[Federal Register Volume 65, Number 127 (Friday, June 30, 2000)]
[Proposed Rules]
[Pages 40564-40576]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-16185]


=======================================================================
-----------------------------------------------------------------------

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 76

[CS Docket No. 00-96; FCC 00-195]


Implementation of the Satellite Home Viewer Improvement Act of 
1999: Broadcast Signal Carriage Issues

AGENCY:  Federal Communications Commission.

ACTION:  Proposed rule.

-----------------------------------------------------------------------

[[Page 40565]]

SUMMARY: This document proposes to implement certain aspects of the 
Satellite Home Viewer Improvement Act of 1999, which was enacted on 
November 29, 1999. Among other things, the act authorizes satellite 
carriers to add more local and national broadcast programming to their 
offerings and seeks to place satellite carriers on an equal footing 
with cable operators with respect to availability of broadcast 
programming. This document discusses specifically the implementation of 
regulations regarding the carriage of local television stations in 
markets where satellite carriers offer local television service to its 
subscribers.

DATES:  Comments due July 7, 2000; reply comments are due July 28, 
2000. Written comments by the public on the proposed information 
collections are due July 31, 2000. Written comments must be submitted 
by the Office of Management and Budget (OMB) on the proposed 
information collection(s) on or before August 29, 2000.

ADDRESSES: Federal Communications Commission, 445 12th Street, SW., 
Washington, DC 20554. In addition to filing comments with the 
Secretary, a copy of any comments on the information collections 
contained herein should be submitted to Judy Boley, Federal 
Communications Commission, 445 12th Street, SW., Washington, DC 20554, 
or via the Internet to <a href="/cdn-cgi/l/email-protection#0e646c61626b774e686d6d20696178"><span class="__cf_email__" data-cfemail="29434b46454c50694f4a4a074e465f">[email protected]</span></a>, and to Edward Springer, OMB Desk 
Officer, 10236 NEOB, 725--17th Street, NW., Washington, DC 20503 or via 
the Internet to <a href="/cdn-cgi/l/email-protection#0a4f6e7d6b786e24597a7863646d6f784a656768246f657a246d657c"><span class="__cf_email__" data-cfemail="1b5e7f6c7a697f35486b6972757c7e695b747679357e746b357c746d">[email protected]</span></a>.

FOR FURTHER INFORMATION CONTACT: Ben Golant at (202) 418-7111 or via 
internet at <a href="/cdn-cgi/l/email-protection#4321242c2f222d37032520206d242c35"><span class="__cf_email__" data-cfemail="375550585b5659437751545419505841">[email protected]</span></a>. For additional information concerning the 
information collection(s) contained in this document, contact Judy 
Boley at 202-418-0214, or via the Internet at <a href="/cdn-cgi/l/email-protection#1a707875767f635a7c7979347d756c"><span class="__cf_email__" data-cfemail="83e9e1ecefe6fac3e5e0e0ade4ecf5">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Notice 
of Proposed Rulemaking (``NPRM''), FCC 00-195, adopted May 31, 2000; 
released June 9, 2000. The full text of the Commission's NPRM is 
available for inspection and copying during normal business hours in 
the FCC Reference Center (Room CY-A257) at its headquarters, 445 12th 
Street, SW., Washington, DC 20554, or may be purchased from the 
Commission's copy contractor, International Transcription Service, 
Inc., (202) 857-3800, 1231 20th Street, NW., Washington, DC 20036, or 
may be reviewed via internet at http://www.fcc.gov/csb/

Synopsis of the Notice of Proposed Rulemaking

I. Introduction

    1. Section 338(a)(1) of the Communications Act, adopted as part of 
the Satellite Home Viewer Improvement Act of 1999 (``SHVIA''), provides 
that after December 31, 2001: each satellite carrier providing 
[television broadcast signals under the compulsory copyright licensing 
system] to subscribers located within the local market of a television 
broadcast station of a primary transmission made by that station shall 
carry upon request the signals of all television broadcast stations 
located within that local market, subject to section 325(b) 
[retransmission consent requirement].
    2. In this NPRM, we seek comment on the appropriate rules to 
implement this requirement. The SHVIA authorizes satellite carriers to 
offer more local and national broadcast programming to their viewers 
and makes that programming available to subscribers who previously have 
been prohibited from receiving broadcast programming via satellite 
under the compulsory licensing provisions of the copyright law. The 
SHVIA generally seeks to place satellite carriers on an equal footing 
with cable operators regarding the provisions of local broadcast 
programming, and thus give consumers more competitive options in 
selecting a multichannel video program distributor (``MVPD''). It is 
the clear intent of both Congress and the Commission to provide 
satellite subscribers with local television service in as many markets 
as possible.
    3. Among other things, this new legislation requires satellite 
carriers, by January 1, 2002, to carry upon request all local broadcast 
stations' signals in local markets in which the satellite carriers 
carry at least one broadcast station signal licensed to the subject 
television market pursuant to section 122 of title 17, United States 
Code. The SHVIA conference report added the cross-reference to section 
122 to the House provision to indicate the relationship between the 
benefits of the statutory license and the carriage requirements imposed 
by this Act. Until January 1, 2002, satellite carriers are granted a 
royalty-free copyright license to retransmit broadcast signals on a 
station-by-station basis, subject to obtaining a broadcaster's 
retransmission consent. This transition period is intended to provide 
the satellite industry with time to begin providing local signals into 
local markets--``local-into-local'' satellite service. The applicable 
statutory provisions, noted in greater detail below, are found in 
section 1008 of the SHVIA and codified at section 338 of the 
Communications Act of 1934, as amended (the ``Communications Act'' or 
``Act'').

II. Background

    4. In 1988, Congress passed the Satellite Home Viewer Act (``1988 
SHVA'') in order to provide households in unserved areas of the country 
with access to broadcast programming via satellite. The 1988 SHVA also 
reflected Congress' intent to maintain the role of local broadcasters 
in providing free, over-the-air television. As an amendment to the 
Copyright Act, the 1988 SHVA accommodated the broadcasters' interests 
by only allowing satellite carriers to provide broadcast programming to 
those satellite subscribers who were unable to obtain broadcast network 
programming over-the-air. Since 1988, subscribership to direct-to-home 
satellite service has increased markedly.
    5. In the SHVIA, Congress amended the law so as to permit satellite 
carriers to provide the signals of local broadcast stations to 
subscribers residing in the broadcaster's market. After December 31, 
2001, satellite carriers that provide local-into-local retransmission 
of broadcast stations pursuant to the statutory copyright license must 
``carry upon request the signals of all television broadcast stations 
within that local market * * *.'' The SHVIA requires the Commission to 
issue rules implementing this carriage requirement within one year of 
the SHVIA's enactment on November 29, 1999. Congress has indicated that 
these requirements should be comparable to those for cable systems, 
specifically noting paragraphs (3) and (4) of section 614(b) and 
paragraphs (1) and (2) of section 615(g), presently found in the 
mandatory broadcast signal carriage provisions in Title VI of the Act.
    6. In Implementation of the Cable Television Consumer Protection 
and Competition Act of 1992, Broadcast Signal Carriage Issues 
(``Broadcast Signal Carriage Order''), the Commission implemented the 
broadcast signal carriage provisions of the Cable Television Consumer 
Protection and Competition Act of 1992 (``1992 Cable Act''). This 
statute the Communications Act to provide television stations with 
certain carriage rights on local market cable television systems. 
Sections 614 and 615 of the Act contain the cable television ``must 
carry'' requirements for commercial and noncommercial television 
stations, respectively. Section

[[Page 40566]]

325 contains retransmission consent requirements pursuant to which 
cable operators may be obligated to obtain the consent of commercial 
broadcasters before retransmitting their signals. Within local market 
areas, commercial television stations may elect cable carriage under 
either the retransmission consent or mandatory carriage requirements. 
Noncommercial television stations may only opt for must carry under the 
Act, but may nevertheless agree to be carried on a voluntary basis.
    7. There are important distinctions between cable operators and 
satellite carriers that are implicated in attempting to harmonize 
section 338 with sections 614 and 615. The first significant difference 
is that satellite carriers have uplink facilities that are used to 
receive, package, and retransmit video programming. In contrast, cable 
operators receive, process, and distribute video programming from a 
local facility called a headend. This distinction is important because 
many cable carriage rules, such as the carriage requirement for local 
noncommercial television stations, rely upon the location of the cable 
operator's principal headend, a facility not used by satellite 
carriers. Second, satellite carriers have no legal obligation to have a 
basic service tier. Thus, they are under no obligation to place 
broadcast signals on such a tier of service as cable operators are 
required to do under the Act. Rather, section 338(d) requires satellite 
carriers to position local broadcast station signals on contiguous 
channels. Third, a satellite carrier has a general obligation to carry 
all television stations in a market, if it carriers one station in that 
market through reliance on the statutory license, without reference to 
a channel capacity cap. In contrast, a cable system with more than 12 
usable activated channels is required to devote no more than one-third 
of the aggregate number of usable activated channels to local 
commercial television stations that may elect mandatory carriage 
rights. A cable system is also obligated to carry a certain number of 
qualified noncommercial educational television stations above the one-
third cap. Fourth, satellite carriers provide a national service and 
need not have a franchise from local or state authorities to serve 
subscribers with any type of television signal nor do they have local 
access channel requirements. Cable operators, on the other hand, serve 
local franchise areas under franchise agreements with either local, 
county, or state authorities. Local franchise authorities often impose 
technical and system build-out requirements, as well as public, 
educational, and government access channel requirements, on cable 
operators. Finally, we note that 82% of all multichannel video 
programming distributor subscribers receive their video programming 
from a local franchised cable operator, while the satellite industry 
represents less than 15% of all MVPD subscribers. We will take into 
account these differences between the two industries in order to 
sensibly implement the requirements of section 338.
    8. Direct broadcast satellite (``DBS'') operators use satellites to 
transmit video programming to subscribers, who must buy or rent a small 
parabolic ``dish'' antenna and pay a subscription fee to receive the 
programming service. To obtain local television signals for local 
distribution, DBS companies may receive the signals over-the-air or 
have voluntary arrangements with local stations to deliver their 
signals via fiber-optic cables to a local telecommunications carrier's 
facilities. At a certain point designated by the satellite carrier, all 
of the broadcast signals are digitally encoded and multiplexed 
together. The packet of digitized television signals are then sent, 
using a high capacity (DS3) line, to the satellite carriers' 
programming facility, or group of facilities, where they are uplinked 
to the appropriate satellite and then retransmitted back to 
subscribers' dishes in the relevant stations' market of origin.
    9. The home satellite dish industry, also known as HSD or C-Band, 
is another type of satellite carrier subject to the SHVIA and its 
related provisions. C-Band subscribers use a much larger dish, some 
seven to ten feet in diameter, to receive video programming than that 
equipment used for reception by DBS subscribers. C-Band subscribers are 
often located in rural areas that are unserved by cable operators.

III. Satellite Broadcast Signal Carriage

A. Carriage Obligations and Definitions

    10. The SHVIA has accorded satellite carriers the right to 
retransmit local television stations without first obtaining 
retransmission consent, and without a mandatory carriage obligation, 
for a six month period from November 29, 1999 to May 28, 2000. 
Beginning on May 29, 2000 and continuing until December 31, 2001, 
carriage of broadcast television stations by satellite carriers is a 
station-by-station basis pursuant to retransmission consent agreement 
between the station and the satellite carrier. On January 1, 2002, 
pursuant to section 338(a)(1) of the Act: Subject to the limitations of 
paragraph (2) [remedies for failure to carry], each satellite carrier 
providing, under section 122 of title 17, United States Code, secondary 
transmissions to subscribers located within the local market of a 
television broadcast station of a primary transmission made by that 
station shall carry upon request the signals of all television 
broadcast stations located within that located market, subject to 
section 325(b). This provision gives satellite carriers a choice. If 
satellite carriers provide their subscribers with the signals of local 
television stations through reliance on the statutory copyrights 
license, they will have the obligations to carry all of the television 
signals in that particular market that request carriage. If satellite 
carriers provide local television signals pursuant to private copyright 
arrangements, the section 338 carriage obligations do not apply.
    11. In order to effectuate section 338, it is necessary to 
determine what constitutes a request for carriage, adopt procedural 
guidelines regarding the manner in which a broadcaster communicates its 
request for carriage, and set out guidelines for the satellite carrier 
to commence carriage. In this context, we seek comment on the meaning 
of the phrase ``carry upon request.'' In the cable context, the 
Commission initially required the cable operator to contact all local 
broadcast television stations, in writing, on matters relating to their 
carriage rights. We ask whether we should establish a similar 
requirement, so that satellite carriers must notify all local broadcast 
television stations, in writing, of their carriage rights once any 
local station in a particular market is being carried. We note that 
broadcast television stations requesting carriage must do so in 
writing--cable marriage of local broadcast television stations 
requesting mandatory carriage then commences on a specified date when 
the request is part of the periodic election process. We ask whether we 
should adopt similar procedural rules in the satellite carriage 
context. We also ask whether we should adopt separate procedural rules 
for the carriage of noncommercial educational television stations to 
mirror the cable carriage requirements. In addition, we ask whether the 
Commission should establish separate procedures to cover new broadcast 
stations that may commence operation in a market or for new satellite 
carriers similar to those established for cable carriage. Finally, we 
seek comment on how the section 338 mandate will work with the revised

[[Page 40567]]

section 325 provision regarding satellite carriers and retransmission 
consent.
    12. Section 338 contains several definitions that provide the 
framework for the satellite broadcast signal carriage paradigm. While 
these definitions are generally self effectuating, such as the meaning 
of ``satellite carrier,'' ``secondary transmission,'' and 
``subscriber,'' two provision require further explication to understand 
the scope of the satellite carriage obligation. These two provisions 
are as follows:
    Television Broadcast Station. Section 338(h)(7) defines the term, 
television broadcast station, as having the meaning given such term in 
section 325(b)(7). Section 325(b)(7) defines television broadcast 
station, as an over-the-air commercial or noncommercial television 
broadcast station licensed by the Commission under subpart E of part 73 
of title 47, Code of Federal Regulations, except that such term does 
not include a low-power or translator station. We seek comment on the 
scope of the definition. We first note that, unlike cable operators, 
satellite carriers have no obligation to carry low power television 
stations in any instance. We also note that, unlike cable operators, 
satellite carriers are not required to carry noncommercial educational 
translator stations with five watts or higher power. We seek comment on 
these apparent differences and what impact they have on a satellite 
carrier's carriage responsibilities under section 338. A question also 
remains about whether satellite carriers must carry ``satellite 
television stations'' as cable operators are required to do. We believe 
that since television stations are not specifically excluded by section 
338(h)(7), satellite carriers have an obligation to carry these 
entities if they carry other local market television stations. We seek 
comment on this interpretation. Finally, we ask if there are any other 
significant differences between the satellite carriage and cable 
carriage definitional requirements that affect this proceeding.
    Distributor. Section 338(h)(1) of the Communications Act defines 
the term, distributor, as an ``entity which contracts to distribute 
secondary transmissions from a satellite carrier and, either as a 
single channel or in a package with other programming, provides the 
secondary transmission either directly to individual subscribers or 
indirectly through other program distribution entities.'' We note that 
the term distributor is not found in any other provision of section 
338, other than the definitional subsection. Given this omission, which 
may or may not have been purposeful, we seek comment on the definition 
of distributor and its relevance in this context.

B. Market Definitions

    13. Section 338(h)(3) defines the term, local market, as having the 
meaning it has under section 122(j) of title 17, United States Code. 
Section 122(j)(2)(A) defines the term, local market, in the case of 
both commercial and noncommercial television broadcast stations, to 
mean the designated market area in which a station is located, and (i) 
in the case of a commercial television broadcast station, all 
commercial television broadcast stations licensed to a community within 
the same designated market area within the same local market; and (ii) 
in the case of a noncommercial educational television broadcast 
station, the market includes any station that is licensed to a 
community within the same designated market area as the noncommercial 
educational television broadcast station. In addition to the area 
described in subparagraph (A), a station's local market includes the 
county in which the station's community of license is located. Section 
122(j)(2)(C) defines the term, designated market area to mean the 
market area as determined by Nielsen Media Research and published in 
the 1999-2000 Nielsen Station Index Directory and Nielsen Station Index 
United States Television Household Estimates or any successor 
publication.
    14. At the outset, we inquire as to why subsections (i) and (ii) 
were added to the overall section. It appears that they clarify that 
the local market includes a geographic area and all broadcast stations 
licensed or located within that designated area. We seek comment on 
this view of subsections (i) and (ii). We also seek comment on when to 
change the reference to the 1999-2000 Nielsen publications to reflect 
changes in market structure and market conditions. We note, in the 
cable context, that the rules account for a market update every three 
years. We ask whether the rules we implement under this section should 
be updated on a triennial basis, at another interval (e.g., every year, 
every five years, etc.) or not at all. We also note that the cable 
industry is required to use the 1997-98 Nielsen publications to 
determine local markets for broadcast signal carriage purposes up until 
January 1, 2003, yet satellite carriers are obliged to use the 1999-
2000 Nielsen publications for carriage purposes. We ask whether 
satellite carriers and cable operators should be required to use the 
same annual Nielsen market publications so that both may rely on the 
same market definition, and thus have virtually the same carriage 
obligations.
    15. It is important to note that a regulatory mechanism exists to 
expand or contract the size of a local television market for cable 
broadcast signal carriage purposes. Pursuant to section 614(h)(1)(C), 
at the request of either a broadcaster or a cable operator, the 
Commission may, with respect to a particular commercial television 
broadcast station, include additional communities within its television 
market or exclude communities from such station's television market to 
better effectuate the purposes of the Act's mandatory carriage 
provisions. In considering market modification requests, the Act 
provides that the Commission shall afford particular attention, ``to 
the value of localism'' by taking into account such factors as (1) 
whether the station, or other stations located in the same are, have 
been historically carried on the cable system or systems within such 
community; (2) whether the television station provides coverage or 
other local service to such community; (3) whether any other television 
station that is eligible to be carried by a cable system in such 
community in fulfillment of the requirements of this section provides 
news coverage of issues of concern to such community or provides 
carriage or coverage of sporting and other events of interest to the 
community; and (4) evidence of viewing patterns in cable and non-cable 
households within the areas served by the cable system or systems in 
such community. The Commission's inclusion of additional communities 
within a station's market imposes new carriage requirements on cable 
operators subject to the modification request while the grant to 
exclude communities from a station's market relieves a cable operator 
from its obligation to carry a certain station's television signal.
    16. No such statutory mechanism exists for satellite broadcast 
signal carriage purposes in section 338. As a result, different 
carriage patterns may emerge between cable operators and satellite 
carriers in certain markets because a cable operator may be carrying 
stations that have expanded their market area while not carrying others 
because those stations were deleted from the relevant market area. We 
seek comment on whether the Commission has the authority to implement a 
market modification mechanism similar to section 614(h) in order to 
provide satellite carriers and broadcast stations the ability to modify 
markets for satellite carriage purposes. If so, should we use the same 
procedural

[[Page 40568]]

and evidentiary standards used for cable market modifications? 
Alternatively, should the Commission's previously granted market 
modifications be applicable to satellite carriers in the affected 
market areas? We seek comment on whether Commission action in this area 
may further the Congressional goal of harmonizing the carriage 
obligations between cable operators and satellite carriers.

C. Broadcast Station Delivery of a Good Quality Signal

    17. Section 338(b)(1) states that, ``A television broadcast station 
asserting is right to carriage under subsection (a) shall be required 
to bear the costs associated with delivering a good quality signal to 
the designated local receive facility of the satellite carrier or to 
another facility that is acceptable to at least one-half the stations 
asserting the right to carriage in the local market.'' A host of novel 
technical and definitional questions arise under this particular 
provision.
    18. We first seek comment on the term ``local receive facility.'' 
Section 338(h)(2) defines the term local receive facility as ``the 
reception point in each local market which a satellite carrier 
designates for delivery of the signal of the station for purposes of 
retransmission.'' There are a variety of possible technical 
configurations that a satellite carrier might use the receive, uplink, 
and distribute local market broadcast signals. Direct broadcast 
satellite operators, such as DirectTV and Echostar, generally appear to 
have one central uplink facility in the center of the country that 
relays content from the ground to the satellites involved. Broadcast 
signals from broadcast markets across the country need to be delivered 
to this facility. This could be accomplished using either a satellite 
or a terrestrial relay. It appears likely that the most economically 
feasible means would be to aggregate the signals in each local market 
at one point and deliver them over the facilities of an interstate 
telecommunications carrier to the uplink site(s). If this is correct, 
the ``local receive facility'' would be co-located at suitable 
carrier's switching center or ``point-of-presence.'' We seek comment on 
whether such a facility should be considered the ``local receive 
facility'' for purpose of section 338. We note that local receive 
facilities could also resemble, in a technical sense, a cable 
operator's headend, because that is where signals are received and 
processed. We seek comment on the parameters under which a satellite 
carrier may construct and designate such a facility. Aside from the 
above stated options, we also seek comment on other reception points a 
satellite carrier can consider to satisfy the provision's requirements. 
Finally, we seek comment on the procedures by which a satellite carrier 
must inform local market television stations of the location of the 
receive facility.
    19. In addition, we seek comment on the meaning of the statutory 
phrase, ``to another facility that is acceptable to at least one-half 
the stations asserting the right to carriage in the local market.'' We 
read the statute to mean that a satellite carrier may establish a 
regional receive facility as long as one-half of broadcasters agree to 
that location. For example, a satellite carrier may establish a receive 
facility for all of New England, which encompasses several DMAs, as 
long as 50% of the relevant broadcasters agree on the location. We seek 
comment on this interpretation. We also inquire about the process by 
which broadcast television stations agree to the establishment and 
location of another facility. What did Congress intend when it included 
the term ``acceptable?'' What happens with those broadcast stations 
that do not agree to the location of the other facility? Who should pay 
to transmit the broadcast signals to such a facility? May the stations 
in the minority file a complaint with the Commission concerning the 
location of such a facility?
    20. We also inquire about what constitutes a ``good quality 
signal'' as the term is used in section 338. Under the current cable 
carriage regime, television broadcast stations must deliver either a 
signal level of -45dBm for UHF signals or -49dBm for VHF signals at the 
input terminals of the signal processing equipment, to be considered 
eligible for carriage. We note that a broadcaster that does not provide 
a good quality signal to a cable system headend is not qualified for 
carriage. In this situation, a cable system is under no obligation to 
carry such a signal, but the broadcaster has an opportunity to provide 
equipment necessary to improve its signal to the requisite level and 
gain carriage rights. We seek comment on whether Congress intended the 
same result for broadcasters that do not provide a good quality signal 
to the local satellite receive facility. We also seek comment on 
whether the signal quality parameters under section 614 and the 
Commission's cable regulations are appropriate in the satellite 
carriage context.
    21. With respect to the manner of testing for a good quality 
signal, we note that the Commission has adopted a method for measuring 
signal strength in the cable carriage context. Generally, if a test 
measuring signal strength results in an initial reading of less than 
-51 dBm for a UHF station, at least four readings must be taken over a 
two-hour period. If the initial readings are between -51 dBm and - dBm, 
inclusive, readings must be taken over a 24-hour period with 
measurements not more than four hours apart to establish reliable test 
results. For a VHF station, if the initial readings are less than -55 
dBm, at least four readings must be taken over a two-hour period. Where 
the initial readings are between -55 dBm and -49 dBm, inclusive, 
readings should be taken over a 24-hour period, with measurements no 
more than four hours apart to establish reliable test results. The 
Commission stated that cable operators are further expected to employ 
sound engineering measurement practices; thus, signal strength surveys 
should, at a minimum, include the following: (1) Specific make and 
model number of the equipment used, as well as its age and most recent 
date(s) of calibration; (2) description(s) of the characteristics of 
the equipment used, such as antenna ranges and radiation patterns; (3) 
height of the antenna above ground level and whether the antenna was 
properly oriented; and (4) weather conditions and time of day when the 
test were done. We seek comment on whether we should require the same 
signal testing practices for measuring a broadcaster's signal strength 
in the satellite context.
    22. We also seek comment on the cost of delivering a good quality 
signal. Under the mandatory cable carriage provisions of section 614, 
television stations are ``required to bear the costs associated with 
delivering a good quality signal or a baseband video signal to the 
principal headend of the cable system.'' The Commission has stated that 
such costs may be for ``improved antennas, increased tower height, 
microwave relay equipment, amplification equipment and tests that may 
be needed to determine whether the station's signal complies with the 
signal strength requirements, especially if the cable system's over-
the-air reception equipment is already in place and is otherwise 
operating properly.'' We seek comment on which of these cost elements 
in the cable context are applicable in the satellite context. Are there 
any additional costs, in a section 338 setting, that are not mentioned 
above?

D. Duplicating Signals

    23. Section 338(c)(1) states that: Notwithstanding subsection (a), 
a satellite carrier shall not be required to carry upon request the 
signal of any

[[Page 40569]]

local commercial television broadcast station that substantially 
duplicates the signal of another local commercial television broadcast 
station which is secondarily transmitted by the satellite carrier 
within the same local market, or to carry upon request the signals of 
more than one local commercial television broadcast station in a single 
local market that is affiliated with a particular television network 
unless such stations are licensed to communities in different states.
    24. Section 614(b)(5) similarly provides that a cable operator is 
not required to carry the signal of any local commercial television 
station that substantially duplicates the signal of another local 
commercial television station which is carried on its cable system, or 
to carry the signals of more than one local commercial television 
station affiliated with a particular broadcast network. The Commission 
has decided that, based on the legislative history of this section, two 
stations ``substantially duplicate'' each other ``if they 
simultaneously broadcast identical programming for more than 50 percent 
of the broadcast week.'' For purposes of this definition, identical 
programming means the identical episode of the same program series. The 
Commission noted that its interpretation was consistent with the 1992 
Cable Act's legislative history that indicates that this phrase refers 
to the ``simultaneous transmission of identical programming on two 
stations'' and which ``constitutes a majority of the programming on 
each station.'' We seek comment on whether we should apply the 
Commission's determination of what constitutes ``substantial 
duplication'' under Title VI to this section of the SHVIA.
    25. We seek comment on the phrase, ``affiliated with a particular 
television network.'' In this situation, we ask what definition of 
``television network'' applies under this provision because that term 
is not specifically defined in section 338. We note that section 339(d) 
includes a definition of television network for purposes of satellite 
carriage of distant signals: ``The term `television network' means a 
television network in the United States which offers an interconnected 
program service on a regular basis for 15 or more hours per week to at 
least 25 affiliated broadcast stations in 10 or more States.'' We ask 
whether we should implement the section 339(d) definition for the 
purposes of administering the duplication provision at issue here. Are 
there any alternative definitions that we should consider?
    26. We also inquire about the application of the statutory phrase, 
``unless such stations are licensed to communities in different 
states.'' Congress stated that this phrase addresses unique and limited 
cases, including such station pairs as WMUR (Manchester, New Hampshire) 
and WCVB (Boston, Massachusetts) in the Boston DMA (both ABC 
affiliates) as well as WPTZ (Plattsburg, New York) and WNNE (White 
River Junction, Vermont) in the Burlington-Plattsburgh DMA (both NBC 
affilates), in which mandatory carriage of both duplicating local 
stations upon request assures that satellite subscribers will not be 
precluded from receiving the network affiliate that is licensed to a 
community in the state in which they reside. We seek comment on whether 
there are other similar situations that must be addressed as we proceed 
with adopting rules here. In addition, we seek comment on whether there 
are other regulatory issues that may arise in this situation.
    27. Section 338(c)(2) states that: The Commission shall prescribe 
regulations limiting the carriage requirements under subsection (a) of 
satellite carriers with respect to the carriage of multiple local 
noncommercial television broadcast stations. To the extent possible, 
such regulation shall provide the same degree of carriage by satellite 
carriers of such multiple stations as is provided by cable systems 
under section 615. Section 615(l)(1), in turn, provides that a local 
noncommercial educational television (``NCE'') station qualifies for 
cable carriage rights if it is licensed by the Commission as an NCE 
station and if it is owned and operated by a public agency, nonprofit 
foundation, or corporation or association that is eligible to receive a 
community service grant from the Corporation for Public Broadcasting. 
An NCE station is also considered qualified if it is owned and operated 
by a municipality and transmits predominantly noncommercial programs 
for educational purposes. For purposes of cable carriage, an NCE 
station is considered local if its community of license is within 50 
miles of, or the station places a Grade B contour over, the principal 
headend of the cable system. Cable systems are obliged to carry local 
noncommercial educational television stations under a statutory 
paradigm based upon a cable system's number of usable activated 
channels. Cable systems with: (1) 12 or fewer usable activated channels 
are required to carry the signal of one qualified local noncommercial 
educational station: (2) 13-36 usable activated channels are required 
to carry no more than three qualified local noncommercial educational 
stations; and (3) more than 36 usable activated channels shall carry at 
least three qualified local noncommercial educational stations. At the 
outset, we seek comment on whether this approach is applicable in the 
satellite context.
    28. A cable operator with cable system capacity of more than 36 
usable activated channels, and carrying the signals of three qualified 
NCE stations, is not required to carry the signals of additional 
stations the programming of which substantially duplicates the 
programming broadcast by another qualified NCE station requesting 
carriage. The Act states that substantial duplication was to be defined 
by the Commission in a manner that promotes access to distinctive 
noncommercial educational television services. The Commission concluded 
that an NCE station does not substantially duplicate the programming of 
another NCE station if at least 50 percent of its typical weekly 
programming is distinct from programming on the other station either 
during prime time or during hours other than prime time. We first seek 
comment on whether Congress, in drafting section 338(c)(2) meant for 
the Commission to focus solely on the substantial duplication language 
of section 615 to limit satellite carriage of NCE stations or whether 
it intended the Commission to prescribe other means to limit such 
carriage. If Congress meant for the Commission to concentrate on 
duplication, we ask whether we should apply the definition set forth in 
the cable carriage context or whether we should devise a new definition 
for satellite carriage purposes. If we are to develop additional 
carriage limitations, we ask what other rules should the Commission 
adopt to more narrowly tailor an NCE satellite carriage requirement to 
make it comparable to the NCE carriage obligations imposed on cable 
operators.

E. Channel Positioning

    29. Section 338(d) of the Communications Act states that: No 
satellite carrier shall be required to provide the signal of a local 
television broadcast station to subscribers in that station's local 
market on any particular channel number or to provide the signals in 
any particular order, except that the satellite carrier shall 
retransmit the signal of the local television broadcast stations to 
subscribers in the stations' local market on contiguous channels and 
provide access to such station's signals at a nondiscriminatory price 
and in a nondiscriminatory manner on any navigational device, on-

[[Page 40570]]

screen program guide, or menu. The Conference Report notes that the 
obligation to carry local stations on contiguous channels is to ensure 
that satellite carriers position local stations in a way that is 
convenient and practically accessible for consumers. The statutory 
directive for channel positioning clearly states that satellite 
carriers are required to present local broadcast channels to satellite 
subscribers in an uninterrupted series. We seek comment, however, on 
whether broadcast signals carried under retransmission consent must be 
contiguous with the television stations carried under section 338 or 
whether they may be presented to satellite subscribers in a non-
contiguous manner.
    30. We also seek comment on the phrase, ``provide access to such 
station's signals at a nondiscriminatory price and in a 
nondiscriminatory manner on any navigational device, on-screen program 
guide, or menu.'' We specifically seek comment on what rules the 
Commission should develop to ensure that television stations are 
accessible to satellite subscribers on nondiscriminatory terms. We ask 
whether there are any existing Commission rules that we may use as a 
model to develop regulations for this particular situation. We ask 
whether Congress meant that television station signals carried pursuant 
to mandatory carriage requests may cost no more per channel to 
subscribers than packages of retransmission consent television station 
signals or other satellite service packages. We seek comment on whether 
Congress meant that electronic program guide information concerning 
required television station signals should be presented to subscribers 
in the same fashion as other programming services provided by the 
satellite carrier.

F. Content To Be Carried

    31. Section 338(g) states that, ``The regulations prescribed [under 
section 338] shall include requirements on satellite carriers that are 
comparable to the requirements on cable operators under section 
614(b)(3) * * * and 615(g)(1).'' Section 614(b)(3) states that: A cable 
operator shall carry in its entirety, on the cable system of that 
operator, the primary video, accompanying audio, and line 21 closed 
caption transmission of each of the local commercial television 
stations carried on the cable system and, to the extent technically 
feasible, program-related material carried in the vertical blanking 
interval or on subcarriers. Retransmission of other nonprogram-related 
material (including teletext and other subscription and advertiser 
supported information services) shall be at the discretion of the cable 
operator. Where appropriate and feasible, operators may delete signal 
enhancements, such as ghost canceling, from the broadcast signal and 
employ such enhancements at the system headend or headends.
    32. Section 615(g)(1), which is the noncommercial equivalent of the 
commercial television station provision in section 614(b)(3), states 
that: A cable operator shall retransmit in its entirety the primary 
video, accompanying audio, and line 21 closed caption transmission of 
each qualified local noncommercial educational television station whose 
signal is carried on the cable system, and, to the extend technically 
feasible, program-related material carried in the vertical blanking 
interval, or on subcarriers, that may be necessary for receipt of 
programming by handicapped persons or educational or language purposes. 
Retransmission of other material in the vertical blanking interval 
[``VBI''] or on subcarriers shall be within the discretion of the cable 
operator.
    33. We seek comment on the applicability of these requirements in 
the satellite carriage context, especially in light of the terms 
``comparable'' contained in section 338(g), above. We recognize that 
the Commission has not specifically defined ``primary video'' in the 
rules and has instead relied on the language of section 614(b)(3)(B) to 
clarify the scope of the term for purposes of cable broadcast signal 
carriage. In view of this history, we seek comment on whether a 
specific definition of primary video is required for satellite carriers 
to fulfill the requirements contained in section 338.
    34. In the Broadcast Signal Carriage Order, the Commission decided 
that the factors enumerated in WGN Continental Broadcasting, Co. v. 
United Video Inc. (``WGN'') provided useful guidance for what 
constitutes program-related material. The WGN case addressed the extent 
to which the copyright on a television program also included program 
material in the VBI of the signal. The WGN court set out three factors 
for making a copyright determination. First, the broadcaster must 
intend for the information in the VBI to be seen by the same viewers 
who are watching the video signal. Second, the VBI information must be 
an integral part of the program. The court in WGN held that if the 
information in the VBI is intended to be seen by the viewers who are 
watching the video signal, during the same interval of time as the 
video signal, and as an integral part of the program on the video 
signal, then the VBI and the video signal are one copyrighted 
expression and must both be carried if one is to be carried. We seek 
comment on whether the WGN program-related analysis applies in the 
context of satellite broadcast signal carriage.
    35. With regard to the ``technical feasibility'' of the carriage of 
program-related material in the VBI or on subcarriers, the Commission 
stated in the Broadcast Signal Carrier Order that such carriage should 
be considered ``technically feasible'' if it does not require the cable 
operator to incur additional expenses and to change or add equipment in 
order to carry such material. The Commission noted that it would 
consider signal carriage to be ``technically feasible'' if only nominal 
costs, additions or changes of equipment are necessary. We seek comment 
on whether the consideration of technical feasibility should be 
different in the context of satellite broadcast signal carriage.
    36. Finally, we note that satellite carriers are required to pass 
through closed captions regardless of the particular arrangements by 
which the broadcast station is carrier. Section 79.1 of the 
Commission's rules, adopted to implement section 713 of the Act, 
requires that all video programming distributors, as defined in 
Sec. 79.1(a)(2) of the Commission's rules, 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 Sec. 15.119 of the Commission's rules. We take this opportunity to 
ask whether satellite carriers have, or will have, any difficulties in 
passing through closed captioning information to its subscribers. If 
so, wee seek comment on what measures the Commission should take to 
ensure that captioning information reaches its intended audience.

G. Material Degradation

    37. Section 338(g) states that, ``The regulations prescribed [by 
the Commission under section 338] shall include requirements on 
satellite carriers that are comparable to the requirements on cable 
operators under sections 614(b)(4) * * * and 615(g)(2).'' Section 
614(b)(4)(A) states that, ``The signals of local commercial television 
stations that a cable operator carriers shall be carried without 
material degradation. The Commission shall adopt carriage standards to 
ensure that, to the extent technically feasible, the quality of signal 
processing and carriage

[[Page 40571]]

provided by a cable system for the carriage of local commercial 
television stations will be no less than that provided by the system 
for carriage of any other type of signal.'' Section 615(g)(2), which is 
the noncommercial equivalent of the commercial television station 
provision in section 614(b)(4), states that, ``A cable operator shall 
provide each qualified local noncommercial educational television 
station whose signal is carried in accordance with this section with 
bandwidth and technical capacity equivalent to that provided in 
commercial television broadcast stations carried on the cable system 
and shall carry the signal of each qualified local noncommerical 
educational television station without material degradation.''
    38. The Conference Report noted that because of unique technical 
challenges on satellite technology and constraints on the use of 
satellite spectrum, satellite carriers may initially be limited in 
their ability to deliver must carry signals into multiple markets. 
According to the Conference Report: ``New compression technologies, 
such as video streaming, may help overcome these barriers, and if 
deployed, could enable satellite carriers to deliver must carry signals 
into many more markets than they could otherwise.'' The Commission is 
urged, pursuant to its obligations under section 338, or in any other 
related proceedings, ``to not prohibit satellite carriers from using 
reasonable compression, reformatting, or similar technologies to meet 
their carriage obligations, consistent with existing authority.''
    39. When implementing the material degradation provision for cable 
carriage, the Commission relied on the technical standards as updated 
in the Cable Technical Report and Order, in defining the scope of the 
requirement. The Cable Technical Report and Order specifically 
addressed the issue of preventing material degradation of local 
television signals carried on cable systems by adopting a number of 
technical standards and providing that cable operators must make 
reasonable efforts and use good engineering practices and proper 
equipment to guard against unnecessary degradation in the signal 
received and delivered to the cable subscriber. The Commission stated 
that the standards adopted in the Cable Technical Report and Order were 
sufficient to satisfy the material degradation requirements contained 
in the 1992 Cable Act. In declining to adopt regulations in addition to 
those found in the Cable Technical Report and Order, the Commission 
stated that further rules may have the unwarranted effect of impeding 
technological advances and experimentation in the cable industry. 
Standards specific to digital communications were not adopted. Given 
the technological differences between cable operators and satellite 
carriers, we seek comment on whether reliance on Commission precedent 
in the cable carriage context regarding material degradation is 
appropriate and whether technical standards mirroring those in the 
cable television field would be warranted. We seek comment on whether 
we should develop new rules for satellite carriers, and if so what such 
rules should be, consistent with the Congressional direction on digital 
compression and taking into account the unique technical aspects of 
satellite carriage of broadcast signals.
    40. It is important to note that our concerns here revolve around 
the satellite carrier's treatment of the broadcast signal on the 
equipment it controls or authorizes. Thus, our focus does not involve 
picture quality issues that may arise because of the type of television 
receiver used since the satellite carrier has little control over the 
use of these devices. Moreover, our analysis of material degradation 
recognizes that dish placement on or near the subscriber's premises can 
affect the quality of the picture received, but that the satellite 
carrier cannot control how and where dishes are installed.
    41. We understand that satellite carriers use a different 
modulation system from cable operators--quadrature phase-shift keying 
or ``QPSK''--as the principal format when transmitting video 
programming. Thus, it is important to note at this juncture, the 
technical steps in the digital conversion process affecting the 
material degradation analysis. In satellite digital television systems, 
such as those implemented by DirecTV and Echostar, there are four 
layers of the systems where video quality may be affected. The first 
layer, known as the picture layer, is where decisions are made 
regarding the use of progressive or interlace scanning techniques as 
well as whether the picture will be produced in a standard definition 
or high definition format. The choices made in this layer will not 
likely affect the quality of retransmitted analog broadcasts. In the 
second layer, the compression layer, decisions are made regarding the 
types of compression techniques used. The relevant digital standard, 
MPEG-2, supports a wide range of compression ratios and data rates. At 
this layer, the satellite carrier attempts to maximize the number of 
channels carried on each transponder and there is an effort to place a 
limit on the maximum data rate of each channel. Limiting the data rate 
may cause the picture quality to degrade, especially when certain video 
scenes involve rapid motion images or there is a greater degree of 
camera panning and zooming. The third layer is known as the transport 
layer and this is where the data are structured and organized into data 
packets. Since most digital video systems use the MPEG packet 
structure, there is little likelihood that any type of degradation 
would occur at this level. The final layer is the transmission layer 
and this is where data are modulated on to a carrier for transmission. 
The use of high efficiency modulation techniques, such as the cable 
industry's QAM standard, permit greater data rate throughput. QPSK, 
however, is a lower order modulation and requires satellite carriers to 
limit the data rate or increase channel bandwidth. The chances for 
degradation to occur at this level are tied to the limiting data rate 
technique in the compression layer.
    42. We specifically note that degradation may result when the 
satellite carrier encodes an analog broadcast signal and readies it for 
digital retransmission. During the encoding process, certain artifacts 
may be introduced into the original material that would have an effect 
on picture quality. The most dominant artifact is quantization noise in 
the picture. This effect is often visible on edges of subjects and 
textured areas of the image. It is caused when there is a high amount 
of picture detail along with a high degree of picture activity and 
levels of quantization are restricted due to data rate reduction. 
Random noise can also be introduced into the source video. This can 
result in activity or ``busyness'' in detail areas of the picture and 
tiling or flicker in other areas of the picture. Such effects are 
caused by the encoder attempting to encode random noise. During the 
encoding process, data rate reduction in combination with rapid picture 
changes may result in another artifact known as the ``dirty window,'' 
where noise appears stationary while the images behind it are moving.
    43. Understanding that satellite carriers use the technical process 
described above in retransmitting analog broadcast signals, and keeping 
in mind Congress's express statement that any reasonable type of 
digital compression technique is permissible, we seek comment on how to 
define material degradation for purposes of section 338. The focus of 
our concern in this context is where the satellite carrier has made a 
conscious decision to increase the number of channels carried to the 
detriment of picture quality. Thus, we

[[Page 40572]]

seek comment on how to define the term ``material,'' but in the context 
of a deliberate action on the part of the satellite carrier. For 
example, when a broadcast television station freezes, ``tiles'' or 
looks ``dirty'' due to a satellite carrier's choice of encoding and 
compression techniques, should that be considered ``material'' or 
``immaterial'' degradation? We also seek comment on whether there are 
certain compression ratios or encoding techniques that should be 
prohibited because their use would result in material degradation.
    44. Aside from the matters discussed above, questions arise as to 
what standards and measurement techniques the Commission should employ 
where specific broadcast signal quality disputes arise. In the cable 
carriage context, where an operator carries the broadcaster's analog 
television signal, issues such as signal to noise ratios and ghosting 
have been the focus of concern. In the satellite carriage situation, 
where an analog broadcast signal is digitally transmitted by a 
satellite carrier, picture resolution is still important but bit error 
rates and data throughput are also relevant. Moreover, the technical 
standards that are employed to evaluate cable analog picture quality 
were adopted and refined over the course of many decades, yet the 
Commission has had relatively little experience in evaluating the 
analog to digital to analog conversion of the type involved in 
satellite broadcast signal carriage. We seek suggestions for 
measurement standards that may be used in addressing signal degradation 
issues.
    45. We also have questions concerning the phrase ``similar 
technologies to meet their carriage obligations'' as it is found in 
this section's legislative history. We first ask what is meant by the 
term ``similar technologies.'' Are there any limits as to the kind of 
technologies a satellite carrier may use to fulfill its statutory 
mandates under section 338? We specifically seek comment on whether the 
phrase encompasses ``spot beaming,'' where a satellite carrier delivers 
programming to a discrete geographical location using a specialized 
satellite. If so, what are the implications for using such technology 
in the satellite broadcast signal carriage context.

H. Digital Television

    46. Section 338(g) states: ``The regulations prescribed [by the 
Commission under Section 338] shall include requirements on satellite 
carriers that are comparable to the requirements on cable operators 
under sections 614(b)(4) * * *.'' Section 614(b)(4)(B) of the Act 
provides: ``At such time as the Commission prescribes modifications of 
the standards for television broadcast signals, the Commission shall 
initiate a proceeding to establish any changes in the signal carriage 
requirements of cable television systems necessary to ensure cable 
carriage of such broadcast signals of local commercial television 
stations which have been changed to conform with such modified 
standards.'' The Conference Report stated: ``By directing the FCC to 
promulgate these must carry rules [found in section 338], the conferees 
do not take any position regarding the application of must-carry rules 
to carriage of digital television signals by either cable or satellite 
systems.''
    47. The Commission has adopted rules establishing a transitional 
process for the conversion from an analog to a digital form of 
broadcast transmission. The rules allow each existing analog television 
licensee or each eligible permittee to construct or operate digital 
facilities with a roughly comparable service area using 6 MHz of 
spectrum, in addition to the 6 MHz of spectrum used for analog 
broadcasting. The broadcast station will transmit a signal consistent 
with the standards adopted in Advanced Television Systems and Their 
Impact Upon the Existing Television Broadcast Service, Fourth Report 
and Order in MM Docket No. 87-268, giving it the flexibility to 
broadcast in a high definition mode, in a multiple program standard 
definition mode, in a datacasting mode, or a mixture of all three. 
During the transition period, both the analog and digital television 
signals will be broadcast. At the end of the transition which is 
scheduled for the year 2006, with certain statutory exceptions, the 
station is to cease broadcasting an analog signal and will return to 
the government 6 MHz of spectrum.
    48. The rules governing the transition from analog to digital 
broadcasting are found in Advanced Television Systems and Their Impact 
Upon the Existing Television Broadcast Service, Fifth Report and Order 
in MM Docket 87-268 (``Fifth Report and Order''). The Fifth Report and 
Order set forth a phased-in implementation schedule for the 
introduction of digital broadcast television. Construction requirements 
vary depending on the size of the television market and other factors.
    49. In July 1998, the Commission commenced a proceeding to 
determine the carriage obligations cable operators should have with 
regard to a broadcast station's digital television signal during the 
transition period to digital television. We sought comment on that 
proceeding on how to accomplish the Congressional goals reflected in 
Sections 614, 615, and 325 of the Act in light of the significant 
changes to the relevant industries resulting from the conversion to 
digital operations. The thrust of the proceeding was to examine the 
timing and scope of digital broadcast signal carriage obligations for 
cable operators. The Commission proposed seven carriage options for the 
transition period ranging from an immediate dual carriage regime, where 
a cable operator would carry both the analog and digital signals at the 
same time, to the no carriage options, where a cable operator would be 
under no obligation to carry the station's digital signal until after 
the transition period has ended.
    50. When this proceeding was initiated, there was no satellite 
broadcast signal carriage requirement, and satellite carriers 
apparently did not find it necessary to comment on the issues addressed 
in that proceeding. Thus, we seek comment on whether satellite carriers 
should be required to carry digital broadcast television signals in 
addition to analog broadcast signals up until the time that television 
stations return their analog spectrum to the government. What are the 
costs and benefits of such a requirement? In what ways would a dual 
carriage rule limit the number of markets satellite carriers can serve 
with analog broadcast signals alone? Moreover, would satellite carriers 
have to drop existing non-broadcast programming to accommodate digital 
television signals? To what extent should any digital carriage 
requirements for satellite carriers be consistent with those for cable 
operations?

I. Compensation for Carriage

    51. Section 338(e) states: ``A satellite carrier shall accept or 
request monetary payment or other valuable consideration in exchange 
either for carriage of local television broadcast stations in 
fulfillment of the requirements of this section or for channel 
positioning rights provided to such stations under this section, except 
that any such station may be required to bear the costs associated with 
delivering a good quality signal to the local receive facility of the 
satellite carrier.'' We will consider the costs associated with 
delivering a good quality signal as part of our consideration of the 
several related local receive facility issues, discussed above. This 
provision largely parallels provisions applicable to cable operators 
that are found in sections 614(b)(10) and 615(i) of the Act that are 
implemented in Sec. 76.60 of the

[[Page 40573]]

Commission's rules. In the cable context, commercial broadcasters elect 
either must carry or retransmission consent to obtain carriage of their 
signals. If mandatory carriage is selected, there are no specific terms 
for carriage that must be requested, other than choosing the relevant 
channel positioning options available to broadcasters under the Act. If 
retransmission consent is selected, the operator may receive 
compensation from the broadcaster in exchange for carriage. We assume 
the same general policy is intended here and that a broadcaster seeking 
carriage rather than requesting carriage ``in fulfillment of the 
requirements of [section 338]'' would simply negotiate carriage 
provisions, including payment terms, in the context of a retransmission 
consent negotiation. We seek comment on this interpretation. We also 
seek comment on the policy underlying this provision and its purpose in 
the statutory scheme.

J. Remedies

    52. Section 338(a)(2) states that the remedies for any failure to 
meet the obligations under subsection (a) (carriage obligations) shall 
be available exclusively under section 501(f) of title 17, United 
States Code. New section 501(f)(1) states: ``With respect to any 
secondary transmission that is made by a satellite carrier of a 
performance or display of a work embodied in a primary transmission and 
is actionable as an act of infringement under section 122, a television 
broadcast station holding a copyright or other license to transmit or 
perform the same version of that work shall, for purposes of subsection 
(b) of this section, be treated as a legal or beneficial owner if such 
secondary transmission occurs within the local market of that 
station.'' New section 501(f)(2) further provides: ``A television 
broadcast station may file a civil action against any satellite carrier 
that has refused to carry television broadcast signals, as required 
under section 122(a)(2), to enforce that television broadcast station's 
rights under section 338(a) of the Communications Act of 1934.'' As it 
appears that the Commission is not the statutory venue to remedy non-
carriage of broadcast station signals by satellite carriers, we believe 
that there is not need for us to implement Section 338(a)(2). We seek 
comment on this view.
    53. Section 338(f)(1) of the Communications Act states: ``Whenever 
a local television broadcast station believes that a satellite carrier 
has failed to meet its obligations under subsections (b) through (e) of 
this section [(b) good signal required, (c) duplication not required, 
(d) channel positioning, and (e) compensation for carriage], such 
station shall notify the carrier, in writing, of the alleged failure 
and identify its reasons for believing that the satellite carrier 
failed to comply with such obligations. The satellite carrier shall, 
within 30 days after such written notification, respond in writing to 
such notification and comply with such obligations or sate its reasons 
for believing that it is in compliance with such obligations. A local 
television broadcast station that disputes a response by a satellite 
carrier that it is in compliance with such obligations may obtain 
review of such denial or response by filing a complaint with the 
Commission. Such complaint shall allege the manner in which such 
satellite carrier has failed to meet its obligations and the basis for 
such allegations.'' In addition, section 338(f)(2) states: ``The 
Commission shall afford the satellite carrier against which a complaint 
is filed under paragraph (1) an opportunity to present data and 
arguments to establish that there has been no failure to meet its 
obligations under this section.
    54. Section 338(f)(3) of the Communications Act states: ``Within 
120 days after the date a complain is filed under paragraph (1), the 
Commission shall determine whether the satellite carrier has met its 
obligations under subsections (b) through (e). If the Commission 
determines that the satellite carrier has failed to meet such 
obligations, the Commission shall order the satellite carrier to make 
appropriate remedial action. If the Commission determines that the 
satellite carrier has fully met the requirements of such subsections, 
the Commission shall dismiss the complaint.'' We seek comment on the 
meaning of the phrase, ``appropriate remedial action'' for each of the 
relevant subsections. We also ask whether the payment of forfeitures 
for non-compliance would fall under the ``appropriate remedial action'' 
rubric.
    55. These provisions clearly state the remedial procedures for 
satellite carrier violations of section 338, with subsection 338(a) 
providing a remedy for failure to carry and subsection 338(f) providing 
specific remedies for unique carriage violations. We seek comment on 
two additional issues, however. First, we seek comment on how the 
section 501(f) remedial limitation in section 338(a)(2) relates to the 
complaint process set forth in section 338(f). For example, if a 
satellite carrier refuses to carry a broadcast station signal because 
of a signal quality dispute, would the broadcaster pursue its remedy in 
court, at the Commission, or would both fora be available? In addition, 
it appears that a broadcaster cannot file a complaint against a 
satellite carrier for non-compliance with the content-to-be-carried or 
material degradation provisions as the SHVIA specifically referenced 
those issues in section 338(g) rather than in (b) through (e), as 
provided in section 338(f). We seek comment on this interpretation. If 
this is the correct reading of the statute, should the Commission 
nonetheless include those issues as subject to the complaint process 
under its general authority to administer the Communications Act?

IV. Procedural Matters

A. Ex Parte Rules

    This proceeding will be treated as a ``permit-but-disclose'' 
proceeding subject to the ``permit-but disclose'' requirements under 
Sec. 1.1206(b) of the Commission's rules. Ex parte presentations are 
permissible if disclosed in accordance with Commission rules, except 
during the sunshine Agenda period when presentations, ex parte or 
otherwise, are generally prohibited. Persons making oral ex parte 
presentations are reminded that a memorandum summarizing a presentation 
must contain a summary of the substance of the presentation and not 
merely a listing of the subjects discussed. More than a one or two 
sentence description of the views and arguments presented is generally 
required. Additional rules pertaining to oral and written presentations 
are set forth in Sec. 1.1206(b) of the Commissions rules.

B. Filing of Comments and Reply Comments

    56. Pursuant to applicable procedures set forth in Sec. 1.415 and 
1.419 of the Commission's rules, interested parties may file comments 
regarding this NPRM on or before July 7, 2000 and reply comments on or 
before July 28, 2000. Comments may be filed using the Commission'e 
Electronic Comment Filing System (``ECFS'') or by filing paper copies. 
Comments filed through the ECFS can be sent as an electronic file via 
the Internet to http://www.fcc/e-file/ecfs.html. Generally, only one 
copy of an electronic submission must be filed. If multiple docket or 
rulemaking numbers appear in the caption of this proceeding, however, 
commenters must transmit one electronic copy of the comments to each 
docket or rulemaking number referenced in the caption. In completing 
the transmittal screen, commenters

[[Page 40574]]

should include their full name, Postal service mailing address, and the 
applicable docket or rulemaking number. Parties may also submit an 
electronic comment by internet e-mail. To get filing instructions for 
e-mail comments, commenters should send an e-mail to <a href="/cdn-cgi/l/email-protection#187d7b7e6b587e7b7b367f776e"><span class="__cf_email__" data-cfemail="5431373227143237377a333b22">[email protected]</span></a>, and 
should include the following words in the body of the message, ``get 
form your e-mail address.'' A sample form and directions will be sent 
in reply.
    57. Written comments by the public on the proposed information 
collections are due July 31, 2000. Written comments must be submitted 
by the Office of Management and Budget (OMB) on the proposed 
information collections on or before August 29, 2000. In addition to 
filing comments with the Secretary, a copy of any comments on the 
information collection(s) contained herein should be submitted to Judy 
Boley, Federal Communications Commission, Room 1-C804, 445 12th Street, 
SW, Washington, DC 20554, or via the Internet to <a href="/cdn-cgi/l/email-protection#deb4bcb1b2bba79eb8bdbdf0b9b1a8"><span class="__cf_email__" data-cfemail="8ce6eee3e0e9f5cceaefefa2ebe3fa">[email protected]</span></a> and to 
Edward C. Springer, OMB Desk Officer, 10236 NEOB, 725--17th Street, NW, 
Washington, DC 20503 or via the Internet to 
<a href="/cdn-cgi/l/email-protection#2b6e4f5c4a594f05785b5942454c4e596b444649054e445b054c445d"><span class="__cf_email__" data-cfemail="4d08293a2c3f29631e3d3f24232a283f0d22202f6328223d632a223b">[email protected]</span></a>.
    58. Parties who choose to file by paper must file an original and 
four copies of each filing. If participants want each Commissioner to 
receive a personal copy of their comments, an original plus nine copies 
must be filed. If more than one docket or rulemaking number appears in 
the caption of this proceeding, commenters must submit two additional 
copies for each additional docket or rulemaking number. All filing must 
be sent to the Commission's Secretary, Magalie Roman Salas, Office of 
the Secretary, Federal Communications Commission, 445 12th Street, SW, 
Washington, DC 20554. The Cable Services Bureau contact for this 
proceeding is Ben Golant at (202) 418-7111, TTY (202) 418-7172, or at 
<a href="/cdn-cgi/l/email-protection#dab8bdb5b6bbb4ae9abcb9b9f4bdb5ac"><span class="__cf_email__" data-cfemail="caa8ada5a6aba4be8aaca9a9e4ada5bc">[email protected]</span></a>.
    59. Parties who choose to file by paper should also submit their 
comments on diskette. Parties should submit diskettes to Ben Golant, 
Cable Services Bureau, 445 12th Street NW, Room 4-A803, Washington, DC 
20554. Such a submission should be on a 3.5-inch diskette formatted in 
an IBM compatible form using MS DOS 5.0 and Microsoft Word, or 
compatible software. The diskette should be accompanied by a cover 
letter and should be submitted in ``ready only'' mode. The diskette 
should be clearly labeled with the party's name, proceeding (including 
the lead docket number in this case, CS Docket No. 00-96), type of 
pleading (comments or reply comments), date of submission, and the name 
of the electronic file on the diskette. The label should also include 
the following phrase ``Disk Copy--Not an Original.'' Each diskette 
should contain only one party's pleadings, referable in a single 
electronic file. In addition, commenters must send diskette copies to 
the Commission's copy contractor, International Transcription Service, 
1231 20th Street, NW, Washington, DC 20036.

C. Paperwork Reduction Act Statement and Initial Regulatory Flexibility 
Act Statement

    60. This NPRM contains a proposed information collection. The 
Commission, as part of its continuing effort to reduce paperwork 
burdens, invites the general public and the Office of Management and 
Budget (OMB) to comment on the information collections(s) contained in 
this NPRM, as required by the Paperwork Reduction Act of 1995, Public 
Law 104-13. OMB notification of action is due August 29, 2000. Comments 
should address: (a) Whether the proposed collection of information is 
necessary for the proper performance of the functions of the 
Commission, including whether the information shall have practical 
utility; (b) the accuracy of the Commission's burden estimates; (c) 
ways to enhance the quality, utility, and clarity of the information 
collected; and (d) ways to minimize the burden of the collection of 
information on the respondents, including the use of automated 
collection techniques or other forms of information technology.
    OMB Control Number: 3060-xxxx
    Title: Implementation of the Satellite Home Viewer Improvement Act 
of 1999: Broadcast Signal Carriage Issues.
    Type of Review: New collection or revision of existing collection.
    Respondents: Business or other for-profit entities.
    Number of Respondents: Satellite carriers--xxxx.
    Estimated Time Per Response: xxxx hours.
    Total Annual Burden: xxxx.
    Cost to Respondents: xxxx.
    Needs and Uses: Congress directed the Commission to adopt 
regulations that apply broadcast signal carriage requirements to 
satellite carriers pursuant to the changes outlined in the Satellite 
Home Viewer Improvement Act of 1999. The availability of such 
information will serve the purpose of informing the public of the 
method of broadcast signal carriage.

Initial Regulatory Flexibility Analysis

    a. As required by the Regulatory Flexibility Act (``RFA''), the 
Commission has prepared this Initial Regulatory Flexibility Analysis 
(``IRFA'') of the possible significant economic impact on small 
entities by the possible policies and rules that would result from the 
NPRM of Proposed Rulemaking (``NPRM'') Written public comments are 
requested on this IRFA. Comments must be identified as responses to the 
IRFA and must be filed by the deadlines for comments on the NPRM. The 
Commission will send a copy on of the NPRM, including this IRFA, to the 
Chief Counsel for Advocacy of the Small Business Administration. In 
addition, the NPRM and IRFA (or summaries thereof) will be published in 
the Federal Register.
    b. Need for, and Objectives of, the Proposed Rules Sections 38(g) 
of the Communications Act of 1934, as amended (``Act''), directed the 
Commission, within one year of enactment of the Satellite Home Viewer 
Improvement Act of 1999, to ``issue regulations implementing this 
section following a rulemaking proceeding.'' The relevant provisions 
concern the carriage of all local television broadcast station signals 
by satellite carriers commencing on January 1, 2002.
    c. Legal Basis. The authority for the action proposed in this 
rulemaking is contained in sections 1, 4(i) and (j), 338,614 and 615 of 
the Communications Act of 1934, as amended, 47 U.S.C. 151, 154(i) and 
(j), 338, 534, and 535.
    d. Description and Estimate of the Number of Small Entities to 
Which the Proposed Rules Will Apply. The IRFA directs the Commission to 
provide a description of and, where feasible, an estimate of the number 
of small entities that will be affected by the proposed rules. The IFRA 
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 
Small Business Administration (``SBA''). The rules we will adopt as a 
result of the NPRM will affect television station licensees and 
satellite carriers.
    e. Television Stations. The proposed rules and policies will apply 
to television broadcasting licenses, and potential licensees of 
television service. The Small Business Administration

[[Page 40575]]

defines a television broadcasting station that has no more than $10.5 
million in annual receipts as a small business. Television broadcasting 
stations consist of establishments primarily engaged in broadcasting 
visual programs by television to the public, except cable and other pay 
television services. Included in this industry are commercial, 
religious, educational, other television stations. Also included are 
establishments primarily engaged in television broadcasting and which 
produce taped television program materials. Separate establishments 
primarily engaged in producing taped television program material are 
classified under another SIC number.
    f. An element of the definition of ``small business'' is that the 
entity not be dominant in its field of operation. We are unable at this 
time to define or quantify the criteria that would establish whether a 
specific television station is dominant in its field of operation. 
Accordingly, the estimates that follow of small businesses to which 
rules may apply to not exclude any television station from the 
definition of a small business on this basis and are therefore over-
inclusive to that extent. As additional element of the definition of 
``small business'' is that the entity must be independently owned and 
operated. As discussed further below, we could not fully apply this 
criterion, and our estimates of small businesses to which rules may 
apply may be over-exclusive to this extent. The SBA's general size 
standards are developed taking into account these two statutory 
criteria. This does not preclude us from taking these factors into 
account in making our estimates of the numbers of small entities. There 
were 1,509 television stations operating in the nation in 1992. That 
number has remained fairly constant as indicated by the approximately 
1,616 operating television broadcasting stations in the nation as of 
September 1999. For 1992, the number of television stations that 
produced less than $10.0 million in revenue was 1,155 
establishments.Thus, the new rules will affect approximately 1,616 
television stations; approximately 77% per 1,230 of those stations are 
considered small business. These estimates may overstate the number of 
small entities since the revenue figures on which they are based on not 
include or aggregate revenues from non-television affiliated companies.
    g. Small MVPDs: SBA has developed a definition of small entities 
for cable and other pay television services, which includes all such 
companies generating $11 million or less in annual receipts. This 
definition includes cable system operators, direct broadcast satellite 
services, multipoint distribution systems, satellite master antenna 
systems and subscription television services. According to the Census 
Bureau data from 1992, there were 1,758 total cable and other pay 
television services and 1,423 had less than $11 million in revenue. We 
address below service individually to provide a more precise estimate 
of small entities.
    h. DBS: There are four licensees of DBS services under part 100 of 
the Commission's rules. Three of those licensees are currently 
operational. Two of the licensees which are operational have annual 
revenues which may be in excess of the threshold for a small business. 
The Commission, however, does not collect annual revenue data for DBS 
and, therefore, is unable to ascertain the number of small DBS 
licensees that could be impacted by these proposed rules. DBS service 
requires a great investment of capital for operation, and we 
acknowledge that there are entrants in this field that may not yet have 
generated $11 million in annual receipts, and therefore may be 
categorized as a small business, if independently owned and operated.
    i. 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 package. Thus, HSD 
users include: (1) Viewers who subscribe to a packaged programming 
service, which affords them access to most of the same programming 
provided to subscribers of other MVPDs; (2) viewers who receive only 
non-subscription programming; and (3) viewers who receive satellite 
programming services illegally without subscribing. Because scrambled 
packages of programming are most specifically intended for retail 
consumers, these are the services most relevant to this discussion.
    j. According to the most recently available information, there are 
approximately 30 program packagers nationwide offering packages of 
scrambled programming to retail consumers. These program packages 
provide subscriptions to approximately 2,314,900 subscribers 
nationwide. This is an average of about 77,163 subscribers per program 
package. This is substantially smaller than the 400,000 subscribers 
used in the commission's definition of a small MSO. Furthermore, 
because this is an average, it is likely that some program packagers 
may be substantially smaller.
    k. Description of Projected Reporting, Recordkeeping and other 
Compliance Requirements. In order to implement the Satellite Home 
Viewer Improvement Act of 1999, the Commission has proposed to add new 
rules. We have yet to determine whether to amend existing provisions of 
the Commission's rules, or to adopt some other regulatory framework or 
procedures concerning satellite broadcast signal carriage. There are 
certain compliance requirements involving the satellite broadcast 
signal carriage process. Foremost is satellite carriers will have to 
carry all local television stations in a given market if it decides to 
carry at least one signal in a market. There will be costs relating to 
the time and effort involved in carrying all local broadcast signals.
    l. In terms of recordkeeping, entities most will likely have to 
keep a record of their election status and entities may be required to 
maintain such information within their business environment and may 
also have to file such information with the Commission.
    m. Steps Taken to Minimize Significant Impact on Small Entities, 
and Significant Alternatives Considered. The RFA requires an agency to 
describe any significant alternatives that it has considered in 
reaching its proposed approach, which may include the following four 
alternatives: (1) The establishment of differing compliance or 
reporting requirements or timetables that take into account the 
resources available to small entities; (2) the clarification, 
consolidation, or simplification of compliance or reporting 
requirements under the rule for small entities; (3) the use of 
performance, rather than design, standards; and (4) an exemption from 
coverage of the rule, or any part thereof, for small entities.
    n. As indicated, the NPRM proposes to implement certain aspects of 
the Satellite Home Viewer Improvement Act of 1999. Among other things, 
the new legislation requires satellite carriers to carry all local 
television broadcast stations in a market, if it carries any local 
market television stations, by January 1, 2002. This document also 
discusses implementing regulations relating to the scope and substance 
of local broadcast signal carriage by satellite carriers. This 
legislation applies

[[Page 40576]]

to small entities and large entities equally. At this time, small 
entities are not treated differently and might not be impacted 
differently, but we seek comment.
    o. Federal Rules Which Duplicate, Overlap, or Conflict with the 
Commission's Proposals. None.
    61. Pursuant to section 1008 of the Satellite Home Viewer 
Improvement Act of 1999, notice is hereby given of the proposals 
described in this NPRM.
    62. The Consumer Information Bureau, Reference Information Center, 
shall send a copy of this NPRM, including the Initial Regulatory 
Flexibility Analysis, to the Chief Counsel for Advocacy of the Small 
Business Administration.

Federal Communications Commission.
Magalie Roman Salas,
Secretary.
[FR Doc. 00-16185 Filed 6-29-00; 8:45 am]
BILLING CODE 6712-01-M


</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>