# Before the

# Federal Communications Commission

# Washington, D.C. 20554

In the Matter of: )

)

Implementation of the Satellite Home ) CS Docket No. 00-96

Viewer Improvement Act of 1999 )

)

Broadcast Signal Carriage Issues )

# NOTICE OF PROPOSED RULE MAKING

**Adopted: May 31, 2000 Released: June 9, 2000**

**Comment Date: July 7, 2000**

**Reply Comment Date: July 28, 2000**

By the Commission:

**TABLE OF CONTENTS**

**[Paragraph]{.underline}**

I. INTRODUCTION 1

II. BACKGROUND 4

III. SATELLITE BROADCAST SIGNAL CARRIAGE 10

A. Carriage Obligations and Definitions 10

B. Market Definitions 13

C. Broadcast Station Delivery of a Good Quality Signal 17

D. Duplicating Signals 23

E. Channel Positioning 29

F. Content to be Carried 31

G. Material Degradation 35

H. Digital Television 44

I. Compensation for Carriage 49

J. Remedies 50

IV\. PROCEDURAL MATTERS 54

Appendix A: Initial Regulatory Flexibility Act Analysis

Appendix B: Section 338 of the Communications Act of 1934, as amended

###### INTRODUCTION

1.  Section 338(a)(1) of the Communications Act, adopted as part of the
    Satellite Home Viewer Improvement Act of 1999 ("SHVIA") [^1],
    provides that after December 31, 2001:

> each satellite carrier providing \[television broadcast signals under
> the compulsory copyright licensing system\] to subscribers located
> within the local market of a television broadcast station of a primary
> transmission made by that station shall carry upon request the signals
> of all television broadcast stations located within that local market,
> subject to section 325(b) \[retransmission consent requirement\].[^2]

2.  In this Notice of Proposed Rulemaking ("Notice"), we seek comment on
    the appropriate rules to implement this requirement. The SHVIA
    authorizes satellite carriers to offer more local and national
    broadcast programming to their viewers and makes that programming
    available to subscribers who previously have been prohibited from
    receiving broadcast programming via satellite under the compulsory
    licensing provisions of the copyright law.[^3] The SHVIA generally
    seeks to place satellite carriers on an equal footing with cable
    operators regarding the provision of local broadcast programming,
    and thus give consumers more competitive options in selecting a
    multichannel video program distributor ("MVPD"). It is the clear
    intent of both Congress and the Commission to provide satellite
    subscribers with local television service in as many markets as
    possible.

3.  Among other things, this new legislation requires satellite
    carriers, by January 1, 2002, to carry upon request all local
    broadcast stations' signals in local markets in which the satellite
    carriers carry at least one broadcast station signal licensed to the
    subject television market pursuant to Section 122 of title 17,
    United States Code.[^4] The SHVIA conference report added the
    cross-reference to Section 122 to the House provision to indicate
    the relationship between the benefits of the statutory license and
    the carriage requirements imposed by this Act.[^5] Until January 1,
    2002, satellite carriers are granted a royalty-free copyright
    license to retransmit 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 signals into local markets \--
    "local-into-local" satellite service. The applicable statutory
    provisions, noted in greater detail below, are found in Section 1008
    of the SHVIA and codified at Section 338 of the Communications Act
    of 1934, as amended (the "Communications Act" or "Act"). Appendix B
    contains the specific language of Section 338 that is the subject of
    this proceeding.

##### II. BACKGROUND

4.  In 1988, Congress passed the Satellite Home Viewer Act ("1988 SHVA")
    in order to provide households in unserved areas of the country with
    access to broadcast programming via satellite.[^6] The 1988 SHVA
    also reflected Congress' intent to maintain the role of local
    broadcasters in providing free, over-the-air television. As an
    amendment to the Copyright Act,[^7] the 1988 SHVA accommodated the
    broadcasters' interests by only allowing satellite carriers to
    provide broadcast programming to those satellite subscribers who
    were unable to obtain broadcast network programming over-the-air.
    Since 1988, subscribership to direct-to-home satellite service has
    increased markedly.[^8]

5.  In the SHVIA, Congress amended the law so as to permit satellite
    carriers to provide the signals of local broadcast stations to
    subscribers residing in the broadcaster's market. After December 31,
    2001, satellite carriers that provide local-into-local
    retransmission of broadcast stations pursuant to the statutory
    copyright license[^9] must "carry upon request the signals of all
    television broadcast stations within that local market . . ."[^10]
    The SHVIA requires the Commission to issue rules implementing this
    carriage requirement within one year of the SHVIA's enactment on
    November 29, 1999.[^11] Congress has indicated that these
    requirements should be comparable to those for cable systems,
    specifically noting paragraphs (3) and (4) of Section 614(b) and
    paragraphs (1) and (2) of Section 615(g), presently found in the
    mandatory broadcast signal carriage provisions in Title VI of the
    Act.[^12]

6.  In *Implementation of the Cable Television Consumer Protection and
    Competition Act of 1992, Broadcast Signal Carriage Issues*
    ("*Broadcast Signal Carriage Order*"),[^13] the Commission
    implemented the broadcast signal carriage provisions of the Cable
    Television Consumer Protection and Competition Act of 1992 ("1992
    Cable Act").[^14] This statute amended the Communications Act to
    provide television stations with certain carriage rights on local
    market cable television systems. Sections 614 and 615 of the Act
    contain the cable television "must carry" requirements for
    commercial and noncommercial television stations, respectively.[^15]
    Section 325 contains retransmission consent requirements pursuant to
    which cable operators may be obligated to obtain the consent of
    commercial broadcasters before retransmitting their signals. Within
    local market areas,[^16] commercial television stations may elect
    cable carriage under either the retransmission consent or mandatory
    carriage requirements. Noncommercial television stations may only
    opt for must carry under the Act, but may nevertheless agree to be
    carried on a voluntary basis.

7.  There are important distinctions between cable operators and
    satellite carriers that are implicated in attempting to harmonize
    Section 338 with Sections 614 and 615. The first significant
    difference is that satellite carriers have uplink facilities that
    are used to receive, package, and retransmit video programming.[^17]
    In contrast, cable operators receive, process, and distribute video
    programming from a local facility called a headend. This distinction
    is important because many cable carriage rules, such as the carriage
    requirement for local noncommercial television stations,[^18] rely
    upon the location of the cable operator's principal headend, a
    facility not used by satellite carriers. Second, satellite carriers
    have no legal obligation to have a basic service tier.[^19] Thus,
    they are under no obligation to place broadcast signals on such a
    tier of service as cable operators are required to do under the
    Act.[^20] Rather, Section 338(d) requires satellite carriers to
    position local broadcast station signals on contiguous channels.
    Third, a satellite carrier has a general obligation to carry all
    television stations in a market, if it carries one station in that
    market through reliance on the statutory license, without reference
    to a channel capacity cap. In contrast, a cable system with more
    than 12 usable activated channels is required to devote no more than
    one‑third of the aggregate number of usable activated channels to
    local commercial television stations that may elect mandatory
    carriage rights.[^21] A cable system is also obligated to carry a
    certain number of qualified noncommercial educational television
    stations above the one-third cap.[^22] Fourth, satellite carriers
    provide a national service and need not have a franchise from local
    or state authorities to serve subscribers with any type of
    television signal nor do they have local access channel
    requirements.[^23] Cable operators, on the other hand, serve local
    franchise areas under franchise agreements with either local,
    county, or state authorities.[^24] Local franchise authorities often
    impose technical and system build-out requirements, as well as
    public, educational, and government access channel requirements, on
    cable operators.[^25] Finally, we note that 82% of all multichannel
    video programming distributor subscribers receive their video
    programming from a local franchised cable operator, while the
    satellite industry represents less than 15% of all MVPD
    subscribers.[^26] We will take into account these differences
    between the two industries in order to sensibly implement the
    requirements of Section 338.

8.  Direct broadcast satellite (\"DBS\") operators use satellites to
    transmit video programming to subscribers, who must buy or rent a
    small parabolic \"dish\" antenna and pay a subscription fee to
    receive the programming service.[^27] To obtain local television
    signals for local distribution, DBS companies may receive the
    signals over-the-air or have voluntary arrangements with local
    stations to deliver their signals via fiber-optic cables to a local
    telecommunications carrier's facilities. At a certain point
    designated by the satellite carrier, all of the broadcast signals
    are digitally encoded and multiplexed together. The packet of
    digitized television signals are then sent, using a high capacity
    (DS3) line, to the satellite carriers' programming facility, or
    group of facilities, where they are uplinked to the appropriate
    satellite[^28] and then retransmitted back to subscribers' dishes in
    the relevant stations' market of origin.

9.  The home satellite dish industry, also known as HSD or C-Band, is
    another type of satellite carrier subject to the SHVIA and its
    related provisions. C-Band subscribers use a much larger dish, some
    seven to ten feet in diameter, to receive video programming than
    that equipment used for reception by DBS subscribers. C-Band
    subscribers are often located in rural areas that are unserved by
    cable operators.[^29]

**III. SATELLITE BROADCAST SIGNAL CARRIAGE**

######## A. Carriage Obligations and Definitions

10. The SHVIA has accorded satellite carriers the right to retransmit
    local television stations without first obtaining retransmission
    consent, and without a mandatory carriage obligation, for a six
    month period from November 29, 1999 to May 28, 2000. Beginning on
    May 29, 2000 and continuing until December 31, 2001, carriage of
    broadcast television stations by satellite carriers is on a
    station-by-station basis pursuant to retransmission consent
    agreements between the station and the satellite carrier.[^30]

On January 1, 2002, pursuant to Section 338(a)(1) of the Act:

> subject to the limitations of paragraph (2)\[remedies for failure to
> carry\], each satellite carrier providing, under section 122 of title
> 17, United States Code, secondary transmissions to subscribers located
> within the local market of a television broadcast station of a primary
> transmission made by that station shall carry upon request the signals
> of all television broadcast stations located within that local market,
> subject to section 325(b).[^31]

This provision gives satellite carriers a choice. If satellite carriers
provide their subscribers with the signals of local television stations
through reliance on the statutory copyright license, they will have the
obligation to carry all of the television signals in that particular
market that request carriage. If satellite carriers provide local
television signals pursuant to private copyright arrangements, the
Section 338 carriage obligations do not apply.[^32]

11. In order to effectuate Section 338, it is necessary to determine
    what constitutes a request for carriage, adopt procedural guidelines
    regarding the manner in which a broadcaster communicates its request
    for carriage, and set out guidelines for the satellite carrier to
    commence carriage. In this context, we seek comment on the meaning
    of the phrase "carry upon request." In the cable context, the
    Commission initially required the cable operator to contact all
    local broadcast television stations, in writing, on matters relating
    to their carriage rights.[^33] We ask whether we should establish a
    similar requirement, so that satellite carriers must notify all
    local broadcast television stations, in writing, of their carriage
    rights once any local station in a particular market is being
    carried. We note that broadcast television stations requesting
    carriage must do so in writing[^34]\-- cable carriage of local
    broadcast television stations requesting mandatory carriage then
    commences on a specified date when the request is part of the
    periodic election process.[^35] We ask whether we should adopt
    similar procedural rules in the satellite carriage context. We also
    ask whether we should adopt separate procedural rules for the
    carriage of noncommercial educational television stations to mirror
    the cable carriage requirements.[^36] In addition, we ask whether
    the Commission should establish separate procedures to cover new
    broadcast stations that may commence operation in a market or for
    new satellite carriers similar to those established for cable
    carriage.[^37] Finally, we seek comment on how the Section 338
    mandate will work with the revised Section 325 provisions regarding
    satellite carriers and retransmission consent.[^38]

12. Section 338 contains several definitions that provide the framework
    for the satellite broadcast signal carriage paradigm. While these
    definitions are generally self effectuating, such as the meaning of
    "satellite carrier,"[^39] "secondary transmission,"[^40] and
    "subscriber,"[^41] two provisions require further explication to
    understand the scope of the satellite carriage obligation. These two
    provisions are as follows:

**Television Broadcast Station.** Section 338(h)(7) defines the term,
television broadcast station, as having the meaning given such term in
Section 325(b)(7).[^42] Section 325(b)(7) defines television broadcast
station, as an over-the-air commercial or noncommercial television
broadcast station licensed by the Commission under subpart E of part 73
of title 47, Code of Federal Regulations, except that such term does not
include a low-power or translator station.[^43] We seek comment on the
scope of the definition. We first note that, unlike cable
operators,[^44] satellite carriers have no obligation to carry low power
television stations in any instance. We also note that, unlike cable
operators, satellite carriers are not required to carry noncommercial
educational translator stations with five watts or higher power.[^45] We
seek comment on these apparent differences and what impact they have on
a satellite carrier's carriage responsibilities under Section 338. A
question also remains about whether satellite carriers must carry
"satellite television stations" as cable operators are required to
do.[^46] We believe that since such television stations are not
specifically excluded by Section 338(h)(7), satellite carriers have an
obligation to carry these entities if they carry other local market
television stations. We seek comment on this interpretation. Finally, we
ask if there are any other significant differences between the satellite
carriage and cable carriage definitional requirements that affect this
proceeding.

**Distributor.** Section 338(h)(1) of the Communications Act defines the
term, distributor, as an "entity which contracts to distribute secondary
transmissions from a satellite carrier and, either as a single channel
or in a package with other programming, provides the secondary
transmission either directly to individual subscribers or indirectly
through other program distribution entities.\"[^47] We note that the
term distributor is not found in any other provision of Section 338,
other than the definitional subsection. Given this omission, which may
or may not have been purposeful, we seek comment on the definition of
distributor and its relevance in this context.

######## B. Market Definitions

13. Section 338(h)(3) defines the term, local market, as having the
    meaning it has under Section 122(j) of title 17, United States
    Code.[^48] Section 122(j)(2)(A) defines the term, local market, in
    the case of both commercial and noncommercial television broadcast
    stations, to mean the designated market area in which a station is
    located, and (i) in the case of a commercial television broadcast
    station, all commercial television broadcast stations licensed to a
    community within the same designated market area within the same
    local market; and (ii) in the case of a noncommercial educational
    television broadcast station, the market includes any station that
    is licensed to a community within the same designated market area as
    the noncommercial educational television broadcast station."[^49] In
    addition to the area described in subparagraph (A), a station's
    local market includes the county in which the station's community of
    license is located.[^50] Section 122(j)(2)(C) defines the term,
    designated market area to mean the market area, as determined by
    Nielsen Media Research and published in the 1999-2000 Nielsen
    Station Index Directory and Nielsen Station Index United States
    Television Household Estimates or any successor publication."[^51]

14. At the outset, we inquire as to why subsections (i) and (ii) were
    added to the overall section. It appears that they clarify that the
    local market includes a geographic area and all broadcast stations
    licensed or located within that designated area. We seek comment on
    this view of subsections (i) and (ii). We also seek comment on when
    to change the reference to the 1999-2000 Nielsen publications to
    reflect changes in market structure and market conditions. We note,
    in the cable context, that the rules account for a market update
    every three years.[^52] We ask whether the rules we implement under
    this section should be updated on a triennial basis, at another
    interval (*e.g*., every year, every five years, etc.) or not at all.
    We also note that the cable industry is required to use the 1997-98
    Nielsen publications to determine local markets for broadcast signal
    carriage purposes up until January 1, 2003,[^53] yet satellite
    carriers are obliged to use the 1999-2000 Nielsen publications for
    carriage purposes. We ask whether satellite carriers and cable
    operators should be required to use the same annual Nielsen market
    publications so that both may rely on the same market definition,
    and thus have virtually the same carriage obligations.

15. It is important to note that a regulatory mechanism exists to expand
    or contract the size of a local television market for cable
    broadcast signal carriage purposes. Pursuant to Section
    614(h)(1)(C), at the request of either a broadcaster or a cable
    operator, the Commission may, with respect to a particular
    commercial 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 mandatory carriage provisions.[^54] In considering
    market modification requests, the Act provides that the Commission
    shall afford particular attention \"to the value of localism\" by
    taking into account such factors as (1) whether the station, or
    other stations located in the same area, have been historically
    carried on the cable system or systems within such community; (2)
    whether the television station provides coverage or other local
    service to such community; (3) whether any other television station
    that is eligible to be carried by a cable system in such community
    in fulfillment of the requirements of this section provides news
    coverage of issues of concern to such community or provides carriage
    or coverage of sporting and other events of interest to the
    community; and (4) evidence of viewing patterns in cable and
    non-cable households within the areas served by the cable system or
    systems in such community.[^55] The Commission\'s inclusion of
    additional communities within a station\'s market imposes new
    carriage requirements on cable operators subject to the modification
    request while the grant to exclude communities from a station\'s
    market relieves a cable operator from its obligation to carry a
    certain station\'s television signal.[^56]

16. No such statutory mechanism exists for satellite broadcast signal
    carriage purposes in Section 338. As a result, different carriage
    patterns may emerge between cable operators and satellite carriers
    in certain markets because a cable operator may be carrying stations
    that have expanded their market area while not carrying others
    because those stations were deleted from the relevant market area.
    We seek comment on whether the Commission has the authority to
    implement a market modification mechanism similar to Section 614(h)
    in order to provide satellite carriers and broadcast stations the
    ability to modify markets for satellite carriage purposes. If so,
    should we use the same procedural and evidentiary standards used for
    cable market modifications?[^57] Alternatively, should the
    Commission's previously granted market modifications be applicable
    to satellite carriers in the affected market areas? We seek comment
    on whether Commission action in this area may further the
    Congressional goal of harmonizing the carriage obligations between
    cable operators and satellite carriers.

######## C. Broadcast Station Delivery of a Good Quality Signal 

17. Section 338(b)(1) states that, "A television broadcast station
    asserting its right to carriage under subsection (a) shall be
    required to bear the costs associated with delivering a good quality
    signal to the designated local receive facility of the satellite
    carrier or to another facility that is acceptable to at least
    one-half the stations asserting the right to carriage in the local
    market."[^58] A host of novel technical and definitional questions
    arise under this particular provision.

18. We first seek comment on the term "local receive facility." Section
    338(h)(2) defines the term local receive facility as "the reception
    point in each local market which a satellite carrier designates for
    delivery of the signal of the station for purposes of
    retransmission."[^59] There are a variety of possible technical
    configurations that a satellite carrier might use to receive,
    uplink, and distribute local market broadcast signals. Direct
    broadcast satellite operators, such as DirecTV and Echostar,
    generally appear to have one central uplink facility in the center
    of the country that relays content from the ground to the satellites
    involved. Broadcast signals from broadcast markets across the
    country need to be delivered to this facility. This could be
    accomplished using either a satellite or a terrestrial relay. It
    appears likely that the most economically feasible means would be to
    aggregate the signals in each local market at one point and deliver
    them over the facilities of an interstate telecommunications carrier
    to the uplink site(s). If this is correct, the "local receive
    facility" would be co-located at suitable carrier's switching center
    or "point-of-presence." We seek comment on whether such a facility
    should be considered the "local receive facility" for purposes of
    Section 338. We note that local receive facilities could also
    resemble, in a technical sense, a cable operator's headend, because
    that is where signals are received and processed. We seek comment on
    the parameters under which a satellite carrier may construct and
    designate such a facility. Aside from the above stated options, we
    also seek comment on other reception points a satellite carrier can
    consider to satisfy the provision's requirements. Finally, we seek
    comment on the procedures by which a satellite carrier must inform
    local market television stations of the location of the receive
    facility.

19. In addition, we seek comment on the meaning of the statutory phrase,
    "to another facility that is acceptable to at least one-half the
    stations asserting the right to carriage in the local market." We
    read the statute to mean that a satellite carrier may establish a
    regional receive facility as long as one-half of broadcasters agree
    to that location. For example, a satellite carrier may establish a
    receive facility for all of New England, which encompasses several
    DMAs, as long as 50% of the relevant broadcasters agree on the
    location. We seek comment on this interpretation. We also inquire
    about the process by which broadcast television stations agree to
    the establishment and location of another facility. What did
    Congress intend when it included the term "acceptable?" What happens
    with those broadcast stations that do not agree to the location of
    the other facility? Who should pay to transmit the broadcast signals
    to such a facility? May the stations in the minority file a
    complaint with the Commission concerning the location of such a
    facility?

20. We also inquire about what constitutes a "good quality signal" as
    that term is used in Section 338. Under the current cable carriage
    regime, television broadcast stations must deliver either a signal
    level of -45dBm for UHF signals or -49dBm for VHF signals at the
    input terminals of the signal processing equipment, to be considered
    eligible for carriage.[^60] We note that a broadcaster that does not
    provide a good quality signal to a cable system headend is not
    qualified for carriage. In this situation, a cable system is under
    no obligation to carry such a signal, but the broadcaster has an
    opportunity to provide equipment necessary to improve its signal to
    the requisite level and gain carriage rights.[^61] We seek comment
    on whether Congress intended the same result for broadcasters that
    do not provide a good quality signal to the local satellite receive
    facility. We also seek comment on whether the signal quality
    parameters under Section 614 and the Commission's cable regulations
    are appropriate in the satellite carriage context.

21. With respect to the manner of testing for a good quality signal, we
    note that the Commission has adopted a method for measuring signal
    strength in the cable carriage context. Generally, if a test
    measuring signal strength results in an initial reading of less than
    ‑51 dBm for a UHF station, at least four readings must be taken over
    a two‑hour period. If the initial readings are between ‑51 dBm and
    ‑45 dBm, inclusive, readings must be taken over a 24‑hour period
    with measurements not more than four hours apart to establish
    reliable test results. For a VHF station, if the initial readings
    are less than ‑55 dBm, at least four readings must be taken over a
    two‑hour period. Where the initial readings are between ‑55 dBm and
    ‑49 dBm, inclusive, readings should be taken over a 24‑hour period,
    with measurements no more than four hours apart to establish
    reliable test results.[^62] The Commission stated that cable
    operators are further expected to employ sound engineering
    measurement practices; thus, signal strength surveys should, at a
    minimum, include the following: (1) specific make and model numbers
    of the equipment used, as well as its age and most recent date(s) of
    calibration; (2) description(s) of the characteristics of the
    equipment used, such as antenna ranges and radiation patterns; (3)
    height of the antenna above ground level and whether the antenna was
    properly oriented; and (4) weather conditions and time of day when
    the tests were done.[^63] We seek comment on whether we should
    require the same signal testing practices for measuring a
    broadcaster's signal strength in the satellite context.

22. We also seek comment on the costs of delivering a good quality
    signal. Under the mandatory cable carriage provisions of Section
    614, television stations are "required to bear the costs associated
    with delivering a good quality signal or a baseband video signal to
    the principal headend of the cable system.\"[^64] The Commission has
    stated that such costs may be for \"improved antennas, increased
    tower height, microwave relay equipment, amplification equipment and
    tests that may be needed to determine whether the station\'s signal
    complies with the signal strength requirements, especially if the
    cable system\'s over-the-air reception equipment is already in place
    and is otherwise operating properly.\"[^65] We seek comment on which
    of these cost elements in the cable context are applicable in the
    satellite context. Are there any additional costs, in a Section 338
    setting, that are not mentioned above?

######## D. Duplicating Signals

23. Section 338(c)(1) states that:

> Notwithstanding subsection (a), a satellite carrier shall not be
> required to carry upon request the signal of any local commercial
> television broadcast station that substantially duplicates the signal
> of another local commercial television broadcast station which is
> secondarily transmitted by the satellite carrier within the same local
> market, or to carry upon request the signals of more than one local
> commercial television broadcast station in a single local market that
> is affiliated with a particular television network unless such
> stations are licensed to communities in different states.[^66]

24. Section 614(b)(5) similarly provides that a cable operator is not
    required to carry the signal of any local commercial television
    station that substantially duplicates the signal of another local
    commercial television station which is carried on its cable system,
    or to carry the signals of more than one local commercial television
    station affiliated with a particular broadcast network.[^67] The
    Commission has decided that, based on the legislative history of
    this section, two stations \"substantially duplicate\" each other
    \"if they simultaneously broadcast identical programming for more
    than 50 percent of the broadcast week.\"[^68] For purposes of this
    definition, identical programming means the identical episode of the
    same program series.[^69] The Commission noted that its
    interpretation was consistent with the 1992 Cable Act's legislative
    history that indicates that this phrase refers to the \"simultaneous
    transmission of identical programming on two stations\" and which
    \"constitutes a majority of the programming on each station.\"[^70]
    We seek comment on whether we should apply the Commission's
    determination of what constitutes "substantial duplication" under
    Title VI to this section of the SHVIA.

25. We seek comment on the phrase, "affiliated with a particular
    television network." In this situation, we ask what definition of
    "television network" applies under this provision because that term
    is not specifically defined in Section 338. We note that Section
    339(d) includes a definition of television network for purposes of
    satellite carriage of distant signals: "The term 'television
    network' means a television network in the United States which
    offers an interconnected program service on a regular basis for 15
    or more hours per week to at least 25 affiliated broadcast stations
    in 10 or more States."[^71] We ask whether we should implement the
    Section 339(d) definition for the purposes of administering the
    duplication provision at issue here. Are there any alternative
    definitions that we should consider?

26. We also inquire about the application of the statutory phrase,
    "unless such stations are licensed to communities in different
    states." Congress stated that this phrase addresses unique and
    limited cases, including such station pairs as WMUR (Manchester, New
    Hampshire) and WCVB (Boston, Massachusetts) in the Boston DMA (both
    ABC affiliates) as well as WPTZ (Plattsburg, New York) and WNNE
    (White River Junction, Vermont) in the Burlington-Plattsburgh DMA
    (both NBC affiliates), in which mandatory carriage of both
    duplicating local stations upon request assures that satellite
    subscribers will not be precluded from receiving the network
    affiliate that is licensed to a community in the state in which they
    reside.[^72] We seek comment on whether there are other similar
    situations that must be addressed as we proceed with adopting rules
    here. In addition, we seek comment on whether there are other
    regulatory issues that may arise in this situation.

27. Section 338(c)(2) states that:

> The Commission shall prescribe regulations limiting the carriage
> requirements under subsection (a) of satellite carriers with respect
> to the carriage of multiple local noncommercial television broadcast
> stations. To the extent possible, such regulation shall provide the
> same degree of carriage by satellite carriers of such multiple
> stations as is provided by cable systems under Section 615.[^73]

Section 615(l)(1), in turn, provides that a local noncommercial
educational television (\"NCE\") station qualifies for cable carriage
rights if it is licensed by the Commission as an NCE station and if it
is owned and operated by a public agency, nonprofit foundation, or
corporation or association that is eligible to receive a community
service grant from the Corporation for Public Broadcasting.[^74] An NCE
station is also considered qualified if it is owned and operated by a
municipality and transmits predominantly noncommercial programs for
educational purposes.[^75] For purposes of cable carriage, an NCE
station is considered local if its community of license is within 50
miles of, or the station places a Grade B contour over, the principal
headend of the cable system.[^76] Cable systems are obliged to carry
local noncommercial educational television stations under a statutory
paradigm based upon a cable system\'s number of usable activated
channels. 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.[^77] At
the outset, we seek comment on whether this approach is applicable in
the satellite context.

28. A cable operator with cable system capacity of more than 36 usable
    activated channels, and carrying the signals of three qualified NCE
    stations, is not required to carry the signals of additional
    stations the programming of which substantially duplicates the
    programming broadcast by another qualified NCE station requesting
    carriage.[^78] The Act states that substantial duplication was to be
    defined by the Commission in a manner that promotes access to
    distinctive noncommercial educational television services.[^79] The
    Commission concluded that 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.[^80] We first seek comment on whether
    Congress, in drafting Section 338(c)(2) meant for the Commission to
    focus solely on the substantial duplication language of Section 615
    to limit satellite carriage of NCE stations or whether it intended
    the Commission to prescribe other means to limit such carriage. If
    Congress meant for the Commission to concentrate on duplication, we
    ask whether we should apply the definition set forth in the cable
    carriage context or whether we should devise a new definition for
    satellite carriage purposes. If we are to develop additional
    carriage limitations, we ask what other rules should the Commission
    adopt to more narrowly tailor an NCE satellite carriage requirement
    to make it comparable to the NCE carriage obligations imposed on
    cable operators.

#### E. Channel Positioning

29. Section 338(d) of the Communications Act states that:

> No satellite carrier shall be required to provide the signal of a
> local television broadcast station to subscribers in that station's
> local market on any particular channel number or to provide the
> signals in any particular order, except that the satellite carrier
> shall retransmit the signal of the local television broadcast stations
> to subscribers in the stations' local market on contiguous channels
> and provide access to such station's signals at a nondiscriminatory
> price and in a nondiscriminatory manner on any navigational device,
> on-screen program guide, or menu.[^81]

The Conference Report notes that the obligation to carry local stations
on contiguous channels is to ensure that satellite carriers position
local stations in a way that is convenient and practically accessible
for consumers.[^82] The statutory directive for channel positioning
clearly states that satellite carriers are required to present local
broadcast channels to satellite subscribers in an uninterrupted series.
We seek comment, however, on whether broadcast signals carried under
retransmission consent must be contiguous with the television stations
carried under Section 338 or whether they may be presented to satellite
subscribers in a non-contiguous manner.

30. We also seek comment on the phrase, "provide access to such
    station's signals at a nondiscriminatory price and in a
    nondiscriminatory manner on any navigational device, on-screen
    program guide, or menu." We specifically seek comment on what rules
    the Commission should develop to ensure that television stations are
    accessible to satellite subscribers on nondiscriminatory terms. We
    ask whether there are any existing Commission rules that we may use
    as a model to develop regulations for this particular situation. We
    ask whether Congress meant that television station signals carried
    pursuant to mandatory carriage requests may cost no more per channel
    to subscribers than packages of retransmission consent television
    station signals or other satellite service packages. We seek comment
    on whether Congress meant that electronic program guide information
    concerning required television station signals should be presented
    to subscribers in the same fashion as other programming services
    provided by the satellite carrier.

######## F. Content To Be Carried

31. Section 338(g) states that, "The regulations prescribed \[under
    Section 338\] shall include requirements on satellite carriers that
    are comparable to the requirements on cable operators under sections
    614(b)(3). . . .and 615(g)(1)."[^83] Section 614(b)(3) states that:

> A cable operator shall carry in its entirety, on the cable system of
> that operator, the primary video, accompanying audio, and line 21
> closed caption transmission of each of the local commercial television
> stations carried on the cable system and, to the extent technically
> feasible, program-related material carried in the vertical blanking
> interval or on subcarriers. Retransmission of other nonprogram-related
> material (including teletext and other subscription and advertiser
> supported information services) shall be at the discretion of the
> cable operator. Where appropriate and feasible, operators may delete
> signal enhancements, such as ghost canceling, from the broadcast
> signal and employ such enhancements at the system headend or
> headends.[^84]

Section 615(g)(1), which is the noncommercial equivalent of the
commercial television station provision in Section 614(b)(3), states
that:

> A cable operator shall retransmit in its entirety the primary video,
> accompanying audio, and line 21 closed caption transmission of each
> qualified local noncommercial educational television station whose
> signal is carried on the cable system, and, to the extent technically
> feasible, program-related material carried in the vertical blanking
> interval, or on subcarriers, that may be necessary for receipt of
> programming by handicapped persons or educational or language
> purposes. Retransmission of other material in the vertical blanking
> interval \["VBI"\] or on subcarriers shall be within the discretion of
> the cable operator.[^85]

We seek comment on the applicability of these requirements in the
satellite carriage context, especially in light of the term "comparable"
contained in Section 338(g), above. We recognize that the Commission has
not specifically defined "primary video" in the rules and has instead
relied on the language of Section 614(b)(3)(B) to clarify the scope of
the term for purposes of cable broadcast signal carriage.[^86] In view
of this history, we seek comment on whether a specific definition of
primary video is required for satellite carriers to fulfill the
requirements contained in Section 338.

32. In the *Broadcast Signal Carriage Order*, the Commission decided
    that the factors enumerated in *WGN Continental Broadcasting, Co. v.
    United Video Inc.* (\"*WGN*\")[^87] provided useful guidance for
    what constitutes program‑related material.[^88] The *WGN* case
    addressed the extent to which the copyright on a television program
    also included program material in the VBI of the signal. The *WGN*
    court set out three factors for making a copyright 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.[^89] 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 are
    one copyrighted expression and must both be carried if one is to be
    carried. We seek comment on whether the *WGN* program-related
    analysis applies in the context of satellite broadcast signal
    carriage.

33. With regard to the \"technical feasibility\" of the carriage of
    program‑related material in the VBI or on subcarriers, the
    Commission stated in the *Broadcast Signal Carriage Order* that such
    carriage should be considered \"technically feasible\" if it does
    not require the cable operator to incur additional expenses and to
    change or add equipment in order to carry such material.[^90] The
    Commission noted that it would consider signal carriage to be
    \"technically feasible\" if only nominal costs, additions or changes
    of equipment are necessary.[^91] We seek comment on whether the
    consideration of technical feasibility should be different in the
    context of satellite broadcast signal carriage.

34. Finally, we note that satellite carriers are required to pass
    through closed captions regardless of the particular arrangements by
    which the broadcast station is carried.[^92] Section 79.1 of the
    Commission\'s rules, adopted to implement Section 713 of the Act,
    requires that all video programming distributors, as defined in
    Section 79.1(a)(2), shall deliver all programming received from the
    video programming owner or other origination source containing
    closed captioning to receiving television households with the
    original closed captioning data intact in a format that can be
    recovered and displayed by decoders meeting the standards of Section
    15.119.[^93] We take this opportunity to ask whether satellite
    carriers have, or will have, any difficulties in passing through
    closed captioning information to its subscribers. If so, we seek
    comment on what measures the Commission should take to ensure that
    captioning information reaches its intended audience.

####  Material Degradation

35. Section 338(g) states that, "The regulations prescribed \[by the
    Commission under Section 338\] shall include requirements on
    satellite carriers that are comparable to the requirements on cable
    operators under sections 614(b)(4). . . .and 615(g)(2)."[^94]
    Section 614(b)(4)(A) states that, "The signals of local commercial
    television stations that a cable operator carries shall be carried
    without material degradation. The Commission shall adopt carriage
    standards to ensure that, to the extent technically feasible, the
    quality of 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."[^95] Section 615(g)(2), which is the noncommercial
    equivalent of the commercial television station provision in Section
    614(b)(4), states that, "A cable operator shall provide each
    qualified local noncommercial educational television station whose
    signal is carried in accordance with this section with bandwidth and
    technical capacity equivalent to that provided to commercial
    television broadcast stations carried on the cable system and shall
    carry the signal of each qualified local noncommercial educational
    television station without material degradation."[^96]

36. The Conference Report noted that because of unique technical
    challenges on satellite technology and constraints on the use of
    satellite spectrum, satellite carriers may initially be limited in
    their ability to deliver must carry signals into multiple
    markets.[^97] According to the Conference Report: "New compression
    technologies, such as video streaming, may help overcome these
    barriers, and if deployed, could enable satellite carriers to
    deliver must carry signals into many more markets than they could
    otherwise."[^98] The Commission is urged, pursuant to its
    obligations under Section 338, or in any other related proceedings,
    "to not prohibit satellite carriers from using reasonable
    compression, reformatting, or similar technologies to meet their
    carriage obligations, consistent with existing authority."[^99]

37. When implementing the material degradation provision for cable
    carriage, the Commission relied on the technical standards as
    updated in the *Cable Technical Report and Order*, in defining the
    scope of the requirement.[^100] The *Cable Technical Report and
    Order* specifically addressed the issue of preventing material
    degradation of local television signals carried on cable systems by
    adopting a number of technical standards and providing that cable
    operators must make reasonable efforts and use good engineering
    practices and proper equipment to guard against unnecessary
    degradation in the signal received and delivered to the cable
    subscriber.[^101] The Commission stated that the standards adopted
    in the *Cable Technical Report and Order* were sufficient to satisfy
    the material degradation requirements contained in the 1992 Cable
    Act.[^102] In declining to adopt regulations in addition to those
    found in the *Cable Technical Report and Order*, the Commission
    stated that further rules may have the unwarranted effect of
    impeding technological advances and experimentation in the cable
    industry.[^103] Standards specific to digital communications were
    not adopted. Given the technological differences between cable
    operators and satellite carriers, we seek comment on whether
    reliance on Commission precedent in the cable carriage context
    regarding material degradation is appropriate and whether technical
    standards mirroring those in the cable television field would be
    warranted. We seek comment on whether we should develop new rules
    for satellite carriers, and if so what such rules should be,
    consistent with the Congressional direction on digital compression
    and taking into account the unique technical aspects of satellite
    carriage of broadcast signals.

38. It is important to note that our concerns here revolve around the
    satellite carrier's treatment of the broadcast signal on the
    equipment it controls or authorizes. Thus, our focus does not
    involve picture quality issues that may arise because of the type of
    television receiver used since the satellite carrier has little
    control over the use of these devices. Moreover, our analysis of
    material degradation recognizes that dish placement on or near the
    subscriber's premises can affect the quality of the picture
    received, but that the satellite carrier cannot control how and
    where dishes are installed.[^104]

39. We understand that satellite carriers use a different modulation
    system from cable operators \-- quadrature phase-shift keying or
    "QPSK" \-- as the principal format when transmitting video
    programming.[^105] Thus, it is important to note at this juncture,
    the technical steps in the digital conversion process affecting the
    material degradation analysis. In satellite digital television
    systems, such as those implemented by DirecTV and Echostar, there
    are four layers of the system where video quality may be
    affected.[^106] The first layer, known as the picture layer, is
    where decisions are made regarding the use of progressive or
    interlace scanning techniques as well as whether the picture will be
    produced in a standard definition or high definition format. The
    choices made in this layer will not likely affect the quality of
    retransmitted analog broadcasts.[^107] In the second layer, the
    compression layer, decisions are made regarding the types of
    compression techniques used. The relevant digital standard, MPEG-2,
    supports a wide range of compression ratios and data rates. At this
    layer, the satellite carrier attempts to maximize the number of
    channels carried on each transponder and there is an effort to place
    a limit on the maximum data rate of each channel. Limiting the data
    rate may cause the picture quality to degrade, especially when
    certain video scenes involve rapid motion images or there is a
    greater degree of camera panning and zooming. The third layer is
    known as the transport layer and this is where the data are
    structured and organized into data packets. Since most digital video
    systems use the MPEG packet structure, there is little likelihood
    that any type of degradation would occur at this level. The final
    layer is the transmission layer and this is where data are modulated
    on to a carrier for transmission. The use of high efficiency
    modulation techniques, such as the cable industry's QAM[^108]
    standard, permit greater data rate throughput. QPSK, however, is a
    lower order modulation and requires satellite carriers to limit the
    data rate or increase channel bandwidth. The chances for degradation
    to occur at this level are tied to the limiting data rate technique
    in the compression layer.

40. We specifically note that degradation may result when the satellite
    carrier encodes an analog broadcast signal and readies it for
    digital retransmission. During the encoding process, certain
    artifacts may be introduced into the original material that would
    have an effect on picture quality. The most dominant artifact is
    quantization[^109] noise in the picture. This effect is often
    visible on edges of subjects and textured areas of the image. It is
    caused when there is a high amount of picture detail along with a
    high degree of picture activity and levels of quantization are
    restricted due to data rate reduction. Random noise can also be
    introduced into the source video. This can result in activity or
    "busyness" in detail areas of the picture and tiling or flicker in
    other areas of the picture. Such effects are caused by the encoder
    attempting to encode random noise. During the encoding process, data
    rate reduction in combination with rapid picture changes may result
    in another artifact known as the "dirty window," where noise appears
    stationary while the images behind it are moving.

41. Understanding that satellite carriers use the technical process
    described above in retransmitting analog broadcast signals, and
    keeping in mind Congress's express statement that any reasonable
    type of digital compression technique is permissible, we seek
    comment on how to define material degradation for purposes of
    Section 338. The focus of our concern in this context is where the
    satellite carrier has made a conscious decision to increase the
    number of channels carried to the detriment of picture quality.
    Thus, we seek comment on how to define the term "material," but in
    the context of a deliberate action on the part of the satellite
    carrier. For example, when a broadcast television station freezes,
    "tiles" or looks "dirty" due to a satellite carrier's choice of
    encoding and compression techniques, should that be considered
    "material" or "immaterial" degradation? We also seek comment on
    whether there are certain compression ratios or encoding techniques
    that should be prohibited because their use would result in material
    degradation.

42. Aside from the matters discussed above, questions arise as to what
    standards and measurement techniques the Commission should employ
    where specific broadcast signal quality disputes arise. In the cable
    carriage context, where an operator carries the broadcaster's analog
    television signal, issues such as signal to noise ratios and
    ghosting have been the focus of concern. In the satellite carriage
    situation, where an analog broadcast signal is digitally transmitted
    by a satellite carrier, picture resolution is still important but
    bit error rates and data throughput are also relevant. Moreover, the
    technical standards that are employed to evaluate cable analog
    picture quality were adopted and refined over the course of many
    decades, yet the Commission has had relatively little experience in
    evaluating the analog to digital to analog conversion of the type
    involved in satellite broadcast signal carriage.[^110] We seek
    suggestions for measurement standards that may be used in addressing
    signal degradation issues.

43. We also have questions concerning the phrase "similar technologies
    to meet their carriage obligations" as it is found in this section's
    legislative history. We first ask what is meant by the term "similar
    technologies." Are there any limits as to the kind of technologies a
    satellite carrier may use to fulfill its statutory mandates under
    Section 338? We specifically seek comment on whether the phrase
    encompasses "spot beaming," where a satellite carrier delivers
    programming to a discrete geographical location using a specialized
    satellite.[^111] If so, what are the implications for using such
    technology in the satellite broadcast signal carriage context.

#### H. Digital Television

44. Section 338(g) states: "The regulations prescribed \[by the
    Commission under Section 338\] shall include requirements on
    satellite carriers that are comparable to the requirements on cable
    operators under sections 614(b)(4) . . . ."[^112] Section
    614(b)(4)(B) of the Act provides: "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."[^113] The Conference Report
    stated: "by directing the FCC to promulgate these must carry rules
    \[found in Section 338\], the conferees do not take any position
    regarding the application of must-carry rules to carriage of digital
    television signals by either cable or satellite systems."[^114]

45. The Commission has adopted rules establishing a transitional process
    for the conversion from an analog to a digital form of broadcast
    transmission.[^115] The rules allow each existing analog television
    licensee or each eligible permittee to construct or operate digital
    facilities with a roughly comparable service area using 6 MHz of
    spectrum, in addition to the 6 MHz of spectrum used for analog
    broadcasting. The broadcast station will transmit a signal
    consistent with the standards adopted in *Advanced Television
    Systems and Their Impact Upon the Existing Television Broadcast
    Service*, Fourth Report and Order in MM Docket No. 87-268, giving it
    the flexibility to broadcast in a high definition mode, in a
    multiple program standard definition mode, in a datacasting mode, or
    a mixture of all three.[^116] During the transition period, both the
    analog and digital television signals will be broadcast.[^117] At
    the end of the transition which is scheduled for 2006, with certain
    statutory exceptions, the station is to cease broadcasting an analog
    signal and will return to the government 6 MHz of spectrum.[^118]

46. The rules governing the transition from analog to digital
    broadcasting are found in *Advanced Television Systems and Their
    Impact Upon the Existing Television Broadcast Service*, Fifth Report
    and Order in MM Docket 87-268 ("Fifth Report and Order"). The *Fifth
    Report and Order* set forth a phased-in implementation schedule for
    the introduction of digital broadcast television. Construction
    requirements vary depending on the size of the television market and
    other factors. [^119]

47. In July 1998, the Commission commenced a proceeding to determine the
    carriage obligations cable operators should have with regard to a
    broadcast station's digital television signal during the transition
    period to digital television. [^120] We sought comment in that
    proceeding on how to accomplish the Congressional goals reflected in
    Section 614, Section 615, and Section 325 of the Act in light of the
    significant changes to the relevant industries resulting from the
    conversion to digital operations. The thrust of the proceeding was
    to examine the timing and scope of digital broadcast signal carriage
    obligations for cable operators. The Commission proposed seven
    carriage options for the transition period ranging from an immediate
    dual carriage regime, where a cable operator would carry both the
    analog and digital signals at the same time, to the no carriage
    option, where a cable operator would be under no obligation to carry
    the station's digital signal until after the transition period has
    ended.[^121]

48. When this proceeding was initiated, there was no satellite broadcast
    signal carriage requirement, and satellite carriers apparently did
    not find it necessary to comment on the issues addressed in that
    proceeding. Thus, we seek comment on whether satellite carriers
    should be required to carry digital broadcast television signals in
    addition to analog broadcast signals up until the time that
    television stations return their analog spectrum to the government.
    What are the costs and benefits of such a requirement? In what ways
    would a dual carriage rule limit the number of markets satellite
    carriers can serve with analog broadcast signals alone? Moreover,
    would satellite carriers have to drop existing non-broadcast
    programming to accommodate digital television signals? To what
    extent should any digital carriage requirements for satellite
    carriers be consistent with those for cable operators?

######## I. Compensation for Carriage

49. Section 338(e) states: "A satellite carrier shall not accept or
    request monetary payment or other valuable consideration in exchange
    either for carriage of local television broadcast stations in
    fulfillment of the requirements of this section or for channel
    positioning rights provided to such stations under this section,
    except that any such station may be required to bear the costs
    associated with delivering a good quality signal to the local
    receive facility of the satellite carrier."[^122] We will consider
    the costs associated with delivering a good quality signal as part
    of our consideration of the several related local receive facility
    issues, discussed above. This provision largely parallels provisions
    applicable to cable operators that are found in Sections 614(b)(10)
    and 615(i) of the Act that are implemented in Section 76.60 of the
    Commission's rules. In the cable context, commercial broadcasters
    elect either must carry or retransmission consent to obtain carriage
    of their signals. If mandatory carriage is selected, there are no
    specific terms for carriage that must be requested, other than
    choosing the relevant channel positioning options available to
    broadcasters under the Act. If retransmission consent is selected,
    the operator may receive compensation from the broadcaster in
    exchange for carriage. We assume the same general policy is intended
    here and that a broadcaster seeking carriage rather than requesting
    carriage "in fulfillment of the requirements of \[Section 338\]"
    would simply negotiate carriage provisions, including payment terms,
    in the context of a retransmission consent negotiation. We seek
    comment on this interpretation. We also seek comment on the policy
    underlying this provision and its purpose in the statutory scheme.

#### J. Remedies

50. Section 338(a)(2) states that the remedies for any failure to meet
    the obligations under subsection (a) (carriage obligations) shall be
    available exclusively under Section 501(f) of title 17, United
    States Code.[^123] New section 501(f)(1) states: "With respect to
    any secondary transmission that is made by a satellite carrier of a
    performance or display of a work embodied in a primary transmission
    and is actionable as an act of infringement under section 122, a
    television broadcast station holding a copyright or other license to
    transmit or perform the same version of that work shall, for
    purposes of subsection (b) of this section, be treated as a legal or
    beneficial owner if such secondary transmission occurs within the
    local market of that station."[^124] New section 501(f)(2) further
    provides: "A television broadcast station may file a civil action
    against any satellite carrier that has refused to carry television
    broadcast signals, as required under section 122(a)(2), to enforce
    that television broadcast station's rights under section 338(a) of
    the Communications Act of 1934."[^125] As it appears that the
    Commission is not the statutory venue to remedy non-carriage of
    broadcast station signals by satellite carriers, we believe that
    there is no need for us to implement Section 338(a)(2). We seek
    comment on this view.

51. Section 338(f)(1) of the Communications Act states: "Whenever a
    local television broadcast station believes that a satellite carrier
    has failed to meet its obligations under subsections (b) through (e)
    of this section \[(b) good signal required, (c) duplication not
    required, (d) channel positioning, and (e) compensation for
    carriage\], such station shall notify the carrier, in writing, of
    the alleged failure and identify its reasons for believing that the
    satellite carrier failed to comply with such obligations. The
    satellite carrier shall, within 30 days after such written
    notification, respond in writing to such notification and comply
    with such obligations or state its reasons for believing that it is
    in compliance with such obligations. A local television broadcast
    station that disputes a response by a satellite carrier that it is
    in compliance with such obligations may obtain review of such denial
    or response by filing a complaint with the Commission. Such
    complaint shall allege the manner in which such satellite carrier
    has failed to meet its obligations and the basis for such
    allegations."[^126] In addition, Section 338(f)(2) states: "The
    Commission shall afford the satellite carrier against which a
    complaint is filed under paragraph (1) an opportunity to present
    data and arguments to establish that there has been no failure to
    meet its obligations under this section.[^127]

52. Section 338(f)(3) of the Communications Act states: "Within 120 days
    after the date a complaint is filed under paragraph (1), the
    Commission shall determine whether the satellite carrier has met its
    obligations under subsections (b) through (e). If the Commission
    determines that the satellite carrier has failed to meet such
    obligations, the Commission shall order the satellite carrier to
    take appropriate remedial action. If the Commission determines that
    the satellite carrier has fully met the requirements of such
    subsections, the Commission shall dismiss the complaint." We seek
    comment on the meaning of the phrase, "appropriate remedial action"
    for each of the relevant subsections. We also ask whether the
    payment of forfeitures for non-compliance would fall under the
    "appropriate remedial action" rubric.[^128]

53. These provisions clearly state the remedial procedures for satellite
    carrier violations of Section 338, with subsection 338(a) providing
    a remedy for failure to carry and subsection 338(f) providing
    specific remedies for unique carriage violations. We seek comment on
    two additional issues, however. First, we seek comment on how the
    Section 501(f) remedial limitation in Section 338(a)(2) relates to
    the complaint process set forth in Section 338(f). For example, if a
    satellite carrier refuses to carry a broadcast station signal
    because of a signal quality dispute, would the broadcaster pursue
    its remedy in court, at the Commission, or would both fora be
    available? In addition, it appears that a broadcaster cannot file a
    complaint against a satellite carrier for non-compliance with the
    content-to-be-carried or material degradation provisions as the
    SHVIA specifically referenced those issues in Section 338(g) rather
    than in (b) through (e), as provided in Section 338(f). We seek
    comment on this interpretation. If this is the correct reading of
    the statute, should the Commission nonetheless include those issues
    as subject to the complaint process under its general authority to
    administer the Communications Act?

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IV. **PROCEDURAL MATTERS**

**A. Initial Regulatory Flexibility Act Statement and Initial Paperwork
Reduction Act of 1995 Analysis**

54. The initial regulatory flexibility analysis is attached to this
    order as Appendix A. This *Notice* contains either a proposed or
    modified information collection. As part of its continuing effort to
    reduce paperwork burdens, we invite the general public and the
    Office of Management and Budget (OMB) to take this opportunity to
    comment on the information collections contained in this *Notice*,
    as required by the Paperwork Reduction Act of 1995, Public Law
    104-13. Public and agency comments are due at the same time as other
    comments on this *Notice*; OMB comments are due 60 days from date of
    publication of this *Notice* in the Federal Register. Comments
    should address: (a) whether the proposed collection of information
    is necessary for the proper performance of the functions of the
    Commission, including whether the information shall have practical
    utility; (b) the accuracy of the Commission\'s burden estimates; (c)
    ways to enhance the quality, utility, and clarity of the information
    collected; and (d) ways to minimize the burden of the collection of
    information on the respondents, including the use of automated
    collection techniques or other forms of information technology.

**B. Ex Parte Rules**

55. 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. 47 C.F.R. §1.1206(b), as revised. Ex
    parte presentations are permissible if disclosed in accordance with
    Commission rules, except during the Sunshine Agenda period when
    presentations, ex parte or otherwise, are generally prohibited.
    Persons making oral ex parte presentations are reminded that a
    memorandum summarizing a presentation must contain a summary of the
    substance of the presentation and not merely a listing of the
    subjects discussed. More than a one or two sentence description of
    the views and arguments presented is generally required. *See* 47
    C.F.R. §1.1206(b)(2), as revised. Additional rules pertaining to
    oral and written presentations are set forth in Section 1.1206(b).

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

56. 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 regarding this *Notice* on or
    before July 7, 2000 and reply comments on or before July 28, 2000.
    Comments may be filed using the Commission\'s Electronic Comment
    Filing System (\"ECFS\") or by filing paper copies.[^129] 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.

57. Written comments by the public on the proposed and/or modified
    information collections are due July 7, 2000. Written comments must
    be submitted by the Office of Management and Budget (OMB) on the
    proposed and/or modified information collections on or before **\[60
    days after date of publication in the Federal Register.\]** In
    addition to filing comments with the Secretary, a copy of any
    comments on the information collection(s) contained herein should be
    submitted to Judy Boley, Federal Communications Commission, Room
    1-C804, 445 12th Street, SW, Washington, DC 20554, or via the
    Internet to jboley@fcc.gov and to Edward C. Springer, OMB Desk
    Officer, 10236 NEOB, 725 - 17th Street, N.W., Washington, DC 20503
    or via the Internet to Edward.Springer@omb.eop.gov.

58. 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 Ben Golant at (202)
    418-7111, TTY (202) 418-7172, or at bgolant@fcc.gov.

59. Parties who choose to file by paper should also submit their
    comments on diskette. Parties should submit diskettes to Ben Golant,
    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. 00-96), 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. Ordering Clauses**

60. Accordingly, **IT IS ORDERED** that pursuant to Section 1008 of the
    Satellite Home Viewer Act of 1999, **NOTICE IS HEREBY GIVEN** of the
    proposals described in this Notice of Proposed Rulemaking.

61. **IT IS FURTHER ORDERED** that the Consumer Information Bureau,
    Reference Information Center, shall send a copy of this Notice of
    Proposed Rulemaking, including the Initial Regulatory Flexibility
    Analysis, to the Chief Counsel for Advocacy of the Small Business
    Administration.

Federal Communications Commission

Magalie Roman Salas

> Secretary

# Appendix A

# Initial Regulatory Flexibility Act Analysis

1\. As required by the Regulatory Flexibility Act (\"RFA\"),[^130] the
Commission has prepared this Initial Regulatory Flexibility Analysis
(\"IRFA\") of the possible significant economic impact on small entities
by the possible policies and rules that would result from this Notice of
Proposed Rulemaking ("Notice"). Written public comments are requested on
this IRFA. Comments must be identified as responses to the IRFA and must
be filed by the deadlines for comments on the Notice provided above in
paragraph 48. The Commission will send a copy of the Notice, including
this IRFA, to the Chief Counsel for Advocacy of the Small Business
Administration.[^131] In addition, the Notice and IRFA (or summaries
thereof) will be published in the Federal Register.[^132]

2*. Need for, and Objectives of, the Proposed Rules.* Section 338(g) of
the Communications Act of 1934, as amended ("Act"), 47 U.S.C. § 338(g),
directed the Commission, within one year of enactment of the Satellite
Home Viewer Improvement Act of 1999,[^133] to "issue regulations
implementing this section following a rulemaking proceeding." The
relevant provisions concern the carriage of all local television
broadcast station signals by satellite carriers commencing on January 1,
2002.

3\. *Legal Basis*. The authority for the action proposed in this
rulemaking is contained in Sections 1, 4(i) and (j), 338, 614 and 615 of
the Communications Act of 1934, as amended, 47 U.S.C. §§ 151, 154(i) and
(j), 338, 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.[^134] 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.[^135] 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\").[^136] The rules we will adopt
as a result of the Notice will affect television station licensees and
satellite carriers.

5\. *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.[^137] Television broadcasting stations
consist of establishments primarily engaged in broadcasting visual
programs by television to the public, except cable and other pay
television services.[^138] Included in this industry are commercial,
religious, educational, and other television stations.[^139] Also
included are establishments primarily engaged in television broadcasting
and which produce taped television program materials.[^140] Separate
establishments primarily engaged in producing taped television program
materials are classified under another SIC number.[^141]

6\. 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.\"

7\. 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
over-inclusive 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 over-inclusive 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.

8\. There were 1,509 television stations operating in the nation in
1992.[^142] That number has remained fairly constant as indicated by the
approximately 1,616 operating television broadcasting stations in the
nation as of September 1999.[^143] For 1992, the number of television
stations that produced less than \$10.0 million in revenue was 1,155
establishments.[^144] Thus, the new rules will affect approximately
1,616 television stations; approximately 77%, or 1,230 of those stations
are considered small businesses.[^145] 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.

9\. *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.[^146] This
definition includes cable system operators, direct broadcast satellite
services, multipoint distribution systems, satellite master antenna
systems and subscription television services. According to the Census
Bureau data from 1992, there were 1,758 total cable and other pay
television services and 1,423 had less than \$11 million in
revenue.[^147] We address below services individually to provide a more
precise estimate of small entities.

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

11\. *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.[^148] 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.[^149]

12\. According to the most recently available information, there are
approximately 30 program packagers nationwide offering packages of
scrambled programming to retail consumers.[^150] These program packagers
provide subscriptions to approximately 2,314,900 subscribers
nationwide.[^151] 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.

13\. *Description of Projected Reporting, Recordkeeping and other
Compliance Requirements.* In order to implement the Satellite Home
Viewer Improvement Act of 1999, the Commission has proposed to add new
rules. We have yet to determine whether to amend existing provisions of
the Commission's rules, or to adopt some other regulatory framework or
procedures concerning satellite broadcast signal carriage. There are
certain compliance requirements involving the satellite broadcast signal
carriage process. Foremost is satellite carriers will have to carry all
local television stations in a given market if it decides to carry at
least one signal in a market[^152] There will be costs relating to the
time and effort involved in carrying all local broadcast signals.

14\. In terms of recordkeeping, entities most will likely have to keep a
record of their election status and entities may be required to maintain
such information within their business environment and may also have to
file such information with the Commission.

15\. *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.

16. As indicated above, the Notice proposes to implement certain aspects
    of the Satellite Home Viewer Improvement Act of 1999. Among other
    things, the new legislation requires satellite carriers to carry all
    local television broadcast stations in a market, if it carries any
    local market television stations, by January 1, 2002. This document
    also discusses implementing regulations relating to the scope and
    substance of local broadcast signal carriage by satellite carriers.
    This legislation applies to small entities and large entities
    equally. At this time, small entities are not treated differently
    and might not be impacted differently, but we seek comment.

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

**Appendix B**

> **Section 338 of the Communications Act of 1934, as amended.**

SEC. 338. CARRIAGE OF LOCAL TELEVISION SIGNALS BY SATELLITE CARRIERS.

\(a\) CARRIAGE OBLIGATIONS.\--

\(1\) IN GENERAL.\--Subject to the limitations of paragraph (2), each
satellite carrier providing, under section 122 of title 17, United
States Code, secondary transmissions to subscribers located within the
local market of a television broadcast station of a primary transmission
made by that station shall carry upon request the signals of all
television broadcast stations located within that local market, subject
to section 325(b).

\(2\) REMEDIES FOR FAILURE TO CARRY.\--The remedies for any failure to
meet the

obligations under this subsection shall be available exclusively under
section 501(f) of title 17, United States Code.

\(3\) EFFECTIVE DATE.\--No satellite carrier shall be required to carry
local television broadcast stations under paragraph (1) until January 1,
2002.

\(b\) GOOD SIGNAL REQUIRED.\--

\(1\) COSTS.\--A television broadcast station asserting its right to
carriage under subsection (a) shall be required to bear the costs
associated with delivering a good quality signal to the designated local
receive facility of the satellite carrier or to another facility that is
acceptable to at least one-half the stations asserting the right to
carriage in the local market.

\(2\) REGULATIONS.\--The regulations issued under subsection (g) shall
set forth the obligations necessary to carry out this subsection.

\(c\) DUPLICATION NOT REQUIRED.\--

\(1\) COMMERCIAL STATIONS.\--Notwithstanding subsection (a), a satellite
carrier shall not be required to carry upon request the signal of any
local commercial television broadcast station that substantially
duplicates the signal of another local commercial television broadcast
station which is secondarily transmitted by the satellite carrier within
the same local market, or to carry upon request the signals of more than
one local commercial television broadcast station in a single local
market that is affiliated with

a particular television network unless such stations are licensed to
communities in different States.

\(2\) NONCOMMERCIAL STATIONS.\--The Commission shall prescribe
regulations limiting the carriage requirements under subsection (a) of
satellite carriers with respect to the carriage of multiple local
noncommercial television broadcast stations. To the extent possible,
such regulations shall provide the same degree of carriage by satellite
carriers of such multiple stations as is provided by cable systems under
section 615.

\(d\) CHANNEL POSITIONING.\--No satellite carrier shall be required to
provide the signal of a local television broadcast station to
subscribers in that station\'s local market on any particular channel
number or to provide the signals in any particular order, except that
the satellite carrier shall retransmit the signal of the local
television broadcast stations to subscribers in the stations\' local
market on contiguous channels and provide access to such station\'s
signals at a nondiscriminatory price and in a nondiscriminatory manner
on any navigational device, on-screen program guide, or menu.

\(e\) COMPENSATION FOR CARRIAGE.\--A satellite carrier shall not accept
or request monetary payment or other valuable consideration in exchange
either for carriage of local television broadcast stations in
fulfillment of the requirements of this section or for channel
positioning rights provided to such stations under this section, except
that any such station may be required to bear the costs associated with
delivering a good quality signal to the local receive facility of the
satellite carrier.

\(f\) REMEDIES.\--

\(1\) COMPLAINTS BY BROADCAST STATIONS.\--Whenever a local television
broadcast station believes that a satellite carrier has failed to meet
its obligations under subsections (b) through (e) of this section, such
station shall notify the carrier, in writing, of the alleged failure and
identify its reasons for believing that the satellite carrier failed to
comply with such obligations. The satellite carrier shall, within 30
days after such written notification, respond in writing to such
notification and comply with such obligations or state its reasons for
believing that it is in compliance with such obligations. A local
television broadcast station that disputes a response by a satellite
carrier that it is in compliance with such obligations may obtain review
of such denial or response by filing a complaint with the Commission.
Such complaint shall allege the manner in which such satellite carrier
has failed to meet its obligations and the basis for such allegations.

\(2\) OPPORTUNITY TO RESPOND.\--The Commission shall afford the
satellite carrier against which a complaint is filed under paragraph (1)
an opportunity to present data and arguments to establish that there has
been no failure to meet its obligations under this section.

\(3\) REMEDIAL ACTIONS; DISMISSAL.\--Within 120 days after the date a
complaint is filed under paragraph (1), the Commission shall determine
whether the satellite carrier has met its obligations under subsections
(b) through (e). If the Commission determines that the satellite carrier
has failed to meet such obligations, the Commission shall order the
satellite carrier to take appropriate remedial action. If the Commission
determines that the satellite carrier has fully met the requirements of
such subsections, the Commission shall dismiss the complaint.

\(g\) REGULATIONS BY COMMISSION.\--Within 1 year after the date of the
enactment of this section, the Commission shall issue regulations
implementing this section following a rulemaking proceeding. The
regulations prescribed under this section shall include requirements on
satellite carriers that are comparable to the requirements on cable
operators under sections 614(b)(3) and (4) and 615(g)(1) and (2).

\(h\) DEFINITIONS.\--As used in this section:

\(1\) DISTRIBUTOR.\--The term \'distributor\' means an entity which
contracts to distribute secondary transmissions from a satellite carrier
and, either as a single channel or in a package with other programming,
provides the secondary transmission either directly to individual
subscribers or indirectly through other program distribution entities.

\(2\) LOCAL RECEIVE FACILITY.\--The term \'local receive facility\'
means the reception point in each local market which a satellite carrier
designates for delivery of the signal of the station for purposes of
retransmission.

\(3\) LOCAL MARKET.\--The term \'local market\' has the meaning given
that term under section 122(j) of title 17, United States Code.

\(4\) SATELLITE CARRIER.\--The term \'satellite carrier\' has the
meaning given such term under section 119(d) of title 17, United States
Code.

\(5\) SECONDARY TRANSMISSION.\--The term \'secondary transmission\' has
the meaning given such term in section 119(d) of title 17, United States
Code.

\(6\) SUBSCRIBER.\--The term \'subscriber\' has the meaning given that
term under section 122(j) of title 17, United States Code.

\(7\) TELEVISION BROADCAST STATION.\--The term \'television broadcast
station\' has the meaning given such term in section 325(b)(7).

[^1]: Pub. Law 106-113, 113 Stat. 1501, Appendix I (1999). This is one
    in a series of Notices of Proposed Rulemaking and Orders the
    Commission will issue to implement the SHVIA.

[^2]: 47 U.S.C. §338(a)(1).

[^3]: We note that DirecTV now offers local television service packages
    to its subscribers in 22 markets and Echostar offers local
    television service in 28 markets. *See* www.directv.com and
    www.dishnetwork.com, respectively.

[^4]: The compulsory license is granted to satellite carriers, and cable
    operators, for the retransmission of television and radio broadcast
    signals. The license is conditioned upon compliance with FCC
    regulations and the remittance of royalty payments to the U.S.
    Copyright Office. The royalty fee is later distributed to the
    copyright owners of programs carried on the signals. The compulsory
    license eliminates the need for satellite carriers and cable
    operators to obtain the retransmission rights of each and every
    program carried by a broadcast station.

[^5]: Joint Explanatory Statement of the Committee of Conference on H.R.
    1554, 106^th^ Cong. ("Conference Report"), 145 Cong. Rec. at H11795
    (daily ed. Nov. 9, 1999).

[^6]: Conference Report at H11792, H11795.

[^7]: 17 U.S.C. §119.

[^8]: *See Annual Assessment of the Status of Competition for the
    Delivery of Video Programming*, Sixth Annual Report, 15 FCC Rcd 978
    at ¶ 70 (2000).

[^9]: *See* 17 U.S.C. §122(a) (*as amended by* §1002 of the SHVIA).

[^10]: 47 U.S.C. §338(a)(1) (*as amended by* §1008 of the SHVIA).

[^11]: The legislative history states that the procedural provisions
    applicable to Section 338 (concerning costs, avoidance of
    duplication, channel positioning, compensation for carriage, and
    complaints by broadcast stations) are generally parallel to those
    applicable to cable systems. Conference Report at H11795.

[^12]: 47 U.S.C. §338(g).

[^13]: *Implementation of the Cable Television Consumer Protection and
    Competition Act of 1992, Broadcast Signal Carriage Issues,* Report
    and Order 8 FCC Rcd 2965 (1993). The Commission later clarified
    these rules. *See Implementation of the Cable Television Consumer
    Protection and Competition Act of 1992, Broadcast Signal Carriage
    Issues,* Order, 8 FCC Rcd 4142 (1993) ("*Clarification Order*").

[^14]: Cable Television Consumer Protection and Competition Act of 1992,
    Pub. L. No. 102-385, 106 Stat. 1460 (1992).

[^15]: 47 U.S.C. §§534 and 535; 47 C.F.R. §76.56.

[^16]: *See* 47 C.F.R. §76.55(e).

[^17]: *But see*, Section C below concerning the new local receive
    facility requirement contained in Section 338.

[^18]: *See, e.g.*, 47 U.S.C. §535(l)(2) ("The term 'qualified local
    noncommercial educational television station' means a qualified
    noncommercial educational television station---(A) which is licensed
    to a principal community whose reference point. . . .is within 50
    miles of the principal headend of the cable system; or (B) whose
    Grade B service contour. . . .encompasses the principal headend of
    the cable system.).

[^19]: Cable operators are required to establish a basic service tier
    consisting of local broadcast signals and public, educational and
    governmental access channels pursuant to the rate regulation
    provisions of the 1992 Cable Act. 47 U.S.C. §543(b)(7).

[^20]: *See id.*

[^21]: 47 U.S.C. §534(b)(1)(B).

[^22]: 47 U.S.C. §535(a).

[^23]: We note, however, that DBS companies must devote 4% of their
    channel capacity to the carriage of noncommercial programming of an
    educational or informational nature. *See Implementation of Section
    25 of the Cable Television and Consumer Protection and Competition
    Act of 1992---Direct Broadcast Satellite Public Interest
    Obligations*, MM Dkt. No. 93-25, 13 FCC Rcd 23254 (1998); 47 U.S.C.
    §335.

[^24]: *See* 47 U.S.C. §541.

[^25]: *See generally*, 47 U.S.C. §§531, 541, and 544.

[^26]: *See Annual Assessment of the Status of Competition for the
    Delivery of Video Programming*, Sixth Annual Report, 15 FCC Rcd at
    981, 984 (2000).

[^27]: DBS operators use the 12 GHz frequency band (12.2-12.7 GHz).

[^28]: A transponder is that portion of a satellite used for reception
    and retransmission of a signal or signals in a certain bandwidth.
    DBS satellites typically use transponders with a 24 MHz bandwidth.
    Satellite digital compression allows 6 to 24 video signals to be
    carried on a single transponder.

[^29]: See Reply Comments of the Satellite Broadcasting and
    Communications Association in CS Docket No. 00-2, *Application of
    Network Nonduplication, Syndicated Exclusivity, and Sports Blackout
    Rules to Satellite Retransmissions*, February 28, 2000 at 2.

[^30]: The Commission has implemented the statutory provisions relating
    to retransmission consent in a separate proceeding. *See
    Implementation of the Satellite Home Viewer Improvement Act of
    1999---Retransmission Consent Issues*, Notice of Proposed
    Rulemaking, 14 FCC Rcd 21736 (1999); *Retransmission Consent Issues:
    Good Faith Negotiation and Exclusivity*, First Report and Order, 15
    FCC Rcd 5445 (2000).

[^31]: 47 U.S.C. §338(a)(1).

[^32]: In the legislative history accompanying Section 338, Congress
    noted its belief that the provision is constitutional under the
    First Amendment: "The conferees believe that the must carry
    provisions of this Act neither implicate nor violate the First
    Amendment. Rather than requiring carriage of stations in the manner
    of cable's mandated duty, this Act allows a satellite carrier to
    choose whether to incur the must carry obligation in a particular
    market in exchange for the benefits of the local statutory license.
    It does not deprive any programmers of potential access to carriage
    by satellite carriers. Satellite carriers remain free to carry any
    programming for which they are able to acquire the property rights.
    The provisions of this Act allow carriers an easier and more
    inexpensive way to obtain the right to use the property of copyright
    holders when they retransmit signals from all of a market's
    broadcast stations to subscribers in that market. The choice whether
    to retransmit those signals is made by carriers, not by the
    Congress. The proposed licenses are a matter of legislative grace,
    in the nature of subsidies to satellite carriers, and reviewable
    under the rational basis standard." *See* Conference Report at
    H11795. The Conferees also noted that they were "confident that the
    proposed license provisions would pass constitutional muster even if
    subjected to the O'Brien standard \[intermediate First Amendment
    scrutiny\] applied to the cable must carry requirement." *Id.*

[^33]: 47 C.F.R. §76.58.

[^34]: *See*, *e.g.*, *Broadcast Signal Carriage Order*, 8 FCC at 2974;
    47 C.F.R. §76.64(h).

[^35]: 47 C.F.R. §76.64(f)(2).

[^36]: *See* 47 C.F.R. §76.61(a) (regarding the carriage of commercial
    television stations) and (b) (regarding the carriage of
    noncommercial television stations).

[^37]: 47 C.F.R. §76.64(f)(4) and (l).

[^38]: 47 U.S.C. §325(b)(3)(C).

[^39]: Section 338(h)(4) of the Communications Act defines the term,
    satellite carrier, as having the meaning given such term in Section
    119(d) of title 17, United States Code. Section 119(d) defines
    satellite carrier to mean an entity that uses the facilities of a
    satellite or satellite service licensed by the Federal
    Communications Commission, to establish and operate a channel of
    communications for point-to-multipoint distribution of television
    station signals, and that owns or leases capacity or a service on a
    satellite in order to provide such point-to-multipoint distribution,
    except to the extent that such entity provides such distribution
    pursuant to tariff under the Communications Act of 1934, other than
    for private home viewing. 17 U.S.C. §119(d).

[^40]: Section 338(h)(5) defines the term, secondary transmission, as
    having the meaning given such term in section 119(d) of title 17,
    United States Code. Section 119(d), in turn, defines secondary
    transmission as having the meaning given such term in Section 111(f)
    of the Copyright Act. Section 111(f) defines secondary transmission
    as the "further transmitting of a primary transmission
    simultaneously with the primary transmission, or non-simultaneously
    with the primary transmission if by a "cable system" not located in
    whole or in part within the boundary of the forty-eight contiguous
    States, Hawaii, or Puerto Rico: *Provided, however*, That a
    non-simultaneous further transmission shall be deemed to be a
    secondary transmission if the carriage of the television broadcast
    signal comprising such further transmission is permissible under the
    rules, regulations, or authorizations of the Federal Communications
    Commission." 17 U.S.C. §111(f).

[^41]: Section 338(h)(6) defines the term, subscriber, as having the
    meaning given that term under section 122(j) of title 17, United
    States Code. Section 122(j) defines the term, subscriber, as a
    person who receives a secondary transmission service from a
    satellite carrier and pays a fee for the service, directly or
    indirectly, to the satellite carrier or to a distributor." 17 U.S.C.
    §122(j)(4).

[^42]: 47 U.S.C. §338(h)(7).

[^43]: 47 U.S.C. §325(b)(7)(B).

[^44]: *See* 47 U.S.C. §534(h)(2).

[^45]: *See* 47 U.S.C. §535(l)(1)

[^46]: *Broadcast Signal Carriage Order*, 8 FCC Rcd at 2973. Satellite
    stations replicate substantially all of the programming of another
    full power television station in a market and also broadcast a
    minimum amount of original programming. *See* *generally* 47 C.F.R.
    §73.3555 at note 5.

[^47]: 47 U.S.C. §338(h)(1).

[^48]: 47 U.S.C. §338(h)(3).

[^49]: 17 U.S.C. §122(j)(2)(A).

[^50]: 17 U.S.C. §122(j)(2)(B).

[^51]: 17 U.S.C. §122(j)(2)(C).

[^52]: *See* 47 C.F.R. §76.55(e)(2).

[^53]: 47 C.F.R. §76.55(e)(2)(i).

[^54]: 47 U.S.C. §534(h)(1)(C).

[^55]: *Id.*; 47 C.F.R. §76.59.

[^56]: *See Carriage of the Transmissions of Digital Television
    Broadcast Stations: Amendment of Part 76 of the Commission's Rules*,
    Notice of Proposed Rulemaking, CS Docket No. 98-120, 13 FCC Rcd
    15092, 15129 (1998) ("Digital Broadcast Signal Carriage Issues").

[^57]: 47 C.F.R. §76.59.

[^58]: 47 U.S.C. §338(b)(1). Subsection(b)(2) of the SHVIA adds that the
    regulations issued under subsection (g), (regarding primary video,
    material degradation for both commercial and noncommercial
    television stations, and digital television for commercial
    television stations) shall set forth the obligations necessary to
    carry out this subsection. 47 U.S.C. §338(b)(2). These issues are
    discussed in greater detail below.

[^59]: 47 U.S.C. §338(h)(2).

[^60]: 47 U.S.C. §534(h)(1)(B)(iii); 47 C.F.R. §76.55(c)(3).

[^61]: *Broadcast Signal Carriage Order*, 8 FCC Rcd at 2991. A broadcast
    station may use microwave facilities, fiber-optics, or even a
    translator station to improve the quality of its signal, and
    therefore be qualified for carriage. *Id.*

[^62]: *See Implementation of the Cable Television Consumer Protection
    and Competition Act of 1992: Broadcast Signal Carriage Issues*,
    Memorandum Opinion and Order, 9 FCC Rcd 6723, 6736 (1994) ("Must
    Carry Reconsideration").

[^63]: *Id.*

[^64]: 47 U.S.C. §534(b)(10); 47 C.F.R. §76.60(a).

[^65]: *Broadcast Signal Carriage Order*, 8 FCC Rcd at 2991.

[^66]: 47 U.S.C. §338(c)(1).

[^67]: 47 U.S.C. §534(b)(5).

[^68]: 8 FCC Rcd at 2980-81. The Commission has stated, in the cable
    carriage context, that programs in foreign languages (e.g.,
    MacNeil/Lehrer in Spanish) are not duplicative of the same programs
    broadcast in English, because they target different audiences. *Id.*
    at 2971.

[^69]: *Id.*

[^70]: *See* *Must Carry Reconsideration*, 9 FCC Rcd at 6733, quoting
    House Committee on Energy and Commerce, H.R. Rep. No. 628, 102d
    Cong., 2^nd^ Sess. (1992) at 94.

[^71]: 47 U.S.C. §339(d)(5).

[^72]: Conference Report at H11795.

[^73]: 47 U.S.C. §338(c)(2).

[^74]: 47 U.S.C. §535(l)(1).

[^75]: 47 C.F.R. §76.55(a).

[^76]: 47 U.S.C. §535(l)(2).

[^77]: *See* 47 U.S.C. §535(b) and (e); 47 C.F.R. §76.56(a).

[^78]: 47 U.S.C. §535(e).

[^79]: *Id.*

[^80]: *Broadcast Signal Carriage 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 were addressed separately in
    the statute and its legislative history. *Id.* at 2980.

[^81]: 47 U.S.C. §338(f)(1). The satellite carriage channel positioning
    scheme is quite different from the requirement imposed on cable
    operators. Under Section 614(b)(6) commercial television stations
    may choose among four channel positioning options vis-à-vis cable
    operators: (1) the channel number on which the station broadcasts
    over-the-air; (2) the channel on which the station was carried on
    July 19, 1985; (3) the channel on which it was carried on January 1,
    1992; and (4) any other channel number as is mutually agreed upon by
    the station and the cable operator. 47 U.S.C. §534(b)(6); 47 C.F.R.
    §76.57(a). Noncommercial television stations have three channel
    positioning options under Section 615(g)(5): (1) the channel number
    on which the station is broadcast over-the-air; (2) the channel on
    which the station was carried on July 19, 1985; and (3) any other
    channel number as is mutually agreed upon by the station and the
    cable operator. 47 U.S.C. §535(g)(5); 47 C.F.R. §76.57(b).

[^82]: Conference Report at H11795.

[^83]: 47 U.S.C. §338(g).

[^84]: 47 U.S.C. §534(b)(3).

[^85]: 47 U.S.C. §535(g)(1).

[^86]: *See Implementation of the Cable Television Consumer Protection
    and Competition Act of 1992---Broadcast Signal Carriage Issues*,
    Notice of Proposed Rulemaking, 7 FCC Rcd 8055, 8062 (1992) ("NPRM")
    (Section 614(b)(3)(B) provides that the cable operator shall carry
    the entirety of the program schedule of any television station
    included on its system unless carriage of specific programming is
    prohibited, and other programming is authorized to be substituted,
    pursuant to Section 76.67 (regarding sports broadcasts) or Subpart F
    of Part 76 of the Commission's rules (regarding nonduplication
    protection and syndicated exclusivity)).

[^87]: *WGN*, 693 F.2d 622 (7th Cir. 1982).

[^88]: *Broadcast Signal Carriage Order*, 8 FCC Rcd at 2986. The
    Commission declined to further define \"program‑related,\" apart
    from the WGN analysis, noting that carriage of information in the
    VBI was rapidly evolving. Close captioning information, and
    television ratings data are some examples of the material carried in
    the vertical blanking interval.

[^89]: The court stated that this could be available on a different
    channel from the video. *WGN*, 693 F.2d at 626.

[^90]: *Broadcast Signal Carriage Order*, 8 FCC Rcd at 2986.

[^91]: *Id.*

[^92]: We note that the closed captioning rules apply to both local and
    distant television stations.

[^93]: 47 C.F.R. §79.1(c). *See also* 47 U.S.C. §613.

[^94]: 47 U.S.C. §338(g).

[^95]: 47 U.S.C. §534(b)(4).

[^96]: 47 U.S.C. §535(g)(2).

[^97]: Conference Report at H11795.

[^98]: *Id.*

[^99]: *Id.*

[^100]: *See* 7 FCC Rcd at 8063 *citing* *Cable Television Technical and
    Operational Requirements*, *Report and Order* in MM Docket Nos.
    91-169 and 85-38, 7 FCC Rcd 2021 (1992) ("Cable Technical Report and
    Order") and *Cable Television Technical and Operational Requirements
    Memorandum Opinion and Order* in MM Docket Nos. 91-169 and 85-38,
    FCC 92-508 (1992) ("Cable Technical Reconsideration").

[^101]: *Broadcast Signal Carriage Order*, 8 FCC Rcd at 2990*.*; *see
    also*, *NPRM*, 7 FCC Rcd at 8063.

[^102]: *See* 8 FCC Rcd at 2990.

[^103]: *Id.*

[^104]: For example, if the dish is not properly situated or is
    obfuscated by foliage, the satellite carrier cannot be held
    responsible for the resulting degradation of picture quality.

[^105]: This is also a different digital format from the vestigial
    sideband modulation ("VSB") system that broadcasters are currently
    using to deliver over-the-air digital signals to viewers.

[^106]: We note that all digital video systems, including DBS, are based
    on MPEG standards for the compression of moving video images.

[^107]: Picture quality questions in this layer may arise in the future
    when satellite carriers decide to retransmit digital broadcast
    signals.

[^108]: QAM is the acronym for quadrature amplitude modulation.

[^109]: Quantization is part of the process by which analog signals are
    encoded into digital form. Specifically, it is the classification
    step that determines the number of bits to be used in the conversion
    process.

[^110]: We note that the signal is converted back to analog at the
    satellite set-top box so that the picture can be displayed on the
    analog television receiver.

[^111]: The coverage area or "footprint" of satellite systems can vary:
    (1) "global beam" where 1/3 of the earth is covered by a satellite;
    (2) "regional beam" where a couple of continents are covered by a
    satellite; (3) "conus coverage" which is the satellite footprint
    over the continental United States; and (4) "spot beam" as described
    above.

[^112]: 47 U.S.C. §338(g).

[^113]: 47 U.S.C. §534(b)(4)(B).

[^114]: Conference Report at H11795.

[^115]: 47 C.F.R. §§73.622-624.

[^116]: *See* 11 FCC Rcd 17771 (1996).

[^117]: Commencing April 1, 2003, digital broadcast television licensees
    and permittees must simulcast at least 50% of the video programming
    transmitted on their analog channel; commencing April 1, 2004, there
    is a 75% simulcasting requirement; commencing April 1, 2005, there
    is a 100% simulcasting requirement until the analog channel is shut
    off. *Fifth Report and Order*, 12 FCC Rcd 12809, 12832.

[^118]: The return of the analog spectrum is subject to certain
    exceptions related to consumer acceptance of digital technology and
    other market-based conditions as provided for in the 1997 Balanced
    Budget Act. 47 U.S.C. §309(j)(14)(B) (Balanced Budget Act language
    concerning the reversion of the analog television spectrum to the
    Government). *See also Fourth Report and Order*, 11 FCC Rcd 17771
    (1996); *Fifth Report and Order*, 12 FCC Rcd 12809 (1997); *Sixth
    Report and Order*, 12 FCC Rcd 14588 (1997).

[^119]: *Fifth Report and Order*, 12 FCC Rcd at 12840-41.

[^120]: *See Digital Broadcast Signal Carriage Issues*, 13 FCC Rcd 15092
    *et. seq*.

[^121]: *Id.* at 15113-15116. The other stated options included the
    System Upgrade Proposal, the Phase-in Proposal, the Either-Or
    Proposal, the Equipment Penetration Proposal, and the Deferral
    Proposal.

[^122]: 47 U.S.C. §338(e). Sections 614(b)(10) and 615(i) impose
    substantially similar requirements on cable operators.

[^123]: 47 U.S.C. §338(a)(2).

[^124]: 17 U.S.C. §501(f)(1)(as amended by Section 1002 of the SHVIA).

[^125]: 17 U.S.C. §501(f)(2).

[^126]: 47 U.S.C. §338(f)(1). The remedial provisions of the SHVIA are
    substantially similar to provisions applicable to cable operators
    set forth in Section 614(d)(1)-(3) of the 1992 Cable Act.

[^127]: 47 U.S.C. §338(f)(2).

[^128]: We note that there is a specific forfeiture provision for cable
    operator violations of the broadcast signal carriage rules. *See* 47
    C.F.R. §1.80: *Table II-Violations Unique to the Service* (base
    amount of individual violation set at \$7,500)

[^129]: *See* *Electronic Filing of Documents in Rulemaking
    Proceedings*, 63 Fed. Reg. 24,121 (1998).

[^130]: *See* 5 U.S.C. §603. The RFA, *see* 5 U.S.C. §601 *et. seq*.,
    has been amended by the Contract With America Advancement Act of
    1996, Pub. L. No. 104-121, 110 Stat. 847 (1996) (CWAAA). Title II of
    the CWAAA is the Small Business Regulatory Enforcement Fairness Act
    of 1996 (SBREFA).

[^131]: *See* 5 U.S.C. §603(a).

[^132]: *See id.*

[^133]: Act of Nov. 29, 1999, Pub. Law 106-113, §1000(9), 113 Stat.
    1501, Appendix A.

[^134]: 5 U.S.C. §604(b)(3).

[^135]: 5 U.S.C. §601(3)(incorporating by reference the definition of
    "small business concern" in 15 U.S.C. § 632.) Pursuant to the RFA,
    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 the term which are appropriate to the activities
    of the agency and publishes such definition(s) in the Federal
    Register. 5 U.S.C. § 601(3).

[^136]: 15 U.S.C. §632.

[^137]: 13 C.F.R. § 121.201, Standard Industrial Code (SIC) 4833 (1996).

[^138]: 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).

[^139]: *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.

[^140]: 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).

[^141]: *Id*.; SIC 7812 (Motion Picture and Video Tape Production); SIC
    7922 (Theatrical Producers and Miscellaneous Theatrical Services
    (producers of live radio and television programs).

[^142]: FCC News Release No. 31327, Jan. 13, 1993; Economics and
    Statistics Administration, Bureau of Census, U.S. Department of
    Commerce, Appendix A-9.

[^143]: FCC News Release, Broadcast Station Totals as of September, 1999
    (released November, 1999).

[^144]: 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.

[^145]: 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 1,230 stations categorized as small
    businesses.

[^146]: 13 C.F.R. §121.201 (SIC 4841).

[^147]: 1992 Economic Census Industry and Enterprise Receipts Size
    Report, Table 2D, SIC Code 4841 (Bureau of the Census data under
    contract to the Office of Advocacy of the SBA).

[^148]: 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").*.

[^149]: *Third Annual Report,* 12 FCC Rcd at 4385, ¶ 49..

[^150]: *Id.*

[^151]: *Id.*

[^152]: *Supra* at ¶ 8.