwidth due to the difference in channel
    alignments between broadcast over-the-air transmission and cable
    carriage. An 8-VSB pass-through of a broadcast station may straddle
    two cable channels and result in the loss of additional channels in
    the system (i.e., the cable operator is not able to use these
    additional channels to carry other programming). Therefore, if a
    small system, which is not otherwise carrying any HDTV signals, is
    required to carry a broadcast signal in HDTV such that it straddles
    two channels in this way, it may include all of its lost spectrum
    when calculating its one-third capacity.

[^218]: We understand that for some time the technology has been
    available to manufacture cable boxes that can either deliver a
    digital signal to the subscriber's digital equipment or downconvert
    the signal to be displayed on analog equipment. *See, e.g.,* AT&T
    *ex parte* of October, 1999. Apparently there is not as yet
    sufficient demand to produce these boxes for retail purchase or for
    rental from the cable operator. We will monitor the market's
    progress to ensure that our permission for analog conversion at the
    headend does not interfere with the marketplace availability of such
    boxes.

[^219]: *DTV Must Carry Notice*, 13 FCC Rcd at 15122.

[^220]: VSB is a form of amplitude modulation in which one sideband of
    the main modulated signal and a small part of the other sideband of
    the same signal are transmitted. The 8 VSB standard has been
    optimized for terrestrial broadcast television delivery where
    transmission errors and data loss are likely. The current analog
    television standard also uses VSB.

[^221]: ^?^Quadrature amplitude modulation, or QAM, is a complex
    modulation technique, using variations in both signal phase and
    amplitude. We note that 256 QAM has a 38 Mpbs data rate while 64 QAM
    has a 27 Mbps data rate.

[^222]: The ATSC standards on which the 8 VSB digital television
    broadcasting system is based, involved the participation of the
    cable industry. It was anticipated in the ATSC process that
    non-broadcast digital video program providers would be using a 16
    VSB modulation system. Although cable operators are now using QAM,
    rather than VSB, it was clearly contemplated throughout the process
    that the cable industry and the broadcasting industry would not be
    using the same modulation technique. On this point MediaOne (now
    part of AT&T Broadband) states that the conversion from VSB to QAM
    causes no degradation of broadcast digital video quality; rather the
    same quality signal the station delivers to the headend will be
    received by cable subscribers with digital television receivers.
    MediaOne Comments at 12. *See also* Mitsubishi Reply Comments at
    10-11 (stating that the remodulation from VSB to QAM should be
    allowed). For purposes of Section 76.630 of our rules, we clarify
    that we do not consider the utilization of QAM modulation by a cable
    operator in the provision of digital cable television service to
    involve scrambling, encryption or similar technologies of the type
    referenced therein. *See* 47 C.F.R. § 76.630.

[^223]: This may be applicable to cable systems that will not be
    providing any digital cable programming or systems not wanting to
    incur the additional expense of 8 VSB to either 64 or 256 QAM
    conversion at the headend or in the set-top box.

[^224]: *See* *DTV Must Carry Notice*, 13 FCC Rcd at 15126 *citing* 47
    U.S.C. §534(b)(7). 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.\" 47 U.S.C. §535(h).

[^225]: Some cable subscribers have older televisions that are not
    capable of receiving all broadcast stations due to on-channel
    placement at a channel number beyond the range of the receiver.
    These subscribers rent a set-top box from the cable system for which
    the system may charge a monthly fee pursuant to 47 U.S.C.
    §543(b)(3)(A). *See also* 47 C.F.R. §76.923. *See also*, *Complaint
    of WLIG*, CSR 3903-M (Cab. Serv.Bur. rel. Nov. 10, 1993)(requiring
    the cable operator to provide boxes to subscribers so that they are
    able to view a local television broadcast signal).

[^226]: *See Compatibility Between Cable Systems and Consumer
    Electronics Equipment*, at ¶ 36. In this proceeding, the cable and
    consumer electronics industries are required to report on their
    progress concerning pending technical standards issues, including
    such standards for direct connection of DTV receivers to digital
    cable systems.

[^227]: *Digital Must Carry Notice*, 13 FCC Rcd at 15126*.*

[^228]: MediaOne Comments at 35.

[^229]: ALTV Comments at 71.

[^230]: *See* 47 C.F.R. §624(f)(1).

[^231]: On this point, NCTA comments that a strict interpretation of
    Section 614(b)(7) by the Commission would impose \$53 billion to
    \$93 billion (\$400-\$700 per sub.) in set top equipment costs on
    subscribers. NCTA Comments at 49

[^232]: 47 U.S.C. § 629.

[^233]: *Navigation Devices Report and Order*, 13 FCC Rcd. 14,775
    (para 1) (1998).

[^234]: *Id.* at para 7.

[^235]: *See Commercial Availability of Navigation Devices*, Report and
    Order, 13 FCC Rcd 14775 at para. 49 (1998) ("Navigation Devices")
    (promulgating rules to facilitate the development and commercial
    availability of navigation equipment). *See also* 47 U.S.C. §544(a);
    47 C.F.R. §§1200 et. seq.

[^236]: 47 U.S.C. §534(b)(6); 47 C.F.R. §76.57(a). There are three
    channel positioning options for commercial television stations but
    only the on-channel option is relevant to the new digital signals.
    The other two options applicable to existing analog stations are the
    channel on which the station was carried on July 19, 1985 and the
    channel on which it was carried on January 1, 1992. These latter two
    channel positioning requirements are not suitable in the era of
    digital television. They are grounded in dates applicable only to
    analog broadcasters that were designed to ensure that subscribers
    would be able to find broadcast programming on familiar channel
    positions. Since digital signals are generally new products, there
    is no analogous supporting rationale for requiring digital channel
    positioning on any cable channel other than on a station\'s
    over-the-air channel. Moreover, each television station now has a
    different digital channel assignment under the Commission\'s new
    table of digital allotments. *See* *Sixth Report and Order*, 12 FCC
    Rcd. at 14699.

[^237]: 47 U.S.C. §535(g)(5); 47 C.F.R. §76.57(b).

[^238]: 47 U.S.C. §534(b)(6), §535(g)(5).

[^239]: Thus, a television station could be assigned channel 4 as its
    analog over-the-air channel number, but channel 24 as its digital
    over-the-air channel number. A television station may switch back to
    channel 4 after the transition and "core" consolidation of broadcast
    signals to channels 2-51.

[^240]: *DTV Must Carry* *Notice*, 13 FCC Rcd. at 15128.

[^241]: *See* *Program and System Information Protocol for Terrestrial
    Broadcast and Cable*, ATSC Document A/65 (Dec. 23, 1997) (\"For
    broadcasters with existing NTSC licenses, the major channel number
    for the existing NTSC channels, as well as the Digital TV channels,
    controlled by the broadcaster, shall be set to the current NTSC RF
    channel number. \[ \] Assume a broadcaster who has an NTSC broadcast
    license for RF channel 13 is assigned RF channel 39 for Digital ATSC
    broadcast. That broadcaster will use major channel number 13 for
    identification of the analog NTSC channel on RF channel 13, as well
    as the digital channels it is controlling on RF channel 39.\")

[^242]: *Id.*

[^243]: *DTV Must Carry* *Notice*, 13 FCC Rcd. at 15129. We also
    suggested that another policy alternative would be to allow
    operators to place digital television signals on any cable channel
    of their 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. *Id*

[^244]: Entravision Comments at 10; Granite Broadcasting at 11.

[^245]: ALTV Comments at 73.

[^246]: MSTV Comments at 32; NAB Comments at 41. *See ATSC Program and
    System Information Protocol for Terrestrial Broadcast and Cable*,
    Table 6.4 \"Bit Stream Syntax for the Terrestrial Virtual Channel
    Table,\" at p. 20, and Table 6.8 Bit Stream Syntax for the Cable
    Virtual Channel Table,\" at p. 26 (12/23/97).

[^247]: NBC Comments at 6.

[^248]: *Id.*

[^249]: *See* revisions to Section 76.57, Channel Positioning, in
    Appendix D.

[^250]: *See Compatibility Between Cable Systems and Consumer
    Electronics Equipment*, 15 FCC Rcd 8776.

[^251]: Nielsen has divided the United States into 210 designated market
    areas.

[^252]: 47 U.S.C. §534(h)(1)(C).

[^253]: 47 U.S.C. §534(h)(1)(C); 47 C.F.R. §76.59.

[^254]: *DTV Must Carry Notice* at 15130.

[^255]: We note that in adopting technical rules for the digital
    transmission of broadcast signals, the Commission attempted to
    insure that a station\'s digital over-the-air coverage area would
    replicate as closely as possible its current over-the-air analog
    coverage area. *Sixth DTV Report and Order*, 12 FCC Rcd 14588, 14605
    (1997).

[^256]: *See* 47 U.S.C. §535(d) (noncommercial educational television
    stations), §534(c)(2) (low power television stations); s*ee also* 47
    C.F.R. §76.56(c).

[^257]: *See* 47 U.S.C. §531(d) (\"In the case of any franchise under
    which channel capacity is designated \[for PEG channels\], the
    franchising authority shall prescribe (1) rules and procedures under
    which the cable operator is permitted to use such channel capacity
    for the provision of other services if such channel capacity is not
    being used for the purposes designated, and (2) rules and procedures
    under which such permitted use shall cease.\")

[^258]: *Must Carry Order*, 8 FCC Rcd. at 2972, 2984.

[^259]: *DTV Must Carry* *Notice*,13 FCC Rcd. at 15126.

[^260]: CBA Comments at 5; Pappas Comments at 32.

[^261]: 47 C.F.R. §§ 76.7 and 76.61.

[^262]: 47 U.S.C. §534(d)(3).

[^263]: *DTV Must Carry* *Notice*, 13 FCC Rcd at 15131.

[^264]: *Id.*

[^265]: *See* AAPTS Comments at 54.

[^266]: 47 U.S.C. §573(c)(1).

[^267]: 47 U.S.C. §573(c)(2)(A).

[^268]: *See* *Implementation of Section 302 of the Telecommunications
    Act of 1996*, *Second Report and Order*, 11 FCC Rcd 18223, 18307-08
    (1996).

[^269]: *Id.* at 18308-09, n.371. We note, however, that an OVS operator
    must make qualified local commercial and noncommercial educational
    television stations available to every subscriber. *See* 47 C.F.R.
    §76.1506(e).

[^270]: *See* 47 U.S.C. §573(c)(1)(B); 11 FCC Rcd at 18311-13.

[^271]: *DTV Must Carry Notice*, 13 FCC Rcd at 15119.

[^272]: Paxson Comments at 30.

[^273]: 47 C.F.R. §76.964(a).

[^274]: *Id.*

[^275]: *DTV Must Carry* *Notice*, 13 FCC Rcd. at 15135.

[^276]: Pappas Comments at 37.

[^277]: ALTV Comments at 82-83.

[^278]: *See* 47 C.F.R. §§78.1-78.115*.*

[^279]: The Commission is currently considering expanding eligibilty for
    CARS licenses to include all MVPDs. To the extent issues related to
    the digital transition are raised in that proceeding, they will be
    addressed in a forthcoming Report and Order. *See* *Petition for
    Rulemaking to Amend Eligibility Requirements in Part 78 Regarding 12
    GHz Cable Television Relay Service*, 14 FCC Rcd. 11967 (1999).

[^280]: 47 C.F.R. §§76.92, 76.101.

[^281]: 47 C.F.R. §§76.92(a), 76.151.

[^282]: *SHVIA Non-duplication, Syndicated Exclusivty and Sports
    Blackout Order,* FCC No. 00-388 (rel. Nov. 2, 2000).

[^283]: 47 C.F.R. §§76.92(f), 76.156(a).

[^284]: A significantly viewed station is defined as one that is viewed
    \"in other than cable television households as follows: (1) For a
    full or partial network station\--a share of viewing hours of at
    least 3 percent (total week hours), and a net weekly circulation of
    at least 25 percent; and (2) for an independent station\--a share of
    viewing hours of at least 2 percent (total week hours) and a net
    weekly circulation of at least 5 percent.\" 47 C.F.R. §76.5(i).

[^285]: 47 C.F.R. §76.67. The application of this rule to cause the
    deletion of certain sports events carried beyond the Grade B contour
    of the station broadcasting the event is through reference to
    Section 76.5(g) of the rules. 47 C.F.R. §76.5(g).

[^286]: 17 U.S.C. §111.

[^287]: *DTV Must Carry* *Notice*, 13 FCC Rcd. at 15135.

[^288]: *Id.*

[^289]: *Id.*

[^290]: NAB Comments at 50-51; a*ccord* ABA Comments at 9-11, Hildreth
    Comments at 11-12.

[^291]: ALTV Comments at 83. Pappas opposes changing the exclusivity
    rules for several reasons: (1) retransmission consent is not
    practically available to a large number of stations, including all
    but one of its own stations, because they do not have bargaining
    leverage; (2) relying on retransmission consent unravels Congress\'s
    intent to provide must carry as an alternative choice for carriage
    on a local cable system; (3) current program exclusivity rules give
    stations that are not carried on cable systems the right to enforce
    the rules, and thus prevent an operator from sidestepping a
    station\'s exclusivity rights; and (4) a cable operator could refuse
    to enter into a retransmission consent agreement, and if there were
    no exclusivity rules in place, the station would be without a remedy
    to enforce its exclusive programming arrangements against imported
    distant network signals. Pappas also states that the Commission
    should treat as significantly viewed in any area a digital signal
    whose companion analog station has been declared to be significantly
    viewed in that same area. Pappas Comments at 40-41.

[^292]: NAB Comments at 50.

[^293]: *Id.* at 51.

[^294]: MSTV Comments at 21-22 and n. 59. MSTV states that if a local
    station cannot obtain exclusivity protection from cable operators,
    then the Champaign, IL cable system, for example, could import the
    Chicago television signal that duplicates the Champaign station\'s
    programming for which the Champaign station has negotiated
    exclusivity within the Champaign market. *Id.*

[^295]: *Id.*

[^296]: MSTV Comments at 24-25 and n. 67, 68.

[^297]: *Id.* ABA and Hildreth also assert that repealing the
    Commission\'s exclusivity rules, and instead relying on
    retransmission consent, is based on the faulty premise that most or
    all stations will elect retransmission consent. The repeal of the
    exclusivity rules is an imperfect idea because even stations that
    are not carried on a cable system can demand exclusivity on that
    system under current rules. Repeal of the rules might also lead to
    more carriage of \"distant\" television stations and less of local.
    ABA Comments at 9-11; Hildreth Comments at 11-12.

[^298]: 47 U.S.C. §339(b)

[^299]: *SHVIA Non-duplication, Syndicated Exclusivity, and Sports
    Blackout Order* at para. 36.

[^300]: *Id.* at para. 76.

[^301]: *DTV Must Carry* *Notice*, 13 FCC Rcd. at 15136.

[^302]: *Id.*

[^303]: *Id.*

[^304]: *Id.*

[^305]: 47 U.S.C. §543(b)(7)(A). *See also* 47 U.S.C. §534(b)(7);
    §535(h); § 543(c).

[^306]: *Digital Must Carry Notice* at 15126-27.

[^307]: Adelphia *et. al.* Comments at 32.

[^308]: ALTV Comments at 71; *accord* Golden Orange Comments at 8,
    Morgan Murphy Comments at 15, and UPN Affiliates Comments at 5.

[^309]: In its *First Rate Report and Order*, the Commission, citing
    provisions in the 1992 Cable Act that consistently refer to \"basic
    tier\" in the singular, concluded that the Act contemplates that
    each cable operator must offer only one basic tier. *See*
    *Implementation of Sections of the Cable Television Consumer
    Protection and Competition Act of 1992: Rate Regulation*, Report and
    Order and Further Notice of Proposed Rulemaking, 8 FCC Rcd. 5631,
    5744 (1993) ("*First Rate Report and Order")*. The U.S. Court of
    Appeals for the District of Columbia Circuit found that the
    Commission\'s single basic tier requirement constituted a
    permissible interpretation of the 1992 Cable Act. *See Time Warner
    v. FCC*, 56 F.3d 151, 199 (D.C. Cir. 1995).

[^310]: *See* 47 U.S.C. §543(a)(3).

[^311]: *See* 47 U.S.C. §543(l)(1).

[^312]: *Time Warner*, 56 F.3d at 192 (holding that other provisions of
    Section 623, such as the Act's tier buy-through requirements, apply
    only in the absence of effective competition).

[^313]: 47 U.S.C. §543(b)(7)(B); s*ee also* 47 C.F.R. §76.901 *et seq*.
    The rates of cable programming service tiers (\"CPST\") were subject
    to Commission regulation on a complaint basis, but these regulations
    sunsetted on March 31, 1999. *See* 47 U.S.C. §543(c)(4).

[^314]: *See* 47 C.F.R. §76.922(a). Initial rates recover the costs of
    the cable network and are adjusted for inflation. A \"cost of
    service\" mechanism is also available to cable system operators that
    believe the benchmark process fails to adequately account for system
    costs. *See* 47 C.F.R. §76.922(i).

[^315]: FCC Form 1210, Updating Maximum Permitted Rates for Regulated
    Cable Service (May 1994), FCC Form 1240, Annual Updating for Maximum
    Permitted Rates For Regulated Cable Service (July 1996); s*ee also*
    47 C.F.R. §§76.922(d), (e), 47 C.F.R. §76.933, and FCC Form 1235,
    Abbreviated Cost of Service Filing for Cable Network Upgrades.

[^316]: 47 C.F.R. §§76.922(c)(3), (f).

[^317]: *See* 47 C.F.R. §76.922(f).

[^318]: *See* 47 U.S.C. §543(b)(1).

[^319]: 47 U.S.C. §543(b)(2)(C)(ii).

[^320]: *DTV Must Carry* *Notice*, 13 FCC Rcd. at 15134-35.

[^321]: *Id.* at 15134-35.

[^322]: Armstrong notes that digital towers require a 1:1 ratio for
    channels to antennas, so that five digital signals carried would
    require five more additional antennas. Armstrong states that it has
    no room on some of its towers and will need new \$100,000
    stand-alone towers in certain circumstances. Armstrong Comments at
    40.

[^323]: SCBA Comments at 6. SCBA adds that if each of the five stations
    chose to broadcast three digital signals and the cable system had to
    carry all of them, the cost could increase to \$30,000 at the
    headend. *Id.*

[^324]: ALTV Comments at 82 and n. 191.

[^325]: *Id.*

[^326]: AAPTS Comments at 52.

[^327]: 47 U.S.C. §534(b)(10)(A).

[^328]: *See* 47 C.F.R. §76.922(f).

[^329]: 47 C.F.R. §76.922(j)(1).

[^330]: *See Rate Regulation and Adoption of Uniform Accounting System
    for Provision of Regulated Cable Service*, Second Report and Order,
    First Order on Reconsideration, and Further Notice of Proposed
    Rulemaking, 11 FCC Rcd. 2220, 2295 (1996) (\"Final Cost Order\");
    *see also* *Marcus Cable Associates, L.P.*:*City of Glendale*.
    Memorandum Opinion and Order, 12 FCC Rcd. 23216 (1997) (\"Marcus\")
    (upgrade form allows cable operators to justify rate increases
    related to significant capital expenditures to improve
    rate‑regulated services).

[^331]: *See Rate Regulation and Adoption of Uniform Accounting System
    for Provision of Regulated Cable Service*, Report and Order and
    Further Notice of Proposed Rulemaking, 9 FCC Rcd. 4527, 4675 (1994)
    (\"*Interim Cost Order*\").

[^332]: *Id.* at 4674.

[^333]: *Id.*; *see also Marcus*, 12 FCC Rcd. at 4.

[^334]: The Minimum Technical Specifications are (1) an increase in
    usable bandwidth to at least 550 MHz capacity with upgrade
    capability to 750 MHz, fiber to the node or beyond, and no more than
    1,500 homes per node; or (2) for \"small systems,\" an increase in
    usable bandwidth to at least 550 MHz, fiber to the node or beyond,
    and no more than 3,000 homes per node. *See* FCC Form 1235, p. 5.

[^335]: *Id.*

[^336]: *See* amended rule in Appendix D (cable operators that undertake
    significant network upgrades requiring added capital investment may
    justify an increase in rates for regulated services by demonstrating
    that the capital investment will benefit subscribers, including
    providing television broadcast programming in a digital format).

[^337]: *See* 47 C.F.R. §76.922(j)(2). The process whereby operators can
    file for pre-approval based on projected costs at any time before
    the upgrade services become available is unchanged. The pre-approval
    upgrade incentive add-on may be charged to subscribers as
    subsections of the system are completed and the upgraded service is
    provided to subscribers. Operators using this option must refile the
    Form 1235 when the upgrade is complete, using actual costs where
    applicable. *See* FCC Form 1235, Instructions for Completion of
    Abbreviated Cost of Service Filing for Cable Network Services at 2
    (Feb. 1996).

[^338]: *See* 47 U.S.C. §543(b)(3)(A), 47 C.F.R. §76.923.

[^339]: *See* 47 C.F.R. §76.923(a)(2).

[^340]: 47 U.S.C. §543(a)(7).

[^341]: *Turner Broadcasting System, Inc. v. U.S.*, 117 S. Ct. 1174,
    1189, 520 US 180 (1997) ("*Turner II*").

[^342]: *Turner Broadcasting System, Inc. v. U.S.*, 512 U.S. 622, 662
    (1994) ("*Turner I*"); *Turner II*, 117 S.Ct. at 1186.

[^343]: 391 U.S. 367, 377 (1968).

[^344]: *Id.*

[^345]: We note that the National Association of Telecommunications
    Officers and Advisors ("NATOA") commented that the Commission should
    carefully study channel capacity and retransmission consent issues
    before acting on the issue of dual carriage. NATOA Reply Comments at
    3-4.

[^346]: Section 309(j)(14)of the Communications Act now provides:

    \(A\) Limitations on terms of terrestrial television broadcast
    licenses. - A television broadcast license that authorizes analog
    television service may not be renewed to authorize such service for
    a period that extends beyond December 31, 2006.

    \(B\) Extension. - The Commission shall extend the date described in
    subparagraph (A) for any station that requests such extension in any
    television market if the Commission finds that\--

    \(i\) one or more of the stations in such market that are licensed
    to or affiliated with one of the four largest national television
    networks are not broadcasting a digital television service signal,
    and the Commission finds that each 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 522 of this title) 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.

[^347]: *Ex Parte* meeting between NAB and Commission Staff, October 26,
    1999; s*ee also*, Peter J. Brown, 2006: A DTV
    Odyssey---Broadcasters, Manufacturers Agree Spectrum Giveback in Six
    Years Highly Unlikely, *Digital Television*, December, 1999 at 1, 6.

[^348]: ALTV Comments at 23-34.

[^349]: DTV Application Processing Status---November 15, 2000,
    http://www.fcc.gov/mmb/vsd/dtvstatus.html.

[^350]: 47 U.S.C. §534(b)(5), *see* *also DTV Must Carry* *Notice*, 13
    FCC Rcd. at 15123.

[^351]: *See DTV Fifth Report and Order*, 12 FCC Rcd. at 12832
    (requiring broadcasters to begin phasing in simulcasting in 2003
    (50%) and complete 100% simulcasting in 2006).

[^352]: *See* discussion at ¶ 34, *supra.*

[^353]: *See, supra,* ¶ 57.

[^354]: Compare Section 614(b)(3)(A) and 615(g)(1).

[^355]: 47 U.S.C. § 535(g)(1).

[^356]: *See e.g., Letter from the Association of America's Public
    Television Stations*, January 18, 2001.

[^357]: *DTV Must Carry* *Notice*, 13 FCC Rcd. at 15121.

[^358]: *Id.*

[^359]: *Id.*

[^360]: *Id.* at 15115.

[^361]: *Id.*

[^362]: *Id.*

[^363]: *Id.*

[^364]: NAB Comments at 27.

[^365]: *Id.* at 53.

[^366]: *See* Time Warner Comments at Exhibit E (listing a select few
    cable system clusters to exemplify the burden a dual carriage
    requirement would impose).

[^367]: *See* http://www.ncta.com/glance.html (*citing* Paul Kagan
    Associates, Inc., Cable TV Technology, May 28, 1999, p.3).

[^368]: Digital programming packages sent via satellite come in clusters
    of services known as "pods." A pod may consist of 3-8 thematically
    similar programming services, such as sports or movies. Until
    recently, cable operators had to receive the entire pod and could
    not parse out individual services.

[^369]: Imedia is one such company that provides cable operators with
    the technology to filter digital program packages.

[^370]: This statistic was taken from *ex parte* comments made by Cox
    Communications on November 15, 1999.

[^371]: *Id.*

[^372]: *Id.*

[^373]: *Id.*

[^374]: *Id.* at 3.

[^375]: *DTV Must Carry* *Notice*, 13 FCC Rcd. at 15110.

[^376]: *Id.*

[^377]: *Id.*

[^378]: *Id.* at 15111.

[^379]: *Id.*

[^380]: *See* AT&T-NBC's Digital Dance, *Broadcasting & Cable*, June 14,
    1999, at 9; AT&T Broadband & Internet Services and Fox Entertainment
    Group Enter Into Long-Term Retransmission and Digital Agreement for
    Fox Owned-and-Operated Stations, AT&T News Release, September 2,
    1999.

[^381]: *See*, *e.g*., *Time Warner Cable and Belo Announce Texas News
    Partnerships*, Press Release, September 25, 2000; *Hearst-Argyle
    Television and Time Warner Cable Reach Agreement on Carriage of
    Local Television Stations*, Press Release, August 14, 2000.

[^382]: *See* *Public Television and Time Warner Cable Agree on Digital
    Carriage*, Press Release, September 19, 2000.

[^383]: *Ex Parte* letter submitted by MSTV, November 9, 1999.

[^384]: *See Review of the Commission's Regulations Governing Television
    Broadcasting*, 14 FCC Rcd. 12903 (1999).

[^385]: 47 U.S.C. § 543(b)(7)(A).

[^386]: *See* 47 C.F.R. §76.922(g).

[^387]: *See Implementation of Sections of the Cable Television Consumer
    Protection and Competition Act of 1992: Rate Regulation*, Second
    Order on Reconsideration, Fourth Report and Order and Fifth Notice
    of Proposed Rulemaking, 9 FCC Rcd. 4119, 4237 (1994) ("*Second Rate
    Reconsideration Order*").

[^388]: *See* 47 C.F.R. 76.922(g); *see also* *Second Rate
    Reconsideration Order*, 9 FCC Rcd. at Table A-3.

[^389]: *Second Rate Reconsideration Order*, 9 FCC Rcd. at 4239-45.

[^390]: The Commission established a per channel adjustment factor of up
    to 20 cents per channel exclusive of programming costs for channels
    added to CPSTs , subject to a cap of \$1.20 on rate increases
    through December 31, 1996 and \$1.40 through December 31, 1997. An
    additional capped amount was allowed for license fees associated
    with the channels. Operators were required to offset any revenues
    received from a channel from the programming costs and per-channel
    adjustment associated with the channel. *Implementation of Sections
    of the Cable Television Consumer Protection and Competition Act of
    1992: Rate Regulation*, Sixth Order on Reconsideration, Fifth Report
    and Order, and Seventh Notice of Proposed Rulemaking, 10 FCC Rcd.
    1226, 1248-57 (1994) ("*Sixth Reconsideration Order* "). The
    Commission limited the per channel adjustment incentive to the CPST
    to maximize subscriber choice where cable operators could choose
    between the BST and the CPST when selecting a tier for a new
    nonbroadcast service and also to avoid increasing the complexity of
    the regulatory task faced by local regulatory authorities.

[^391]: *See Sixth Reconsideration Order*, 10 FCC Rcd. at 1256-57.

[^392]: Pub. Law 106-113, 113 Stat. 1501, 1501A-526 to 1501A-545 (Nov.
    29, 1999). The Commission adopted the *Notice* *of Proposed
    Rulemaking* to implement Section 338 on May 31, 2000. *See
    Implementation of the Satellite Home Viewer Improvement Act of
    1999---Broadcast Signal Carriage Issues*, Notice of Proposed
    Rulemaking, 15 FCC Rcd 12147 (2000).

[^393]: *Implementation of the Satellite Home Viewer Improvement Act of
    1999: Broadcast Signal Carriage Issues*, Report and Order, FCC
    00-417 (adopted November 29, 2000).

[^394]: *Id.* at paras. 125-129.

[^395]: 47 U.S.C. §338(g).

[^396]: *See* *SHVIA Non-duplication, Syndicated Exclusivity, and Sports
    Blackout Order* FCC No. 00-388 at para. 36.

[^397]: Joint Explanatory Statement of the Committee of Conference on
    H.R. 1554, 106^th^ Cong. , 145 Cong. Rec. H11793, H11796 (daily ed.
    Nov. 9, 1999). *See also*, 47 U.S.C. 339(b)(1)(B).

[^398]: *See* *SHVIA Non-duplication, Syndicated Exclusivity, and Sports
    Blackout Order* at para. 75.

[^399]: 47 C.F.R. §1.1206(b) (as revised).

[^400]: *See* 47 C.F.R. §1.1206(b)(2) (as revised).

[^401]: *See* *In re* *Electronic Filing of Documents in Rulemaking
    Proceedings*, 13 FCC Rcd. 11322 (1998) (amending Parts 0 and 1 of
    the Commission's rules to allow electronic filing of comments and
    other pleadings).

[^402]: *See* 5 U.S.C. §604. The RFA has been amended by the *Contract
    With America Advancement Act of 1996*, Pub. L. No. 104-121, 110
    Stat. 847 (1996) ("CWAAA"). *See* 5 U.S.C. §601 et. seq. Title II of
    the CWAAA is the *Small Business Regulatory Enforcement Fairness Act
    of 1996* ("SBREFA").

[^403]: *See id.*

[^404]: SCBA Comments at 24. SCBA is now known as American Cable
    Association (\"ACA\").

[^405]: *Id.*; a*ccord* Pellegrin Comments at 6.

[^406]: 5 U.S.C. §604(b).

[^407]: 5 U.S.C. §601(3) and (6).

[^408]: 15 U.S.C. §632.

[^409]: 13 C.F.R. §121.201 (SIC 4841).

[^410]: U.S. Department of Commerce, Bureau of the Census, Industry and
    Enterprise Receipts Size report, Table 2D, SIC 4841 (Bureau of the
    Census data under contract to the Office of Advocacy of the SBA).

[^411]: 47 C.F.R. §76.901(e). The Commission developed this definition
    based on its determinations that a small cable system operator is
    one with annual revenues of \$100 million or less. *Sixth Report and
    Order and Eleventh Order on Reconsideration*, MM Dkt Nos. 92-266 and
    93-215, 10 FCC Rcd. 7393 (1995).

[^412]: Paul Kagan Associates, Inc., Cable TV Investor, Feb. 29, 1996
    (based on figures for Dec. 30, 1995).

[^413]: 47 U.S.C. §543(m)(2).

[^414]: 47 C.F.R. §76.1403(b).

[^415]: Paul Kagan Associates, Inc., Cable TV Investor, Feb. 29, 1996
    (based on figures for Dec. 30, 1995).

[^416]: \"Establishments primarily engaged in the production of
    theatrical and nontheatrical motion pictures and video tapes for
    exhibition or sale, including educational, industrial, and religious
    films. Included in the industry are establishments engaged in both
    production and distribution. Producers of live radio and television
    programs are classified in Industry 7922. Standard Industrial
    Classification Manual, SIC 7812, Executive Office of the President,
    Office of Management and Budget (1987) ("OMB SIC Manual").

[^417]: \"Establishments primarily engaged in the distribution (rental
    or sale) of theatrical and nontheatrical motion picture films or in
    the distribution of video tapes and disks, except to the general
    public.\" OMB SIC Manual, SIC 7822.

[^418]: \"Establishments primarily engaged in providing live theatrical
    presentations, such as road companies and summer theaters. . . .
    Also included in this industry are producers of . . . live
    television programs.\" OMB SIC Manual, SIC 7922.

[^419]: 13 C.F.R. §121.201.

[^420]: U.S. Small Business Administration 1992 Economic Census Industry
    and Enterprise Report, Table 2D, SIC 7812, (U.S. Bureau of the
    Census data adapted by the Office of Advocacy of the U.S. Small
    Business Administration) (\"SBA 1992 Census Report\"). Because the
    Census data do not include a category for \$21.5 million, we have
    reported the closest increment below and above the \$21.5 million
    threshold. There is a difference of 15 firms between the \$16,999
    and \$24,999 million annual receipt categories. It is possible that
    these 15 firms could have annual receipts of \$21.5 million or less
    and would therefore be classified as small businesses.

[^421]: SBA 1992 Census Report, SIC 7922.

[^422]: 13 C.F.R. § 121.201, Standard Industrial Code (SIC) 4833 (1996).

[^423]: Economics and Statistics Administration, Bureau of Census, U.S.
    Department of Commerce, 1992 Census of Transportation,
    Communications and Utilities, Establishment and Firm Size, Series
    UC92-S-1, Appendix A-9 (1995).

[^424]: *Id*. *See* Executive Office of the President, Office of
    Management and Budget, Standard Industrial Classification Manual
    (1987), at 283, which describes \"Television Broadcasting Stations
    (SIC Code 4833)\" as:

    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 here are
    establishments primarily engaged in television broadcasting and
    which produce taped television program materials.

[^425]: Economics and Statistics Administration, Bureau of Census, U.S.
    Department of Commerce, 1992 Census of Transportation,
    Communications and Utilities, Establishment and Firm Size, Series
    UC92-S-1, Appendix A-9 (1995).

[^426]: *Id*.; SIC 7812 (Motion Picture and Video Tape Production); SIC
    7922 (Theatrical Producers and Miscellaneous Theatrical Services
    (producers of live radio and television programs).

[^427]: FCC News Release No. 31327, Jan. 13, 1993; Economics and
    Statistics Administration, Bureau of Census, U.S. Department of
    Commerce, Appendix A-9.

[^428]: FCC News Release, Broadcast Station Totals as of September 30,
    1999 (released November 22, 1999).

[^429]: The amount of \$10 million was used to estimate the number of
    small business establishments because the relevant Census categories
    stopped at \$9,999,999 and began at \$10,000,000. No category for
    \$10.5 million existed. Thus, the number is as accurate as it is
    possible to calculate with the available information.

[^430]: ^?^We use the 77 percent figure of TV stations operating at less
    than \$10 million for 1992 and apply it to the 1999 total of 1,616
    TV stations to arrive at the total number of stations categorized as
    small businesses.

[^431]: U.S. Dept. of Commerce, 1992 Census of Transportation,
    Communications and Utilities, Table 1D, (issued May 1995), SIC
    category 3663.

[^432]: This category excludes establishments primarily engaged in the
    manufacturing of household audio and visual equipment which is
    categorized as SIC 3651.

[^433]: 13 C.F.R. §121.201, SIC Code 3663.

[^434]: 13 C.F.R. §121.201, SIC Code 3651.

[^435]: U.S. Small Business Administration 1995 Economic Census Industry
    and Enterprise Report, Table 3, SIC Code 3651, (Bureau of the Census
    data adapted by the Office of Advocacy of the U.S. Small Business
    Administration).

[^436]: 13 C.F.R. §121.201, SIC Code 3571.

[^437]: U.S. Small Business Administration 1995 Economic Census Industry
    and Enterprise Report, Table 3, SIC Code 3571, (Bureau of the Census
    data adapted by the Office of Advocacy of the U.S. Small Business
    Administration).

[^438]: SCBA Comments at 24. SCBA is now known as American Cable
    Association (\"ACA\").

[^439]: *Id.*; a*ccord* Pellegrin Comments at 6.

[^440]: *See* 5 U.S.C. §801(a)(1)(A).

[^441]: *See* 5 U.S.C. §604(b).

[^442]: *See* 5 U.S.C. §603. The RFA has been amended by the *Contract
    With America Advancement Act of 1996*, Pub. L. No. 104-121, 110
    Stat. 847 (1996) (CWAAA). *See* 5 U.S.C. §601 et. seq. Title II of
    the CWAAA is the *Small Business Regulatory Enforcement Fairness Act
    of 1996* ("SBREFA").

[^443]: *See* 5 U.S.C. §603(a).

[^444]: *See id.*

[^445]: 5 U.S.C. §603(b)(3).

[^446]: 5 U.S.C. §601(3) and (6).

[^447]: 15 U.S.C. §632.

[^448]: 13 C.F.R. §121.201 (SIC 4841).

[^449]: U.S. Department of Commerce, Bureau of the Census, Industry and
    Enterprise Receipts Size report, Table 2D, SIC 4841 (Bureau of the
    Census data under contract to the Office of Advocacy of the SBA).

[^450]: 47 C.F.R. §76.901(e). The Commission developed this definition
    based on its determinations that a small cable system operator is
    one with annual revenues of \$100 million or less. *Sixth Report and
    Order and Eleventh Order on Reconsideration*, MM Dkt Nos. 92-266 and
    93-215, 10 FCC Rcd 7393 (1995).

[^451]: Paul Kagan Associates, Inc., Cable TV Investor, Feb. 29, 1996
    (based on figures for Dec. 30, 1995).

[^452]: 47 U.S.C. §543(m)(2).

[^453]: 47 C.F.R. §76.1403(b).

[^454]: Paul Kagan Associates, Inc., Cable TV Investor, Feb. 29, 1996
    (based on figures for Dec. 30, 1995).

[^455]: \"Establishments primarily engaged in the production of
    theatrical and nontheatrical motion pictures and video tapes for
    exhibition or sale, including educational, industrial, and religious
    films. Included in the industry are establishments engaged in both
    production and distribution. Producers of live radio and television
    programs are classified in Industry 7922.\" Standard Industrial
    Classification Manual, SIC 7812, Executive Office of the President,
    Office of Management and Budget (1987) (OMB SIC Manual).

[^456]: \"Establishments primarily engaged in the distribution (rental
    or sale) of theatrical and nontheatrical motion picture films or in
    the distribution of video tapes and disks, except to the general
    public.\" OMB SIC Manual, SIC 7822.

[^457]: \"Establishments primarily engaged in providing live theatrical
    presentations, such as road companies and summer theaters. . . .
    Also included in this industry are producers of . . . live
    television programs.\" OMB SIC Manual, SIC 7922.

[^458]: 13 C.F.R. §121.201.

[^459]: U.S. Small Business Administration 1992 Economic Census Industry
    and Enterprise Report, Table 2D, SIC 7812, (U.S. Bureau of the
    Census data adapted by the Office of Advocacy of the U.S. Small
    Business Administration) (\"SBA 1992 Census Report\"). Because the
    Census data do not include a category for \$21.5 million, we have
    reported the closest increment below and above the \$21.5 million
    threshold. There is a difference of 15 firms between the \$16,999
    and \$24,999 million annual receipt categories. It is possible that
    these 15 firms could have annual receipts of \$21.5 million or less
    and would therefore be classified as small businesses.

[^460]: SBA 1992 Census Report, SIC 7922.

[^461]: Annual Assessment of the Status of Competition in Markets for
    the Delivery of Video Programming, Third Annual Report, CS Docket
    No. 96-133, 12 FCC Rcd 4358, 4385 (1996)("*Third Annual Report").*

[^462]: *Third Annual Report,* 12 FCC Rcd at 4385.

[^463]: *Id.*

[^464]: *Id.*

[^465]: ^?^13 C.F.R. § 121.201, Standard Industrial Code (SIC) 4833
    (1996).

[^466]: ^?^Economics and Statistics Administration, Bureau of Census,
    U.S. Department of Commerce, 1992 Census of Transportation,
    Communications and Utilities, Establishment and Firm Size, Series
    UC92-S-1, Appendix A-9 (1995).

[^467]: *Id*. *See* Executive Office of the President, Office of
    Management and Budget, Standard Industrial Classification Manual
    (1987), at 283, which describes \"Television Broadcasting Stations
    (SIC Code 4833)\" as:

    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 here are
    establishments primarily engaged in television broadcasting and
    which produce taped television program materials.

[^468]: Economics and Statistics Administration, Bureau of Census, U.S.
    Department of Commerce, 1992 Census of Transportation,
    Communications and Utilities, Establishment and Firm Size, Series
    UC92-S-1, Appendix A-9 (1995).

[^469]: *Id*.; SIC 7812 (Motion Picture and Video Tape Production); SIC
    7922 (Theatrical Producers and Miscellaneous Theatrical Services
    (producers of live radio and television programs).

[^470]: FCC News Release No. 31327, Jan. 13, 1993; Economics and
    Statistics Administration, Bureau of Census, U.S. Department of
    Commerce, Appendix A-9.

[^471]: FCC News Release, Broadcast Station Totals as of September 30,
    1999 (released November 22, 1999).

[^472]: The amount of \$10 million was used to estimate the number of
    small business establishments because the relevant Census categories
    stopped at \$9,999,999 and began at \$10,000,000. No category for
    \$10.5 million existed. Thus, the number is as accurate as it is
    possible to calculate with the available information.

[^473]: ^?^We use the 77 percent figure of TV stations operating at less
    than \$10 million for 1992 and apply it to the 1999 total of 1,616
    TV stations to arrive at the total number of stations categorized as
    small businesses.

[^474]: U.S. Dept. of Commerce, 1992 Census of Transportation,
    Communications and Utilities, Table 1D, (issued May 1995), SIC
    category 3663.

[^475]: This category excludes establishments primarily engaged in the
    manufacturing of household audio and visual equipment which is
    categorized as SIC 3651.

[^476]: 13 C.F.R. §121.201, SIC Code 3663.

[^477]: 13 C.F.R. §121.201, SIC Code 3651.

[^478]: U.S. Small Business Administration 1995 Economic Census Industry
    and Enterprise Report, Table 3, SIC Code 3651, (Bureau of the Census
    data adapted by the Office of Advocacy of the U.S. Small Business
    Administration).

[^479]: *See* 5 U.S.C. §801(a)(1)(A).

[^480]: *See* 5 U.S.C. §604(b).

[^481]: Para. 3.

[^482]: Para. 114, *citing U.S. v. O'Brien*, 391 U.S. 367, 377 (1968).

[^483]: Para. 113, *citing Turner Broadcasting System, Inc. v. U.S.*,
    512 U.S. 622, 662 (1997) (*Turner II*). It is important to note that
    the deference the Supreme Court afforded Congress in *Turner II*
    might not extend to this Agency. Therefore, we cannot be assured
    that, even if we assemble a voluminous record, the *Turner II*
    decision would sustain a dual carriage decision, especially given
    the relatively scant legislative history concerning digital
    broadcasting.

[^484]: Para. 113.

[^485]: Para. 112, n. 4.

[^486]: *Letter from the Association of America's Public Television
    Stations*, January 18, 2001.

[^487]: See Para. 112 (*citing* sections 614(b)(3)(A) and 615(g)(1) of
    the Act).

[^488]: ^1^ 47 U.S.C. §336(d)("Nothing in this section shall be
    construed as relieving a television broadcast station from its
    obligation to serve the public interest, convenience, and
    necessity.")

[^489]: ^2^ 47 U.S.C. §521(2) and (4)

[^490]: ^3^ Order at pgs. 24-28 (construing 47 U.S.C.
    §614(b)(3)(requiring cable operators to carry the "primary video"
    signal of a broadcast station.)

[^491]: ^4^ Order at pg. 28