**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 | ** |                              |
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| Extension and Reauthorization    | *  |                              |
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**NOTICE OF PROPOSED RULEMAKING**

**Adopted: March 2, 2005 Released: March 7, 2005**

**Comment Date: 30 days after publication in the Federal Register**

**Reply Comment Date: 45 days after publication in the Federal
Register**

By the Commission:

# Introduction

1\. In this Notice of Proposed Rulemaking ("*Notice*") we seek comment
on the implementation of 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 reciprocal good faith retransmission
consent bargaining obligations 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 tentatively 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.

**II. DISCUSSION**

**A. The Good Faith Provisions of SHVIA**

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 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]

**B. The Reciprocal Bargaining Obligations of SHVERA**

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]

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, we believe
that Congress did not intend that the Commission revisit the findings
and conclusions that were reached in the SHVIA rulemaking. 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.[^18]

We believe 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. We tentatively conclude that we
should amend Sections 76.64(l) and 76.65 as set forth on Appendix A of
this *Notice*. We seek comment on this proposal and any other reasonable
implementation of Section 207.

8\. We note that the original SHVIA good faith provision by its terms
applied to "television broadcast stations." Similarly, the SHVERA good
faith provision applies to "multichannel video programming
distributors." We seek 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
designated market area ("DMA").[^19] 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. We seek
comment as to whether the Commission has discretion under Section
325(b)(3)(C) to distinguish this situation. For example, if a television
broadcast station from DMA X is significantly viewed in DMA Y and seeks
carriage on an MVPD located in DMA Y, must the MVPD in DMA Y negotiate
retransmission consent in good faith with the broadcaster from DMA X in
exactly the same way that it negotiates with broadcasters that are
located in DMA Y? Should the same good faith negotiation standard apply
to broadcasters and MVPDs regardless of the DMA in which they reside?
Should a different standard apply, and if so what standard? Should the
good faith retransmission consent negotiation obligation apply only to
MVPDs and broadcasters located in the same DMA? We seek comment on this
issue.

# III. Procedural Matters {#iii.-procedural-matters .unnumbered}

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

9\. The Initial Regulatory Flexibility Analysis is attached to this
*Notice* as Appendix B.

## B. Initial Paperwork Reduction Act of 1995 Analysis {#b.-initial-paperwork-reduction-act-of-1995-analysis .unnumbered}

10\. 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. Ex Parte Rules  {#c.-ex-parte-rules .unnumbered}

11\. *Permit-But-Disclose.* 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 Commission's rules.[^20] *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.[^21] Additional rules
pertaining to oral and written presentations are set forth in section
1.1206(b).

## D. Filing Requirements {#d.-filing-requirements .unnumbered}

12\. *Comments and Replies*. Pursuant to Sections 1.415 and 1.419 of the
Commission's rules,[^22] interested parties may file comments on this
Notice **on or before** 30 days after publication in the Federal
Register, and reply comments **on or before** 45 days after publication
in the Federal Register. Comments may be filed using: (1) the
Commission's Electronic Comment Filing System ("ECFS"), (2) the Federal
Government's eRulemaking Portal, or (3) by filing paper copies.[^23]

13\. *Electronic Filers:* Comments may be filed electronically using the
Internet by accessing the ECFS: <http://www.fcc.gov/cgb/ecfs/> or the
Federal eRulemaking Portal:
[http://www.regulations.gov](http://www.regulations.gov/). Filers should
follow the instructions provided on the website for submitting comments.
For ECFS filers, if multiple docket or rulemaking numbers appear in the
caption of this proceeding, filers must transmit one electronic copy of
the comments for each docket or rulemaking number referenced in the
caption. In completing the transmittal screen, filers should include
their full name, U.S. 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, filers should
send an e-mail to <ecfs@fcc.gov>, and include the following words in the
body of the message, "get form." A sample form and directions will be
sent in response.

14\. *Paper Filers:* Parties who choose to file by paper must file an
original and four copies of each filing. If more than one docket or
rulemaking number appears in the caption of this proceeding, filers must
submit two additional copies for each additional docket or rulemaking
number. Filings can be sent by hand or messenger delivery, by commercial
overnight courier, or by first-class or overnight U.S. Postal Service
mail (although we continue to experience delays in receiving U.S. Postal
Service mail). All filings must be addressed to the Commission's
Secretary, Office of the Secretary, Federal Communications Commission.

-   The Commission's contractor will receive hand-delivered or
    messenger-delivered paper filings for the Commission's Secretary at
    236 Massachusetts Avenue, NE., Suite 110, Washington, DC 20002. The
    filing hours at this location are 8:00 a.m. to 7:00 p.m. All hand
    deliveries must be held together with rubber bands or fasteners. Any
    envelopes must be disposed of before entering the building.

-   Commercial overnight mail (other than U.S. Postal Service Express
    Mail and Priority Mail) must be sent to 9300 East Hampton Drive,
    Capitol Heights, MD 20743.

-   U.S. Postal Service first-class, Express, and Priority mail should
    be addressed to 445 12th Street, SW, Washington DC 20554.

    15\. *Availability of Documents*. Comments, reply comments, and *ex
    parte* submissions will be available for public inspection during
    regular business hours in the FCC Reference Center, Federal
    Communications Commission, 445 12^th^ Street, S.W., CY-A257,
    Washington, D.C., 20554. These documents will also be available via
    ECFS. Documents will be available electronically in ASCII, Word 97,
    and/or Adobe Acrobat.

    16\. *Accessibility Information.* To request information in
    accessible formats (computer diskettes, large print, audio
    recording, and Braille), send an e-mail to <fcc504@fcc.gov> or call
    the FCC's Consumer and Governmental Affairs Bureau at (202) 418-0530
    (voice), (202) 418-0432 (TTY). This document can also be downloaded
    in Word and Portable Document Format (PDF) at:
    [http://www.fcc.gov](http://www.fcc.gov/).

    17\. *Additional Information*. For additional information on this
    proceeding, contact Steven Broeckaert, Steven.Broeckaert@fcc.gov, of
    the Media Bureau, Policy Division, (202) 418-2120.

# IV. Ordering Clauses {#iv.-ordering-clauses .unnumbered}

18\. 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, **NOTICE IS HEREBY
GIVEN** of the proposals and tentative conclusions described in this
Notice of Proposed Rulemaking.

19\. **IT IS FURTHER ORDERED** that the Reference Information Center,
Consumer and Governmental Affairs 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

Marlene H. Dortch

Secretary

**Appendix A**

**PROPOSED RULE CHANGES**

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

Part 76 -- Multichannel Video and Cable Television Service

1.  The authority citation for Part 76 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:

(A) Refusal by a Negotiating Entity to negotiate retransmission consent;

(B) Refusal by a Negotiating Entity to designate a representative with
    authority make binding representations on retransmission consent;

(C) 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;

(D) Refusal by a Negotiating Entity to put forth more than a single,
    unilateral proposal.

(E) 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;

(F) 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

(G) 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**

**Initial Regulatory Flexibility Act Analysis**

As required by the Regulatory Flexibility Act of 1980, as amended
("RFA")[^24] the Commission has prepared this present Initial Regulatory
Flexibility Analysis ("IRFA") concerning the possible significant
economic impact on small entities by the policies and rules proposed in
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
provided in Section III.D. of the *Notice*. The Commission will send a
copy of the *Notice,* including this IRFA, to the Chief Counsel for
Advocacy of the Small Business Administration (SBA).[^25] In addition,
the *Notice* and IRFA (or summaries thereof) will be published in the
Federal Register.[^26]

## Need for, and Objectives of, the Proposed Rule Changes {#need-for-and-objectives-of-the-proposed-rule-changes .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").[^27] 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.[^28] This *Notice* achieves these
statutory objectives by opening the present proceeding and proposes rule
changes to Part 76 of the Commission's rules to implement Section
325(b)(3)(C).[^29]

## Legal Basis {#legal-basis .unnumbered}

The proposed action is authorized under 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.

## Description and Estimate of the Number of Small Entities to Which the Proposed Rules Will Apply {#description-and-estimate-of-the-number-of-small-entities-to-which-the-proposed-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 the proposed rules, if adopted.[^30] The RFA generally
defines the term "small entity" as having the same meaning as the terms
"small business," small organization," and "small government
jurisdiction."[^31] In addition, the term "small business" has the same
meaning as the term "small business concern" under the Small Business
Act.[^32] 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.[^33]

The proposed rules contained in this *Notice*, as required by statute,
are intended to require MVPDs to negotiate retransmission consent in
good faith with television broadcast stations.[^34] Therefore, "MVPDs,"
which includes Cable and other Program distributors and Satellite
Carriers, will be directly and primarily affected by the proposed rules,
if adopted. In addition, because Section 207 also extends until 2010 the
good faith negotiation obligations of broadcasters, we believe the
proposed rules, if adopted, will also directly affect television
broadcast stations. Therefore, in this IRFA, we consider, and invite
comment on, the impact of the proposed 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.[^35] 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.[^36] 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.[^37] We last estimated that there were
1,439 cable operators that qualified as small cable companies at the end
of 1995.[^38] 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."[^39] The Commission has determined that there are 67.7
million subscribers in the United States.[^40] 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.[^41] 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,[^42] 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.[^43] 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.[^44] 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.[^45] For purposes of
this IRFA, we tentatively conclude that the definition of "satellite
carrier" would include all three types of entities described above, but
nonetheless request comment on this issue.

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.[^46] According to Census Bureau data
for 1997, in this category there was a total of 324 firms that operated
for the entire year.[^47] 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.[^48] 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.[^49] This definition provides that a small entity
is one with \$12.5 million or less in annual receipts.[^50] 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[^51] and
EchoStar Communications Corporation ("EchoStar"),[^52] 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.[^53] The fourth DBS
operator, Dominion Video Satellite, Inc. ("Dominion"), offers religious
(Christian) programming and does not report its annual receipts.[^54]
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.[^55] 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.[^56] 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.[^57] Currently, there are approximately 135
members in the Independent Multi-Family Communications Council (IMCC),
the trade association that represents PCOs.[^58] 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.[^59] 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.[^60] 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.[^61] 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.[^62] 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.[^63] 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")[^64] and Instructional Television Fixed
Service ("ITFS")[^65] 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.[^66] 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,[^67] 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.[^68] This definition of a
small entity in the context of MDS auctions has been approved by the
SBA.[^69] 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.[^70] 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.[^71] 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,[^72] 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.[^73] 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.[^74] These definitions of "small business" and "very small
business" in the context of the LMDS auctions have been approved by the
SBA.[^75] 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,[^76] 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.[^77] 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.[^78] As of June 2003, BSPs served
approximately 1.4 million subscribers, representing 1.49 percent of all
MVPD households.[^79] Among BSPs, however, those operating under the OVS
framework are in the minority, with approximately eight percent
operating with an OVS certification.[^80] Serving approximately 460,000
of these subscribers, Affiliates of Residential Communications Network,
Inc. ("RCN") is currently the largest BSP and 11th largest MVPD.[^81]
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.[^82] Business concerns included in this
industry are those "primarily engaged in broadcasting images together
with sound."[^83] 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[^84] 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).[^85] 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 {#entities-not-directly-affected-by-proposed-rules .unnumbered}

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 invite 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.

## Description of Projected Reporting, Record Keeping and other Compliance Requirements {#description-of-projected-reporting-record-keeping-and-other-compliance-requirements .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 proposed rule changes that we believe will directly affect
reporting, recordkeeping and other compliance requirements are described
below.[^86]

This *Notice* proposes rules that would 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.[^87] The *Notice* proposes only
to impose these same rules on MVPDs.

This *Notice* further requires that MVPDs bringing good faith complaints
pursuant to Section 325 will 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.[^88] 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, this *Notice* seeks comment on whether the Commission can
impose different good faith retransmission consent negotiating standards
for carriage of significantly viewed television broadcast stations
outside of their designated market area ("DMA").[^89] 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* seeks comment as to whether Section
325(b)(3)(C) permits the Commission to account for this distinction.

**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 (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.[^90]

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.[^91] Accordingly, the SHVERA employs
identical language to apply the existing good faith obligation to
MVPDs.[^92] Therefore, the Commission does not have 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 propose 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.[^93] 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.

Nevertheless, to the extent they are affected, we urge small broadcast
stations and small MVPDs to provide data on the impact of the proposals
and issues raised in the *Notice*, including how we might, consistent
with the statutory directives of Section 207, tailor our proposals to
address and minimize the impact on small businesses. We expect that,
whichever alternatives are chosen, the Commission will seek to minimize
any adverse effects on small entities, to the extent permitted by
statute.

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.[^94] Congress,
however, recognized that the SHVERA may impact the competitiveness 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.[^95] Accordingly, the Commission has issued a Public
Notice to initiate this inquiry.[^96]

## Federal Rules Which Duplicate, Overlap, or Conflict with the Commission's Proposals {#federal-rules-which-duplicate-overlap-or-conflict-with-the-commissions-proposals .unnumbered}

None.

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

[^19]: 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]: *See* 47 C.F.R. § 1.1206(b); *see also* 47 C.F.R. §§ 1.1202,
    1.1203.

[^21]: *See* 47 C.F.R. § 1.1206(b)(2).

[^22]: *See* *id*. §§ 1.415, 1419.

[^23]: *See* *Electronic Filing of Documents in Rulemaking Proceedings*,
    13 FCC Rcd 11322 (1998).

[^24]: *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. 847
    (1996). The SBREFA was enacted as Title II of the Contract With
    America Advancement Act of 1996 ("CWAAA").

[^25]: *See* 5 U.S.C. § 603(a).

[^26]: *See* 5 U.S.C. § 603(a).

[^27]: 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."

[^28]: 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).

[^29]: *See* proposed rules contained in Appendix A to this *Notice*.

[^30]: 5 U.S.C. § 603(b)(3).

[^31]: 5 U.S.C. § 601(6).

[^32]: 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).

[^33]: 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.

[^34]: *See*, *supra*, Section II of the *Notice*; *see also* 47 U.S.C.
    § 325(b)(3)(C).

[^35]: 13 C.F.R. § 121.201, NAICS code 517510.

[^36]: 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.

[^37]: 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).

[^38]: Paul Kagan Associates, Inc., Cable TV Investor, Feb. 29, 1996
    (based on figures for Dec. 30, 1995).

[^39]: 47 U.S.C. § 543(m)(2).

[^40]: *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*.

[^41]: 47 C.F.R. § 76.901(f).

[^42]: 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.

[^43]: *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).

[^44]: 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.

[^45]: *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).

[^46]: 13 C.F.R. § 121.201, NAICS code 517410 (changed from 513340 in
    October 2002).

[^47]: 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).

[^48]: *Id*.

[^49]: 13 C.F.R. § 121.201, NAICS code 517510.

[^50]: *Id.*

[^51]: 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*").

[^52]: 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*.

[^53]: Rainbow DBS, which provides service under the brand name VOOM,
    reported an estimated 25,000 subscribers. *Id*.

[^54]: Dominion, which provides service under the brand name Sky Angel,
    does not publicly disclose its subscribership numbers on an
    annualized basis. *Id*.

[^55]: *See* 47 C.F.R. § 2.1(c).

[^56]: 13 C.F.R. § 121.201, NAICS code 517510.

[^57]: 13 C.F.R. § 121.201, NAICS code 517510.

[^58]: *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*").

[^59]: *See 2005 Cable Competition Report*, FCC 05-13, ¶¶ 110.

[^60]: 13 C.F.R. § 121.201, NAICS code 517510. This NAICS code applies
    to all services listed in this paragraph.

[^61]: 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.

[^62]: 13 C.F.F. § 121.201, NAICS code 517510.

[^63]: *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.

[^64]: 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"*).

[^65]: 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.

[^66]: *See* Local Multipoint Distribution Service, 12 FCC Rcd 12545
    (1997) ("*LMDS Order*").

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

[^68]: 47 C.F.R. § 21.961(b)(1).

[^69]: *See ITFS* *Order*, 10 FCC Rcd at 9589.

[^70]: 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.

[^71]: 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.

[^72]: 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.)

[^73]: *See LMDS* *Order,* 12 FCC Rcd at 12545.

[^74]: *Id.*

[^75]: *See* Letter to Daniel Phythyon, Chief, Wireless
    Telecommunications Bureau (FCC) from A. Alvarez, Administrator, SBA
    (January 6, 1998).

[^76]: *See* 47 U.S.C. § 573.

[^77]: 13 C.F.R. § 121.201, NAICS code 517510.

[^78]: *See 2005 Cable Competition Report*, FCC 05-13, ¶ 71.

[^79]: *See 2004 Cable Competition Report*, 19 FCC Rcd at 1659-60, ¶¶
    80-1.

[^80]: *See 2005 Cable Competition Report*, FCC 05-13, ¶ 71.

[^81]: *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.

[^82]: *See* 13 C.F.R. § 121.201, NAICS Code 515120 (adopted Oct. 2002).

[^83]: 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.

[^84]: "\[Business concerns\] 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).

[^85]: FCC News Release, "Broadcast Station Totals as of September 30,
    2002."

[^86]: *See* proposed rules contained in Appendix A to this *Notice*.

[^87]: *See, e.g., supra* ¶ 3 of the *Notice* (negotiation standards).

[^88]: *See* 47 C.F.R. §§ 76.5, 76.7, 76.65; *see also, supra,* Section
    II of the *Notice*.

[^89]: 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.*

[^90]: 5 U.S.C. § 603(c)(1)-(c)(4)

[^91]: *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*.

[^92]: 17 U.S.C. § 119(a)(3).

[^93]: *See, e.g., supra* ¶ 3 of the *Notice* (negotiation standards).

[^94]: *See id*.

[^95]: *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).

[^96]: 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.).