# Before the

# Federal Communications Commission

# Washington, D.C. 20554

In the Matter of: )

)

Implementation of the Satellite Home ) CS Docket No. 99-363

Viewer Improvement Act of 1999 )

)

Retransmission Consent Issues )

# NOTICE OF PROPOSED RULE MAKING

**Adopted: December 21, 1999 Released: December 22, 1999**

**Comment Date Section IV: 14 days after publication in the Federal
Register.**

**Reply Comment Date Section IV: 21 days after publication in the
Federal Register.**

**Comment Date Section III & V: February 1, 2000**

**Reply Comment Date Section III & V: February 20, 2000**

**By the Commission:**

###### INTRODUCTION

1\. In this Notice of Proposed Rulemaking ("*Notice*"), we seek comment
on our implementation of certain aspects of the Satellite Home Viewer
Improvement Act of 1999 ("1999 SHVIA"), which was enacted on November
29, 1999.[^1] This act authorizes satellite carriers to add more local
and national broadcast programming to their offerings, and to make that
programming available to subscribers who previously have been prohibited
from receiving broadcast fare via satellite under compulsory licensing
provisions of the copyright law. The legislation generally seeks to
place satellite carriers on an equal footing with local cable operators
when it comes to the availability of broadcast programming, and thus
give consumers more and better choices in selecting a multichannel video
program distributor ("MVPD"). We intend to implement the 1999 SHVIA
aggressively to ensure that the pro-competitive goals underlying this
important legislation are realized.

2\. Among other things, the new legislation requires broadcasters, until
2006, to negotiate in good faith with satellite carriers and other MVPDs
with respect to their retransmission of the broadcasters' signals, and
prohibits broadcasters from entering into exclusive retransmission
agreements. We are initiating, and plan to conclude, this rulemaking
well ahead of our statutory deadlines for doing so because of the vital
importance of these provisions of the 1999 SHVIA.[^2] Strict adherence
by broadcasters to the good faith requirement is crucial if the
statutory objectives are to be fulfilled. This *Notice* also seeks
comment on the adoption of implementing regulations relating to the
exercise by television broadcast stations of the right to grant
retransmission consent. Retransmission consent is the process whereby
television broadcasters negotiate and consent to carriage of their
signals by MVPDs such as cable television operators and satellite
carriers.

## II. BACKGROUND

II. 

3\. The advent of home satellite dish technology in the 1980's made it
technically possible for the consumer to receive directly by satellite
the television programming being transmitted by the television networks
to their affiliates throughout the nation. This included consumers, such
as those living in remote areas, who were then unable to receive network
programming from a local broadcaster. Local broadcasters were concerned,
however, that consumers who could, in fact, receive local broadcast
signals over-the-air might nonetheless opt to receive the network
signals via satellite. This would lead to a reduction to local
broadcasters\' viewership and, in turn, advertising revenue, thus
possibly threatening the viability of free over-the-air broadcasting.

4\. In 1988, Congress passed the Satellite Home Viewer Act ("1988 SHVA")
in order to provide people in unserved areas of the country with access
to broadcast programming via satellite.[^3] The 1988 SHVA also reflected
Congress' intent to protect the role of local broadcasters in providing
free, over-the-air television. As an amendment to the Copyright Act,[^4]
the 1988 SHVA protected the broadcasters' interests while simultaneously
enabling satellite carriers[^5] to provide broadcast programming to
those satellite subscribers who were unable to obtain broadcast network
programming over-the-air. In the 1988 SHVA, Congress created a limited
exception to the exclusive programming copyrights enjoyed by television
networks and their affiliates.[^6] Therefore, according to the 1988
SHVA, consumers are eligible for satellite-delivered network service
only when a local broadcaster grants permission or when the consumer (1)
is "unserved" by the over-the-air signals of a local network affiliate,
and (2) has not received cable service in the last 90 days.[^7]
According to the 1988 SHVA, "unserved" means that a consumer cannot
receive, using a conventional outdoor rooftop antenna, an over-the-air
signal of grade B intensity.[^8] As a general matter, the effect of the
1988 SHVA was to prevent satellite carriers from retransmitting
broadcast network television signals directly to consumers in most
circumstances.

5\. Since 1988, subscribership to direct-to-home satellite service has
increased markedly.[^9] Satellite subscribers complain, however, about
the limited availability of broadcast programming.[^10] At the same
time, increases in satellite capacity have made it possible for
satellite carriers to carry some of the local signals of individual
broadcasters, not simply the feeds of a limited number of major network
stations.

6\. The 1999 SHVIA revises the 1988 SHVA and reflects changes not only
involving the satellite industry and subscribers, but television
broadcast stations and MVPDs. The 1999 SHVIA adopts changes in several
areas, including retransmission consent, must-carry, and retransmission
of local broadcast signals. In particular, the 1999 SHVIA addresses
several limitations previously placed on satellite carriers, including
the issue of satellite carrier retransmission of local broadcast
programming.

## III. RETRANSMISSION CONSENT

7\. The Commission, in *Implementation of the Cable Television Consumer
Protection and Competition Act of 1992, Broadcast Signal Carriage
Issues* ("*Broadcast Signal Carriage Order*"),[^11] implemented the
retransmission consent provisions of the Cable Television Consumer
Protection and Competition Act of 1992 ("1992 Cable Act").[^12] The 1992
Cable Act amended Section 325 of the Communications Act of 1934 by
adding provisions governing retransmission of broadcast signals by cable
systems and other MVPDs. Section 325 of the 1992 Cable Act provided that
television broadcast stations were required to make an election every
three years whether to proceed under the mandatory cable signal carriage
rules[^13] or to govern their relationship with cable operators or other
MVPDs by electing retransmission consent.[^14] Congress indicated that
the retransmission consent and must-carry rule election provisions
adopted pursuant to the 1992 Cable Act provide a model for
implementation of the retransmission consent election provisions of the
1999 SHVIA.[^15]

### A. Retransmission Consent and the Election Process

8\. Section 1009 of the 1999 SHVIA amends Section 325(b)(1) and provides
that no cable system or other MVPD shall transmit the signal of a
broadcasting station, or any part thereof, except: (A) with the express
authority of the originating station; (B) pursuant to Section 614, in
the case of a station electing to assert the right to carriage by a
cable operator;[^16] or (C) pursuant to Section 338, in the case of a
station electing to assert the right to carriage by a satellite
carrier.[^17] Thereafter, the 1999 SHVIA provides that every three years
television stations covered by 325(b) are required to elect
retransmission consent pursuant to Section 325 or must-carry pursuant to
Sections 614 or 338.[^18]

9.  Amended Section 325(b)(2) provides five exceptions to the
    retransmission consent requirement of Section 325(b)(1). The
    amendment provides that the retransmission consent requirement does
    not apply to: (1) noncommercial television broadcast stations; (2)
    retransmission, in certain circumstances, of the signal of a
    superstation outside the station's local market by a satellite
    carrier; (3) until December 31, 2004, retransmission of signals of
    network stations directly to a home satellite antenna, if the
    subscriber receiving the signal is located in an area outside the
    local market of such station and resides in an unserved
    household; (4) retransmission, in certain circumstances, by a cable
    operator or other MVPD other than a satellite carrier of the signal
    of a superstation outside the station's local market; and (5) during
    the six month period following the date of enactment of the 1999
    SHVIA, the retransmission of the signal of a television broadcast
    station within the station's local market by a satellite carrier
    directly to its subscribers.[^19] In other words, subject to the
    limitations set forth therein, MVPDs, including satellite carriers,
    may freely transmit the signals of any of the broadcasters
    satisfying the criteria set forth in Section 325(b)(2) without
    obtaining retransmission consent from such broadcasters.

10. Section 325(b)(3)(C) directs the Commission, within 45 days after
    the date of enactment of the 1999 SHVIA, to commence a rulemaking to
    administer the limitations contained in Section 325(b)(2). At the
    outset, we note that this *Notice* relates to retransmission consent
    only. The exercise of must carry rights by broadcasters with regard
    to satellite carriers does not commence until January 1, 2002 and
    will be addressed in a subsequent Notice and Rulemaking proceeding.
    As part of that proceeding, we will seek comment on any necessary or
    prudent revisions to our retransmission consent rules as a result of
    the initiation of satellite must carry.

11. The Commission was directed by Congress to undertake a rulemaking to
    implement a substantially similar provision of the 1992 Cable Act.
    In the *Broadcast Signal Carriage Order*, the Commission adopted
    such regulations. [^20] The rules implementing this provision are
    codified at Section 76.64 of the Commission's rules.[^21] We seek
    comment on the appropriate manner to implement the provisions of
    amended Section 325(b)(2). In particular, we seek comment on whether
    the amended provisions should be incorporated into existing Section
    76.64 of the Commission's rules, or whether some other regulatory
    framework or procedures would more appropriately implement amended
    Section 325(b)(2). We also seek comment on any other issues relevant
    to the implementation of Section 325(b)(2). In addition, we note
    that, although the statute is entitled the "*Satellite"* Home Viewer
    Improvement Act, some of the amendments Congress enacted to Section
    325 appear to have general impact upon the retransmission consent
    provisions as applied to all MVPDs. We tentatively conclude that
    such was Congress' intent and seek comment on this tentative
    conclusion.

12\. Congress also amended Section 325(b) by adding new paragraph
(3)(C)(i), which requires the Commission to adopt regulations which
shall "establish election time periods that correspond with those
regulations adopted under subparagraph (B) of this paragraph. . .
."[^22] Subparagraph (B) of existing Section 325(b)(3) provides that:

> The regulations required by subparagraph (A) \[retransmission consent
> and must carry rights\] shall require that television stations, within
> one year after the date of enactment of the Cable Television Consumer
> Protection and Competition Act of 1992 and every three years
> thereafter, make an election between the right to grant retransmission
> consent under this subsection and the right to signal carriage under
> section 614. If there is more than one cable system that services the
> same geographic area, a station's election shall apply to all such
> cable systems.[^23]

The Commission adopted the required regulations in the *Broadcast Signal
Carriage Order*.[^24] The regulations are codified in Section 76.64 of
the Commission's rules.[^25]

13\. We seek comment on the appropriate manner to implement Section
325(b)(3)(C)(i). In particular we seek comment on whether, following an
initial election period applicable only to satellite carriers, the
Commission should merely incorporate the satellite carrier must
carry-retransmission consent election cycle into the Commission's
regulations, employing the same rules and procedures the Commission
adopted in response to the 1992 Cable Act. In the alternative, we seek
comment on whether a different election cycle with different procedures
is required to appropriately implement Section 325(b)(3)(C)(i) and what
the effect would be of having different procedures in the cable and
satellite contexts. In this regard, we seek comment on any statutory,
regulatory or technical differences between satellite carriers and other
MVPDs that would justify a different election scheme. Section 76.64(g)
requires that broadcasters make consistent must carry-retransmission
consent elections where the franchise areas of cable systems
overlap.[^26] We seek comment on the consistent election requirement and
how it would be implemented, if at all, in the context of any election
cycle in which satellite carriers participate. We also seek comment on
any other issues relevant to the implementation of Section
325(b)(3)(C)(i).

# 

## EXCLUSIVITY AND GOOD FAITH NEGOTIATION

## A. Good Faith Negotiation Requirement 

14\. Congress further amended Section 325(b) of the Communications Act,
requiring the Commission to adopt regulations that shall:

. . . until January 1, 2006, prohibit a television broadcast station
that provides retransmission consent from . . . 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.[^27]

The Joint Explanatory Statement of the Committee of Conference
("Conference Report") does not explain or clarify the statutory language
and merely states that:

> The regulations would, until January 1, 2006, prohibit a television
> broadcast station from . . . refusing to negotiate in good faith
> regarding retransmission consent agreements. A television station may
> generally offer different retransmission consent terms or conditions,
> including price terms, to different distributors. The \[Commission\]
> may determine that such different terms represent a failure to
> negotiate in good faith only if they are not based on competitive
> marketplace considerations.[^28]

Accordingly, we seek comment on the good faith negotiation requirement
of Section 325(b)(3)(C).

15\. Congress did not expressly define the term "good faith" in the
statutory language or the legislative history other than to instruct
that retransmission consent agreements containing different terms and
conditions, including price terms, with different video programming
distributors do not reflect a failure to negotiate in good faith on
behalf of the television broadcast station if such different terms and
conditions are based on competitive marketplace conditions. While
Congress did not expressly define what constitutes good faith under
Section 325(b)(3)(C), Congress has signaled its intention to impose some
heightened duty of negotiation on broadcasters in the retransmission
consent process. We seek to fulfill Congress' intent by adopting
substantive and procedural rules that are clear and subject to swift and
effective enforcement. We therefore seek comment on the criteria that
should be employed to define "good faith." We also seek comment on
whether the duty of good faith negotiation applies equally to the MVPD
negotiating a retransmission consent agreement. We seek comment on
whether we need to explicitly define what constitutes good faith under
Section 325(b)(3)(C). The Uniform Commercial Code ("UCC") defines the
term "good faith" as "honesty in fact in the conduct of the transaction
concerned."[^29] In addition, Black's Law Dictionary defines good faith
as "an intangible and abstract quality with no technical meaning or
statutory definition, and it encompasses, among other things, an honest
belief, the absence of malice, and the absence of design to defraud or
to seek an unconscionable advantage . . ." [^30] We seek comment on
whether to adopt either of these definitions, or some other explicit
definition of the term good faith.

16\. We note that, in other contexts within both the Communications Act
and other Federal laws, Congress has imposed a good faith negotiation
requirement upon parties subject to a federal statutory scheme. For
example, Section 8(d) of the Taft-Hartley Act details the collective
bargaining duty of both employers and employees, providing that:

> To bargain collectively is the performance of the mutual obligation of
> the employer and the representative of the employees to meet at
> reasonable times and confer in good faith with respect to wages,
> hours, and other terms and conditions of employment . . . but such
> obligation does not compel either party to agree to a proposal or
> require the making of a concession.[^31]

In determining good faith under Section 8(d), the National Labor
Relations Board ("NLRB") and the courts apply two independent tests to
see whether a party has acted in good faith during collective
bargaining. In one test, the NLRB applies an objective set of criteria
to determine whether a party has violated one or more enumerated *per
se* violations of the duty to negotiate in good faith.[^32] In the
second test, the NLRB subjectively examines the "totality of the
circumstances" evidencing a party's behavior during negotiations to
determine whether the duty to negotiate in good faith has been
violated.[^33] The objective test allows the NLRB to single out specific
recurring or particularly damaging behavior.[^34] On the other hand, the
subjective test allows the NLRB to punish behavior that would not by
itself constitute a *per se* violation, but when examined along with
other suspect behavior constitutes a violation of the duty to negotiate
in good faith.[^35]

17\. Congress imposed a good faith negotiation requirement upon common
carriers as part of the Telecommunications Act of 1996 ("1996 Act").
Section 251(c)(1) of the Communications Act imposes on incumbent local
exchange carriers ("ILECs"):

> The duty to negotiate in good faith in accordance with section 252 the
> particular terms and conditions of agreements to fulfill the duties
> described in paragraphs (1) through (5) of subsection (b) and this
> subsection. The requesting telecommunications carrier also has the
> duty to negotiate in good faith the terms and conditions of such
> agreements.[^36]

In implementing Section 251(c)(1), the Commission adopted a two-part
test to determine good faith similar to that used by the NLRB. Reasoning
that it would be futile to try to determine in advance every possible
action that might be inconsistent with the duty to negotiate in good
faith, the Commission found that it was appropriate to identify factors
or practices that may be evidence of failure to negotiate in good faith,
but that need to be considered in light of all relevant
circumstances.[^37] The Commission adopted a list of eight specific
actions or practices that, among other unenumerated actions or practices
to be determined on a case-by-case basis, violate the Section 251(c)(1)
duty to negotiate in good faith.[^38]

18\. We seek comment on whether to adopt a two-part objective-subjective
test for good faith similar to that embraced by the NLRB and by the
Commission pursuant to Section 251 of the Communications Act. In this
regard, we seek comment on specific actions or practices which would
constitute a *per se* violation of the duty to negotiate in good faith
in accordance with Section 325(b)(3)(C). Establishing a specific list of
*per se* requirements or prohibitions would lend clarity to, and thus
expedite, the negotiation process and would do likewise with respect to
our enforcement mechanism, where enforcement became necessary. In
addition to any other actions or practices, we ask commenters to address
whether it would be appropriate to include in any such list provisions
similar to the *per se* violations set forth in Section 51.301 of the
Commission's.[^39] Although the Section 51.301 process provides a basis
for comment in this proceeding, we emphasize that the good faith
standard of SHVIA is different in significant respects.[^40] We also
seek comment on any other specific legal precedent upon which we should
rely and any other regulatory approach that might appropriately
implement the good faith negotiation requirement of Section 325(b)(3)(C)
of the Communications Act.

19\. Section 325(b)(3)(C) permits television broadcast stations to
negotiate in good faith retransmission consent agreements with different
MVPDs with different terms and conditions, including price terms,
provided that such different terms and conditions are based upon
"competitive marketplace considerations."[^41] We seek comment on what
constitutes a competitive marketplace consideration.[^42] We seek to
define the term as specifically as possible in this rulemaking, rather
than to adopt a general standard to be fleshed out in subsequent
adjudication. While we will resolve each case on its own merits, adding
specification to our rules should add certainty to the negotiation
process and reduce the number of cases presented to the Commission for
adjudication. We note that the Commission has adopted non-discrimination
standards in both the program access and open video system
contexts.[^43] We seek comment on the relevance, if any, of these
standards to what constitutes a "competitive market consideration." We
seek comment on the scope of the relevant marketplace to which Congress
refers. In addition, we seek comment on any other factors or approaches
to determining what constitutes competitive marketplace considerations
under Section 325(b)(3)(C). In this regard, we note that the Commission
has recently relaxed the television broadcast ownership rules, in
certain circumstances, permitting companies to own two television
broadcast stations within a given market.[^44] We seek comment on this
development and its impact upon a broadcaster's duty to negotiate in
good faith. For example, can companies with two broadcast stations
within the same market negotiate a joint retransmission consent
agreement or should they be required to negotiate separate arms-length
retransmission consent agreements on behalf of each station?[^45]

20\. The Commission is aware that direct broadcast satellite providers
have entered into retransmission consent agreements with television
broadcast stations that predate enactment of Section 325(b)(3)(C). In
addition, we note that we are also aware of agreements that have been
executed since the enactment of the 1999 SHVIA. We seek comment on the
impact on these agreements of the duty to negotiate in good faith.

#  

#  B. Prohibition of Exclusive Retransmission Consent 

21\. Section 325(b) of the Communications Act also directs the
Commission to commence a rulemaking proceeding that shall:

> until January 1, 2006, prohibit a television broadcast station that
> provides retransmission consent from engaging in exclusive contracts.
> . .[^46]

The accompanying Conference Report contains no language to clarify or
explain the prohibition, stating only:

> The regulations would, until January 1, 2006, prohibit a television
> broadcast station from entering into an exclusive retransmission
> consent agreement with a multichannel video programming distributor .
> . .[^47]

22\. The Commission established a similar prohibition in rulemakings
following passage of the 1992 Cable Act. The 1992 Cable Act called upon
the Commission to "establish regulations to govern the exercise by
television broadcast stations of the right to grant retransmission
consent . . ."[^48] In the *Broadcast Signal Carriage Order*, the
Commission recognized that "exclusivity can be an efficient form of
distribution, but, in view of the concerns that led Congress to regulate
program access and signal carriage arrangements, we believe that it is
appropriate to extend the same nonexclusivity safeguards to non-cable
multichannel distributors with respect to television broadcast signals,
at least initially."[^49] The Commission established the following
prohibition on exclusive retransmission contracts:

Exclusive retransmission consent agreements are prohibited. No
television broadcast station shall make an agreement with one
multichannel distributor for carriage, to the exclusion of other
multichannel distributors.[^50]

23\. Section 325(b)(3)(C)(ii) requires us to "until January 1, 2006,
prohibit a television broadcast station that provides retransmission
consent from engaging in exclusive contracts."[^51] We seek comment on
what activities would constitute "engaging in" exclusive retransmission
agreements. We note that Section 325(b)(3)(C)(ii) prohibits a
broadcaster from "engaging in" exclusive retransmission consent
agreements, while the Conference Report describes the prohibition of
"entering into" exclusive retransmission consent agreements.[^52] While
the phrase "engaging in" could be interpreted to suggest a currently
effective exclusive relationship, it would appear to allow television
broadcast stations to negotiate future exclusive contracts that would
take effect on or after January 1, 2006. We seek comment on whether the
statute allows negotiation and execution of such agreements before
January 1, 2006. We also note the distinction between the phrases
"engaging in" and "entering into." While the statutory phrase "engaging
in" seems to indicate not only the act of entering into a contract, but
also the acts necessary to performance of a contract, the phrase
"entering into" seems to indicate only the process of negotiating and
formalizing a contract. We seek comment on the significance, if any, of
the Conference Report's use of the phrase "entering into."

24\. The Conference Report states that the prohibition applies to "an
exclusive retransmission consent agreement with a multichannel video
programming distributor" until January 1, 2006.[^53] On its face, this
provision would seem to sunset any prohibition on exclusive
retransmission consent contracts for all multichannel video program
distributors. Under this reading of the statute, the Commission's rule
prohibiting exclusive retransmission consent agreements for cable
operators would be deemed abrogated as of January 1, 2006. We seek
comment on whether this was Congress' intent in enacting Section
325(b)(3)(C)(ii). In addition, we seek comment regarding what public
interest concerns are involved in such a sunset. Section
325(b)(3)(C)(ii) appears to have immediate effect. We seek comment on
the existence of exclusive satellite carrier retransmission consent
agreements that either predate the enactment of the 1999 SHVIA or under
the Commission's rules implementing Section 325(b)(3)(C)(ii). Assuming
any such agreements exist, we seek comment on what, if anything, the
Commission should do about them.

25\. We seek comment on what evidence should be required to demonstrate
the existence of an exclusive contract in violation of Section
325(b)(3)(C)(ii). Presumably, if companies are engaged in an exclusive
contractual relationship, they are in violation of the statute's
prohibitions. However, there is no mechanism for determining whether
such exclusive contracts exist. As such, it may be difficult for a MVPD
not party to an exclusive retransmission consent agreement to determine
whether one exists. We seek comment on approaches to establishing the
existence of an exclusive retransmission consent agreement.

**C. Procedural Issues**

26\. In directing the Commission to adopt regulations which, until
January 1, 2006, prohibit exclusive carriage agreements and require good
faith negotiation of retransmission consent agreements, Congress did not
indicate what procedures the Commission should employ to enforce these
provisions. We seek comment on what procedures the Commission should
employ to enforce the provisions adopted pursuant to Section
325(b)(3)(C). As indicated above, our goal is swift and certain
enforcement of the rules that Congress has directed us to adopt to
further the pro-competitive goals of the 1999 SHVIA. Commenters should
state whether the same set of enforcement procedures should apply to
both the exclusivity prohibition and the good faith negotiation
requirement, or whether the Commission should adopt different procedures
tailored to each prohibition. We seek comment regarding whether special
relief procedures of the type found in Section 76.7 of the Commission's
rules provide an appropriate framework for addressing issues arising
under Section 325(b)(3)(C).[^54] We seek comment on whether expedited
procedures are necessary to the appropriate resolution of either
exclusivity or good faith proceedings.[^55] We seek comment on whether
there are circumstances in which the use of alternative dispute
resolution services would assist in determining whether a television
broadcast station negotiated in good faith as defined by Section
325(b)(3)(C)(ii) and the Commission\'s rules adopted thereunder.[^56]

27\. We also seek comment on how the burden of proof should be
allocated. In this regard, we seek comment on whether the burden should
rest with the complaining party until it has made a *prima facie*
showing and then shift to the defending party.[^57] Under this approach,
we seek comment on what would constitute a *prima facie* showing
sufficient to shift the burden to the defending party.

28\. Section 325(b)(3)(C) directs that the regulations adopted by the
Commission prohibit exclusive carriage agreements and require good faith
negotiation of retransmission consent agreements "until January 1,
2006."[^58] We seek comment on whether the Commission's rules regarding
exclusive carriage agreements and good faith negotiation should
automatically sunset on this date. We seek comment on whether any sunset
of regulations should apply to television broadcast stations
negotiations with all MVPDs or solely to negotiations with satellite
programming distributors. We also seek comment on what, if anything, is
the Commission's role with regard to these issues after January 1, 2006.

IV. **ADMINISTRATIVE MATTERS**

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

29\. The initial regulatory flexibility analysis is attached to this
order as Appendix A.

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

**B. Ex Parte Rules**

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

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

31\. Pursuant to applicable procedures set forth in Sections 1.415 and
1.419 of the Commission\'s Rules, 47 C.F.R. §§ 1.415 and 1.419,
interested parties may file comments on Sections III and V of this
*Notice* or before February 1, 2000 and reply comments on or before
February 20, 2000; interested parties may file comments on Section IV of
this *Notice* on or before 14 days after publication in the Federal
Register and reply comments on or before 21 days after publication in
the Federal Register. Comments may be filed using the Commission\'s
Electronic Comment Filing System (\"ECFS\") or by filing paper
copies.[^59] Comments filed through the ECFS can be sent as an
electronic file via the Internet to \<http://www.fcc/e-file/ecfs.html\>.
Generally, only one copy of an electronic submission must be filed. If
multiple docket or rulemaking numbers appear in the caption of this
proceeding, however, commenters must transmit one electronic copy of the
comments to each docket or rulemaking number referenced in the caption.
In completing the transmittal screen, commenters should include their
full name, Postal service mailing address, and the applicable docket or
rulemaking number. Parties may also submit an electronic comment by
Internet e-mail. To get filing instructions for e-mail comments,
commenters should send an e-mail to ecfs@fcc.gov, and should include the
following words in the body of the message, \"get form\<your e-mail
address.\" A sample form and directions will be sent in reply.

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

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

34\. Parties who choose to file by paper should also submit their
comments on diskette. Parties should submit diskettes to Steven
Broeckaert, Cable Services Bureau, 445 12th Street N.W., Room 4-A865,
Washington, D.C. 20554. Such a submission should be on a 3.5-inch
diskette formatted in an IBM compatible form using MS DOS 5.0 and
Microsoft Word, or compatible software. The diskette should be
accompanied by a cover letter and should be submitted in \"read only\"
mode. The diskette should be clearly labeled with the party\'s name,
proceeding (including the lead docket number in this case CS Docket No.
99-363), type of pleading (comments or reply comments), date of
submission, and the name of the electronic file on the diskette. The
label should also include the following phrase \"Disk Copy - Not an
Original.\" Each diskette should contain only one party\'s pleadings,
referable in a single electronic file. In addition, commenters must send
diskette copies to the Commission\'s copy contractor, International
Transcription Service, 1231 20th Street, N.W., Washington, D.C. 20036.

V.  **ORDERING CLAUSES**

35\. Accordingly, **IT IS ORDERED** that pursuant to Section 1009 of the
Satellite Home Viewer Act of 1999, **NOTICE IS HEREBY GIVEN** of the
proposals described in this Notice of Proposed Rulemaking.

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

Federal Communications Commission

Magalie Roman Salas

> Secretary

# Appendix A

# Initial Regulatory Flexibility Act Analysis

1\. As required by the Regulatory Flexibility Act (\"RFA\"),[^60] the
Commission has prepared this Initial Regulatory Flexibility Analysis
(\"IRFA\") of the possible significant economic impact on small entities
by the possible policies and rules that would result from this Notice of
Proposed Rulemaking ("Notice"). Written public comments are requested on
this IRFA. Comments must be identified as responses to the IRFA and must
be filed by the deadlines for comments on the Notice provided above in
paragraph 31. The Commission will send a copy of the Notice, including
this IRFA, to the Chief Counsel for Advocacy of the Small Business
Administration.[^61] In addition, the Notice and IRFA (or summaries
thereof) will be published in the Federal Register.[^62]

*2. Need for, and Objectives of, the Proposed Rules.* Section
325(b)(3)(C), of the Communications Act of 1934, as amended ("Act"), 47
U.S.C. § 325, directed the Commission, within 45 days of enactment of
the Satellite Home Viewer Improvement Act of 1999,[^63] "to commence a
rulemaking proceeding to revise the regulations governing the exercise
by television broadcast stations of the right to grant retransmission
consent." These provisions concern retransmission consent in connection
with transmission of television broadcast station signals by
multichannel video programming distributors ("MVPDs").

3\. *Legal Basis*. The authority for the action proposed in this
rulemaking is contained in Sections 1, 4(i) and (j), 325, 338, and 614
of the Communications Act of 1934, as amended, 47 U.S.C. §§ 151, 154(i)
and (j), 325, 338, and 534.

4\. *Description and Estimate of the Number of Small Entities to Which
the Proposed Rules Will Apply.* The IRFA directs the Commission to
provide a description of and, where feasible, an estimate of the number
of small entities that will be affected by the proposed rules.[^64] The
IRFA defines the term \"small entity\" as having the same meaning as the
terms \"small business,\" \"small organization,\" and \"small business
concern\" under Section 3 of the Small Business Act.[^65] Under the
Small Business Act, a small business concern is one which: (1) is
independently owned and operated; (2) is not dominant in its field of
operation; and (3) satisfies any additional criteria established by the
Small Business Administration (\"SBA\").[^66] The rules we may adopt as
a result of the Notice will affect television station licensees, cable
operators, and other MVPDs.

*5. Television Stations*. The proposed rules and policies will apply to
television broadcasting licensees. The Small Business Administration
defines a television broadcasting station that has no more than \$10.5
million in annual receipts as a small business.[^67] Television
broadcasting stations consist of establishments primarily engaged in
broadcasting visual programs by television to the public, except cable
and other pay television services.[^68] Included in this industry are
commercial, religious, educational, and other television stations.[^69]
Also included are establishments primarily engaged in television
broadcasting and which produce taped television program materials.[^70]
Separate establishments primarily engaged in producing taped television
program materials are classified under another SIC number.[^71] There
were 1,509 television stations operating in the nation in 1992.[^72]
That number has remained fairly constant as indicated by the
approximately 1,579 operating full power television broadcasting
stations in the nation as of May 31, 1998.[^73]

6\. Thus, the proposed rules will affect many of the approximately 1,579
television stations; approximately 1,200 of those stations are
considered small businesses.[^74] These estimates may overstate the
number of small entities since the revenue figures on which they are
based do not include or aggregate revenues from non-television
affiliated companies.

7\. In addition to owners of operating television stations, any entity
that seeks or desires to obtain a television broadcast license may be
affected by the proposals contained in this item. The number of entities
that may seek to obtain a television broadcast license is unknown. We
invite comment as to such number.

8\. *Small MVPDs*: SBA has developed a definition of small entities for
cable and other pay television services, which includes all such
companies generating \$11 million or less in annual receipts.[^75] This
definition includes cable system operators, direct broadcast satellite
services, multipoint distribution systems, satellite master antenna
systems and subscription television services. According to the Census
Bureau data from 1992, there were 1,758 total cable and other pay
television services and 1,423 had less than \$11 million in
revenue.[^76] We address below services individually to provide a more
precise estimate of small entities.

9\. *Cable Systems*: The Commission has developed, with SBA\'s approval,
our own definition of a small cable system operator for the purposes of
rate regulation. Under the Commission\'s rules, a \"small cable
company\" is one serving fewer than 400,000 subscribers nationwide.[^77]
Based on our most recent information, we estimate that there were 1439
cable operators that qualified as small cable companies at the end of
1995.[^78] Since then, some of those companies may have grown to serve
over 400,000 subscribers, and others may have been involved in
transactions that caused them to be combined with other cable operators.
Consequently, we estimate that there are fewer than 1439 small entity
cable system operators that may be affected by the decisions and rules
emanating out of the Notice.

10\. The Communications Act also contains a definition of a small cable
system operator, which is \"a cable operator that, directly or through
an affiliate, serves in the aggregate fewer than 1% of all subscribers
in the United States and is not affiliated with any entity or entities
whose gross annual revenues in the aggregate exceed
\$250,000,000.\"[^79] The Commission has determined that there are
61,700,000 subscribers in the United States. Therefore, an operator
serving fewer than 617,000 subscribers shall be deemed a small operator,
if its annual revenues, when combined with the total annual revenues of
all of its affiliates, do not exceed \$250 million in the
aggregate.[^80] Based on available data, we find that the number of
cable operators serving 617,000 subscribers or less totals approximately
1450.[^81] Although it seems certain that some of these cable system
operators are affiliated with entities whose gross annual revenues
exceed \$250,000,000, we are unable at this time to estimate with
greater precision the number of cable system operators that would
qualify as small cable operators under the definition in the
Communications Act. It should be further noted that recent industry
estimates project that there will be a total 64,000,000 subscribers and
we have based our fee revenue estimates on that figure.

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

12\. *Multichannel Multipoint Distribution Service ("MMDS")*: The
Commission refined the definition of \"small entity\" for the auction of
MMDS as an entity that together with its affiliates has average gross
annual revenues that are not more than \$40 million for the proceeding
three calendar years.[^82] This definition of a small entity in the
context of the Commission\'s Report and Order concerning MMDS auctions
that has been approved by the SBA.[^83]

13\. The Commission completed its MMDS auction in March, 1996 for
authorizations in 493 basic trading areas (\"BTAs\"). Of 67 winning
bidders, 61 qualified as small entities. Five bidders indicated that
they were minority‑owned and four winners indicated that they were
women‑owned businesses. MMDS is an especially competitive service, with
approximately 1,573 previously authorized and proposed MMDS facilities.
Information available to us indicates that no MDS facility generates
revenue in excess of \$11 million annually. We tentatively conclude that
for purposes of this IRFA, there are approximately 1,634 small MMDS
providers as defined by the SBA and the Commission\'s auction rules.

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

15\. *HSD*: The market for HSD service is difficult to quantify. Indeed,
the service itself bears little resemblance to other MVPDs. HSD owners
have access to more than 265 channels of programming placed on C‑band
satellites by programmers for receipt and distribution by MVPDs, of
which 115 channels are scrambled and approximately 150 are
unscrambled.[^84] HSD owners can watch unscrambled channels without
paying a subscription fee. To receive scrambled channels, however, an
HSD owner must purchase an integrated receiver‑decoder from an equipment
dealer and pay a subscription fee to an HSD programming package. Thus,
HSD users include: (1) viewers who subscribe to a packaged programming
service, which affords them access to most of the same programming
provided to subscribers of other MVPDs; (2) viewers who receive only
non‑subscription programming; and (3) viewers who receive satellite
programming services illegally without subscribing. Because scrambled
packages of programming are most specifically intended for retail
consumers, these are the services most relevant to this discussion.[^85]

16\. According to the most recently available information, there are
approximately 30 program packages nationwide offering packages of
scrambled programming to retail consumers.[^86] These program packages
provide subscriptions to approximately 2,314,900 subscribers
nationwide.[^87] This is an average of about 77,163 subscribers per
program package. This is substantially smaller than the 400,000
subscribers used in the commission\'s definition of a small MSO.
Furthermore, because this is an average, it is likely that some program
packages may be substantially smaller.

17\. *SMATVs*: Industry sources estimate that approximately 5,200 SMATV
operators were providing service as of December, 1995.[^88] Other
estimates indicate that SMATV operators serve approximately 1.05 million
residential subscribers as of September, 1996.[^89] The ten largest
SMATV operators together pass 815,740 units.[^90] If we assume that
these SMATV operators serve 50% of the units passed, the ten largest
SMATV operators serve approximately 40% of the total number of SMATV
subscribers. Because these operators are not rate regulated, they are
not required to file financial data with the Commission. Furthermore, we
are not aware of any privately published financial information regarding
these operators. Based on the estimated number of operators and the
estimated number of units served by the largest ten SMATVs, we
tentatively conclude that a substantial number of SMATV operators
qualify as small entities.

18\. *Description of Projected Reporting, Recordkeeping and other
Compliance Requirements.* In order to implement the Satellite Home
Viewer Improvement Act of 1999, the Commission has proposed to add new
rules and modify others. We have yet to determine whether to amend
existing provisions of the Commission's rules, or to adopt some other
regulatory framework or procedures concerning retransmission consent.
There are certain compliance requirements involving the retransmission
consent agreement process. Foremost is that entities most likely will
have to participate in a negotiation process.[^91] There may be costs
relating to the time and effort involved in discussions, in crafting,
and possibly in achieving an agreement. In certain circumstances, there
my be costs associated with hiring accounting or engineering personnel,
as there may be instances where entities my have to provide detailed
information relating to such aspects of their particular operations.
Conversely, research may have to be conducted and information may have
to be obtained on other entities' operations. All such data may be key
to a negotiation and a retransmission consent agreement.

19\. In terms of recordkeeping, entities most likely will have to keep a
record of their election status and entities may be required to maintain
such information within their business environment and may also have to
file such information with the Commission. As discussed in the Notice,
however, it is unclear what records or recordkeeping would be required
of entities relating to the good faith negotiation and exclusive
carriage aspects of a retransmission consent agreement.[^92] At this
time, small businesses might not be impacted differently, but we seek
comment on these and the above matters.

20\. *Steps Taken to Minimize Significant Impact on Small Entities, and
Significant Alternatives Considered.* The RFA requires an agency to
describe any significant alternatives that it has considered in reaching
its proposed approach, which may include the following four
alternatives: (1) the establishment of differing compliance or reporting
requirements or timetables that take into account the resources
available to small entities; (2) the clarification, consolidation, or
simplification of compliance or reporting requirements under the rule
for small entities; (3) the use of performance, rather than design,
standards; and (4) an exemption from coverage of the rule, or any part
thereof, for small entities.

21\. As indicated above, the Notice proposes to implement certain
aspects of the Satellite Home Viewer Improvement Act of 1999. Among
other things, the new legislation requires television broadcasters,
until 2006, to negotiate in good faith with satellite carriers and other
multichannel video programming distributors ("MVPDs") with respect to
their retransmission of the broadcasters' signals, and prohibits
broadcasters from entering into exclusive retransmission agreements.
This document also discusses implementing regulations relating to the
exercise by television broadcast stations of the right to grant
retransmission consent to satellite carriers and other MVPDs.

22\. This legislation applies to small entities and large entities
equally. However, in terms of the election process, in the Notice we
specifically ask whether there are any statutory, regulatory, or
technical differences between any of the MVPDs that would justify
different election schemes.[^93] The Commission acknowledges that
consideration should be given to possible differences in services. There
may be established a different election process timetable or compliance
requirement, and also possibly a different filing requirement, among the
different MVPDs. In the Notice, however, the possible distinction in
treatment was not related to the size of the entity. At this time, small
entities are not treated differently and might not be impacted
differently, but we seek comment.

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

[^1]: Act of Nov. 29, 1999, PL 106-113, §1000(9), 113 Stat. 1501
    (enacting S. 1948, including the Satellite Home Viewer Improvement
    Act of 1999 ("SHVIA"), Title I of the Intellectual Property and
    Communications Omnibus Reform Act of 1999 ("IPACORA"), relating to
    copyright licensing and carriage of broadcast signals by satellite
    carriers, codified in scattered sections of 17 and 47 U.S.C.). This
    is the first of a series of Notices of Proposed Rulemaking and
    orders the Commission will issue to implement the 1999 SHVIA.

[^2]: New Section 325(b)(3)(C) requires the Commission to commence a
    rulemaking within 45 days of the enactment of the 1999 SHVIA and to
    complete all actions necessary to prescribe regulations within 1
    year after such date of enactment. 47 U.S.C. § 325(b)(3)(C).

[^3]: Conference Report at 1.

[^4]: 17 U.S.C. § 119.

[^5]: The term "satellite carrier" means an entity that uses the
    facilities of a satellite or satellite service licensed by the
    Federal Communications Commission and operates in the
    Fixed-Satellite Service under Part 25 of Title 47 of the Code of
    Federal Regulations or the Direct Broadcast Satellite Service under
    part 100 of title 47 of the Code of Federal Regulations, to
    establish and operate a channel of communications for
    point-to-multipoint distribution of television station signals, and
    that owns or leases a capacity or service on a satellite in order to
    provide such point-to-multipoint distribution, except to the extent
    that such entity provides such distribution pursuant to tariff under
    the Communications Act of 1934, other than for private home viewing.
    17 U.S.C. § 119(d)(2). Satellite carriers' customers are home
    satellite dish households.

[^6]: 17 U.S.C. § 119(a).

[^7]: Id. § 119(d)(10).

[^8]: *See* 47 C.F.R. § 76.683.

[^9]: *See Annual Assessment of the Status of Competition for the
    Delivery of Video Programming*, Fifth Annual Report, 13 FCC Rcd
    24284, at ¶ 62 (rel. December 23, 1998).

[^10]: *Id.*

[^11]: *Implementation of the Cable Television Consumer Protection and
    Competition Act of 1992, Broadcast Signal Carriage Issues,* Report
    and Order 8 FCC Rcd 2965 (1993). The Commission later clarified
    these rules. *See Implementation of the Cable Television Consumer
    Protection and Competition Act of 1992, Broadcast Signal Carriage
    Issues,* Order, 8 FCC Rcd 4142 (1993) ("*Clarification Order*").

[^12]: Cable Television Consumer Protection and Competition Act of 1992,
    Pub. L. No. 102-385, 106 Stat. 1460 (1992).

[^13]: *See* 47 U.S.C. § 543; 47 C.F.R. § 76.56. A cable operator is
    required to set aside a portion of its channel capacity for the
    benefit of local broadcasters electing must carry status and must
    honor such elections subject to certain conditions set forth in the
    1992 Cable Act and the Commission's rules.

[^14]: 47 C.F.R. §76.64. A broadcaster that elects retransmission
    consent status is entitled to carriage on the system of a local
    cable operator under contractually agreed upon terms subject to the
    risk of not being carried on the cable system at all if the parties
    are unable to reach agreement on terms of carriage.

[^15]: *See* 47 U.S.C. § 325(b)(3)(C)(i), directing the Commission to
    establish election time periods for satellite carrier retransmission
    consent consistent with the those established pursuant to the 1992
    Cable Act.

[^16]: 47 U.S.C. § 325(b)(1)(B). Section 614 details cable operators'
    obligation to carry local commercial television signals. 47 U.S.C. §
    534.

[^17]: 47 U.S.C. § 325(b)(1)(C). Section 338 was enacted as part of the
    1999 SHVIA and details satellite carriers' obligations to carry
    local television signals. 47 U.S.C. § 338. Section 1008(a) of the
    1999 SHVIA requires the Commission to issue regulations regarding
    satellite carriers' obligations to carry local television signals.

[^18]: 47 U.S.C. § 325(b)(3)(B).

[^19]: 47 U.S.C. § 325(b)(2). Section 325(b)(2), set forth in full,
    provides:

    This subsection shall not apply --

    to retransmission of the signal of a non-commercial television
    broadcast station;

    to retransmission of the signal of a television broadcast station
    outside the station's local market by a satellite carrier directly
    to its subscribers, if --

    such station was a superstation on May 1, 1991;

    as of July 1, 1998, such station was retransmitted by a satellite
    carrier under the statutory license of section 119 of title 17,
    United States Code; and

    the satellite carrier complies with any network nonduplication,
    syndicated exclusivity, and sports blackout rules adopted by the
    Commission under section 339(b) of this Act;

    until December 31, 2004, to retransmission of the signals of network
    stations directly to a home satellite antenna, if the subscriber
    receiving the signal --

    is located in an area outside the local market of such stations; and

    resides in an unserved household;

    to retransmission by a cable operator or other multichannel video
    provider, other than a satellite carrier, of the signal of a
    television broadcast station outside the station's local market if
    such signal was obtained from a satellite carrier and --

    the originating station was a superstation on May 1, 1991; and

    as of July 1, 1998, such station was retransmitted by a satellite
    carrier under the statutory license of Section 119 of title 17,
    United States Code; or

    during the 6-month period beginning on the date of the enactment of
    the Satellite Home Viewer Improvement Act of 1999, to the
    retransmission of the signal of a television broadcast station
    within the stations local market by a satellite carrier directly to
    subscribers under the statutory license of section 122 of title 17,
    United States Code.

    47 U.S.C. §325(b)(2). Section 1009 of 1999 SHVIA instructs the
    Commission that the terms "satellite carrier" and "superstation"
    have the meanings given those terms, respectively, in Section 119(d)
    of title 17, United States Code as in effect on the date of the
    enactment of the 1992 Cable Act. The term "unserved household" has
    the meaning given that term under Section 119(d) and the term "local
    market" has the meaning given that term in Section 122(j) of title
    17, United States Code.

[^20]: *Implementation of the Cable Television Consumer Protection and
    Competition Act of 1992, Broadcast Signal Carriage Issues,* Report
    and Order 8 FCC Rcd 2965 (1993). The Commission later clarified
    these rules. *See Implementation of the Cable Television Consumer
    Protection and Competition Act of 1992, Broadcast Signal Carriage
    Issues,* Order, 8 FCC Rcd 4142 (1993) ("*Clarification Order*").

[^21]: 47 C.F.R. § 76.64(a)&(b).

[^22]: Communications Act § 325(b)(3)(C), 47 U.S.C. § 325(b)(3)(C).

[^23]: *Id.* § 325(b)(3)(B).

[^24]: *Implementation of the Cable Television Consumer Protection and
    Competition Act of 1992, Broadcast Signal Carriage Issues,* Report
    and Order 8 FCC Rcd 2965 (1993). The Commission later clarified
    these regulations in the *Clarification Order,* 8 FCC Rcd 4142
    (1993).

[^25]: 47 C.F.R. §76.64(f)-(l).

[^26]: 47 C.F.R. § 76.64(g).

[^27]: Communications Act § 325(b)(3)(C), 47 U.S.C. §325(b)(3)(C)(ii).

[^28]: Conference Report at 13. In his comments on the pending
    legislation, Senator Kohl stated:

    > The original House language was predicated on the belief that
    > there exists unequal bargaining positions between the broadcasters
    > and the satellite companies. Our Senate bill took precisely the
    > opposite approach. But our law comes out somewhere in the middle:
    > it will . . . ensure that parties negotiate in "good faith" when
    > making these agreements, and put some teeth into "good faith" by
    > adding the "competitive marketplace considerations" language.

    145 Cong. Rec. S15017 (daily ed. Nov. 19, 1999) (statement of Sen.
    Kohl).

[^29]: UCC § 1-201(19) (1981).

[^30]: Black's Law Dictionary at 353 (Abridged ed. 1983).

[^31]: National Labor Relations Act § 8(d), 29 U.S.C. § 158(d).

[^32]: *See NLRB v. Katz*, 369 U.S. 736 (1962).

[^33]: *See e.g., General Electric Co.*, 150 N.L.R.B. 192 (1964),
    *enforced*, 418 F.2d 736 (2d Cir 1969*), cert. denied*, 397 U.S. 965
    (1970); *Virginia Holding Corp*., 293 N.L.R.B. 12 (1989); *American
    Commercial Lines, Inc.*, 291 N.L.R.B. 1066 (1988).

[^34]: *See* Comment, "Negotiate in Good Faith As To What? An Analysis
    of the Good Faith Negotiation Clause of the Telecommunications Act
    of 1996, 69 U. Colo. L. Rev. 257, 273-74 (1998).

[^35]: *Id.*

[^36]: Communications Act § 251(c)(1), 47 U.S.C. § 251(c)(1).

[^37]: *See Implementation of the Local Competition Provisions in the
    Telecommunications Act of 1996: Interconnection between Local
    Exchange Carriers and Commercial Mobile Radio Service Providers*,
    First Report and Order, 11 FCC Rcd 15499, 15571 (1996)
    ("*Interconnection* *First Report and Order*").

[^38]: *See* 47 C.F.R. §51.301. Section 51.301(c) of the Commission's
    rules provides:

    > If proven to the Commission, an appropriate state commission, or a
    > court of competent jurisdiction, the following actions or
    > practices, among others, violate the duty to negotiate in good
    > faith: (1) Demanding that another party sign a nondisclosure
    > agreement that precludes such party from providing information
    > requested by the Commission, or a state commission, or in support
    > of a request for arbitration under section 252(b)(2)(B) of the
    > Act; (2) Demanding that a requesting telecommunications Carrier
    > attest that an agreement complies with all provisions of the Act,
    > federal regulations, or state law; (3) Refusing to include in an
    > arbitrated or negotiated agreement a provision that permits the
    > agreement to be amended in the future to take into account changes
    > in Commission or state rules; (4) Conditioning negotiation on a
    > requesting telecommunications carrier first obtaining state
    > certification; (5) Intentionally misleading or coercing another
    > party into reaching an agreement it would not otherwise have made;
    > (6) Intentionally obstructing or delaying negotiations or
    > resolution of disputes; (7) Refusing throughout the negotiation
    > process to designate a representative with authority to make
    > binding representations, if such refusal significantly delays
    > resolution of issues; and (8) Refusing to provide information
    > necessary to reach agreement. Such refusal includes, but is not
    > limited to: (i) Refusal by an incumbent LEC to furnish information
    > about its network that a requesting telecommunications carrier
    > reasonably requires to identify the network elements that it needs
    > in order to serve a particular customer; and (ii) Refusal by a
    > requesting telecommunications carrier to furnish cost data that
    > would be relevant to setting rates if the parties were in
    > arbitration.

    47 C.F.R. § 51.301(c)(1)-(8).

[^39]: 47 C.F.R. § 51.301(c)(1), (2), (3), (5), (6), (7), & (8).

[^40]: An example of the significant difference between the good faith
    negotiation process required by SHVIA and the Section 51.301 process
    is set forth in Section 252(i) of the Communications Act, which
    provides that local exchange carriers shall make available any
    "interconnection, service, or network element provided under an
    agreement approved under this section to which it is a party" to any
    other telecommunications carrier upon the same terms and conditions
    as those provided in the agreement. 47 U.S.C. § 252(i). Conversely,
    the 1999 SHVIA expressly permits broadcasters to negotiate
    retransmission consent agreements with different terms and
    conditions based on competitive marketplace considerations. 47
    U.S.C. § 325(b)(3)(C)(ii).

[^41]: Communications Act § 325(b)(3)(C), 47 U.S.C. § 325(b)(3)(C).

[^42]: On the subject of "competitive marketplace considerations,"
    Senator Kohl commented that:

    > . . . there may be some disagreement as to what exactly this new
    > provision means. At the very least, "competitive marketplace
    > considerations" may simply be interpreted as the normal, everyday
    > jostling that takes place in the business world. At the very most,
    > a "competitive marketplace" would tolerate differences based upon
    > legitimate cost justifications, but not anti-competitive practices
    > such as illegal tying and bundling. The answer probably lies
    > somewhere between these two interpretations and we trust the
    > sometimes confused \[Commission\], as we often do, to properly
    > divine the real intent of a sometimes confused Congress.

    145 Cong. Rec. S15017 (daily ed. Nov. 19, 1999) (statement of Sen.
    Kohl).

[^43]: *See* 47 C.F.R. § 76.1002(b) (program access standard); 47 C.F.R.
    § 76.1503(a) (open video system standard).

[^44]: *See Review of the Commission's Regulations Governing Television
    Broadcasting*, MM Docket No. 91-221, *Television Satellite Stations
    Review of Policy and Rules*, MM Docket No. 87-8, FCC 99-209 (rel.
    Aug. 6, 1999).

[^45]: *Cf. Interconnection First Report and Order,* 11 FCC Rcd at
    15576.

[^46]: S. 1948, the Intellectual Property and Communications Omnibus
    Reform Act of 1999, Section 1009(a)(2)(C)(ii), p. 46

[^47]: Joint Explanatory Statement of the Committee of Conference on the
    Intellectual Property and Communications Omnibus Reform Act of 1999,
    p. 13

[^48]: 106 STAT. 1482, P.L. 102-385, Oct. 5, 1992

[^49]: *Broadcast Signal Carriage Order*, 8 FCC Rcd at 3006.

[^50]: 47 C.F.R. § 76.64(m).

[^51]: S. 1948, the Intellectual Property and Communications Omnibus
    Reform Act of 1999, Section 1009(a)(2)(C)(ii), p. 46

[^52]: 47 U.S.C. §325(b)(3)(C)(ii); Conference Report at 13.

[^53]: Joint Explanatory Statement of the Committee of Conference on the
    Intellectual Property and Communications Omnibus Reform Act of 1999,
    p. 13. The Commission's regulations define a multichannel video
    program distributor as:

    \[A\]n entity such as, but not limited to, a cable operator, a
    multichannel multipoint distribution service, a direct broadcast
    satellite service, a television receive-only satellite program
    distributor, or a satellite master antenna television system
    operator, that make available for purchase, by subscribers or
    customers, multiple channels of video programming.

    47 C.F.R. § 76.64(d).

[^54]: *See* 47 C.F.R. § 76.7, as amended by 1998 Biennial Regulatory
    Review: Part 76 -- Cable Television Service Pleading and Complaint
    Rules, 14 FCC Rcd 418 (1999).

[^55]: We note that, in amended Section 325(e) of the Communications
    Act, Congress established expedited enforcement procedures for
    complaints by broadcasters that a satellite carrier has
    retransmitted such broadcaster's signal in its local market in
    violation of Section 325(b)(1). 47 U.S.C. § 325(e); *see* 47 U.S.C.
    § 325(b)(1), requiring that no MVPD may retransmit the signal of a
    broadcasting station, except with the express authority 338 or 614
    of the Communications Act. We note that good faith is not a defense
    under Section 325(e).

[^56]: *See e.g., Implementation of the Telecommunications Act of 1996:
    Amendment of Rules Governing Procedures to be Followed When Formal
    Complaints are Filed Against Common Carriers*, Second Report and
    Order, 13 FCC Rcd 17018, ¶¶ 14-15 (rel. July 14, 1998); *Use of
    Alternative Dispute Resolution Procedures in Commission Proceedings
    and Proceedings in which the Commission is a Party*, Initial Policy
    Statement and Order, 6 FCC Rcd 5669 (1991); 47 C.F.R. § 1.18.

[^57]: The Commission adopted such a shifting burden approach in the
    program access context. *See Implementation of Sections 12 and 19 of
    the Cable Television Consumer Protection and Competition Act of
    1992: Development of Competition and Diversity in Video Programming
    Distribution and Carriage*, First Report and Order, 8 FCC Rcd 3359,
    3416-22 (1993).

[^58]: Communications Act § 325(b)(3)(C), 47 U.S.C. §325(b)(3)(C)(ii).

[^59]: *See* *Electronic Filing of Documents in Rulemaking Proceedings*,
    63 Fed. Reg. 24,121 (1998).

[^60]: *See* 5 U.S.C. §603. The RFA, *see* 5 U.S.C. §601 *et. seq*., has
    been amended by the Contract With America Advancement Act of 1996,
    Pub. L. No. 104-121, 110 Stat. 847 (1996) (CWAAA). Title II of the
    CWAAA is the Small Business Regulatory Enforcement Fairness Act of
    1996 (SBREFA).

[^61]: *See* 5 U.S.C. §603(a).

[^62]: *See id.*

[^63]: S. 1948, the Satellite Home Viewer Improvement Act of 1999.
    Enacted November 29, 1999.

[^64]: 5 U.S.C. §604(b)(3).

[^65]: 5 U.S.C. §601(3)(incorporating by reference the definition of
    "small business concern" in 15 U.S.C. § 632.) Pursuant to the RFA,
    the statutory definition of a small business applies, "unless an
    agency, after consultation with the Office of Advocacy of the SBA
    and after opportunity for public comment, establishes one or more
    definitions of such the term which are appropriate to the activities
    of the agency and publishes such definition(s) in the Federal
    Register. 5 U.S.C. § 601(3).

[^66]: 15 U.S.C. §632.

[^67]: 13 C.F.R. §121.201, Standard Industrial Code (SIC) 4833 (1996).

[^68]: Economics and Statistics Administration, Bureau of Census, U.S.
    Department of Commerce, 1992 CENSUS OF TRANSPORTATION,
    COMMUNICATIONS AND UTILITIES, ESTABLISHMENT AND FIRM SIZE, Series
    UC92-S-1, Appendix A-9 (1995).

[^69]: *Id*. *See* *also* OMB SIC Manual at 283, which describes
    \"Television Broadcasting Stations (SIC Code 4833) as:

    Establishments primarily engaged in broadcasting visual programs by
    television to the public, except cable and other pay television
    services. Included in this industry are commercial, religious,
    educational and other television stations. Also included here are
    establishments primarily engaged in television broadcasting and
    which produce taped television program materials.

[^70]: Economics and Statistics Administration, Bureau of Census, U.S.
    Department of Commerce, 1992 CENSUS OF TRANSPORTATION,
    COMMUNICATIONS AND UTILITIES, ESTABLISHMENT AND FIRM SIZE, Series
    UC92-S-1, Appendix A-9 (1995).

[^71]: *Id*. SIC 7812 (Motion Picture and Video Tape Production); SIC
    7922 (Theatrical Producers and Miscellaneous Theatrical Services
    (producers of live radio and television programs).

[^72]: FCC News Release No. 31327, Jan. 13, 1993.

[^73]: *See Broadcast Station Totals As Of May 31, 1998*, FCC News
    Release, June 19, 1998.

[^74]: We use the 77 percent figure of TV stations operating at less
    than \$10 million for 1992 and apply it to the 1998 total of 1579 TV
    stations to arrive at 1,200 stations categorized as small
    businesses.

[^75]: 13 C.F.R. §121.201 (SIC 4841).

[^76]: 1992 Economic Census Industry and Enterprise Receipts Size
    Report, Table 2D, SIC Code 4841 (Bureau of the Census data under
    contract to the Office of Advocacy of the SBA).

[^77]: 47 C.F.R. §76.901(e). The Commission developed this definition
    based on its determinations that a small cable system operator is
    one with annual revenues of \$100 million or less. *Sixth Report and
    Order and Eleventh Order on Reconsideration*, MM Docket Nos. 92-266
    and 93-215, 10 FCC Rcd 7393 (1995).

[^78]: Paul Kagan Associates, Inc., *Cable TV Investor*, Feb. 29, 1996
    (based on figures for Dec. 30, 1995).

[^79]: 47 U.S.C. §543(m)(2).

[^80]: 47 C.F.R. §76.1403(b).

[^81]: Paul Kagan Associates, Inc., *Cable TV Investor*, Feb. 29, 1996
    (based on figures for Dec. 30, 1995).

[^82]: 47 U.S.C. § 21.961(b)(1).

[^83]: In the Matter of Amendment of Parts 21 and 74 of the Commission's
    Rules With Regard to Filing Procedures in the Multipoint
    Distribution Service and in the Instructional Television Fixed
    Service and Implementation of Section 309(j) of the Communications
    Act -- Competitive Bidding MM Docket No. 94-31 and PP Docket No.
    93-253, *Report and Order*, 10 FCC Rcd 9589 (1995).

[^84]: Annual Assessment of the Status of Competition in Markets for the
    Delivery of Video Programming, Third Annual Report, CS Docket No.
    96-133, 12 FCC Rcd 4358, 4385 (1996)("*Third Annual Report").*.

[^85]: *Third Annual Report,* 12 FCC Rcd at 4385, ¶ 49..

[^86]: *Id.*

[^87]: *Id.*

[^88]: *Third Annual Report*, 12 FCC Rcd at 4403, ¶ 81.

[^89]: *Id.*

[^90]: *Id.*

[^91]: *Supra* at ¶ 8.

[^92]: *Supra* at ¶ 26.

[^93]: *Supra* at ¶13.