**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

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| In the Matter of:                | *  | MB Docket No. 05-89          |
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| Implementation of Section 207 of | ** |                              |
| the Satellite Home Viewer        |    |                              |
| Extension and Reauthorization    | *  |                              |
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**REPORT AND ORDER**

**Adopted: June 6, 2005 Released: June 7, 2005**

By the Commission:

# Introduction

1\. In this Report and Order ("*Order*"), we adopt rules implementing
Section 207 of the Satellite Home Viewer Extension and Reauthorization
Act of 2004 ("SHVERA").[^1] Section 207 extends Section 325(b)(3)(C) of
the Communications Act until 2010 and amends that section to impose a
reciprocal good faith retransmission consent bargaining obligation on
multichannel video programming distributors ("MVPDs"). This section
alters the bargaining obligations created by the Satellite Home Viewer
Improvement Act of 1999 ("SHVIA") which imposed a good faith bargaining
obligation only on broadcasters.[^2] As discussed below, because the
Commission has in place existing rules governing good faith
retransmission consent negotiations and because Congress did not
instruct us through the SHVERA to modify those rules in any substantive
way, we conclude that the most faithful and expeditious implementation
of the amendments contemplated in Section 207 of the SHVERA is to extend
to MVPDs the existing good faith bargaining obligation imposed on
broadcasters under our rules. We also conclude that the reciprocal
bargaining obligation applies to retransmission consent negotiations
between all broadcasters and MVPDs regardless of the designated market
area in which they are located.

**II. BACKGROUND**

2\. Section 325(b)(3)(C) of the Communications Act, as enacted by the
SHVIA, instructed the Commission to commence a rulemaking proceeding to
revise the regulations by which television broadcast stations exercise
their right to grant retransmission consent.[^3] Specifically, that
section required that the Commission, until January 1, 2006:

> prohibit a television broadcast station that provides retransmission
> consent from engaging in exclusive contracts for carriage or failing
> to negotiate in good faith, and it shall not be a failure to negotiate
> in good faith if the television broadcast station enters into
> retransmission consent agreements containing different terms and
> conditions, including price terms, with different multichannel video
> programming distributors if such different terms and conditions are
> based on competitive marketplace considerations.[^4]

The Commission issued a Notice of Proposed Rulemaking seeking comment on
how best to implement the good faith and exclusivity provisions of the
SHVIA.[^5] After considering the comments received in response to the
notice, the Commission adopted rules implementing the SHVIA good faith
provisions and complaint procedures for alleged rule violations.[^6]

3\. The *Good Faith Order* determined that Congress did not intend to
subject retransmission consent negotiation to detailed substantive
oversight by the Commission.[^7] Instead, the order found that Congress
intended that the Commission follow established precedent, particularly
in the field of labor law, in implementing the good faith retransmission
consent negotiation requirement.[^8] Consistent with this conclusion,
the *Good Faith Order* adopted a two-part test for good faith. The first
part of the test consists of a brief, objective list of negotiation
standards.[^9] First, a broadcaster may not refuse to negotiate with an
MVPD regarding retransmission consent. Second, a broadcaster must
appoint a negotiating representative with authority to bargain on
retransmission consent issues. Third, a broadcaster must agree to meet
at reasonable times and locations and cannot act in a manner that would
unduly delay the course of negotiations. Fourth, a broadcaster may not
put forth a single, unilateral proposal. Fifth, a broadcaster, in
responding to an offer proposed by an MVPD, must provide considered
reasons for rejecting any aspects of the MVPD's offer. Sixth, a
broadcaster is prohibited from entering into an agreement with any party
conditioned upon denying retransmission consent to any MVPD. Finally, a
broadcaster must agree to execute a written retransmission consent
agreement that sets forth the full agreement between the broadcaster and
the MVPD.[^10]

4\. The second part of the good faith test is based on a totality of the
circumstances standard. Under this standard, an MVPD may present facts
to the Commission which, even though they do not allege a violation of
the specific standards enumerated above, given the totality of the
circumstances constitute a failure to negotiate in good faith.[^11]

5\. The *Good Faith Order* provided examples of negotiation proposals
that presumptively are consistent and inconsistent with "competitive
marketplace considerations."[^12] The *Good Faith Order* found that it
is implicit in Section 325(b)(3)(C) that any effort to further
anti-competitive ends through the negotiation process would not meet the
good faith negotiation requirement.[^13] The order stated that
considerations that are designed to frustrate the functioning of a
competitive market are not "competitive marketplace considerations."
Further, conduct that is violative of national policies favoring
competition \-- that, for example, is intended to gain or sustain a
monopoly, an agreement not to compete or to fix prices, or involves the
exercise of market power in one market in order to foreclose competitors
from participation in another market \-- is not within the competitive
marketplace considerations standard included in the statute.[^14]

6\. Finally, the *Good Faith Order* established procedural rules for the
filing of good faith complaints pursuant to Section 76.7 of the
Commission's rules.[^15] The burden of proof is on the complainant to
establish a good faith violation and complaints are subject to a one
year limitations period.[^16]

**III. DISCUSSION**

7\. In enacting the SHVERA good faith negotiation obligation for MVPDs,
Congress used language identical to that of the SHVIA imposing a good
faith obligation on broadcasters, requiring the Commission, until
January 1, 2010, to:

> prohibit a multichannel video programming distributor from failing to
> negotiate in good faith for retransmission consent under this section,
> and it shall not be a failure to negotiate in good faith if the
> distributor enters into retransmission consent agreements containing
> different terms and conditions, including price terms, with different
> broadcast stations if such different terms and conditions are based on
> competitive marketplace considerations.[^17]

The Commission issued a Notice of Proposed Rulemaking seeking comment on
how to implement the reciprocal bargaining obligation set forth in the
SHVERA.[^18] The Commission also requested comment on whether the good
faith negotiating standards may be different for carriage of television
broadcast stations outside of their designated market area ("DMA").[^19]

**A. The Reciprocal Bargaining Obligation for Entities within the Same
DMA**

8\. In the *Notice*, the Commission observed that Congress did not
instruct the Commission to amend its existing good faith rules in any
way other than to implement the statutory extension and impose the good
faith obligation on MVPDs. Accordingly, the Commission stated that it
did not believe that Congress intended that the Commission revisit the
findings and conclusions that were reached in the SHVIA rulemaking.[^20]
The little legislative history directly applicable to Section 207
supports this approach and, in pertinent part, provides:

> In light of evidence that retransmission negotiations continue to be
> contentious, the Committee chose to extend these obligations, and also
> to begin applying the good-faith obligations to MVPDs. The Committee
> intends the MVPD good-faith obligations to be analogous to those that
> apply to broadcasters, and not to affect the ultimate ability of an
> MVPD to decide not to enter into retransmission consent with a
> broadcaster.[^21]

The *Notice* stated that the Commission believed that the implementation
of Section 207 most consistent with the apparent intent of Congress is
to amend our existing rules to apply equally to both broadcasters and
MVPDs and tentatively concluded Sections 76.64(l) and 76.65 should be
amended accordingly.[^22] The *Notice* sought comment on that approach
and any other reasonable implementation of Section 207.[^23]

9\. The majority of commenters agreed with the implementation proposed
by the Commission in the *Notice* as it applies to in-market
negotiations.[^24] The Network Affiliates assert that:

> \[b\]ecause it is presumed that Congress acts with knowledge of the
> existing regulatory framework when it enacts new legislation,
> including when the new law incorporates the language of the prior law,
> the *Notice*'s conclusion that "Congress did not intend that the
> Commission revisit the findings and conclusions that were reached in
> the SHVIA rulemaking" is undoubtedly correct, as is the *Notice*'s
> tentative conclusion "to amend our existing rules to apply equally to
> both broadcasters and MVPDs."[^25]

10\. EchoStar asserts, however, that MVPDs and broadcasters occupy
significantly different positions when negotiating retransmission
consent and that the Commission should recognize this distinction when
applying the totality of the circumstances test and in determining
whether specific terms and conditions are consistent with "competitive
market place conditions."[^26] EchoStar asserts that it would be
premature to provide an extensive list of bargaining conduct that could
be considered a failure to negotiate in good faith under the totality of
the circumstances test and advises that the Commission pursue such
measures on a case-by-case basis.[^27] Finally, EchoStar argues that the
Commission should clarify that tying is not consistent with competitive
marketplace considerations if it would violate the antitrust laws.[^28]

11\. NCTA argues that:

> Congress intended that broadcasters *have to* offer to make their
> programming available to all MVPDs at some price or other terms.
> Otherwise, one MVPD could obtain de facto exclusivity over a
> broadcaster's signal.
>
> \* \* \*
>
> MVPDs, on the other hand, have a duty to carry a local broadcast
> signal if the broadcaster opts for mandatory carriage, but no duty to
> agree to pay or carry a broadcaster if it elects *retransmission
> consent*. Indeed, Congress made clear in section 207 that it intends
> the "analogous" good faith obligations to "[not affect the ultimate
> ability of an MVPD to decide not to enter into retransmission consent
> with a broadcaster]{.underline}."[^29]

Absent an MVPD's ability to ultimately refuse carriage of a broadcaster
that has elected retransmission consent, argues NCTA, reciprocal good
faith bargaining rules simply turn retransmission consent into another
form of must carry but with the possibility of payment in addition. NCTA
states that it is broadcasters' unique status as users of public
spectrum with the obligation to provide free over-the-air signals and
ability to exact mandatory carriage on cable and satellite providers
that triggers their obligation to negotiate retransmission consent in
good faith in all instances.[^30] NCTA asserts that there are "no
corresponding reasons why cable operators should be required to
negotiate to carry the signals of broadcasters that have specifically
elected to forgo their statutory right to be carried."[^31] Citing a
"host of legitimate editorial and business reasons why a cable operator
could decide not to carry a particular broadcast station," NCTA
maintains that the Commission should interpret the good faith
negotiation rules to give MVPDs the right to refuse to enter into
retransmission consent negotiations.[^32] NAB counters that NCTA's
argument nullifies the language of the statute imposing a reciprocal
good faith negotiation obligation on MVPDs and Congress's intent that
such obligation "be analogous \[to\] those that apply to
broadcasters."[^33] At the very least, NCTA asserts, the Commission
should confirm that cable operators have the right to insist upon
carriage compensation in all retransmission consent negotiations.[^34]

12\. Arguing that the Commission has recognized the imbalance of power
in retransmission consent negotiations between media conglomerates and
small and medium sized cable operators, ACA requests that the Commission
adopt procedural protections for these cable operators.[^35] ACA
requests that the Commission require that broadcasters give 30 days
written notice to a small or medium sized cable operator of their intent
to file a good faith complaint. In addition, ACA asks that the
Commission provide an extended 30 day period in which to respond to good
faith complaints filed against them.[^36] ACA emphasizes that these
protections are solely procedural and that the substantive good faith
rules would be the same for MVPDs of all sizes.[^37] NAB and the Network
Affiliates assert that ACA offers no support for a procedural
distinction for medium and small cable operators and argue that the
better course would be to grant individual requests for extensions of
time on a case-by-case basis.[^38] Finally, ACA asks the Commission to
clarify that it is not a violation of the good faith rules for a cable
operator to decline to carry a broadcaster's multicast programming.[^39]
NAB and the Network Affiliates assert that the Commission, in the *Good
Faith Order,* found that proposals for carriage "conditioned on carriage
of any other programming, *such as a broadcaster's digital signals*. . .
." to be consistent with competitive marketplace considerations.[^40]
These commenters argue that ACA provides no evidence to justify a
departure from the Commission's finding. Indeed, NBC asks the Commission
to clarify that, now and after completion of the digital transition, the
good faith obligation requires MVPDs to negotiate for the entire free,
over-the-air signal offered by a television station.[^41]

13\. After reviewing the record in this proceeding, we adopt the
tentative conclusion set forth in the *Notice* in order to implement the
will of Congress as indicated in Section 207 and the legislative
history. Accordingly, we will amend our existing rules to apply equally
to both broadcasters and MVPDs.[^42] Broadcasters will now be able to
file a complaint against an MVPD alleging that such MVPD breached its
duty to negotiate retransmission consent in good faith.[^43]
Broadcasters and MVPDs must comply with the seven objective negotiation
standards set forth in Section 76.65(b)(1) as amended herein. In
addition, MVPDs and broadcasters will now be equally subject to, and
able to file, a complaint based on the totality of the
circumstances.[^44]

14\. We cannot agree with NCTA's assertion that, because of the
differences between MVPDs and broadcasters, MVPDs should have the option
of refusing outright to negotiate retransmission consent with any
broadcaster within that MVPD's DMA. To agree with NCTA's assertion would
be to render Section 207 a virtual nullity. Under NCTA's interpretation
of Section 207, the good faith negotiation obligation is not triggered
unless and until an MVPD has determined that retransmission of a
broadcaster's signal is attractive. The Commission rejected similar
arguments raised by broadcasters in implementing the good faith
provisions of the SHVIA:

> \[W\]e do not interpret Section 325(b)(3)(C) as largely hortatory as
> suggested by some commenters. As we stated in the Notice, Congress has
> signaled its intention to impose some heightened duty of negotiation
> on broadcasters in the retransmission consent process. In other words,
> Congress intended that the parties to retransmission consent have
> negotiation obligations greater than those under common law. . . . We
> believe that, by imposing the good faith obligation, Congress intended
> that the Commission develop and enforce a process that ensures that
> broadcasters and MVPDs meet to negotiate retransmission consent and
> that such negotiations are conducted in an atmosphere of honesty,
> purpose and clarity of process.[^45]

This "heightened duty of negotiation" has now been imposed by Congress
on MVPDs. In drafting Section 207, Congress was fully aware of the
Commission's implementation of the SHVIA good faith provision.[^46]
Armed with this knowledge, Congress crafted the reciprocal bargaining
provision to mirror the obligation imposed by the SHVIA and the House
Report stated that it was intended to be "analogous" to the SHVIA good
faith obligation.[^47] We believe that if Congress had intended that
this duty apply to MVPDs only when they were affirmatively interested in
a prospective carriage arrangement, it would have so indicated in the
statute or legislative history.[^48] Moreover, we do not believe that
the obligations imposed herein will unduly burden MVPDs. First, the good
faith obligation merely requires that MVPDs comply with the per se
negotiating standards of Section 76.65(b)(1) and refrain from insisting
on rates, terms and conditions that are inconsistent with competitive
marketplace considerations. Second, as discussed below, because we
conclude that negotiations involving truly distant broadcasters and
MVPDs and negotiations for which a broadcaster is contractually
precluded from reaching consent may be truncated, MVPDs and broadcasters
alike will not be required to engage in an unending procession of
extended negotiations. Finally, provided that a party to a reciprocal
bargaining negotiation complies with the requirements of the
Commission's rules, failure to reach agreement would not violate either
Section 325(b)(3)(C) or Section 76.65 of the Commission's rules.
Accordingly, NCTA's argument that the reciprocal bargaining obligation
will lead to another form of must carry is incorrect.

15\. With regard to the totality of the circumstances test, we agree
with EchoStar that MVPDs and broadcasters occupy different positions
when negotiating retransmission consent and that the Commission should
recognize this distinction when applying the totality of the
circumstances test and in determining whether specific terms and
conditions are consistent with competitive marketplace considerations.
The Commission must always take into account the relative bargaining
positions of the parties when examining the totality of the
circumstances for a failure to negotiate in good faith.[^49] We also
agree that identifying additional negotiating proposals that can be
considered to reflect a failure to negotiate in good faith under the
totality of the circumstances test should be done on a case-by-case
basis. Finally, we clarify that tying is not consistent with competitive
marketplace considerations if it would violate the antitrust laws.[^50]

16\. We decline to establish special procedures for medium and small
cable operators as requested by ACA. We agree with NAB and the Network
Affiliates that ACA has failed to justify different procedural treatment
for smaller cable operators. We fail to see what benefit the 30 day
pre-complaint notice would have for these operators, particularly in
instances where a retransmission consent agreement will imminently
expire with the attendant loss of the broadcaster's signal. Because the
Commission concluded in the *Good Faith Order* that MVPDs cannot
continue to carry a broadcaster's signal after the existing consent
expires even if a complaint is pending with the Commission,[^51] it
benefits both broadcasters and MVPDs alike that the Commission decline
to institute a procedural delay that would preclude the filing of a good
faith complaint as soon as possible after the alleged violation.
Accordingly, we believe that the more prudent course is to entertain
individual requests for extensions of time on a case-by-case basis
through which MVPDs and broadcasters, large and small, can establish
that the existing pleading cycle set forth in Section 76.7 of the
Commission's rules is inadequate to allow that party to present an
effective defense to a good faith complaint.

17\. ACA requested that the Commission clarify that it is not a
violation of the good faith rules for a cable operator to decline to
carry a broadcaster's multicast programming. Conversely, NBC asks that
the Commission determine that now, and after completion of the digital
transition, the good faith obligation requires MVPDs to negotiate for
the entire free, over-the-air signal offered by a television station.
The Commission stated numerous times in the *Good Faith Order* that
"proposals for carriage conditioned on carriage of any other programming
such as a broadcaster's digital signals" are presumptively consistent
with competitive marketplace considerations and the good faith
negotiation requirement.[^52] As the Commission stated:

> We do not find anything to suggest that, for example, requesting an
> MVPD to carry . . . digital broadcast signals is impermissible or
> other than a competitive marketplace consideration. . . . After
> passage of the 1992 Cable Act, Congress left negotiation of
> retransmission consent to the give and take of the competitive
> marketplace. In SHVIA, absent conduct that is violative of national
> policies favoring competition, we believe Congress intended this same
> give and take to govern retransmission consent. In addition, *we point
> out that these are bargaining proposals which an MVPD is free to
> accept, reject or counter with a proposal of its own.*[^53]

Whether an MVPD carries a broadcaster's entire free, over-the-air
signal, be it high definition or multicast, is a matter to be determined
through the retransmission consent negotiation process. The reciprocal
bargaining obligation neither requires nor prohibits the carriage of a
broadcaster's entire free signal. If it is important for a broadcaster
to obtain full carriage of its digital signal, the broadcaster must be
willing to accommodate the reasonable requests of an MVPD in order to
secure such carriage. If it is important for an MVPD to carry part, but
not all, of a broadcaster's digital signal it likewise must negotiate in
good faith. In each instance, either party must be willing to forgo
carriage if agreement is not reached after negotiating in accordance
with the rules established herein.

**B. The Reciprocal Bargaining Obligation and Entities Located in
Different DMAs**

18\. In the *Notice*, the Commission noted that the original SHVIA good
faith provision by its terms applied to "television broadcast
stations."[^54] Similarly, the SHVERA good faith provision applies to
"multichannel video programming distributors." The Commission sought
comment whether, under the statute, the good faith negotiating standards
may be any different for carriage of significantly viewed television
broadcast stations outside of their DMA.[^55] Significantly viewed
television broadcast stations do not have carriage rights outside of
their DMA and carriage of their signals by out-of-market MVPDs is
permissive. The *Notice* asked whether the same good faith negotiation
standard should apply to broadcasters and MVPDs regardless of the DMA in
which they reside, or whether the good faith retransmission consent
negotiation obligation should apply only to MVPDs and broadcasters
located in the same DMA.[^56] As discussed below, we do not interpret
Section 325(b)(3)(C) to limit the geographic scope of the reciprocal
bargaining obligation in retransmission consent negotiations. At the
same time, we conclude that the nature of this obligation may vary
according to where the MVPD and the broadcaster are located. With regard
to significantly-viewed and in-market signals, we believe that the
obligation should be essentially the same. With regard to more distant
signals, the obligation applies, but distance is likely to be a critical
factor in determining compliance under the totality of circumstances
test.

19\. The Network Affiliates, NAB, and NBC assert that the good faith
bargaining obligation should not apply to negotiations for consent to
retransmit broadcast signals outside of a television station's
market.[^57] The Network Affiliates argue that:

> Indeed, SHVERA itself, in enacting new Section 340, the significantly
> viewed provision, expressly provides (1) that "\[c\]arriage of a
> signal under this section is not mandatory" by a satellite carrier and
> (2) that the "eligibility of the signal of a station to be carried
> under this section does not affect any right of the licensee of such
> station to grant (or withhold) retransmission consent under section
> 325(b)(1)."[^58]

The Network Affiliates stress that, in granting significantly viewed
broadcasters the right to withhold retransmission consent, the SHVERA
"specifically references Section 325(b)(1), the statutory retransmission
consent provision, not Section 325(b)(3)(C), the statutory good faith
bargaining provision."[^59]

20\. NBC argues that, in adopting the SHVIA, Congress expressly intended
to protect the property rights of program providers as well as the
market-based outcomes of private negotiations between program providers
and local broadcasters.[^60] Citing the legislative history of SHVIA,
NBC asserts that Congress was guided by three principles: (1) the desire
to promote competition in the marketplace for MVPD programming to reduce
costs to subscribers; (2) "the importance of protecting and fostering
the system of television networks as they relate to the concept of
localism;" and (3) "perhaps most importantly" the need to act narrowly
to protect the "exclusive property rights granted by the Copyright Act
to copyright holders" and "minimize the effects of government intrusion
on the broader market in which the affected property rights and
industries operate."[^61] NBC maintains that neither Congress nor the
Commission suggested that the good faith requirement should be read to
override the private property rights of networks, syndicators or other
program providers and permit a distribution outlet, either broadcaster
or cable operator, to consent to further redistribution of programming
that the outlet does not own.[^62] NBC concedes that under the good
faith requirements, a station cannot refuse to negotiate with an MVPD
located in the same DMA regarding retransmission consent. Similarly,
argues NBC, a station cannot enter into an agreement with an MVPD that
prohibits the station from entering into retransmission consent with
another MVPD. Neither of these concepts, however, prevents a station
from refusing to grant out-of-market retransmission consent with respect
to programming for which it does not hold extra-territorial rights.[^63]
NBC also argues that Congress has consistently, both in the 1992 Cable
Act[^64] and the SHVIA,[^65] protected the rights afforded by
programming providers to local stations against distant stations. The
Network Affiliates note that this concern is carried through in the
legislative history of the SHVERA.[^66] NBC also cites numerous points
in the *Good Faith Order* in which the Commission discussed the "local"
nature of the good faith negotiation obligation.[^67]

21\. Several commenters argue that the reciprocal bargaining obligation
should be the same regardless of whether or not the entities are located
in the same DMA, or at a minimum, extended to those areas in which a
station is significantly viewed.[^68] EchoStar argues that "\[i\]n the
absence of specific limiting language, the good faith standards
established by the Commission under Section 325(b)(3)(C) apply to all
cases where retransmission consent is required."[^69] As support for
this conclusion, EchoStar, and other commenters, cite the Media Bureau's
decision in *Monroe, Georgia Water Light and Gas Commission v. Morris
Network, Inc.,* in which the Media Bureau stated that "\[w\]e caution
broadcasters to be aware of existing contractual obligations that affect
a television station\'s ability to negotiate retransmission consent in
good faith. The statute appears to apply equally to stations and MVPDs
in the same local market or different markets."[^70] The Network
Affiliates argue that reliance on the Media Bureau's *Monroe* decision
is misplaced because the statement quoted is no more than equivocal
*dicta.*[^71]

22\. DirecTV and EchoStar argue that the fact that out-of-market
broadcasters have no carriage rights is inapposite because once an
in-market broadcaster forgoes mandatory carriage, it too has no
guaranteed carriage rights.[^72] DirecTV asserts that allowing
significantly viewed broadcasters to refuse to negotiate with DBS
operators where cable operators already distribute such programming
would violate SHVERA's prohibition on exclusive retransmission consent
agreements.[^73] ACA states that this situation is particularly
problematic for its members, many of which serve rural communities on
the edges of DMAs in which out-of-market signals from an adjoining DMA
are considered "local" by subscribers.[^74]

23\. EchoStar argues further that contractual provisions that restrict a
broadcaster's ability to negotiate retransmission consent in good faith
(*e.g*., certain network affiliation agreements) must be declared per se
good faith violations by the Commission.[^75] Citing the *Good Faith
Order*, EchoStar states that the Commission has already determined that
"\[p\]roposals that result from agreements not to compete or fix prices"
are presumed inconsistent with competitive marketplace
considerations.[^76] EchoStar asserts that NBC's "protection of property
rights" argument is flawed because it assumes that copyright holders
have the "unfettered right to control further redistribution of
broadcast programming."[^77] EchoStar maintains that Congress limited
copyright holders' absolute control over redistribution of broadcast
programming when it created the cable and satellite compulsory licenses
for retransmission of broadcast signals.[^78] NBC asserts that
compulsory copyright licenses offer no refuge from territorial
exclusivity because "\[t\]hese limited statutory licenses provide an
administratively convenient means to permit redistribution of
proprietary television programming via cable and satellite, but only
*after* the \[cable or satellite provider\] has received the express
consent of the affected television station, subject to the terms of that
station's existing programming agreements with regard to territorial
exclusivity."[^79] EchoStar argues that contractual provisions that
prevent the granting of retransmission consent to out-of-market MVPDs
would thwart Congress's intent to make out-of-market stations available
to MVPD subscribers through the compulsory licensing provisions of the
Copyright Act.[^80] ACA agrees asserting that the plain language of
Section 325(b), the legislative history of SHVIA and the Commission's
implementing regulations prohibit market exclusivity provisions in
network affiliation agreements.[^81] The Network Affiliates counter that
there is nothing in SHVERA or its legislative history to justify the
sweeping effect that EchoStar desires -- "to effectively nullify the
territorial restrictions in programming agreements that serve to grant,
and to limit, program exclusivity."[^82]

24\. EchoStar also contends that local broadcasters are beginning to
demand that MVPDs contract away their right to import significantly
viewed out-of-DMA stations as part of retransmission consent
negotiations.[^83] The Network Affiliates defend this practice. Citing
the *Good Faith Order*, the Network Affiliates state that the Commission
found that it would be presumptively inconsistent with competitive
marketplace considerations and the good faith negotiation requirement
for a broadcast station to offer a proposal that "specifically
foreclose\[s\] carriage of other programming services by the MVPD that
*do not substantially duplicate the proposing broadcaster's
programming*."[^84] Thus, argue the Network Affiliates, broadcasters can
offer proposals that foreclose the carriage of other programming
services by an MVPD that substantially duplicate the local broadcast
station's programming.

25\. DirecTV advises the Commission to adopt an "agree with one,
negotiate with all" rule that applies to negotiations for significantly
viewed broadcast signals. Under this rule, both broadcasters and MVPDs
are free to refuse outright to negotiate carriage of significantly
viewed signals under certain conditions.[^85] Once a party has agreed to
significantly viewed carriage with any other party, however, it must
negotiate in good faith for carriage with all other similarly situated
parties.[^86] DirecTV explains its proposal as follows:

> Any broadcaster would be free, if it wished, to categorically reject
> negotiations for carriage in out-of-market, significantly viewed areas
> -- but only if it did so with respect to *all* MVPDs. Once a
> broadcaster granted consent for one MVPD to carry such signals,
> however, it would have to negotiate with all other MVPDs for such
> carriage, and such negotiations would have to comply with the
> Commission's good faith negotiation standard. . . . This rule would
> apply reciprocally to MVPDs. DirecTV would be free to decide, for
> example, that it will not carry New York stations in significantly
> viewed areas in the Hartford DMA and, having made that decision, would
> be free not to negotiate with New York stations regarding such
> carriage. If however, it were to carry one New York station in a
> Hartford significantly viewed area, it would have to negotiate \[in
> good faith\] with all \[significantly viewed\] New York stations
> seeking carriage in Hartford. . . .[^87]

Under either scenario, DirecTV asserts, the parties would not be
required to reach agreement, but only to negotiate in good faith in
accordance with the Commission's rules.[^88]

26\. As noted above, the SHVIA good faith provision by its terms applied
to "television broadcast stations." Similarly, the SHVERA good faith
provision applies to "multichannel video programming distributors."
Neither the text of the SHVIA or the SHVERA, nor their respective
legislative histories, expressly delineate a territorial boundary of the
good faith negotiation obligation. Some commenters argue that the
reciprocal bargaining obligation attaches to negotiations between MVPDs
and broadcasters that are significantly viewed outside of their DMA.
Others assert that these obligations attach to any retransmission
consent negotiation regardless of where the MVPD and the broadcaster are
situated. For the reasons discussed below, we agree with the latter
interpretation of Section 325(b)(3)(C).[^89]

27\. The language adopted by Congress in Section 325(b)(3)(C) of the
SHVIA, as well the amendment adopted in the SHVERA, support the
conclusion that the reciprocal bargaining obligation applies to all
retransmission consent agreements. The text of the statute applies
without qualification to "television broadcast stations," "multichannel
video programming distributors" and "retransmission consent
agreements."[^90] Nor does the legislative history appear to contemplate
a limitation on the reciprocal bargaining obligation such that it would
apply to some, but not all, retransmission consent negotiations. Other
than mandatory carriage pursuant to Section 614 and satellite carrier
service to unserved households, all other lawful carriage of television
broadcast stations is by retransmission consent. There is no statutory
or regulatory distinction between in-market carriage and out-of-market
carriage pursuant to retransmission consent. Here, we believe that the
statute is clear on its face and we must give effect to its plain
meaning.[^91] Further, we believe that this is the best interpretation
of the provision consistent with the SHVIA, the SHVERA and their
respective legislative histories. This interpretation avoids the
incongruous result of satellite carriers seeking to carry a broadcaster
in significantly viewed communities facing outright refusal to negotiate
carriage by such broadcaster even though cable operators in the same
communities are actually carrying such programming through
retransmission consent.[^92] We fail to see how an interpretation of
Section 325(b)(3)(C) that permits this result implements Congress's
direction that "MVPD good-faith obligations . . . be analogous to those
that apply to broadcasters."[^93] Accordingly, we conclude that the
reciprocal bargaining obligation of Section 325(b)(3)(C) applies to the
negotiation of all retransmission consent.

28\. Some commenters argue that a separate provision of the SHVERA, new
Section 340 of the Communications Act, indicates that the reciprocal
bargaining provision applies solely to in-market retransmission consent
negotiations. We disagree. Section 340(d) of the Communications Act, as
enacted in the SHVERA, discusses the carriage rights of satellite
carriers with respect to significantly viewed broadcast stations and
states that "\[t\]he eligibility of the signal of a station to be
carried under this section does not affect any right of the licensee of
such station to grant (or withhold) retransmission consent under section
325(b)(1)."[^94] The legislative history of the provision provides that:

> Cable operators are under no obligation to carry in a local market a
> distant significantly viewed signal, and the Committee intends
> satellite carriage of such a distant signal in a local market to be
> similarly voluntary. . . . Cable operators must obtain retransmission
> consent to carry distant significantly viewed signals into a local
> market and the committee intends the same obligation to apply to
> satellite.[^95]

We interpret this provision, and its legislative history, merely to
acknowledge that mandatory carriage operates only with regard to
broadcasters and cable operators and satellite carriers operating in the
same DMA. As discussed above, retransmission consent carriage of
significantly viewed signals is permissive. We do not interpret this
provision as limiting the geographic scope of Section 325(b)(3)(C). Nor
do we interpret as conflicting with this reading the fact that Congress,
in Section 340(d), referenced Section 325(b)(1) of the Communications
Act, rather than Section 325(B)(3)(C), the reciprocal bargaining
obligation.[^96] Section 325(b)(1) is the statutory provision that gives
rise to the right of retransmission consent. It originates in the 1992
Cable Act and predates both the SHVIA and the SHVERA. The right of
in-market broadcasters and out-of-market broadcasters alike to require
retransmission consent arises from Section 325(b)(1). The reciprocal
bargaining provision of Section 325(b)(3)(C) is an obligation that
Congress deliberately overlay upon the substantive retransmission
consent right created by Section 325(b)(1).

29\. We emphasize that, although the reciprocal bargaining obligation
applies without geographic limitation, that does not mean it will apply
exactly the same way in all negotiations. Rather, we conclude that
Section 325(b)(3)(C) and the inherent nature of a good faith obligation
permit the Commission to account for the distinction between in-market
and out-of-market signals in determining compliance under the totality
of the circumstances test. In other words, the determination of what
conduct constitutes a breach of the duty of good faith is necessarily
contextual. Congress created the mandatory carriage/retransmission
consent framework as part of the 1992 Cable Act.[^97] Through this
framework, a broadcaster has the option to elect mandatory carriage and
forgo compensation for carriage of its signal or pursue retransmission
consent and risk the failure to agree and non-carriage.[^98] The
mandatory carriage/retransmission consent option applies only to
carriage within a broadcaster's DMA. In contrast, the carriage of
significantly viewed signals outside of a broadcaster's DMA has always
been, and continues to be under the SHVERA, solely at the agreement of
the broadcaster and the out-of-market MVPD. Notwithstanding the
uncertain nature of retransmission consent, we believe that broadcasters
generally have a greater expectation of carriage within their local
market. Notwithstanding this expectation, it is also possible, subject
to certain limitations,[^99] that a cable operator located in the New
York DMA could through retransmission consent carry the signal of a
broadcaster located in the San Diego DMA. We believe that a reasonable
application of the statutory good faith standard permits variations in
parties' reciprocal bargaining obligations in two such distinct
situations.

30\. With regard to significantly viewed signals and in-market signals,
we believe that the reciprocal bargaining obligation should be
essentially the same. In 1972, the Commission adopted the concept of
significantly viewed signals to differentiate between out-of-market
televisions stations "that have sufficient audience to be considered
local and those that do not."[^100] The copyright provisions that apply
to cable systems have recognized the Commission's designation of
stations as significantly viewed and treated them, for copyright
purposes, as "local," and therefore subject to reduced copyright payment
obligations.[^101] In the SHVERA, Congress extended to satellite
carriers the right, already held by cable operators, to provide through
retransmission consent out-of-market signals to the communities in which
they are significantly viewed.[^102] Given the proximity of broadcasters
to the communities in which they are significantly viewed, we can
discern no reason to differentiate these signals from in-market signals
for reciprocal bargaining purposes. In either situation, failure to
reach retransmission consent is not a violation of the reciprocal
bargaining obligation provided the parties comply with our rules.
Because satellite carriers' retransmission consent rights apply only to
in-market and significantly viewed signals, their reciprocal bargaining
obligation applies only to retransmission of these signals.[^103]

31\. The situation for cable operators beyond in-market and
significantly viewed signals, however, is more complex. As discussed
above, different statutory provisions govern cable operators and permit
pursuant to retransmission consent the carriage of distant signals
originating far beyond the boundaries of the cable operator's DMA. In
these cases, although the reciprocal bargaining obligation still
applies, we believe that the Commission should apply a different
calculus in evaluating complaints involving cable operators and distant
broadcasters. As with all retransmission consent negotiations, the per
se negotiating standards set forth in Section 76.65 will still apply to
such negotiations as will the requirement that both parties to the
negotiation refrain from insisting on terms that are not consistent with
competitive marketplace considerations. The main difference in these
distant reciprocal bargaining negotiations should lie in either party's
ability, after evaluating the prospect of distant carriage and giving
full consideration to the proposals of the party requesting carriage, to
reject the proposal and terminate further negotiation. We emphasize that
until such negotiations are formally terminated, either orally or,
preferably, in writing, the reciprocal bargaining obligation must be
observed.

32\. We believe that, in many cases, distance will play a critical
factor in determining whether a party complied with its reciprocal
bargaining obligation. In the example discussed above, if a San Diego
broadcaster offered retransmission consent to a New York cable operator
in exchange for a monthly consideration per subscriber, the cable
operator after permitting the broadcaster to fully present its proposal
and giving such proposal due consideration, would not violate its
reciprocal bargaining obligation by concluding that the distance between
the broadcaster and cable operator is simply too great to make
retransmission consent worthwhile to the cable operator. After so
advising the broadcaster, the cable operator would have satisfied its
reciprocal bargaining obligation. As the distances involved lessen, we
would expect the party requested to engage in retransmission consent
negotiations to be more willing to engage in extended negotiations to
comply with the reciprocal bargaining requirement. In addressing
reciprocal bargaining complaints involving distant carriage
negotiations, the Commission will evaluate whether the party against
whom the complaint is filed complied with the per se standards during
the course of the negotiations. The length of the negotiation, the
decision to terminate further negotiation and the distance between the
broadcaster and the cable operator will be considered as part of the
totality of the circumstances test. We believe that further guidance on
this issue is best provided by the Commission through the resolution of
actual disputes. At bottom, we do not believe that the reciprocal
bargaining obligation should be used to engage distant entities and
require protracted good faith negotiation for signals that have no
logical or local relation to the MVPD's service area.

33\. Certain commenters ask that the Commission declare a per se
violation of a broadcaster's reciprocal bargaining obligation a
contractual provision, such as one contained in a network affiliation
agreement, that restricts a broadcaster's ability to negotiate
retransmission consent in good faith. These commenters assert that some
networks, through their affiliation agreements, restrict a broadcaster's
ability to grant retransmission consent outside of a specified
geographic area, often the broadcaster's DMA. NBC and the Network
Affiliates assert that Congress has consistently acknowledged and
preserved the network-affiliate system.[^104] As the record indicates,
Congress in the 1992 Cable Act, the SHVIA and the SHVERA stressed the
importance of this system.[^105] We agree with NBC and the Network
Affiliates that neither the text nor the legislative history of the
SHVIA or the SHVERA indicate a congressional intent to restrict the
rights of networks and their affiliates through the good faith or
reciprocal bargaining obligation to agree to limit an affiliate's right
to redistribute affiliated programming.[^106] This is reflected in the
*Notice* in this proceeding which did not raise for comment the issue of
the reciprocal bargaining obligation and its relation to the preclusion
of retransmission consent through network-affiliate agreements. Because
we perceive no intent on the part of Congress that the reciprocal
bargaining obligation interfere with the network-affiliate relationship
or to preclude specific terms contained in network-affiliate agreements,
we decline to take action on these issues in this proceeding.[^107] Even
were we so inclined, we are concerned that the *Notice* in this
proceeding may not have given interested parties appropriate notice that
the Commission was contemplating action in this regard.[^108] However,
because we decline to take action for the reasons described above, we
need not reach the issue of the sufficiency of our *Notice*.

34\. Nor do we agree that restrictions in existing network-affiliate
agreements are prohibited by Section 76.65 of the Commission's rules.
Section 76.65 provides that it is a per se violation of the good faith
negotiation provision for a television broadcast station to execute "an
agreement with any party, a term or condition of which, requires that
such television broadcast station not enter into a retransmission
consent agreement with any multichannel video programming distributor. .
. ."[^109] As is evidenced by the discussion in the *Good Faith Order*,
that provision is intended to cover collusion between a broadcaster and
an MVPD requiring non-carriage by another MVPD, "\[f\]or example,
Broadcaster A is prohibited from agreeing with MVPD B that it will not
reach retransmission consent with MVPD C."[^110] In adopting Section
76.65(b)(1)(iv), the Commission did not intend to affect the ability of
a network affiliate agreement to limit redistribution of network
programming.[^111]

35\. The question arises, however, what is a broadcaster's reciprocal
bargaining obligation with regard to MVPDs which it is precluded from
granting retransmission consent by its network affiliation agreement. As
discussed above, the reciprocal bargaining obligation imposes a
"heightened duty of negotiation" on broadcasters and MVPDs involved in
retransmission consent negotiations. We believe that it is incumbent on
broadcasters subject to such contractual limitations that have been
engaged by an out-of-market MVPD to negotiate retransmission consent of
its signal to at least inquire with its network whether the network
would waive the limitation with regard to the MVPD in question. We
believe that in many situations retransmission of the broadcaster's
signal by a distant MVPD would be deemed advantageous to the network as
well as the broadcaster and MVPD. In such situations, we believe that a
network that has otherwise restricted a broadcaster's redistribution
rights might be amenable to a limited waiver of the restriction.

36\. With respect to EchoStar's contention that local broadcasters are
beginning to demand that MVPDs contract away their right to import
significantly viewed out-of-DMA stations as part of retransmission
consent negotiations, we reiterate our conclusion in the *Good Faith
Order* that "\[p\]roposals that specifically foreclose carriage of other
programming services by the MVPD that do not substantially duplicate the
proposing broadcaster's programming" are "not consistent with
competitive marketplace considerations and the good faith negotiation
requirement. . . ."[^112] If complaints are filed on this issue, we will
evaluate as part of the totality of the circumstances whether or not the
programming sought to be foreclosed actually substantially duplicates
the programming of the broadcaster negotiating retransmission consent.

# IV. Procedural Matters {#iv.-procedural-matters .unnumbered}

## A. Regulatory Flexibility Analysis {#a.-regulatory-flexibility-analysis .unnumbered}

37\. The Final Regulatory Flexibility Analysis is attached to this
*Order* as Appendix C.

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

38\. This document does not contain proposed information collection(s)
subject to the Paperwork Reduction Act of 1995 (PRA), Public Law 104-13.
In addition, therefore, it does not contain any new or modified
"information collection burden for small business concerns with fewer
than 25 employees," pursuant to the Small Business Paperwork Relief Act
of 2002, Public Law 107-198, *see* 44 U.S.C. 3506(c)(4).

**C. Congressional Review Act**

39\. The Commission will send a copy of this *Order* in a report to be
sent to Congress and the Government Accountability Office pursuant to
the Congressional Review Act, *see* 5 U.S.C. 801(a)(1)(A).

# V. Ordering Clauses {#v.-ordering-clauses .unnumbered}

40\. Accordingly, **IT IS ORDERED** that pursuant to Section 207 of the
Satellite Home Viewer Extension and Reauthorization Act of 2004, and
Sections 1, 4(i) and (j), and 325 of the Communications Act of 1934, as
amended, 47 U.S.C. §§ 151, 154(i) and (j), and 325, the Commission's
rules **ARE HEREBY AMENDED** as set forth in Appendix A.

41\. **IT IS FURTHER ORDERED** that the rule amendments set forth in
Appendix A **WILL BECOME EFFECTIVE** 30 days after publication in the
Federal Register.

42\. **IT IS FURTHER ORDERED** that the Reference Information Center,
Consumer and Governmental Affairs Bureau, shall send a copy of this
Report and Order, including the Final Regulatory Flexibility Analysis,
to the Chief Counsel for Advocacy of the Small Business Administration.

FEDERAL COMMUNICATIONS COMMISSION

Marlene H. Dortch

Secretary

**APPENDIX A**

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

Part 76 -- Multichannel Video and Cable Television Service

1.  The authority citation for Part 76 continues to read as follows:

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

2.  Section 76.64(l) is amended as follows:

**§ 76.64 Retransmission Consent.**

\*\*\*\*\*

\(l\) Exclusive retransmission consent agreements are prohibited. No
television broadcast station shall make or negotiate any agreement with
one multichannel video programming distributor for carriage to the
exclusion of other multichannel video programming distributors. This
paragraph shall terminate at midnight on December 31, 2009.

3.  Section 76.65 is amended as follows:

**§ 76.65 Good Faith and Exclusive Retransmission Consent Complaints.**

(a) *Duty to Negotiate in Good Faith.* Television broadcast stations and
    multichannel video programming distributors shall negotiate in good
    faith the terms and conditions of retransmission consent agreements
    to fulfill the duties established by section 325(b)(3)(C) of the
    Act; provided, however, that it shall not be a failure to negotiate
    in good faith if: (1) the television broadcast station proposes or
    enters into retransmission consent agreements containing different
    terms and conditions, including price terms, with different
    multichannel video programming distributors if such different terms
    and conditions are based on competitive marketplace considerations;
    or (2) the multichannel video programming distributor enters into
    retransmission consent agreements containing different terms and
    conditions, including price terms, with different broadcast stations
    if such different terms and conditions are based on competitive
    marketplace considerations. If a television broadcast station or
    multichannel video programming distributor negotiates in accordance
    with the rules and procedures set forth in this section, failure to
    reach an agreement is not an indication of a failure to negotiate in
    good faith.

(b) *Good Faith Negotiation.*

\(1\) *Standards.* The following actions or practices violate a
broadcast television station's or multichannel video programming
distributor's (the "Negotiating Entity") duty to negotiate
retransmission consent agreements in good faith:

> \(i\) Refusal by a Negotiating Entity to negotiate retransmission
> consent;
>
> \(ii\) Refusal by a Negotiating Entity to designate a representative
> with authority make binding representations on retransmission consent;
>
> \(iii\) Refusal by a Negotiating Entity to meet and negotiate
> retransmission consent at reasonable times and locations, or acting in
> a manner that unreasonably delays retransmission consent negotiations;
>
> \(iv\) Refusal by a Negotiating Entity to put forth more than a
> single, unilateral proposal;

(v) Failure of a Negotiating Entity to respond to a retransmission
    consent proposal of the other party, including the reasons for the
    rejection of any such proposal;

> \(vi\) Execution by a Negotiating Entity of an agreement with any
> party, a term or condition of which, requires that such Negotiating
> Entity not enter into a retransmission consent agreement with any
> other television broadcast station or multichannel video programming
> distributor; and
>
> \(vii\) Refusal by a Negotiating Entity to execute a written
> retransmission consent agreement that sets forth the full
> understanding of the television broadcast station and the multichannel
> video programming distributor.

\(2\) *Totality of the circumstances.* In addition to the standards set
forth in subsection 76.65(b)(1), a Negotiating Entity may demonstrate,
based on the totality of the circumstances of a particular
retransmission consent negotiation, that a television broadcast station
or multichannel video programming distributor breached its duty to
negotiate in good faith as set forth in subsection 76.65(a).

\(c\) *Good Faith Negotiation and Exclusivity Complaints.* Any
television broadcast station or multichannel video programming
distributor aggrieved by conduct that it believes constitutes a
violation of the regulations set forth in this section or subsection
76.64(l) may commence an adjudicatory proceeding at the Commission to
obtain enforcement of the rules through the filing of a complaint. The
complaint shall be filed and responded to in accordance with the
procedures specified in Section 76.7 of this part.

\(d\) *Burden of proof.* In any complaint proceeding brought under this
section, the burden of proof as to the existence of a violation shall be
on the complainant.

\(e\) *Time limit on filing of complaints.* Any complaint filed pursuant
to this subsection must be filed within one year of the date on which
one of the following events occurs:

(1) a complainant enters into a retransmission consent agreement with a
    television broadcast station or multichannel video programming
    distributor that the complainant alleges to violate one or more of
    the rules contained in this subpart; or

(2) a television broadcast station or multichannel video programming
    distributor engages in retransmission consent negotiations with a
    complainant that the complainant alleges to violate one or more of
    the rules contained in this subpart, and such negotiation is
    unrelated to any existing contract between the complainant and the
    television broadcast station or multichannel video programming
    distributor; or

(3) the complainant has notified the television broadcast station or
    multichannel video programming distributor that it intends to file a
    complaint with the Commission based on a request to negotiate
    retransmission consent that has been denied, unreasonably delayed,
    or unacknowledged in violation of one or more of the rules contained
    in this subpart.

    \(f\) *Termination of rules.* This section shall terminate at
    midnight on December 31, 2009.

**APPENDIX B**

**Commenters and Reply Commenters**

**Comments:**

ABC, CBS, FBC and NBC Television Affiliate Associations ("Network
Affiliates")

American Cable Association ("ACA")

EchoStar Satellite L.L.C. ("EchoStar")

National Association of Broadcasters ("NAB")

National Cable & Telecommunications Association ("NCTA")

NBC Telemundo License Co. ("NBC")

**Reply Comments:**

ABC, CBS, FBC and NBC Television Affiliate Associations ("Network
Affiliates")

American Cable Association ("ACA")

DIRECTV, Inc. ("DirecTV")

EchoStar Satellite L.L.C. ("EchoStar")

National Association of Broadcasters ("NAB")

National Cable & Telecommunications Association ("NCTA")

NBC Telemundo License Co. ("NBC")

**APPENDIX C**

**Final Regulatory Flexibility Analysis**

As required by the Regulatory Flexibility Act of 1980, as amended
(RFA),[^113] an Initial Regulatory Flexibility Analysis (IRFA) was
incorporated in the *Implementation of Section 207 of the Satellite Home
Viewer Extension and Reauthorization Act of 2004: Reciprocal Bargaining
Obligations* ("*Notice*").[^114] The Commission sought written public
comment on the proposals in the *Notice*, including comment on the IRFA.
The comments received are discussed below. This present Final Regulatory
Flexibility Analysis (FRFA) conforms to the RFA.[^115]

## A. Need for, and Objectives of, the Order {#a.-need-for-and-objectives-of-the-order .unnumbered}

Section 207 of the Satellite Home Viewer Extension and Reauthorization
Act of 2004 ("SHVERA") extends Section 325(b)(3)(C) of the
Communications Act until 2010 and amends that section to impose
reciprocal good faith retransmission consent bargaining obligations on
multichannel video programming distributors ("MVPDs").[^116] This
section alters the bargaining obligations created by the Satellite Home
Viewer Improvement Act of 1999 ("SHVIA"), which imposed a good faith
bargaining obligation only on broadcasters.[^117] This *Order* achieves
these statutory objectives by adopting rule changes to Part 76 of the
Commission's rules to implement Section 325(b)(3)(C).[^118]

## B. Summary of Significant Issues Raised by Public Comments in Response to the IRFA {#b.-summary-of-significant-issues-raised-by-public-comments-in-response-to-the-irfa .unnumbered}

The American Cable Association ("ACA"), the trade association for small
and rural cable operators, was the only entity that filed comments
specifically in response to the Initial Regulatory Flexibility Act
Analysis that accompanied the *Notice* that initiated this proceeding.
ACA's comments and the Commission's response thereto are discussed in
Part E of this FRFA.

## C. Description and Estimate of the Number of Small Entities to Which the Rules Will Apply {#c.-description-and-estimate-of-the-number-of-small-entities-to-which-the-rules-will-apply .unnumbered}

The RFA directs the Commission to provide a description of and, where
feasible, an estimate of the number of small entities that will be
affected by rules changes.[^119] The RFA generally defines the term
"small entity" as having the same meaning as the terms "small business,"
small organization," and "small government jurisdiction."[^120] In
addition, the term "small business" has the same meaning as the term
"small business concern" under the Small Business Act.[^121] A small
business concern is one which: (1) is independently owned and operated;
(2) is not dominant in its field of operation; and (3) satisfies any
additional criteria established by the SBA.[^122]

The rules adopted in the *Order*, as required by statute, require MVPDs
to negotiate retransmission consent in good faith with television
broadcast stations.[^123] Therefore, "MVPDs," which includes cable and
other program distributors and satellite carriers, will be directly and
primarily affected by the rules. In addition, because Section 207 also
extends until 2010 the good faith negotiation obligations of
broadcasters, we believe the rules will also directly affect television
broadcast stations. Therefore, in this FRFA, we consider the impact of
the rules on small television broadcast stations, small cable and
satellite operators, and other small entities. A description of such
small entities, as well as an estimate of the number of such small
entities, is provided below.

*Cable and Other Program Distribution.* Cable system operators fall
within the SBA-recognized definition of Cable and Other Program
Distribution, which includes all such companies generating \$12.5
million or less in revenue annually.[^124] According to the Census
Bureau data for 1997, there were a total of 1,311 firms that operated
for the entire year in the category of Cable and Other Program
Distribution. Of this total, 1,180 firms had annual receipts of under
\$10 million and an additional 52 firms had receipts of \$10 million or
more, but less than \$25 million.[^125] The Commission therefore
estimates that the majority of providers in this category of Cable and
Other Program Distribution are small businesses.

*Cable System Operators (Rate Regulation Standard).* The Commission has
developed, with SBA's approval, its own definition of a small cable
system operator for the purposes of rate regulation. Under the
Commission's rules, a "small cable company" is one serving 400,000 or
fewer subscribers nationwide.[^126] We last estimated that there were
1,439 cable operators that qualified as small cable companies at the end
of 1995.[^127] Since then, some of those companies may have grown to
serve more than 400,000 subscribers, and others may have been involved
in transactions that caused them to be combined with other cable
operators. Consequently, we estimate that there are fewer than 1,439
small entity cable system operators that may be affected by the
proposals contained in this *Notice*.

*Cable System Operators (Telecom Act Standard).* The Communications Act
of 1934, as amended, also contains a size standard for a "small cable
operator," which is "a cable operator that, directly or through an
affiliate, serves in the aggregate fewer than one percent of all
subscribers in the United States and is not affiliated with any entity
or entities whose gross annual revenues in the aggregate exceed
\$250,000,000."[^128] The Commission has determined that there are 67.7
million subscribers in the United States.[^129] Therefore, an operator
serving fewer than 677,000 subscribers shall be deemed a small operator,
if its annual revenues, when combined with the total annual revenues of
all of its affiliates, do not exceed \$250 million in the
aggregate.[^130] Based on available data, we estimate that the number of
cable operators serving 677,000 subscribers or less totals approximately
1,450. The Commission neither requests nor collects information on
whether cable system operators are affiliated with entities whose gross
annual revenues exceed \$250 million,[^131] and therefore is unable at
this time to estimate more accurately the number of cable system
operators that would qualify as small cable operators under the size
standard contained in the Communications Act.

*Satellite Carriers.* The SHVERA defines the term "satellite carrier" by
reference to the definition in the copyright title 17.[^132] This
definition includes entities providing services as described in 17
U.S.C. § 119(d)(6) using the facilities of a satellite or satellite
service licensed under Part 25 of the Commission's rules to operate in
Direct Broadcast Satellite (DBS) or Fixed-Satellite Service (FSS)
frequencies.[^133] As a general practice, not mandated by any
regulation, DBS licensees usually own and operate their own satellite
facilities as well as package the programming they offer to their
subscribers. In contrast, satellite carriers using FSS facilities often
lease capacity from another entity that is licensed to operate the
satellite used to provide service to subscribers. These entities package
their own programming and may or may not be Commission licensees
themselves. In addition, a third situation may include an entity using a
non-U.S. licensed satellite to provide programming to subscribers in the
United States pursuant to a blanket earth station license.[^134]

The SBA has developed a small business size standard for Satellite
Telecommunications, which consists of all such firms having \$12.5
million or less in annual receipts.[^135] According to Census Bureau
data for 1997, in this category there was a total of 324 firms that
operated for the entire year.[^136] Of this total, 273 firms had annual
receipts of under \$10 million, and an additional twenty-four firms had
receipts of \$10 million to \$24,999,999.[^137] Thus, under this size
standard, the majority of firms can be considered small.

*Direct Broadcast Satellite ("DBS") Service.* DBS service is a
nationally distributed subscription service that delivers video and
audio programming via satellite to a small parabolic "dish" antenna at
the subscriber's location. Because DBS provides subscription services,
DBS falls within the SBA-recognized definition of Cable and Other
Program Distribution.[^138] This definition provides that a small entity
is one with \$12.5 million or less in annual receipts.[^139] Currently,
only four operators hold licenses to provide DBS service, which requires
a great investment of capital for operation. All four currently offer
subscription services. Two of these four DBS operators, DirecTV[^140]
and EchoStar Communications Corporation ("EchoStar"),[^141] report
annual revenues that are in excess of the threshold for a small
business. A third operator, Rainbow DBS, is a subsidiary of
Cablevision's Rainbow Network, which also reports annual revenues in
excess of \$12.5 million, and thus does not qualify as a small
business.[^142] The fourth DBS operator, Dominion Video Satellite, Inc.
("Dominion"), offers religious (Christian) programming and does not
report its annual receipts.[^143] The Commission does not know of any
source which provides this information and, thus, we have no way of
confirming whether Dominion qualifies as a small business. Because DBS
service requires significant capital, we believe it is unlikely that a
small entity as defined by the SBA would have the financial wherewithal
to become a DBS licensee. Nevertheless, given the absence of specific
data on this point, we acknowledge the possibility that there are
entrants in this field that may not yet have generated \$12.5 million in
annual receipts, and therefore may be categorized as a small business,
if independently owned and operated.

*Fixed-Satellite Service ("FSS")*. The FSS is a radiocommunication
service between earth stations at a specified fixed point or between any
fixed point within specified areas and one or more satellites.[^144] The
FSS, which utilizes many earth stations that communicate with one or
more space stations, may be used to provide subscription video service.
Therefore, to the extent FSS frequencies are used to provide
subscription services, FSS falls within the SBA-recognized definition of
Cable and Other Program Distribution, which includes all such companies
generating \$12.5 million or less in revenue annually.[^145] Although a
number of entities are licensed in the FSS, not all such licensees use
FSS frequencies to provide subscription services. Two of the DBS
licensees (EchoStar and DirecTV) have indicated interest in using FSS
frequencies to broadcast signals to subscribers. It is possible that
other entities could similarly use FSS frequencies, although we are not
aware of any entities that might do so.

*Private Cable Operators (PCOs) also known as Satellite Master Antenna
Television (SMATV) Systems*. PCOs, also known as SMATV systems or
private communication operators, are video distribution facilities that
use closed transmission paths without using any public right-of-way.
PCOs acquire video programming and distribute it via terrestrial wiring
in urban and suburban multiple dwelling units such as apartments and
condominiums, and commercial multiple tenant units such as hotels and
office buildings. The SBA definition of small entities for Cable and
Other Program Distribution Services includes PCOs and, thus, small
entities are defined as all such companies generating \$12.5 million or
less in annual receipts.[^146] Currently, there are approximately 135
members in the Independent Multi-Family Communications Council (IMCC),
the trade association that represents PCOs.[^147] Individual PCOs often
serve approximately 3,000-4,000 subscribers, but the larger operations
serve as many as 15,000-55,000 subscribers. In total, PCOs currently
serve approximately 1.1 million subscribers.[^148] Because these
operators are not rate regulated, they are not required to file
financial data with the Commission. Furthermore, we are not aware of any
privately published financial information regarding these operators.
Based on the estimated number of operators and the estimated number of
units served by the largest ten PCOs, we believe that a substantial
number of PCO qualify as small entities.

*Other Program Distribution.* The SBA-recognized definition of Cable and
Other Program Distribution includes these other MVPDs, such as HSD,
MDS/MMDS, ITFS, LMDS and OVS. This definition provides that a small
entity is one with \$12.5 million or less in annual receipts.[^149] As
previously noted, according to the Census Bureau data for 1997, there
were a total of 1,311 firms that operated for the entire year in the
category of Cable and Other Program Distribution. Of this total, 1,180
firms had annual receipts of under \$10 million and an additional 52
firms had receipts of \$10 million or more, but less than \$25
million.[^150] The Commission therefore estimates that the majority of
providers in this category of Cable and Other Program Distribution are
small businesses.

*Home Satellite Dish ("HSD") Service.* Because HSD provides subscription
services, HSD falls within the SBA-recognized definition of Cable and
Other Program Distribution, which includes all such companies generating
\$12.5 million or less in revenue annually.[^151] HSD or the large dish
segment of the satellite industry is the original satellite-to-home
service offered to consumers, and involves the home reception of signals
transmitted by satellites operating generally in the C-band frequency.
Unlike DBS, which uses small dishes, HSD antennas are between four and
eight feet in diameter and can receive a wide range of unscrambled
(free) programming and scrambled programming purchased from program
packagers that are licensed to facilitate subscribers' receipt of video
programming. There are approximately 30 satellites operating in the
C-band, which carry over 500 channels of programming combined;
approximately 350 channels are available free of charge and 150 are
scrambled and require a subscription. HSD is difficult to quantify in
terms of annual revenue. HSD owners have access to program channels
placed on C-band satellites by programmers for receipt and distribution
by MVPDs. Commission data shows that, between June 2003, and June 2004,
HSD subscribership fell from 502,191 subscribers to 335,766 subscribers,
a decline of more than 33 percent.[^152] The Commission has no
information regarding the annual revenue of the four C-Band
distributors.

*Wireless Cable Systems.* Wireless cable systems use the Multipoint
Distribution Service ("MDS")[^153] and Instructional Television Fixed
Service ("ITFS")[^154] frequencies in the 2 GHz band to transmit video
programming and provide broadband services to subscribers. Local
Multipoint Distribution Service ("LMDS") is a fixed broadband
point-to-multipoint microwave service that provides for two-way video
telecommunications.[^155] As previously noted, the SBA definition of
small entities for Cable and Other Program Distribution, which includes
such companies generating \$12.5 million in annual receipts, appears
applicable to MDS, ITFS and LMDS. In addition, the Commission has
defined small MDS and LMDS entities in the context of Commission license
auctions.

In the 1996 MDS auction,[^156] the Commission defined a small business
as an entity that had annual average gross revenues of less than \$40
million in the previous three calendar years.[^157] This definition of a
small entity in the context of MDS auctions has been approved by the
SBA.[^158] In the MDS auction, 67 bidders won 493 licenses. Of the 67
auction winners, 61 claimed status as a small business. At this time,
the Commission estimates that of the 61 small business MDS auction
winners, 48 remain small business licensees. In addition to the 48 small
businesses that hold BTA authorizations, there are approximately 392
incumbent MDS licensees that have gross revenues that are not more than
\$40 million and are thus considered small entities.[^159] MDS licensees
and wireless cable operators that did not participate in the MDS auction
must rely on the SBA definition of small entities for Cable and Other
Program Distribution. Information available to us indicates that there
are approximately 850 of these licensees and operators that do not
generate revenue in excess of \$12.5 million annually. Therefore, we
estimate that there are approximately 850 small MDS providers as defined
by the SBA and the Commission's auction rules.

While SBA approval for a Commission-defined small business size standard
applicable to ITFS is pending, educational institutions are included in
this analysis as small entities.[^160] There are currently 2,032 ITFS
licensees, and all but 100 of these licenses are held by educational
institutions. Thus, the Commission estimates that at least 1,932 ITFS
licensees are small businesses.

In the 1998 and 1999 LMDS auctions,[^161] the Commission defined a small
business as an entity that had annual average gross revenues of less
than \$40 million in the previous three calendar years.[^162] Moreover,
the Commission added an additional classification for a "very small
business," which was defined as an entity that had annual average gross
revenues of less than \$15 million in the previous three calendar
years.[^163] These definitions of "small business" and "very small
business" in the context of the LMDS auctions have been approved by the
SBA.[^164] In the first LMDS auction, 104 bidders won 864 licenses. Of
the 104 auction winners, 93 claimed status as small or very small
businesses. In the LMDS re-auction, 40 bidders won 161 licenses. Based
on this information, we believe that the number of small LMDS licenses
will include the 93 winning bidders in the first auction and the 40
winning bidders in the re-auction, for a total of 133 small entity LMDS
providers as defined by the SBA and the Commission's auction rules.

In sum, there are approximately a total of 2,000 MDS/MMDS/LMDS stations
currently licensed. Of the approximate total of 2,000 stations, we
estimate that there are 1,595 MDS/MMDS/LMDS providers that are small
businesses as deemed by the SBA and the Commission's auction rules.

*Open Video Systems ("OVS").* The OVS framework provides opportunities
for the distribution of video programming other than through cable
systems. Because OVS operators provide subscription services,[^165] OVS
falls within the SBA-recognized definition of Cable and Other Program
Distribution Services, which provides that a small entity is one with \$
12.5 million or less in annual receipts.[^166] The Commission has
certified 25 OVS operators with some now providing service. Broadband
service providers (BSPs) are currently the only significant holders of
OVS certifications or local OVS franchises, even though OVS is one of
four statutorily-recognized options for local exchange carriers (LECs)
to offer video programming services.[^167] As of June 2003, BSPs served
approximately 1.4 million subscribers, representing 1.49 percent of all
MVPD households.[^168] Among BSPs, however, those operating under the
OVS framework are in the minority, with approximately eight percent
operating with an OVS certification.[^169] Serving approximately 460,000
of these subscribers, Affiliates of Residential Communications Network,
Inc. ("RCN") is currently the largest BSP and 11th largest MVPD.[^170]
RCN received approval to operate OVS systems in New York City, Boston,
Washington, D.C. and other areas. The Commission does not have financial
information regarding the entities authorized to provide OVS, some of
which may not yet be operational. We thus believe that at least some of
the OVS operators may qualify as small entities.

*Television Broadcasting.* The SBA defines a television broadcasting
station as a small business if such station has no more than \$12
million in annual receipts.[^171] Business concerns included in this
industry are those "primarily engaged in broadcasting images together
with sound."[^172] According to Commission staff review of the BIA
Publications, Inc. Master Access Television Analyzer Database as of June
26, 2004, about 860 of the 1,270 commercial television stations in the
United States have revenues of \$12 million or less. We note, however,
that, in assessing whether a business concern qualifies as small under
the above definition, business (control) affiliations[^173] must be
included. Our estimate, therefore, likely overstates the number of small
entities that might be affected by our action, because the revenue
figure on which it is based does not include or aggregate revenues from
affiliated companies. There are also 2,127 low power television stations
(LPTV).[^174] Given the nature of this service, we will presume that all
LPTV licensees qualify as small entities under the SBA definition.

In addition, 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 estimate 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. Also as noted, an additional element of the definition of "small
business" is that the entity must be independently owned and operated.
We note that it is difficult at times to assess these criteria in the
context of media entities and our estimates of small businesses to which
they apply may be over-inclusive to this extent.

### *[Entities Not Directly Affected By Proposed Rules]{.underline}*: Because the scope of Section 207 broadly impacts television broadcast stations and MVPDs, we believe that all of the entities, large and small, that are impacted by Section 207 are directly impacted. Nevertheless, although not required by the RFA, we invited comment from any other small entity which may be indirectly impacted from our proposed implementation of Section 207, but only to the extent that the impact on small entities can be minimized while fully implementing that section. No comments were filed.  {#entities-not-directly-affected-by-proposed-rules-because-the-scope-of-section-207-broadly-impacts-television-broadcast-stations-and-mvpds-we-believe-that-all-of-the-entities-large-and-small-that-are-impacted-by-section-207-are-directly-impacted.-nevertheless-although-not-required-by-the-rfa-we-invited-comment-from-any-other-small-entity-which-may-be-indirectly-impacted-from-our-proposed-implementation-of-section-207-but-only-to-the-extent-that-the-impact-on-small-entities-can-be-minimized-while-fully-implementing-that-section.-no-comments-were-filed. .unnumbered}

## D. Description of Projected Reporting, Record Keeping and other Compliance Requirements for Small Entities {#d.-description-of-projected-reporting-record-keeping-and-other-compliance-requirements-for-small-entities .unnumbered}

Section 207 of the SHVERA was enacted to extend Section 325(b)(3)(C) of
the Communications Act until 2010 and amend that section to impose
reciprocal good faith retransmission consent bargaining obligations on
MVPDs. The rule changes that we believe will directly affect reporting,
recordkeeping and other compliance requirements are described
below.[^175]

This *Order* adopts rules that require MVPDs to negotiate retransmission
consent in good faith in conformance with Section 325(b)(3)(C) of the
Communications Act and amended Section 76.65 of the Commission's rules.
Section 76.65 of the Commission's rules is already in place and
applicable to broadcasters.[^176] The *Order* only imposes these same
rules on MVPDs.

This *Order* further requires that MVPDs bringing good faith complaints
pursuant to Section 325 follow the same petition process now in place
for broadcasters, as required by Sections 76.5, 76.7 and 76.65 of the
Commission's rules.[^177] Therefore, entities seeking a good faith
determination would file a complaint pursuant to the pleading
requirements in Section 76.7(a)(2) and use the methods described in
Section 76.65 to demonstrate a violation of Section 325(B)(3)(C).

Furthermore, the *Order* determines that the reciprocal bargaining
obligation applies to all retransmission consent negotiations whether
between entities located in the same designated market area
("DMA")[^178] or entities located in different DMAs.

**E.** **Steps Taken to Minimize Significant Economic 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 (among others): (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.[^179]

With respect to the implementation of amended Section 325, the SHVERA
does not offer much flexibility with respect to minimizing its impact on
small entities. In seeking analogous good faith obligations for MVPDs
and broadcasters, Congress apparently sought to apply to MVPDs the
existing regulatory framework concerning good faith retransmission
consent negotiation obligations.[^180] Accordingly, the SHVERA employs
identical language to apply the existing good faith obligation to
MVPDs.[^181] Therefore, the Commission does not have apparent discretion
to impose differing good faith standards for small MVPDs than those for
larger entities.

The statute's compliance requirements primarily impact MVPDs, such as
cable and DBS providers. As discussed above, a large number of cable and
other programming distributors, such as OVS, wireless cable systems and
PCOs, are likely to be small businesses. As also discussed above,
however, the SHVERA appears to give the Commission no discretion to
craft alternate rules to minimize the impact of Section 325(b)(3)(C) on
small entities. As previously noted, there are now only four DBS
licensees, none of which are small entities. Small businesses do not
generally have the financial ability to become DBS licensees because of
the high implementation costs associated with satellite services.

In any event, we do not anticipate that the rules we adopt today will
have a significant impact on small entities. In order to gain carriage
on MVPDs, broadcasters must either elect must carry or retransmission
consent. If must carry is elected, the good faith rules are
inapplicable. If retransmission consent is elected, the parties must
negotiate a carriage agreement. The proposed good faith rules merely
require broadcasters and MVPDs to negotiate in accordance with the basic
requirements of Section 76.65.[^182] If they do so, the failure to reach
a carriage agreement is not a violation of our rules or the
Communications Act. Broadcasters, large and small, have had to comply
with the good faith obligation since 2000.

ACA requested that the Commission require that broadcasters give 30 days
written notice to a small or medium sized cable operator of their intent
to file a good faith complaint. In addition, ACA asked that the
Commission provide an extra 10 day period in which to respond to good
faith complaints filed against them.[^183] The *Order* declined to
establish special procedures for medium and small cable operators as
requested by ACA. First, the Commission concluded that the requested 30
day pre-complaint notice would often not benefit these operators,
particularly in instances where a retransmission consent agreement will
imminently expire with the attendant loss of the broadcaster's signal.
Because the Commission concluded in the *Good Faith Order* that MVPDs
cannot continue to carry a broadcaster's signal after the existing
consent expires even if a complaint is pending with the
Commission,[^184] it benefits both broadcasters and MVPDs alike that the
Commission decline to institute a procedural delay that would preclude
the filing of a good faith complaint as soon as possible after the
alleged violation. The *Order* also concluded that the ability to
request individual extensions of time on a case-by-case basis through
which MVPDs and broadcasters, large and small, can establish that the
existing pleading cycle set forth in Section 76.7 of the Commission's
rules is inadequate to allow that party to present an effective defense
to a good faith complaint better serves the reciprocal bargaining
process.

We believe that Section 207 of the SHVERA will benefit small broadcast
stations. Since the imposition of the good faith negotiation obligation
in 2000, broadcasters have had a good faith obligation without a
corresponding obligation on the part of MVPDs. The proposed amendments
to Section 76.65 will level the playing field in this regard. In fact,
the express intent of the statute was to level the competitive playing
field between cable operators and satellite providers.[^185] Congress,
however, recognized that the SHVERA may impact the competitiveness of
cable operators of all sizes, including "rural cable operators," and
thus directed the Commission to conduct an inquiry in a separate
proceeding on the impact of specific provisions of the Communications
Act of 1934, as amended, the SHVERA provisions, and Commission rules on
competition in the MVPD market.[^186] Accordingly, the Commission has
issued a Public Notice to initiate this inquiry.[^187]

**[Report to Congress:]{.underline}** The Commission will send a copy of
the Report and Order, including this FRFA, in a report to be sent to
Congress pursuant to the Congressional Review Act.[^188] In addition,
the Commission will send a copy of the Report and Order, including this
FRFA, to the Chief Counsel for Advocacy of the SBA. A copy of the Report
and Order and FRFA (or summaries thereof) will also be published in the
Federal Register.[^189]

[^1]: The Satellite Home Viewer Extension and Reauthorization Act of
    2004, Pub. L. No. 108-447, § 207, 118 Stat 2809, 3393 (2004) (to be
    codified at 47 U.S.C. § 325). The SHVERA was enacted on December 8,
    2004 as title IX of the "Consolidated Appropriations Act, 2005." The
    SHVERA requires that the Commission prescribe regulations
    implementing Section 207 within 180 days after the date of the
    enactment thereof.

[^2]: SHVIA was enacted as title I of the Intellectual Property and
    Communications Omnibus Reform Act of 1999 (relating to copyright
    licensing and carriage of broadcast signals by satellite carriers,
    codified in scattered sections of 17 and 47 U.S.C.), PL 106-113, 113
    Stat. 1501, Appendix I (1999).

[^3]: 47 U.S.C. §325(b)(3)(C).

[^4]: 47 U.S.C. §325(b)(3)(C)(ii).

[^5]: *Implementation of the Satellite Home Viewer Improvement Act of
    1999: Retransmission Consent Issues*, 14 FCC Rcd 21736 (1999)
    ("*Good Faith Notice*").

[^6]: *Implementation of the Satellite Home Viewer Improvement Act of
    1999: Retransmission Consent Issues*, 15 FCC Rcd 5445 (2000) ("*Good
    Faith Order*"), *recon. granted in part*, 16 FCC Rcd 15599 (2001).

[^7]: *Good Faith Order*, 15 FCC Rcd at 5450.

[^8]: *Id.* at 5453-54.

[^9]: *Id.* at 5457-58.

[^10]: *Id.* at 5462-5464; *see* 47 C.F.R. §§ 76.65(b)(1)(i)-(vii).

[^11]: *Good Faith Order,* 15 FCC Rcd at 5458; *see* 47 C.F.R. §
    76.65(b)(2).

[^12]: *Good Faith Order*, 15 FCC Rcd at 5469-70.

[^13]: *Id.* at 5470.

[^14]: *Id.*

[^15]: 47 C.F.R § 76.65(c); *see* 47 C.F.R. § 76.7.

[^16]: 47 C.F.R. §§ 76.65(d) & (e).

[^17]: 47 U.S.C. § 325(b)(3)(C)(iii).

[^18]: *Implementation of Section 207 of the Satellite Home Viewer
    Extension and Reauthorization Act of 2004: Reciprocal Bargaining
    Obligations*, FCC 05-49 (rel. March 7, 2005) ("*Notice*"). A list of
    commenters is contained in Appendix B.

[^19]: *Notice* at ¶ 8. A DMA is a geographic market designation created
    by Nielsen Media Research that defines each television market
    exclusive of others, based on measured viewing patterns.
    Essentially, each county in the United States is allocated to a
    market based on which home-market stations receive a preponderance
    of total viewing hours in the county. For purposes of this
    calculation, both over-the-air and cable television viewing are
    included. For a more complete description of how counties are
    allocated, *see* Nielsen Media Research's *Nielsen Station Index:
    Methodology Techniques and Data Interpretation.*

[^20]: *Notice* at ¶ 7.

[^21]: H.R. Rep. No. 108-634, 108^th^ Cong., 2^nd^ Sess. 19 (2004)
    ("House Report").

[^22]: *Notice* at ¶ 7*.*

[^23]: *Id.*

[^24]: *See* EchoStar Comments at 2; NAB Comments at 1-2; Network
    Affiliates Comments at 3; NAB Reply Comments at 1; NCTA Comments at
    5 (agreeing that negotiating parties should be subject to the same
    time, place and manner objective rules once negotiations are
    underway); ACA Comments at 5 (seeking only procedural, but not
    substantive rule changes); NBC Comments at 10.

[^25]: Network Affiliates Comments at 3, quoting *Notice* at ¶ 7
    (footnotes omitted)

[^26]: EchoStar Comments at 2.

[^27]: *Id; see* Network Affiliate Reply Comments at 11.

[^28]: EchoStar Comments at 2-3.

[^29]: NCTA Comments at 5-6, quoting House Report at 19 (emphasis NCTA).

[^30]: NCTA Reply Comments at 2-3.

[^31]: *Id.* at 3.

[^32]: NCTA Comments at 7-8. NCTA's cited reasons include when a station
    largely duplicates content already carried, increases in compulsory
    copyright expenses, syndicated exclusivity or network
    non-duplication blackout problems, or the desire to use available
    capacity for other video or non-video services. *Id.* at 8.

[^33]: NAB Reply Comments at 2, quoting House Report at 19; *see*
    Network Affiliates Reply Comments at 2 ("While a broadcast station
    takes the risk, in electing to negotiate with an MVPD for
    retransmission consent, that the parties will fail to reach a
    mutually acceptable agreement, SHVERA's new provision makes it plain
    that one risk the broadcast station is *not* taking is that the MVPD
    will simply refuse to negotiate at all.") (emphasis Network
    Affiliates).

[^34]: NCTA Reply Comments at 3.

[^35]: ACA Comments at 5, citing *General Motors Corporation and Hughes
    Electronic Corporation, Transferors and The News Corporation
    Limited, Transferee, For Authority to Transfer Control*, 19 FCC Rcd
    473, 552 (2004) ("\[S\]mall and medium sized MVPDs may be at
    particular risk of temporary foreclosure strategies aimed at
    securing supra-competitive programming rate increases for 'must
    have' programming. . . .").

[^36]: *Id*. at 5. ACA argues that these procedural protections should
    apply not just to cable companies that serve 400,000 or fewer
    subscribers, but should also extend to "all medium-sized,
    non-vertically integrated cable companies." *Id*. n.7.

[^37]: *Id.* at 5.

[^38]: NAB Reply Comments at 5; Network Affiliates Reply Comments at
    12-13.

[^39]: ACA Comments at 6. ACA asserts that this is consistent with the
    Commission's holding that the must carry rules do not require
    carriage of other than the primary digital video stream. *Id*.,
    citing *Carriage of Digital Television Broadcast signals: Amendments
    to Part 76 of the Commission's Rules*, CS Docket No. 98-120 at ¶ 41
    (2005).

[^40]: NAB Reply Comments at 6, Network Affiliates Reply Comments, each
    quoting *Good Faith Order*, 15 FCC Rcd at 5469 (emphasis NAB).

[^41]: NBC Reply Comments at 5.

[^42]: Sections 76.64(l) and 76.65 will be amended as set forth in
    Appendix A of this *Order*.

[^43]: *See* Appendix A, § 76.65(c).

[^44]: *See* Appendix A, § 76.65(b)(2).

[^45]: *Good Faith Order*, 15 FCC Rcd at 5455 (footnotes and internal
    quotation marks omitted).

[^46]: *See Lorillard v. Pons*, 434 U.S. 575, 580-81 (1978) ("Congress
    is presumed to be aware of an administrative or judicial
    interpretation of a statute and to adopt that interpretation when it
    re-enacts a statute without change. So too, where, as here, Congress
    adopts a new law incorporating sections of a prior law, Congress
    normally can be presumed to have had knowledge of the interpretation
    given to the incorporated law, at least insofar as it affects the
    new statute.") (citations omitted); *Bragdon v. Abbott*, 524 U.S.
    624, 645 (1998) (same).

[^47]: House Report at 19.

[^48]: Of course, the reciprocal bargaining obligation would be largely
    unnecessary if it were limited in this manner.

[^49]: For example, a negotiating proposal put forth by a small cable
    operator might be found consistent with competitive marketplace
    considerations, whereas the same proposal put forth by the nation's
    largest MVPD might not.

[^50]: *See Good Faith Order*, 15 FCC Rcd at 5470 ("Conduct that is
    violative of national policies favoring competition -- that is, for
    example, intended to gain or sustain a monopoly, is an agreement not
    to compete or fix prices, or involves the exercise of market power
    in one market in order to foreclose competitors from participation
    in another market -- is not within the competitive marketplace
    considerations standard included in the statute.").

[^51]: *Id*. at 5471-72.

[^52]: *Id.* at 5469.

[^53]: *Id.* at 5469-70 (emphasis added).

[^54]: *Notice* at ¶ 8.

[^55]: *Id.*

[^56]: *Id.*

[^57]: Network Affiliates Comments at 5; NAB Comments at 2-3; NBC
    Comments at 10.

[^58]: Network Affiliates Comments at 4 (footnotes omitted).

[^59]: *Id.* at 4-5; *see* NAB Comments at 2-3 (agreeing with the
    conclusion and supporting analysis of the Network Affiliates on this
    issue); Network Affiliates Reply Comments at 4. NAB argues further
    that "since neither party is obligated to even begin retransmission
    consent negotiations, or to reach a retransmission consent
    agreement, logic dictates that there cannot be any obligations to
    negotiate in good faith." NAB Reply Comments at 3.

[^60]: NBC Comments at 2.

[^61]: *Id*., quoting H.R. Rep. No. 106-464, Conference Report, Joint
    Explanatory Statement of the Committee of the Conference, at 92
    (1999) ("SHVIA Conference Report"); Network Affiliates Reply
    Comments at 4.

[^62]: NBC Comments at 3-4.

[^63]: *Id.* At 5.

[^64]: S. Rep. No. 102-92, at 38, 106 Stat. 1133, 1171 (1991). The
    legislative history to the 1992 Cable Act provides that "the
    Committee has relied on the protections which are afforded local
    stations by the FCC's network nonduplication and syndicated
    exclusivity rules. Amendments or deletions of those rules in a
    manner that would allow distant stations to be substituted on cable
    systems for carriage \[of\] local stations carrying the same
    programming would, in the Committee's view, be inconsistent with the
    regulatory structure created in \[the 1992 Cable Act\]." *Id.*

[^65]: SHVIA Conference Report at 92. The legislative history of the
    SHVIA states that "the broadcast television market has developed in
    such a way that copyright licensing practices in this area take into
    account the national network structure, which grants exclusive
    territorial rights to programming in a local market to local
    stations either directly or through affiliation agreements." *Id.*
    The SHVIA Conference Report went on to state that "allowing the
    importation of distant or out-of-market network stations in
    derogation of the local stations' exclusive right -- bought and paid
    for in market-negotiated arrangements -- to show the works in
    question undermines those market arrangements." *Id.* at 92-93.
    Accordingly, Congress structured the compulsory copyright license in
    SHVIA "to hew as closely to those arrangements as possible." *Id.*
    at 92.

[^66]: The SHVERA House Report provides that "\[w\]here a satellite
    provider can retransmit a local station's exclusive network
    programming but chooses to substitute identical programming from a
    distant network affiliate of the same network instead, the satellite
    carrier undermines the value of the license negotiated by the local
    broadcast station as well as the continued viability of the
    network-local affiliate relationship." House Report at 11.

[^67]: NBC Comments at 7-8, citing *Good Faith Order*, 15 FCC Rcd at
    5446, 5449.

[^68]: *See* EchoStar Comments at 3-5; ACA Comments at 3-4.

[^69]: EchoStar Comments at 3; *see* ACA Comments at 3; EchoStar Reply
    Comments at 2.

[^70]: EchoStar Comments at 3; ACA Comments at 3-4, quoting *Monroe,
    Georgia Water Light and Gas Commission v. Morris Network, Inc.,* 19
    FCC Rcd 13997 n. 24 (M.B. 2004).

[^71]: Network Affiliates Reply Comments at 6-7.

[^72]: EchoStar Reply Comments at 3; DirecTV Reply Comments at 3.

[^73]: DirecTV Reply Comments at 4.

[^74]: ACA Comments at 4.

[^75]: EchoStar Comments at 4; EchoStar Reply Comments at 6.

[^76]: EchoStar Comments at 4, quoting *Good Faith Order*, 15 FCC Rcd at
    5470.

[^77]: EchoStar Reply Comments at 4.

[^78]: *Id*. at 4-5.

[^79]: NBC Reply Comments at 2 (emphasis NBC).

[^80]: *Id.* at 5.

[^81]: ACA Reply Comments at 3-5.

[^82]: Network Affiliates Reply Comments at 9.

[^83]: EchoStar Reply Comments at 4-5.

[^84]: Network Affiliates Reply Comments at 9-10, quoting Good Faith
    Order, 15 FCC Rcd at 5470 (emphasis Network Affiliates).

[^85]: DirecTV Reply Comments at 6.

[^86]: *Id.*

[^87]: *Id.* at 6-7 (emphasis DirecTV).

[^88]: *Id*. at 7.

[^89]: Because we reach this conclusion, we need not examine DirecTV's
    "agree with one, negotiate with all" proposal.

[^90]: 47 U.S.C. § 325(b)(3)(C).

[^91]: *See Chevron USA Inc. v. Natural Resources Defense Council,
    Inc.*, 467 U.S. 837, 842 (1984); *Qwest Corp. v. FCC*, 258 F.3d
    1191, 1199 (10^th^ Cir. 2001); *Bell Atlantic Tel. Cos. V. FCC*, 131
    F.3d 1044, 1047 (D.C. Cir. 1997).

[^92]: In this regard, we agree with DirecTV that a contrary
    interpretation might conflict with the prohibition on exclusive
    retransmission consent agreements contained in Section 325(b)(3)(C).
    *See* 47 U.S.C. § 325(b)(3)(C); DirecTV Reply Comments at 4.

[^93]: *See* House Report at 19.

[^94]: 47 U.S.C. § 340(d)(2).

[^95]: House Report at 14.

[^96]: See 47 U.S.C. § 325(b)(1).

[^97]: *See Implementation of the Cable Television Consumer Protection
    and Competition Act of 1992: Broadcast Signal Carriage Issues*, 8
    FCC Rcd 2965 (1993).

[^98]: *Id.*

[^99]: Such as the invocation of network nonduplication and syndicated
    exclusivity rights of broadcasters in the MVPD's DMA.

[^100]: *Cable Television Report and Order*, 36 FCC 2d 143, 174 (1972).

[^101]: *See* 17 U.S.C. § 111(a), (c) and (f).

[^102]: 47 U.S.C. § 340.

[^103]: *See* 47 U.S.C. §§ 338, 339 & 340.

[^104]: *See* NBC Comments at 2-4; Network Affiliates Reply Comments at
    4-6.

[^105]: *See* supra nn. 64-66 (discussing Congress's protection of the
    rights of copyright holders and support for the network-affiliate
    relationship.

[^106]: *See supra* ¶ 20 (discussing the arguments of NBC and the
    Network Affiliates).

[^107]: We note that the issue of retransmission consent generally, and
    the impact of network affiliation agreements on retransmission
    consent specifically, is more squarely raised in a petition for
    rulemaking pending before the Commission. *See Petition for
    Rulemaking to Amend 47 C.F.R. §§ 76.64, 76.93, and 76.103:
    Retransmission Consent, Network Non-Duplication, and Syndicated
    Exclusivity*, RM 11203 (filed March 2, 2005). In addition Section
    208 of the SHVERA requires the Commission to complete an inquiry and
    report to Congress regarding how the retransmission consent, network
    non-duplication, syndicated exclusivity and sports blackout rules
    impact MVPD competition, including the ability of rural cable
    operators to compete with satellite carriers in providing digital
    broadcast signals. SHVERA, Pub. L. No. 108-447, § 208. The
    Commission is currently preparing this report.

[^108]: *See* 5 U.S.C. § 553(b)(1)-(3) (Administrative Procedure Act
    notice requirements). *See Omnipoint Corp. v. FCC*, 78 F.3d 620, 631
    (D.C. Cir. 1996) ("a final rule is not a logical outgrowth of a
    proposed rule 'when the changes are so major that the original
    notice did not adequately frame the subjects for discussion.'"),
    quoting *Connecticut Light and Power Co. v. NRC*, 673 F.2d 525, 533
    (D.C. Cir.), *cert. denied*, 459 U.S. 835 (1982).

[^109]: 47 C.F.R. § 76.65(b)(1)(vi).

[^110]: *Good Faith Order*, 15 FCC Rcd at 5464.

[^111]: *See Monroe*, 19 FCC Rcd at 13997 n.24 ("To the extent, however,
    that Monroe Utilities is arguing that the existence of an underlying
    agreement between Morris and NBC is itself a violation of the good
    faith negotiation requirement, we agree with Morris that the good
    faith requirement applies to negotiations between MVPDs and
    broadcast stations, and not between a network and an affiliate.").

[^112]: *Good Faith Order*, 15 FCC Rcd at 5470.

[^113]: *See* 5 U.S.C. § 603. The RFA, *see* 5 U.S.C. § 601 -- 612, has
    been amended by the Small Business Regulatory Enforcement Fairness
    Act of 1996 (SBREFA), Pub. L. No. 104-121, Title II, 110 Stat. 857
    (1996).

[^114]: *Notice*, FCC 05-49 at p. 9 (rel. March 7, 2005).

[^115]: *See* 5 U.S.C. § 604.

[^116]: The Satellite Home Viewer Extension and Reauthorization Act of
    2004, Pub. L. No. 108-447, § 207, 118 Stat 2809, 3393 (2004) (to be
    codified at 47 U.S.C. § 325). The SHVERA was enacted on December 8,
    2004 as title IX of the "Consolidated Appropriations Act, 2005."

[^117]: SHVIA was enacted as title I of the Intellectual Property and
    Communications Omnibus Reform Act of 1999 (relating to copyright
    licensing and carriage of broadcast signals by satellite carriers,
    codified in scattered sections of 17 and 47 U.S.C.), PL 106-113, 113
    Stat. 1501, Appendix I (1999).

[^118]: *See* proposed rules contained in Appendix A to this *Notice*.

[^119]: 5 U.S.C. § 603(b)(3).

[^120]: 5 U.S.C. § 601(6).

[^121]: 5 U.S.C. § 601(3) (incorporating by reference the definition of
    "small business concern" in 15 U.S.C. § 632). 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
    Small Business Administration 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." 5 U.S.C. § 601(3).

[^122]: 15 U.S.C. § 632. Application of the statutory criteria of
    dominance in its field of operation and independence are sometimes
    difficult to apply in the context of broadcast television.
    Accordingly, the Commission's statistical account of television
    stations may be over-inclusive.

[^123]: *See*, *supra*, Section II of the *Notice*; *see also* 47 U.S.C.
    § 325(b)(3)(C).

[^124]: 13 C.F.R. § 121.201, NAICS code 517510.

[^125]: U.S. Census Bureau, 1997. Economics and Statistics
    Administration, Bureau of Census, U.S. Department of Commerce, 1997
    Economic Census, Subject Series -- Establishment and Firm Size,
    Information Sector 51, Table 4 at 50 (2000). The amount of \$10
    million was used to estimate the number of small business firms
    because the relevant Census categories stopped at \$9,999,999 and
    began at \$10,000,000. No category for \$12.5 million existed. Thus,
    the number is as accurate as it is possible to calculate with the
    available information.

[^126]: 47 C.F.R. § 76.901(e). The Commission developed this definition
    based on its determinations that a small cable system operator is
    one with annual revenues of \$100 million or less. For "regulatory
    simplicity," the Commission established the company size standard in
    terms of subscribers, rather than dollars; in the cable context,
    \$100 million in annual regulated revenues equates to approximately
    400,000 subscribers. *See Implementation of Sections of the Cable
    Television Consumer Protection and Competition Act of 1992: Rate
    Regulation, MM Doc. Nos. 92-266 and 93-215, Sixth Report and Order
    and Eleventh Order on Reconsideration*, 10 FCC Rcd 7393, 7408-7409,
    ¶¶ 28-30 (1995).

[^127]: Paul Kagan Associates, Inc., Cable TV Investor, Feb. 29, 1996
    (based on figures for Dec. 30, 1995).

[^128]: 47 U.S.C. § 543(m)(2).

[^129]: *See* Public Notice, "FCC Announces New Subscriber Count for the
    Definition of Small Cable Operator," 16 FCC Rcd 2225 (2001) ("*2001
    Subscriber Count PN*"). In this Public Notice, the Commission
    established the threshold for determining whether a cable operator
    meets the definition of small cable operator at 677,000 subscribers,
    and determined that this threshold will remain in effect until the
    Commission issues a superceding Public Notice. We recognize that the
    number of cable subscribers was recently estimated by the Commission
    to be almost 66.1 million, as of June 2004; *see* *2005 Cable
    Competition Report*, FCC 05-13, ¶¶ 9, 21. However, because the
    Commission has not issued a public notice subsequent to the *2001
    Subscriber Count PN,* we propose to rely on the subscriber count
    threshold established by the *2001 Subscriber Count PN*.

[^130]: 47 C.F.R. § 76.901(f).

[^131]: The Commission does receive such information on a case-by-case
    basis if a cable operator appeals a local franchise authority's
    finding that the operator does not qualify as a small cable operator
    pursuant to § 76.901(f) of the Commission's rules. *See* 47 U.S.C. §
    573.

[^132]: *See* 47 U.S.C. § 340(i)(1); 47 U.S.C. § 338(k)(3), as amended
    by the SHVERA, and 17 U.S.C. §119(d)(6).

[^133]: Part 100 of the Commission's rules was eliminated in 2002 and
    now both FSS and DBS satellite facilities are licensed pursuant to
    Part 25 of the rules. *Policies and Rules for the Direct Broadcast
    Satellite Service*, 17 FCC Rcd 11331 (2002); 47 C.F.R. § 25.148.

[^134]: *See, e.g., Application Of DirecTV Enterprises, LLC, Request For
    Special Temporary Authority for the DirecTV 5 Satellite; Application
    Of DirecTV Enterprises, LLC, Request for Blanket Authorization for
    1,000,000 Receive Only Earth Stations to Provide Direct Broadcast
    Satellite Service in the U.S. using the Canadian Authorized DirecTV
    5 Satellite at the 72.5° W.L. Broadcast Satellite Service Location,*
    19 FCC Rcd. 15529 (Sat. Div. 2004).

[^135]: 13 C.F.R. § 121.201, NAICS code 517410 (changed from 513340 in
    October 2002).

[^136]: U.S. Census Bureau, 1997 Economic Census, Subject Series:
    Information, "Establishment and Firm Size (Including Legal Form of
    Organization)," Table 4, NAICS code 513340 (issued October 2000).

[^137]: *Id*.

[^138]: 13 C.F.R. § 121.201, NAICS code 517510.

[^139]: *Id.*

[^140]: DirecTV is the largest DBS operator and the second largest MVPD,
    serving an estimated 13.04 million subscribers nationwide; *see*
    Annual Assessment of the Status of Competition in the Market for the
    Delivery of Video Programming, *Eleventh Annual Report*, FCC 05-13,
    ¶ 55 (rel. Feb. 4, 2005) ("*2005 Cable Competition Report*").

[^141]: EchoStar, which provides service under the brand name Dish
    Network, is the second largest DBS operator and the fourth largest
    MVPD, serving an estimated 10.12 million subscribers nationwide.
    *Id*.

[^142]: Rainbow DBS, which provides service under the brand name VOOM,
    reported an estimated 25,000 subscribers. *Id*.

[^143]: Dominion, which provides service under the brand name Sky Angel,
    does not publicly disclose its subscribership numbers on an
    annualized basis. *Id*.

[^144]: *See* 47 C.F.R. § 2.1(c).

[^145]: 13 C.F.R. § 121.201, NAICS code 517510.

[^146]: 13 C.F.R. § 121.201, NAICS code 517510.

[^147]: *See 2005 Cable Competition Report*, FCC 05-13, ¶ 110.
    Previously, the Commission reported that IMCC had 250 members; *see*
    Annual Assessment of the Status of Competition in the Market for the
    Delivery of Video Programming, *Tenth Annual Report*, 19 FCC Rcd
    1606, 1666, ¶ 90 (2004) ("*2004 Cable Competition Report*").

[^148]: *See 2005 Cable Competition Report*, FCC 05-13, ¶¶ 110.

[^149]: 13 C.F.R. § 121.201, NAICS code 517510. This NAICS code applies
    to all services listed in this paragraph.

[^150]: U.S. Census Bureau, 1997. Economics and Statistics
    Administration, Bureau of Census, U.S. Department of Commerce, 1997
    Economic Census, Subject Series -- Establishment and Firm Size,
    Information Sector 51, Table 4 at 50 (2000). The amount of \$10
    million was used to estimate the number of small business firms
    because the relevant Census categories stopped at \$9,999,999 and
    began at \$10,000,000. No category for \$12.5 million existed. Thus,
    the number is as accurate as it is possible to calculate with the
    available information.

[^151]: 13 C.F.F. § 121.201, NAICS code 517510.

[^152]: *See 2005 Cable Competition Report*, FCC 05-13, ¶ 64. HSD
    subscribership declined more than 28 percent between June 2002 and
    June 2003. *See 2004 Cable Competition Report*, 19 FCC Rcd 1654-55,
    ¶¶ 73-4.

[^153]: MDS, also known as Multichannel Multipoint Distribution Service
    ("MMDS"), is regulated by Part 21 of the Commission's rules; *see*
    47 C.F.R. Part 21, subpart K; and has been renamed the Broadband
    Radio Service (BRS); *see* Amendment of Parts 1, 21, 73, 74 and 101
    of the Commission's Rules to Facilitate the Provision of Fixed and
    Mobile Broadband Access, Educational and Other Advanced Services in
    the 2150-2162 and 2500-2690 MHz Bands; Part 1 of the Commission\'s
    Rules - Further Competitive Bidding Procedures; Amendment of Parts
    21 and 74 to Enable Multipoint Distribution Service and the
    Instructional Television Fixed Service Amendment of Parts 21 and 74
    to Engage in Fixed Two-Way Transmissions; Amendment of Parts 21 and
    74 of the Commission\'s Rules With Regard to Licensing in the
    Multipoint Distribution Service and in the Instructional Television
    Fixed Service for the Gulf of Mexico; 19 FCC Rcd 14165 (2004)
    ("*MDS/ITFS Order"*).

[^154]: ITFS systems are regulated by Part 74 of the Commission's rules;
    *see* 47 C.F.R. Part 74, subpart I. ITFS, an educational service,
    has been renamed the Educational Broadband Service (EBS); *see*
    *MDS/ITFS Order*, 19 FCC Rcd 14165. ITFS licensees, however, are
    permitted to lease spectrum for MDS operation.

[^155]: *See* Local Multipoint Distribution Service, 12 FCC Rcd 12545
    (1997) ("*LMDS Order*").

[^156]: MDS Auction No. 6 began on November 13, 1995, and closed on
    March 28, 1996. (67 bidders won 493 licenses.)

[^157]: 47 C.F.R. § 21.961(b)(1).

[^158]: *See ITFS* *Order*, 10 FCC Rcd at 9589.

[^159]: 47 U.S.C. § 309(j). Hundreds of stations were licensed to
    incumbent MDS licensees prior to implementation of Section 309(j) of
    the Communications Act of 1934, 47 U.S.C. § 309(j). For these
    pre-auction licenses, the applicable standard is SBA's small
    business size standards for "other telecommunications" (annual
    receipts of \$12.5 million or less). *See* 13 C.F.R. § 121.201,
    NAICS code 517910.

[^160]: In addition, the term "small entity" under SBREFA applies to
    small organizations (nonprofits) and to small governmental
    jurisdictions (cities, counties, towns, townships, villages, school
    districts, and special districts with populations of less than
    50,000). 5 U.S.C. §§ 601(4)-(6). We do not collect annual revenue
    data on ITFS licensees.

[^161]: The Commission has held two LMDS auctions: Auction 17 and
    Auction 23. Auction No. 17, the first LMDS auction, began on
    February 18, 1998, and closed on March 25, 1998. (104 bidders won
    864 licenses.) Auction No. 23, the LMDS re-auction, began on April
    27, 1999, and closed on May 12, 1999. (40 bidders won 161 licenses.)

[^162]: *See LMDS* *Order,* 12 FCC Rcd at 12545.

[^163]: *Id.*

[^164]: *See* Letter to Daniel Phythyon, Chief, Wireless
    Telecommunications Bureau (FCC) from A. Alvarez, Administrator, SBA
    (January 6, 1998).

[^165]: *See* 47 U.S.C. § 573.

[^166]: 13 C.F.R. § 121.201, NAICS code 517510.

[^167]: *See 2005 Cable Competition Report*, FCC 05-13, ¶ 71.

[^168]: *See 2004 Cable Competition Report*, 19 FCC Rcd at 1659-60, ¶¶
    80-1.

[^169]: *See 2005 Cable Competition Report*, FCC 05-13, ¶ 71.

[^170]: *Id*. WideOpenWest is the second largest BSP and 15th largest
    MVPD, with cable systems serving about 288,000 subscribers as of
    September 2003. The third largest BSP is Knology, which currently
    serves approximately 174,957 subscribers as of June 2004; *see*
    *2005 Cable Competition Report*, FCC 05-13, ¶ 71.

[^171]: *See* 13 C.F.R. § 121.201, NAICS Code 515120 (adopted Oct.
    2002).

[^172]: NAICS Code 515120. This category description continues, "These
    establishments operate television broadcasting studios and
    facilities for the programming and transmission of programs to the
    public. These establishments also produce or transmit visual
    programming to affiliated broadcast television stations, which in
    turn broadcast the programs to the public on a predetermined
    schedule. Programming may originate in their own studios, from an
    affiliated network, or from external sources." Separate census
    categories pertain to businesses primarily engaged in producing
    programming. *See* Motion Picture and Video Production, NAICS code
    512110; Motion Picture and Video Distribution, NAICS Code 512120;
    Teleproduction and Other Post-Production Services, NAICS Code
    512191; and Other Motion Picture and Video Industries, NAICS Code
    512199.

[^173]: "\[Business concerns\] are affiliates of each other when one
    concern controls or has the power to control the other or a third
    party or parties controls or has to power to control both." 13
    C.F.R. § 121.103(a)(1).

[^174]: FCC News Release, "Broadcast Station Totals as of September 30,
    2002."

[^175]: *See* proposed rules contained in Appendix A to this *Notice*.

[^176]: *See, e.g., supra* ¶ 3 of the *Notice* (negotiation standards).

[^177]: *See* 47 C.F.R. §§ 76.5, 76.7, 76.65; *see also, supra,* Section
    II of the *Notice*.

[^178]: A DMA is a geographic market designation created by Nielsen
    Media Research that defines each television market exclusive of
    others, based on measured viewing patterns. Essentially, each county
    in the United States is allocated to a market based on which
    home-market stations receive a preponderance of total viewing hours
    in the county. For purposes of this calculation, both over-the-air
    and cable television viewing are included. For a more complete
    description of how counties are allocated, *see* Nielsen Media
    Research's *Nielsen Station Index: Methodology Techniques and Data
    Interpretation.*

[^179]: 5 U.S.C. § 603(c)(1)-(c)(4)

[^180]: *See* 17 U.S.C. § 119(a)(3); *House Commerce Committee Report*
    at 1 (Purpose of the SHVERA includes "increasing regulatory parity
    by extending to satellite carriers the same type of authority cable
    operators already have to carry 'significantly viewed' signals into
    a market"); *see also, supra,* Section III.A.3. of the *Notice*.

[^181]: 17 U.S.C. § 119(a)(3).

[^182]: *See, e.g., supra* ¶ 3 of the Order (negotiation standards).

[^183]: ACA Comments at 5. ACA argues that these procedural protections
    should apply not just to cable companies that serve 400,000 or fewer
    subscribers, but should also extend to "all medium-sized,
    non-vertically integrated cable companies." *Id*. n.7.

[^184]: *Implementation of the Satellite Home Viewer Improvement Act of
    1999: Retransmission Consent Issues*, 15 FCC Rcd 5445, 5471-72
    (2000) ("*Good Faith Order*"), *recon. granted in part*, 16 FCC Rcd
    15599 (2001).

[^185]: *See id*.

[^186]: *See* Section 208 of SHVERA. The Commission is required to
    submit a report to Congress on the results of its inquiry no later
    than nine months after SHVERA's enactment date (*i.e.*, September 8,
    2005).

[^187]: Public Notice, "Media Bureau Seeks Comment For Inquiry Required
    By the Satellite Home Viewer Extension and Reauthorization Act on
    Rules Affecting Competition In the Television Marketplace," MB
    Docket No. 05-28, DA 05-169 (rel. Jan. 25, 2005) (Comments are due
    March 1, 2005; replies are due March 16, 2005.).

[^188]: *See* 5 U.S.C. § 801(a)(1)(A).

[^189]: *See* 5 U.S.C. § 604(b).