Before the
              FEDERAL COMMUNICATIONS COMMISSION
                     Washington, D.C. 20554
     In the Matter of)
     )
  Closed Captioning and Video Description)
    of Video Programming    )
      )MM Docket No. 95-176
   Implementation of Section 305 of the )
   Telecommunications Act of 1996)
     )
   Video Programming Accessibility)
                       REPORT AND ORDER
          Adopted:  August 7, 1997Released:  August 22, 1997
By the Commission:   Chairman Hundt and Commissioner Chong issuing separate statements.
                       Table of Contents
                                                      Paragraph
   I.INTRODUCTION .  . .  . .  . .  . .  . .  . .  . .  . .  .  1
   II.SECTION 713 .  . .  . .  . .  . .  . .  . .  . .  . .  .  5
      A.Statutory Requirements of Section 713 . .  . .  . .  .. .. . .. . .5
      B.Background.  . .  . .  . .  . .  . .  . .  . .  . .  .  7
      C.Summary of the Rules Adopted to Implement Section 713.. .. . .. . .18
 III.RESPONSIBILITY FOR COMPLIANCE  . .  . .  . .  . .  . .  . 19
 IV. TRANSITION RULES. .  . .  . .  . .  . .  . .  . .  . .  . 31
      A.Transition Rules For New Programs. .  . .  . .  . .  .. .. . .31
      B.Transition Rules For Pre-Rule Programming  . .  . .  .. .. . .48
   V.MEASURING COMPLIANCE WITH THE RULES . .  . .  . .  . .  .. .67
  VI.EXEMPTIONS FROM THE CLOSED CAPTIONING RULES.  . .  . .  . 87
      A.Exemptions Based on "Economically Burdensome" Standard  .. . .. . .. . .87
      B.Exemptions Based on Existing Contracts. .  . .  . .  .. .. . .169
      C.Exemptions Based on the Undue Burden Standard.  . .  .. .. . . 182
 VII.STANDARDS FOR QUALITY AND ACCURACY  . .  . .  . .  . .  .206
      A.Standards for the Technical Aspects of Closed Captioning.. . .. . .. . .208
      B.Standards for the Non-Technical Aspects of Captioning.. .. . .. . .214
      C.Certification of Stenocaptioners . .  . .  . .  . .  .. .. . .226
VIII.ENFORCEMENT AND COMPLIANCE REVIEW MECHANISMS  . .  . .  .231
  IX.OTHER ISSUES .  . .  . .  . .  . .  . .  . .  . .  . .  .247
   X.FINAL REGULATORY FLEXIBILITY ANALYSIS .  . .  . .  . .  .. .258
  XI.PAPERWORK REDUCTION ACT OF 1995 ANALYSIS . .  . .  . .  .. . 299XII.ORDERING CLAUSES.. . .. . .. . .. . .. . .. . .. . .. . .301
APPENDICES
 Appendix A:List of Commenters
 Appendix B: Rules
   I.INTRODUCTION
      1.By this Report and Order, the Commission adopts rules implementing Section 713 of the
Communications Act of 1934, as amended ("Communications Act").  Section 713, Video Programming
Accessibility, was added to the Communications Act by Section 305 of the Telecommunications Act of 1996
("1996 Act").  Section 713 generally requires that video programming be closed captioned.  It requires the
Commission to prescribe, by August 8, 1997, rules and implementation schedules for the closed captioning
of video programming and to establish appropriate exemptions.  In crafting rules to implement Section 713,
we have endeavored to ensure that persons with hearing disabilities have access to video programming while
at the same time taking into consideration the effect of our rules on the video programming industry.
      2. Closed captioning is an assistive technology designed to provide access to television for
persons with hearing disabilities.  Closed captioning is similar to subtitles in that it displays the audio
portion of a television signal as printed words on the television screen.  To assist viewers with hearing
disabilities, captions may also identify speakers, sound effects, music and laughter.  Unlike subtitles,
however, closed captioning is hidden as encoded data transmitted within the television signal.  To view the
closed captioning, a viewer must use a set-top decoder or a television receiver with built in decoder
circuitry.
      3.The Commission's Notice of Proposed Rulemaking ("Notice") in this proceeding sought
comment on proposed rules and implementation schedules to fulfill the statutory mandate of Section 713.
In the Notice, the Commission discussed proposals intended to maximize the amount of programming
containing closed captioning with appropriate exemptions and reasonable timetables to take into account the
relevant technical and cost issues involved.  We received 120 comments and 67 reply comments in response
to the Notice.
      4.In Section II of this Report and Order, we set out the provisions of Section 713, discuss the
objectives of Section 713 and summarize the rules adopted by the Commission to implement the statute.  In
Section III, we discuss the responsibility for compliance with the rules we adopt.  In Section IV, we address
obligations as to programming first published or exhibited after the effective date of our rules ("new
programming") and programming first published or exhibited prior to the effective date of our rules ("pre-
rule programming"), including phase-in schedules.  In Section V, we discuss the measurement of compliance
with the rules.  In Section VI, we consider the exemptions authorized by Congress:  (a) based on the
"economically burdensome" standard; (b) based on existing contracts; and (c) under the undue burden
standard.  Section VII discusses standards for quality and accuracy of closed captioning.  In Section VIII,
we establish mechanisms for enforcement and compliance review.  Finally, in Section IX, we address other
issues relating to implementation of Section 713 and matters for future review.
  II.SECTION 713
      A.Statutory Requirements of Section 713
      5.Section 713(b) requires the Commission to adopt rules within 18 months of enactment to
ensure that:
     (1)  video programming first published or exhibited after the effective date of such
     regulations is fully accessible through the provision of closed captions, except as provided
     in subsection (d); and
      (2)  video programming providers or owners maximize the accessibility of video
     programming first published or exhibited prior to the effective date of such regulations
     through the provision of closed captions, except as provided in subsection (d).
Section 713(c) provides that:
     Such regulations shall include an appropriate schedule of deadlines for the provision of
     closed captioning of video programming.
Notwithstanding the provisions of Section 713(b), the statute permits certain exemptions of closed captioning
requirements.  Specifically, under Section 713(d):
     (1)  the Commission may exempt by regulation programs, classes of programs, or services
     for which the Commission has determined that the provision of closed captioning would be
     economically burdensome to the provider or owner of such programming;
     (2)  a provider of video programming or the owner of any program carried by the provider
     shall not be obligated to supply closed captions if such action would be inconsistent with
     contracts in effect on the date of enactment of the Telecommunications Act of 1996, except
     that nothing in this section shall be construed to relieve a video programming provider of
     its obligations to provide services required by Federal law; and
     (3)  a provider of video programming or program owner may petition the Commission for
     an exemption from the requirements of this section, and the Commission may grant such
     petition upon a showing that the requirements contained in this section would result in an
     undue burden.
Section 713(e) states that:
     The term "undue burden" means significant difficulty or expense.  In determining whether
     the closed captions necessary to comply with the requirements of this paragraph would
     result in an undue economic burden, the factors to be considered include --
     (1)  the nature and cost of the closed captions for the programming;
     (2)  the impact on the operation of the provider or program owner;
     (3)  the financial resources of the provider or program owner; and
     (4)  the type of operations of the provider or program owner.
In addition, Section 713(h) reads:
     Nothing in this section shall be construed to authorize any private right of action to enforce any
     requirement of this section or any regulation thereunder.  The Commission shall have exclusive
     jurisdiction with respect to any complaint under this section.
      6.As we previously stated, the provisions of Section 713 apply to all types of video
programming delivered electronically to consumers, regardless of the entity that provides the programming
or the category of programming.  In the Notice, we stated that the proposed rules and implementation
schedules for closed captioning requirements would apply to various distribution technologies used to deliver
this programming to consumers, including over-the-air broadcast television service (both commercial and
noncommercial) and all multichannel video programming distributors ("MVPDs").  Among these MVPDs
are:  cable television, direct-to-home ("DTH") satellite services, including direct broadcast satellite ("DBS")
services and home satellite dishes ("HSD"); wireless cable systems using the multichannel multipoint
distribution service ("MMDS"), instructional television fixed service ("ITFS") or local multipoint
distribution service ("LMDS"); satellite master antenna television ("SMATV") services; and open video
systems ("OVS").
      B.Background
      7.Section 713 is intended to ensure that video programming is closed captioned and accessible
to persons with hearing disabilities.  The closed captioning of television programming began over 20 years
ago and today is a common feature of much widely available and popular programming.  Through the
voluntary efforts of the video programming industry and with financial support from the Department of
Education ("DOE") and private entities, a considerable amount of television programming is currently
accessible to persons with hearing disabilities.  As Congress recognized, there has been a significant increase
in captioning since the enactment of TDCA of 1990, which required all television sets with screens of 13
inches or larger to have the capability to decode closed captioning.  However, as the number of channels
of video programming continues to increase and the variety of program offerings expands, a large amount
of video programming remains uncaptioned.  As the legislative history notes, Congress was concerned "that
video programming through all delivery systems should be accessible . . . ."   In accordance with this
congressional mandate, we seek to make closed captioning an integral part of video programming as soon
as possible to provide persons with hearing disabilities with the same opportunity to share in the benefits
provided by television programming that is available to others.
      8.As we reported to Congress, virtually all of the prime time programming distributed by the
six major national commercial broadcast networks (i.e., ABC, CBS, NBC, Fox, WB and UPN) is closed
captioned.  These networks also caption a significant amount of their other programming, including news,
children's programming, daytime programming and sports.  The Public Broadcasting Service ("PBS")
captions all its children's programs, prime time programming and the Newshour with Jim Lehrer and requires
the closed captioning of all programming funded by PBS' National Program Service.  Furthermore, many
local broadcast television stations caption their local programming.
      9.The nonbroadcast networks that are available to the greatest number of MVPD subscribers
and achieve the highest viewing levels also caption many of their programs, especially those distributed in
prime time.  There is also a significant amount of captioned  programming that is distributed by both
broadcast and nonbroadcast video programming providers.  The highest rated and most widely available
first-run syndicated programs (e.g, Oprah and Wheel of Fortune) are closed captioned.  Further, as newer
network programming (e.g., Roseanne and Seinfeld) goes into syndication, an increasing number of these
programs contain captions and some earlier off-network programs that remain popular have been captioned
(e.g., I Love Lucy).  Almost all widely-distributed motion pictures currently produced and distributed by
member companies of the Motion Picture Association of America ("MPAA") are closed captioned for
distribution over broadcast television, MVPDs and home video following their theatrical release.  Finally,
many commercials are captioned by the advertising agencies that produce them.
      10.However, we note that during time periods other than prime time, the amount of closed
captioning remains limited.  There are approximately 165 national nonbroadcast networks, 50 regional
nonbroadcast networks, and much locally originated programming offered by broadcast television stations
and cable systems.
      11.Section 713 and the rules we adopt in this Report and Order are intended to further increase
the amount of programming with closed captions to expand the accessibility of video programming for
persons with hearing disabilities.  We recognize the important role that video programming plays in
American society today as a source of information and entertainment.  Thus, we seek to maximize the
amount of video programming that is available to the 8.6% of the nation's population who are hearing
disabled as rapidly as practical.  This goal is consistent with the statute and its legislative history that
clearly indicate that Congress intended for video programming to be captioned and available to persons with
hearing disabilities.  At the same time, the statute directs us to consider the realities of the video
programming marketplace, including the many programs yet to be captioned, the financial resources of video
programming providers and current limitations on the supply of captioners.  In order to balance the important
need for closed captioned video programming against these market conditions, we consider a number of
factors in developing rules to make video programming accessible as soon as possible.
      12.First, we seek to increase the amount of closed captioned video programming incrementally
over time.  Our rules contain transition periods, during which the amount of closed captioned programming
will increase.  There is an eight year transition period for new programming, and a ten year transition period
for pre-rule programming.  In setting these deadlines, we have considered the limited number of available
captioners and captioning services in existence, the increased demand for captioning which has been created
by Section 713, and the cost of captioning.  Allowing a transition period ensures that Section 713 is
implemented in an efficient and practical manner.  In addition, the rules require that any program received
by a provider with captioning, and for which the captions do not require reformatting, must be passed on to
consumers with the captions intact.  We believe that these rules will ensure accessibility in a reasonable
amount of time, with significant increases in captioning throughout these periods.
      13.Second, we seek to have a wide array of video programming with captions, recognizing that
persons with hearing disabilities desire as wide a choice of programming to be accessible as do members of
the public generally.  Under our rules, compliance is measured on a channel-by-channel basis, and thus the
captioned programs will reflect the overall diversity of the many channels of programming now available.
Further, while requiring increasing amounts of programming to be captioned until we reach the degree of
accessibility provided by Section 713, our rules allow significant discretion in their implementation by video
programming providers because we believe that video programming providers are in the best position to
respond to the preferences of their viewers.
      14.Third, we seek to promote competition among sources of video programming, consistent
with the 1996 Act's overall intent.  Our rules apply evenhandedly to all video programming providers and
are not intended to intrude upon video programming providers' editorial decisions.  In this manner, we
maintain competition among video programming distributors regardless of the technologies used, continue
to foster diversity of video programming and encourage new types of video programming to become
available to all viewers.
      15.Fourth, we seek to provide appropriate and reasonable exemptions, as required by Section
713(d), while ensuring that a substantial amount of programming gets captioned.  The statute provides for
exemptions where captioning would impose an economic burden.  We exempt a limited number of
programming types from the closed captioning requirements on the basis of economic burden.  We also
permit some smaller video programming providers to caption less than the specified benchmark amounts
of their programming by permitting them to cap their spending on closed captioning, based on their gross
revenues.  Our rules also provide sufficient flexibility to consider unusual cases under the undue burden
standard.
      16.Fifth, we seek to adopt rules and procedures that are straightforward and easy to enforce with
minimal administrative burdens on the Commission, affected industries and consumers.  We adopt a
relatively simple enforcement process that places a limited burden on the complainant and permits the video
programming provider to demonstrate compliance without a significant paperwork burden.
      17.Finally, we seek to place maximum reliance on competitive market forces to develop
efficient and cost effective methods for captioning and for ensuring a high level of quality for all captions.
Our rules recognize that time must be allowed for the video marketplace to adjust to these new rules.  We
are aware that those who distribute programming and their program suppliers must coordinate their efforts
to determine the most efficient ways to caption programming.  In situations where multiple entities in the
distribution chain use the same programming, there is a need to determine the best means for captioning
programming so that all will have access to such programming without duplication of effort.  We also know
that some programming providers may not have taken the costs of captioning into account when developing
programming budgets.  Yet, closed captioning must become an integral part of the production of new
programming and programming providers need time to begin to incorporate captioning at the outset of the
production process. We want to allow time for these entities to find sources of funding or sponsors to
underwrite the additional costs of captioning.  In addition, captioning resources must expand to meet the
increased demand for captioned programming.  While the number of captioners may be sufficient to meet
current demand, it appears that we must allow time for the pool of captioners to grow, which is dependent
on the training of additional stenocaptioners, and for the number of captioning agencies to increase to meet
the demand for captioning of pre-recorded programming.   Moreover, as competition for captioning services
increases and new technologies are developed, the cost of captioning is likely to decrease.  Accordingly,
while it would be ideal to require all video programming to be captioned within a minimal amount of time,
we must consider the realities of the marketplace and its need to adjust to the new requirements.
      C.Summary of the Rules Adopted to Implement Section 713
      18.The following summarizes the rules we adopt to implement the closed captioning
requirements under Section 713, which become effective on January 1, 1998:
      Responsibility for compliance with captioning requirements:  Section 713 refers to the
closed captioning of programming by providers and owners of video programming.  Because it is efficient
and will focus responsibility for rule compliance, we will generally place the responsibility for compliance
with our closed captioning rules on video programming distributors, defined as all entities who provide video
programming directly to customers' homes, regardless of distribution technology used (i.e., broadcasters and
MVPDs).  Video programming distributors, however, will not be responsible for the captioning of
programming that is not subject to their editorial control.  The responsibility for compliance with respect to
such programming will be placed on the providers and owners of such programming.
      Transition schedule:
      	New Programming - Section 713(b)(1) requires the Commission to adopt rules to
ensure that video programming first published or exhibited after the effective date of our rules ("new
programming") be fully accessible through closed captioning.  For new programming that does not meet any
of our criteria for exemption, we adopt an eight year transition period with benchmarks specified as a number
of hours of required captioning.   We will define full accessibility as the captioning of 95% of all new, non-
exempt programming to provide for unforeseen difficulties that may arise.  Compliance will be measured
on a channel-by-channel basis for MVPDs and will be measured over each calendar quarter.  During the
transition period, each channel of programming will be required to meet the specified benchmark unless the
amount of new nonexempt programming offered on the channel is less than the benchmark.  In such
instances, at least 95% of the new, non-exempt programming on the channel will be required to be captioned.
After the transition period, all channels will be required to caption 95% of their new, non-exempt
programming.
     We also will require video programming providers to continue to provide closed captioning at a level
substantially the same as the average level of captioning that they provided during the first six months of
1997, even if the amount of captioned programming exceeds that required under the benchmarks.  Video
programming distributors are required to pass through to consumers any programming they receive with
closed captioning, even if they have already met their benchmarks, when they do not edit the programming.
      	Pre-rule programming - For video programming first published or exhibited on or
before the effective date of our rules ("pre-rule programming"), Section 713 requires that we maximize the
accessibility of such programming through the provision of closed captions.  With respect to pre-rule
programming that does not meet any of our criteria for exemption, at least 75% of such programming must
contain closed captions after the end of a ten year transition period.  Compliance will be measured on a per-
channel, quarterly basis.  We expect that the amount of captioning of such programming will increase
incrementally over the transition period.  While we will not set specific benchmarks as we are doing for new
programming, we will monitor distributors' efforts to increase the amount of captioning of pre-rule
programming to determine whether channels are progressing toward the 75% requirement.  After four years,
we will reevaluate our decision not to establish specific benchmarks and will reevaluate whether the 75%
threshold for maximizing the accessibility of pre-rule programming is the appropriate amount to meet the
goals of the statute.
      Exemption based on economic burden:   Section 713(d)(1) permits the Commission to
exempt by regulation programs, classes of programs or services for which we determine a requirement to
provide closed captioning will be economically burdensome.  We will exempt from our closed captioning
rules several specific classes of programs for which such requirements would be economically burdensome.
These include non-English language programming, primarily textual programming, programming distributed
between 2 a.m. and 6 a.m., interstitial announcements, promotional programming and public service
announcements, advertising, certain locally-produced and distributed programming, non-vocal musical
programming, ITFS programming and programming on new networks.  We further exempt any video
programming provider from closed captioning requirements where the provider has annual gross revenues
of less than three million dollars.  In addition, we will not require any video programming provider to spend
more than 2% of its annual gross revenues on closed captioning.  Under this provision, we minimize the
economic burden of captioning video programming while at the same time requiring efforts to increase video
accessibility by as many entities as possible.
      Exemptions based on existing contracts:  We will exempt any programming subject to a
contract in effect on February 8, 1996, for which compliance with the closed captioning requirements would
constitute a breach of contract.
      Exemptions based on undue burden:   Under Section 713(d)(3), the Commission is required
to consider petitions for exemption from the closed captioning rules if the requirements would impose an
undue burden, which is defined as a significant burden or expense.  Parties shall file requests for exemption
based on the undue burden standard.  A petition may be submitted by any party in the programming
distribution chain.  Petitions must include information that demonstrates how the programming for which
the exemption is sought meets one or more of the statutory criteria for undue burden exemptions.  Petitioners
may also submit any other information they deem appropriate for our evaluation of their situations.
Depending on the individual circumstances, we may grant partial exemptions and may consider proposals
that programming be made accessible through alternative means (e.g., additional text or graphics).
      Standards for quality and accuracy:  Video programming providers will be required to
deliver intact the closed captioning they receive as part of the programming they distribute to viewers where
the captions do not need to be reformatted.  Video programming providers must maintain and monitor their
equipment to ensure the technical quality of the closed captioning they transmit.  We will not adopt standards
for the non-technical aspects of closed captioning.  We will, however, monitor the captions that result from
implementation of our rules, and, if necessary, revisit this issue at a later date.  We will not establish any
standards for captioners.  We will not restrict the use of captioning methodology generally.  Video
programming providers may use the electronic newsroom ("ENR") method of closed captioning.
      The enforcement process:  Complaints alleging violation of our closed captioning rules must
first be directed in writing to the video programming provider responsible for distribution of the
programming.  A complaint must be filed with the video programming provider no later than the end of the
calendar quarter following the calendar quarter in which the alleged violation occurred.  The video
programming provider must provide a written response to a complaint within 45 days after the end of the
calendar quarter in which the violation occurred or 45 days after receipt of the complaint, whichever is later.
If a video programming provider fails to respond to a complaint or a dispute remains following this initial
procedure, a complaint may be filed with the Commission.  A video programming provider will have 15 days
to respond to the complaint filed with the Commission.  If the Commission determines that a violation has
occurred, we may impose penalties, including a requirement that the video programming provider deliver
programming containing closed captioning in an amount exceeding that required by the rules.  We will not
adopt any specific recordkeeping requirements.  In response to a complaint, however, a video programming
provider is obligated to provide the Commission with sufficient records and documentation to demonstrate
that it is in compliance with the rules.  We also will permit video programming providers to rely on
certifications from program suppliers for compliance.
 III.Responsibility for Compliance
      A.Background
      19.In the Notice, we proposed to place the responsibility for compliance with our closed
captioning requirements on video programming distributors, which we defined as all entities who provide
video programming directly to a customer's home, regardless of the distribution technologies employed by
such entities.  We sought comment as to the possible effect such a rule would have on video programming
providers, and the effect that our proposal might have on the diversity of available programming as well as
the availability of closed captioned programming.  We also sought comment as to whether this proposed
placement of responsibility might create any anomalous situations.  In addition, we sought comment on
whether the use of the term "program providers and owners" in Section 713 may have been intended to
provide the Commission with jurisdiction over producers of video programming, given the statement in
the legislative history that "[t]he term 'provider' contained throughout [this section] refers to the specific
television station, cable operator, cable network or other service that provides programming to the public."
We solicited comment on the feasibility of having program owners and providers share responsibility for
compliance obligations with our closed captioning rules.
      20.A variety of commenters, including commenters representing persons with hearing
disabilities, support our proposal to place responsibility for compliance on video programming distributors,
noting that we have never exercised direct jurisdiction over networks or producers.  WGBH notes that
efficiency dictates that captioning be done by the original program producers, but asserts that the ultimate
responsibility for compliance must rest with a single entity.  MPAA claims that holding program owners
responsible for closed captioning would require the Commission to "parse complex contractual relationships"
to determine which of several entities holding concurrent rights to a particular video product is responsible
for a violation.  MPAA also contends that joint responsibility for captioning would be unworkable because
neither consumers nor the Commission would know to whom complaints should be addressed, and both
video programming providers and distributors could disclaim responsibility for closed captioning.
According to MPAA, we should allow the parties' contract negotiations to allocate responsibility, similar
to the approach which has proven workable in enforcing children's commercial limits imposed by the
Children's Television Act of 1990.
      21.Some commenters representing persons with hearing disabilities assert that placing
compliance responsibility on video programming distributors will make it easier for us to monitor and
enforce our closed captioning requirements, especially since it will eliminate the need for the Commission
to track who produced a particular program.  At the same time, however, several commenters note that
placing responsibility for captioning at the production stage would be the most efficient method for ensuring
compliance.  For example, LHH states that closed captioning when handled by the original program
producers will ensure efficiency and accuracy, and will avoid duplication of efforts.  Similarly, NAD notes
that there may be instances where captioning costs could be too burdensome for the distributor, but not for
the producer, and contends that Congress intended producers to provide closed captioning in such
situations.
      22.Captivision states that shared responsibility may be appropriate for certain live broadcast
programming carried by MVPDs.  NCI contends that it may make sense to impose closed captioning
responsibility on national or regional video programming distributors with respect to programs they control,
but not on distributors that do not control the bulk of their distributed programming.  NCI states that it is
important to place captioning responsibility at the point in the production and distribution process where it
makes best economic sense to do so.  Several commenters support joint responsibility for compliance, but
generally offer no proposals for how such joint responsibility should be apportioned.
      23.Video programming distributors generally oppose our proposal to make them primarily
responsible for compliance with our closed captioning rules.  A number of commenters cite the statute's
explicit references to program "owners" in Section 713 as support for our jurisdiction over such entities.
Distributors assert that the consensus that closed captioning can be most efficiently and accurately
accomplished at the production stage dictates placement of the captioning burden on producers, not
distributors.  In light of our assumption that distributors could transfer closed captioning responsibility to
producers by refusing to purchase uncaptioned programs, AlphaStar asserts that we should just place the
compliance burden on producers.  Encore argues that distributors are unlikely to be able to pass captioning
responsibility on to producers by simply refusing to purchase uncaptioned programs in light of the current
video programming marketplace.  Encore claims that contracts with producers typically extend for seven
year terms, and that refusal to accept a particular film or program may breach a long-term contract and could
force a distributor to find other programming to fill a spot at considerable, duplicative expense.
      24.Several MVPDs, including satellite and wireless cable distributors, raise concerns specific
to their medium.  Satellite distributors argue that they typically have little or no control over the programs
which they distribute and that they merely obtain the right to retransmit programming, unaltered and in its
entirety, through retransmission and affiliation agreements, but do not purchase programming directly from
producers.  AlphaStar claims that the general terms of its programming distribution licenses prohibit it from
adding captions, as its licenses require AlphaStar to retransmit programs in their entirety, without deletion
or modification.  TCI contends that its affiliation agreements explicitly reserve to the programmer all rights
not specified in the agreement, and that the right to caption the programming is not granted to TCI in any
of those agreements.  Primestar maintains that DTH distributors are technically incapable of producing
captions and inserting them after a program has been created due to the mechanics of DTH transmission and
technical configuration of the systems themselves.  Time Warner argues that cable operators who refuse
to carry leased access programming, must-carry stations or public, educational or governmental ("PEG")
access programming due to lack of closed captioning could be in violation of the Communications Act or
franchise or retransmission consent agreements.
      25.In addition, several distributors argue that copyright law may prevent them from closed
captioning the programming they distribute.  United Video maintains that Section 119(a)(4) of the Copyright
Act of 1976 "forbids any willful alteration of the content of any satellite broadcast signal secondarily
transmitted by a satellite carrier," and argues that any material related to a particular program which a
satellite carrier might insert into line 21 would constitute an alteration of the broadcast signal and thus
copyright infringement.  USSB is concerned that it might violate intellectual property rights if it captions
someone else's work.  AlphaStar and Bell Atlantic claim that permission from the original author to publish
the dialogue of a video program may be needed to avoid copyright infringement issues.
      26.Finally, a number of commenters express concern that program owners or producers might
not offer captioned programming to all distributors, forcing smaller distributors with less bargaining power
to caption programming that is offered to other distributors already captioned.  Several commenters urge
us to prohibit discrimination against any distributors by requiring program owners and producers or
syndicators to offer captioned programming equally to all distributors.
      B.Discussion
      27.Both Section 713 and the legislative history indicate that Congress intended to give us
sufficient jurisdiction to ensure the accessibility of video programming.  Section 713 refers to the closed
captioning of programming by providers and owners of video programming.  The legislative history defines
the term "providers" to include the specific television station, cable operator, cable network or other service
that provides programming to the public.  We believe that we should craft our captioning rules in a manner
that will increase the availability of video programming with closed captions most expeditiously as well as
focus compliance responsibility.  In order to accomplish these goals, we believe it desirable to hold video
programming distributors, defined as all entities who provide video programming directly to a customer's
home, regardless of the distribution technologies employed by such entities, responsible for compliance with
our closed captioning rules.  Accordingly, broadcasters, cable operators, wireless cable operators, ITFS or
LMDS, SMATV operators, DBS providers, DTH providers, HSD providers and OVS operators will be
responsible for compliance with our rules.  We believe that placing compliance obligations on distributors
will allow us to monitor and enforce these rules more efficiently.  By holding distributors responsible for
captioning, there typically will be a single entity to which complaints must be addressed, and there will be
no need for tracking the entities responsible for producing programs alleged to violate the rules.  However,
as described below, we will measure compliance with our closed captioning on the basis of each channel of
video programming provided to consumers.
      28.Although we are placing the ultimate responsibility on program distributors, we expect that
distributors will incorporate closed captioning requirements into their contracts with producers and owners,
and that parties will negotiate for an efficient allocation of captioning responsibilities.  The references to
program "owners" in Section 713 reflect Congress' recognition that it is most efficient to caption
programming at the production stage, and the assumption that owners and producers will be involved in the
captioning process.  We therefore expect that program owners and producers will cooperate with
distributors to ensure that nonexempt programming is closed captioned in accordance with our rules.  We
will allow distributors to demonstrate compliance with these rules by relying on certifications from program
sources, such as producers, networks or syndicators, that expressly state that the programming is either
captioned or exempt from our closed captioning rules, similar to the rules concerning commercial limits
imposed by the Children's Television Act of 1990.  Distributors will not be held responsible for situations
where a program source falsely certifies that programming delivered to the distributor meets our captioning
requirements if the distributor is unaware that the certification is false.  We anticipate that it would be
reasonable for video programming providers to rely on the accuracy of certifications, and we would take
appropriate action if there were deliberate falsifications.
      29.In some instances, a program distributor is prohibited by law from exercising editorial
control over certain types of programming it offers, such as public, educational and governmental ("PEG")
or leased access.  In these situations, the distributor shall be exempt from captioning such programming.
Thus, for example, a satellite provider that secondarily transmits broadcast signals pursuant to the
compulsory copyright licensing provisions of Section 111 and 119 of the Copyright Act will not be required
to caption those signals, nor will a distributor be required to caption PEG, leased access or must-carry
programming that is delivered to the provider uncaptioned.   Distributors will not be penalized for
transmitting such programming without captions, and need not refuse to carry such programming due to lack
of captions where an addition of captions or refusal to carry could violate the Communications Act or their
franchise or retransmission consent agreements.  Instead, video program producers and owners will be
responsible for captioning in situations where the program distributors may not refuse to carry the
programming pursuant to Federal law, to the extent the programming is not otherwise exempt under the rules
we adopt in this Report and Order.
      30.We believe that commenters' concerns that producers will refuse to caption programming
before delivery to the distributor are overstated.  The video programming industry, providers and producers
alike, must adapt to the changes mandated by Section 713.  Cooperation between video programming
distributors and producers is necessary if video programming is to be captioned as required by Section 713.
Video programming providers may no longer view closed captioning as an option in the production process,
but as a requirement, the cost of which must be factored in with the costs and budgets for video programming
generally. Our captioning rules will be applied to all distributors, which will prevent producers and program
suppliers from "shopping around" for distributors who have no closed captioning obligations.  There will
be few, if any, outlets for programming that are not captioned as the transition period progresses.  The
inherent need to increase viewership will create an incentive for many program owners and producers to
provide captioning to gain carriage on other systems.  Thus, we believe the realities of the marketplace will
result in shared responsibility for the closed captioning of video programming, although ultimate
responsibility for compliance will generally be on the video programming distributor who distributes the
programming to viewers.
IV.  TRANSITION RULES
     A.   Transition Rules for New Programming
      1.Background
      31.Transition Schedules.  We proposed an eight-year transition schedule for programming first
published or exhibited after the effective date of our rules ("new programming"), which would phase in
closed captioning of all non-exempt new programming by 25% increments every two years.  We also
offered an alternative proposal under which closed captioning of non-exempt new programming would be
phased in over ten years, with 25% captioned after three years, 50% after five years, 75% after seven years,
and 100% after ten years.  Under our proposal, program providers would have significant discretion
regarding what to caption to meet the requirements and how to use funding available for captioning.  We
noted that the level of captioned programming currently offered by some programmers may exceed these
benchmarks, and that we expected current levels of closed captioning to continue.
      32.Numerous commenters, including video programming distributors and providers, captioners
and deaf advocates, support the proposed eight-year or ten-year schedules.  In addition, some commenters
find merit in both proposals.  NCD states that eight years "may be the shortest practicable" transition
schedule, but that we should adopt a ten-year schedule if the relevant industry groups could guarantee that
all new programming would be made fully accessible in that time span.
      33.Several commenters qualify their support for the proposed transition schedules, based on
our adoption of certain requested exemptions, a decision not to adopt non-technical quality standards, or
the application of the rules to program owners.  NCD recommends that distributors show some evidence
of progress each year, aggregating to 25% every two years.  Similarly, Captivision contends that we should
require some increase in closed captioning levels within the first year after the rules become effective, if we
adopt the eight-year transition period.  MCS supports adoption of the proposed eight-year transition period,
provided that we use current captioning levels as the starting point from which the amount of captioned
programming would be increased.
      34.Commenters that oppose our proposals primarily represent persons with hearing
disabilities.  They propose alternative implementation schedules generally ranging from one to five years.
Many commenters argue that shorter time frames are reasonable because closed captioning technology has
been available for 20 years; the technology is widely available and affordable; caption services are
abundant and competitive; and programmers and owners have been aware that they would be required to
provide closed captioning since the passage of the 1996 Act.
      35.SHHH notes that the proposed schedules would allow major networks to do nothing for the
first seven years, and could allow them to decrease current levels of closed captioning.  Numerous
commenters assert that the percentage increments should be over and above current captioning levels.
WGBH argues that it is unlikely that Congress intended Section 713 to result in a cutback in current closed
captioning levels, and recommends using February 8, 1996, as the baseline upon which the 25% thresholds
are added.  In addition, several commenters express doubt about the continuance of current captioning
levels, and note that reductions in closed captioning have occurred already.
      36.A number of commenters suggest that our final benchmark for closed captioning of non-
exempt new programming should be less than 100%.  Some of these commenters propose that allowing
"substantial compliance" with our closed captioning rules will ease the burden on distributors and lessen
the drain on Commission resources engendered by requests for individual exemptions under Section
713(d)(3).  Other commenters claim that without a "de minimis" exemption a distributor would have no
time to request an exemption when a program is received shortly before its scheduled air time and is
uncaptioned, and the programming might simply be pulled from the schedule.  Alternatively, these
commenters claim that such situations could arise quite frequently, and that we would therefore be
overwhelmed with individual exemption requests, as it will be difficult to anticipate and address in this
proceeding every valid exemption situation that could arise in the future.  The proposed "de minimis" or
"substantial compliance" thresholds range from 80% to 98% captioning of all non-exempt new
programming.
      37.Closed Captioning Priorities.  We solicited comment on whether certain types of
programming should be subject to an accelerated implementation schedule.  We also noted that a significant
portion of funding for current levels of closed captioning comes from DOE grants and the availability of such
funding in the future is unclear, which could affect the amount of captioning that can be provided.  We
asked commenters to consider whether other factors, including the type of programming, the time of day the
program is offered, audience size, the type of program provider, the number of households served by the
distributor (e.g., homes in the television market or homes passed by the cable system), or some combination
of these factors should be incorporated into our phase in schedules or be the basis of alternative proposals.
      38.With respect to possible earlier implementation of closed captioning for certain types of
programming, comments from organizations representing persons with hearing disabilities strongly support
priority captioning of news, emergency announcements, current affairs and educational programs, while
comments from others support our proposal to let providers decide what programs should be captioned
first.  MCS and HBO agree that programmers should have discretion in determining how best to allocate
closed captioning resources.  HBO also claims that market forces will continue to be the significant
catalyst for captioning that such forces have been to date, ensuring that the most desirable programming will
be captioned first.  C-SPAN contends that the "spoken word intensive character" of news and public affairs
programming supports the need for a longer transition period for closed captioning of such programming.
NACDA claims that sports programming should be given a later implementation schedule than other
programming so that scarce live captioning resources can be devoted to news and public affairs programming
first.
      39. Captivision contends that current closed captioning levels should not be reduced, regardless
of the availability of federal funds for captioning.  This commenter claims that DOE funding for captioning
was intended merely to "kick-start" the captioning process and allow stations to garner their own financial
support for closed captioning.  MCS expresses concern that the proposed transition rules will allow
programmers the flexibility to reduce their captioned programming if the level of federal support for closed
captions decreases.  MCS submits that this could result in a net reduction of the current level of captioned
hours, which would be inconsistent with the intent of the statute.
      40.NCI proposes that a distinction be made between programs with large and small potential
audiences.  NCI contends that such a distinction makes economic sense because the cost of closed
captioning widely available programming is de minimis in relation to production costs and distribution
revenues of such programming.  NCI submits that where the video market is large and captioning costs are
low, a significant time lag for implementation of closed captioning is unnecessary and illogical.  In
addition, NCI states that video programming distributors or providers that do not voluntarily caption
programming intended for wide audiences should be required to caption programs reaching wide audiences
first and then caption other types of programming.  Allnewsco contends, however, that market size and
geographic location bear no relationship to the burden of closed captioning on a particular type of
programming.
      2.Discussion
      41.We adopt an eight year transition period for video programming first published or exhibited
after the effective date of our rules ("new programming").  During this transition period, distributors will be
required to increase over time the amount of closed captioned video programming they distribute until full
accessibility of new programming is achieved.  Our goal, consistent with the intent of Section 713, is to make
all new video programming fully accessible as soon as possible.  However, we must take into consideration
that this goal cannot be reached immediately due to the limited number of available captioners and
captioning services in existence, the increased demand for captioning which will be created by Section 713,
and the cost of captioning.  With respect to cost, we note that the cost of captioning varies with the type of
programming and method used.  As we reported to Congress, off-line captioning of prerecorded
programming is estimated to be between $800 and $2500 an hour.  For live programming requiring real
time stenocaptioning, cost estimates range from $120 to $1200 an hour.  For scripted live programming
that uses a teleprompter from which captions can be created, the cost of installing the captioning capability,
referred to as electronic newsroom, is between $2500 and $5000.  We also note that, according to NCI,
the cost of captioning all types of video programming has decreased considerably over the past several
years.  Further, we are also concerned that requiring distributors to implement captioning immediately
could reduce the availability of certain types of video programming in the near term, or pose implementation
problems where distributors and producers have entered into long term contracts which do not address the
responsibility for captioning.  We believe that the rules we adopt provide a balanced approach that will result
in full accessibility in a reasonable amount of time with significant increases as captioning is phased in.
Allowing a transition to full captioning to occur over a period of years will help to ensure that the goal of
the statute is met in an efficient and practical manner.
      42.We are not convinced by those commenters arguing for a shorter transition period than either
of those we proposed in the Notice.  We agree that closed captioning technology has been available for many
years, and that the video industry has been aware since the passage of the 1996 Act that closed captioning
would no longer be voluntary.  However, we recognize that existing closed captioning resources may not be
able to achieve full accessibility immediately.  The record in this proceeding demonstrates that although
there may be sufficient captioning resources available to meet current demand, the amount of closed
captioning to be undertaken in compliance with our rules will significantly increase demands on these
resources.  For example, while the broadcast networks and the most widely available and popular non-
broadcast networks caption significant amounts of their programming, a large amount of programming will
be captioned for the first time.  We note that the number of captioners, especially the number of real time
stenocaptioners needed for live programming, is currently limited.  While we expect the pool of captioners
to expand to meet the increased demand for closed captioning, that expansion is dependent on individuals
acquiring captioning skills.  We are also not persuaded that a longer transition period offers significant
advantages over an eight year period.
      43.Our rules will require that, at the end of the transition period, 95% of all new programming
that does not fall within any of our exemptions will be closed captioned.  Because we recognize that there
are unforeseen difficulties that could arise that might unintentionally result in video programming providers
being unable to provide such new programming with captions, we believe it is reasonable to define full
accessibility at the end of the transition period as slightly less than 100% of all new nonexempt
programming.  The 95% requirement provides some leeway to accommodate these difficulties.   Although
the statute uses the term "fully accessible" in describing the amount of new programming to be captioned
under our rules, the statute also includes provisions for exemptions from the captioning rules, an
acknowledgement that some new programming will not be captioned.  In addition, the legislative history
states that "the Committee expects that most new programming will be closed captioned," indicating
Congress' recognition that something less than all new programming would be captioned.  A final
requirement that at least 95% of all new nonexempt programming be captioned will ease the burden on
distributors that receive programs without captions shortly before their scheduled air times, allowing
distributors to air such programs without having to seek last-minute waivers, and will also accommodate
occasional technical lapses which may occur due to circumstances beyond a distributor's control.
      44.The transition schedule will phase in closed captioning for new nonexempt video
programming until full accessibility is reached after the end of the eight year transition period.  We believe
that some time is needed to permit video programming distributors sufficient time to determine the
availability of programming with closed captioning and to make whatever arrangements are necessary to
ensure that they are able to provide programming with closed captioning to viewers in compliance with our
requirements.  Therefore, the initial benchmark for captioning is set for the first calendar quarter of 2000.
Beginning with the first calendar quarter of 2000, distributors will be required to meet increasing closed
captioning benchmarks for new nonexempt programming.
      45.We establish three benchmarks during the transition period.  As described below, compliance
with and measurement of these benchmarks will determined on a per channel and calendar quarter basis.
(Also as described below, video programming providers will be permitted to treat as exempt up to four hours
of late night programming.)   These benchmarks are based on average amounts of required captioning of new
nonexempt programming of approximately five hours per day after two years, ten hours per day after four
years and 15 hours per day after six years.  These requirements are measured over the course of the calendar
quarter, so, for example, the first benchmark requires that at least 450 hours of new nonexempt programming
be captioned per calendar quarter in 2000 and 2001.  We recognize that many channels provide a mix of
new, pre-rule and exempt programming and we believe that all channels should be afforded the benefit of
captioning 95% rather than 100% of new nonexempt programming.  Therefore, our rules provide that, when
the closed captioning requirements specified in our rules exceed the number of hours of new nonexempt
programming on a channel during the calendar quarter, 95% of the new nonexempt programming on such
channel must contain captions.  For example, during the first calendar quarter of 2002 (i.e., January, February
and March 2002), if a channel has 850 hours of new nonexempt programming (an amount less than the 900
hours benchmark requirement), then it is in compliance if 807 hours (95% of 850) are captioned.  We
expect video programming distributors to plan to deliver to consumers captioned programming sufficient
to maintain the needed flexibility for the occasional situations where unintended difficulties arise.
      46.Finally, notwithstanding the specific transition requirements and the exemptions otherwise
provided for in the rules, in order to make sure that the level of captioning is generally increasing, we will
also require video programming providers to continue to provide closed captioning at level substantially the
same as the average level of captioning that they provided during the first six months of 1997, even if the
amount of captioned programming exceeds that requirement under the benchmarks.  We reject, however,
the implicit suggestion of some of the commenting parties that entities that already captioned large amounts
of programming should be required to complete the transition process at an earlier date.
      47.Finally, we decline to adopt an expedited schedule for captioning of any particular type of
programming.  Although we recognize the importance of, for example, news and community affairs
programming to viewers, we believe that distributors can best determine what programs to caption first, and
we expect that consumer demand, among other factors, will be taken into account in making those
determinations.  We wish to emphasize that the ultimate goal of the statute is to make video programming
accessible to persons with hearing disabilities, which we believe is accomplished by our rules.  All new
programming, less the 5% allowance for unforeseen difficulties, will be captioned after the transition period.
This will represent a significant increase in the amount and variety of captioned programming available to
viewers with hearing disabilities.
      B.Transition Rules for Pre-Rule Programming
      1.Background
      48.In the Notice, we referred to the statutory distinction between the closed captioning
requirements for programming first published or exhibited after the effective date of our rules ("fully
accessible") and programming first published or exhibited before that date ("maximize accessibility").
Because of this distinction, we believe that Congress did not intend that all programming published prior to
the effective date of our rules would be captioned.  We also noted that a requirement that nearly all
programming be captioned could present a significant burden, as well as the possibility that distributors
would elect to remove older, uncaptioned programming from their scheduled offerings rather than captioning
such programs.  We sought comment on whether our rules should require that a percentage of pre-rule
programming, perhaps 75%, ultimately be captioned or whether it may be unnecessary to require that pre-
rule programming be captioned by a date certain.
      49.Definition.  Several commenters seek clarification of the definition of pre-rule programming.
For example, MPAA, HBO and Viacom suggest clarifying our definition of pre-rule programming such that
"first published or exhibited" refers to the time when the work was first publicly distributed in its original
form in any medium.  These commenters would define programs first exhibited in any medium prior to
August 8, 1997 as "pre-rule programming" for the purposes of our rules.  Thus, theatrical films and home
videos first publicly distributed prior to the effective date of our rules would not be considered "new
programming," even though such works might first be aired on television after the effective date of the
rules.  NCD asks whether colorizing, remastering or otherwise restoring or modifying a vintage film "in
accordance with contemporary technology and tastes" would transform the film from pre-rule programming
to new material.  NCD claims that, even if such modifications are not deemed to re-classify the material
as new programming for the purposes of our rules, in many cases the costs of captioning may represent only
a small portion of or minor addition to the overall modification costs, making economic arguments against
captioning less persuasive in such situations.  MPAA and NCTA contend that a reformatted version of a
previously-published program should not be re-categorized as "new."
      50.MPAA and Viacom argue that once a new program is ten years old, it should no longer be
considered new and should be subject to the less stringent standard, while HBO would remove a program
from the new category one year after it is first exhibited.  MPAA and Viacom claim that, as new programs
age, their value diminishes, and eventually the burden of captioning or reformatting existing captions
becomes uneconomical.  HBO contends that it would be illogical for all programs first publicly distributed
after October 31, 1997 to be considered "new" in perpetuity.
      51.NAB agrees that the definition of pre-rule programming in the Notice may be too narrow,
and that it would implicitly deprive broadcasters and producers of flexibility in implementing captions.
NAB maintains that our proposed schedule allows stations to air declining amounts of new programs without
captions until full captioning requirements are in place.  Thus, if programs that were properly produced and
aired without captions during the transition period are not reclassified, they would have to be captioned for
any further exhibition, even if the burden of doing so would be high.  The alternative to captioning such
programs would be to remove them from distribution, which would contravene Congress' intent.  Thus, NAB
proposes that the definition of "pre-rule programming" include both programs first published or exhibited
before the effective date of our rules and programs first published or exhibited after that date without
captions.
      52.In addition, numerous commenters request clarification that any captioning requirements
apply only to programs that are actually aired subsequent to the effective date of the rules, rather than to all
previously produced programming.
      53.Pre-Rule Programming Benchmarks.  Video industry commenters addressing this topic
recommend that we set no requirements or even targets for pre-rule programming.  They assert that market
forces have resulted in high levels of captioning of library product to date, and will continue to ensure the
captioning of such materials.  They contend that:  (a) a captioning requirement for pre-rule programming
will reduce the amount and variety of programming available to all viewers; (b) the percentage of
captioned "library" materials will naturally increase as the phase-in schedule for non-exempt new
programming progresses and new programs "age" into "library" programs; and (c) it would be consistent
with the intent of the statute to refrain from imposing a mandatory captioning requirement on pre-rule
materials, as Congress did not intend to deter providers from airing pre-rule programming due to the costs
of captioning.  In contrast, VITAC maintains that statistics and anecdotal evidence strongly suggest that
a significant number of widely distributed programs would never be voluntarily made accessible to the
viewers who rely upon or use captions.  MPAA and Viacom recommend a requirement that, at most, 50%
of the pre-rule programs that are actually aired be captioned, claiming that any higher percentage will result
in a reduction of program variety.
      54.Several commenters also express concern that a captioning requirement for pre-rule
programs will unfairly burden networks dedicated to airing vintage material, and also new programming
networks, which tend to rely more heavily on older materials in their early stages.  NCTA claims that new
programming can be expected to have a "multi-year, multi-outlet life cycle" over which a provider can
recover the costs of captioning, whereas older programming generally does not.  Some commenters also
note that providers often acquired these programs without contemplating the cost of or need for adding
captions at a later date, and that a captioning requirement for pre-rule programming would result in programs
purchased or licensed prior to the advent of the captioning mandate being archived rather than aired,
effectively causing a loss of funds spent to acquire such programs.
      55.A number of commenters contend that there are now large amounts of previously captioned
video material which are repeatedly transmitted without captions, and that we should first ensure that,
regardless of editing or licensing of rights, once a program has been captioned for any venue, those captions
will be reused even if slight reformatting is necessary.  Several commenters would have program providers
compile an inventory of all existing captioned programming, which would be submitted to the Commission
shortly after the rules take effect.
      56.Commenters representing persons with hearing disabilities oppose our proposal for
captioning pre-rule programs.  Several commenters urge us to require that all pre-rule programming be
captioned. ALDA and CAN contend that our proposal to limit any captioning requirement to 75% of pre-
rule materials is arbitrary and unsupported by law.  NAD claims that both the statutory language and the
legislative history make clear that our proposed 75% requirement is not what Congress intended, while
LHH contends that the 75% goal falls "far short" of what would be a reasonable requirement for pre-rule
programming.  Others maintain that Section 713(b)(2) requires the maximization of captioning for pre-rule
programming "except as provided in subsection (d)," and that our proposal to exempt 25% of that
programming would not fall within any Section 713(d) exception.
      57.One commenter with a hearing disability notes that older programming predominates the
video offerings of many cable networks, and argues that an exemption for such programming will leave cable
television largely inaccessible to persons with hearing disabilities.  NCD claims that, where a programmer
offers few or no new programs, a captioning requirement for some pre-rule material potentially involves no
greater cost than would be incurred by a station which airs mainly new material.  NCD asserts that
Congress did not intend Section 713(b)(2) to create incentives for programmers to rely on older video
materials as a means of avoiding our captioning requirements.
      58.Transition Schedule.  APTS supports a captioning requirement for 75% of any pre-rule
materials still in use after the initial eight or ten year transition period for captioning of new programming,
within a subsequent eight year period.  APTS contends that the initial phase in will allow stations to build
collections of captioned materials, and the subsequent period will allow time to identify and caption pre-rule
programming that will have recurrent use.  MPAA and Viacom suggest a 15 year transition period for
captioning pre-rule programs, with 10% increments every three years and with compliance calculated as
a percentage of annual hours delivered by the provider to consumers.  GSN requests that we adopt a lower
percentage requirement, perhaps 25%, and allow 16 years for implementation.
      59.Commenters representing persons with hearing disabilities propose time frames for pre-rule
programming ranging from three to ten years.  Several commenters propose that such programs be
captioned within the same time frame as new programs.  A few propose a seven year transition period,
while LHH urges a goal of captioning 100% of pre-rule nonexempt programming over ten years, with
increasing 20% increments every two years.  Captivision similarly suggests that captioning for pre-rule
programs could be addressed with a longer implementation period of ten years, or by captioning 75% of the
movies or series that are shown most often.
       2.Discussion
      60.Section 713 requires that we maximize the accessibility of video programming first
published or exhibited prior to the effective date of our rules through the provision of closed captions.  With
respect to the definition of pre-rule programming, the statute refers exclusively to video programming which
was "first published or exhibited prior to the effective date" of the rules promulgated in this Report and
Order.  Thus, a program either will or will not have been first published or exhibited prior to the effective
date of our rules.  We clarify that the relevant date of first exhibition or publication of a program is its first
exhibition or publication, by any distribution method.  Finally, although the standard setting process for
closed captioning decoders for high definition and digital television receivers is well underway, final
standards for such receivers do not yet exist, making it difficult for entities preparing to broadcast or transmit
to such receivers to finally format closed caption content for these uses.  Accordingly, we believe it
appropriate to also define material prepared for such transmission as "pre-rule" until such time as the
necessary decoder standard rules have been adopted by the Commission and are effective.
      61.Our rules establish a ten year transition period for captioning of pre-rule programming, and
require that 75% of all pre-rule nonexempt programming delivered to consumers during the first quarter of
2008 and thereafter must be captioned.  The requirement for pre-rule nonexempt programming will only
apply to such programming that is actually aired by distributors.  As with new programming, compliance
with the 75% requirement for pre-rule programming as of 2008 shall be measured channel-by-channel,
averaged over each calendar quarter.
      62.We believe that the legislative history, in conjunction with the statute's distinction between
captioning requirements for pre-rule and new programming, supports an interpretation of the statute that
requires captioning of a lesser amount of pre-rule nonexempt programming than new programming over a
longer transition period.  The legislative history of the statute illustrates Congress' expectation that something
less than all pre-rule programming would ultimately be captioned:  "[T]he Committee expects that . . .
preexisting programming will be captioned to the maximum extent possible, with the recognition that
economic or logistical difficulties make it unrealistic to caption all previously produced programming."
In contrast, the legislative history states, with respect to new programming, "the Committee expects that
most new programming will be closed captioned."  Thus, we believe that at this time we should not
implement a rule that will require that all pre-rule programming be captioned.  In addition, given the vast
amount of such programming in existence, the limited captioning resources available to produce captions
for all programming at present, and Congress' concern that pre-rule programs not be relegated to the archives
due to the cost of captioning, we believe that the longer, ten year transition period we adopt is the
"appropriate schedule" for captioning of pre-rule programming.  We expect that allowing additional time
to achieve the pre-rule captioning requirement will help to alleviate some of the initial strain on captioning
resources which will be created by our rules, and will ensure a more orderly, efficient transition to
maximized accessibility of pre-rule programming.
      63.We believe that this rule strikes the proper balance between the statutory obligation to
increase the amount of programming accessible through captions, without reducing the amount of pre-rule
programs aired, and the economic and logistical concerns raised by captioning large amounts of pre-existing
programs.  While we sought comment on leaving decisions regarding the captioning of pre-rule
programming to the marketplace, we are concerned that, without any requirements, much of this
programming may remain inaccessible.  We note that many nonbroadcast networks and many broadcast
stations not affiliated with major networks rely on significant amounts of older programming.  Without
captioning requirements for such programs, we believe the viewing choices of persons with hearing
disabilities could be significantly diminished.  Requiring that 75% of pre-rule nonexempt programming be
captioned as of 2008 will provide a substantial increase in the accessibility of such programs, while allowing
significant flexibility in achieving this goal.
      64.We will not establish interim benchmarks for pre-rule programming at this time.  Our
presumption is that market forces will foster increased captioning of pre-rule programs over time, rather than
leaving the bulk of such programming to be captioned at the end of the transition period.  We expect all
distributors to make reasonable efforts to incrementally increase the amount of captioned older programming
they offer prior to the pre-rule captioning deadline.  We will monitor distributors' efforts to increase the
amount of captioning of pre-rule programs to determine whether channels are progressing toward the 75%
requirement.  If sufficient progress is not evident, we may institute specific percentage requirements for the
remaining years of the transition period.  We will also reevaluate the 75% requirement after four years to
determine whether it is appropriate or whether a different percentage should be required.  We recognize that
the expansion of captioning resources and technological developments which may be made during the course
of the transition period may lessen the costs and other difficulties involved with captioning pre-rule programs
such that captioning a greater percentage of such programs will not pose a significant burden.  By the same
token, it might be that a 75% requirement is more burdensome than expected.  By reviewing the status of
captioning of pre-rule programming, we will be able to make adjustments to our rules, if warranted, to ensure
that distributors are maximizing the accessibility of older video programming, while allowing significant
flexibility in achieving this goal.
      65.  We expect that video programming providers will use the flexibility granted by the
transition period to determine cost-effective and practical usage of captioning resources for pre-rule
programming.  We also expect that this flexibility will address commenters' claims that distributors can
neither bargain for captioning to be included in the license, nor refuse to buy uncaptioned programming in
the near term, due to standard, long-term film licensing contracts, which typically extend for several years.
A ten year transition period for captioning pre-rule programs will allow time for most existing contracts to
expire and for distributors and owners to negotiate for an efficient provision of captioning in new and
existing contracts.
      66.With respect to commenters' suggestions that we create an inventory of pre-rule
programming that has already been closed captioned, we recognize that such an inventory could assist
distributors in meeting our captioning requirements, but we believe that the administrative burden of
establishing and maintaining such an inventory is not suited to the regulatory process.  Producers and
programmers that have made the effort to caption their video programs should know which of their programs
have captions and which do not.  We encourage programmers to create inventories of their captioned
programs, and to make such information publicly available, including available to entities that license or
purchase such programs.
   V.MEASURING COMPLIANCE WITH THE RULES
      A.Background
      67.With respect to MVPDs, we sought comment as to whether the percentages of programming
that must be captioned should be applied on a system-wide basis or to each program service or channel
transmitted by an MVPD.  A few commenters support our proposal for a system-wide approach.  For
example, DirecTV states that a system-wide application of the percentage requirements would make a
market-driven allocation of closed captioning resources possible.  Encore claims that this approach will
allow for minor variations among channels and differences in captioning burdens among the programs
carried by different networks.  Primestar and HBO recommend that we allow MVPDs to elect either
system-wide or per-channel compliance.
      68.The majority of commenters who addressed this issue, however, support a channel-by-
channel application, noting that this would be fairer and result in more closed captioning than our system-
wide proposal.  For example, CBS and several others contend that under the system-based approach
MVPDs could pressure one service to caption more programming so that others could caption little, if any,
programming.  NCD submits that we should allow MVPDs some variation within the per-channel
approach, but requests that we prohibit any practices that tend to restrict the viewing options of closed
captioning users.  We also solicited comment on how to determine closed captioning requirements for
programming services using multiplexing to offer multiple programs simultaneously.  NAB states that
since the captions are embedded in each individual program, the program will contain captions before the
signal is multiplexed, and therefore captions can simply be passed through on the multiplexed channel.
SBC argues that any closed captioning offered on multiplexed channels should count toward a provider's
captioning quota, if providers are held responsible for closed captioning compliance.  Captivision contends
that, at a minimum, the passing through of existing closed captions for multiplexing should be mandatory.
      69.We also sought comment on whether a determination that a percentage requirement has been
met should be based on the amount of programming with closed captioning that has been shown over a
month, a week, or some other period of time.  A few commenters with hearing disabilities maintain that
distributors should be required to comply on a daily basis.  Supporters of weekly measurements note that
most distributor's schedules are set up on a weekly basis, and that data collection burdens could become
too great if the time frame were longer than a week.  Commenters advocating monthly measurements note
that such a time frame is reasonable, will reduce the recordkeeping burden on distributors, and will allow
programmers flexibility to determine where to best spend limited captioning dollars, at least in the initial
compliance periods.  TVFN supports monthly measurements, but adds that the time frame should not be
shorter than a week in any event.
      70.Some commenters recommend quarterly measurements.  Lifetime, for example, supports
this approach and states that compliance measurements on a quarterly basis will permit optimum flexibility
for packaging of programming especially during featured periods (e.g., special events months).  A few
others propose annual compliance measurements.  MPAA contends that annual measurements are
appropriate because the volume of new programs aired varies according to the program season.  According
to MPAA, measuring compliance on a weekly or monthly basis would not take seasonal variances into
account, and would provide an incomplete or inaccurate assessment of closed captioning efforts, whereas
measuring compliance annually would give programmers needed flexibility in scheduling.  Similarly, ABC
recommends annual review because it will give providers flexibility during the phase-in period to select
those programs best suited for closed captioning and will encourage the most efficient use of resources for
captions.
      71. We requested comment on whether compliance with our rules should be the responsibility
of the MVPD or broadcaster where a broadcast station is retransmitted by an MVPD.  Producers and
distributors are concerned about the apportionment of responsibility for closed captioning of broadcast
programs that are retransmitted by MVPDs.  In such instances, CBS contends that the broadcast station's
obligation to the MVPD should not go beyond the station's ordinary closed captioning responsibilities under
the rules.  On the other hand, SBC maintains that broadcast stations should bear exclusive responsibility
for captioning their programming, if distributors are held responsible for captioning generally.  Persons
with hearing disabilities generally oppose a rule which would allow MVPDs to count broadcast captioning
towards their percentage requirements. As CAN contends, such a rule would allow some distributors to
make no increase in closed captioning for several years.
      72.HBO requests clarification that any non-English language program captioning requirement
ultimately adopted does not extend to services which offer a second language soundtrack, as this would
require a single program to be captioned twice, doubling the cost of captioning.  HBO also seeks
clarification that non-English language programming which already contains English subtitles need not be
captioned, and that discrete portions of programs which contain non-English dialogue (e.g., an English
language war film that includes scenes where foreign soldiers speak in another language without translation)
need not be captioned.
      73.In the Notice, we tentatively concluded that it would not be appropriate or necessary to
restrict captioning methodologies.  We were concerned that any restrictions on the method of captioning
would prevent certain types of programming from being captioned.  For example, we noted that the ENR
method does not provide complete captioning when not all aural portions of a program are scripted, yet it
has the advantage over other methods in that once an initial investment is made in equipment and software,
it is relatively cost free.
      74.Comments on this issue focus on whether the ENR method of captioning should be
acceptable for compliance with our rules.  Parties supporting our proposal not to restrict the use of this
method generally state that its use will permit the captioning of certain types of programming, especially
local news and other live programs, that otherwise would not be captioned in the short term.  RTNDA
claims that the ENR method of captioning can yield highly reliable captions for the majority of live, local
news content at modest cost.  In this regard, Pulitzer asserts that the content of the limited amount of non-
scripted material is often communicated in other ways (e.g., weather reports that contain graphical and visual
elements).  WGBH states that, if carefully and intelligently prepared, ENR captioning can provide access
to large portions of news programs.  In this regard, WGBH states that we should indicate that users of the
ENR method need to enter additional script transcriptions into their systems.  It suggests that we require that
a percentage of a program (e.g., 50% or 75%) be accessible through captions if ENR is used.  Similarly,
MCS states that a program should not count towards compliance if more than 20% is not captioned.
      75.Several commenters are concerned about the cost of real-time captioning should it be
mandated for their live programming.  For example, RTNDA claims that a requirement for real-time
captioning could add at least $100,000 to a station's annual budget.  Time Warner estimates that the cost
of stenocaptioning its 24-hour local news service would be $500,000 a year.  Allnewsco indicates that its
ENR system cost $100,000 and that a requirement to use real-time captioning would double the per hour cost
of its programming. These commenters assert that the costs of mandated real-time captioning would likely
result in the reduction or elimination of the local news services they offer.  In addition, commenters
indicate that, if ENR is declared inadequate, it is not certain that all programs currently captioned would
remain captioned, and a loss of accessibility might result.
      76.Alternatively, NAD, Captivision, and Cassidy maintain that the use of the ENR method is
not sufficient to satisfy the intent of Section 713 to make video programming "fully accessible."  They
contend that ENR does not satisfy full accessibility since it does not provide captions for many elements of
a news program and, therefore, is not the functional equivalent of the audio portion of the program.
NAD rejects any proposals to find the use of ENR acceptable, including those proposals to permit the use
of ENR if a specified percentage of the programming is captioned using this method.  While noting our
concern about the availability of a sufficient number of stenocaptioners, NAD argues that, as captioning
becomes required, the number of captioners will increase to fill the need.  On this basis, NAD and a few
other commenters state that any rule which permits ENR captioning should be limited to one or two years
at most.
      77.We further proposed that a distributor that receives a program with captions, and does not
edit that program, be required to deliver that programming with captions, regardless of whether the
distributor has already met any percentage requirement. Most commenters that address this issue agree
with this proposal.  We also sought comment on whether distributors that edit pre-recorded captioned
programming should be required to reformat the captions of such programming.  Many commenters
support a requirement that previously captioned programming be reformatted if necessary, citing the
relatively low cost of reformatting.  NAD opines that a rule for previously captioned programming that
does not encompass reformatting will not significantly improve access.  LHH contends that distributors
accept certain costs of editing to add commercials, and that reformatting should be viewed as part of those
costs.
      78.In contrast, NAB states that a requirement that previously captioned programs be transmitted
with captions is unnecessary, because this is current practice for programming that is not edited prior to
airing.  However, NAB argues that it would be unreasonable to expect broadcasters that receive programs
with captions that are damaged or in need of reformatting to bear the burden of repairing or reformatting
those captions.  According to NAB, this would require broadcasters to screen every program that is delivered
to the station, determine what the original text of the captions was and how it was formatted, and then repair
or reformat the captions.  MPAA and CBS also oppose a rule which would  require previously-captioned
material to be reformatted.  CBS contends that the costs of reformatting are substantial and should not be
imposed on a distributor that is already meeting its obligations.  MPA claims that such a rule would impose
unnecessary costs and discourage distributors from editing programs to add local content or meet other local
requirements.
      B.Discussion
      79.Compliance with our closed captioning requirements will be measured on a channel-by-
channel basis.  Measurement of compliance on a channel-by-channel basis was supported by the majority
of commenters on this issue.  We are persuaded that the system-wide approach proposed in the Notice would
allow MVPDs to require some services to offer more captioning to balance out services that offer little or
no captioning.  In addition, MVPDs might be required to monitor the amount of captioning on each channel
they carry and then determine whether they meet an overall system average.  Moreover, by measuring
compliance on a channel-by-channel basis, a network will be able to set budgets and hire staff based on the
requirements applicable for its own programming, without having to factor in the efforts of others.  Thus,
we conclude that a system-wide approach would prove administratively burdensome for video programming
distributors.  Furthermore, we do not believe that a system-based approach is consistent with the goal of
ensuring captioning of diverse programming services.  We believe that it is important to increase the
availability of closed captioning on each channel of video programming over the transition period to provide
persons with hearing disabilities a wide range of programming choices.
      80.We believe that holding video programming distributors responsible for captioning, and
measuring compliance with our rules on a channel-by-channel basis, adequately address commenters'
concerns regarding captioning responsibility for broadcast stations retransmitted by MVPDs.  Broadcast
stations will be responsible for ensuring their compliance with our rules in their role as video programming
distributors.  Broadcasters will caption to meet their requirements, and MVPDs will be required to pass
through those captions intact.  Also, in view of our channel-by-channel compliance requirement, each
channel of a multiplexed signal will be obligated to meet the minimum requirements of our rules.  We
recognize, however, that in some situations, such as where a "video on demand" type of service is in
operation or the content of a channel is otherwise dependent on specific subscriber requests, it may be
difficult, if not impossible, to schedule programming with the advance knowledge that it will meet the
applicable standards.  In such situations, we will only require that a reasonable judgment be made in advance
as to the likely output of the channel, with captioning provided based on this estimate.  To the extent
necessary, Commission guidance also may be sought in advance regarding the appropriate methodology for
determining this estimate and for compliance with our captioning requirements.
      81.Compliance with our rules will be measured on a quarterly basis.  We believe that a
calendar quarter for measuring compliance with our closed captioning rules provides a reasonable balance
among the various alternative time periods suggested, especially during the transition period.  Commenters
indicate that programmers often set aside weeks or months for special programming.  Thus, by measuring
compliance over a calendar quarter, programmers will have the flexibility to incorporate specials and
thematic programming into their schedules while still meeting our closed captioning benchmarks.  Shorter
compliance periods would hinder such flexibility and could prove administratively burdensome.  Periods
such as a day or a week also may not take into account normal scheduling differences.  For example,
program schedules often differ between weekdays and weekends.  Similarly, there may be unusual weeks
of scheduling, such as a local sports tournament or elections.  We believe that a programmer should have
the flexibility to consider the nature of these programming differences when determining how best to meet
the captioning requirements.  We also reject longer measurement periods, such as six months or a year.  We
are concerned that these longer periods for measuring compliance would make it more difficult to enforce
the rules during the transition period and after our permanent captioning requirements take effect.  In
particular, it would take months for complaints to be resolved since a period of up to a year may have to
elapse before we will be able to determine whether an alleged violation has occurred.
      82.We establish a number of additional rules with respect to the measurement of compliance.
For determining the hours of programming with captioning, a video programming distributor may consider
a program to be the length of the time period for which it is scheduled.  We will permit video programming
distributors to count any new exempt programming that is captioned towards their requirements, except that
which is distributed during late night hours during the eight year transition period.  During the transition
period, distributors may not count any pre-rule captioned programming toward the new programming
benchmark.  Any captioned pre-rule exempt programming may be counted towards the requirements for
pre-rule programming after they become effective in 2008.  In addition, when video programming is no
longer exempt, then it becomes subject to the rules applicable to all programming.  Moreover, we
recognize that MVPDs sometimes combine portions of different full-time programming networks and
services to create one channel that is distributed to viewers.  Where a video programming distributor
combines the  programming of two or more programming networks (or other sources of programming) to
create a single channel, that channel will be considered to be in compliance if each of the programming
sources is in compliance where it is carried on a full time basis.  That is, each network carried on a shared
basis will be deemed in compliance based on its programming and not just the hours selected by the
distributor for its shared channel.
      83.We also will permit video programmers to count towards compliance with our rules any
program that is open, rather than closed captioned.  Open captioning provides the same information as closed
captions but includes this information as part of the primary video signal instead of carrying the captions on
line 21 of the VBI.  Thus, the information is available to all viewers without decoding.  Because this
technique ensures the same accessibility as closed captioning, we will permit video programming providers
and distributors to use open captioning.  Similarly, we permit subtitles that are available to all viewers to
count towards compliance if they are in the language of the target audience.  While we recognize that
subtitles may provide only the dialogue of a program visually, and not some of the other audio portions of
the programming, we believe that they can make programming that might not otherwise be accessible
available to persons with hearing disabilities.  In addition, where a program includes a second language
soundtrack on its secondary audio programming ("SAP") signal, the second audio signal need not be
captioned.  We also conclude that discrete portions of programs which contain non-English dialogue, such
as where characters in an English language film speak in another language without translation, need not be
captioned.
      84.We will not adopt any limits on the methodology that can be used to create closed captioning
and will permit the use of ENR.  We may alter this policy in the future, but, at this time, it appears
reasonable to permit its use.  We are concerned that certain portions of live newscasts often remain
uncaptioned even with the use of ENR because they are not scripted, and as commenters representing persons
with hearing disabilities point out this method is not the functional equivalent of the audio portion of the
programming.   However, the record before us provides conflicting evidence regarding the number of real-
time captioners for programming, primarily live newscasts, for which ENR is an alternative method.  For
example, MATP reports that there are 542 court reporters certified as real-time stenocaptioners and hundreds
more registered with real-time captioning skills, yet VITAC, one of the larger captioning agencies, states
that there is a shortage of qualified stenocaptioners for real-time captioning.  However, we recognize that
an enormous amount of programming that has not been captioned up until this time will soon have to be
captioned.  We believe that the interests of persons with hearing disabilities and the video industry are served
by permitting the use of ENR at this time.  We conclude that ENR will permit such programming to be made
accessible under the transition schedule we adopt at a reasonable cost.  Accordingly, consistent with
Section 713, our decision to permit ENR will promote accessibility without imposing a captioning
requirement that is an economic or undue burden.  We also hope that once an entity invests in the software
needed to convert a teleprompter script into captions, it will have an incentive to use this equipment for all
or a significant portion of its live programming (e.g., all its newscasts), and not just the amount of
programming needed to satisfy the transition benchmarks.  Thus, additional programming may be made
accessible at a faster rate.  We expect to revisit this issue in the future to evaluate whether ENR provides
sufficient captioning of news programming that is of such importance to persons with hearing disabilities.
In the meantime, we urge video programming providers to script additional portions of their programming,
especially weather and sports reports.  We also believe that, if ENR is used, an introduction to or short
description of the non-captioned segment (e.g., live remote) should be provided to allow persons with
hearing disabilities to be aware of the topic of the story.   We believe that it may be appropriate to reconsider
the use of ENR as a means of captioning once the cost of real-time captioning declines, the availability of
captioners increases, and the technology to provide live captioning from remote locations becomes more
readily available.
      85.In addition, we will require distributors to pass through existing captions where the
programming they distribute is received with captions, regardless of whether the distributor has already met
the relevant captioning benchmark.  This requirement will apply to both new and pre-rule programming
when distributors deliver programming to consumers without editing.  This requirement will not impose a
burden on distributors, as all distributors have the technical ability to pass through captioning and it simply
requires them to ensure that their technical facilities are in proper working order to pass through the
captioning data.  Thus, all video programming distributors will be required to deliver all programming they
receive that contains closed captioning, regardless of the programming source, to consumers with the
captions intact.
      86.We recognize that persons with hearing disabilities find it frustrating when a program
previously viewed with captions is shown at another time without captions.  In some instances, the reason
for this is that the program has been edited, which may require that the captions be reformatted.  We
recognize that reformatting involves some expense and effort in order to ensure that the captions correspond
to the edited program.  We believe that the reformatting of captions when programming is edited is an
important part of providing access  to video programming consistent with the intent of Section 713.  Thus,
we expect that video programming providers will make the reformatting of captions a common practice when
programs are edited.  However, we are aware that a requirement, in addition to the other requirements of our
rules, that every program that has previously been captioned have its captions reformatted before it is
redistributed to consumers could be economically burdensome in some cases because of the type or amount
of editing that is done.  Accordingly, we will not at this time adopt a requirement for reformatting, although
we strongly encourage video programming providers to reformat captions as part of the editing process.
We also anticipate that more reformatting of captions will be done as the marketplace evolves, video
programming providers become more accustomed to captioning their programming and technological
changes make reformatting easier, less expensive and less onerous.  We intend to review this decision as our
closed captioning rules are implemented to determine whether our expectation that reformatting will become
an industry practice is fulfilled.  At that time, we will consider whether a reformatting requirement is
necessary.
VI.  EXEMPTIONS FROM THE CLOSED CAPTIONING RULES
     A.   Exemptions Based on "Economically Burdensome" Standard
      1.Background
      a.Exempt Classes of Programming
      87.The statute allows the Commission to "exempt by regulation programs, classes of programs,
or services" for which the Commission determines that "the provision of closed captioning would be
economically burdensome."  We sought to establish a number of general classifications of programming
that would be exempt from our requirements because captioning would be economically burdensome.  We
requested detailed comments regarding the appropriate class exemptions that would be consistent with the
statutory mandate to make video programming fully accessible to individuals with hearing disabilities.  In
particular, we sought comment on whether a definition of economic burden should be based on factors such
as relative market size, degree of distribution, audience ratings or share, relative programming budgets or
revenue base, lack of repeat value, or a combination of factors.  We also requested comment on whether
specific types of programming should be encompassed by our general class exemptions.
      88.Commenters representing persons with hearing disabilities and captioners generally argue
that any class exemptions we adopt should be narrowly drawn, with some commenters recommending that
there be virtually no general exemptions.  SHHH and NCI ask that any class exemptions we adopt be
subject to review within two years, arguing that Congress did not intend to exempt certain types of new
programming forever.  Captivision contends that general exemptions should not apply wherever a program
has high public interest value and would affect "the deaf community's interaction with their environment."
NCI argues that we should address exemption requests by adopting longer implementation periods for the
types of programming for which exemptions are sought.  CAN asserts that exemptions should be
conditioned on the use of textual and graphic summaries, to the maximum extent reasonable.
      89.AIM maintains that budget size should be a factor for determining exemptions, while
Captivision states that factors such as market size, degree of distribution, audience, ratings or share are
irrelevant to Congress' intent of full accessibility.  USSB contends that, in crafting exemptions to our
closed captioning rules, we should consider all the factors enumerated in the Notice, as well as the nature
and cost of providing captions and the impact of captioning upon the operations of providers, owners and
programmers.  Another commenter urges that, as with the Americans with Disabilities Act ("ADA"),
consideration for exemptions should take into account the revenue base of a programmer's parent
company.
      90.Commenters define a few classes of programming that should be exempt or criteria for
determining whether a captioning requirement would be economically burdensome.  Principally, however,
commenters addressed specific types of programming, particular programming services, and classes of
providers and whether they should be exempt under this standard.  We first describe the class exemptions
proposed by commenters, including new programming networks, overnight programming, local
origination programming, certain locally produced public television programming, non-profit
programmers, and programming for which captioning costs would represent 10% or more of the
production budget.  Next we discuss the comments regarding specific types of programming that were
enumerated in the Notice.  Then, we present the comments of BIT, QVC, the Weather Channel, GSN, and
Prevue that seek waivers as individual services.  Finally, we describe the comments regarding exemptions
for classes of providers, such as ITFS licensees, wireless cable operators using ITFS frequencies, LPTV
stations, and cable systems.
      91.New Networks.  Numerous commenters recommend an exemption, at least initially, for
programming offered by new programming networks, arguing that the economic burden of captioning could
mean the difference between success and failure of a new network.  Such an exemption, Viacom contends,
is consistent with Congress' objective of eliminating market entry barriers for small entities.  Commenters
assert that launching a new network can cost $100 million or more, and that it generally takes at least five
years for new networks to reach the break even point.  Outdoor Life maintains that affiliation fees and
advertising revenues, which are the main sources of cash flow for programming networks, are limited for
new networks initially because many multiple system operators ("MSOs") demand one or more years of free
programming service in exchange for carriage on a cable system, and major advertisers are unwilling to place
advertisements on new networks until they reach a threshold subscriber base of 15 to 20 million
subscribers.  A few of these commenters ask that we exempt new networks from our captioning
requirements for at least the first five years from their launch dates, and thereafter allow these networks
the same amount of time to phase in captioning of new programming that established networks are granted
under our rules.  Several parties urge us to exempt networks that have limited subscriber bases from
captioning requirements even after their first five years.  These parties argue that a network should be
exempt from our requirements until it reaches a minimum number of subscribers, with the suggested
subscriber thresholds ranging from 15 to 50 million.  In support of this proposal, Outdoor Life notes that
exempting low-penetrated networks will affect programming that is provided to only 17% of the collective
number of subscribers to all national, basic, nonbroadcast networks.  Additionally, it proposes that a
network that reaches the 20 million mark but later falls below it would not revert to exempt status.  Rather,
such a network would be required to seek an exemption from captioning requirements under the undue
burden procedure.
      92.Late Night Programming.  A number of programmers seek a class exemption for overnight
news feed services that are distributed during the late night or early morning hours.  These programs are
typically compiled from a variety of sources, and consist of unscripted, uncaptioned materials edited together
and redistributed to network affiliates around the country.  Commenters contend that such compilations
would require real-time captioning, the cost of which is not warranted for programming aired late at night
when viewership and advertising revenues are low, and where the programming has no residual market
value.  Others request an exemption for all late night programming, citing the low viewership, license fees
and advertising revenues generated by programs aired between 2:00 a.m. and 6:00 a.m. and the limited
resources available for captioning of all programs as support for such an exemption.
      93.Local Origination Programming.  Some commenters suggest that local origination
programming should be exempt from our captioning rules because it serves significant community public
interests, but operates on extremely low budgets.  According to commenters, much of this programming
consists of unscripted, live programs such as talk shows, local sporting and charity events, and public affairs
programming, which would be very expensive to caption.  US West and SCBA note the similarities
between local origination and PEG access programming, which we tentatively proposed to exempt.  Time
Warner and CBA contend that our rules should balance the need for captioning against the risk of
suppressing this type of programming.
      94.Noncommercial Programming.  APTS requests an exemption for all local programs
produced by small noncommercial television stations and for all locally produced programs offered to the
Program Exchange Service.  APTS defines small noncommercial stations as those that operate with annual
budgets of less than three million dollars.  APTS claims that both non-commercial programs and
programming produced locally and distributed through the Program Exchange Service have minimal
budgets, and that a captioning requirement for these programs will cause stations to stop producing them,
as captioning costs will significantly increase the costs of production for such programming.  Similarly,
APS proposes a general exemption for public broadcasters, citing funding concerns for all public broadcast
stations and programming.  USSB seeks an exemption for the noncommercial educational and
informational programming DBS providers will be required to provide under Section 335(b)(1) of the
Communications Act, claiming that these programs typically operate on relatively small budgets and
captioning is likely to place a heavy burden on the producers of such programs.
      95.Nonprofit Networks.  A few commenters propose that we exempt nonprofit program
networks from our captioning requirements.  EWTN seeks an exemption for all nonprofit networks as a
class, noting that Congress specifically enumerated nonprofit status as a factor we should consider in crafting
our exemptions.  In the alternative, EWTN seeks a six-year exemption for all nonprofit networks that have
not broken even in any one of the five years preceding the effective date of our rules, or for which captioning
costs are estimated to exceed 25% of the programming budget in any phase in period.  Using its experience
as an example, EWTN contends that nonprofit programmers typically receive no advertising revenues or
subscriber fees, but are supported by viewer contributions.  EWTN claims that captioning costs will add
significantly to programming expenses for nonprofit programmers, noting that viewer contributions may not
cover existing expenses and are unlikely to cover the additional costs of captioning.  Similarly, the
California Channel proposes an exemption for regional or state public affairs cable networks which televise
legislative proceedings and are recognized as exempt organizations under section 501(c)(3) of the Internal
Revenue Code.  California Channel is also funded exclusively by contributions and offers no advertising,
and contends that a captioning requirement will result in either the significant reduction or elimination of
its service.
      96.Program Budget Concerns.  Kaleidoscope proposes that programming for which captioning
costs would amount to more than 10% of the program budget should be exempt from our captioning
requirements.  Kaleidoscope asserts that caption costs above this threshold may make captioning
economically burdensome.  Similarly, Viacom requests an exemption for programs which are either
produced on budgets of $100,000 or less, or that earn license fees of up to $10,000.  Viacom claims that such
an exemption will nurture alternative programming sources and diversity of programming.
      97.Non-English Language Programming.  We observed that captioning of non-Latin-based-
language programming is not technically feasible at this time.  A number of commenters concur with this
observation.  However, some commenters claim that advanced television captioning standards are
incorporating provisions for non-Latin-based alphabets and recommend that we reconsider any exemption
of non-Latin-based language programs when technology to caption such programming becomes widely
available.
      98.Most providers that comment on the issue support a complete exemption of non-English
language programming from our captioning requirements.  Some of these commenters request, at a
minimum, an exemption for all non-English language programming that is produced in or acquired from
foreign sources.  They assert that:  (a) the scarcity of captioning services for non-English language
captioning is greater than that for English captioning; (b) much non-English language programming is
imported from countries which do not have captioning requirements; (c) the market for such programs in
the U.S. is small, as are the advertising revenues these programs generate, but the costs of non-English
language captioning are higher than those for English captioning; and (d) a captioning requirement would
likely result in a reduction in the amount of non-English language programming offered to all viewers.
Lincoln and KCSI note that English language captioning of non-English language programming would be
of little use, given that the intended audience for such programs is viewers who speak little or no English.
      99.Commenters representing persons with hearing disabilities favor a captioning requirement
for programming in non-English languages using Latin-based alphabets.  For example, AIM asserts that
where there are large, non-English-speaking populations, captioning of essential news and information
should be required at a minimum.  ALDA declares that non-English language program captioning is
warranted to make non-English language programming accessible to late-deafened adults who are already
fluent in those languages, and to give viewers with hearing disabilities the same opportunities that other
viewers have to learn non-English languages through video programming.  NAD and LHH assert that non-
English language captioning resources are readily available since many captioning agencies employ
captioners proficient in other languages, including Spanish, French and German.  However, CAN
acknowledges that a temporary exemption for smaller providers of non-English language programming may
be warranted.
      100.We also sought information on the benefits of captioning non-English language
programming that serves significant population groups, such as Spanish language programming.  Televisa
claims that the market for Spanish language captioning is extremely limited, estimating that there are only
1,733,000 Spanish-speaking persons with hearing disabilities in the U.S., and that only 185,000 of those
individuals speak only Spanish.  VITAC submits that few schools teach Spanish stenotypy, and claims
it would take at least four years to train Spanish-speaking stenocaptioners to real time caption Spanish
newscasts.  The company knows of no stenocaptioners capable of non-English real time captioning in any
other languages.  Due to these limitations, VITAC recommends that the transition period for real time
Spanish language captioning be 25% in six years, 50% in eight years, and 100% in ten years.  It notes,
however, that off-line Spanish or other Latin-based alphabet captioning could be started within a matter of
months.
      101.Primarily Textual Programming.  We proposed to include video programming that is
primarily textual, including channels dedicated to on-screen program schedules or guides, stock tickers and
bulletin boards, and possibly other selected programs, in the classes of exempt programming.  We also
requested commenters to consider what, if any, definition of primarily textual video programming is needed
for our rules.  Commenters that address this proposal generally agree that textual programming should be
exempt.  A number of commenters suggest that the definition of such programming should take into
account the purpose of the audio and whether the audio track provides any information necessary to
understand the program, while SHHH would evaluate the audio track for content and whether or not it is
duplicated in text.  Prevue proposes that the Commission exempt:
     any programming service which is substantially comprised of alpha-numeric text, with or
     without accompanying video or graphic elements, and provides viewers with (i) television
     programming listings, (ii) program schedule information and/or (iii) promotional and/or
     purchase information regarding programming or services, which in each case are specific
     to such viewers' multichannel video programming distributor.
      102.PEG Access Programming.  We solicited comment on whether PEG access programming
should be encompassed by our general exemptions, and whether there are certain types of PEG access
programming for which we should require captioning.  Most commenters who discuss this proposal favor
a complete exemption of PEG access programming from our closed captioning rules.  Many agree with our
initial assessment that a captioning requirement would be financially burdensome for PEG programming due
to the modest budgets on which most PEG programming operates.  A number of commenters contend that
requiring captions will defeat the goal of providing mass media access to those who otherwise would not
have it, by effectively turning free access into access at $500 to $2500 an hour (i.e., the cost to caption).
Some others note that a captioning requirement will likely result in a reduction of the amount of PEG
programming offered to all viewers.
      103.Many commenters urge us to either adopt a blanket exemption of PEG access programming
and programmers from our captioning requirements or "identify and provide for alternative funding sources"
to allow for some captioning of PEG programs.  BellSouth maintains that it would be more efficient to
leave PEG captioning requirements to negotiation between local franchising authorities and cable operators
rather than to have producers besiege the Commission with individual exemption requests.  Kansas City
contends that a federal requirement that cities expend public money to caption government access
programming could result in the limitation of available PEG programming or preclude the use of local funds
for activities preferred by local residents.
      104.Commenters representing persons with hearing disabilities oppose an exemption for PEG
access programming.  Most claim that PEG access provides information about important community events
and issues, and that many communities already are or plan to provide captions for some of this
programming.  Many also assert that there are low cost options for captioning such programming, such
as new do-it-yourself hardware and software.  They also state that a small fee can be added to monthly
cable bills to finance PEG captioning, as has been done by the City of Fremont, California.  In addition,
NAD notes that the ADA requires effective communications access to local government hearings and
information provided by PEG programming.  NAD suggests that, where real-time captioners or court-
assisted reporting services are used to provide access to local government meetings, the captions generated
could be used for simultaneous television transmission of those proceedings.  Captivision declares that
captioning costs could be cut by having the captions manually rolled or pop-up instead of time-coded onto
the master tape, and preparation time could be reduced by making scripts available on disk.  This
commenter acknowledges that live programs would have to be real time captioned, but notes that such
programs could be recorded and the provider could then use a captioned submaster for rebroadcast.
      105. Leased Access Programming.  We did not propose to exempt leased access channels from
our captioning requirements since these channels are intended to serve as commercial outlets for
programming and, to some extent, are expected to be used by nationally-distributed programming
networks.  Commenters generally support our position.  However, Alphastar declares that leased access
programming, including nonprofit educational and informational programming which may ultimately meet
the DBS public service obligations, should be exempt.
      106.Instructional Programming.  We sought comment as to whether locally produced and
distributed instructional programming should be encompassed by our general exemptions, and requested
comment on whether there are alternatives to an exemption for this class of programming that would allow
it to be closed captioned without imposing significant economic burdens that would result in a loss of certain
programs.  We also solicited comment regarding whether nationally-distributed instructional programming
should be encompassed by our exemptions.  A number of commenters generally support an exemption for
instructional programming.  Encore contends that the cost of captioning educational and instructional
programming is prohibitive for the producing institutions, and would exceed the license fees paid by Encore
to the producers.  Encore claims that it would be forced to drop instructional programming if captioning costs
were to increase license fees for the programs by more than 100%.  APTS supports an exemption for
locally produced and distributed educational and instructional programming, as well as for ITFS programs,
noting that such programs have low budgets.  It also states that an APTS survey indicates that public
stations would not be able to provide such programs if captions were required.
      107.Commenters representing persons with hearing disabilities oppose exempting  instructional
programming from our captioning requirements.  For example, AIM asserts that  prerecorded, nationally
produced instructional programming should be captioned, and declares that large cable companies should
help pay for the captioning of local instructional programming.  ALDA contends that educational programs
broadcast by colleges and universities should not be exempted, while another commenter claims that such
programming should be captioned by the school since this is covered by earlier education laws.
      108.ITFS providers and wireless cable entities request a specific exemption for ITFS
programming.  These commenters assert that the effect of a captioning mandate for ITFS would be the
reduction or withdrawal of such programming from distribution.  A few commenters claim that they
have never received a request for captioning of their ITFS programming.  Most of these commenters also
argue that other federal laws already require ITFS providers to accommodate their students' disabilities on
a more individualized basis, and that therefore an exemption for such programming generally will not result
in a deprivation of service to the disabled.  Furthermore, Arizona State Board notes that ITFS
programming is clearly defined in Section 74.931 of the Commission's rules, and can therefore be narrowly
defined as a class for exemption purposes.
      109.Although it does not explicitly oppose an exemption for instructional programming, WGBH
urges us to consider the range of instructional programming budgets, the growing use of such programming
in schools, and the lack of accessible programming for deaf and hard-of-hearing students when considering
exemptions for this type of programming.  Lansing maintains that educational programming should have
high priority in the requirements for captioning and that, under the ADA and the Rehabilitation Act of 1973
("Rehabilitation Act"), there should be no exemption for educational materials.
      110.Advertising.  We sought comment on whether all or only certain types of advertising should
be encompassed by our general exemptions.  Many commenters support an exemption for all short-form
commercials, arguing that sufficient market incentive exists to encourage increased voluntary captioning of
such programs.  Most of these parties also support our conclusion that the cost of captioning commercials
will be more burdensome for local advertisers, and may prevent local commercials from airing.  ALTV
contends that keeping track of whether commercials are captioned for purposes of compliance with the
proposed transition benchmarks would pose an inordinate burden on local television stations.
      111.Some parties argue that all advertising, including long-form or infomercial advertising,
should be exempt from our captioning requirements.  Similarly, NAB requests that television stations not
be required to caption advertisements, infomercials or similar programs that the station is paid to air and that
are produced by entities not under the station's control.  CBS argues that requiring providers to caption
commercials or infomercials would effectively force providers to subsidize advertisers' messages.  Access
TV contends that the low production budgets and limited audience base for infomercials, along with the
unavailability of DOE captioning funds for such programs, support a determination that it would be
economically burdensome to require infomercials to be captioned.  Commenters assert that much of the
pertinent information presented in the audio track of the infomercial is also presented graphically or textually
on screen, and that adding captions could block much of the information already displayed textually.
DMA and NIMA maintain that the Commission's Telephone Relay Service ("TRS") requirements will help
to ensure that viewers with hearing disabilities are able to access telephone information about the products
offered in the infomercial.
      112.Commenters representing persons with hearing disabilities disagree.  For example, a few
commenters argue that many, if not most, businesses who make use of television advertising can easily
afford the cost of captioning, which these commenters claim is only about $200 per commercial.  AIM
maintains that national commercials certainly should be captioned, and suggests that captioning of local
commercials could be phased in over time.
      113.Home Shopping Programming.  We tentatively concluded that home shopping programming
should not be exempt from our captioning requirements because all of the descriptive material and
information provided by home shopping program hosts is not currently available in textual form on the
television screen.  Captioners and organizations representing persons with hearing disabilities support this
proposal.  Captivision maintains that a portion of the revenues generated by home shopping can fund
captioning. ALDA argues that, without captioning, consumers with hearing disabilities will be unable to
make the same informed decisions in making their purchases as those who depend on audio information.
      114.Producers of home shopping programs and others involved in direct marketing urge
exemption of home shopping programs, contending that all pertinent information which is necessary to make
a buying decision is displayed graphically, and that captions would obscure some of this information.
QVC asserts that the question should not be whether the home shopping host's oral presentation is
completely reproduced in on-screen text or graphics, but whether the programming, taken as a whole, is
accessible.  HSN recommends that we require electronic retailers to provide product, price and payment
information as visual text a substantial percentage of the time, but exempt electronic retailers from general
captioning requirements.  In addition, the commenters note that, since home shopping programs are
generally telecast live, captioning would require real time captioners, but the quality and error problems
associated with real time captioning could cause consumer confusion or misinformation about products
offered.  QVC observes that such inaccuracies could inadvertently raise disclosure and deceptive
advertising issues, and argues that a class exemption for home shopping programming is particularly
warranted in light of limited captioning resources available to produce real time captions.  The commenters
also state that home shopping programs are highly perishable, which would prevent captioning costs from
being spread out over multiple airings.  DMA and NIMA maintain that the economics of home shopping
programs require any increase in the costs of program production to be reflected in the cost of the products
sold, which could make some products unmarketable.
      115.Interstitials, Promotional Announcements and Public Service Announcements.  We
tentatively concluded that interstitials and promotional advertisements should be exempt from our captioning
requirements, provided that the basic information provided by these types of announcements is displayed
in some textual or graphic form in order to provide accessibility to persons with hearing disabilities.
Program producers and providers favor an exemption for interstitials and promotional advertisements.
ABC asserts that funds spent captioning such material would be better spent on new program captioning.
Others cite the large number of such programs, the brief period from creation to airing, and the short shelf
life of this type of programming, and note that captioning would be expensive, logistically difficult, and offer
little public benefit.  ALTV alleges that requiring captioning of such programming will render assessments
of compliance with percentage requirements difficult, since stations would have to review every minute of
their schedules rather than simply reviewing individual programs.  APS seeks clarification that this
exemption would include public television licensees' programming of five minutes or less duration, while
HBO and C-SPAN would define "interstitials" as programs of 15 minutes or less in length, and would
exempt all such programs from our captioning requirements.
      116.MPAA disagrees that interstitials and promotional advertisements should be required to
display their basic message in text or graphic form in order to qualify for exemption, maintaining that fillers,
bumpers and wraparounds, which are not primarily textual, often have a limited repeat value, and are
therefore not cost-effective to caption.  In contrast, Captivision agrees that interstitials and promotional
advertisements that provide a graphic display of audio content should be exempt, but contends that, though
the short production time of these programs makes captioning more difficult, it does not necessarily make
captioning unduly burdensome.
      117.Similarly, a few video programming providers have requested an exemption for public
service announcements ("PSAs").  A PSA is an announcement for which no charge is made and which
promotes programs, activities, or services of Federal, State or local governments (e.g., recruiting, sales of
bonds) or the programs, activities or services of nonprofit organizations (e.g., Red Cross blood donations)
and other announcements regarded as serving community interests.  Parties supporting such an exemption
claim that:  (1) PSAs are similar to interstitials in that they are unscheduled, brief pieces of programming
prepared within a short time frame; (2) PSAs are often produced free of charge by entities who may not have
closed captioning capabilities; and (3) a captioning requirement would increase the production costs for
PSAs significantly.
      118.Commenters representing persons with hearing disabilities generally support our proposal
to exempt interstitials where the basic information provided by these types of programs is displayed in
textual or graphic form.  However, despite its support for an exemption where graphics are offered, ALDA
submits that as a general rule, closed captioning should apply to all interstitials.  NAD and Council of
Organizational Representatives argue that the national broadcasters, large producers and cable networks
could handle the rapid turn-around time for captioning of interstitials by hiring in-house captioners.  They
contend that only to the extent such programming is provided on a local basis with little funding should it
qualify for exemption.  For this latter category of interstitial programming, these commenters would require
graphic display of the basic information.
      119.Political Advertising.  We sought comment on whether political advertising should be
exempt from our captioning requirements, noting that a captioning requirement could prevent some of this
type of advertising from airing.  A few commenters argue that a captioning requirement is unnecessary
because political advertisers have strong incentive to caption.  Captivision notes that a lack of captions will
send a message about the candidate. ALTV agrees that a captioning requirement will discourage some
candidates from advertising on television, especially candidates in local elections.
      120.Deaf advocacy organizations assert that political advertising provides information about
candidates that is important to the informed exercise of the constitutional right to vote, and therefore this
advertising should not be exempt from our captioning requirements.  Some of these commenters request
that we mandate captioning of political  advertisements for national elections and for any election for
which the candidate receives local or federal government funding.  NAD contends that it is unlikely a
candidate who can afford a television commercial cannot afford the additional $200 to caption it, and urges
that exemptions for local political advertisements should only be granted on a case-by-case showing of undue
financial burden.  NAD would require those candidates who can demonstrate such a burden to provide text
or graphical displays of the information conveyed by the commercials.
      121.We also sought comment on whether a requirement for closed captioning of political
advertisements would be inconsistent with the anti-censorship provisions of the Communications Act.
Several commenters argue that the anti-censorship provisions of Section 315 would prevent providers from
captioning political advertisements, and maintain that candidates, not providers, should be required to
caption such advertisements if they are not exempt.  CBS asserts that forcing providers to caption political
advertisements raises First Amendment implications, because such a requirement would effectively force
providers to subsidize political speech.  In contrast, NAD, LHH and WGBH assert that the concerns
regarding the anti-censorship provision of the Communications Act are unfounded.
      122.Fundraising Activities of Noncommercial Broadcasters.  We tentatively concluded that live
portions of noncommercial broadcasting stations' fundraising activities should be included within the classes
of programming exempt from our closed captioning requirement.  We also sought comment on whether
there are less economically burdensome alternatives to captioning that would ensure accessibility, and
suggested a requirement that periodic textual graphics be displayed during a fundraising program that would
summarize the highlights of the program.  Commenters generally support our proposal.  However, NAD
and WGBH request a clarification that the programming offered in conjunction with the live portions of the
fundraising would not be exempt.  Several commenters also note that WGBH has developed automated
software to create a continuous, captioned message which enables viewers with hearing disabilities to
participate in the live portions of these programs, and that WGBH has offered this software free of charge
to all public broadcasters.  One commenter suggests that public broadcasters should recruit volunteers to
do captioning, as volunteers answer the phones for these programs.
      123.Music Programming.  We sought comment on our tentative conclusion that music videos
should be captioned, and also solicited comment on a proposal to exempt background music and primarily
instrumental music performances (e.g., symphony concerts, ballets) from our captioning requirements.
Many commenters agree that music videos should not be exempt, and that programming that is primarily
instrumental should be exempt.  California concurs that instrumental videos need not be captioned, but
notes that, while viewers who are completely deaf may not fully appreciate captions, those who can follow
the melody but not the lyrics desire such captioning.  A&E states that our proposed exemptions for music
programming are appropriate because there is only a marginal value to captioning such programs.
However, one commenter asks that we not adopt an automatic exemption for primarily instrumental
programming, claiming that it would cost very little to caption the commentary which accompanies ballet
programs.
      124.A number of commenters seek a general exemption for music videos.  These commenters
maintain that music lyrics are often subordinate to the actual music and can be unintelligible, making
captioning unnecessary or impossible in some situations.  RIAA admits that an economic burden
exemption for music videos produced by the vast majority of its member companies is unnecessary, but that
it might be appropriate for music videos produced by independent record labels.  RIAA argues that since
an assessment of whether economic burden should apply in individual situations could be difficult and time
consuming, it would be more practical to accommodate independent labels and simultaneously recognize
the vast number of videos already being captioned by exempting music videos under the general
exemption.  BET contends that our assumptions regarding the extent of current captioning, shelf-life, and
production budgets of music videos are overly generalized and inaccurate for many of these programs, and
that a captioning requirement for such programming will result in a reduction of the diversity of such
programming available to all viewers.
      125.With respect to captioning the lyrics for theme, background and other music that is not an
essential program element, ALTV agrees that such captioning is unnecessary because it is rarely essential
to understanding any aspect of the program's subject matter and could conflict with dialogue captions.  On
the other hand, commenters representing persons with hearing disabilities contend that such music should
not be exempt because it can add to the viewer's enjoyment of a program or provide information that helps
viewers understand the program.  One commenter requests that such lyrics always be captioned unless the
captioning would interfere with dialogue.
      126.We inquired whether live performances should be included within our general exemptions,
and proposed to require that any rebroadcast of a live musical performance that is not primarily instrumental
be captioned.  Several commenters support both of these prospects.  For example, HBO argues that such
an exemption is appropriate because there are simply too few skilled real time captioners available at present
to meet broad requirements for live captioning.  HBO also requests that we define a telecast as live if it
occurs within 24 hours after the actual event, as concerts are often not performed and telecast simultaneously
due to time zone differences.  Captivision states that captioning live music programs in real-time is
extremely difficult without sufficient advance preparation materials, as it is too hard to hear and understand
the music without prior knowledge of lyrics.  However, commenters representing persons with hearing
disabilities contend that live music performances should be captioned, arguing that pre-scripted lyrics can
be made available to captioners ahead of time.
      127.Alphastar requests that we exempt all music programming from our captioning
requirements, while CBA argues that we should exempt music programs where captioning is not
undertaken by a national distributor, due to the skill needed to caption song lyrics.  BET seeks an
exemption of all music performance programming, live and prerecorded, which it defines as video programs
where more than 50% of the program content is comprised of musical performances.  Alternatively, BET
seeks exemption of all primarily instrumental music programming, which it defines as video programs for
which at least 50% of the content consists of musical performances without literal lyrics.  Also, several
satellite providers seek an exemption for their digital audio channel programs, which typically consist of
either a static photo or blank screen with music in the background.  Primestar contends that digital audio
channels are more akin to radio than television services and that the costs of captioning them would likely
result in the elimination of the channels.
      128.Weather programming.  We proposed not to exempt weather programming from our general
captioning requirements, but sought comment as to the feasibility of captioning such programming and
whether the cost of such captioning would outweigh its utility.  We noted our belief that a significant
amount of information is conveyed in the audio portion that is not captured by the graphics accompanying
the report.  Most commenters representing persons with hearing disabilities concurred with this tentative
decision, with some observing the importance of weather information to viewers' sense of safety and well-
being as a primary reason for requiring captions.  Captivision asserts that many health and safety issues
are not fully conveyed through the occasional use of on-screen graphics, and that it is difficult or impossible
to read the announcer's lips when he or she stands in profile to the camera or speaks offscreen.
      129.Few video programming providers specifically address captioning for weather programs,
though several discuss captioning requirements for local news generally, which would include weather
reports.  NAB acknowledges that scripting weather reports in advance may not be burdensome for all
television stations, but also indicates that much weather programming contains text and graphics which do
not require captions for comprehension.  NAB suggests that we encourage stations to add captioning to
weather programs, but "remain open to requests for exemption where captions would substantially burden
the station."
      130.Sports Programming.  We did not propose to exempt sports programming as a whole, but
sought comment on whether there should be an exemption for particular types of local sports
programming.  In addition, we solicited comment on whether the textual or graphic presentation of the
basic information presented in this type of programming would be an appropriate, less burdensome
alternative to a closed captioning requirement.  Captioners and commenters representing persons with
hearing disabilities support the proposal not to exempt sports programming generally.  AAAD agrees that
local sports programs could be exempted, but urges that broadcasts that include paid commentators should
be closed captioned.  California states that though most sports programs incorporate graphics and consist
of action, sports commentators provide a substantial amount of information that is not displayed.  AIM
contends that the significant amounts of money generated by sporting events, such as postseason baseball,
Monday Night Football, and the NCAA men's basketball tournament, support a requirement that this
programming be captioned.  Many of these commenters request that we require those sports programs that
we exempt from the rules to provide text or graphics of necessary information, such as the score and time
remaining in the game.  However, Captivision suggests that college sports programs not in the top of their
division be subject to a lower economic burden threshold rather than a general exemption, arguing that $200
to $300 a game for captioning is a reasonable cost for a college athletic program to absorb.  WGBH
contends that a requirement that exempt sports programs include on-screen text in place of captions could
be intrusive to all viewers, and that captions possibly could be produced just as readily as the on-screen
text.
      131.With respect to regional sports programming, ALDA acknowledges that captioning of such
events is challenging, but submits that the technology allowing remote real-time captioning is already in
wide use.  Similarly, Captivision states that the technical and logistical problems of delivering different
regional games to different affiliates simultaneously can be solved with multiple encoders for each region
at the uplink site, asserting that most captioners have satellite links which can pick up many different feeds
to permit direct viewing of the various games to be televised.  NCI asserts that captioners need not be
physically present at the sporting event to produce captions.  NCI claims that the entity telecasting the event
merely needs to have an encoder on site, which can be placed in the remote broadcast van, and to have a
captioner view or hear the event and be connected to the transmission uplink by modem.
      132.Video programming interests and collegiate sports associations generally agree that local
and regional sports programming should be exempt from our captioning requirements.  These commenters
argue that captioning of local and regional sports would be economically burdensome because:  (a) these
sports programs typically have a very small audience or subscriber base over which to spread the costs of
captioning; (b) live sports programs require real time captioning resources, which are scarce and costly;
(c) the costs of captioning a sports event cannot be recouped over multiple airings of the program; and (d)
sports programming is by nature visually accessible and contains significant amounts of graphic information
which increase its accessibility without the need for captions.  Viewer's Choice raises these same concerns
in support of its request that pay-per-view sports programming be exempt.  In addition, several
commenters claim that a mandatory captioning requirement for regional college sports coverage may compel
providers to eliminate coverage of such events in favor of more national coverage of single games, which
would fail to serve regional college team interests.
      b.Exempt Program Services and Providers
      133.Several commenters take issue with our proposal that individual program services should
not be exempt from captioning requirements.  These commenters note that Section 713(d)(1) is not limited
to class exemptions, and that the language of the statute plainly allows exemptions for individual services.
They also contend that granting individual exemptions at this stage of the proceeding will reduce the number
of discrete cases to be adjudicated under the undue burden process.
      134.The services that seek individual exemptions generally contend that they are primarily
textual in nature and therefore readily accessible without the need for captions.   For instance, BIT and
QVC point out that their programming provides textual information in an L-shaped box which covers a
significant portion of the screen at all times.  Prevue describes its service as a scrolling, alpha-numeric
presentation of schedule and program information over the lower half of the screen with short video trailers
and other information in the top half.  The Weather Channel maintains that its local programming and
emergency alerts are entirely textual and therefore completely accessible.  These commenters claim that
captioning would detract from the accessibility of their programming by obscuring the textual and graphic
information already provided.  In addition, these commenters state that some of their services provide live
programming, 24 hours a day, and the programming provided by each of these services has little residual
value and may not recoup captioning costs through multiple airings.  According to these commenters,
captioning would require full-time stenocaptioning resources, which they claim are extremely limited and
can be quite expensive, and which would reduce the availability of such resources for other live
programming.
      135.Similarly, GSN asserts that its interactive and virtual environment game shows are
logistically unsuited for captioning.  GSN maintains that the game components for its live, interactive
programming fill most or all of the screen, such that it would be impossible to display captions for these
games without blocking one or more of the components.  GSN further contends that these programs are
transmitted live, with players participating by telephone, and that the three-second delay inherent in real-time
captioning would prevent viewers with hearing impairments from participating in these games in any
event.
      136.In addition, QVC seeks an exemption based on the accessibility it provides through other
means.  It indicates that it provides facilities and personnel dedicated specifically to serve persons with
hearing disabilities, including a separate 800 number for a telephone for the deaf ("TTY"), which is staffed
24 hours a day, 365 days a year, by specially-trained sales representatives who only handle TTY calls.
QVC also provides an on-line service which is fully synchronized with its television service, and from which
orders can be placed and information on products obtained.  QVC submits that these additional aspects
of its service provide full accessibility to persons with hearing disabilities and support an individual
exemption for its service, if a general exemption is not adopted for home shopping programs.
      137. Prevue submits that the technology required for the locally customized programming it
presents in the top half of the screen is incompatible with caption technology.  The top portion of the
Prevue screen delivers a dual video feed that is processed at each MVPD reception site to produce local
customization, and there is no currently available method which allows coordination of separate captioning
data with the video stream selected for display.  Moreover, the video offered in these quarter screen
sections consist of 10 to 30 second segments of promotional and advertising material with an extremely
limited shelf life.
      138.Although we sought comment as to whether classes of video providers should be exempt
from our closed captioning rules, we declined to propose any such exemptions based on our belief that
provider exemptions were unnecessary.  We noted that the various providers distribute the same types of
programming to consumers, and all classes of providers appear to have the technical capability to deliver
closed captioning to viewers intact.  Viewers with hearing disabilities support this tentative decision, and
MATP and NCI claim there is no authority in the statute to exempt classes of providers.  NCI further
argues that exemptions for individual providers should only be granted where it is shown that captioning
would preclude the program's production or distribution.
      139.However, ITFS licensees and wireless cable providers urge us to exempt ITFS providers as
a class.  These commenters seek confirmation that the definition of "provider" does not include ITFS
licensees, at least to the extent that their programming is delivered to ITFS educational sites, because these
providers do not offer a commercial service to the general public.  These commenters also assert that an
exemption for ITFS providers will not necessarily result in a deprivation of service to persons with
disabilities, because other federal laws, such as Section 504 of the Rehabilitation Act, the Individuals with
Disabilities Education Act, and Title II, Sections 201-205 of the ADA, already require ITFS licensees
to provide more individualized accommodations as needed for the students to whom their programming is
directed.  The Los Angeles Archdiocese argues that captioning is only one method schools may choose
to accommodate students with hearing disabilities, and that schools should not be forced to pay for captioned
programs when other accommodations have already been made for students who require them.
      140.Some ITFS programming is transmitted by wireless cable operators that negotiate excess
capacity agreements with ITFS licensees.  Commenters seek a limited exemption for ITFS programming
that is distributed on wireless cable systems.  They argue that wireless operators cannot afford to caption
such programming, while ITFS programmers operate on limited budgets, have limited resources to devote
to captioning of their programming, and may not be able to obtain DOE funding for captions due to the
limited distribution of this programming or its religious nature.  These commenters assert that a captioning
requirement for ITFS programming will likely result in the elimination of such programming from
distribution on wireless systems.
      141.Similarly, some commenters seek an exemption for LPTV providers, arguing that LPTV
stations are small businesses with limited financial resources, and that a captioning requirement would likely
force many of these stations out of operation.  Commenters assert that LPTV stations typically serve niche
audiences and less populated areas, providing programming of significant public interest.  Further, these
commenters are concerned that their services face the threat of extinction by the advent of digital
television.  Three Angels also notes that it would be more administratively efficient to grant a blanket
exemption for all LPTV providers than to deal with numerous individual requests for waivers.  CBA seeks
an exemption for programs produced by a single LPTV station for its own use or for the use of fewer than
15 stations.  However, CBA observes that captioning requirements may be feasible for LPTV stations in
very limited circumstances, such as:  (a) for all programs supplied to LPTV stations by a syndicator or
network that is responsible for adding captions; (b) for programmers where LPTV stations are able to buy
a captioned version of a program; and (c) for LPTV stations that use teleprompters to feed the script into a
caption machine simultaneously, provided that VBI insertion equipment is available at a modest cost.
CBA also seeks a clarification that we will not penalize a cable system for carrying uncaptioned
programming if the cable system transmits LPTV programs that are exempt.  Otherwise, CBA argues,
carriage of LPTV stations may be discouraged, reducing program choices for all.
      142.SCBA seeks an exemption for small cable operators, defined as systems serving 1000 or
fewer subscribers.  SCBA claims captioning costs for such operators could range from $0.30 to $2.50 per
hour per subscriber.  SDC contends that C-band satellite distributors cannot be held responsible for
captioning requirements as "providers" of video program services because they have no control over the
content of their satellite signals, and are incapable of inserting captioning or any other information into the
signal at any point.  They argue that these distributors merely sell programming packages to consumers
and authorize consumers' integrated receiver/decoder boxes for reception of paid for signals.  However,
SDC acknowledges that it may be possible to impose captioning responsibility on C-band distributors that
are vertically integrated with programming suppliers, at least for the programming provided to the C-band
distributor by that supplier.
      2.Discussion
      143.Section 713's goal is to complete the process of making closed captioned video programming
available so that viewers with hearing disabilities are afforded the same opportunities to understand and
enjoy this programming as are other members of the public.  However, in enacting Section 713, Congress
expressly recognized "that the cost to caption certain programming may be prohibitive given the market
demand for such programs and other factors."  Accordingly, Congress both permitted the Commission to
establish an appropriate schedule of deadlines, as discussed above, and provided for exemptions in instances
where imposing a captioning obligation would be burdensome.  Specifically, Section 713(d)(1) permits the
Commission to exempt by regulation programs, classes of programs, or services when the provision of closed
captioning would be economically burdensome to the provider or owner of such programming.  This
provision is closely related to and carries forward in terms of general rule exemptions the same "undue
burden" exemptions that are available under Section 713(d)(3) on specific petition.  Under this provision the
Commission is instructed to consider: (1) the nature and cost of the closed captions for the programming;
(2) the impact on the operation of the provider or program owner; (3) the financial resources of the provider
or program owner; and (4) the type of operations of the provider or program owner.  These criteria also
provide useful guidance in considering more general class exemptions.  In order to make sure that the
exemption process does not undermine the broad goals of Section 713, we believe exemptions should be
limited to only those situations where captioning truly is an economic burden.  Section 713 is intended to
create a new programming norm where programming is generally accessible to the persons with hearing
disabilities through closed captioning.
      144.In an effort to determine when a closed captioning requirement would be economically
burdensome, we requested detailed comment on appropriate exemptions based on such factors as market
size, degree of distribution, audience ratings or share, programming budgets or revenue base, lack of repeat
value, or a combination of such factors.  We received little information addressing these general criteria;
most comments addressed only exemptions for specific programming or services.  We understand the
difficulty in determining general criteria as to when a captioning requirement is economically burdensome
in a particular situation.  Such determination can depend on the type of captioning required, the type of
programming involved, the cost of captioning at the time (which depends on the market for captioning
services at that time), the financial resources of the entity involved, the specific point in the distribution
process where captioning takes place, who bears the burden of captioning, the size of the audience for the
programming and the repeat value of the programming.  Notwithstanding these difficulties, it is unavoidable,
if an equitable exemption process is to function, that we focus on the relevant general criteria on which
exemptions may be based.
      145.Our analysis of the exemption issue suggests that there are two somewhat different types
of situations that need to be addressed.  First, there are certain specific classes of situations where captioning
would be difficult or technically infeasible, would not add significantly to the information that is already
available visually, would create severe logistical problems, or the economic support for the programming
is inherently fragile.  In such cases, we find that the benefits of captioning will not offset the economic
burden that would be imposed by a captioning requirement.  These situations we address through the
adoption of a limited number of specific category exemptions.  A second class of exemptions have been
sought where it is contended that the economic underpinnings of the video programming provider in question
cannot support the additional expense involved with captioning.  We believe it clearly is the case that there
are certain kinds of services where the addition of extensive captioning obligations would either make the
service nonviable or adversely impact the content of the service provided.  The video programming
marketplace has evolved to the point where there are now a large number of service providers providing
programming for very specific limited local audiences or directing their programming to very limited
segments of a national or regional audience.  We address these types of situations below through a general
exemption rule -- keyed to the applicable gross programming revenues involved -- that seeks in a neutral and
nonintrusive fashion to provide exemptions where they are warranted.  We address first the specific category
based exemption proposals and requests.
      a.Specific Exemption Categories
      146.Non-English Language Programming.  For technical reasons, existing captioning decoders
can only display letters in the standard Latin alphabet and a few specific special characters such as a musical
note or trademark symbol.  In light of these technical obstacles we adopt a class exemption for captioning
of non-Latin-based language programming.  Although we may need to revisit this exemption if
technological changes make the encoding of captions for such programming feasible, captioning of
programming in languages that cannot be written in a Latin-based alphabet would clearly be economically
burdensome given the current state of technology.
      147.The captioning of non-English language programming that makes use of a Latin-based
alphabet is technically possible.  Two obstacles, however, remain to the captioning of this programming.
First, with the exception of Spanish, the potential audiences for such programming tend to be very limited
and thus the economic support is limited.  Census Data (1990) indicate that there are in the United States
198,600,798 individuals who speak only English.  The next most spoken language is Spanish, of which there
are 17,339,172 speakers.  The third most spoken language is French with 1,702,176 speakers.  Some 47
additional languages are also reflected in the census data.  Second, the personnel and the facilities necessary
to caption languages other than English are extremely limited and with respect to live captioning are almost
entirely nonexistent.  Where the programming is acquired from outside of the United States, in many
situations, additional logistical problems are presented due to the timing of the programming delivery
process and the fact that the programming is produced primarily for markets outside of the United States,
where there is no closed captioning obligation and, indeed, where there may be no technical system and
standards for the distribution of such materials. Thus, it would be to impose general captioning obligations
on non-English language programming that makes use of Latin-based alphabets at this time.
      148.The one major exception to this general observation is that pre-scripted programming that
makes use of a teleprompter can be captioned using the ENR technique without significant cost and without
problems being created by the absence of closed captioning stenotypers, regardless of the language involved.
That is, if the on-screen speakers are reading from an electronically formatted teleprompter, that script can
also be directed to the line 21 closed caption transmission system without further editorial or other
intervention.  Because the ENR technique is used mostly frequently with news programming, and because
the accessibility of news programming is likely to be of considerable importance to persons with hearing
disabilities, we will not extend this general exemption to programming readily captioned through the ENR
technique.  We are aware that the general non-English language exemption leaves a substantial portion of
the population, including in particular the large Spanish speaking population, outside the coverage of these
rules.  Accordingly, this is an area that warrants careful review and reevaluation during the transition.  At
that time, we will consider whether a captioning requirement for such programming is needed.
      149.Primarily Textual Programming.  We also exempt from captioning requirements video
programming for which the content of the soundtrack is substantially and materially displayed visually
through text or graphics and any programming service which is substantially comprised of alpha-numeric
text, with or without accompanying video or graphic elements.  We are persuaded by the comments that a
requirement for captioning of such programming, where information is already provided visually with little
or no relevant audio track, would be unnecessary and economically burdensome as it would outweigh the
benefits provided by the captions.  This exemption would encompass a programming guide service, such as
that described by Prevue, or community bulletin boards, which provide all relevant information about
program schedules or events in textual form.
      150.A number of parties in their comments have argued that sports programming should be
exempt because it is primarily visual and because critical information is visually available through on-screen
scoreboards and other graphic materials.  Others have argued that home shopping type programming
should be exempt because the products in question and the quantity, price and ordering information are
visually displayed.  Finally, the argument has been made that weather information should be exempt where
the weather maps and other critical weather information is visually displayed.  In addition to the information
already being displayed on the screen, the argument is also made that closed captioning would cover up and
obscure the information that is available, rendering closed captions counterproductive.  This argument is
also urged as a reason for exempting certain interactive (audience participation) game show programming.
While sports, shopping, and weather programming may well be more accessible without captioning than are
programs that rely more heavily on the spoken word alone, with respect to each of these program types
critical portions of the information conveyed is lost if captioning is absent.  We also note that users of closed
captioning are able to turn off the captioning when they find that captions interfere with other textual or
graphical material.  Thus, we are not persuaded that the inclusion of sports, shopping or weather
programming in a category of exempt "primarily textual" programming is justified.  To the extent that
providers of such programming believe that as much or more information would be available without
captioning, we will consider applications for exemption based on the individual circumstances under the
undue burden standard.
      151.Interstitials, Promotional Announcements, and Public Service Announcements.  We agree
with the tentative conclusion in our Notice, and with those filing supporting comments, that interstitial
announcements (i.e., programming of brief duration that is used as a bridge between two longer programs)
and promotional announcements should be exempt from captioning.  We exempt interstitial
announcements, promotional advertisements and PSAs that are of ten minutes' duration or less.  We are
persuaded that the benefits of captioning interstitial materials and promotional announcements are
outweighed by the burdens of captioning such programming.  As the record demonstrates, the large number
of such programs, the brief period from their creation to airing, and their short shelf life make captioning
these programs expensive and logistically difficult.  A television station or network could easily have
several hundred interstitial announcements inserted into its schedule in a single day and much of this material
would be inexpensively produced and completed only shortly before its air time.  In these circumstances,
the cost of captioning this material and the resulting logistical problems would appear to be disproportionate
to any benefits received.  We note, moreover, that much of the information involved is displayed in visual
form in the ordinary course as part of the process of trying to attract the viewer's attention to the
announcements involved.  We include public service announcements in this category as well because such
announcements are essentially without an independent source of financial  support, frequently are created
with donated production resources, and fill otherwise unsold advertising time.  Thus, the additional cost
of captioning could interfere with the PSA creation and distribution process.  We intend this exemption to
cover, for example, programming which is used to fill time between the end of one scheduled program and
the beginning of another or to inform viewers of upcoming scheduled programs.
      152.Advertising.  We conclude that commercials of five minutes' duration or less are not
included in the definition of programming here.  Advertising is generally regarded as ancillary to the main
programming content which is the focus of Section 713.  In this regard, we note that the statute did not
provide for captions "on all televised material" or did not specifically address advertising as it has in other
contexts.  In addition, the logistics of distribution of commercials may also impose an economic burden
that outweighs the benefits of requiring captions.  Video programming distributors receive large numbers
of advertisements, often close to air time, and to monitor whether each individual commercial is captioned
could be burdensome.  Thus, while we recognize that in some contexts programming and advertising may
be treated as the same for definitional purposes, here we conclude that it is reasonable to define short form
advertising as separate from programming and thus not subject to the captioning obligation.  We note,
however, that many advertisers, including in particular large national advertisers, have already recognized
the benefits of captioning their commercials.  We believe that this trend will increase as the closed captioning
of video programming becomes the norm and strongly encourage advertisers to participate in making their
commercials accessible through captioning.
      153.We, however, believe that longer commercials of more than five minutes' duration are
included in the definition of programming in this context.  We also conclude that infomercials (i.e., program-
length commercials) should be subject to the same captioning requirements and transition schedules as all
other nonexempt programming offered by a provider.  We note that such programs are generally prerecorded,
generally distributed nationwide, and are formatted to resemble traditional television programming.  We
therefore believe that the burdens and benefits of captioning infomercials are likely to be analogous to those
for traditional prerecorded programming.
      154.Programming on New Networks.  We believe that the record supports the conclusion that
new programming networks face significant start-up costs and that the additional costs of captioning could
pose an economic burden that might deter entry by some networks.  Commenters on this issue request an
exemption for new national nonbroadcast networks either based on the number of subscribers or for a
specified time period after launch, generally recommending criteria of 20 million subscribers or five
years.  We believe that an exemption for all new networks is appropriate for reasons similar to those
presented in the record for national nonbroadcast networks.  We do not intend our closed captioning
requirements to inhibit new sources of video programming due to our interest in fostering diversity in video
programming.  Thus, we will adopt an exemption for any new network, whether it is broadcast or
nonbroadcast, national or regional.  We conclude that an exemption based on years that a programming
network has been in operation is more relevant than one that incorporates subscriber numbers when applied
to a number of different types of networks.  For example, if we were to adopt a 20 million subscriber limit,
it is unlikely that any regional network would ever be subject to the rules, yet such networks are intended
for smaller subscriber bases and can be successful with far fewer subscribers.  Accordingly, a programming
network will be exempt from our closed captioning rules for its first four years.  The number of years will
be calculated from the launch date of the network.  A network must comply with the closed captioning rules
once its exemption expires.  A network will be able to prepare for the required amount of captioning during
the period it is exempt, and we do not believe that meeting the required levels of captioning will be an
economic burden at that time.
      155.Late Night Programming.  We agree that the costs of captioning late night programs
outweigh the benefits to be derived from captioning such programming at this time.  Programming
distributed in the middle of the night typically has a very limited audience and receives limited revenues.
Indeed for much of the history of television broadcasting, the late night hours were not occupied with
programming at all due to the costs of producing and distributing programming for such a limited audience.
We therefore include in the rules an exemption for video program providers distributing programming in the
late night or overnight time period.  We may review this decision in the future to determine whether we
should modify this exemption.
      156. Programs that are distributed between 2 a.m. and 6 a.m. local time will be exempt.  Based
on the recommendation of commenters, we select these times based on the small size of the viewing
audience during this period.  Video programming providers distributing a service that is exhibited for
viewing in more than one time zone will be exempt from closed captioning that service for any continuous
four hour time period they may select, commencing not earlier than 12 a.m. local time and ending not later
than 7 a.m. local time in any location where that service is intended for viewing.  This exemption is to be
determined based on the primary reception locations of the programming, and remains applicable even if the
transmission is accessible and distributed or exhibited in other time zones on a secondary basis.  This time
period will permit those programmers that distribute programming simultaneously to the 48 contiguous states
to take advantage of this exemption.  As is the case generally with our rules, providers must pass through
the captions where the programming contains captions.  Notwithstanding this exemption, we anticipate that
much of the programming shown at those hours will consist of programming that is already captioned, or
repeats of programming that will have to be captioned under our new rules.  Any captioned programming
shown during overnight hours may not be counted toward benchmarks the provider must meet, since, as
explained in an earlier section, overnight hours are excluded in calculating the total hours requirement.  As
we implement our closed captioning rules, we will consider whether there is a continued need to exempt this
daypart and whether captioning of programming distributed during the late night time period should be
counted towards compliance with the rules.
      157.Music.  We suggested in the Notice that an exemption might be desirable where the music
is primarily instrumental (non-vocal) in nature, such as a symphony or ballet.  The purely non-vocal portions
of such programming would not be captioned.  We believe, however, that even when there are some spoken
words, such as an introductory discussion of the performance, the entire program should be exempt if it is
primarily non-vocal in nature.  Such an exemption is warranted because the resources necessary to caption
even minor portions of the program would appear to outweigh the benefits.  Accordingly, we include in the
rules an exemption for programming that is primarily non-vocal music.
      158.Locally Produced and Distributed Non-News Programming With Limited Repeat Value.
Both cable system operators and broadcasters in their comments have emphasized that there are certain types
of locally produced and distributed programs that are of  primarily local public interest, have little repeat
value and have an inherently fragile economic support system.  Much of this programming is produced on
a very low budget basis, is not remunerative in itself, is presented essentially as a "public service," and has
only a one time appeal to a local audience.  Thus, a captioning requirement could result in a sufficient
economic burden that such programs are not televised at all.  The possibility that the output of such
programming might be reduced based on a captioning burden is sufficiently realistic that we believe a
narrowly focused exemption for programming of this type is in order.  We intend, however, that it apply only
to a limited class of truly local materials, including, for example, local parades, local high school and other
nonprofessional sports, live unscripted local talk shows, and community theatre productions.  We would not
include within this category local news, programs readily captioned through an ENR process, or programs
that have repeat value.  The programming in question would have to be locally created and not networked
outside of the local service area or market of a broadcast station or an equivalent area if produced by a cable
system operator or other MVPD.  We anticipate a review of the use of this exemption during the transition
process to make sure that it is being used for only its intended purpose and to see, in practice,  if its scope
is appropriately targeted.
      159.ITFS Programming.  We will exempt ITFS programming from our closed captioning
requirements.  This programming is intended for specific receive sites and not for general distribution to
residential television viewers.  To the extent that persons with hearing disabilities are the intended recipients
of this programming, we conclude that other laws require that accommodations be made to make this
instructional programming accessible.  We also will not require wireless cable operators that retransmit ITFS
programming to consumers to provide closed captioning for such programming.  We note that wireless cable
operators that lease ITFS channels for use during those parts of the day when instructional programming is
not offered simply pass through the programming rather than allowing the channel to go dark.  We believe
that a captioning requirement for wireless cable operators under these circumstances would likely result in
an economic burden since they probably would not be able to recoup these costs through advertising or
subscriber revenues.  With respect to other local instructional programming, we believe that our general
exemption for local programming or our general revenue exemption will encompass cases where closed
captioning is an economic burden.
      b.General Revenue Based Exemption
      160. As indicated above, commenters have urged that we include as specifically exempt from
captioning the following: new national cable networks, cable local origination programming, noncommercial
programming, nonprofit networks, cable PEG access programming, leased access programming, instructional
programming, home shopping, political advertising, fundraising activities of noncommercial broadcasters,
music programming, weather programming, sports programming, low power television station programming,
interactive game show programming, and programming provided by operators of small cable systems, ITFS
operators and C-band satellite distributors.
      161.   Although some of the category specific arguments made address unique aspects of the
service or programming for which an exemption is sought, the proponents of most of these categorical
exemption proposals simply urge that the programming in question lacks a sufficient economic base from
which to fund the additional costs associated with captioning.  Thus, it is contended that, rather than being
shown with captions, the programming will never be shown at all or that the costs associated with captioning
will cause a proportionate decline in programming investments and hence in the quality of the programming
involved.  Given the inevitable existence, in a competitive market, of programming that is on the margin of
economic viability, these arguments have warranted careful review.  Because of the difficulties of defining
by specific service or program types what should or should not be included in an exempt class, we have
decided to address the aspect of the "economically burdensome" exemption equation through the adoption
of a broad revenue based formula that is discussed below, rather than attempt to address individually each
of the varied circumstances in which a class exemption might be appropriate.
      162. In searching for criteria to address those providers that lack the necessary resources to
support a captioning obligation, we note first that an enormous number of different circumstances exist.
Thus, while LPTV stations generally serve a small localized audience, some operate in urban centers with
service areas equivalent to full power broadcast stations; while some cable networks may not thrive without
broad national distribution, others successfully perform the same functions as local broadcast stations in
regional markets; while professional sports, as a general matter, may have a stronger economic base than
nonprofessional sports, there are many situations where collegiate sports programming attracts a large and
loyal audience and there are professional sports with only a minimal following; that profit and nonprofit
entities may significantly overlap in the functions they perform; that specific programs may individually
garner limited audiences or economic support but may be important loss leaders or brand identifiers, etc.
In looking for common criteria that might either be used to identify categories to exempt or as the basis for
a more generalized exemption, we have explored the following different measurement standards or criteria:
potential audience (circulation or subscribers), actual audience (share or rating), program production costs,
cost of captioning per viewer or potential viewer, profitability, cash flow, or revenues.  Each of these
presents difficulties, but we have concluded that a revenue based exemption test, as discussed below, best
accommodates the variety of different situations involved while still being administratively practical.  It
specifically recognizes that all providers are not financially equal and that the burden imposed by our
captioning requirements will vary with the size and resources of the provider.  We believe that a general
exemption such as this is contemplated by, and consistent with, the statute and will encompass many of the
more narrowly-focused exemption proposals raised in the record without creating anomalous situations due
to the manner in which more limited exemptions are defined.  It also does not require us to anticipate, and
address individually, programs, classes of programs, or services that would be deserving of exemption by
regulation, including circumstances which may not have been raised in the record.  Where parties believe
it fails to sufficiently identify their specific circumstance, the option of an "undue burden" petition, as
discussed below, will still remain available.
      163. This exemption test has a number of conceptual advantages.  First, because the issue in
question is the economic burden of captioning, it properly focuses on one of the key indicia of economic
strength, without at the same time forcing us to become engaged in difficult accounting issues that might,
for example, be associated with a profitability analysis.  Second, rather than leaving programming providers
either covered by or exempt from the rules, it operates in a flexible fashion so that as revenues increase the
amount of captioning increases.  Rather than providing complete exemptions as advocated by many of the
commenters, providers will be required to do some captioning; that is, they will be required to caption to the
extent that such a requirement is not economically burdensome.  Therefore, nearly every provider will be
responsible for some captioned programming, thus increasing the overall amount of closed captioned
programming.  As captioning resources increase and new technology allows captioning to be done more
easily and efficiently, we expect the cost of captioning to decrease, and therefore the funds allocated should,
over time, purchase more captioning.  Third, it is designed to allow service providers room to make their own
decisions as to which programs captioning resources are best devoted.  Finally, it is equitable in its
application as between different technologies and different kinds of networks and service providers so that
competition takes place without the captioning regulations and exemptions tilting the marketplace toward
any service provider.
      164. Under this exemption, all program providers will fall within our general rules for closed
captioning.  However, no video programming provider shall be required to expend more than 2% of the
annual gross revenues that program provider received from that channel during the previous year.  Where
a provider has spent 2% of its revenues but does not reach the relevant captioning benchmark, the provider
need not spend more money on captioning so as to meet that benchmark.  One exception to this requirement
will be for program providers with annual gross revenues of less than $3,000,000 during the previous year.
No video programming provider will be required to expend any money to caption any channel of video
programming producing annual gross revenues of less than $3,000,000 other than the obligation to pass
through video programming already captioned, and not requiring reformatting, when received.  This
$3,000,000 revenue exemption is intended to address the problems of small providers that are not in a
position to devote significant resources towards captioning (i.e., those who would find it economically
burdensome) and who would, even if they expended 2% of their revenues on captioning, provide
approximately two hours a week, a minimal amount of captioned programming at a $500 an hour captioning
cost.
      165.  Annual gross revenues shall be calculated for each channel individually based on revenues
received in the preceding calendar year from all sources related to the programming on that channel.
Revenue for channels shared between network and local programming shall be separately calculated for
network and for non-network programming, with neither the network nor the local video programming
provider being required to spend more than 2% of its revenues for captioning.  Thus, for example,
compliance with respect to a network service distributed by a multichannel video service distributor, such
as a cable operator, would be calculated based on the revenues received by the network itself (as would the
related captioning expenditure).  For local service providers such as broadcasters, advertising revenues from
station-controlled inventory would be included.  For cable operators providing local origination
programming, the annual gross revenues received for each channel will be used to determine compliance.
Evidence of compliance could include certification from the network supplier that the requirements of the
test had been met.  In order to make this exemption workable from a practical point of view, multichannel
video programming distributors, in calculating non-network revenues for a channel offered to subscribers
as part of a multichannel package or tier, will not include a pro rata share of subscriber revenues, but will
include all other revenues from the channel, including advertising and ancillary revenues.  Revenues for
channels supported by direct sales of products will include only the revenues from the product sales activity
(e.g., sales commissions) and not the revenues from the actual products offered to subscribers.
      166. For purposes of the expenditure portion of this exemption, captioning expenses include
direct expenditures for captioning and reformatting of captions as well as allowable costs specifically
allocated by a programming supplier through the price of the video programming to that video programming
provider.  To be an allowable allocated cost, a programming supplier may not allocate more than 100% of
the costs of captioning to individual video programming providers.  A programming supplier may allocate
the captioning costs only once and may use any commercially reasonable allocation method.  This allocation
process is intended to avoid creating unwarranted distinctions between programming purchased that is
already captioned and captioning that the provider itself creates.
      167. Providers will have full discretion as to how to allocate the 2% cap of revenues to
captioning.  For example, a provider may elect to spend its captioning funds on programming that is widely
viewed rather than other programming offered that is less popular or, alternatively, the expenditure might
be for less widely viewed programming, such as local public affairs, that may be of more importance to the
hearing disabled community in light of the absence of alternative sources for that type of information.
      168. Our conclusion that an expenditure of 2% of revenues on captioning properly equates with
the "economically burdensome" criteria set forth in the statute is based on a judgment as to the point at which
service providers are likely to have significant incentives to shift programming content towards already
captioned or otherwise exempt material rather than make that material accessible to persons with hearing
disabilities. We have found in the legislative history and in the comments received no specific indication as
to the meaning of the term "economically burdensome."  The "undue burden" concept has its origins in
provisions of the Americans with Disabilities Act of 1990 and the other related legislation.  Although
there has been a considerable amount of litigation and scholarly discussion of the appropriate methodology
for evaluating this issue as a consequence of these earlier laws, no readily adaptable formulation that could
be transferred to this proceeding has been found in that history either.  The analytical problem is
exacerbated by the difficulty of knowing in what circumstances the costs may be directly passed on to
consumers or shared with other entities in the program creation and distribution chain.  There are also
differences between services that are likely to have relatively fixed costs, such as those that are involved
daily in the direct creation of programming and those that purchase programming and may have a more
flexible cost structure in terms of program inputs.  Clearly, when the burden involved would result in a
reduction of programming output rather than an increase in captioned material, the statutory test would be
met.  The legislative history suggests the need to balance the need for closed captioned programming against
the potential for hindering the production and distribution of programming.  In our judgment, and with a
full recognition of the need to address a variety of different situations, we believe that the use of a revenue
base and a 2% exemption level should result in captioning expenditure levels that can be absorbed without
adverse consequences to the product output of video service providers in most cases.
      B.EXEMPTIONS BASED ON EXISTING CONTRACTS
      1.Background
      169.Section 713(d)(2) exempts video programming providers or owners from our
closed captioning requirements to the extent that such requirements are inconsistent with existing
contracts.  Specifically, Section 713(d)(2) states:
     a provider of video programming or the owner of any program carried by the provider shall
     not be obligated to supply closed captions if such captions would be inconsistent with
     contracts in effect on the date of enactment of the Telecommunications Act of 1996, except
     that nothing in this section shall be construed to relieve a video programming provider of
     its obligations to provide services required by Federal law.
      170.In the Notice, we sought comment on a tentative conclusion that the class of contracts
covered by Section 713(d)(2) includes contracts which specifically prohibit closed captioning.  We also
requested comment on other contractual provisions which might properly be exempt pursuant to Section
713(d)(2).  In soliciting comment on such contract provisions, however, we noted that too broad an
interpretation of Section 713(d)(2) could result in a substantial portion of new programming provided
pursuant to such contracts not being closed captioned.  We further observed that such a result may be
contrary to Congress' intent to make video programming fully accessible.
      171.Several commenters assert that they are unaware of any contracts that specifically ban closed
captioning.  A&E, for example, asserts that our interpretation of this provision is not realistic and would
be an illusory exemption as few, if any, contracts affirmatively prohibit closed captioning.
      172.Generally, commenters representing persons with hearing disabilities urge us to construe
this provision of the 1996 Act as narrowly as possible.  Several commenters suggest that provisions which
affirmatively prohibit captioning are invalid or should be subject to a good faith test.  NAD
recommends that we limit this definition to situations where the parties are acting in good faith and have not
merely colluded in order to avoid the closed captioning requirements.  Similarly, NCD expresses concern
regarding collusion between affiliated entities.  NCD also suggests that parties relying on this exemption
should be required to ascertain whether the provision remains critical to its author or might be waived.
According to NCD, this is especially critical with regard to long term contracts which provide for periodic
redetermination of certain terms and conditions.  At the very least, NCD suggests that parties relying on such
an exemption should be required to certify that they have made reasonable good faith efforts to secure a
waiver or modification of the anti-captioning requirements.  NAD, while questioning the validity of
contracts which prohibit captioning, asserts that the existing contract provision was intended to cover the
limited situation where syndicated programs had already been distributed to local broadcasters on videotape
and where requiring the recall and captioning of such tapes would result in a heavy financial burden to video
service providers.
      173.In the Notice, we sought comment on other contractual provisions which might be construed
as inconsistent with the closed captioning requirements and thus subject to the exemption provided in Section
713(d)(2).  Several commenters assert that many contracts prohibit the video programming provider from
altering the programming in any way.  Encore cites contractual language that grants the provider limited
exhibition rights but reserves all other rights to the grantor.  Encore also argues that the proposed definition
of existing contracts fails to recognize the copyright issues involved.  According to Encore, industry practice
considers a closed captioned film to be a separate version or derivative work similar to a Spanish language
version, an airline version or a broadcast version.  Finally, ICCP raises international copyright issues
regarding contracts to distribute foreign programming.  According to ICCP, foreign copyright law often
recognizes "moral rights."
      174.Other commenters argue that the absence of any provision for closed captioning is sufficient
to make a contract inconsistent with our closed captioning requirements.  These commenters argue that
it would be unfair to impose closed captioning requirements upon contracting parties that had already
negotiated an agreement that did not contemplate either party providing closed captioning.
      175.A number of commenters representing the video programming industry seek to expand the
statutory provision to include contracts that predate the adoption of our captioning rules but became effective
after the effective date of the 1996 Act.  MPAA recommends that we exempt all pre-rule programming
licensed pursuant to contracts in effect on the date the captioning rules are adopted.  Similarly, NCTA
argues that all contracts in effect as of that date should be grandfathered because renegotiating existing
affiliation contracts would impose significant burdens, both financially and operationally, on video
programming providers and program owners.  TCI advocates that we grandfather all contracts which
predate the effective date of the captioning rules as compared with the statutory provision which addresses
only contracts in effect as of the passage of the 1996 Act.  These commenters assert that fairness dictates
that we expand the statutory exemption to include at least some of the contracts agreed to prior to
promulgation of our rules but after enactment of the 1996 Act.
      2.Discussion
      176.We conclude that our initial interpretation of this provision is essentially correct.  We believe
that Congress intended this provision to be narrowly construed.  We need only look at the final clause of
Section 713(d)(2) to conclude that Congress did not intend this provision to frustrate the overall objective
of Section 713 to increase the availability of captioned programming.  Therefore, we will exempt from our
requirements those contracts that specifically prohibit closed captioning and were in effect on February 8,
1996.  We will further exempt video programming providers from responsibility for captioning programming
if to do so would result in a breach of a contract in effect on February 8, 1996.  We conclude that a broader
interpretation of this exemption would be contrary to the overall intent of Section 713 to increase the
availability of closed captioned video programming.  We further note that this exemption does not relieve
a video programming provider of any other obligations it may have under other Federal law.
      177.We reject the argument that we should exempt contracts that lack provisions concerning
closed captioning.  This interpretation would exempt virtually all pre-enactment contracts.  We conclude that
if Congress had intended to exempt all pre-enactment contracts, it would not have limited this provision to
"inconsistent" contracts.  We believe that our interpretation of this provision is consistent with the overall
statutory goal of making video programming more accessible through increased closed captioning.  To the
extent that adding captions creates a burden, we expect that the needs of the contracting parties to maximize
the usefulness of their respective products will ensure that captioning is efficiently provided.  Similarly, we
reject the assertion that we should exempt contracts which contain language specifically restricting or
limiting the rights being granted to the video programming provider unless captioning programming pursuant
to such contracts would result in a breach of contract.  In the event of a complaint, the entity relying on the
exemption shall bear the burden of demonstrating that the captioning constitutes a breach of the contract.
      178.Section 713(d)(2) is explicit regarding the applicable date of this provision, i.e., "contracts
in effect on the date of enactment of the Telecommunications Act of 1996."  Thus, we find the proposal to
include within this exemption contracts which were signed prior to the adoption date of our closed captioning
rules but after the enactment date of the statute to be inconsistent with the plain language of the statute.
Moreover, we note that parties entering into contract agreements between the enactment date of the statute
and the adoption of our rules have been aware that closed captioning rules would be adopted.
      179.In adopting this interpretation of Section 713(d)(2), we note that the transition schedule we
have adopted does not require captioning until the first calendar quarter of 2000, approximately four years
after the cutoff date for such contracts.  Given that these contracts are typically for terms of five to ten
years, we expect that many of the contracts in effect on February 8, 1996, will have already expired from
routine attrition.  By the time the final benchmarks take effect on January 1, 2006 and January 1, 2008, for
new and pre-rule programming respectively, we believe that most pre-statute contracts will have expired.
Thus, we expect only a small and continually decreasing number of contracts to be covered by this
exemption.  In order to maximize this effect, this exemption is applicable to contracts in effect on or before
February 8, 1996 and will not apply to renewal or extensions of such contracts.  Parties renegotiating or
renewing such contracts will have an opportunity to incorporate our closed captioning requirements into their
agreements.
      180.In addition to rejecting interpretations of this section that are overly broad, we also reject
those interpretations that are more narrow than the statute intends.  Several of the commenters suggest that
clauses prohibiting captioning should not be enforceable or they should be subject to a "good faith" test, but
these commenters fail to provide any support for their interpretation of Section 713(d)(2).  Significantly,
these commenters are unaware of any such contracts.  The statute does not appear to contemplate any sort
of a "good faith" test for contracts.  Given the apparent rarity of such contracts we believe it is unnecessary
to require video programming providers to demonstrate "good faith" or otherwise restrict the availability of
this requirement.  We further believe that such an interpretation completely undermines the significance
of Section 713(d)(2).  Such an interpretation would create such a high threshold and be applicable to so few
contracts as to render that provision meaningless.  We further reject the assertion by some commenters that
this provision was meant only to apply to programs in the possession of broadcasters at the time the rules
become effective.  There is nothing in the statute that would provide any authority to limit this exemption
to one type of programming.  Such an interpretation is primarily concerned with the physical possession of
the programming rather than the compatibility of the contract with a closed captioning requirement.
      181.Finally, we reject the argument raised by some commenters that a broader interpretation is
needed to avoid copyright conflicts.  Because these requirements are broadly applicable, we believe that the
copyright owners will have significant incentives to ensure that their programming is closed captioned
regardless of whether a particular contract calls for the programming to be closed captioned.  Thus, if the
copyright owner wishes the programming to retain any significant value, the programming will necessarily
be captioned.
      C.EXEMPTIONS BASED ON THE UNDUE BURDEN STANDARD
      1.Background
      182.Section 713(d)(3) permits a video programming provider or program owner to petition the
Commission for an exemption from the closed captioning requirements where it can be shown that such
requirements would result in an "undue burden."  Section 713(e) defines undue burden as a significant
difficulty or expense.  In determining whether our closed captioning requirements would result in an undue
economic burden, the factors we are required by the statute to consider include:  (a) the nature and cost of
the closed captions for the programming; (b) the impact on the operation of the provider or program owner;
(c) the financial resources of the provider or program owner; and (d) the type of operations of the provider
or program owner.
      183.In the Notice, we discussed the legislative history of Section 713(d)(3) and tentatively
concluded that Congress intended to permit us to balance the need for closed captioned programming against
the possibility of inhibiting the production and distribution of programming and thereby restricting the
diversity of programming available to the public.  We also noted that this provision does not limit us to
the enumerated factors, but rather seems to invite the consideration of other relevant factors.  In soliciting
comments on the implementation of Section 713(d)(3), we specifically requested that commenters address
the standards or factors to be reviewed when considering an undue burden petition, and the procedures
appropriate in reviewing such petitions.
      a.Factors to be Considered
      184.Several groups representing persons with hearing disabilities suggest that we should adopt
a high threshold for petitions seeking an exemption for an undue burden.  For instance, MATP maintains
that because the number of persons with hearing disabilities is increasing, we should consider the expanding
need for closed captioning and that a broad based undue burden standard substantially restricts equal access
for people with hearing loss.  Other commenters assert that closed captioning technology is widely and
inexpensively available and has not proven to be technically or operationally "significantly difficult."
These commenters further assert that we should only use the factors enumerated in the Notice and if we do,
only a handful of local programs in the smallest markets would warrant an undue burden exemption.  CAN
and other commenters suggest that we should only grant an exemption where the programming would not
otherwise be provided.
      185.Some commenters representing persons with hearing disabilities propose objective standards
for evaluating petitions for undue burden exemptions.  Captivision suggests that the standard should differ
for national and local programming.  It further recommends that petitioners be required to include five bids
from various captioners to demonstrate that captioning would be disproportionate to other production
costs.  Further, NCD suggests that we reserve the right to grant the petition in part by simply reducing the
amount of captioning required.  CSD comments that we should consider the ability of broadcast stations
to pass costs through to advertisers when considering the undue burden standard.  To ease the
administrative burden of evaluating requests for undue burden, MCS proposes a system of weighting various
factors to determine whether an exemption should be granted.  Finally, MCS recommends that petitioners,
particularly those that affect large regional or national areas, be limited to one undue burden exemption per
year during the eight year transition period.
      186.Commenters representing the video programming industries urge us to be flexible in our
interpretation of the undue burden standard and consider factors beyond those enumerated in the statute.
For example, Encore recommends that the Commission refrain from establishing specific standards to ensure
maximum flexibility in considering undue burden petitions.  According to Encore, the nature of an undue
burden means it is unusual and presumably involves specific circumstances which must be resolved with a
more flexible interpretation of the rules.
      187.Other commenters suggest specific factors we should consider in addition to the statutorily
enumerated factors.  For instance, GSN urges us to consider program format and the complexity of closed
captioning a particular show in determining whether to grant an exemption petition.  APTS contends that
we should consider creating a presumption in favor of small public broadcasters if a general class exemption
is not created for the local productions of small public broadcasters under Section 713(d)(1).  Also, even
if such a general class exemption is available, APTS recommends a presumption in favor of the local
productions of any public broadcasters.  Similarly, LPTV Licensees recommend that, if we decline to
adopt a blanket exemption for LPTV stations, there should a lower threshold for LPTV stations to
demonstrate an undue burden.
      188.The Weather Channel asserts that we should establish rebuttable presumptions to streamline
the undue burden petitions process and to make a more efficient use of captioning and administrative
resources.  Among the categories of programming the Weather Channel recommends be presumptively
exempted are:  (a) 24-hour live, unscripted programming; (b) perishable programming; (c) programming in
which the audio information is simultaneously reproduced in graphical or textual form; and (d) any
programming which would be diminished in value if closed captioned.
      189.In the Notice, we referred to the legislative history that states that we should ". . . focus on
the individual outlet and not on the financial condition of that outlet's corporate parent, nor on the resources
of other business units within the parent's corporate structure."  Several commenters representing persons
with hearing disabilities advocate using the ADA interpretation of undue burden which takes into account
the financial resources of the parent corporation.  For example, AIM maintains that we should apply the
ADA definition of undue burden so as to apply the standard up the corporate chain, although it acknowledges
that this view is not consistent with the legislative history.
      190.NAD suggests that, even if a corporate parent's resources are not considered in the undue
burden determination, there are other components of the ADA's analysis that apply.  NAD argues that, like
the ADA, the instant "undue burden" standard directs us to balance the nature and the cost of providing
captions with resources of the provider and type of operation of the operator, and narrowly permits an
exemption only upon a showing that captioning would result in a "significant difficulty or expense."  NAD
argues that this standard only permits an exemption where the covered entity can prove that accommodating
the disability would so adversely affect the finances or administration of its operation as to be unduly
burdensome.  According to NAD, this interpretation is consistent with the legislative intent, which directs
us to balance the need for closed captioned programming against the potential for hindering the production
and distribution of programming.  Further, NAD asserts that size of market, program distribution and
audience ratings or share are not permissible factors for consideration.  According to NAD, captioning
should be required when the overall resources of a provider, producer, or owner are sufficient to handle
captioning costs, even when the particular production budget of or revenues derived from a particular
program may not be substantial.
      191.NCTA concurs with our preliminary determination that the undue burden standard here
differs from the ADA standard in that it does not intend for us to look to the assets of affiliated companies.
NCTA asserts that only the economic viability of the program should be considered, and not the overall
financial resources of the provider or program owner.  NCTA argues that programming budgets are based
on the economics of a particular program and our rules should reflect the economic reality of the budgeting
process.
      b.Procedures
      192.Generally, parties representing both the video programming industries and persons with
hearing disabilities support the use of existing procedures when considering undue burden petitions.  A
number of commenters, however, emphasize the need for procedural safeguards when considering undue
burden petitions.
      193.Commenters representing persons with hearing disabilities are concerned with the need for
public notice and comment.  Captivision urges the Commission to make public notice and comment an
integral part of the petition process.  MCS urges the Commission to rely heavily on electronic filing
mechanisms, such as e-mail.  NAD further suggests that the Commission post all undue burden petitions
on its World Wide Web page to facilitate public awareness of the petition.
      194.In the Notice, we requested comment as to whether program owners, producers and
syndicators should be permitted to file under the undue burden petitioning process.  Generally, commenters
representing persons with hearing disabilities recommend restricting the availability of this process to video
distributors.  CAN asserts that allowing producers or syndicators to petition for undue burden exemptions
would be inconsistent with Congressional intent and our proposal to apply the closed captioning
requirements to video programming distributors.  Similarly, NVRC opposes permitting producers or
syndicators to file for undue burden petitions unless they are also subject to our requirements.  NAD
suggests that only distributors be permitted to seek an exemption given our proposal to place the
responsibility for closed captioning on the distributor.  NAD contends that undue burden exemptions should
only be available where the distributor can demonstrate that neither the distributor nor the producer can be
expected to caption the programming.
      195.Video programming industry commenters recommend that we make the undue burden
process more widely available.  For example, NCTA asserts that allowing cable networks to petition for
an undue burden exemption would be consistent with the intent that captioning be inserted as economically
as possible.
      196. Both the video programming industry and persons with hearing disabilities express concern
that undue burden petitions be resolved quickly and efficiently.  NCTA suggests that we adopt timetables
for resolving undue burden petitions expeditiously.  SCBA recommends that we adopt a streamlined
procedure to allow small cable operators with fewer than 15,000 subscribers to demonstrate an undue burden,
suggesting that small cable operators be permitted to file a letter that sets forth any information they believe
justifies an exemption rather than a more formal petitioning process.  Finally, Ameritech proposes that we
adopt a relatively short period of time for rendering a decision in such cases since the programming may be
unavailable to the public during the pendency of the petition.
      c.Conditions, Restrictions and Limitations
      197.Generally, commenters representing persons with hearing disabilities support our proposal
to grant undue burden exemptions subject to conditions in some instances.  Para Technologies, for
instance, encourages us to consider conditional or temporary undue burden exemptions since technology is
likely to gradually alleviate many undue burdens.  Kaleidoscope suggests that, if a petitioner proposes an
alternative mechanism, it should be required to demonstrate the reasonableness of the proposed substitute.
NAD, however, opposes conditioning an undue burden exemption on greater use of graphics, except in
situations where the exemption would be granted anyway.  Commenters representing persons with hearing
disabilities suggest limiting the duration of undue burden exemptions to allow us to periodically reevaluate
the justification for a particular exemption.  NAD and others urge us to limit such exemptions to one year
so that the need for an undue burden exemption may be reviewed.  CAN asserts that classes of
programming should not be granted undue burden exemptions.  In contrast, NCTA recommends we permit
petitions of general applicability and allow the ruling to apply to all similarly situated entities.
      2.Discussion
      198.We conclude that the undue burden exemption is intended to be sufficiently flexible to
accommodate a wide variety of circumstances for which compliance with our closed captioning requirements
would pose a significant financial or technical burden.  Accordingly, we will establish a petitioning process
that allows us to consider any factors relevant to a petitioner's situation and provides parties significant
leeway with respect to the information that can be submitted to demonstrate how the statutory factors
specified in Section 713(d)(3) are met.  We also will consider any other data or information in addition to
that noted in Section 713(e) presented by petitioners that they believe is relevant to an analysis of whether
a requirement for closed captioning causes an undue burden in their individual circumstances.
      199.We will use a petition process for consideration of requests for exemptions based on the
undue burden standard.  Any party within the video programming distribution chain can file such a petition.
Section 713(d)(3) specifically permits program providers and owners to file such petitions.  The legislative
history of Section 713(d)(3) instructs the Commission to consider the potential for hindering the production
and distribution of video programming.  The legislative history of Section 713 generally contemplates
considering the effect of closed captioning requirements on video programming providers, owners and
distributors.  Thus, we also will permit program producers, owners and distributors (e.g., syndicators) to
request exemptions based on this standard.  As we have previously noted, closed captioning is most likely
to be done at the production stage or prior to distribution where it is most economically and technically
efficient.  Thus, we expect that most captioning will be done through arrangements between the video
programming distributors responsible for compliance and these other entities.  Since the actual captioning
is likely to take place before the video programming distributor receives the programming, we believe it is
appropriate to permit program owners, producers and distributors to petition for undue burden exemptions.
Furthermore, it would be inefficient to require each individual video program distributor to petition for an
exemption when a more centralized entity, such as the video program producer, owner or syndicator, can
petition for an exemption before distributing the programming to a number of video programming
distributors.
      200. A petition for exemption will be placed on public notice to allow for public comment.  Any
interested person may file comments or oppositions to the petition within 30 days of the public notice.
Comments or oppositions must be served on the petitioner and must include a certification that the petitioner
was served.  The petitioner may file a response to any opposition or comment within 20 days of the close
of the comment period.  The petitioner will provide copies of the response to parties who filed oppositions
or comments.  Upon a showing of good cause, the Commission may lengthen or shorten the response period
and waive or establish other procedural requirements.  During the pendency of an undue burden petition, the
programming subject to the request for exemption will be considered exempt from the closed captioning
requirements.  We will consider requests for full or partial exemptions from the closed captioning
requirements.  The petition may seek exemption for a channel of video programming, a category or type of
video programming, an individual video service, a specific video program or a video programming provider.
The petition must include sufficient evidence to demonstrate that compliance with the requirements to closed
caption programming would cause an undue burden under Section 713(d)(3).  In addition to these factors,
the petition may describe any other factors the petitioner deems relevant to our decision as to whether closed
captioning entails a significant difficulty or expense.
      201.To the extent feasible, petitioners should provide proposals regarding alternative
mechanisms that might constitute a reasonable substitute for the closed captioning requirements that would
make their programming more readily accessible to persons with hearing disabilities, but may not be as
burdensome as closed captioning.  These alternatives may include, but are not limited to, text or graphic
display of the content of the audio portion of the programming or the use of sign language interpretation.
While such alternative mechanisms are not substitutes for closed captioning, they may provide a means to
make the programming more accessible to persons with hearing disabilities without placing an undue burden
on video programming providers, owners or producers.  Accordingly, in an effort to make even exempt
programming more accessible, we encourage petitioners seeking undue burden exemptions to devise
innovative alternatives for such programming and may consider such proposals when deciding whether to
exempt programming under the undue burden standard.  We also encourage petitioners to propose alternative
implementation schedules or benchmarks that could minimize the burden of compliance with the rules, but
would increase the amount of captioning available for their viewers.
      202.Several commenters urged that we establish specific presumptions or standards for
considering these petitions.  In light of the complexities of implementing the new closed captioning
requirements and the significant number and types of affected entities, we will not at this time establish
standards for evaluating petitions.  We believe that such procedures are, at a minimum, premature because
we are not yet aware of the kinds of situations that will result in closed captioning being an undue burden.
In reaching this conclusion, we are allowing petitioners sufficient discretion to demonstrate burdens that are
unanticipated in the generally applicable rules and exemptions.  Such standards would prevent us from
exercising our discretion and restrict the expansion of our understanding of the effects of our closed
captioning rules.  For instance, relying on an objective test, as recommended by Captivision, MCS, and other
commenters, might well result in a rigid rule that would not provide the flexibility that Congress
intended.  The rebuttable presumptions suggested by parties such as the Weather Channel, GSN, APTS
or SCBA, might well prevent us from examining the effect our closed captioning requirements would have
on a specific video programming provider or even a class of programmers.  Similarly, we reject the weighted
formula crafted by MCS.  On its face, such a formula seems unnecessarily constrained and eliminates the
flexibility Congress intended to provide in Section 713(d)(3).  MCS fails to justify the various weights and
values it has adopted as part of its formula or explain the methodology used to develop the formula.
      203.We recognize the special needs of persons with hearing disabilities and the accessibility that
can be provided by the Internet and electronic mail.  The Commission is currently exploring the possibility
of electronic filing for its proceedings.  The outcome of  that proceeding will determine whether we will
be able to accept petitions for exemptions under the undue burden standard that are filed electronically.  Until
that time, we encourage parties filing petitions under this provision to include a disk containing the text of
their petitions along with the paper copy so that we can place the petition on our Internet site.  In any event,
we will place notice of the receipt of petitions on our Internet site.
      204.In the Notice, we tentatively concluded that the undue burden test should apply to the
individual outlet in question and not its affiliates or parent corporations.  We based this conclusion on the
legislative history, which explicitly provides that when considering such exemptions we should focus on the
individual outlet and not on the financial condition of the outlet's corporate parent or the resources of other
business units within the parent's corporate structure.  While some commenters advocate that an
assessment of the need for an undue burden exemption should take into account the financial resources of
the petitioner, its affiliates and parent corporation, as is done under the ADA, they fail to reconcile this
position with the legislative history of the 1996 Act that rejects such a requirement.  Other commenters
argue that we should only focus on the resources available for production of a particular program.  We find
this approach could unnecessarily limit the availability of captioning and would thus also frustrate
Congressional intent.  Where appropriate, we will, therefore, consider the resources of the individual outlet
and its ability to provide closed captioning when deciding whether to grant a petition for an undue burden
exemption.  In this regard, we will examine the overall budget and revenues of the individual outlet and not
simply the resources it chooses to devote to a particular program.  We find this approach consistent with the
legislative history that directs us to evaluate the resources of the individual outlet seeking an exemption and
not those of the parent corporation and other affiliates.
      205.In the Notice, we also requested comment on the advisability of limiting the duration of
undue burden exemptions.  Based on the record before us, we recognize that changes in technology, the
economics of captioning, or the financial resources of a video programming provider may affect the
justification for an undue burden exemption.  We do not believe, however, that a rule imposing a specific
time limit on exemptions is appropriate.  We believe that it is better to maintain the flexibility to limit the
duration of an undue burden exemption if the facts before us indicate that the particular circumstances of the
petition warrant a limited exemption.
 VII.STANDARDS FOR ACCURACY AND QUALITY
      206.Section 713 does not require us to adopt rules or standards for the accuracy or quality of
closed captioning.  However, throughout this proceeding, commenters have reported problems associated
with the technical and non-technical aspects of existing closed captions.  In the Notice, we stated that
inherent in a captioning obligation is the possibility of some definition of a minimal level of quality
necessary to demonstrate compliance with the requirement.  Thus, we concluded that it is well within the
Commission's discretion to consider whether to adopt rules, standards, or guidelines that address these
matters.
      207.In the Notice, we proposed rules to address technical quality issues, including captions not
being delivered intact, captions not synchronized with the video portion of the program, captions ending
before the end of the programming, programming without captions even though the program indicates
captioning, or captions transmitted during one offering of the program but not another.  Specifically, we
proposed to extend the existing cable rule that requires the delivery of existing captions to consumers intact
and to require video programming providers to take whatever steps are necessary to ensure that the
equipment and signal transmissions are capable of delivering existing captions.  With respect to the non-
technical aspects of captioning, such as spelling, grammar, placement and style, in the Notice we stated our
tentative view that we should not impose standards at the start of our phase-in of closed captioning
regulation, although we indicated that we might revisit the issue at a later date if quality levels appeared
unsatisfactory.  In the Notice, we also sought comment on a proposal not to establish minimum credentials
for those employed to provide closed captioning for video programming.
     A.   Standards for the Technical Aspects of Closed Captioning
      1.Background
      208.The technical problems identified by commenters include captions not being delivered intact,
captions not synchronized with the video portion of the program, captions ending before the end of the
programming, programming without captions even though the program indicates captioning, or captions
transmitted during one offering of the program but not another.  In the Notice, we noted that current
technology is sufficient to ensure that every video programming provider is capable of transmitting to
consumers the captioning included with the programming.  We also observed that the basic technical
compatibility among captioning services is assured by virtue of Section 15.119 of our rules, which sets forth
the technical requirements for transmission and display of closed captioning.  We further asserted that
many of the reported technical problems appear to be the result of lax maintenance and monitoring of
equipment.  We concluded that video program providers must be responsible for the transmission of the
captioning and should take whatever steps are necessary to monitor their equipment and signal transmission
to ensure that captioning is included with the video programming that reaches consumers.  Specifically, we
proposed to extend Section 76.606 of our rules that requires cable operators to deliver existing captions intact
to all video program providers, regardless of distribution technology, to ensure that programming with closed
captions is delivered to viewers in a complete manner.
      209.Commenters representing a variety of interests, including video programming providers,
programming networks, individuals with hearing disabilities, and captioning services, state that it is
appropriate for us to require video programming providers to deliver captions to consumers intact.  These
commenters believe that such a rule and its enforcement should remedy a number of identified problems.
In this regard, NCTA asserts that the cable industry's obligation to transmit captions intact pursuant to
Section 76.606 has ensured that captioning that arrives at the cable headend is delivered to consumers.
DirecTV, however, suggests that, in crafting the rule, we should ensure that it is adaptable to the distribution
systems and decoder boxes of new MVPD services.  Ameritech is concerned about the implications of a
specific requirement for MVPDs to monitor the simultaneous transmission of 500 channels of digital
programming.
      210.A number of commenters claim that the requirements of Sections 15.119 and 76.606 are not
always followed or enforced.  Several commenters are concerned that not all caption producers adhere to
the voluntary industry guidelines published by the Electronic Industry Association, "EIA-608 Recommended
Practice for Line 21 Data Service."  They recommend that we explicitly direct caption providers to follow
the provisions of EIA-608 and assert that, if the use of this technical document is required for all caption
providers, it will help assure a reliable and standardized service.  HBO, however, states that in similar
situations where industry guidelines exist we have refrained from further micromanagement and that we
should refrain from imposing industry guidelines in this context as well.
      2.Discussion
      211.We adopt a rule that requires all video programming providers, regardless of distribution
technology, to ensure that programming with closed captions is delivered to viewers in a complete manner.
We find it unacceptable that existing captions might fail to be transmitted in a complete and intact manner
to consumers.  The reported problems -- such as captions not being delivered intact, captions not
synchronized with the video portion of the program, captions ending before the end of the programming,
programming without captions even though the program indicates captioning or captions transmitted during
one offering of the program but not another -- deny accessibility to persons with hearing disabilities even
when captioning seems to be available.  Thus, we will adopt and enforce a rule to ensure that captioned
programming is always delivered to viewers complete and intact.  This rule, Section 79.1(c), is an extension
of the existing provision of the cable rules that requires cable operators to deliver existing captions intact.
Accordingly, video programming providers must pass through any captioning they receive that is included
with the video programming they distribute as long as the captions do not need to be reformatted.  We
believe that our enforcement of this new rule and the enforcement of the requirements of Sections 15.119
and 73.682 in conjunction with the mandatory captioning requirements will ensure the technical quality for
the closed captioning that is delivered to viewers' television receivers.
      212.We also will require video programming distributors to be responsible for any steps needed
to monitor and maintain their equipment and signal transmissions to ensure that the captioning included with
the video programming reaches consumers.  Programming distributors will be responsible for any corrective
measures necessary to ensure that the captioning is consistently included with the video programming
delivered to viewers.  With respect to Ameritech's concern about the need to monitor the simultaneous
transmission of 500 channels of digital programming, we note that the video programming distributor's
responsibility is to ensure that the equipment used to transmit these channels to viewers is capable of passing
the captioning through along with the programming is in proper working order.  They may rely on
certifications from video programming suppliers that the programming contains captions and will not need
to actually review every program before distribution to consumers.
      213.  Section 73.682(a)(22) refers to "EIA-608 - Recommended Practice for Line 21 Data
Service" published by EIA, which provides voluntary industry guidelines to protect against interference to
closed captioning from other data transmitted on line 21 of the VBI.  We have relied on this industry
standard for specific information on the use of line 21 and have found it a useful supplement to the specific
requirements of our rules.  EIA-608 provides industry standards to ensure compatibility between the
various uses of line 21, yet due to its broad acceptance the need for increased government regulation has
been minimized.  We believe that it is appropriate to continue to rely on this voluntary standard and expect
those involved in the closed captioning of video programming to follow its procedures.  We conclude that
this approach is beneficial, especially in light of the ability of the industry to modify the standards to
accommodate new uses of line 21.
     B.   Standards for the Non-Technical Aspects of Closed Captioning
      1.Background
      214.The non-technical aspects of captioning include such matters as accuracy of transcription,
spelling, grammar, punctuation, placement, identification of nonverbal sounds, pop-on or roll-up style,
verbatim or edited for reading speed, and type font.  In the Notice, we tentatively concluded that we should
not impose standards for quality and accuracy at the start of our phase in of closed captioning regulation,
although we recognized that the quality of captioning is a matter of considerable importance to those who
view captions.  We based our tentative judgment on several considerations.  In particular, we were
concerned about the availability of captioning services and stenocaptioners, the cost of captioning the
significant amounts of video programming we propose to require to be captioned, and the difficulty of
developing and administering quality standards.  However, we proposed to revisit this issue if, after a
period of experience, it became apparent that quality levels were unsatisfactory.
      215.Video programming distributors and  programming networks support our proposal not
to adopt standards for the quality and accuracy of the non-technical aspects of captioning at this time.
Several commenters believe that we should allow a reasonable amount of time for captioners, program
producers and video programming providers to adjust to the new captioning requirements before determining
whether there is a need for quality and accuracy standards.  A number of commenters state that
marketplace forces and the complaint-driven enforcement process will provide incentives for program
producers and owners to distribute the best quality captioning possible.  For example, NAB asserts that
the quality of captioning will increase as captioning becomes more widespread, technology improves, and
captioning personnel become more experienced.  MPAA contends that adequate controls already exist and
notes that video programming providers and producers currently return prerecorded captions with errors to
caption suppliers for correction.  It also claims that contracts for captioning live programming contain
quality control standards, and captioners that provide poor service will not have their contracts renewed and,
in some cases, can be penalized for breach of contract.
      216.HBO argues that quality standards would be difficult to administer, stifle the development
and expansion of captioning, and limit the types of programs that would be captioned.  In the Notice, we
listed guidelines for the quality and accuracy of captioning that had been proposed by commenters in
response to the Notice of Inquiry in this proceeding.  We also stated that we would encourage industry
groups and individuals with hearing disabilities to work together to establish voluntary standards similar to
these proposed guidelines.  Para Technologies observes that some of the proposed guidelines are content
oriented and are subjective and artistic in nature and that a requirement that these guidelines be used as
standards would prove too restrictive.  MPAA notes that program dialogue does not adhere to rules of
grammar, but rather follows the characteristics of normal conversation or is ungrammatical as a matter of
artistic choice.  Thus, according to MPAA, for us to enforce standards of quality and accuracy could
require extensive reviews of programming, an inefficient method that would impose a significant
administrative burden.
      217.Commenters supporting the adoption of quality and accuracy standards generally represent
persons with hearing disabilities.  They are concerned that captions are not useful if they are not accurate
or the "functional equivalent" of the audio portion of the programming.  A number of commenters state
that without standards there will be little incentive for program producers to contract with high quality
captioning providers.  In addition, several commenters contend that the marketplace will not ensure high
quality captions because closed captions are sold to video providers and programmers and are not sold
directly to television viewers who are deaf.
      218.In the Notice, we asked parties that disagreed with our proposal not to adopt standards for
the non-technical aspects of captioning at this time to provide specific standards or guidelines that could be
implemented, monitored, and enforced as we phase in our closed captioning requirements.  Many of the
commenters on this issue recommend that we adopt the guidelines listed in the Notice or a slightly
modified version of these guidelines rather than simply encouraging their use.  In support of the adoption
of guidelines, a number of parties state that minimum guidelines are needed to ensure full accessibility and
to keep mistakes to a bare minimum.  NAD states that some basic, but minimum, standards for captioning
quality are needed to provide guidance for new entrants into the captioning field and to indicate what is
legally required under Section 713.
      219.Alternatively, VITAC proposes that a program should only be considered captioned if it is
captioned from start to finish and the captions are as close to verbatim as technically possible.  VITAC
suggests that we require virtually all the words to be spelled correctly, and it would set criteria that no more
than two tenths of a percent (0.2%) of the words in a prerecorded show and 3% of the words in a live show
may be wrong, misspelled or absent, with the only exception being when captions would significantly
conflict with other information presented visually.
      220.NCI recommends a procedure of self-policing and self-reporting by those who are
responsible for ensuring that captions are distributed.  Under its proposal, captioning service distributors
would be required to provide a simple annual report to the Commission regarding the quality and accuracy
of their captioning services.  These reports, which would be available for public inspection, would cover such
matters as spelling accuracy, accuracy of transcription, punctuation, placement, identification of nonverbal
sounds, and other matters we deem appropriate.
      221.A few commenters supporting the adoption of non-technical standards assert that, if we do
not adopt their proposals, we should establish a process and timetable for revisiting the issue.  For
example, NAD and the Council of Organizational Representatives proposes that this review take place two
years after the rules go into effect.  CAN suggests that we plan to adopt specific rules to address quality
and accuracy issues in two years.  ALDA and NVRC state that, at a minimum, there should be monitoring
for the first year of implementation and, if warranted, standards established that would become effective no
later than two years after the effective date of the rules.  In addition, WGBH and LHH recommend that
a joint consumer and industry panel be established to formulate a means for examining quality issues and
that the findings of this panel be reported at the end of each year of implementation.
      2.Discussion
      222.We will not adopt standards for the quality and accuracy of closed captioning at this time.
We are not persuaded that our initial assessment of the difficulty in establishing standards at this time was
incorrect.  There are vast amounts of programming that will need to be captioned and those responsible for
captioning under our rules will need to undertake significant efforts to ensure that the programming they
distribute is in compliance with our rules.  By leaving the development of quality standards to the
marketplace, we are allowing video programming providers to establish quality standards and quality
controls for the non-technical aspects of captioning through their arrangements with captioning suppliers or
as part of the requirements of their programming contracts and licensing agreements.  We expect that this
approach will result in high quality captions comparable to the level of quality of other aspects of
programming such as the audio and video.  We will, however, consider revisiting this issue if, after some
period of implementation of our transition rules, it becomes apparent that our assumptions regarding the
marketplace incentives for quality captioning are incorrect.
      223.We continue to believe that video programming providers have an incentive to ensure that
the programming they deliver to consumers is of a high overall quality.  Because captioning will now be
mandatory, it will become an integral part of programming.  As with other aspects of programming (e.g., the
audio and video), programming providers have a strong incentive to maintain the overall quality of the
programs they deliver to consumers, including captions of comparable quality.  We also reject the claim that
without specific quality standards program producers will not contract for high quality captions because they
are not the actual consumers of the captions.  We believe that, as with any aspect of television programming
(e.g., the audio and video), consumers can demonstrate their satisfaction or lack of satisfaction with what
is shown through their purchase of advertised products, subscriptions to programming services, or contacts
with the video programming providers or video programmers.  Programming providers and producers further
will be aware that we will be monitoring the implementation of all aspects of captioning, including the
quality.
      224.We further find that the record provides evidence that it would be difficult to establish
standards in this area.  While we requested specifics regarding any proposed standards in the Notice,
including means for monitoring and enforcement, commenters provide only general guidelines without the
details we requested.  For example, CAN directs us to adopt standards for proper spelling and to ensure that
grammar, timing, accuracy and placement of captions are appropriate without providing any suggestions
regarding how to define "proper" or "appropriate" in this context.  We also are concerned about the
administrative burden that would be imposed on video programming providers and the Commission if
millions of hours of television programming must be monitored to make sure that no more than a specified
percentage of the words are wrong, misspelled or missing at the same time that mandatory captioning is
being implemented. On balance, we believe that it is not appropriate to impose such an administrative
burden without knowing whether market forces are sufficient to ensure quality captioning and our
assumption regarding marketplace incentives is correct.  For these reasons, we continue to believe that it is
better to allow the competitive market forces to establish standards of acceptable captioning quality.  In this
context, we encourage industry participants to develop voluntary industry guidelines, as have been proposed
in this proceeding.
      225.Our transition schedule is intended to allow us the flexibility to revisit issues, such as the
quality of captioning, as it is implemented, if necessary.  We conclude, however, that it is not appropriate
to establish a date certain for revisiting the issue of non-technical standards at this time, as requested by some
commenters.  We will consider any information we receive regarding any problems related to the non-
technical aspects of closed captioning once our requirements take effect and use this information when
determining whether to further consider the adoption of standards for quality and accuracy.  While the
proposed joint consumer and industry panel designed to formulate a means for examining quality issues
and to report to the Commission at the end of each year of implementation may be one means for information
to be directed to us, we will not establish any forum outside the Commission to monitor the effectiveness
of our regulations.  We also will not adopt any reporting requirements regarding the non-technical aspects
of captioning because such requirements would impose an administrative burden on video programming
providers and the Commission at a time when resources are best used to ensure the captioning of
programming.
      C.Certification of Stenocaptioners
      1.Background
      226.In the Notice, we did not propose to establish minimum credentials for those employed to
provide closed captioning for video programming.  We stated that imposition of such a standard would
unnecessarily delay implementation of any closed captioning requirements without any evidence that only
those passing a specific test are the best qualified to provide this service. We also expected that the quality
of closed captioning would improve as the amount of captioning increases and that the marketplace will
establish standards for those employed to prepare captions.
      227.The limited comments on this issue support our conclusion.  HBO, MCS, and Primestar
point out that there are existing methods of professional certification through the National Court Reporters
Association ("NCRA") and DOE guidelines.  MCS states that establishing a credential process would
hinder our intent to see an economically based competitive marketplace for captioning.  Moreover, MCS
asserts that as the demand for captioning increases, it would expect further efforts by professional court
reporting organizations to incorporate real time writing techniques as part of the credential process.
Primestar also contends that additional requirements for professional certification would put captioning out
of reach for some producers, thus diminishing the diversity of programming available.  As an alternative
to government regulation of stenocaptioners, SHHH and California recommend that we request the NCRA
to develop standards for training, testing, and certification.  Para Technologies proposes that, rather than
accrediting captioners, we require the name and address of the caption provider to appear at the beginning
and end of each program as a means of accountability.  Kaleidoscope suggests that a private sector
initiative be undertaken to develop a style manual for captioning similar to the "Chicago Manual of Style"
used by the print media.
      2.Discussion
      228.The record demonstrates concurrence with our tentative conclusion not to establish any
certification or professional accreditation requirements for stenocaptioners.  There appear to be a number
of professional credentials in the court reporting profession that indicate the level of skills required for closed
captioning.  In addition, there is no clear evidence that a specific method of training captioners or a specific
test would be the only predictors of successful achievement in this field.
      229.We do, however, believe that the commenters provide several useful suggestions regarding
voluntary industry efforts that can be undertaken to ensure that captioners have the skills needed to provide
quality captions.  We encourage any joint efforts of captioning organizations, video industry representatives
and consumers of captioning that will help increase the number of trained stenocaptioners and improve the
skills of those developing captions.  Such a group may be an appropriate forum for developing a style
manual, such as one suggested by Kaleidoscope, which can be used to promote consistent standards.
      230.We also will not require that captioning organizations be identified at any point in the
programming that they caption.  We note that captioning agencies or captioners may find it useful to provide
this information in order to receive direct feedback from consumers.
VIII.ENFORCEMENT AND COMPLIANCE REVIEW MECHANISM
      1.Background
      231.In the Notice, we tentatively concluded that we should enforce our closed captioning
requirements through existing complaint procedures.  We proposed to permit private parties and
government agencies to file complaints with the Commission.  We also proposed that complaints first be
directed to the video programming distributor in order to encourage resolution at the local level.  If the
parties are unable to resolve the complaint, then the complaint could be filed with the Commission.  We
further proposed to require that all complaints be accompanied by the best available documentation.  Upon
receipt at the Commission level, if we determined that the complaint complied with all the technical
requirements, we would notify the video programming provider of this determination.  The video
programming provider would then be permitted to respond to the complaint.  We solicited comment on these
proposals and requested that commenters address the potential effectiveness of the proposed process.  We
also encouraged commenters to suggest modifications to this process which would improve its effectiveness
and efficiency.  Finally, we requested comments on what elements we should require for a valid complaint.
      232.Many commenters generally support our proposal to enforce captioning requirements
through a complaint mechanism.  Several commenters, while generally approving, offer suggestions to
make the process more "user-friendly," more efficient and less burdensome for both the programming
industry and consumers.  Several commenters express concern that the proposed procedures may be
unnecessarily complex and flawed.  Other commenters question the effectiveness of the procedures we
have proposed.  CAN asserts that the complaint driven enforcement mechanism proposed in the Notice
is too inconvenient for consumers.  Accordingly, CAN proposes that we establish a consumer council or
coordination point to resolve these disputes.  Several commenters representing persons with hearing
disabilities suggest that requiring documentation may be unduly burdensome.  Other commenters support
CAN's proposal that we establish a consumer council to alleviate these difficulties.  MPAA argues that
Section 713(h) gives us exclusive jurisdiction with respect to any complaint under this section and that such
an industry funded council would create a confusing, inefficient system for dispute resolution.
      233.NCD proposes modifications to our proposal, suggesting that we consider the adequacy of
captioning (i.e., complaints alleging that the quality of the captioning is so poor as to negate its value or
use).  NCD also expresses concern that we are creating an excessive burden of proof for consumers.  NCD
maintains that few, if any, complainants will be in a position to produce program logs, transcripts, video
tapes or other documentary evidence of alleged violations.
      234.Several commenters suggest specific steps or requirements to ensure that the complaint
mechanism is readily accessible to persons with hearing disabilities.  MCS recommends that we adopt
electronic filing procedures.  It also suggests that we provide a checklist on our World Wide Web page
to assist the public in identifying problems and in filing complaints.  SHHH recommends that video
program distributors be required to provide well publicized contacts for complaints including a TTY number
and an e-mail address.  SHHH also states that we should set limits on the amount of time video program
distributors could have to resolve complaints before the complaints are forwarded to the Commission.
      235.Commenters representing several different interests support our proposal to require
complaints to be directed to the programming distributor before they are submitted to the Commission.
Some commenters, while substantially supporting the proposed procedures, raise specific concerns or offer
suggestions to ensure that the process is less burdensome to video programming distributors or
programmers.  Ameritech, for example, urges us to clarify that there is no decisional significance to a
determination that a complaint is valid on its face.  Ameritech also seeks clarification that the complaint
process cannot be used to re-litigate exemptions provided under Sections 713(d)(1) or 713(d)(3).  C-SPAN
recommends that no enforcement action should be initiated on the basis of a single complaint.  WCA
suggests that we allow 60 days for program distributors to resolve complaints before the complainant could
file with the Commission.  WCA also suggests that we clarify that complaints regarding broadcast
licensees should go to the licensees and not to an MVPD that happens carry them.
      236.Several commenters cite potential problems with our proposals.  For instance, Cox argues
that our proposed enforcement procedures could lead to anomalous results, particularly when a widely
distributed programming service violates the rules.  According to Cox, because we have proposed placing
responsibility for compliance on the video program providers, we could be inundated with complaints against
numerous MVPDs, even though only one party (i.e. the program producer) is at fault.  Cox asserts that
such a procedure is inherently inefficient and cumbersome.  NCTA notes that, because of the system of
proposed exemptions and phase ins, we should limit complaints to those which allege a violation of the
implementation schedule and not permit complaints that merely allege that a particular program (or
programs) was not captioned.
      237.In the Notice, we sought comment on whether we should adopt any recordkeeping
requirements as part of our enforcement procedures.  Commenters representing the video programming
industry generally oppose any new or increased recordkeeping requirements.  Encore states that, instead
of imposing additional recordkeeping requirements, we should permit MVPDs to rely on certifications from
the networks they carry.  Encore contends that certification of compliance has been successfully relied upon
in the past.  GTE also suggests that a compliance mechanism similar to the one adopted in the Children's
Programming rules might be appropriate and balance the need for compliance verification with burdensome
monitoring or recordkeeping requirements
      238.Other video programming industry commenters suggest that our closed captioning rules and
the need to demonstrate compliance in response to possible enforcement actions will ensure that video
providers will keep adequate records and they oppose additional public file or recordkeeping requirements.
According to ALTV, stations will have every incentive to maintain adequate records in order to demonstrate
compliance in response to a possible complaint.  USSB concurs and suggests that this issue can be
revisited after we gain further experience.
      239.Alternatively, groups representing persons with hearing disabilities commenting on this issue
support a recordkeeping requirement.  CAN supports the proposal to require that video program providers
retain records sufficient to verify compliance with the closed captioning rules.  According to CAN, such
recordkeeping is reasonable given that providers generally have adequate documentation as part of the
process of having material captioned.  The Council of Organizational Representatives recommends that
these records be retained by the Commission or the proposed consumer council.
      2.Discussion
      240.We conclude that our initial proposal to use a simplified complaint mechanism modeled after
existing complaint procedures is appropriate and supported by the record.  Accordingly, we will adopt the
rules appended to this Report and Order at Appendix B.  We believe that our original proposal to require
that complaints first be directed to video programming distributors is an effective and efficient way to
streamline the process.  We expect this process will result in a large number of complaints being resolved
at the distributor level.  We believe that this approach will lead to quicker action to resolve a complaint than
if the complaint were filed directly with the Commission, eliminating any unnecessary administrative
burdens for consumers and video programming distributors.  In order to further minimize the administrative
burden on individual video programming distributors, we will not prescribe specific recordkeeping
requirements but will simply require video programming distributors to maintain records sufficient to
demonstrate compliance in response to any complaint.
      241.Because the information necessary to demonstrate compliance will be in the hands of
distributors and because it would not be feasible for potential complainants in the first instance to document
all the factors necessary to establish a violation, e.g., to identify the exempt or nonexempt status of each
program, we will not require them to do so.  On the other hand, it is appropriate for the complainants to have
some basis for believing that a violation has taken place and not simply allege that an individual program
lacks captions.  Thus, any complaint filed should, at a minimum, state with specificity the Commission rule
violated and should provide some information which supports the alleged rule violation.  Thus, for example,
complainants could review a reasonable sampling of programming or published program schedules to
determine whether sufficient captioned programming exists on a daily basis to meet the requirements of the
rules if extrapolated to a full calendar quarter.  Further, if a distributor's response to a complaint demonstrates
compliance, such complaint should not be forwarded to the Commission pursuant to the procedures set forth
below unless there is some reason to believe that the response is inaccurate.  Limiting the process in this
fashion is important because it will serve to focus the resources devoted to achieving compliance with the
rules on those situations where there is most likely to be a violation and not on those where ready
explanations for the absence of captions exist.
      242.Complaints regarding alleged violations may be filed by individual consumers, organizations
or government agencies.  Violations may include failure to meet the benchmarks we have established or
failure to pass existing captions through to the consumer intact.  A complaint cannot be used to challenge
a previously approved exemption.  A complaint may, however, allege that a provider is inappropriately
relying on an economic burden categorical exemption under Section 713(d)(1).  Prior to filing a complaint
with the Commission, the complainant must file a written complaint with the video programming
distributor.  The complaint filed with the video programming distributor may be in the form of a letter.
It must state the alleged violations and should include (as discussed above) any available evidence.  In the
case of an alleged violation by a broadcast television licensee, the complaint should be directed to the
broadcast licensee.  In the case of programming over which the video programming distributor may not
exercise editorial control, the complaint should be directed to the entity responsible for the programming
rather than the video programming distributor.  A video programming distributor receiving a complaint
regarding programming of a broadcast television licensee, or programming over which the distributor does
not exercise editorial control (as described in paragraph 29), must return the complaint to the complainant,
within seven days of receipt, with written instructions informing the complainant of the name and address
of the appropriate party, as described above, to whom the complaint should be sent.  Alternatively, the
distributor may forward the complaint itself within seven days to that party and inform the complainant that
the complaint has been forwarded.  A complaint will not be considered if it is filed with the video
programming distributor later than the end of the calendar quarter following the calendar quarter in which
the alleged violation has occurred.  We encourage parties to wait to file complaints addressing the amount
of captioned programming until after the relevant quarter has ended.
      243. A video programming distributor will have a limited amount of time to initiate discussions
to try to resolve the complaint.  In order to ensure that all available information is available, the video
programming distributor shall respond in writing to the complaint no later than 45 days after the end of the
quarter in which the violation is alleged to have occurred or 45 days after receipt of the written complaint,
whichever is later.  Thus, a complaint received on February 28 alleging violations in the first quarter of the
year need not be addressed until May 15, while a complaint filed on April 15 alleging violations in the first
quarter requires the video programming distributor to reply by May 30.  This requirement should resolve the
concerns of commenters who indicate that video service providers have been unresponsive to complaints in
the past.  If the video programming distributor fails to respond to a complaint or a dispute remains after the
initial attempt at resolution by the video programming distributor and the complainant, the complaint may
be filed with the Commission within 30 days after the time allotted for the video programming provider to
respond.  A complaint filed with the Commission must include an original and two copies and must that the
complaint was first served on the video programming distributor.  The complaint must include evidence that
demonstrates the alleged violation of the closed captioning requirements and must certify that a copy of the
complaint and the supporting evidence was first directed to the video programming distributor.  The video
programming distributor shall have 15 days to respond to the complaint and shall provide the complainant
with a copy of the response.  In its response to a complaint, a video programming distributor is obligated to
provide the Commission with sufficient records and documentation to demonstrate compliance with the
Commission's rules.  After reviewing the complaint and the supporting documentation, we will determine
whether a violation of the closed captioning requirements has occurred.  If the Commission determines that
a violation has occurred, we may impose appropriate penalties, including for example, forfeitures, or in
instances of a flagrant rule violation, we may require that the video programming distributor deliver
captioned programming in excess of the established benchmarks.  We believe that these procedures will
provide consumers with an effective and easily accessible complaint resolution mechanism, while freeing
the programming industry of any unnecessary burdens.
      244.In the Notice, we discussed the possibility of enforcing these requirements through a
reporting requirement.  We recognize that good business practices will necessitate that video programming
distributors maintain records in order to ensure compliance with our rules, as well as to defend against
possible consumer complaints.  We also recognize that the availability of such records could facilitate some
consumer complaints and perhaps avoid others.  At the same time, we recognize the additional burdens that
recordkeeping requirements can pose for video programming distributors, particularly for small businesses.
Accordingly, we will not adopt specific recordkeeping requirements nor will we require video programming
distributors to file periodic reports or maintain public files recording their compliance.  We believe that
specific recordkeeping or filing requirements would be unnecessarily burdensome and administratively
cumbersome.  Thus, we will only require that video programming distributors maintain records sufficient
to demonstrate compliance and will leave the specifics of recordkeeping to their discretion.  Finally, we will
permit MVPDs to rely upon certifications of compliance from the various networks they carry.
      245.We recognize that our complaint procedures must accommodate the special needs of persons
with hearing disabilities.  Accordingly, we will generally incorporate the recommendations of groups, such
as MCS and SHHH, to use the Internet as a mechanism for providing information on our rules and complaint
procedures.  Furthermore, the Commission is currently exploring the possibility of electronic filing.  As
we previously noted, we expect this procedure will be especially useful for persons with hearing disabilities
and will facilitate their participation in the complaint process.
      246.Finally, several commenters propose that we establish a consumer council that could provide
information regarding our rules and their implementation to consumers and the video programming industry
and could serve as a clearinghouse to combine related complaints or prevent unfounded complaints from
being filed.  Section 713(h), however, vests exclusive jurisdiction over enforcement of these provisions
with the Commission.  Accordingly, we will not establish a consumer council as such an organization could
only serve an ancillary or advisory role.
  IX.OTHER ISSUES
      247.New Technologies.  We solicited comment on what steps we should take, if any, to ensure
that our closed captioning rules do not impede the development of new technologies such as digital television
("DTV").  With respect to future technological advances and their effects on closed captioning, commenters
are not optimistic about the future of technologies that create captions directly from speech (i.e., voice
recognition technology).  WGBH states that there is no real possibility in the near or long-term future that
will allow automatic captioning through voice recognition.  VITAC observes that no adequate voice
recognition system exists or is likely to exist in the near future, and "certainly not in a size and at a price to
be built into television receivers."  Most commenters also agree that there is no need to establish rules
governing DTV closed captioning at this time, and some recommend that our rules be sufficiently flexible
so as not to impede the development of DTV.
      248.A few commenters observe that we did not mention video programming delivered over the
Internet or other emerging technologies among the distribution technologies cited in the Notice.  In this
regard, the commenters contend that high-resolution video downloaded through such media should be
required to contain closed captions that can be viewed by means of decoder-equipped televisions.  On the
other hand, BellSouth contends that there is no legal or public policy basis for us to address video delivered
by the Internet in this proceeding.  BellSouth argues that such services are not comparable to the
programming over which we have authority, and that a closed captioning requirement for Internet
programming could derail the development of high-speed Internet access services that the cable industry is
preparing to offer the public.  A&E argues that Section 713 does not grant us authority to regulate
programming provided by the Internet, and that any closed captioning obligations imposed on Internet
programming at this time will forestall the development of such programming and could contribute to the
demise of emerging Internet services.
      249.At this time, we do not believe it would be appropriate to adopt additional or different
captioning requirements specific to DTV technology that rely on the extended capacities and potential
inherent in the digital transmission process.  We note that the Commission has considered the technical
requirements that would allow closed captioning information to be carried by DTV stations.  We expect
that programming entities involved in the development of DTV technology and the conversion of video
programming to digital formats are taking into account the need to transmit captions in the DTV signal.  We
expect that DTV receiver decoder standards will be available for consideration in the relatively near future
and that a standard captioning process can then proceed with relatively little difficulty.  Nevertheless, we
believe the additional captioning potentials this technology may make available warrant review in the future
to make sure that full advantage is taken of this and associated technological improvements.  Similarly, we
recognize that there are issues that need to be addressed relating to the convergence of television receivers
and computers and the growth of Internet video like programming that may need to be addressed in the
future.
      250.We received limited information in response to our request for comment regarding
technologies that may change the manner in which captions are created and delivered.  We believe that as
a result of our requirements and the increased demand for captioning, new technologies may develop that
facilitate captioning.  For example, the captioning marketplace may find new ways to use telephone lines
for remote captioning or the Internet may provide mechanisms for the preparation and transmission of
captioning data.  Moreover, developments in the use of digital technology may provide new methodologies
for captioning.
      251.Thus, we believe that further study of these issues relating to new technologies and
captioning is needed.  Accordingly, we will reexamine issues relating to digital television, technological
changes that affect the closed captioning process and other matters relating to technological change that may
affect our captioning requirements.  We will use the information gathered in this subsequent proceeding
to determine whether any modifications to the rules we adopt are necessary.
      252.Emergency matters.  Providing all viewers with accurate information regarding fast breaking
news is of great importance, and we are concerned that viewers with hearing disabilities may not always have
access to the same information that is currently available to other viewers.  Examples of such news include
information regarding severe weather conditions, flooding, earthquakes, and disruptions of the transportation
system.  These reports generally provide information that must be available to people immediately and often
affect the safety and well-being of viewers.  Commenters generally stress the importance of having access
to this type of information, and request that captioning of this information receive priority over other types
of programs.  An announcer may interrupt a program with an audio message that is not also displayed
visually, or the audio portion providing this information may be longer and offer more detailed information
than that displayed visually, leaving viewers with hearing disabilities without full details on the situation.
Similarly, a visually displayed message may direct the viewer to watch a later news report for details, but
if the news is captioned using ENR and the information relating to an event that is occurring is unscripted,
viewers with hearing disabilities will not have access to this information, which can be vital to their safety.
      253.Due to the limited comments on this issue in the record, we are not adopting specific rules
for this type of programming at this time.  We will initiate a proceeding to examine the captioning of
information of such immediate importance that programming is often interrupted to provide it and to
determine whether transitional requirements are needed for such programming to ensure that persons with
hearing disabilities have full access to this important information.  We believe that it is very important for
emergency programming to be accessible and that there are methods to provide this vital information in some
format for persons with hearing disabilities.  We note that video programming providers currently can use
open visual scrawls, open captioning, slides or other methods to provide this information in visual form.  In
the absence of closed captioning, we expect video programming providers to use these other methods to
ensure that all of the details of this information is fully accessible.  We note that Section 73.1250(h) of the
Commission's rules already provides that information broadcast with respect to emergencies involving the
safety of life and property be transmitted both aurally and visually (or only visually).  Further, the
Emergency Alert System Rules also address the needs of the deaf and hard-of-hearing for access to
emergency information.
      254.Matters for Future Review.  As indicated in the Report and Order, we will monitor the
implementation of closed captioning of pre-rule programming to determine whether the amount of such
programming containing captions during the transition period is increasing incrementally without specified
benchmarks.  We also believe that it will be appropriate to reevaluate our decision to define maximum
accessibility as the captioning of 75% of pre-rule programming.  Thus, we will undertake a review of our
rules relating to pre-rule programming after four years to consider whether specific percentage benchmarks
are needed to ensure sufficient progress towards the captioning of this programming and whether we should
require a different percentage of such programming to be captioned to ensure maximum accessibility to
persons with hearing disabilities without economically burdening programming providers.
      255.At the time of our review, we will also consider the appropriateness of certain of the specific
exemptions we have adopted, e.g., exemptions for non-English language and locally produced programming.
      256.We also believe that our decision to permit the captioning of programming using ENR
should be reevaluated during the transition period.  Our decision to permit the use of this method of
captioning initially is based on our concern regarding the current availability of real time captioners and the
potential costs of captioning this live programming at this time.  However, ENR does not provide complete
captioning for this very important information and we encourage video programming providers to script
additional portions of their programming, especially weather and sports reports included in newscasts, and
to include introductions or short descriptions of the non-captioned segments (e.g., live remote) to ensure that
persons with hearing disabilities are aware of the topic of the story.  The use of ENR may not be appropriate
once the marketplace adapts to the demand for captioning as a result of Section 713.  At that time, the
availability of captioners or technology to facilitate the captioning of news programming may make the use
of real time captioning more feasible.  Thus, we intend to revisit this issue and to consider whether to amend
the rules to require real time captioning of news programming.
      257.In addition, we concluded that it would be best not to adopt standards relating to the non-
technical quality of captioning and to allow market forces establish industry standards.  As indicated above,
we intend to monitor the quality of the captions that are provided during the transition period.  Based
information we gather or receive from the public, we may revisit the need for standards for non-technical
quality during the transition period.  The review during the transition period will allow us to consider
whether we have taken the appropriate actions necessary to further the important goal of accessibility of
video programming as directed by Congress.
   X.FINAL REGULATORY FLEXIBILITY ANALYSIS
       A.Background
      258.As required by the Regulatory Flexibility Act (RFA), an Initial Regulatory Flexibility
Analysis ("IRFA") was incorporated into the Notice of Proposed Rulemaking in this proceeding.  The
Commission sought written public comment on the expected impact of the proposed policies and rules on
small entities in the Notice, including comments on the IRFA.  This present Final Regulatory Flexibility
Analysis ("FRFA") conforms to the RFA.
      259.Need for Action and Objectives of the Rule:  The 1996 Act added a new Section 713 to the
Communications Act of 1934 that inter alia requires the Commission to develop rules to increase the
availability of video programming with closed captioning.  The Commission is promulgating these rules
in order to implement this provision of Section 713.  The statutory objective of the closed captioning
provisions is to promote the increased accessibility of video programming for persons with hearing
disabilities.
     B.   Summary of Significant Issues Raised by the Public Comments in Response to the IRFA
      260.The Small Cable Business Association ("SCBA") filed the only comment specifically
responsive to the IRFA.  Several other commenters addressed the IRFA in their general comments.  Other
parties, while not specifically commenting on the IRFA, discuss the potential effect of the proposed rules
on small entities.
      261.SCBA concurs with our estimates regarding the number of small cable operators that may
be affected by our closed captioning requirements.  SCBA offers several specific suggestions to minimize
the effects of the closed captioning requirements on small cable operators.  These proposals include:
     a.   Allocating the burden of compliance to programming producers and owners.
     b.   A class exemption for small cable operators serving 1,000 or fewer subscribers.
     c.   Streamlined compliance and complaint rules for small cable systems serving 15,000 or
          fewer subscribers including:
     1.   Reliance on statements of compliance from programmers to respond to establish
          compliance.
     2.   The burden of proof shifts to the complainant when statements from programmers
          demonstrate compliance.
     d.   Streamlined waiver procedures to permit qualifying small systems to access a simplified,
          low-cost waiver process.
     e.   A class exemption for PEG programming.
     f.   A class exemption for local origination programming.
      262.Cassidy asserts that our conclusions are overly inclusive and, if all small providers were
exempted, Congress' intent to increase the availability of closed captioned programming would be
circumvented.  Commenters representing smaller captioning agencies suggest ways to minimize the effect
of the new regulations small captioners.  Para Technologies, for instance, recommends that we adopt a
more "linear" phase in schedule.  Specifically, Para Technologies proposes that we adopt a phase-in
schedule requiring video program providers to increase closed captioned programming 4% every three
months over the eight year transition period.  According to Para Technologies, such a plan would increase
competition in the captioning industry, leading to lower rates and more widely available captioned
programming.  MCS suggests that we should require that video producers and program providers use small
captioning companies for a minimum of 25% of their real time captioning requirements.
      263.Kaleidoscope indicates that its proposal to define economic burden as a situation where the
cost of captioning would exceed 10% of the relative program budget should minimize the burden on small
entities.  Kaleidoscope asserts that this is an objective test that would exempt small entities from closed
captioning requirements that they may find economically burdensome.
      264.The Association of America's Public Television Stations ("APTS") asserts that the closed
captioning requirements would be especially onerous to its smaller members.  According to APTS,
approximately one-third of its members have annual budgets under $3,000,000.  APTS suggests that the
$3,000,000 benchmark is generally accepted among noncommercial stations as indicative of a small station
and notes that virtually all members of the public television Small Station Association have operating
budgets below $3,000,000.  APTS urges us to adopt an economic burden exemption for local programming
produced by such stations.
      265.Instructional Television Fixed Services ("ITFS") licensees argue that their programming
should not be subject to the closed captioning requirements.  These parties assert that closed captioning
would represent an formidable economic burden.  Several commenters argue that they are already obligated
to ensure that their services are accessible under both the ADA and the Rehabilitation Act of 1973.  These
commenters propose excluding ITFS providers from the definition of "video programming provider" and
exempting ITFS programming carried on wireless cable systems from any closed captioning requirements.
      266.Several low power television station ("LPTV") operators assert that as small businesses,
LPTV operators warrant an exemption based on the economic burden that closed captioning requirements
would pose.  The Community Broadcasters Association ("CBA") suggests that specific classes of
programming carried by some LPTV stations should be exempt in order to relieve these providers of an
economic burden.
      267.Access centers and organizations providing governmental programming assert that their
operations qualify as small entities and they would face a questionable future if required to closed caption
a substantial portion of their programming.  These commenters assert that, in many cases, that the financial
requirements for closed captioning would exceed or substantially consume their entire annual budgets.
Several of these commenters state that mandatory captioning requirements could effectively eliminate public,
educational and governmental ("PEG") programming.  Accordingly, these commenters seek an exemption
based on the economic burden posed by closed captioning requirements unless an alternative funding
mechanism becomes available.  The Greater Metro Telecommunications Consortium ("GMTC") suggests
that PEG programmers should be allowed to weigh the costs and the benefits of providing captioning and
consider alternatives.  Several commenters representing multichannel video programming distribution
systems ("MVPDs") join the access centers in arguing that PEG channels should be exempt.  These
commenters concur that PEG channels generally operate on very limited budgets which preclude captioning.
     C.   Description and Estimate of the Number of Small Entities to Which the Rules Will Apply
      268.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.  The RFA 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.  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 SBA.
      269.Small MVPDs:  The 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.
This definition includes cable system operators, closed circuit television services, direct broadcast satellite
services, multipoint distribution systems, satellite master antenna systems and subscription television
services.  According to the Bureau of the Census, there were 1,758 total cable and other pay television
services and 1,423 had less than $11 million in revenue.  We address below each service individually to
provide a more precise estimate of small entities.
      270.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.  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.  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 we are adopting.  We conclude that only a small percentage of these
entities currently provide qualifying "telecommunications services" as required by the Communications Act
and, therefore, estimate that the number of such entities are significantly fewer than noted.
      271.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."  The Commission has determined that there are 61,700,000
subscribers in the United States.  Therefore, we found that 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.  Based on available data, we
find that the number of cable operators serving 617,000 subscribers or less totals 1450. 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.
      272.Multipoint Multichannel Distribution Systems ("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 preceding three calendar years.  This
definition of a small entity in the context of MMDS auctions has been approved by the SBA.
      273.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 1573 previously authorized and proposed MMDS
facilities. Information available to us indicates that no MMDS facility generates revenue in excess of $11
million annually.  We conclude that, for purposes of this FRFA, there are approximately 1634 small MMDS
providers as defined by the SBA and the Commission's auction rules.
      274.ITFS:  There are presently 2032 ITFS licensees.  All but 100 of these licenses are held by
educational institutions.  Educational institutions are included in the definition of a small business.
However, we do not collect annual revenue data for ITFS licensees and are not able to ascertain how many
of the 100 non-educational licensees would be categorized as small under the SBA definition. No
commenters address these non-educational licensees.  Accordingly, we conclude that at least 1932 licensees
are small businesses.
      275.Direct Broadcast Satellite ("DBS"):  Because DBS provides subscription services, DBS falls
within the SBA definition of cable and other pay television services (SIC 4841).  As of December 1996, there
were eight DBS licensees.  However, the Commission does not collect annual revenue data for DBS and,
therefore, is unable to ascertain the number of small DBS licensees that could be affected by these proposed
rules.  Although DBS service requires a great investment of capital for operation, in the Notice, we
acknowledged that there are several new 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.  Since the publication of the Notice, however, more information has become available.  Estimates
of 1996 revenues for various DBS operators are significantly greater than $11,000,000 and range from a low
of $31,132,000 for Alphastar to a high of $1,100,000,000 for Primestar.  Accordingly, we now conclude
that no DBS operator qualifies as a small entity.
      276.Home Satellite Dish ("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.  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 packager.  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 nonsubscription programming; and (3) viewers
who receive satellite programming services illegally without subscribing.
      277.According to the most recently available information, there are approximately 30 program
packagers nationwide offering packages of scrambled programming to retail consumers.  These program
packagers provide subscriptions to approximately 2,314,900 subscribers nationwide.  This is an average
of about 77,163 subscribers per program packager.  This is substantially smaller than the 400,000 subscribers
used in the Commission's definition of a small multiple system operator ("MSO").  Furthermore, because
this an average, it is likely that some program packagers may be substantially smaller.
      278.Open Video System ("OVS"):  The Commission has certified nine OVS operators.  Of these
nine, only two are providing service.  On October 17, 1996, Bell Atlantic received approval for its
certification to convert its Dover, New Jersey Video Dialtone ("VDT") system to OVS.  Bell Atlantic
subsequently purchased the division of Futurevision which had been the only operating program package
provider on the Dover system, and has begun offering programming on this system using these resources.
Metropolitan Fiber Systems was granted certifications on December 9, 1996, for the operation of OVS
systems in Boston and New York, both of which are being used to provide programming.  Bell Atlantic
and Metropolitan Fiber Systems have 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.  In the Notice, we concluded that one OVS licensee qualifies as a small business
concern.  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.
      279.Satellite Master Antenna Television ("SMATVs"):  Industry sources estimate that
approximately 5200 SMATV operators were providing service as of December 1995.  Other estimates
indicate that SMATV operators serve approximately 1.05 million residential subscribers as of September
1996.  The ten largest SMATV operators together pass 815,740 units.  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 conclude that a substantial number of
SMATV operators qualify as small entities.
      280.Local Multipoint Distribution System ("LMDS"):  Unlike the above pay television services,
LMDS technology and spectrum allocation will allow licensees to provide wireless telephony, data, and/or
video services.  A LMDS provider is not limited in the number of potential applications that will be available
for this service.  Therefore, the definition of a small LMDS entity may be applicable to both cable and other
pay television (SIC 4841) and/or radiotelephone communications companies (SIC 4812).  The SBA
definition for cable and other pay services is defined in paragraph 269 supra.  A small radiotelephone entity
is one with 1500 employees or less. However, for the purposes of this Report and Order on closed
captioning, we include only an estimate of LMDS video service providers.
      281.LMDS is a service that is expected to be auctioned by the FCC in 1997.  The vast majority
of LMDS entities providing video distribution could be small businesses under the SBA's definition of cable
and pay television (SIC 4841).  However, in the Third NPRM, we proposed to define a small LMDS
provider as an entity that, together with affiliates and attributable investors, has average gross revenues for
the three preceding calendar years of less than $40 million.  We have not yet received approval by the SBA
for this definition.
      282.There is only one company, CellularVision, that is currently providing LMDS video
services.  Although the Commission does not collect data on annual receipts, we assume that CellularVision
is a small business under both the SBA definition and our proposed auction rules.  No commenters addressed
the tentative conclusions we reached in the Notice.  Accordingly, we affirm our tentative conclusion that a
majority of the potential LMDS licensees will be small entities, as that term is defined by the SBA.
      283.Small Broadcast Stations:  The SBA defines small television broadcasting stations as
television broadcasting stations with $10.5 million or less in annual receipts.
      284.Estimates Based on Census and BIA Data:  According to the Bureau of the Census, in 1992,
1155 out of 1478 operating television stations reported revenues of less than $10 million for 1992.  This
represents 78% of all television stations, including noncommercial stations.  The Bureau of the Census
does not separate the revenue data by commercial and noncommercial stations in this report.  Neither does
it allow us to determine the number of stations with a maximum of $10.5 million in annual receipts.  Census
data also indicate that 81% of operating firms (that owned at least one television station) had revenues of
less than $10 million.
      285.We also have performed a separate study based on the data contained in the BIA
Publications, Inc. Master Access Television Analyzer Database, which lists a total of 1141 full power
commercial television stations.  It should be noted that, using the SBA definition of small business
concern, the percentage figures derived from the BIA database may be underinclusive because the database
does not list revenue estimates for noncommercial educational stations, and these therefore are excluded
from our calculations based on the database.  The BIA data indicate that, based on 1995 revenue estimates,
440 full power commercial television stations had an estimated revenue of $10.5 million or less.  That
represents 54% of full power commercial television stations with revenue estimates listed in the BIA
program.  The database does not list estimated revenues for 331 stations.  Using a worst case scenario, if
those 331 stations for which no revenue is listed are counted as small stations, there would be a total of 771
stations with an estimated revenue of $10.5 million or less, representing approximately 68% of the 1141 full
power commercial television stations listed in the BIA data base.
      286.Alternatively, if we look at owners of commercial television stations as listed in the BIA
database, there are a total of 488 owners.  The database lists estimated revenues for 60% of these owners,
or 295.  Of these 295 owners, 156 or 53% had annual revenues of less than $10.5 million.  Using a worst case
scenario, if the 193 owners for which revenue is not listed are assumed to be small, then small entities would
constitute 72% of the total number of owners.
      287.In summary, based on the foregoing worst case analysis using Bureau of the Census data,
we estimate that our rules will apply to as many as 1150 commercial and noncommercial television stations
(78% of all stations) that could be classified as small entities.  Using a worst case analysis based on the data
in the BIA data base, we estimate that as many as 771 commercial television stations (about 68% of all
commercial television stations) could be classified as small entities.  As we noted above, these estimates are
based on a definition that we tentatively believe greatly overstates the number of television broadcasters that
are small businesses.  Further, it should be noted that under the SBA's definitions, revenues of affiliates that
are not television stations should be aggregated with the television station revenues in determining whether
a concern is small.  The estimates overstate the number of small entities since the revenue figures on which
they are based do not include or aggregate such revenues from nontelevision affiliated companies.
      288.Program Producers and Distributors:  The Commission has not developed a definition of
small entities applicable to producers or distributors of television programs. Therefore, we will utilize the
SBA classifications of Motion Picture and Video Tape Production (SIC 7812), Motion Picture and Video
Tape Distribution (SIC 7822), and Theatrical Producers (Except Motion Pictures) and Miscellaneous
Theatrical Services (SIC 7922).  These SBA definitions provide that a small entity in the television
programming industry is an entity with $21.5 million or less in annual receipts for SIC 7812 and 7822, and
$5 million or less in annual receipts for SIC 7922.  The 1992 Bureau of the Census data indicate the
following:  (1) there were 7265 U.S. firms classified as Motion Picture and Video Production (SIC 7812),
and that 6987 of these firms had $16,999 million or less in annual receipts and 7002 of these firms had
$24,999 million or less in annual receipts; (2) there were 1139 U.S. firms classified as Motion Picture and
Tape Distribution (SIC 7822), and that 1007 of these firms had $16,999 million or less in annual receipts and
1013 of these firms had $24,999 million or less in annual receipts; and (3) there were 5671 U.S. firms
classified as Theatrical Producers and Services (SIC 7922), and that 5627 of these firms had less than $5
million in annual receipts.
      289.Each of these SIC categories is very broad and includes firms that may be engaged in various
industries including television.  Specific figures are not available as to how many of these firms exclusively
produce and/or distribute programming for television or how many are independently owned and operated.
Consequently, we conclude that there are approximately 6987 small entities that produce and distribute taped
television programs, 1013 small entities primarily engaged in the distribution of taped television programs,
and 5627 small producers of live television programs that may be affected by the rules adopted in this Report
and Order.
     D.   Description of Reporting, Recordkeeping and Other Compliance Requirements
      290.We have not prescribed any reporting requirements.  While several parties encouraged
adoption of such requirements, we believe that our enforcement process alleviates the need for reporting.
Thus, we will not impose recordkeeping requirements for video programming providers.  Rather, we shall
allow them to exercise their own discretion and only require that they retain records sufficient to demonstrate
compliance with our rules (Section 79.1(g)(6)).  In order to further relieve small video programming
distributors of any unnecessary recordkeeping burden, we will permit video programming distributors to rely
on certifications from the programming suppliers to demonstrate compliance with our closed captioning rules
(Section 79.1(g)(6)).
     E.   Steps Taken to Minimize Significant Economic Impact On Small Entities and Significant
          Alternatives Considered
      291.In formulating our closed captioning rules, we believe that we have minimized the effect
on small entities while making video programming more accessible to persons with hearing disabilities.
These efforts are consistent with the Congressional goal of increasing the availability of closed captioned
programming while preserving the diversity of available programming.
      292.Generally, we have not specifically exempted any class of video programming distributor
because, we have determined that all video programming distributors are technically capable of delivering
captioning.  We have, however, recognized that ITFS licensees serve a particular well defined niche as
distributors of specialized programming directed at specified sites and not generally intended for residential
use.  We also recognize that the general public benefits from the redistribution of this programming by
MMDS operators.  We have, therefore, determined that ITFS operators warrant a blanket exemption.
Accordingly, we will exempt programming originated by ITFS licensees, regardless of the facility used to
distribute this programming (Section 79.1(d)(7)).
      293.We have also recognized the significance of locally produced and distributed programming
of primarily local interest and limited repeat value.  Much of this programming is produced on a low budget
as a public service and our closed captioning requirements might impose a significant economic burden that
could result in such programming not being televised.  We have, therefore, created a limited exemption for
such programming (Section 79.1(d)(8)).
      294.We recognize that many new video programming services will often qualify as small
entities.  We also recognize the need to allow new and innovative services designed to serve emerging or
niche markets greater flexibility than more established services serving well defined markets.  Accordingly,
we have created an exemption to relieve new services from our captioning rules for their first four years of
operation (Section 79.1(d)(9)).
      295.We will not require any video programming provider to spend more than 2% of its annual
gross revenues received from a channel on closed captioning (Section 79.1(d)(11)).  This will require video
programming providers to devote a reasonable portion of their revenue stream to closed captioning.  This
mechanism will help to avoid an "all or nothing" approach thus ensuring that accessibility to captioned
programming is increased without creating an economic burden on video programming providers.
      296.Furthermore, we will exempt from our closed captioning requirements any video
programming provider with less than $3 million in annual gross revenues except that it will be required to
pass through any captioning it may receive (Section 79.1(d)(12)).  This provision is intended to address the
problems of small video programming providers that are not in a position to devote significant resources
towards captioning and who would, even if they expended 2% of their revenues on captioning, provide only
a minimal amount of captioned programming.  This will relieve the smallest of entities of any burdensome
obligation to provide captioning without significantly reducing the availability of captioning.
      297.In order to further minimize the impact of any unanticipated burdens that may be created
by our closed captioning requirements, we have adopted a petition process that permits us to consider
requests for individual exemptions from these rules based on the statutory undue burden standard (Section
79.1(f)). This mechanism will allow us to address the impact of these rules on individual entities and modify
the rules to accommodate individual circumstances.  We have specifically designed these procedures to
ameliorate the impact of the closed captioning rules in a manner consistent with the objective of increasing
the availability of captioned programming.
      F.Report to Congress
      298.The Commission will send a copy of the Report and Order including this FRFA in a report
to Congress pursuant to the Small Business Regulatory Enforcement Fairness Act of 1996, 5 U.S.C.
 801(a)(1)(A).  A copy of the Report and Order and this FRFA (or a copy thereof) will also be published
in the Federal Register, see 5 U.S.C.
 608(b) and will be sent to the Chief Counsel for Advocacy of the Small Business Administration.
   XI.PAPERWORK REDUCTION ACT OF 1995 ANALYSIS
      299.The requirements adopted in this Report and Order have been analyzed with respect to the
Paperwork Reduction Act of 1995 ("1995 Act") and found to impose new or modified information collection
requirements on the public.  Implementation of any new or modified requirements will be subject to approval
by the Office of Management and Budget ("OMB") as prescribed by the 1995 Act.  The Commission, as part
of its continuing effort to reduce paperwork burdens, invites the general public and OMB to comment on the
information collections contained in the Report and Order as required by the 1995 Act.  OMB comments
are due 60 days from date of publication of the Report and Order in the Federal Register.  Comments should
address:  (1) 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; (2) the accuracy
of the Commission's burden estimates; (3) ways to enhance the quality, utility, and clarity of information
collected; and (4) ways to minimize the burden of collection of information on respondents, including the
use of automated collection techniques or other forms of information technology.
      300.Written comments by the public on the proposed and/or modified information collections
are due on or before 30 days after publication of this Report and Order in the Federal Register.  Written
comments must be submitted by OMB on the proposed and/or modified information collections on or before
60 days after publication of this Report and Order in the Federal Register.  A copy of any comments on the
information collections contained herein should be submitted to Judy Boley, Federal Communications
Commission, Room 234, 1919 M Street, N.W., Washington, D.C.  20554, or via the Internet to
jboley@fcc.gov and to Timothy Fain, OMB Desk Officer, 10236, NEOB, 725-17th Street, N.W.,
Washington, D.C.  20502 or via the Internet to fain_t@al.eop.gov.  For additional information concerning
the information collections contained herein contact Judy Boley at 202-418-0214, or via the Internet at
jboley@fcc.gov.
 XII.ORDERING CLAUSES
      301.Accordingly, IT IS ORDERED that, pursuant to authority found in Sections 4(i), 303(r), and
713 of the Communications Act of 1934, as amended, 47 U.S.C.  154(i), 303(r), and 613, the
Commission's rules ARE HEREBY AMENDED by adding a new Part 79 as shown in Appendix B.  The
amendments set forth in Appendix B shall become effective January 1, 1998.  Any information collection
requirements shall be subject to approval by the Office of Management and Budget and be effective January
1, 1998.
      302.IT IS FURTHER ORDERED that the Secretary shall send a copy of this Report and Order,
including the Final Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business
Administration in accordance with paragraph 603(a) of the Regulatory Flexibility Act, Pub.L. No. 96-354,
94 Stat. 1164, 5 U.S.C.  601 et seq. (1981).
     FEDERAL COMMUNICATIONS COMMISSION
     William F. Caton
     Acting Secretary
                          APPENDIX A
                       List of Commenters
Comments
   1.ABC, Inc.
2.   Access Fort Wayne ("Fort Wayne")
   3.Access to Independence and Mobility ("AIM")
   4.Access Television Network, Inc. ("Access Television")
   5.A & E Television Networks, The History Channel, and Ovation  ("A & E")
   6.Alliance for Community Media ("Alliance")
   7.Alphastar Television Network, Inc. ("Alphastar")
   8.American Association of Advertising Agencies ("AAAA")
9.   American Association of Community Colleges, Community College Satellite Network,          Americ
                                                                                               a Indian
                                                                                               Higher
                                                                                               Educati
                                                                                               on
                                                                                               Consort
                                                                                               ium,
                                                                                               George
                                                                                               Washin
                                                                                               gton
                                                                                               Univers
                                                                                               ity
                                                                                               Televisi
                                                                                               on,
                                                                                               Hispani
                                                                                               c
                                                                                               Educati
                                                                                               on
                                                                                               Teleco
                                                                                               mmuni
                                                                                               cations
                                                                                               System,
                                                                                               Nationa
                                                                                               l
                                                                                               Techno
                                                                                               logical
                                                                                               Univers
                                                                                               ity,
                                                                                               Nationa
                                                                                               l
                                                                                               Univers
                                                                                               ity
                                                                                               Teleco
                                                                                               mmuni
                                                                                               cations
                                                                                               Networ
                                                                                               k,
                                                                                               Oklaho
                                                                                               ma
                                                                                               State
                                                                                               Univers
                                                                                               ity,
                                                                                               Institute
                                                                                               for
                                                                                               Teleco
                                                                                               mmuni
                                                                                               cations,
                                                                                               Old
                                                                                               Domini
                                                                                               on
                                                                                               Univers
                                                                                               ity, and
                                                                                               Univers
                                                                                               ity of
                                                                                               New
                                                                                               Mexico
                                                                                               ("Highe
                                                                                               r
                                                                                               Educati
                                                                                               on
                                                                                               Parties"
                                                                                               )
10.  American Athletic Association of the Deaf ("AAAD")
11.  American Program Service, Connecticut Public Broadcasting, Inc., Detroit Educational           Televisi
                                                                                                    on
                                                                                                    Founda
                                                                                                    tion,
                                                                                                    Greater
                                                                                                    New
                                                                                                    Orleans
                                                                                                    Educati
                                                                                                    onal
                                                                                                    Televisi
                                                                                                    on
                                                                                                    Founda
                                                                                                    tion,
                                                                                                    Louisia
                                                                                                    na
                                                                                                    Educati
                                                                                                    onal
                                                                                                    Televisi
                                                                                                    on
                                                                                                    Authori
                                                                                                    ty,
                                                                                                    Maryla
                                                                                                    nd
                                                                                                    Public
                                                                                                    Broadc
                                                                                                    asting
                                                                                                    Commi
                                                                                                    ssion,
                                                                                                    Metrop
                                                                                                    olitan
                                                                                                    Board
                                                                                                    of
                                                                                                    Public
                                                                                                    Educati
                                                                                                    on,
                                                                                                    Mid-
                                                                                                    South
                                                                                                    Public
                                                                                                    Commu
                                                                                                    nication
                                                                                                    s
                                                                                                    Founda
                                                                                                    tion,
                                                                                                    Mississ
                                                                                                    ippi
                                                                                                    Authori
                                                                                                    ty for
                                                                                                    Educati
                                                                                                    onal
                                                                                                    Televisi
                                                                                                    on, New
                                                                                                    Jersey
                                                                                                    Public
                                                                                                    Broadc
                                                                                                    asting
                                                                                                    Authori
                                                                                                    ty,
                                                                                                    Oregon
                                                                                                    Public
                                                                                                    Broadc
                                                                                                    asting,
                                                                                                    St.
                                                                                                    Lawren
                                                                                                    ce
                                                                                                    Valley
                                                                                                    Educati
                                                                                                    onal
                                                                                                    Televisi
                                                                                                    on
                                                                                                    Council
                                                                                                    , Inc.,
                                                                                                    South
                                                                                                    Florida
                                                                                                    Public
                                                                                                    Teleco
                                                                                                    mmuni
                                                                                                    cations,
                                                                                                    Inc.,
                                                                                                    South
                                                                                                    Texas
                                                                                                    Public
                                                                                                    Broadc
                                                                                                    asting
                                                                                                    System,
                                                                                                    Univers
                                                                                                    ity of
                                                                                                    New
                                                                                                    Hamps
                                                                                                    hire,
                                                                                                    Univers
                                                                                                    ity of
                                                                                                    North
                                                                                                    Carolin
                                                                                                    a Center
                                                                                                    for
                                                                                                    Public
                                                                                                    Televisi
                                                                                                    on,
                                                                                                    Western
                                                                                                    New
                                                                                                    York
                                                                                                    Public
                                                                                                    Broadc
                                                                                                    asting
                                                                                                    Associa
                                                                                                    tion,
                                                                                                    Windo
                                                                                                    w to the
                                                                                                    World
                                                                                                    Commu
                                                                                                    nication
                                                                                                    s, Inc.,
                                                                                                    and
                                                                                                    WQED
                                                                                                    Pittsbur
                                                                                                    gh
                                                                                                    ("APS")
  12.Ameritech New Media, Inc. ("Ameritech")
13.  Archdiocese of Los Angeles Education and Welfare Corp., Diocese of Orange       Educati
                                                                                     on and
                                                                                     Welfare
                                                                                     Corpor
                                                                                     ation,
                                                                                     and
                                                                                     Caritas
                                                                                     Teleco
                                                                                     mmuni
                                                                                     cations,
                                                                                     Inc.
                                                                                     ("L.A.
                                                                                     Archdi
                                                                                     ocese")
 14.  Arizona State Board of Regents for Benefit of the University of Arizona, Board of        Regents
                                                                                               of the University of Wisconsin System, California State University, Greater Dayton Public
                                                                                               Television, Inc., KCTS Television, Northeastern Educational Television of Ohio, Inc., Oregon State
                                                                                               System of Higher Education, Pasadena Unified School District, Regents of the University of
                                                                                               Minnesota, St. Louis Regional Educational and Public Television Commission, San Diego County
                                                                                               Superintendent of Schools, Santa Ana Unified School District, South Carolina Educational
                                                                                               Television Commission, State of Wisconsin--Educational Communications Board, The Ohio State
                                                                                               University, University of Maine System, University of Southern California, University of Wyoming,
                                                                                               University System of the Ana G. Mendez Educational Foundation, WITF, Inc., and West Central
                                                                                                Illinois Educational Telecommunications Corp. ("Arizona State Board")
 15.  Association of America's Public Television Stations and The Public Broadcasting      Service
                                                                                          ("APTS
                                                                                          ")
16.  Association of Independent Video & Filmmakers ("AIVF")
17.  Association of Late-Deafened Adults, Inc. ("ALDA")
18.  Association of Local Television Stations, Inc. ("ALTV")
19.  Bell Atlantic and NYNEX ("Bell Atlantic")
20.  BellSouth Corporation, Bell South Interactive Media Services, Inc. and
          BellSouth Wireless Cable, Inc. ("BellSouth")
21.  Bloomberg Information Television ("BIT")
 22.  Californians for Television Access and Self Help for Hard of Hearing People - California
                                                                                               ("California")
23.  Captivision
24.  Joan Cassidy ("Cassidy")
25.  Catholic Television Network ("CTN")
26.  CBS, Inc.
27.  James J. Chladek, Cooperation TV Association of Southern Minnesota, Island
          Broadcasting Co., Selective TV, Inc., Teleview Systems of Minnesota, and UHF Television,
          Inc. ("LPTV Licensees")
28.  Chicago Access Corporation ("Chicago")
28.  Cincinnati Community Video ("Cincinnati")
30.  City of Kansas City, Missouri, Office of City Communications ("Kansas City")
31.  City of Pittsburgh ("Pittsburgh")
32.  City of Pocatello ("Pocatello")
33.  Coalition of Protection and Advocacy Systems ("The Coalition")
34.  Communications Services for the Deaf ("CSD")
35.  Community Access Center ("CAC")
36.  Community Access TV of Boulder, Inc. ("Boulder")
37.  Community Broadcasters Association ("CBA")
38.  Community Television Network - Ann Arbor, MI ("Ann Arbor")
39.  Consumer Action Network ("CAN")
40.  Leslie L. Cotter ("Cotter")
41.  Cox Enterprises, Inc. ("Cox")
42.  Dayton Access Television ("Dayton")
43.  Direct Marketing Association, Inc. ("DMA")
44.  DIRECTV, Inc. ("DirecTV")
45.  E! Entertainment Television, Inc. ("E!")
46.  Encore Media Corp. ("Encore")
47.  Evanston Community Media Center ("Evanston")
48.  Fox  Sports NET, LLC ("Fox")
49.  The Game Show Network, L.P. ("GSN")
50.  Georgia Public Telecommunications Commission ("GPTC")
 51.  Greater Metro Telecommunications Consortium and The National Association of
     Telecommunications Officers and Advisors ("GMTC")
52.  Grupo Televisa, S.A. ("Televisa")
53.  GTE Service Corp. ("GTE")
54.  Ho'ike: Kauai Community Television, Inc.  ("Kauai")
55.  Home Box Office ("HBO")
56.  HSN, Inc.
57.  Indiana Higher Education Telecommunication System ("IHETS")
58.  Intergovernmental Cable Communications Authority ("ICCA")
59.  International Cable Channels Partnership, Ltd. ("ICCP")
60.  International Computers
61.  Japan Network Group, Inc. ("JNG")
62.  Jerald M. Jordan ("Jordan")
63.  Kaleidoscope Television ("Kaleidoscope")
64.  KSLS, Inc. ("KSCI")
65.  Lansing School District ("Lansing")
66.  League of the Hard of Hearing ("LHH")
67.  Lincoln Park Cable Commission ("Lincoln Park")
68.  Lincoln Broadcasting Company ("Lincoln Broadcasting")
69.  Massachusetts Assistive Technology Partnership ("MATP")
70.  Media Captioning Services ("MCS")
71.  Motion Picture Association of America, Inc. ("MPAA")
72.  National Association of Broadcasters ("NAB")
73.  National Association of the Deaf  ("NAD")
74.  National Association of Collegiate Directors of Athletics ("NACDA")
75.  National Broadcasting Company, Inc. ("NBC")
76.  National Cable Satellite Corporation ("C-SPAN")
77.  National Cable Television Association ("NCTA")
78.  National Captioning Institute ("NCI")
79.  National Collegiate Athletic Association ("NCAA")
  80.National Council on Disability ("NCD")
81.  NIMA International ("NIMA")
82.  Northern Virginia Resource Center for Deaf and Hard of Hearing Persons ("NVRC")
83.  Ohio Educational Telecommunications ("OET")
84.  Outdoor Life Network, Speedvision Network, The Golf Channel, BET on Jazz, and
          America's Health Network ("Outdoor Life")
85.  Pace Telecommunications Center ("Pace")
86.  Pacific 10 Conference ("Pac-10")
87.  Para Technologies, Inc.
88.  Paxson Communications Corp. ("Paxson")
89.  Pay-Per-View-Network, Inc. d/b/a Viewers Choice ("Viewer's Choice")
90.  Plymouth Community Channel 3 ("Plymouth")
91.  Prevue Networks, Inc. ("Prevue")
92.  Primestar Partners, L.P. ("Primestar")
93.  Public Access Corporation of the District of Columbia and the District of Columbia Office of   Cable
                                                                                                    Television ("District of Columbia")
94.  Pulitzer Broadcasting Company ("Pulitzer")
95.  QVC, Inc.
96.  Radio-Television News Directors Association ("RTNDA")
97.  Recording Industry Association of America ("RIAA")
98.  Roman Catholic Diocese of Rockville Centre d/b/a Telicare ("Telicare")
99.  Satellite Broadcasting and Communications Association of America ("SBCA")
100. Satellite Distributors Cooperative ("SDC")
101. SBC Communications, Inc., Southwestern Bell Video Services, Inc., and Southwestern        Bell
                                                                                               Media
                                                                                               Venture
                                                                                               s, Inc.
                                                                                               ("SBC")
102. Self Help for Hard of Hearing People, Inc. ("SHHH")
103. SHHH Nova West ("Nova West")
104. Sierra Nevada Community Access Television ("SNCT")
105. Southwest Suburban Cable Commission ("Southwest Suburban")
106. Southwestern Oakland Cable Commission ("Southwestern Oakland")
107. Telemundo Group, Inc. ("Telemundo")
108. Television Food Network ("TVFN")
109. Three Angels Broadcasting Network, Inc. ("Three Angels")
110. Time Warner Cable ("Time Warner")
111. Tualatin Valley Community Access ("Tualatin")
112. United Video Satellite Group, Inc. ("United Video")
113. United States Satellite Broadcasting Company, Inc. ("USSB")
114. Univision Communications, Inc. ("Univision")
115. U S West, Inc. ("US West")
116. VITAC
117. The Weather Channel
118. Westsound Community Access Television, Inc. ("Westsound")
119. WGBH Educational Foundation ("WGBH")
120. Wireless Cable Association International Inc. ("WCA")
Reply Comments
1.   A & E Network, The History Channel, and Ovation ("A & E")
2.   ALLNEWSCO, Inc. d/b/a NEWSCHANNEL 8 ("Allnewsco")
3.   American Athletic Association of the Deaf, Inc. ("AAAD")
4.   Ameritech New Media, Inc ("Ameritech")
5.   Ball State University ("Ball State")
6.   Bell Atlantic and NYNEX ("Bell Atlantic")
7.   BellSouth Corporation, BellSouth Interactive Media Services, Inc. and BellSouth Wireless       Cable,
                                                                                                     Inc. ("BellSouth")
8.   BET Holdings, Inc. ("BET Holdings")
9.   Bloomberg Information Television ("BIT")
10.  The California Channel
11.  Catholic Television Network ("CTN")
12.  City of Sterling Heights, Sterling Heights Television Network ("Sterling Heights")
13.  City of Indianapolis, Cable Communications Agency ("Indianapolis")
14.  Community Television of Prince George's ("Prince George's)
15.  Consumer Action Network ("CAN")
16.  The Council of Organizational Representatives on National Issues Concerning PeopleWho Are           Deaf
                                                                                                         or hard of Hearing ("Council of Organizational Representatives")
17.  Encore Media Corp. ("Encore")
18.  Eternal Word Television Network ("EWTN")
19.  Fox  Sports Net, L.L.C. ("Fox")
20.  The Game Show Network, L.P. ("GSN")
21.  Greene Communications, Inc. ("Greene")
22.  Grupo Televisa, S.A. ("Televisa")
23.  Hear Ink Video Captioning ("Hear Ink")
24.  Home Box Office ("HBO")
25.  HSN, Inc.
26.  Illinois Institute of Technology, Northeastern University, and The Board of Directors of the        Leland
                                                                                                         Stanford Junior University ("Illinois Institute")
 27.  International Cable Channels Partnership, Ltd. ("ICCP")
28.  International Computers
29.  Kansas Association of the Deaf ("KAD")
30.  Lansing School District ("Lansing")
31.  Lifetime Television ("Lifetime")
32.  Lincoln Broadcasting Company ("Lincoln")
33.  Madison City Channel ("Madison")
34.  Media  Captioning Services ("MCS")
35.  Motion Picture Association of America, Inc. ("MPAA")
36.  National Association of Collegiate Directors of Athletics ("NACDA")
37.  National Association of Broadcasters ("NAB")
38.  National Association of the Deaf ("NAD")
39.  National Cable Television Association ("NCTA")
40.  National Captioning Institute ("NCI")
41.  National Cable Satellite Corporation ("C-SPAN")
  42.New England Cable News ("NECN")
43.  New England College of Optometry (New England College")
44.  Newhouse Broadcasting Corp. d/b/a Advance Entertainment Corp. ("AEC")
45.  NIMA International ("NIMA")
46.  Paxson Communications Corp. ("Paxson")
47.  Pennsylvania Cable Network ("PCN")
48.  Pennsylvania Cable & Telecommunications Association ("PCTA")
49.  Primestar Partners L.P. ("Primestar")
50.  QVC, Inc. ("QVC")
51.  Radio-Television News Directors Association ("RTNDA")
52.  Rainbow Programming Holdings, Inc. ("Rainbow")
53.  The Small Cable Business Association ("SCBA")
54.  Solon Community Television ("Solon")
55.  Sonny Access Consulting ("Sonny")
56.  Stavros Center for Independent Living, Inc. ("Stavros")
57.  Tele-Communications, Inc. ("TCI")
58.  Telemundo Group, Inc. ("Telemundo")
  59.Neil Thompson and Thomas D'Angelo ("Thompson and D'Angelo")
60.  Three Angeles Broadcasting Network, Inc. ("Three Angels")
61.  Time Warner Cable ("Time Warner")
62.  United States Satellite Broadcasting Company, Inc. ("USSB")
63.  ValueVision International ("ValueVision")
64.  Viacom Inc.
65.  The Weather Channel
66.  Wireless Cable Association International, Inc. ("WCA")
  67.W.T. Woodson High School ("Woodson")
                           APPENDIX B
Rules
Title 47 of the Code of  Federal Regulations is amended by adding a new Part 79 to read as follows:
 1.  The authority citation for Part 79 is added to read as follows:
AUTHORITY:  47 U.S.C. 613.
 2.  A new Section 79.1 is added to reads as follows:
PART 79--CLOSED CAPTIONING OF VIDEO PROGRAMMING
Sec.
 79.1Closed captioning of video programming.
  Part 79  Closed captioning of video programming.
Section 79.1  Closed captioning of video programming.
(a)  Definitions. For purposes of this section the following definitions shall apply:
(1)  Video programming.  Programming provided by, or generally considered comparable to programming
provided by, a television broadcast station that is distributed and exhibited for residential use.  Video
programming includes advertisements of more than five minutes in duration but does not include
advertisements of five minutes' duration or less.
(2)  Video programming distributor.  Any television broadcast station licensed by the Commission and any
multichannel video programming distributor as defined in  76.1000(e) of this chapter, and any other
distributor of video programming for residential reception that delivers such programming directly to the
home and is subject to the jurisdiction of the Commission.  An entity contracting for program distribution
over a video programming distributor that is itself exempt from captioning that programming pursuant to
paragraph (e)(9) of this section shall itself be treated as a video programming distributor for purposes of this
section  To the extent such video programming is not otherwise exempt from captioning, the entity that
contracts for its distribution shall be required to comply with the closed captioning requirements of this
section.
(3)  Video programming provider.  Any video programming distributor and any other entity that provides
video programming that is intended for distribution to residential households including, but not limited to
broadcast or nonbroadcast television network and the owners of such programming.
(4)  Closed captioning.  The visual display of the audio portion of video programming contained in line 21
of the vertical blanking interval (VBI) pursuant to the technical specifications set forth in  15.119 of this
chapter or the equivalent thereof.
(5)  New programming.  Video programming that is first published or exhibited on or after January 1, 1998.
(6)  Pre-rule programming.
(i)   Video programming that was first published or exhibited before January 1, 1998.
(ii)  Video programming first published or exhibited for display on television receivers equipped for display
of digital transmissions or formatted for such transmission and exhibition prior to the date on which such
television receivers must, by Commission rule, be equipped with built-in decoder circuitry designed to
display closed-captioned digital television transmissions.
(7)  Nonexempt programming.  Video programming that is not exempt under paragraph (d) of this section
and, accordingly, is subject to closed captioning requirements set forth in this section.
(b)  Requirements for Closed Captioning of Video Programming.
(1)  Requirements for new programming.  Video programming distributors must provide closed captioning
for nonexempt video programming that is being distributed and exhibited on each channel during each
calendar quarter in accordance with the following requirements:
(i)   Between January 1, 2000, and December 31, 2001, video programming distributors shall provide at least
450 hours of captioned video programming, or if the video programming distributor provides less than 450
hours of new nonexempt video programming, then 95% of its new nonexempt video programming must be
provided with captions;
(ii)  Between January 1, 2002, and December 31, 2003, video programming distributors shall provide at least
900 hours of captioned video programming, or if the video programming distributor provides less than 900
hours of new nonexempt video programming, then 95% of its new nonexempt video programming must be
provided with captions;
(iii) Between January 1, 2004, and December 31, 2005, video programming distributors shall provide at least
an average of 1350 hours of captioned video programming, or if the video programming distributor provides
less than 1350 hours of new nonexempt video programming, then 95% of its new nonexempt video
programming must be provided with captions; and
(iv) As of January 1, 2006, and thereafter, 95% of the programming distributor's new nonexempt video
programming must be provided with captions.
(2)  Requirements for pre-rule programming.  As of January 1, 2008, and thereafter, 75% of the
programming distributor's pre-rule nonexempt video programming being distributed and exhibited on each
channel during each calendar quarter must be provided with closed captioning.
(3)  Video programming distributors shall continue to provide captioned video programming at substantially
the same level as the average level of captioning that they provided during the first 6 months of 1997 even
if that amount of captioning exceeds the requirements otherwise set forth in this section.
(c)  Obligation to Pass Through Captions of Already Captioned Programs.  All video programming
distributors shall deliver all programming received from the video programming owner or other origination
source containing closed captioning to receiving television households with the original closed captioning
data intact in a format that can be recovered and displayed by decoders meeting the standards of  15.119
of this chapter unless such programming is recaptioned or the captions are reformatted by the programming
distributor.
(d)  Exempt Programs and Providers.  For purposes of determining compliance with this section, any video
programming or video programming provider that meets one or more of the following criteria shall be
exempt to the extent specified in this paragraph.
(1)  Programming Subject to Contractual Captioning Restrictions.  Video programming that is subject to a
contract in effect on or before February 8, 1996, but not any extension or renewal of such contract, for which
an obligation to provide closed captioning would constitute a breach of contract.
(2)  Video Programming or Video Programming Provider For Which the Captioning Requirement has been
Waived.  Any video programming or video programming provider for which the Commission has determined
that a requirement for closed captioning imposes an undue burden on the basis of a petition for exemption
filed in accordance with the procedures specified in paragraph (f) of this section.
(3)  Non-English Language Programming.  All programming for which the audio is in a language other than
English, except that scripted programming that can be captioned using the "electronic news room" technique
is not exempt.
(4)  Primarily Textual Programming.  Video programming or portions of video programming for which the
content of the soundtrack is displayed visually through text or graphics (e.g., program schedule channels or
community bulletin boards).
(5)  Programming Distributed in the Late Night Hours.  Programming that is being distributed to residential
households between 2 a.m. and 6 a.m. local time.  Video programming distributors providing a channel that
consists of a service that is distributed and exhibited for viewing in more than a single time zone shall be
exempt from closed captioning that service for any continuous 4 hour time period they may select,
commencing not earlier than 12 a.m. local time and ending not later than 7 a.m. local time in any location
where that service is intended for viewing.  This exemption is to be determined based on the primary
reception locations and remains applicable even if the transmission is accessible and distributed or exhibited
in other time zones on a secondary basis.  Video programming distributors providing service outside of the
48 contiguous states may treat as exempt programming that is exempt under this paragraph when distributed
in the contiguous states.
(6)  Interstitials, Promotional Announcements and Public Service Announcements.  Interstitial material,
promotional announcements, and public service announcements that are 10 minutes or less in duration.
(7)  ITFS Programming.  Video programming produced for the instructional television fixed service (ITFS).
(8)  Locally Produced and Distributed Non-News Programming With Limited Repeat Value.    Programming
that is locally produced by the video programming distributor, has no repeat value, is of local public interest,
is not news programming, and for which the "electronic news room" technique of captioning is unavailable.
(9)  Programming on New Networks.  Programming on a video programming network for the first four years
after it begins operation.
(10) Primarily Non-vocal Musical Programming.  Programming that consists primarily of non-vocal music.
(11) Captioning Expense in Excess of 2% of Gross Revenues.  No video programming provider shall be
required to expend any money to caption any video programming if such expenditure would exceed 2% of
the gross revenues received from that channel during the previous calendar year.
(12) Channels Producing Revenues of Under $3,000,000.  No video programming provider shall be required
to expend any money to caption any channel of video programming producing annual gross revenues of less
than $3,000,000 during the previous calendar year other than the obligation to pass through video
programming already captioned when received pursuant to paragraph (c) of this section.
(e)  Responsibility for and Determination of Compliance.
(1)  Compliance shall be calculated on a per channel, calendar quarter basis;
(2)  Open captioning or subtitles in the language of the target audience may be used in lieu of closed
captioning;
(3)  Live programming or repeats of programming originally transmitted live that are captioned using the
so-called "electronic news room" technique will be considered captioned.  The live portions of
noncommercial broadcasters' fundraising activities that use automated software to create a continuous
captioned message will be considered captioned;
(4)  Compliance will be required with respect to the type of video programming generally  distributed to
residential households.  Programming produced solely for closed circuit or private distribution is not covered
by these rules;
(5)  Video programming that is exempt pursuant to paragraph (d) of this section that contains captions,
except video programming exempt pursuant to paragraph (d)(5) (late night hours exemption) of this section,
can count towards the compliance with the requirements for new programming prior to January 1, 2006.
Video programming that is exempt pursuant to paragraph (d) of this section that contains captions, except
that video programming exempt pursuant to paragraph (d)(5) (late night hours exemption) of this section,
can count towards compliance with the requirements for pre-rule programming.
(6)  For purposes of paragraph (d)(11) of this section, captioning expenses include direct expenditures for
captioning as well as allowable costs specifically allocated by a programming supplier through the price of
the video programming to that video programming provider.  To be an allowable allocated cost, a
programming supplier may not allocate more than 100% of the costs of captioning to individual video
programming providers.  A programming supplier may allocate the captioning costs only once and may use
any commercially reasonable allocation method;
(7)  For purposes of paragraphs (d)(11) and (d)(12) of this section, annual gross revenues shall be calculated
for each channel individually based on revenues received in the preceding calendar year from all sources
related to the programming on that channel.  Revenue for channels shared between network and local
programming shall be separately calculated for network and for non-network programming, with neither the
network nor the local video programming provider being required to spend more than 2% of its revenues for
captioning.  Thus, for example, compliance with respect to a network service distributed by a multichannel
video service distributor, such as a cable operator, would be calculated based on the revenues received by
the network itself (as would the related captioning expenditure).  For local service providers such as
broadcasters, advertising revenues from station-controlled inventory would be included.  For cable operators
providing local origination programming, the annual gross revenues received for each channel will be used
to determine compliance.  Evidence of compliance could include certification from the network supplier that
the requirements of the test had been met.  Multichannel video programming distributors, in calculating non-
network revenues for a channel offered to subscribers as part of a multichannel package or tier, will not
include a pro rata share of subscriber revenues, but will include all other revenues from the channel,
including advertising and ancillary revenues.  Revenues for channels supported by direct sales of products
will include only the revenues from the product sales activity (e.g., sales commissions) and not the revenues
from the actual products offered to subscribers.  Evidence of compliance could include certification from
the network supplier that the requirements of this test have been met.
(8)  If two or more networks (or sources of programming) share a single channel, that channel shall be
considered to be in compliance if each of the sources of video programming are in compliance where they
are carried on a full time basis;
(9)  Video programming distributors shall not be required to provide closed captioning for video
programming that is by law not subject to their editorial control, including but not limited to the signals of
television broadcast stations distributed pursuant to Sections 614 and 615 of the Communications Act or
pursuant to the compulsory copyright licensing provisions of Sections 111 and 119 of the Copyright Act
(Title 17 U.S.C. 111 and 119); programming involving candidates for public office covered by Sections
315 and 312 of the Communications Act and associated policies; commercial leased access, public access,
governmental and educational access programming carried pursuant to Sections 611 and 612 of the
Communications Act; video programming distributed by direct broadcast satellite (DBS) services in
compliance with the noncommercial programming requirement pursuant to Section 335(b)(3) of the
Communications Act to the extent such video programming is exempt from the editorial control of the video
programming provider; and video programming distributed by a common carrier or that is distributed on an
open video system pursuant to Section 653 of the Communications Act by an entity other than the open video
system operator.  To the extent such video programming is not otherwise exempt from captioning, the entity
that contracts for its distribution shall be required to comply with the closed captioning requirements of this
section.
(f)  Procedures for Exemptions Based on Undue Burden.
(1)  A video programming provider, video programming producer or video programming owner may petition
the Commission for a full or partial exemption from the closed captioning requirements.  Exemptions may
be granted, in whole or in part, for a channel of video programming, a category or type of video
programming, an individual video service, a specific video program or a video programming provider upon
a finding that the closed captioning requirements will result in an undue burden.
(2)  A petition for an exemption must be supported by sufficient evidence to demonstrate that compliance
with the requirements to closed caption video programming would cause an undue burden.  The term "undue
burden" means significant difficulty or expense.  Factors to be considered when determining whether the
requirements for closed captioning impose an undue burden include:
     (i)  The nature and cost of the closed captions for the programming;
     (ii) The impact on the operation of the provider or program owner;
     (iii) The financial resources of the provider or program owner; and
     (iv) The type of operations of the provider or program owner.
(3)  In addition to these factors, the petition shall describe any other factors the petitioner deems relevant to
the Commission's final determination and any available alternatives that might constitute a reasonable
substitute for the closed captioning requirements including, but not limited to, text or graphic display of the
content of the audio portion of the programming.  Undue burden shall be evaluated with regard to the
individual outlet.
(4)  An original and two (2) copies of a petition requesting an exemption based on the undue burden
standard, and all subsequent pleadings, shall be filed in accordance with  0.401(a) of this chapter.
(5)  The Commission will place the petition on public notice.
(6)  Any interested person may file comments or oppositions to the petition within 30 days of the public
notice of the petition.  Within 20 days of the close of the comment period, the petitioner may reply to any
comments or oppositions filed.
(7)  Comments or oppositions to the petition shall be served on the petitioner and shall include a certification
that the petitioner was served with a copy.  Replies to comments or oppositions shall be served on the
commenting or opposing party and shall include a certification that the commenter was served with a copy.
(8)  Upon a showing of good cause, the Commission may lengthen or shorten any comment period and waive
or establish other procedural requirements.
(9)  All petitions and responsive pleadings shall contain a detailed, full showing, supported by affidavit, of
any facts or considerations relied on.
(10) The Commission may deny or approve, in whole or in part, a petition for an undue burden exemption
from the closed captioning requirements.
(11) During the pendency of an undue burden determination, the video programming subject to the request
for exemption shall be considered exempt from the closed captioning requirements.
(g)  Complaint Procedures.
(1)  No complaint concerning an alleged violation of the closed captioning requirements of this section shall
be filed with the Commission unless such complaint is first sent to the video programming distributor
responsible for delivery and exhibition of the video programming.  A complaint must be in writing, must
state with specificity the alleged Commission rule violated and must include some evidence of the alleged
rule violation.  In the case of an alleged violation by a television broadcast station or other programming for
which the video programming distributor is exempt from closed captioning responsibility pursuant to
paragraph (e)(9) of this section, the complaint shall be sent directly to the station or owner of the
programming.  A video programming distributor receiving a complaint regarding such programming must
forward the complaint within seven days of receipt to the programmer or send written instructions to the
complainant on how to refile with the programmer.
(2)  A complaint will not be considered if it is filed with the video programming distributor later than the
end of the calendar quarter following the calendar quarter in which the alleged violation has occurred.
(3)  The video programming distributor must respond in writing to a complaint no later than 45 days after
the end of the calendar quarter in which the violation is alleged to have occurred or 45 days after receipt of
a written complaint, whichever is later.
(4)  If a video programming distributor fails to respond to a complaint or a dispute remains following the
initial complaint resolution procedures, a complaint may be filed with the Commission within 30 days after
the time allotted for the video programming distributor to respond has ended.  An original and two (2) copies
of the complaint, and all subsequent pleadings shall be filed in accordance with  0.401(a) of this chapter.
The complaint shall include evidence that demonstrates the alleged violation of the closed captioning
requirements of this section and shall certify that a copy of the complaint and the supporting evidence was
first directed to the video programming distributor.  A copy of the complaint and any supporting
documentation must be served on the video programming distributor.
(5)  The video programming distributor shall have 15 days to respond to the complaint.  In response to a
complaint, a video programming distributor is obligated to provide the Commission with sufficient records
and documentation to demonstrate that it is in compliance with the Commission's rules.  The response to the
complaint shall be served on the complainant.
(6)  Certifications from programming suppliers, including programming producers, programming owners,
networks, syndicators and other distributors, may be relied on to demonstrate compliance.  Distributors will
not be held responsible for situations where a program source falsely certifies that programming delivered
to the distributor meets our captioning requirements if the distributor is unaware that the certification is false.
Video programming providers may rely on the accuracy of certifications.  Appropriate action may be taken
with respect to deliberate falsifications.
(7)  The Commission will review the complaint, including all supporting evidence, and determine whether
a violation has occurred.  The Commission shall, as needed, request additional information from the video
programming provider.
(8)  If the Commission finds that a violation has occurred, penalties may be imposed, including a requirement
that the video programming distributor deliver video programming containing closed captioning in an
amount exceeding that specified in paragraph (b) of this section in a future time period.
(h)  Private Rights of Action Prohibited.  Nothing in this section shall be construed to authorize any private
right of action to enforce any requirement of this section.  The Commission shall have exclusive jurisdiction
with respect to any complaint under this section.
                SEPARATE STATEMENT OF CHAIRMAN REED E. HUNDT
Re:   MM Docket No. 95-176  In the Matter of Closed Captioning and Video Description of Video
Programming;  Implementation of Section 305 of the Telecommunications Act of 1996;  Video
Programming Accessibility
     The Telecommunications Act of 1996 mandated  higher quality telecommunications services and
expanded access  to the American public.  One of the most important dimensionsof this congressional intent
is Section 713, that requires closed captioning as a means to expand video programming accessibility for
people with hearing disabilities.
     In fulfillment of the statute's intent, today's decision by the Commission will give people with
hearing disabilities greater access -- to the news, entertainment, sports, and the other many benefits provided
by television -- whether they receive TV by broadcast, cable, DBS, MMDS, OVS, or other multichannel
video programming distributors.
     Our rules will ensure that when a person with a hearing disability turns on the television set, he or
she will have closed captioned programs available from morning to night, across the different channels of
programming provided by a multichannel video programming provider. the majority of the Commission has
set a pace for transition to an era in which most programs will be captioned that is slower than I would
prefer. nevertheless it is good news that we have set a schedule that will ultimately ensure that Americans
with hearing disabilities will have access to important video services and programming.
     The marketplace does not always generate a necessary and appropriate amount of  the sort of benefits
from the communications revolution that help preserve our unity as a nation, as a society, as a complex group
of mutually involved citizens, as a fantastically varied and extended family of Americans.  The benefits not
necessarily produced by the pro-competitive doctrine this Commission justly has prided itself on during the
last four years include, among other things, children's educational television, free time for political debate,
communications connections in classrooms, and access to communications for people with disabilities. That
these benefits be made available is thought by Congress, the Administration, and this Commission to be
important not only for their direct constituencies but for all of us, on the theory stated long ago by John
Donne -- never send to know for whom the bell tolls; it tolls for thee.
     Closed captioning also demonstrates one of the remarkable facts about doing the right thing.  The
extent of the benefits can surprise. Closed captioning, it turns out, benefits not only people with hearing
disabilities, but also children learning to read, people learning English as a second language, and even
travellers in airports and exercisers in gyms who can see but not hear the television.
     Closed captioning also proves that markets do wondrous things when they are jump-started by a
modest governmental intervention.  Even the existing first-generation governmental action related to closed
captioning and decoders have helped encourage new technologies that in time will produce much cheaper
and more sophisticated means of providing closed captioning than currently available.  These new
technologies make me completely confident that the Commission in time can require that all television
programs be closed captioned in light of the fact that such a requirement will be an insignificant economic
burden relative to the benefits to a huge and varied audience.
     Our decision today establishes several important principles.  First, our rules set dates certain by
which material must generally be closed captioned.  New programming must be fully captioned within eight
years of our rules, and benchmarks along the way ensure that the amount of captioning increases as we move
toward the transition's end.  At the same time, the "no backsliding" rule ensures that the amount of captioning
stays at least at the level that the deaf and hearing-disabled community has come to expect.   Our rules also
require that older, or "pre-rule" programming be 75% captioned at the end of ten years.  Intermediate
benchmarks would have been a sound idea.  However, even without them, our decision emphasizes that we
fully expect to see an increase in the captioning of pre-rule programming as the transition moves forward.
Furthermore, we will consider imposing benchmarks if such programming is not being captioned.
     Second, we have taken steps to simplify the determination of whether an exemption is warranted due
to economic burden.  Our rule that an entity need not spend more than 2% of annual gross revenues on closed
captioning assures that even entities that cannot assume the full captioning responsibility nevertheless do
some captioning.  And, as the price of captioning falls with the changes in the market and improved
technology, that 2% of gross revenues will purchase more captioning.  We exempt any provider that has
annual gross revenues of less than $3 million, because 2% of such revenues would be so low as to place a
burden on the entity that would not be outweighed by the benefit to people with hearing disabilities.
     Third, we take steps to ensure that programming that has been captioned continues to be shown with
its captions.  Our rules require that where a captioned program has not been reformatted, its captions must
be shown. We refrain at this time from imposing a hard and fast requirement that captioned, reformatted
programming must carry captions. (In my view, this is probably a mistake on our part, but it can be
revisited). But we make clear that we expect that such previously captioned material will continue to be
captioned.  Our decision today emphasizes that if this result does not occur, the Commission will consider
imposing rules to ensure accessibility.
     Fourth, our decision provides for future review to ensure that our rules stay current with the changes
that will surely occur in the marketplace -- in terms of technological ability, labor capacity, and provision
of accessibility.  We anticipate that the implementation of the statute will stimulate growth in the captioning
field, and a concomitant drop in price.  Review will allow our rules to keep pace with developments in the
marketplace and in society.  Review will allow us to consider a number of issues, such as whether the
percentages of captioning requirements are set correctly, whether Electronic News Room is a reasonable
alternative to real-time captioning, whether non-English language captioning should be required, whether
our specific exemptions uphold the spirit of Congress' intent to maximize the accessibility of video
programming, and whether our enforcement process is realistic and efficient.  Our decision also commits
us to initiating a proceeding to examine the captioning of vital emergency information, to ensure that this
critical information is accessible to persons with hearing disabilities.
     As I indicated above, I would have preferred to have these rules be more aggressive in providing
swifter accessibility to much more TV programming for our nation's 20 million persons with hearing
disabilities.   I have joined the vote today because, for the most part, the item heads in the right direction.
But I think it important to note that, in my view, eight years is more than a reasonable amount of time for
a transition to captioning of all kinds of programming.  I would have imposed the same eight-year transition
period on both new and older, "pre-rule" programming.  I also would have set the first benchmark in the
transition for new programming earlier.  Furthermore, although 75% in ten years marks a step forward in
increased access to older video programming for people with hearing disabilities, I believe the Commission
should  have gone further by requiring that programming that pre-dates our rules should, like new
programming, be fully captioned in time.  It is important to note that while we now set the percentage at
75%, our decision holds that a review during the transition period will permit us to consider whether 75 %
is, in fact, the appropriate percentage or whether, as I believe, it should be higher.
     I also believe that rather than exempting now, in this Report and Order, some specific categories
of programming, we should have waited until later in the transition to determine whether such specific relief
is necessary.  I appreciate the concerns of those who fear that the cost of captioning might cause valued
programming to be dropped.  Such an unintended consequence must be avoided. However, our transition
rules in fact avoid that result by permitting flexibility in setting captioning priorities.  Therefore, many of
these concerns will not arise ever or at any rate not until much later during the transition.  Therefore the
Commission simply does not know enough now to decide whether and what specific exemptions may be
necessary.   I also would have imposed a captioning requirement on advertising -- at least national asking --
in light of the evidence in the record suggesting this requirement is absolutely economically feasible.
     Closed captioning will allow people with hearing disabilities to benefit fully from information and
entertainment that television provides so amply,universally, and without charge.  The significance of this
rule to at least a tenth of our people cannot be exaggerated.  We have to a large degree taken a step today of
which we, and everyone in the television business, can be proud. If we should have done more today,  then
more can be done by future Commissions.
                                                  August 7, 1997
                     SEPARATE STATEMENT OF
                 COMMISSIONER RACHELLE B. CHONG
Re:       Closed Captioning and Video Description of Video Programming, Implementation of
          Section 305 of the Telecommunications Act of 1996, Report and Order, MM Docket No. 95-
          176.
     There is an inherent tension in new Section 713 of the Communications Act, which
orders new closed captioning and video description requirements for video programming
throughout the nation.  While the statute mandates full accessibility for new programming
and requires a "maximization" of accessibility of pre-rule programming, the statute also makes
clear that undue economic burdens should not be imposed on program providers by these
rules, and grants the Commission broad discretion to order exemptions.  Balancing these
competing directives was a difficult task, and while I generally feel that we ultimately achieved
the right balance, I do have some residual concerns about our new rules.
      Overall, I am pleased to support the decision because it will greatly increase the
accessibility of video programming for the deaf community.  As a result of today's decision,
the amount and variety of closed captioned video programs will dramatically increase over
time.  This will have tremendous benefits for the members of the deaf community, who will
enjoy a fuller television experience and more easily receive crucial news and information.  As a
result of our decision today, I am hopeful that closed captioning will become an integral part
of the video production process.
      In crafting our rules, we tried strike a reasonable balance between the benefits that will
flow from more closed captioning and the statute's mandate that we not place an undue
economic burden on program providers.  In particular, I had concerns about whether the
economic burdens associated with the captioning requirements might have an inadvertent,
negative effect on the diversity of programming.  Specifically, some types of very worthy new
programming that richly contribute to the diversity of our programming have very fragile
support systems, due to the fact that the programming only attracts a small audience, has little
repeat value, or is filmed on a shoestring production budget.  Such programs might include
the airing of a local high school football game, a community parade, a foreign language film, a
locally produced children's educational program, or a city council debate.  I believe that
several of the exemptions that we adopt today will help ensure that this programming will not
be driven off the air by a well-intentioned captioning requirement.  I do not believe that
anyone, including the deaf community, would have benefitted if our captioning requirements
resulted in the loss of such programming.
     I was also concerned about the impact that our pre-rule programming requirements
might have on program diversity.  While encouraging us to "maximize" captioning of this
older programming, Congress also appeared concerned that pre-rule programming not be
relegated to the dusty archives due to the cost of captioning.  As a practical matter, this
older pre-rule programming is often relied upon by new cable networks, because such
programs are relatively inexpensive and well-received by audiences.  I am concerned that an
overly stringent pre-rule programming captioning requirement may inadvertently have the
effect of discouraging new cable networks whose business plan relied on this older
programming.  Although the captioning requirements we adopted for pre-rule programming
provide more flexibility to programming providers than our rules for new programming, I
remain concerned that our requirements may be too onerous.  In particular, our requirement
that 75% of pre-rule programming be captioned might be excessive.  I believe that we ought to
monitor the impact of this requirement carefully to ensure we are not overburdening pre-rule
programming unduly.
     When I stepped back from our final product, I became concerned that, in our attempt
to address the many legitimate concerns raised by the commenters and to strike the balance
mandated by Congress, the rules we adopt today may be complex and difficult to apply.  They
appear over-regulatory in an era of deregulation.  I am pleased, however, that our staff has
committed to working with the programming providers and the deaf community to help
them understand and work with the rules.  While the decision reflects a difficult compromise
that may not fully please either the deaf community or programming providers, in the end, I
believe it to be a fair compromise.