[Federal Register Volume 86, Number 34 (Tuesday, February 23, 2021)]
[Rules and Regulations]
[Pages 10847-10856]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-28615]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 73

[MB Docket No. 20-145; FCC 20-181; FRS 17327]


Promoting Broadcast Internet Innovation Through ATSC 3.0

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: Through this final rule, the Commission fosters the efficient 
and robust use of broadcast spectrum capacity for the provision of 
Broadcast internet services consistent with statutory directives. In 
this document, the Commission concludes that ancillary and 
supplementary (A&S) fees should be calculated based on the gross 
revenue received by the broadcaster, without regard to the gross 
revenue of an unaffiliated third party, such as a spectrum lessee; 
should retain the existing standard of derogation of broadcast service, 
but amend the wording of the rules to eliminate the outdated reference 
to analog television; and should reaffirm that noncommercial 
educational television broadcast stations (NCEs) may offer Broadcast 
internet services. The Commission also reinterprets the application to 
permit noncommercial educational stations (NCEs) to devote the 
substantial majority of their spectrum not just to free over-the-air 
television but also ancillary and supplementary services; lowers the 
ancillary and supplementary service fee for certain NCE services; and 
clarifies that NCEs may offer limited Broadcast internet services to 
donors without transforming those donations into feeable ancillary and 
supplementary service revenue.

DATES: Effective March 25, 2021.

FOR FURTHER INFORMATION CONTACT: For additional information, contact 
Lyle Elder, <a href="/cdn-cgi/l/email-protection#81cdf8ede4afc4ede5e4f3c1e7e2e2afe6eef7"><span class="__cf_email__" data-cfemail="377b4e5b5219725b5352457751545419505841">[email protected]</span></a>, of the Media Bureau, Policy Division, 
(202) 418-2120. Direct press inquiries to Janice Wise at (202) 418-
8165.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Report 
and Order, FCC 20-181, adopted and released on December 10, 2020. The 
full text of this document is available electronically via the FCC's 
Electronic Document Management System (EDOCS) website at https://www.fcc.gov/edocs or via the FCC's Electronic Comment Filing System 
(ECFS) website at https://www.fcc.gov/ecfs. (Documents will be 
available electronically in ASCII, Microsoft Word, and/or Adobe 
Acrobat.) Alternative formats are available for people with 
disabilities (Braille, large print, electronic files, audio format), by 
sending an email to <a href="/cdn-cgi/l/email-protection#7e181d1d4b4e4a3e181d1d50191108"><span class="__cf_email__" data-cfemail="9dfbfefea8ada9ddfbfefeb3faf2eb">[email protected]</span></a> or calling the Commission's Consumer 
and Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 418-
0432 (TTY).

Synopsis

    1. Earlier last year, the Commission initiated a proceeding to 
encourage the provision of new and innovative Broadcast internet 
services enabled by ATSC 3.0--the ``Next Generation'' broadcast 
television standard often referred to as Next Gen TV--that can 
complement the nation's 5G wireless networks.\1\ In so doing, the 
Commission sought to eliminate uncertainty cast on such services by 
legacy regulations and to consider whether, and if so how, to update 
the Commission's rules regarding ancillary and supplementary services, 
adopted over 20 years ago. With this item, we take additional steps to 
clarify and update the regulatory landscape in order to foster the 
efficient and robust use of broadcast spectrum capacity for the 
provision of Broadcast internet services consistent with statutory 
directives.
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    \1\ Promoting Broadcast Internet Innovation Through ATSC 3.0, MB 
Docket No. 20-145, Declaratory Ruling and notice of proposed 
rulemaking, 85 FR 43142 and 85 FR 43195 (July 16, 2020) (Declaratory 
Ruling and NPRM). The Commission referred to these new ancillary 
offerings over broadcast spectrum as ``Broadcast internet'' services 
to distinguish them from traditional over-the-air video services. We 
note that the rule changes we adopt herein will apply equally to all 
ancillary and supplementary services provided using either the ATSC 
1.0 or 3.0 transmission standards.
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    2. In this Report and Order (Order), we adopt, with only minor 
changes, four of the tentative conclusions set forth in the NPRM. 
Specifically, we clarify the basis on which to calculate ancillary and 
supplementary service fees. We retain the existing standard of 
derogation of broadcast service. We also, however, amend the derogation 
rule to eliminate an outdated reference to analog television. We 
reaffirm the freedom of noncommercial educational television stations 
(NCEs) to provide ancillary and supplementary services. And while we 
generally decline at this time to adjust the fee imposed on ancillary 
and supplementary services, we intend to revisit this issue at a future 
date to determine whether we should adjust the fee or the basis of the 
fee once the market for Broadcast internet services develops.
    3. Recognizing the unique educational public service mission of 
NCEs seeking to provide Broadcast internet services, we also adopt a 
number of additional proposals designed to preserve and expand this 
essential mission. Notably, we find that an NCE television broadcast 
station may use its 6 MHz channel capacity primarily not only for its 
free, over-the-air nonprofit, noncommercial, educational, television 
broadcast service, as under our current interpretation of the rule, but 
also for any nonprofit, noncommercial, educational (``primary'') 
ancillary and supplementary services. We also adopt a reduced fee of 
2.5% on gross revenue generated by such ``primary'' ancillary and 
supplementary services, as opposed to the 5% fee applied to ancillary 
and supplementary services generally. With these actions, this Order 
continues to lay the groundwork for broadcasters, and thereby the 
general public, to explore and benefit from the possibilities and 
opportunities that Broadcast internet provides.
    4. Background. As the Commission explained in the NPRM, the ATSC 
3.0 IP-based standard offers greater effective spectral capacity than 
ATSC 1.0, the current digital broadcast television standard. The 
additional capacity will allow broadcasters to expand their traditional 
television offerings, including by offering higher quality video and 
audio and a wider range of programming choices. Broadcasters may also 
provide innovative non-traditional services, and the NPRM asked about 
the ``types of Broadcast internet services that are likely to be 
provided in the future.'' Commenters describe a wide array of exciting 
possibilities. APTS/

[[Page 10848]]

PBS explain that NCEs might expand and roll out offerings in ``a 
variety of areas that further their public service missions, especially 
education, child development, public safety, national security, job 
training, and telehealth.'' PMG describes a wide range of possible 
uses, including: (i) Distance learning services, such as distributing 
subject- and classroom-specific lectures and reading materials to 
students, and broadcasting content to school buses during long rural 
commutes to make that time more enriching for students; (ii) trusted, 
encrypted, and curated distribution of health-related content to those 
unserved and underserved by high-speed internet; (iii) emergency 
alerting services that allow more homes, vehicles, and first responders 
to gain access to life-saving information; (iv) expanded distribution 
of local and hyper-local news to audiences across a community; and (iv) 
software and cybersecurity updates to power smart cities, automobiles, 
and ``Internet of Things'' (IoT) products and applications. ONE Media 
explains that:

[i]n addition to enhanced broadcast programming, the ATSC 3.0 
standard enables use of television spectrum to communicate with 
devices over wide areas efficiently, expanding opportunities for 
distance learning, advanced emergency alerting and information 
functions, highly secure file delivery and authentication, 
offloading large data files (including video) needed by carriers to 
cache programming directly on user devices, dramatically improving 
efficient distribution of data to autonomous driving vehicles, 
facilitating near-instantaneous needs for IoT devices and 
telemedicine or smart agriculture activities, and other innovative 
services yet to be conceived.

    5. In June 2020, the Commission commenced this proceeding to ensure 
that our rules will help foster the development of innovative and 
efficient uses of broadcast spectrum like the ones described above. In 
the Declaratory Ruling, the Commission clarified that the lease of 
excess broadcast television spectrum to a third party, including 
another broadcaster, for the provision of ancillary and supplementary 
services does not result in attribution under our broadcast television 
station ownership rules or for any other requirements related to 
television station attribution (e.g., filing ownership reports). The 
Commission explained that regulatory clarity will help ensure that 
broadcasters and other innovators have the flexibility to generate the 
scale--both locally and nationally--that may be necessary to support 
certain Broadcast internet services, and that regulatory reform can 
ensure that market forces, rather than outdated rules, determine the 
success of the nascent Broadcast internet industry. In the accompanying 
NPRM, the Commission sought comment on any rule changes needed to 
further promote regulatory certainty and greater investment in 
innovative Broadcast internet services.
    6. Specifically, the NPRM sought comment on a number of general 
matters concerning the potential uses and applications of excess 
broadcast spectrum capacity resulting from the transition to ATSC 3.0; 
on whether the amount and method of calculating the ancillary and 
supplementary services fee should be reconsidered given the new 
potential uses of excess spectrum capacity; and on whether the 
Commission should clarify or modify the rules prohibiting derogation of 
broadcast service and defining an analogous service. The NPRM elicited 
17 comments, 12 replies, and numerous ex parte filings from commenters 
representing companies and industry groups from the broadcast, cable, 
wireless, and consumer electronics industries, as well as non-profit 
groups and groups hoping to explore new Broadcast internet 
opportunities. Commenters are largely supportive of the Commission's 
tentative conclusions, although as discussed below there is notable 
opposition to the proposal to exclude third party facility improvements 
from revenue calculations, a proposal we decline to adopt today. There 
is also disagreement regarding the proposal to clarify the derogation 
standard, both from parties who support a significant change and 
parties who oppose any change at all to the existing text. The record 
also reflects widespread skepticism about any Commission action that 
would go beyond the tentative conclusions, with two notable exceptions. 
First, NCEs and associated parties make a compelling case that 
substantial public benefits could accrue through the widespread 
deployment of Broadcast internet over public television spectrum, 
justifying additional steps to encourage that deployment. Second, a 
large number of low power television (LPTV) station representatives and 
interested parties propose changes to the rules governing LPTV service, 
though the proposals are largely unrelated to Broadcast internet 
services.
    7. Discussion. Ancillary and Supplementary Service Fee. With one 
exception, discussed below, we decline at this time to adjust the fee 
program associated with ancillary and supplementary services. Rather, 
we will revisit the size and basis of the fee, as well as other 
relevant issues, when we have a better understanding of how the 
transition to ATSC 3.0 is progressing. We do, however, adopt our 
tentative conclusion that fees should be calculated based on the gross 
revenue received by the broadcaster rather than revenue received by a 
spectrum lessee. Finally, we decline at this time to adopt the proposal 
made by Public Knowledge et al. that we use the fees we collect for 
ancillary and supplementary services to fund a program to offset costs 
for consumers who upgrade their equipment as part of the transition to 
ATSC 3.0, and we decline at this time to exempt from the ancillary and 
supplementary service fee ``in-kind'' contributions, or otherwise 
change our fee for ancillary and supplementary services that fall into 
certain classes of service.
    8. The Telecommunications Act of 1996 (1996 Act) requires 
broadcasters to pay a fee to the United States Treasury to the extent 
they use their digital television (DTV) spectrum to provide ancillary 
and supplementary services for which the payment of a subscription fee 
is required in order to receive such services, or for which the 
licensee directly or indirectly receives compensation from a third 
party in return for transmitting material furnished by such a third 
party (other than commercial advertisements used to support 
broadcasting for which a subscription fee is not required). The 1996 
Act further provides that the ancillary and supplementary services fee 
program shall be designed to recover for the public a portion of the 
value of the public spectrum resource made available for such 
commercial use, and to avoid unjust enrichment through the method 
employed to permit such uses of that resource; and to recover for the 
public an amount that, to the extent feasible, equals but does not 
exceed (over the term of the license) the amount that would have been 
recovered had such services been licensed at auction. In addition, the 
Commission is required by statute to adjust the ancillary and 
supplementary services fee from time to time in order to ensure that 
these requirements continue to be met.
    9. As a preliminary matter, we reaffirm that section 336 of the 
1996 Act gives the Commission flexibility to determine the appropriate 
fee for ancillary and supplementary services within the parameters set 
forth in the statute. Section 336 directs the Commission to ``establish 
a program to assess and collect . . . an annual fee or other schedule 
or method of payment that promotes the objectives'' described by the 
statute. Specifically, the statute requires that the fee program be

[[Page 10849]]

designed to recover for the public some portion of the value of the 
spectrum, prevent the unjust enrichment of broadcasters providing 
ancillary and supplementary services, and approximate the revenues that 
would have been received had the spectrum on which the services are 
provided been licensed through an auction. As the Commission has 
observed, ``the 1996 Act gives the Commission broad discretion in 
setting the amount of the fee for ancillary and supplementary 
services,'' bounded by the criteria set forth in section 336(e). 
Commenters who addressed this issue agree with this analysis.
    10. Fee for Commercial Television Broadcast Stations. We conclude 
that we do not have sufficient information at this early stage in the 
ATSC 3.0 transition to evaluate fully whether a change to, much less 
elimination of, the current fee for feeable ancillary and supplementary 
services offered by commercial television stations would better reflect 
the directives of section 336(e). Accordingly, we retain the current 
fee of 5% for such stations and intend to reevaluate the fee once the 
marketplace for Broadcast internet services has become more mature.
    11. As the Commission previously has recognized, in considering how 
to calculate the appropriate ancillary and supplementary fee, we must 
balance potentially competing statutory goals: Recover a portion of the 
value of the spectrum used for ancillary and supplementary services, 
avoid unjust enrichment, and approximate the revenue that would have 
been received had these services been licensed through an auction. A 
fee that is too high could dissuade broadcasters from providing 
Broadcast internet services and thereby reduce the potential benefits 
to consumers of such services and preclude the Commission from 
collecting fees approximating the amount that would have been recovered 
for the spectrum at auction. On the other hand, a fee that is too low 
may both fail to prevent the unjust enrichment of licensees and to 
recover for the public an amount approximating the amount that would 
have been recovered at auction.
    12. In considering these statutory mandates, we conclude that it 
would be premature at this time to adjust the ancillary and 
supplementary service fee without knowing more about the kinds of 
Broadcast internet services that will be provided and the economics 
thereof. The conversion to ATSC 3.0 is entirely voluntary, and 
commercial service has only recently commenced in a few television 
markets. We cannot yet gauge the extent to which ATSC 3.0 will be 
deployed and adopted by consumers or which ATSC 3.0-based services and 
features will be offered as feeable Broadcast internet services. 
Indeed, the Commission recently reached a similar conclusion when it 
first authorized the voluntary transmission to ATSC 3.0. Accordingly, 
we reject commenters' suggestions that we reconsider the current 5% fee 
on broadcast commercial stations, at this time. Instead, consistent 
with recommendations in the record, we believe it would be better to 
revisit the ancillary and supplementary service fee when the ATSC 3.0 
marketplace has further developed.
    13. Calculation of Gross Revenue. We adopt our tentative conclusion 
that fees should be calculated based on the gross revenue received by 
the broadcaster rather than revenue received by a spectrum lessee. As 
the Commission stated in the NPRM, to hold otherwise could subject a 
broadcaster to a fee payment in excess of the gross revenue it actually 
receives. All commenters who addressed this issue agree with this 
approach regarding the calculation of gross revenue. As proposed in the 
NPRM, we also conclude that to the extent the licensee and the lessee 
are affiliated, we will attribute the gross revenue of the lessee to 
the licensee for purposes of calculating the ancillary and 
supplementary services fee, based on a share of gross revenue that is 
proportional to the licensee's stake in the lessee. Otherwise, as the 
Commission noted in the NPRM, the licensee (or its parent company) 
could create a subsidiary for the sole purpose of evading the fee while 
retaining all of the financial benefit of the arrangement.
    14. We decline at this time to take up the issue of whether to 
exclude from gross revenue the value of ``in-kind'' facility 
improvements. Although the Commission tentatively concluded in the NPRM 
that the value of such improvements should be excluded from the gross 
revenue calculation, the record on this issue was limited and the 
comments were mixed. We will continue to monitor the progress of the 
transition to ATSC 3.0, the provision of Broadcast internet services, 
and the status of ``in-kind'' facility improvements in the marketplace, 
and may address this issue in the future if warranted.
    15. ATSC 3.0 Consumer Equipment. We decline at this time to adopt 
the proposal made by Public Knowledge et al. that we use the fees 
collected from ancillary and supplementary services to fund a program 
offsetting costs for consumers who upgrade their consumer premises 
equipment as part of the ATSC 3.0 transition. These commenters note 
that ATSC 3.0 is not compatible with current television devices and 
contend that, because consumers will have to replace their television 
sets or purchase converter devices to receive ATSC 3.0 signals, the 
transition to ATSC 3.0 ``will create high consumer costs, similar to 
those faced by consumers during the DTV transition.'' Thus, they 
maintain we should act now, to develop a program to offset ATSC 3.0 
transition costs for consumers. We note that the transition to ATSC 3.0 
is voluntary and still in its early stages; therefore, we find it is 
premature to consider such a program at this time. We also note that 
the DTV transition equipment subsidy program was explicitly mandated by 
Congress.
    16. Classes of Ancillary and Supplementary Service. We decline to 
grant fee exemptions for certain classes of Broadband internet service, 
such as telehealth, distance learning, public safety, or homeland 
security-related services, or for services that promote internet access 
in rural areas. Although, according to the record, such services are 
currently beginning to be provided by, or are in development by, NCE 
stations, we believe it is premature to take any such action given the 
nascent state of the market for these ATSC 3.0 services. As discussed 
further below, we take action in this Order to encourage the 
development of ``primary'' NCE ancillary and supplementary services 
(those used for nonprofit, noncommercial, educational purposes), by 
reducing the fee associated with such services. At the same time, we 
conclude that we do not have a sufficient basis at this time to support 
changing our fee approach for any other type of ancillary and 
supplementary service that are not considered ``primary.'' Among other 
things, we lack information regarding how such services are likely to 
be provided, whether they will be revenue-generating, whether there 
will be sufficient demand to support the provision of such services, or 
whether our current fee for ancillary and supplementary services will 
dissuade broadcasters from offering such services. For similar reasons, 
we also decline at this time to exempt from fees, or adopt a lower fee 
for, services that promote internet access in rural areas. We will 
continue to monitor the transition to ATSC 3.0, including the provision 
of Broadcast internet services such as telehealth, public safety, and 
homeland security-related services, as well as services that provide 
internet access in rural areas, and may reconsider this issue in the 
future.

[[Page 10850]]

    17. NCE Television Stations. NCE television stations play an 
important role in providing nonprofit, noncommercial, and education 
services to communities nationwide, and the Commission is committed to 
supporting their enthusiastic embrace of the possibilities that Next 
Gen TV provides. Accordingly, we adopt, in part, the commenter proposal 
to reinterpret Sec.  73.621 of our rules, which will allow NCEs to 
provide a wider range of services that align with their core mission. 
While, as discussed above, we generally decline to adjust the fee 
associated with ancillary and supplementary services, to the extent 
that NCE television stations offer feeable ancillary and supplementary 
services that are nonprofit, noncommercial, and educational, we adopt a 
reduced fee based on 2.5% of gross revenues generated by such 
``primary'' ancillary and supplementary services. We also clarify that 
when an NCE television station provides ``donor exclusive'' ancillary 
and supplementary services that are nominal in value in return for 
contributions to the licensee, we will not treat such contributions as 
``subscription fees'' under section 336 of the 1996 Act or Sec.  73.621 
of our rules.
    18. NCE Ancillary and Supplementary Services. We conclude that an 
NCE television licensee may provide Broadcast internet services, 
provided that the substantial majority of its 6 MHz channel capacity is 
dedicated to a combination of free, over-the-air nonprofit, 
noncommercial, educational, television broadcast service and any 
nonprofit, noncommercial, educational (or ``primary'') ancillary and 
supplementary services it chooses to provide.\2\ In this regard, we 
modify the 2001 NCE Ancillary Services Report and Order's 
interpretation of Sec.  73.621,\3\ which held that a substantial 
majority of an NCE television licensee's digital capacity must be 
dedicated to nonprofit, noncommercial, educational broadcast service, 
limiting ancillary and supplementary services to an NCE television 
licensee's excess capacity. In so doing, we seek to preserve the 
nonprofit, noncommercial, educational nature of an NCE television 
licensee's service to its community, while affording such NCE licensees 
increased flexibility to provide ``primary'' services that are not 
traditional broadcasting. Although we decline to define what 
constitutes a ``substantial majority'' of the NCE's digital bitstream 
at this time, we expect to seek comment in a future proceeding on 
whether it is appropriate to revise Sec.  73.621(j) regarding the 
amount of its 6 MHz channel capacity that an NCE television licensee 
must devote to ``primary'' uses, the scope of those primary uses, and 
any other related matters.\4\
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    \2\ An NCE television licensee may provide ancillary and 
supplementary services that are not nonprofit, noncommercial, and 
educational--including commercial services--on the licensee's excess 
(i.e., non-primary) capacity. Such services will be subject to the 
standard fee of 5% of gross revenues. We note that an NCE licensee, 
like all other television broadcasters, must broadcast at least one 
free over-the-air video programming stream, and its ancillary and 
supplementary services must not derogate this service. During the 
transition period to ATSC 3.0 service, we are affording NCE 
television broadcasters significant flexibility to determine the 
best mix of services for their communities. However, as during the 
DTV transition, our expectation remains that the fundamental use of 
the DTV license will be for the provision of free, over-the-air 
television service. We do not decide at this time the separate, 
broader issue of how much spectral capacity a broadcast television 
station (commercial or NCE) must use after the ATSC 3.0 transition 
period for the provision of its free over-the-air television 
service. We will consider this issue in a future proceeding, such as 
when we decide it is the appropriate time to consider eliminating 
the ATSC 1.0 simulcasting requirement.
    \3\ 66 FR 58973 (Nov. 26, 2001).
    \4\ In addition, until we address this issue in this future 
proceeding, we will consider waiver requests as necessary to allow 
public safety or other ancillary and supplementary uses that are 
nonprofit and noncommercial, but may not be educational in nature, 
to be applied to the ``substantial majority'' portion of an NCE 
licensee's spectrum dedicated for ``primary'' purposes.
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    19. As an initial matter, we adopt our unopposed tentative 
conclusion that NCE television licensees are allowed to provide 
ancillary and supplementary services. Indeed, the 2001 NCE Ancillary 
Services Report and Order sought to clarify not whether NCEs could 
offer ancillary and supplementary services, but ``the manner in which 
[NCE] television licensees may use their excess [DTV] capacity for 
remunerative purposes.'' The 2001 NCE Ancillary Services Report and 
Order amended Sec.  73.621 of the rules ``to clarify that the 
[s]ection's requirements apply to the entire digital bitstream of NCE 
[television] licensees, including the provision of ancillary or 
supplementary services,'' in order to ``preserve the noncommercial 
educational nature of public broadcasting, while allowing NCE 
[television] licensees some flexibility in remunerative use of their 
spectrum.'' The Commission concluded at the time that this balance 
required NCE television licensees to ``use their entire digital 
capacity primarily for a nonprofit, noncommercial, educational 
broadcast service.'' The Commission ``decline[d] to quantify the term 
`primarily,' '' but ``consider[ed] it to mean a `substantial majority' 
of [the NCE television licensee's] entire digital capacity.''
    20. In light of the unique educational public service mission of 
noncommercial educational television stations (NCEs) seeking to provide 
ancillary and supplementary services, we clarify that Sec.  73.621 
allows NCE television licensees to count as part of the ``primary'' use 
of their spectrum not just ``nonprofit, noncommercial, educational, 
broadcast service,'' but also ancillary and supplementary services that 
are nonprofit, noncommercial, and educational in nature. Specifically, 
we conclude that Sec.  73.621(j) permits an NCE television licensee to 
count nonprofit, noncommercial, and educational ancillary and 
supplementary services, together with its free, over-the-air nonprofit, 
noncommercial, educational television broadcast service, as ``primary'' 
services that fall within Sec.  73.621(a). Section 73.621(j) states 
that Sec.  73.621 ``will apply to the entire digital bitstream of 
noncommercial educational television stations, including the provision 
of ancillary or supplementary services.'' We recognize that the 2001 
NCE Ancillary Services Report and Order, which adopted Sec.  73.621(j), 
interpreted this provision to mean that NCE television licensees are 
required to use their entire digital capacity ``primarily'' for their 
free, over-the-air television nonprofit, noncommercial, educational 
broadcast service and that ancillary and supplementary services do not 
qualify as a ``primary'' use. We reject this interpretation of Sec.  
73.621(j) of our rules as unnecessarily narrow. Rather, we agree with 
APTS/PBS and PMVG that it is reasonable to afford greater flexibility 
to NCE television licensees to provide ancillary and supplementary 
services that are nonprofit, noncommercial, and educational in nature 
as a ``primary'' use, and that there is a wide potential variety of 
such services.\5\ We are

[[Page 10851]]

unpersuaded by Public Knowledge's contention that ``allowing NCEs to 
count spectrum used for ancillary and supplementary services as primary 
service . . . violates 47 U.S.C. [397](11).'' \6\ Accordingly, we 
interpret the language of Sec.  73.621(j) providing that the 
requirements of Sec.  73.621 will apply to the entire digital bitstream 
of NCE television stations, ``including the provision of ancillary or 
supplementary services,'' to broaden the scope of Sec.  73.621(a) such 
that NCE television stations have the flexibility to make ``primary'' 
use of their ``entire digital bitstream'' through provision of not only 
a nonprofit, noncommercial, educational television broadcast service, 
but also any nonprofit, noncommercial, and educational ancillary and 
supplementary services it chooses to provide.
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    \5\ APTS/PBS maintain that any ancillary or supplementary 
service that `` `serve[s] the educational needs of the community' or 
furthers the `advancement of educational programs' '' should be 
considered ``primary.'' We reject this view because it would permit 
for-profit, commercial educational services (or non-educational 
television broadcasts) to be counted among the ``primary'' uses of 
an NCE's spectrum. Instead, consistent with the requirements in 
Sec.  73.621(a) that the station qualify as ``noncommercial 
educational'' and is licensed ``only to [a] nonprofit educational 
organization,'' the rule requires that all ``primary'' uses, whether 
broadcast television or ancillary and supplementary, must be 
nonprofit, noncommercial, and educational. We find this reading best 
preserves the nonprofit, noncommercial, and educational nature of 
public broadcasting. We note that our decision today applies only to 
the application of Sec.  73.621(a) to the provision of ancillary and 
supplementary services pursuant to Sec.  73.621(j); it does not 
change an NCE television licensee's broadcast and other obligations 
under Sec.  73.621(a).
    \6\ Applying the last-antecedent rule, which ``provides that `a 
limiting clause or phrase . . . should ordinarily be read as 
modifying only the noun or noun phrase that it immediately follows,' 
'' we observe that ``engaged primarily in the production, 
acquisition, distribution, or dissemination of educational and 
cultural television or radio programs'' is defining ``any nonprofit 
institution,'' and not ``any licensee or permittee of a public 
broadcast station.'' Furthermore, our ``primary service'' decision 
applies to the use of a licensee's spectrum, not the activities of 
the licensee itself.
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    21. Although we adopt the NCE proposal to reinterpret our rules to 
permit ``primary'' ancillary and supplementary services, we decline to 
``pre-approve'' specific services that could be considered primary. 
APTS/PBS and PMVG ask us essentially to create a ``safe harbor'' for 
Broadcast internet services by identifying specific services that will 
qualify as ``primary'' uses under Sec.  73.621(a). Given the nascent 
state of the Broadcast internet market, we find that it would be 
premature to classify such services in this manner. Instead, consistent 
with our precedent in applying Sec.  73.621(a) to broadcast 
programming, we will defer to the judgment of the broadcaster when 
evaluating whether a given ancillary and supplementary service is 
educational unless such categorization appears to be arbitrary or 
unreasonable.
    22. We also decline, at this time, to adopt the NCE television 
broadcasters' proposal to redefine the term ``primarily,'' as used in 
Sec.  73.621(a), to mean a ``simple majority'' instead of a 
``substantial majority,'' which is the definition adopted by the 
Commission in the 2001 NCE Ancillary Services Report and Order. We 
disagree with APTS/PBS that there is a plain or common meaning of the 
term ``primarily,'' and instead find that the term is ambiguous.\7\ In 
light of this ambiguity, the Commission previously determined in 2001 
that ``primarily'' means ``substantial majority.'' This definition was 
not challenged at the time, and we are not persuaded by the arguments 
in the record that present circumstances warrant reconsideration of 
this earlier decision. Given the retention of our substantial majority 
requirement, Public Knowledge is incorrect that our rules ``will allow 
NCEs to sublease or otherwise monetize the majority of their spectrum 
to third parties instead of providing free service to the public.'' 
Moreover, we find that our decision to include certain ancillary and 
supplementary services as part of the ``primary'' use of their spectrum 
affords NCE television licensees substantial additional flexibility in 
light of the enhanced capabilities made possible by the ATSC 3.0 
standard.\8\ As these services reach the market, we will have 
additional context upon which to evaluate whether any changes to the 
definition of ``primarily'' are warranted. Accordingly, we defer 
examination of this issue and any other related matters until the 
Broadcast internet marketplace matures.\9\
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    \7\ We note that the Merriam-Webster online dictionary defines 
``primarily'' as ``for the most part; chiefly.'' Webster's New World 
Dictionary defines it as ``mainly; principally.'' Thus, while 
``primarily'' could be used to mean a ``simple majority,'' that is 
far from the ``common'' understanding.
    \8\ Public Knowledge's claims to the contrary notwithstanding, 
nothing in this Order undermines the policy of ensuring free, over-
the-air, educational television programming. As required by existing 
rules, each NCE station must continue to provide a free, over-the-
air, nonprofit, noncommercial, educational television broadcast 
service.
    \9\ We will also consider waiver requests, as necessary, to 
allow public safety or other ancillary and supplementary uses that 
are nonprofit and noncommercial, but may not be educational in 
nature, to be applied to the ``substantial majority'' portion of an 
NCE licensee's spectrum committed to ``primary'' purposes.
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    23. Fee for NCE Primary Ancillary and Supplementary Services. While 
we generally decline to adjust the fee associated with ancillary and 
supplementary services, to the extent that NCE television stations 
offer feeable ancillary and supplementary services that are nonprofit, 
noncommercial, and educational, we adopt a reduced fee of 2.5% on gross 
revenues generated by such ``primary'' services. As discussed above, 
Sec.  73.621 of our rules provides that NCE stations must ``be used 
primarily to serve the educational needs of the community; for the 
advancement of educational programs; and to furnish a nonprofit and 
noncommercial television broadcast service,'' and extends this 
requirement to all services provided via the station's digital 
bitstream. Given the benefit of the ``distinctive content of public 
broadcast programming'' provided by NCEs, and the fact that the auction 
value of spectrum that must be ``primarily'' used for such services is 
likely lower than that of spectrum used for services without such 
restrictions, we believe this lower fee is appropriate.
    24. Although we decline at this time to exempt NCE television 
stations entirely from all fees on ancillary and supplementary service 
revenues devoted to the station's nonprofit activities as APTS/PBS 
suggest, we believe that the reduction we adopt is an appropriate 
incremental and balanced approach. While some commenters suggest that 
we make no change to the 5% fee under any circumstances, and others 
asked us to eliminate it entirely, we find that a fee of 2.5% for 
``primary'' NCE ancillary and supplementary services that are feeable 
under the statute appropriately recognizes the public service mission 
of public television stations without creating a significant disparity 
with the 5% fee applied to other ancillary and supplementary services 
offered by NCE and commercial television stations. While we decline to 
adjust the 5% fee generally, choosing instead to wait until the ATSC 
3.0 marketplace further develops and after a further review is 
conducted, we believe a different approach is warranted for NCE 
stations. We seek to support the ability of public television stations 
to provide and expand their nonprofit, noncommercial, educational 
services and engage in new and innovative educational efforts using 
ATSC 3.0 technology.\10\ NCE nonprofit, noncommercial, educational 
services, provided by the nonprofit, education-focused licensees of NCE 
stations, uniquely advance the public interest and therefore should be 
treated differently under our fee program than other ancillary and 
supplementary services that are provided by NCE and commercial 
broadcast stations. Given this, our approach appropriately reduces the 
fees on any revenue generated by such ``primary'' NCE ancillary and 
supplementary services, thereby permitting the nonprofit, education-
focused licensees of NCE television stations to retain a larger 
percentage of any such revenue, providing more funds to support the

[[Page 10852]]

core educational public service missions of such stations.
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    \10\ We note that Public Knowledge et al. contend that the 
Commission is prohibited from setting a fee of zero for any 
licensee. Because we will continue to collect ancillary and 
supplementary fees from every licensee, both commercial and 
noncommercial, we need not address Public Knowledge et al.'s 
argument.
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    25. We find that our approach is consistent with section 336 of the 
1996 Act. As discussed above, the language of section 336 gives the 
Commission wide discretion to select the appropriate fee for feeable 
ancillary and supplementary services. Thus, we conclude that we have 
discretion under the statute to establish a fee for NCE primary 
ancillary and supplementary services that is lower than the fee for 
other ancillary and supplementary services, including those provided by 
commercial stations. Section 336(e)(1) directs the Commission to 
establish ``a program to assess and collect'' ancillary and 
supplementary fees that, pursuant to section 336(e)(2), recover ``a 
portion of the value of the public spectrum,'' ``avoid unjust 
enrichment,'' and, eventually, recover an amount approximately 
equivalent to the spectrum's value at auction. Section 336 does not 
require the Commission to levy fees in direct proportion to the amount 
of spectrum held by each licensee. Adjusting our program of fees to 
impose a reduced fee of 2.5% for NCE stations' ``primary'' ancillary 
and supplementary services will not undermine the Commission's ability 
to recover for the public a portion of the value of the spectrum made 
available for ancillary and supplementary uses. Furthermore, a reduced 
fee on the nonprofit, noncommercial, educational ancillary and 
supplementary services offered by NCEs will not create a danger of 
unjust enrichment. Any additional ``primary'' NCE ancillary and 
supplementary services offered as a result of these lower fees will, by 
their nature, redound to the public's benefit more than to the benefit 
of the nonprofit educational organization licensees of the NCE 
stations.
    26. Finally, we conclude that a 2.5% fee is consistent with our 
directive under section 336(e)(2)(B) to recover for the public an 
amount that would have been recovered ``had such services been 
licensed'' pursuant to an auction. The reduced fee of 2.5% will apply 
only to feeable ancillary and supplementary services that qualify as 
``primary'' NCE services under Sec.  73.621 of our rules, which means 
they must be nonprofit, noncommercial, and educational in nature. If 
spectrum restricted in this manner were offered for auction, we expect 
that bidders would offer a more modest amount of money for the right to 
build facilities that are restricted to providing services that are 
``primarily'' nonprofit, noncommercial, and educational as opposed to 
spectrum designated for commercial use.\11\ In other words, the 
requirements imposed on the use of the NCE station spectrum make this 
spectrum inherently less valuable at auction than spectrum without such 
use restrictions.\12\ Given the benefits to the public of an 
accelerated rollout of NCE primary Broadcast internet services, we find 
it is appropriate to adopt this reduced fee even though it may 
overstate the auction value of spectrum so restricted. We are directed 
not only to ``collect an amount that . . . equals but does not exceed'' 
the auction value of the spectrum, but also to recover a ``portion of 
the value of the public spectrum resource'' while avoiding unjust 
enrichment. While we find 2.5% to be appropriate at this time, we 
intend to monitor the development of the NCE Broadcast internet 
marketplace and may adjust the fee if conditions warrant.
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    \11\ Our analysis is consistent with the analysis the Commission 
applied to section 336(e)(2)(B) in the NCE Ancillary Services Report 
and Order.
    \12\ We agree with BitPath that, in considering among other 
things the appropriate level of the fee, the Commission should 
consider the auction value of the spectrum in the context of the 
ancillary and supplementary services being provided, not merely the 
auction value of the spectrum in the abstract.
---------------------------------------------------------------------------

    27. In reaching our decision, we are not constrained by the 
Commission's previous decision to apply to NCE licensees the same fee 
for ancillary and supplementary services that we apply to commercial 
licensees. Instead, we conclude that advances in technology and the 
associated new offerings anticipated by NCE stations suggest a 
different approach is currently warranted when assessing the 
appropriate fee for NCE ``primary'' ancillary and supplementary 
services. Public television stations are already experimenting with 
ancillary and supplementary services that advance the public interest. 
Applying a reduced fee for ``primary'' NCE services will give NCE 
licensees both an additional incentive to pursue the expensive 
transition to ATSC 3.0 and additional resources to devote to their core 
mission. We find that the 2.5% rate for ``primary'' ancillary and 
supplementary services is sufficient to meet our obligations under 
section 336 of the 1996 Act and will advance our goals of promoting 
Broadcast internet services and supporting the mission of NCE 
television stations to provide nonprofit, noncommercial, educational 
services.
    28. We note that this limited change does not excuse NCEs from 
their obligation to file an ``Annual DTV Ancillary/Supplementary 
Services Report'' whenever they receive feeable ancillary and 
supplementary services revenue. We expect that, in this report, NCE 
filers will clearly identify any services that are nonprofit, 
noncommercial, and educational and therefore qualify for the reduced 
fee.\13\
---------------------------------------------------------------------------

    \13\ We dismiss as moot NTCA's proposal for a detailed reporting 
and audit system, which they suggest should apply if we waived all 
fees for certain Broadcast internet services.
---------------------------------------------------------------------------

    29. Donor Contributions to NCE Television Stations. As requested by 
PMVG and unopposed by other commenters, we clarify that, when an NCE 
television station provides ``donor exclusive'' ancillary and 
supplementary services that are nominal in value in return for 
contributions to the licensee, we will not treat such contributions as 
``subscription fees'' under section 336 of the 1996 Act or Sec.  73.621 
of our rules. For example, PMVG notes that stations may provide donor 
households with exclusive links to supplemental content, such as 
extended interviews or reference materials relevant to public affairs 
programming, or stations could offer donor households enhanced viewing 
experiences, such as the opportunity to view a local orchestra 
performance in 4K definition with immersive sound. We will not treat 
such donor exclusive services as feeable as long as the ancillary and 
supplementary service provided in return is comparable in terms of 
value to the kinds of small gifts (e.g., coffee mugs, tote bags) that 
NCE stations often give donors in return for contributions. We agree 
with PMVG that the type of limited content offerings described above 
are comparable to the traditional donor gifts provided by NCE stations 
and should not be treated as ancillary and supplementary services 
provided in return for a subscription fee. We also agree that, unlike 
programming provided in return for a subscription fee, the value of 
such content offerings made in return for a donation is likely minimal 
as compared to the value of the donation. In addition, unlike a 
subscription fee, the donation is made voluntarily and not pursuant to 
a subscription agreement. We intend to monitor the provision of ``donor 
exclusive'' services, however, and we may reconsider our decision in 
the future if such donor services appear to be comparable to 
subscription-based services.

[[Page 10853]]

    30. Derogation and Analogous Services. We adopt our tentative 
conclusion that whether a broadcast station's signal has been derogated 
should continue to be evaluated by whether it provides ``at least one 
standard definition over-the-air video program signal at no direct 
charge to viewers that is at least comparable in resolution to analog 
television programming.'' We also adopt our tentative conclusion to 
amend the wording of Sec.  73.624(b) to define the precise resolution 
that is considered to be ``at least comparable in resolution to analog 
television programming'' as 480i, with a slight modification.\14\ Based 
on the record, we decline to adopt two other proposals on which we 
sought comment in the NPRM--a presumption that Broadcast internet 
services are not analogous to any other service regulated by the 
Commission and a de minimis service threshold under which ancillary and 
supplementary services might be exempted from the need to comply with 
the regulations applicable to an analogous service otherwise regulated 
by the Commission.
---------------------------------------------------------------------------

    \14\ The number ``480'' identifies a vertical resolution of 480 
lines, and the ``i'' signifies an interlaced resolution.
---------------------------------------------------------------------------

    31. As discussed in the NPRM, section 336 of the 1996 Act allows 
broadcasters the flexibility to provide ancillary and supplementary 
services on their DTV channels.\15\ In authorizing such services, 
Congress directed the Commission to adopt rules ensuring that 
broadcasters providing ancillary and supplementary services: (1) Avoid 
derogating any advanced television services that the Commission may 
require; and (2) are subject to Commission regulations applicable to 
analogous services. In furtherance of these statutory requirements, the 
Commission adopted Sec.  73.624(c) of the rules, which permits 
broadcasters to offer ancillary and supplementary services provided 
they ``do not derogate the DTV broadcast stations' obligations under 
paragraph (b) of this section.'' Section 73.624(b) of the rules, in 
turn, requires that each DTV broadcast licensee transmit at least one 
standard definition (SD) over-the-air video program signal on its 
digital channel, at no charge to viewers, that is at least comparable 
in resolution to analog television programming. The Commission also 
adopted rules codifying that broadcasters are permitted to provide 
ancillary and supplementary services on their broadcast spectrum that 
are analogous to other regulated services. If they choose to do so, 
however, they are required to adhere to any rules specific to such type 
of service.
---------------------------------------------------------------------------

    \15\ In general, the 1996 Act seeks ``[t]o promote competition 
and reduce regulation in order to secure lower prices and higher 
quality services for American telecommunications consumers and 
encourage the rapid deployment of new telecommunications 
technologies.'' More specifically, the 1996 Act gives the Commission 
discretion to determine, in the public interest, whether to permit 
broadcasters to offer ancillary and supplementary services.
---------------------------------------------------------------------------

    32. Derogation of Service. Derogation of Service Standard. We adopt 
our tentative conclusion that whether a broadcast station's signal has 
been derogated should continue to be evaluated by whether it provides 
``at least one standard definition over-the-air video program signal at 
no direct charge to viewers that is at least comparable in resolution 
to analog television programming.'' As acknowledged both in this 
proceeding and by the Commission in the Next Gen TV Report and 
Order,\16\ the ATSC 3.0 standard will provide expanded capacity for 
broadcasters to offer not only HD programming, but also other enhanced 
television resolutions such as 4K and 8K more efficiently. However, as 
noted by NAB and BitPath, in light of the ATSC 3.0 local simulcasting 
requirement, requiring broadcasters to provide a higher resolution 
above SD at this early stage of ATSC 3.0 deployment could jeopardize 
their ability to preserve both primary and secondary ATSC 1.0 signals 
as stations convert to ATSC 3.0. Moreover, we agree with NAB, Pearl, 
and BitPath that current marketplace forces are sufficient to 
incentivize broadcasters to maintain their existing standards of 
service for viewers, which notably may include HD programming streams.
---------------------------------------------------------------------------

    \16\ 83 FR 4998 (Feb. 2, 2018), 84 FR 60350 (Dec. 20, 2017).
---------------------------------------------------------------------------

    33. Next, we deny requests from several commenters that we prohibit 
broadcasters from transitioning a signal from HD to SD in order to 
provide an ancillary and supplementary service. Earlier this year, the 
Commission rejected NCTA's proposal to require that ATSC 1.0 signals be 
simulcast in HD. While we agree with NCTA that transitioning an ATSC 
1.0 signal from HD to SD to facilitate the deployment of ancillary and 
supplementary services is different than transitioning a signal from HD 
to SD in order to comply with the ATSC 1.0 simulcast requirement, we 
reiterate that there is no obligation that broadcasters provide an HD 
signal, even if they have chosen to do so in the past. Imposing such a 
signal quality requirement remains inappropriate, for the same reasons 
it did six months ago--broadcasters have strong market incentives to 
maintain HD service, and a decision not to do so would be in response 
to competitive marketplace conditions. We therefore ``decline to 
substitute our own judgment for that of local television stations that 
best know their communities' needs,'' but will continue to monitor 
broadcasters' deployment of ATSC 3.0 services and evaluate the need for 
changes to our derogation standard as part of a planned future 
proceeding.\17\
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    \17\ In the Spring of 2022, the Commission expects to open a 
proceeding to evaluate the sunsetting of certain ATSC 3.0 technical 
provisions. Separately, the Commission has stated that it will 
consider as part of a future proceeding the continued necessity of 
the ATSC 1.0 simulcasting requirement, which does not sunset. As 
part of a future proceeding, based on the development of the ATSC 
3.0 marketplace, we expect likewise to determine whether to 
reevaluate our derogation standard. While we have elected to 
maintain our current derogation standard at this time, we continue 
to ``expect that the fundamental use of the 6 MHz DTV license will 
be for the provision of free over-the-air television service.''
---------------------------------------------------------------------------

    34. Definition of a Standard Definition Signal. Notwithstanding our 
decision to maintain the existing derogation standard, we adopt our 
tentative conclusion to modernize Sec.  73.624(b) so that a standard 
definition signal is defined as one that has a resolution of at least 
480i (vertical resolution of 480 lines, interlaced), as supported by 
multiple broadcast commenters. Despite NAB's suggestion to the 
contrary, the record provides no evidence that clarifying and 
modernizing the definition of a ``standard definition signal'' will 
place an increased burden on broadcasters. Rather, this change will 
merely remove an outdated reference to analog television and codify 
what is universally accepted as the digital resolution of a standard 
definition broadcast signal. While, as pointed out by BitPath, the 480i 
resolution standard was adopted over 20 years ago, it is universally 
utilized by television sets today for displaying standard definition 
programming. Continued reliance on an obsolete analog broadcasting 
standard would be an outdated method by which to determine what is an 
acceptable digital standard definition signal. Further, we conclude 
that this rule update is fully consistent with the broad initiative the 
Commission has undertaken the past four years to modernize its rules by 
removing outdated references that no longer reflect the current media 
marketplace.
    35. Analogous Services Analysis. In light of the limited record on 
this topic and the present lack of clarity concerning the precise 
Broadcast internet services that broadcasters may offer, we find it is 
premature to adopt

[[Page 10854]]

a presumption that certain Broadcast internet services are or are not 
analogous to any other service regulated by the Commission. For the 
same reasons, we decline to adopt a de minimis service threshold under 
which ancillary and supplementary services might be exempted from the 
need to comply with the regulations of an analogous service otherwise 
regulated by the Commission.
    36. In reaching both of these conclusions, we agree with NCTA and 
CTIA that, at this initial stage in the development of Broadcast 
internet services, the Commission should continue to evaluate whether 
or not a service is analogous to other regulated services on a case-by-
case basis. While we do not foreclose adopting specific indicia of 
whether a service is or is not likely to be found to be analogous at 
some future point, we must first gain a better understanding of how 
Broadcast internet services ultimately evolve in the marketplace. 
While, as argued by PMG, it may in fact end up being the case that 
Broadcast internet services will be provided only on a one-way, one-to-
many basis, as is the case with traditional video broadcast services, 
without knowing the precise services broadcasters will offer we cannot 
universally conclude that such services are inherently not analogous to 
any other service regulated by the Commission.\18\ We also agree with 
commenters that it is premature to adopt a presumptive or de minimis 
threshold under which ancillary and supplementary services otherwise 
akin to other regulated services would be found not to be 
analogous.\19\
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    \18\ Pearl also requests that the Commission ``clarify broadly 
that broadcast television regulations do not apply to broadcast 
internet services.'' For the same reasons discussed above, we are 
unable to conclude on a blanket basis, as requested by Pearl, that 
all broadcast television rules do not apply to Broadcast internet 
services. While as a general matter we envision that many broadcast 
television rules (such as those related to children's television or 
indecency, and, as discussed by Pearl, our rules on attribution) 
would not apply to Broadcast internet services, others (such as 
technical rules governing station operations) may still be 
applicable. We note that our analysis in the Declaratory Ruling was 
conducted solely in the context of evaluating our media ownership 
and attribution rules and the applicability of those rules to the 
leasing of excess broadcast television spectrum to a third party, 
including another broadcaster, for the provision of ancillary and 
supplementary services.
    \19\ NCTA maintains that the plain language of section 336(b) of 
the 1996 Act does not permit a de minimis exemption, and no 
commenters disagree.
---------------------------------------------------------------------------

    37. Though we decline to adopt additional rules at this time, we 
recognize that broadcasters may continue to seek clarification from the 
Commission, from time to time, about whether a particular service would 
be analogous to another, or whether specific broadcast rules would 
apply. Finally, we will continue to monitor the marketplace and provide 
any necessary clarification in the future once both broadcasters and 
the Commission know the type of Broadcast internet services that may be 
deployed and offered to consumers.
    38. Other proposals. Low Power Television. We decline to adopt any 
of the proposals by low power television and translator (LPTV) station 
representatives and others to change our LPTV service rules in this 
proceeding. In addition to seeking comments on the ancillary and 
supplementary service fee and derogation of service issues, the NPRM 
generally sought comment on the provision of Broadcast internet 
services by LPTV stations and what steps, if any, the Commission should 
take to facilitate the provision of such services by LPTV stations. In 
response, LPTV groups and interested parties, such as ARK, ATBA, Edge 
Spectrum, Evoca, NRB, NTA, Spectrum Evolution, and One Ministries, 
proposed a wide range of changes to the rules governing LPTV service. 
Among other things, these proposals include: Equalizing LPTV 
interference protection with that of full power and Class A TV stations 
(essentially eliminating LPTV's secondary status); creating a path for 
certain LPTV stations to attain primary status; lifting certain 
restrictions on LPTV service; granting blanket construction permit and 
license extensions for LPTV stations seeking to build ATSC 3.0 
facilities; abolish the ATSC 3.0 consumer education requirement for 
silent and newly built LPTV stations, changing aspects of the 
interference rules; and changing aspects of the Commission's 
distributed transmission systems (DTS) rules.
    39. We find that all of these proposals, many of which call for 
sweeping changes to the nature of LPTV service or translator service 
specifically, are insufficiently related to Broadcast internet and are 
thus beyond the scope of this proceeding. We note, however, that all 
LPTV stations transitioning to digital service are eligible to request 
a one-time, six-month extension of their construction permit, and that 
we will continue to consider requests to extend LPTV licenses pursuant 
to the equity and fairness provision of section 312(g) of the Act on a 
case-by-case basis.\20\ Further, pursuant to our existing rules, LPTV 
stations that are unable to air the required ATSC 3.0 consumer 
education notifications because they not operational (i.e., silent or 
newly constructed) may seek a waiver of the Commission's notice 
requirement from the Media Bureau.\21\ Finally, we note that the 
proposals to allow LPTV stations to use DTS and to protect LPTV 
stations from full power DTS service are presently being considered in 
the DTS proceeding.
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    \20\ We note that the Commission intended that the LPTV 
exemption from the local simulcasting requirement would help ensure 
that analog LPTV/translator stations and stations that have been 
displaced due to the post-incentive auction repacking process were 
not forced to build both an ATSC 1.0 and an ATSC 3.0 facility. We 
also note that under section 312(g) of the Communications Act of 
1934, as amended (the Act), if a station fails to transmit a 
broadcast signal for any consecutive 12-month period its license 
automatically expires at the end of that period. However, under that 
section a licensee may request an extension of its license if doing 
so would ``promote equity and fairness.'' The Commission has 
exercised its discretion under section 312(g) to extend or reinstate 
a station's expired license ``to promote equity and fairness'' only 
in limited circumstances where a station's failure to transmit a 
broadcast signal is due to compelling circumstances that were beyond 
the licensee's control. The Commission has stated that it would 
consider extensions in cases where stations were forced to remain 
dark for more than 12 months by the repack process. The Media Bureau 
will continue to consider such relief for LPTV stations impacted by 
the repack.
    \21\ Stations should file requests for waiver as a Legal STA in 
the Commission's Licensing and Management System (LMS). All waiver 
requests will be evaluated on a case-by-case basis and must include 
the following information: (1) An explanation describing why the 
station is unable to comply with the existing consumer education 
requirements; (2) an alternative but comparable means the station 
will use to notify viewers of the station's new channel or if the 
station has previously not been operational (i.e., is newly built) 
why notice would not be in the public interest; and (3) how grant of 
the waiver request complies with the Commission's general waiver 
standard. A station may propose to provide alternative notification 
to viewers through, for example, local newspaper, radio, other in-
market television stations, and/or digital and social media.
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    40. Retransmission Consent. MVPD Carriage of Broadcast internet 
Services. We likewise decline to interpret our retransmission consent 
rules in the context of this proceeding. NCTA asks us to clarify that a 
broadcaster's use of retransmission consent to negotiate for carriage 
of Broadcast internet services provided by a consortium of non-commonly 
owned broadcasters in the same market is prohibited by the bar on joint 
or coordinated retransmission consent negotiations. NAB opposes this 
proposal as premature, urging us ``to reject, now for the third time, 
NCTA's efforts to impose restraints on negotiations in the absence of 
any demonstration of real world market failure.'' \22\ We decline to 
address this

[[Page 10855]]

issue, finding it beyond the scope of this proceeding.\23\
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    \22\ Although we note that NCTA's request is more narrowly 
focused than NAB suggests, we nonetheless agree that retransmission 
consent issues are not relevant to this proceeding.
    \23\ We note that the NPRM indicated that changes to our rules 
and policies regarding retransmission consent agreements are beyond 
the scope to this proceeding.
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    41. Retransmission Consent Agreements Including Ancillary and 
Supplementary Services. We also reject NTCA's proposal that we exempt 
broadcasters from all ancillary and supplementary service fees if they 
provide ancillary and supplementary services at no additional charge to 
unaffiliated MVPDs with which they have an existing retransmission 
consent agreement. No commenters addressed this proposal. We note that 
ancillary and supplementary services that are solely being offered free 
of charge do not generate revenue and, therefore, are not subject to 
the ancillary and supplementary services fee.
    42. Procedural Matters. Final Regulatory Flexibility Analysis. As 
required by the Regulatory Flexibility Act of 1980, as amended (RFA), 
an Initial Regulatory Flexibility Analysis (IRFA) was incorporated in 
the NPRM in this proceeding. The Commission sought written public 
comment on the proposals in the NPRM, including comment on the IRFA. We 
received no comments specifically directed toward the IRFA. This 
present Final Regulatory Flexibility Analysis (FRFA) conforms to the 
RFA.
    43. Need for, and Objective of, the Report and Order. The 
Commission seeks to promote and preserve free, universally available, 
local broadcast television by providing a clear regulatory landscape 
that permits licensees the flexibility to succeed in a competitive 
market and incentivizes the most efficient use of prime spectrum. We 
undertook this proceeding to ensure that our rules, most over 20 years 
old, will help foster the introduction of new Broadcast internet 
services and the efficient use of existing television broadcast 
spectrum under the new ATSC 3.0 standard. In this Report and Order, we 
therefore conclude that ancillary and supplementary (A&S) fees should 
be calculated based on the gross revenue received by the broadcaster, 
without regard to the gross revenue of an unaffiliated third party, 
such as a spectrum lessee; should retain the existing standard of 
derogation of broadcast service, but amend the wording of the rules to 
eliminate the outdated reference to analog television; and should 
reaffirm that noncommercial educational television broadcast stations 
(NCEs) may offer Broadcast internet services. We also reinterpret the 
application of Sec.  73.621 of our rules to permit noncommercial 
educational stations (NCEs) to devote the substantial majority of their 
spectrum not just to free over-the-air television but also ancillary 
and supplementary services; lower the ancillary and supplementary 
service fee for certain NCE services; and clarify that NCEs may offer 
limited Broadcast internet services to donors without transforming 
those donations into feeable ancillary and supplementary service 
revenue. With these changes, we seek to clarify the regulatory 
landscape in order to foster the efficient and robust use of broadcast 
spectrum capacity for the provision of Broadcast internet services 
consistent with statutory directives.
    44. Summary of Significant Issues Raised by Public Comments in 
Response to the IRFA. There were no comments filed in response to the 
IRFA.
    45. Response to Comments by the Chief Counsel for Advocacy of the 
Small Business Administration. Pursuant to the Small Business Jobs Act 
of 2010, which amended the RFA, the Commission is required to respond 
to any comments filed by the Chief Counsel for Advocacy of the Small 
Business Administration (SBA), and to provide a detailed statement of 
any change made to the proposed rules as a result of those comments.
    46. The Chief Counsel did not comment in response to the proposed 
rules in this proceeding.
    47. Description and Estimate of the Number of Small Entities to 
Which Rules Will Apply. The RFA directs agencies to provide a 
description of, and where feasible, an estimate of the number of small 
entities that may be affected by the proposed rules, if adopted. The 
RFA generally defines the term ``small entity'' as having the same 
meaning as the terms ``small business,'' ``small organization,'' and 
``small governmental jurisdiction.'' In addition, the term ``small 
business'' has the same meaning as the term ``small business concern'' 
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. Below, we provide a description of such small 
entities, as well as an estimate of the number of such small entities, 
where feasible.
    48. Television Broadcasting. This Economic Census category 
``comprises establishments primarily engaged in broadcasting images 
together with sound.'' These establishments operate television 
broadcast studios and facilities for the programming and transmission 
of programs to the public. These establishments also produce or 
transmit visual programming to affiliated broadcast television 
stations, which in turn broadcast the programs to the public on a 
predetermined schedule. Programming may originate in their own studio, 
from an affiliated network, or from external sources. The SBA has 
created the following small business size standard for such businesses: 
Those having $41.5 million or less in annual receipts. The 2012 
Economic Census reports that 751 firms in this category operated in 
that year. Of this number, 656 had annual receipts of less than $25 
million, 25 had annual receipts ranging from $25 million to 
$49,999,999, and 70 had annual receipts of $50 million or more. Based 
on this data we therefore estimate that the majority of commercial 
television broadcasters are small entities under the applicable SBA 
size standard.
    49. Additionally, the Commission has estimated the number of 
licensed commercial television stations to be 1,374. Of this total, 
1,282 stations (or 94.2%) had revenues of $41.5 million or less in 
2018, according to Commission staff review of the BIA Kelsey Inc. Media 
Access Pro Television Database (BIA) on April 15, 2019, and therefore 
these licensees qualify as small entities under the SBA definition. In 
addition, the Commission estimates the number of licensed noncommercial 
educational (NCE) television stations to be 388. The Commission does 
not compile and does not have access to information on the revenue of 
NCE stations that would permit it to determine how many such stations 
would qualify as small entities.
    50. We note, however, that in assessing whether a business concern 
qualifies as ``small'' under the above definition, business (control) 
affiliations must be included. Our estimate, therefore, likely 
overstates the number of small entities that might be affected by our 
action, because the revenue figure on which it is based does not 
include or aggregate revenues from affiliated companies. In addition, 
another element of the definition of ``small business'' requires that 
an entity not be dominant in its field of operation. We are unable at 
this time to define or quantify the criteria that would establish 
whether a specific television broadcast station is dominant in its 
field of operation. Accordingly, the estimate of small businesses to 
which rules may apply does not exclude any television station from the 
definition of a small business on this basis and is therefore possibly 
over-inclusive.
    51. There are also 387 Class A stations. Given the nature of these 
services, the Commission presumes that

[[Page 10856]]

all of these stations qualify as small entities under the applicable 
SBA size standard. In addition, there are 1,892 LPTV stations and 3,621 
TV translator stations. Given the nature of these services as secondary 
and in some cases purely a ``fill-in'' service, we will presume that 
all of these entities qualify as small entities under the above SBA 
small business size standard.
    52. Description of Projected Reporting, Recordkeeping, and Other 
Compliance Requirements for Small Entities. This Report and Order 
imposes no new reporting, recordkeeping, or compliance requirements.
    53. Steps Taken to Minimize the Significant Economic Impact on 
Small Entities, and Significant Alternatives Considered. The RFA 
requires an agency to describe any significant alternatives that it has 
considered in developing its approach, which may include the following 
four alternatives (among others): ``(1) The establishment of differing 
compliance or reporting requirements or timetables that take into 
account the resources available to small entities; (2) the 
clarification, consolidation, or simplification of compliance an 
reporting requirements under the rule for such small entities; (3) the 
use of performance rather than design standards; and (4) an exemption 
from coverage of the rule, or any part thereof, for such small 
entities.''
    54. Our rules will not impose a negative economic impact on any 
parties, because they increase opportunities for broadcasters without 
imposing additional obligations. Indeed, by clarifying the scope of 
feeable revenue our rule may allow small broadcast entities 
transitioning to ATSC 3.0 to experience positive economic impacts 
through partnership with unaffiliated third parties. NCE television 
stations in particular, both large and small, will experience positive 
benefits from the decisions made in this item, which will allow them to 
offer nonprofit, noncommercial, educational Broadcast internet services 
alongside their television programming as part of the primary use of 
their spectrum, and which imposes a reduced two and a half percent fee 
on these services.
    55. Report to Congress. The Commission will send a copy of the 
Report and Order, including this FRFA, in a report to be sent to 
Congress pursuant to the Congressional Review Act. In addition, the 
Commission will send a copy of the Report and Order, including this 
FRFA, to the Chief Counsel for Advocacy of the SBA. A copy of the 
Report and Order and FRFA (or summaries thereof) will also be published 
in the Federal Register.
    56. Final Paperwork Reduction Act Analysis. This document does not 
contain new or modified information collection requirements subject to 
the Paperwork Reduction Act of 1995 (PRA), Public Law 104-13. In 
addition, therefore, it does not contain any new or modified 
information collection burden for small business concerns with fewer 
than 25 employees, pursuant to the Small Business Paperwork Relief Act 
of 2002 (SBPRA), Public Law 107-198, see 44 U.S.C. 3506(c)(4).
    57. Congressional Review Act. The Commission has determined, and 
the Administrator of the Office of Information and Regulatory Affairs, 
Office of Management and Budget, concurs, that this rule is ``non-
major'' under the Congressional Review Act, 5 U.S.C. 804(2). The 
Commission will send a copy of the Order to Congress and the Government 
Accountability Office, pursuant to 5 U.S.C. 801(a)(1)(A).
    58. Accordingly, it is ordered that, pursuant to the authority 
contained in sections 1, 4(i), 4(j), 303(r), and 336 of the 
Communications Act of 1934, as amended, 47 U.S.C. 151, 154(i), 154(j), 
303(r), and 336, the Report and Order is adopted.
    59. It is further ordered that the Commission's rules are hereby 
amended as set forth in the Final Rules, effective as of 30 days after 
the date of publication in the Federal Register.
    60. It is further ordered that the Commission will send a copy of 
the Report and Order in a report to Congress and the Government 
Accountability Office pursuant to the Congressional Review Act (CRA).
    61. It is further ordered that should no petitions for 
reconsideration or petitions for judicial review be timely filed, MB 
Docket No. 20-145 shall be terminated and its docket closed.

List of Subjects in 47 CFR Part 73

    Communications equipment, Television.

Federal Communications Commission.
Marlene Dortch,
Secretary.

Final Rules

    For the reasons stated in the preamble, the Federal Communications 
Commission amends 47 CFR part 73 as follows:

PART 73--RADIO BROADCAST SERVICES

0
1. The authority citation for part 73 continues to read as follows:

    Authority:  47 U.S.C. 154, 155, 301, 303, 307, 309, 310, 334, 
336, 339.


0
2. Amend Sec.  73.624 by revising paragraphs (b) introductory text and 
(g) introductory text to read as follows:


Sec.  73.624  Digital television broadcast stations.

* * * * *
    (b) DTV broadcast station permittees or licensees must transmit at 
least one over-the-air video program signal at no direct charge to 
viewers on the DTV channel. Until such time as a DTV station permittee 
or licensee ceases analog transmissions and returns that spectrum to 
the Commission, and except as provided in paragraph (b)(1) of this 
section, at any time that a DTV broadcast station permittee or licensee 
transmits a video program signal on its analog television channel, it 
must also transmit at least one over-the-air video program signal on 
the DTV channel. The DTV service that is provided pursuant to this 
paragraph (b) must have a resolution of at least 480i (vertical 
resolution of 480 lines, interlaced).
* * * * *
    (g) Commercial DTV licensees and permittees, and low power 
television, TV translator and Class A television stations DTV licensees 
and permittees, must annually remit a fee of 5 percent of the gross 
revenues derived from all ancillary and supplementary services, as 
defined by paragraph (b) of this section, which are feeable, as defined 
in paragraphs (g)(1)(i) and (ii) of this section. Noncommercial DTV 
licensees and permittees must annually remit a fee of 5 percent of the 
gross revenues derived from all ancillary and supplementary services, 
as defined by paragraph (b) of this section, which are feeable, as 
defined in paragraphs (g)(1)(i) and (ii) of this section, except that 
such licensees and permittees must annually remit a fee of 2.5 percent 
of the gross revenues from such ancillary or supplementary services 
which are nonprofit, noncommercial, and educational.
* * * * *
[FR Doc. 2020-28615 Filed 2-22-21; 8:45 am]
BILLING CODE 6712-01-P


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