Federal Register / Vol. 72, No. 72 / Monday, April 16, 2007 / Notices 19039 

provided, referrals made, recidivism 

statistics, project success stories, 

upcoming grant activities, promising 

approaches and processes, and progress 

in achieving performance outcomes; 

2. Challenges, barriers, or concerns 

regarding project progress; 

3. Lessons learned in the areas of 

project administration and management, 

successful referral structures, project 

implementation, partnership 

relationships and other related areas. 

MIS Data. Grantees will be required to 

submit updated MIS data on enrollment, 

services provided, placements, 

outcomes, and follow-up status. DOL 

will coordinate with sites after grant 

award to implement an MIS system for 

this project. 

Part VII. Agency Contacts 

Any technical questions regarding 

this SGA should be faxed to Melissa 

Abdullah, Grants Management 

Specialist, Division of Federal 

Assistance, at (202) 693–2705. This is 

not a toll-free number. You must 

specifically address your fax to the 

attention of Melissa Abdullah and 

should include SGA/DFA PY 06–14, a 

contact name, fax, and telephone 

number. 

FOR FURTHER INFORMATION CONTACT: 

Please contact Melissa Abdullah, Grants 

Management Specialist, Division of 

Federal Assistance, on (202) 693–3346. 

This is not a toll-free number. 

This announcement is also being 

made available on the ETA Web site at 

http://www.doleta.gov/sga/sga.cfm and 

http://www.grants.gov. 

Part VIII. Other Information 

OMB Information Collection No. 

1205–0458. 

Expires September 30, 2009. 

According to the Paperwork 

Reduction Act of 1995, no persons are 

required to respond to a collection of 

information unless such collection 

displays a valid OMB control number. 

Public reporting burden for this 

collection of information is estimated to 

average 20 hours per response, 

including time for reviewing 

instructions, searching existing data 

sources, gathering and maintaining the 

data needed, and completing and 

reviewing the collection of information. 

Send comments regarding the burden 

estimated or any other aspect of this 

collection of information, including 

suggestions for reducing this burden, to 

the U.S. Department of Labor, the OMB 

Desk Officer for ETA, Office of 

Management and Budget, Room 10235, 

Washington, DC 20503. PLEASE DO 

NOT RETURN YOUR COMPLETED 

APPLICATION TO THE OMB. SEND IT 

TO THE ADDRESS PROVIDED IN PART 

IV OF THIS SOLICITATION. 

This information is being collected for 

the purpose of awarding a grant. The 

information collected through this 

‘‘Solicitation for Grant Applications’’

will be used by the Department of Labor 

to ensure that grants are awarded to the 

applicant best suited to perform the 

functions of the grant. Submission of 

this information is required in order for 

the applicant to be considered for award 

of this grant. Unless otherwise 

specifically noted in this 

announcement, information submitted 

in the respondent’s application is not 

considered to be confidential. 

Resources for the Applicant 

DOL maintains a number of webbased resources that may be of 

assistance to applicants. The webpage 

for the DOL Center for Faith-Based and 

Community Initiatives (http:// 

www.dol.gov/CFBCI) is a valuable 

source of background on the President’s 

Initiative at the Department of Labor. It 

also contains valuable information on 

prisoner reentry. America’s Service 

Locator (http://www.servicelocator.org) 

provides a directory of our nation’s OneStop Career Centers. Applicants are 

encouraged to review ‘‘Understanding 

the Department of Labor Solicitation for 

Grant Applications and How to Write an 

Effective Proposal’’ (http://www/ 

dol.gov/cfbci/sgabrochure.htm). 

Signed at Washington, DC, this 11th day of 

April, 2007. 

Eric D. Luetkenhaus, 

Grant Officer, Employment and Training 

Administration. 

[FR Doc. E7–7151 Filed 4–13–07; 8:45 am] 

BILLING CODE 4510–FT–P 

LIBRARY OF CONGRESS 

Copyright Office 

[Docket No. 2007–1] 

Section 109 Report to Congress 

AGENCY: Copyright Office, Library of 

Congress. 

ACTION: Notice of Inquiry. 

SUMMARY: Pursuant to statute, the 

Copyright Office is seeking comment on 

issues related to the operation of, and 

continued necessity for, the cable and 

satellite statutory licenses under the 

Copyright Act. 

DATES: Written comments are due July 

2, 2007. Reply comments are due 

September 13, 2007. April 16, 2007. 

ADDRESSES: If hand delivered by a 

private party, an original and five copies 

of a comment or reply comment should 

be brought to the Library of Congress, 

U.S. Copyright Office, Public and 

Information Office, 101 Independence 

Ave, SE, Washington, DC 20559, 

between 8:30 a.m. and 5 p.m. The 

envelope should be addressed as 

follows: Office of the General Counsel, 

U.S. Copyright Office. 

If delivered by a commercial courier, 

an original and five copies of a comment 

or reply comment must be delivered to 

the Congressional Courier Acceptance 

Site (‘‘CCAS’’) located at 2nd and D 

Streets, NE, Washington, D.C. between 

8:30 a.m. and 4 p.m. The envelope 

should be addressed as follows: Office 

of the General Counsel, U.S. Copyright 

Office, LM 430, James Madison 

Building, 101 Independence Avenue, 

SE, Washington, DC. Please note that 

CCAS will not accept delivery by means 

of overnight delivery services such as 

Federal Express, United Parcel Service 

or DHL. 

If sent by mail (including overnight 

delivery using U.S. Postal Service 

Express Mail), an original and five 

copies of a comment or reply comment 

should be addressed to U.S. Copyright 

Office, Copyright GC/I&R, P.O. Box 

70400, Southwest Station, Washington, 

DC 20024. 

FOR FURTHER INFORMATION CONTACT: Ben 

Golant, Senior Attorney, and Tanya M. 

Sandros, Acting General Counsel, 

Copyright GC/I&R, P.O. Box 70400, 

Southwest Station, Washington, DC 

20024. Telephone: (202) 707–8380. 

Telefax: (202) 707–8366. 

SUPPLEMENTARY INFORMATION: 

I. BACKGROUND 

Overview. There are three statutory 

licenses in the Copyright Act (‘‘Act’’) 

governing the retransmission of distant 

and local broadcast station signals. A 

statutory license is a codified licensing 

scheme whereby copyright owners are 

required to license their works at a 

regulated price and under government–

set terms and conditions. There is one 

statutory license applicable to cable 

television systems and two statutory 

licenses applicable to satellite carriers. 

The cable statutory license, enacted in 

1976 and codified in Section 111 of the 

Act, permits a cable operator to 

retransmit both local and distant radio 

and television signals to its subscribers 

who pay a fee for such service. The 

satellite carrier statutory license, 

enacted in 1988 and codified in Section 

119 of the Act, permits a satellite carrier 

to retransmit distant television signals 

(but not radio signals) to its subscribers 


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19040 Federal Register / Vol. 72, No. 72 / Monday, April 16, 2007 / Notices 

1We note that, unlike Section 111, Section 119 

does not use the term ‘‘distant’’ to refer to those 

broadcast station signals retransmitted under the 

statutory license. For the purposes of this NOI, 

however, the term ‘‘distant’’ may be used in the 

Section 119 context to describe a television station 

signal retransmitted by a satellite carrier. 

2Aside from the requirement to issue a report 

under Section 109, the SHVERA also required the 

Copyright Office to examine select portions of the 

Section 119 license and to determine what, if any, 

effect Sections 119 and 122 have had on copyright 

owners whose programming is retransmitted by 

satellite carriers. Specifically, Section 110 of the 

SHVERA required the Register of Copyrights to 

report her findings and recommendations on: (1) 

the extent to which the unserved household 

limitation for network stations contained in Section 

119 has operated efficiently and effectively; and (2) 

the extent to which secondary transmissions of 

primary transmissions of network stations and 

superstations under Section 119 harm copyright 

owners of broadcast programming and the effect, if 

any, of Section 122 in reducing such harm. The 

Section 110 report was released in 2006. See 

Satellite Home Viewer Extension and 

Reauthorization Act § 110 Report, A Report of the 

Register of Copyrights (February 2006). 

for private home viewing as well as to 

commercial establishments.1

The royalties collected under the 

Section 111 and Section 119 licenses are 

paid to the copyright owners or their 

representatives, such as the Motion 

Picture Association of America 

(‘‘MPAA’’), the professional sports 

leagues (i.e., MLB, NFL, NHL, and the 

NBA, et. al.), performance rights groups 

(i.e., BMI and ASCAP), commercial 

broadcasters, noncommercial 

broadcasters, religious broadcasters, and 

Canadian broadcasters for the public 

performance of the programs carried on 

the retransmitted station signal. Under 

Chapter 8 of the Copyright Act, the 

Copyright Royalty Judges are charged 

with adjudicating royalty claim disputes 

arising under Sections 111 and 119 of 

the Act. See 17 U.S.C. 801. 

The Section 122 statutory license, 

enacted in 1999, permits satellite 

carriers to retransmit local television 

signals (but not radio) into the stations’

local market on a royalty–free basis. The 

license is contingent upon the satellite 

carrier complying with the rules, 

regulations, and authorizations 

established by the Federal 

Communications Commission (‘‘FCC’’) 

governing the carriage of television 

broadcast signals. Section 338 of the 

Communications Act of 1934 

(‘‘Communications Act’’), a corollary 

statutory provision to Section 122 and 

also enacted in 1999, required satellite 

carriers, by January 1, 2002, ‘‘to carry 

upon request all local television 

broadcast stations’ signals in local 

markets in which the satellite carriers 

carry at least one television broadcast 

station signal,’’ subject to the other 

carriage provisions contained in the 

Communications Act. The FCC 

implemented this provision in 2000 and 

codified the ‘‘carry–one carry–all’’ rules 

in 47 CFR 76.66. The carriage of such 

signals is not mandatory, however, 

because satellite carriers may choose not 

to retransmit a local television signal to 

subscribers in a station’s local market. 

Section 109. On December 8, 2004, 

the President signed the Satellite Home 

Viewer Extension and Reauthorization 

Act of 2004, a part of the Consolidated 

Appropriations Act of 2004. See Pub. L. 

No. 108–447, 118 Stat. 3394 (2004) 

(hereinafter ‘‘SHVERA’’). Section 109 of 

the SHVERA requires the Copyright 

Office to examine and compare the 

statutory licensing systems for the cable 

and satellite television industries under 

Sections 111, 119, and 122 of the Act 

and recommend any necessary 

legislative changes no later than June 

30, 2008. The Copyright Office has 

conducted similar analyses of the 

Section 111 and 119 statutory licenses 

at the request of Congress in 1992 and 

1997. See The Cable and Satellite 

Compulsory Licenses: An Overview and 

Analysis (March 1992); A Review of the 

Copyright Licensing Regimes Covering 

Retransmission of Broadcast Signals 

(August 1997). 

Under Section 109, Congress 

indicated that the report shall include, 

but not be limited to, the following: (1) 

a comparison of the royalties paid by 

licensees under such sections [111, 119, 

and 122], including historical rates of 

increases in these royalties, a 

comparison between the royalties under 

each such section and the prices paid in 

the marketplace for comparable 

programming; (2) an analysis of the 

differences in the terms and conditions 

of the licenses under such sections, an 

analysis of whether these differences are 

required or justified by historical, 

technological, or regulatory differences 

that affect the satellite and cable 

industries, and an analysis of whether 

the cable or satellite industry is placed 

in a competitive disadvantage due to 

these terms and conditions; (3) an 

analysis of whether the licenses under 

such sections are still justified by the 

bases upon which they were originally 

created; (4) an analysis of the 

correlation, if any, between the 

royalties, or lack thereof, under such 

sections and the fees charged to cable 

and satellite subscribers, addressing 

whether cable and satellite companies 

have passed to subscribers any savings 

realized as a result of the royalty 

structure and amounts under such 

sections; and (5) an analysis of issues 

that may arise with respect to the 

application of the licenses under such 

sections to the secondary transmissions 

of the primary transmissions of network 

stations and superstations that originate 

as digital signals, including issues that 

relate to the application of the unserved 

household limitations under Section 

119 and to the determination of 

royalties of cable systems and satellite 

carriers.2

According to Section 109’s legislative 

history, the Copyright Office shall 

conduct a study of the Section 119 and 

Section 122 licenses for satellite, and 

the Section 111 license for cable, and 

make recommendations for 

improvements to Congress no later than 

June 30, 2008. The legislative history 

further instructs that the Copyright 

Office must analyze the differences 

among the three licenses and consider 

whether they should be eliminated, 

changed, or maintained with the goal of 

harmonizing their operation. See H.R. 

Rep. No. 108–660, 108th Cong., 2d 

Sess., at 19 (2004). 

This Notice of Inquiry (‘‘NOI’’) 

commences our efforts to collect 

information necessary to address the 

issues posed to us by Congress in 

Section 109 of the SHVERA. We plan to 

hold hearings on matters raised in this 

NOI later this year to further 

supplement the record. A separate 

Federal Register notice will be issued 

announcing the dates and procedures 

associated with those hearings. 

Interested parties will be provided an 

opportunity to testify at the hearings 

and respond to testimony submitted at 

those hearings. 

II. DISCUSSION 

We hereby seek comment on Sections 

111, 119, and 122 of the Copyright Act. 

We analyze the rates, terms, and 

conditions found in the three licenses at 

issue. We also examine how 

multichannel video competition has 

been affected by the licenses and 

whether cable and satellite subscribers 

have benefitted from them. In addition, 

we explore the application of the 

licenses to new digital video 

technologies. We conclude our inquiry 

by seeking comment on whether the 

licenses should be maintained, 

modified, expanded, or eliminated. 

A. Comparison of Royalties 

1. Background 

Section 111. The royalty payment 

scheme for the Section 111 license is 

complex and is based, in large part, on 

broadcast signal carriage regulations 

adopted by the FCC over thirty years 

ago. Cable operators pay royalties based 

on mathematical formulas established in 

Section 111(d)(1)(B), (C), and (D) of the 

Copyright Act. Section 111 segregates 


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Federal Register / Vol. 72, No. 72 / Monday, April 16, 2007 / Notices 19041 

3 In 1980, the FCC eliminated its distant signal 

carriage and syndicated exclusivity rules. The 

Copyright Royalty Tribunal (‘‘CRT’’), in response to 

the FCC’s actions, conducted a rate adjustment 

proceeding to establish two new rates applicable 

only to Form SA-3 systems: (1) to compensate for 

the loss of the distant signal carriage rules, the CRT 

adopted the 3.75% fee; and (2) to compensate for the 

loss of the syndex rules, the CRT adopted the SES 

fee. See 47 FR 52146 (1982). The FCC reinstituted 

its syndicated exclusivity rules in the late 1980s. 

cable systems into three separate 

categories according to the amount of 

revenue, or ‘‘gross receipts,’’ a cable 

system receives from subscribers for the 

retransmission of distant broadcast 

station signals. For purposes of 

calculating the royalty fee cable 

operators must pay under Section 111, 

gross receipts include the full amount of 

monthly (or other periodic) service fees 

for any and all services (or tiers) which 

include one or more secondary 

transmissions of television or radio 

broadcast stations, for additional set 

fees, and for converter (‘‘set top box’’) 

fees. Gross receipts are not defined in 

Section 111, but are defined in the 

Copyright Office’s rules. See 37 CFR 

201.17(b)(1). These categories are: (1) 

systems with gross receipts between $0–

$263,800 (under Section 111(d)(1)(C)); 

(2) systems with gross receipts more 

than $263,800 but less than $527,600 

(under Section 111(d)(1)(D)); and (3) 

systems with gross receipts of$527,600 

and above (under Section 111(d)(1)(B)). 

This revenue–based classification 

system reveals Congress’ belief that 

larger cable systems have a significant 

economic impact on copyrighted works. 

The Copyright Office has developed 

Statement of Account (‘‘SOA’’) forms 

that must be submitted by cable 

operators on a semi–annual basis for the 

purpose of paying statutory royalties 

under Section 111. There are two types 

of cable system SOAs currently in use. 

The SA1–2 Short Form is used for cable 

systems whose semi–annual gross 

receipts are less than $527,600.00. There 

are three levels of royalty fees for cable 

operators using the SA1–2 Short Form: 

(1) a system with gross receipts of 

$137,000.00 or less pays a flat fee of 

$52.00 for the retransmission of all local 

and distant broadcast station signals; (2) 

a system with gross receipts greater than 

$137,000.00 and equal to or less than 

$263,000.00, pays between $52.00 to 

$1,319.00; and (3) a system grossing 

more than $263,800.00, but less than 

$527,600.00 pays between $1,319.00 to 

$3,957.00. Cable systems falling under 

the latter two categories pay royalties 

based upon a fixed percentage of gross 

receipts notwithstanding the number of 

distant station signals they retransmit. 

The SA–3 Long Form is used by larger 

cable systems grossing $527,600.00 or 

more semi–annually. The vast majority 

of royalties paid under Section 111 

come from Form SA–3 systems. 

A key element in calculating the 

appropriate royalty fee involves 

identifying subscribers of the cable 

system located outside the local service 

area of a primary transmitter. See 17 

U.S.C. 111(d)(1)(B); see also 17 U.S.C. 

111(f) (definition of ‘‘local service area 

of a primary transmitter’’). This 

determination is predicated upon two 

sets of FCC regulations: the broadcast 

signal carriage rules in effect on April 

15, 1976, and a station’s television 

market as currently defined by the FCC. 

In general, a broadcast station is 

considered distant vis–a–vis a particular 

cable system where subscribers served 

by that system are located outside that 

broadcast station’s specified 35 mile 

zone (a market definition concept 

arising under the FCC’s old rules), its 

Area of Dominant Influence (‘‘ADI’’) 

(under Arbitron’s defunct television 

market system), or Designated Market 

Area (‘‘DMA’’) (under Nielsen’s current 

television market system). However, 

there are other sets of rules and criteria 

(e.g., Grade B contour coverage or 

‘‘significantly viewed’’ status) that also 

apply in certain situations when 

assessing the local or distant status of a 

station–even when subscribers are 

located outside its zone, ADI and DMA 

for copyright purposes. A cable system 

pays a ‘‘base rate fee’’ if it carries any 

distant signals regardless of whether or 

not the system is located in an FCC–

defined television market area. Form 

SA–3 cable systems that carry only local 

signals do not pay the base rate fee, but 

do pay the minimum fee of $5,344.59 

(i.e. 1.013% x $527, 600.00). 

The royalty scheme for Form SA–3 

cable systems employs the statutory 

device known as the distant signal 

equivalent (‘‘DSE’’). Section 111 defines 

a DSE as ‘‘the value assigned to the 

secondary transmission of any non–

network television programming carried 

by a cable system in whole or in part 

beyond the local service area of a 

primary transmitter of such 

programming.’’ 17 U.S.C. 111(f). A DSE 

is computed by assigning a value of one 

(1.0) to a distant independent broadcast 

station (as that term is defined in the 

Copyright Act), and a value of one–

quarter (.25) to distant noncommercial 

educational stations and network 

stations (as those terms are defined in 

the Copyright Act). 

A Form SA–3 cable system pays 

royalties based upon a sliding scale of 

percentages of its gross receipts 

depending upon the number of DSEs it 

carries. The greater the number of DSEs, 

the higher the total percentage of gross 

receipts and, consequently, the larger 

the total royalty payment. For example: 

(1) 1st DSE = 1.013% of gross receipts; 

(2) 2, 3 & 4th DSE = .668% of gross 

receipts; and (3) 5th, etc., DSE = .314%

of gross receipts. Cable systems carrying 

distant television station signals after 

June 24, 1981, that would not have been 

permitted under the FCC’s former rules 

in effect on that date, must pay a royalty 

fee of 3.75% of gross receipts using a 

formula based on the number of relevant 

DSEs. The cable operator would pay 

either the sum of the base rate fee and 

the 3.75% fee, or the minimum fee, 

whichever is higher. Cable systems 

located in whole or in part within a 

major television market (as defined by 

the FCC), must calculate a syndicated 

exclusivity surcharge (‘‘SES’’) for the 

retransmission of any commercial VHF 

station signal that places a Grade B 

contour, in whole or in part, over the 

cable system which would have been 

subject to the FCC’s syndicated 

exclusivity rules in effect on June 24, 

1981. If any signals are subject to the 

SES, an SES fee is added to the 

foregoing larger amount to determine 

the system’s total royalty fee.3

At this juncture, it is important to 

note that the FCC does not currently 

restrict the kind and quantity of distant 

signals a cable operator may retransmit. 

Nevertheless, the FCC’s former market 

quota rules, which did limit the number 

of distant station signals carried and 

were part of the FCC’s local and distant 

broadcast carriage rules in 1976, are still 

relevant for Section111 purposes. These 

rules are integral in determining: (1) 

whether broadcast signals are permitted 

or non–permitted; (2) the applicable 

royalty fee category; and (3) a station’s 

local or distant status for copyright 

purposes. Broadcast station signals 

retransmitted pursuant to the former 

market quota rules are considered 

permitted stations and are not subject to 

a higher royalty rate. To put these rules 

in context, a cable system in a smaller 

television market (as defined by the 

FCC) was permitted to carry only one 

independent television station signal 

under the FCC’s former market quota 

rules. Currently, a cable system in a 

smaller market is permitted to 

retransmit one independent station 

signal. A cable system located in the top 

50 television market or second 50 

market (as defined by the FCC), was 

permitted to carry more independent 

station signals under the former market 

quota rules; a cable system in these 

markets is currently permitted under 

Section 111 to retransmit more 

independent station signals than a cable 

system in a smaller market. The former 

market quota rules did not apply to 


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19042 Federal Register / Vol. 72, No. 72 / Monday, April 16, 2007 / Notices 

4The Copyright Royalty and Distribution Reform 

Act of 2004 (Pub. L. No. 108–419) eliminated the 

Copyright Arbitration Royalty Panel (‘‘CARP’’) 

system that had been part of the Copyright Office 

since 1993. The Act replaced CARP (which itself 

replaced the Copyright Royalty Tribunal in 1993) 

with a system of three Copyright Royalty Judges 

(‘‘CRJs’’), who now determine rates and terms for 

the copyright statutory licenses and make 

determinations on distribution of statutory license 

royalties collected by the Copyright Office. 

cable systems located ‘‘outside of all 

markets’’ and these systems under 

Section 111 are currently permitted to 

retransmit an unlimited number of 

television station signals without 

incurring the 3.75% fee (although these 

systems still pay at least a minimum 

copyright fee or base rate fee for those 

signals). 

There are other bases of permitted 

carriage under the current copyright 

scheme that are tied to the FCC’s former 

carriage requirements. They include: (1) 

specialty stations; (2) grandfathered 

stations; (3) commercial UHF stations 

placing a Grade B contour over a cable 

system; (4) noncommercial educational 

stations; (5) part time or substitute 

carriage; and (6) a station carried 

pursuant to an individual waiver of FCC 

rules. If none of these permitted bases 

of carriage are applicable, then the cable 

system pays a relatively higher royalty 

fee for the retransmission of that 

station’s signal. 

The Copyright Office has divided the 

royalties collected from cable operators 

into three categories to reflect their 

origin: (1) the ‘‘Basic Fund,’’ which 

includes all royalties collected from 

Form SA–1 and Form SA–2 systems, 

and the royalties collected from Form 

SA–3 systems for the retransmission of 

distant signals that would have been 

permitted under the FCC’s former 

distant carriage rules; (2) the ‘‘3.75%

Fund,’’ which includes royalties 

collected from Form SA–3 systems for 

distant signals whose carriage would 

not have been permitted under the 

FCC’s former distant signal carriage 

rules; and 3) the ‘‘Syndex Fund,’’ which 

includes royalties collected from Form 

SA–3 systems for the retransmission of 

distant signals carrying programming 

that would have been subject to black–

out protection under the FCC’s old 

syndicated exclusivity rules. We note 

that royalties collected from the syndex 

surcharge decreased considerably after 

the FCC reimposed syndicated 

exclusivity protection in 1988. 

In order to be eligible for a 

distribution of royalties, a copyright 

owner of broadcast programming 

retransmitted by one or more cable 

systems under Section 111 must submit 

a written claim to the Copyright Royalty 

Judges. Only copyright owners of non–

network broadcast programming are 

eligible for a royalty distribution. 

Eligible copyright owners must submit 

their claims in July for royalties 

collected from cable systems during the 

previous year. If there are no 

controversies, meaning that the 

claimants have settled among 

themselves as to the amount of royalties 

each claimant is due, then the Copyright 

Royalty Judges distribute the royalties in 

accordance with the claimants’

agreement(s) and the proceeding is 

concluded.4

Section 119. The satellite carrier 

statutory license, first enacted through 

the Satellite Home Viewer Act 

(‘‘SHVA’’) of 1988, and codified in 

Section 119 of the Act, establishes a 

statutory copyright licensing scheme for 

satellite carriers that retransmit the 

signals of distant television network 

stations and superstations to satellite 

dish owners for their private home 

viewing and for viewing in commercial 

establishments. Satellite carriers may 

use the Section 119 license to retransmit 

the signals of superstations to 

subscribers located anywhere in the 

United States. However, the Section 119 

statutory license limits the secondary 

transmissions of network station signals 

to no more than two such stations in a 

single day to persons who reside in 

unserved households. An ‘‘unserved 

household’’ is defined as one that 

cannot receive an over–the–air signal of 

Grade B intensity of a network station 

using a conventional rooftop antenna. 

17 U.S.C. 119(d). Congress created the 

unserved household provision to protect 

the historic network–affiliate 

relationship as well as the program 

exclusivity enjoyed by television 

broadcast stations in their local markets. 

The Section 119 license is similar to 

the cable statutory license in that it 

provides a means for satellite carriers to 

clear the rights to television broadcast 

programming upon semi–annual 

payment of royalty fees to the Copyright 

Office. However, the calculation of 

royalty fees under the Section 119 

license is significantly different from the 

cable statutory license. Rather than 

determine royalties based upon old FCC 

rules, royalties under the Section 119 

license are calculated on a flat, per 

subscriber per station basis. Television 

broadcasts are divided into two 

categories: superstations (i.e., 

commercial independent television 

broadcast stations), and network 

stations (i.e., commercial televison 

network stations and noncommercial 

educational stations); each with its own 

attendant royalty rates. Satellite carriers 

multiply the respective royalty rate for 

each station by the number of 

subscribers, on a monthly basis, who 

receive the station’s signal during the 

six–month accounting period to 

calculate their total royalty payment. 

Each year, satellite carriers submit 

royalties to the Copyright Office which 

are, in turn, distributed to copyright 

owners whose works were included in 

a retransmission of a broadcast station 

signal and for whom a claim for 

royalties was timely filed with the 

Copyright Royalty Judges. 

Section 122. The Section 122 license 

allows satellite carriers to retransmit 

local television signals. Because there 

are no royalty fees or carriage 

restrictions for local signals 

retransmitted under Section 122, there 

is no need to distinguish between 

network stations and superstations as is 

the case in Section 119. The Section 122 

statutory copyright license, permits, but 

does not require, satellite carriers to 

engage in the satellite retransmission of 

a local television station signal into the 

station’s own market (DMA) without the 

need to identify and obtain 

authorization from copyright owners to 

retransmit the owners’ programs. See 17 

U.S.C. 122. 

2. Payments and Rate Increases 

Congress has asked us to compare the 

royalties paid by licensees under 

Sections 111, 119, and 122, and report 

on the historical rates of increases in 

these royalties. 

Royalties Paid. Cable operators have 

paid, on average, $125,000,000.00 in 

royalties annually since the 

implementation of Section 111 by the 

Copyright Office in 1978. While royalty 

payments under the cable statutory 

license have increased over the past 

seven years, there have been periods of 

fluctuation in the past 29 years. For 

example, royalties decreased 30% in 

1998 from the year before partly because 

WTBS changed its status from a distant 

superstation to a basic cable network. 

Royalties also decreased by 13% in 1994 

from the year before likely because cable 

operators dropped distant signals in 

order to accommodate the carriage of 

local signals mandated by Sections 614 

and 615 of the 1992 Cable Act. See 

Cable Television Consumer Protection 

and Competition Act of 1992, Pub. L. 

No. 102–385, 106 Stat. 1460. 

We estimate that smaller cable 

operators (SA–1/SA–2 systems) pay, on 

average, .4% of their gross receipts into 

the royalty pool. In comparison, larger 

cable operators (SA–3 systems) pay, on 

average, 1.2% of their gross receipts into 

the royalty pool. These figures, based on 

the 2001/1 and 2001/2 accounting 

periods (as typical periods), are derived 

by dividing a system’s royalty fees by its 


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5We note that in the 2001/1 accounting period, 

for example, there were: (1) 5,517 SA–1 form filers 

paying $202,193.37 in cable royalties; (2) 2,117 SA2 form filers paying $2,186,554.15 in cable 

royalties; and (3) 1,844 SA–3 form filers paying 

$57,773, 352.29 in royalties. This figure was 

calculated by adding the base fee ($51,497,381.75) 

+ 3.75% fee ($6,020,168.47) + SES fee ($$48,369.30) 

+ interest ($207,432.77). 

6Echostar reports that it serves 174 DMAs (out of 

210) with the signals of local television stations. See 

https://customersupport.dishnetwork.com/ 

customernetqual/prepAddress.do. DirecTV reports 

that it serves 142 DMAs (out of 210) with the signals 

of local television stations (and notes that this 

number accounts for more than 94% of the nation’s 

television households). See http:// 

www.directv.com/DTVAPP/packProg/ 

localChannel.jsp?assetId=900018. However, the 

number of signals carried in each market is not 

specifically listed on either website. 

gross receipts. 5 These percentages are 

generally consistent over other 

accounting periods as well. 

In comparison, satellite carriers have 

paid, on average, nearly $50,000,000.00 

in royalties annually, since the 

Copyright Office began implementing 

the Section 119 license in 1989. Like the 

Section 111 royalties described above, 

there have been fluctuations due to 

changed circumstances. For example, 

satellite royalties decreased by over 26%

in 1999 from the year before likely 

because satellite carriers began offering 

local–into–local service under Section 

122 of the Copyright Act and Section 

338 of the Communications Act and 

because of a royalty rate decrease 

announced in December 1999. See 

http://www.copyright.gov/fedreg/1999/ 

64fr71659.pdf. We cannot determine 

how much satellite carriers paid in 

royalties as a percentage of revenue 

because Section 119 royalties are based 

on a flat fee per subscriber and not on 

a gross receipt basis as is the case under 

Section 111. However, Copyright Office 

records do indicate that DirecTV has 

paid more than $326 million in royalty 

fees between the second half of 1997 

through the end of 2006, while Echostar 

has paid more than $158 million during 

the same period. Other (existing and 

defunct) satellite carriers, such as 

Primetime 24, Primestar Partners, and 

Satellite Communications, have also 

paid royalties under Section 119 over 

the last ten years. The payment of 

royalties by these and other companies 

are included in the average total 

discussed above. 

As for Section 122, we reiterate that 

satellite carriers may carry local 

broadcast station signals on a royalty–

free basis as long as they abide by the 

carry–one carry–all requirements of 

Section 338 of the Communications Act. 

Therefore, there are no royalty data to 

examine for our purposes here. 

Stations Carried. According to data 

obtained from the SA–3 forms filed with 

the Copyright Office, there has been a 

slow, but steady, increase in the number 

of unique distant broadcast station 

signals retransmitted by cable operators 

across the United States over the last 15 

years. For example, during the 1992/1 

accounting period, cable operators 

retransmitted 822 unique distant 

signals. During the 2000/1 accounting 

period, that number increased to 918. 

And, during the 2005–1 accounting 

period, the number of unique distant 

signals retransmitted by cable operators 

reached 1,029. This increase is partly 

attributable to the retransmission of new 

distant analog television signals as well 

as new digital television signals (see 

infra) which are counted separately 

from their analog counterparts. This 

increase could also be due to the 

increased retransmission of distant low 

power television signals over the past 

decade. 

However, there has been a decrease in 

the average number of distant station 

signals retransmitted by cable operators 

over the same time period. Copyright 

Office data gleaned from the SA–3 forms 

suggests that during the 1992–1 

accounting period, a cable system 

retransmitted an average of 2.74 distant 

signals (2,256 SA3s divided by 822 

distant signals). During the 2000/1 

accounting period, the average number 

of distant signals retransmitted by cable 

operators dropped to 2.52. And, during 

the recent 2005/1 accounting period, 

records show that a cable system 

retransmitted an average of 1.5 distant 

signals. There were, of course, some 

SA–3 systems that reported 

retransmitting more than four distant 

signals, and some that reported no 

distant signals being retransmitted at all, 

but these types of systems are atypical. 

The average decrease reflected in 

these accounting periods can be 

attributed to various factors, such as: (1) 

WTBS no longer being carried as a 

distant television signal since its 

conversion to a basic cable network in 

the late 1990s; (2) cable operators being 

required to carry local television signals, 

per Sections 614 and 615 of the 

Communications Act, and having had to 

drop distant signals to accommodate the 

carriage of such stations; (3) fewer SA–

3 forms being filed with the Copyright 

Office because of cable system mergers 

and acquisitions; and (4) statutory 

changes to the definition of ‘‘local 

service area’’ in the early 1990s. 

As for the retransmission of distant 

television signals under Section 119, we 

note that the type and number of signals 

retransmitted varies from carrier to 

carrier. For example, Echostar’s SOA for 

the 2006/2 accounting period shows 

that it retransmitted six superstation 

signals (KTLA, KWGN, WGN, WPIX, 

WSBK, and WWOR) and paid royalties 

in excess of $13 million for service to 

residential subscribers for private home 

viewing over the six month period. 

Echostar paid an additional $21,000.00 

in royalties for service to commercial 

establishments for the retransmission of 

these same superstation signals in the 

2006/2 period. Echostar also reported 

that it retransmitted network station 

signals to subscribers in 168 DMAs in 

the first five months of the 2006/2 

accounting period, and paid nearly $3 

million in royalties, before it had to 

terminate such service per a Federal 

court injunction issued in December, 

2006. See infra. Satellite carriers do not 

have to report on the number of local 

television signals carried under Section 

122, but Echostar states on its website 

that it provides local–into–local service 

in all but the smallest 36 DMAs in the 

nation.6

Questions. We seek comment on the 

accuracy of the above–stated figures and 

ask for further explanation for the 

historic trends described above. Are 

there different reasons, other than the 

ones stated, explaining why royalties 

have fluctuated in the periods 

examined? We ask commenters to 

provide a granular analysis of the trends 

in royalty payments so that we may 

provide Congress with the information 

it seeks. On this point, we note that the 

Copyright Office periodically releases 

data showing the royalty amounts paid 

by cable operators and satellite carriers 

under their respective licenses. See 

http://www.copyright.gov/licensing/lic–

receipts.pdf. These data should be used 

by commenters when responding to this 

request. 

We also seek comment on current 

distant signal trends under Section 111. 

For example, are distant television 

signals mainly retransmitted by cable 

operators serving smaller markets who 

are underserved by local television 

programming? Alternatively, are they 

retransmitted to subscribers who live on 

the fringes of television markets and are 

in need of valued broadcast 

programming unavailable from their 

local market stations? For example, do 

cable operators serving the Springfield–

Holyoke DMA retransmit signals from 

the adjacent Boston (Manchester) DMA 

so that their subscribers have access to 

state government news from Boston as 

well as popular sports programming 

carried by Boston television stations? 

We also seek comment on the number 

of distant and local signals 

retransmitted by satellite carriers. For 

example, are the six superstations listed 


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above typically retransmitted under 

Section 119? If so, why? How does a 

satellite carrier decide which 

superstation and network station signals 

it will retransmit? Does it decide based 

on the amount of royalties it has to pay 

or does the satellite carrier retransmit 

signals based on subscriber demand? 

Are there certain ‘‘must–have’’ distant 

television signals, including 

superstation signals, that satellite 

carriers retransmit to remain 

competitive with cable operators? What 

factors will likely affect the 

retransmission of distant television 

signals, and the concomitant royalties 

paid, by satellite carriers in the future? 

On average, does a subscriber to a cable 

service receive the same broadcast 

signal channel line–up as a subscriber to 

a satellite service? If not, what are the 

differences and why do they exist? 

3. Marketplace Rates Compared 

Congress has also asked us to compare 

the royalties under Sections 111, 119, 

and 122 and the prices paid in the 

marketplace for comparable 

programming. The difficult issue here is 

parsing the term ‘‘comparable 

programming’’ so that the analysis is 

clear. The inquiry assuredly includes an 

examination of the local broadcast 

station market, but the term could be 

read more expansively to include an 

analysis of the prices (license fees) paid 

by cable operators and satellite carriers 

to carry non–broadcast programmers, 

such as basic cable networks. Given the 

ambiguous wording in the statute, we 

shall consider both local broadcast 

stations and basic cable networks in the 

analysis. With regard to broadcast 

stations, we will analyze the rates, 

terms, and conditions of carriage 

privately negotiated by cable operators, 

satellite carriers, and broadcast stations 

under the retransmission consent 

provisions found in Section 325 of the 

Communications Act of 1934, as 

amended by the 1992 Cable Act. 

A brief history of broadcast–cable 

carriage negotiations is necessary here. 

Prior to 1992, cable operators were not 

required to seek the permission of a 

local broadcast station before carrying 

its signal nor were they required to 

compensate the broadcaster for the 

value of its signal. Congress found that 

a broadcaster’s lack of control over its 

signal created a ‘‘distortion in the video 

marketplace which threatens the future 

of over–the–air broadcasting.’’ See S. 

Rep. No. 102–92, 102d Cong., 1st Sess. 

(1991) at 35. In 1992, Congress acted to 

remedy the situation by giving a 

commercial broadcast station control 

over the use of its signal through 

statutorily–granted retransmission 

consent rights. Retransmission consent 

effectively permits a commercial 

broadcast station to seek compensation 

from a cable operator for carriage of its 

signal. Congress noted that some 

broadcasters might find that carriage 

itself was sufficient compensation for 

the use of their signal by an MVPD 

while other broadcasters might seek 

monetary compensation, and still others 

might negotiate for in–kind 

consideration such as joint marketing 

efforts, the opportunity to provide news 

inserts on cable channels, or the right to 

program an additional channel on a 

cable system. Congress emphasized that 

it intended ‘‘to establish a marketplace 

for the disposition of the rights to 

retransmit broadcast signals’’ but did 

not intend ‘‘to dictate the outcome of 

the ensuing marketplace negotiations.’’

Id. at 36. 

With regard to copyright issues, the 

legislative history indicates that 

Congress was concerned with the effect 

retransmission consent may have on the 

Section 111 license stating that ‘‘the 

Committee recognizes that the 

environment in which the compulsory 

copyright [sic] operates may change 

because of the authority granted 

broadcasters by section 325(b)(1).’’ Id. 

The legislative history later stated that 

cable operators would continue to have 

the authority to retransmit programs 

carried by broadcast stations under 

Section 111. Id. 

During the first round of 

retransmission consent negotiations in 

the early 1990s, broadcasters initially 

sought cash compensation in return for 

retransmission consent. However, most 

cable operators, particularly the largest 

multiple system operators, were not 

willing to enter into agreements for 

cash, and instead sought to compensate 

broadcasters through the purchase of 

advertising time, cross–promotions, and 

carriage of affiliated non–broadcast 

networks. Many broadcasters were able 

to reach agreements that involved in–

kind compensation by affiliating with 

an existing non–broadcast network or by 

securing carriage of their own newly–

formed, non–broadcast networks. See 

FCC, Retransmission Consent and 

Exclusivity Rules: Report to Congress 

Pursuant to Section 208 of the Satellite 

Home Viewer Extension and 

Reauthorization Act of 2004 (Sept. 8, 

2005)(noting that the new broadcast–

affiliated MVPD networks included 

Fox’s FX, ABC’s ESPN2, and NBC’s 

America’s Talking, which later became 

MSNBC). Broadcast stations that 

insisted on cash compensation were 

forced to either lose cable carriage or 

grant extensions allowing cable 

operators to carry their signals at no 

charge until negotiations were complete. 

Fourteen years later, cash still has not 

emerged as the sole form of 

consideration for retransmission 

consent, but the request and receipt 

involving such compensation is 

increasing. See Peter Grant and Brooks 

Barnes, Television’s Power Shift: Cable 

Pays For Free Shows, Wall Street 

Journal, Feb. 5, 2007, at A1, A14 (noting 

that broadcast television station owners 

may be able to collect almost $400 

million in retransmission fees from 

cable by 2010, increasing each 

subscriber’s bill by $2.00 per month). 

Under Section 325 of the 

Communications Act, as amended, 

retransmission consent for the carriage 

of commercial broadcast signals applies 

not only to cable operators, but also to 

other multichannel video programming 

distributors (‘‘MVPDs’’), such as satellite 

carriers and multichannel multipoint 

distribution services (‘‘MMDS’’ or 

‘‘Wireless Cable’’). 

Cable operators generally do not need 

to obtain retransmission consent for the 

carriage of established superstations 

under the Communications Act. 

Satellite carriers generally do not need 

to obtain retransmission consent to 

retransmit established superstations or 

network stations (if the subscriber is 

located in an area outside the local 

market of such stations and resides in 

an unserved household.) See 47 U.S.C. 

325(b)(1). 

We also must point out that 

retransmission consent is a right given 

to commercial broadcast stations. 

Copyright owners of the programs 

carried on such stations do not 

necessarily benefit financially from 

agreements between broadcasters and 

cable operators or satellite carriers. 

We seek comment on how the prices, 

terms, and conditions of retransmission 

consent agreements between local 

broadcast stations and MVPDs relates to 

the statutory licenses at issue here. 

Specifically, we seek comment on how 

retransmission consent agreements 

reflect marketplace value for broadcast 

programming and how this value 

compares with the royalties collected 

under the statutory licenses. As noted 

above, it may be difficult to analyze 

these two variables because the benefits 

of retransmission consent inures to 

broadcast stations while the statutory 

royalty fees are paid to copyright 

owners (which include, but are not 

limited to, broadcast stations). In any 

event, we believe that the compensation 

paid for retransmission consent for local 

stations may serve as a proxy for prices 

paid for the carriage of distant broadcast 

stations and the programs retransmitted 


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therein. We seek comment on whether 

this approach is correct. 

We also seek comment on what the 

marketplace rate for distant signals 

would be if a basic cable network was 

used as a surrogate. There are hundreds 

of basic cable networks that may be 

used as a point of comparison. Which 

ones should we select for our analysis? 

We could use the TBS license fee 

structure (i.e., as dictated in the 

affiliation agreement between the 

network and the MVPD) as a model 

since it was formerly a superstation 

carried under the Section 111 and 

Section 119 licenses, but is now paid a 

per subscriber licensing fee as a basic 

cable network. Is this an appropriate 

comparison? We understand that it may 

be easier for cable operators and satellite 

carriers to license basic cable networks, 

like TBS and CNN, than it would be for 

distant broadcast signals. To wit, a non–

broadcast program network obtains 

licenses from each copyright owner for 

all of the works in its line–up to enable 

a cable operator or satellite carrier to 

retransmit the network, but there is no 

equivalent conveyance of rights where 

cable or satellite retransmission of a 

broadcast station signal is concerned. Is 

this difference relevant to the analysis? 

What are the similarities between basic 

cable networks and distant broadcast 

stations that we should be aware of? Are 

there other ways to determine the value 

of copyrighted content carried by 

distant signals? 

B. Differences in the Licenses 

1. Terms and Conditions. 

Congress has asked us to analyze the 

differences in the terms and conditions 

of the statutory licenses. First, there is 

a difference in how royalties are based. 

Satellite carriers pay a flat royalty fee on 

a per subscriber basis while cable 

operators pay royalties based on a 

complex system tied to cable system 

size and old FCC carriage rules. 

Compare 17 U.S.C. 119(b) with 17 

U.S.C. 111(d). Second, satellite carriers 

are permitted to market and sell distant 

network station signals only to unserved 

households (i.e., those customers who 

are unable to receive the signals of local 

broadcast stations) while cable operators 

are not so restricted. Compare 17 U.S.C. 

119(a)(2)(B) with 17 U.S.C. 111(c). 

Third, satellite carriers cannot provide 

the signals of more than two network 

stations in a single day to its subscribers 

in unserved households while cable 

operators may carry as many distant 

network station signals as they wish so 

long as they pay the appropriate royalty 

fee for each signal carried. Compare 17 

U.S.C. 119(a)(2)(B)(i) with 17 U.S.C. 

111(c) and (d). Fourth, cable operators 

are permitted to retransmit radio station 

signals under Section 111 while satellite 

carriers do not have such a right. See 17 

U.S.C. 111(f). Fifth, Congress 

specifically accounted for the 

retransmission of digital television 

station signals by satellite carriers in the 

last revision of Section 119 in 2004, but 

has not yet addressed the retransmission 

of digital television signals by cable 

operators under Section 111. Finally, 

the Section 119 statutory license expires 

after a five year period, unless renewed 

by Congress, while the Section 111 

statutory license, as well as the Section 

122 license, are permanent. We seek 

comment on other differences between 

the statutory licenses, that are not noted 

above, that are relevant to this 

proceeding. 

2. Justifications for Differences. 

Congress also asked for an analysis of 

whether these differences are required 

or justified by historical, technological, 

or regulatory differences that affect the 

satellite and cable industries. We 

provide a broad overview to put this 

inquiry into perspective. 

a. Historical Differences. 

Section 111. The years leading up to 

the enactment of the Copyright Act of 

1976 were marked by controversy over 

the issue of cable television. Through a 

series of court decisions, cable systems 

were allowed under the Copyright Act 

of 1909 to retransmit the signals of 

broadcast television stations without 

incurring any copyright liability for the 

copyrighted programs carried on those 

signals. See Fortnightly Corp. v. United 

Artists Television, 392 U.S. 390 (1968) 

(pertaining to the retransmission of local 

television station signals), Teleprompter 

Corp. v. Columbia Broadcasting System, 

Inc., 415 U.S. 394 (1974) (pertaining to 

the retransmission of distant television 

station signals). The question, at that 

time, was whether copyright liability 

should attach to cable transmissions 

under the proposed Copyright Act, and 

if so, how to provide a cost–effective 

means of enabling cable operators to 

clear rights in all broadcasting 

programming that they retransmitted. 

In the mid–1970s, cable operators 

typically carried multiple broadcast 

signals containing programming owned 

by dozens of copyright owners. At the 

time, it was not realistic for hundreds of 

cable operators to negotiate individual 

licenses with dozens of copyright 

owners, so a practical mechanism for 

clearing rights was needed. As a result, 

Congress created the Section 111 

statutory license for cable systems to 

retransmit broadcast signals. Congress 

enacted Section 111 after years of 

industry input and in light of (1) FCC 

regulations that inextricably linked the 

cable and broadcast industries and (2) 

the need to preserve the nationwide 

system of local broadcasting. See H.R. 

Rep. No. 1476 at 88-91; see also, Cable 

Compulsory Licenses: Definition of 

Cable Systems, 62 FR 18705, 18707 

(Apr. 17, 1997) (‘‘The Office notes that 

at the time Congress created the cable 

compulsory license, the FCC regulated 

the cable industry as a highly localized 

medium of limited availability, 

suggesting that Congress, cognizant of 

the FCC’s regulations and market 

realities, fashioned a compulsory 

license with a local rather than a 

national scope. This being so, the Office 

retains the position that a provider of 

broadcast signals be an inherently 

localized transmission media of limited 

availability to qualify as a cable 

system.’’). It is important to note that at 

the time Section 111 was enacted, there 

were few local media outlets and 

virtually no competition to the Big 3 

television networks (ABC, CBS, and 

NBC). 

The structure of the cable statutory 

license was premised on two prominent 

congressional considerations: (1) the 

perceived need to differentiate between 

the impact on copyright owners of local 

versus distant signals carried by cable 

operators; and (2) the need to categorize 

cable systems by size based upon the 

dollar amount of receipts a system 

receives from subscribers for the 

carriage of distant signals. These two 

considerations played a significant role 

in determining what economic effect 

cable systems had on the value of 

copyrighted works carried on broadcast 

stations. Congress concluded that a 

cable operator’s retransmission of local 

signals did not affect the value of the 

copyrighted works broadcast because 

the signal is already available to the 

public for free through over–the–air 

broadcasting. Therefore, the cable 

statutory license permits cable systems 

to retransmit local television signals 

without a significant royalty obligation. 

Congress did determine, however, that 

the retransmission of distant signals 

affected the value of copyrighted 

broadcast programming because the 

programming was reaching larger 

audiences. The increased viewership 

was not compensated because local 

advertisers, who provide the principal 

remuneration to broadcasters, were not 

willing to pay increased advertising 

rates for cable viewers in distant 

markets who could not be reasonably 

expected to purchase their goods. As a 

result, Congress believed that 


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7The United States Court of Appeals for the 

District of Columbia Circuit struck down, as 

unconstitutional under the First Amendment, two 

different sets of must carry rules promulgated by 

the FCC. See Quincy Cable TV, Inc. v. FCC, 768 

F.2d 1434 (D.C. Cir. 1985); Century 

Communications Corp. v. FCC, 835 F.2d 292 (D.C. 

Cir. 1987). Congress did not enact Sections 614 and 

615 of the Communications Act until 1992. 

broadcasters had no reason or incentive 

to pay greater sums to compensate 

copyright owners for the receipt of their 

signals by viewers outside their local 

service area. 

The Section 111 statutory license has 

not been the only means for licensing 

programming carried on distant 

broadcast signals. Copyright owners and 

cable operators have been free to enter 

into private licensing agreements for the 

retransmission of broadcast 

programming. Private licensing most 

frequently occurs in the context of 

particular sporting events, when a cable 

operator wants to retransmit a sporting 

event carried on a distant broadcast 

signal, but does not want to carry the 

signal on a full–time basis. The practice 

of private licensing has not been 

widespread and most cable operators 

have relied exclusively on the cable 

statutory license to clear the rights to 

broadcast programming. Section 111 has 

been lightly amended since enacted in 

1976. 

Section 119. From the time of passage 

of the Copyright Act of 1976 through the 

mid–1980s, the developing satellite 

television industry operated without 

incurring copyright liability under the 

passive carrier exemption of Section 

111(a)(3) of the Act. That subsection 

provides an exemption for secondary 

transmissions of copyrighted works 

where the carrier has no direct or 

indirect control over the content or 

selection of the primary transmission or 

over the particular recipients of the 

secondary transmission, and the 

carrier’s activities with respect to the 

secondary transmission consist solely of 

providing wires, cables, or other 

communications channels for the use of 

others. 

In the mid–1980s, however, many 

resale carriers and copyright holders 

began scrambling their satellite signals 

to safeguard against the unauthorized 

reception of copyrighted works. Only 

authorized subscribers were able to 

descramble the encrypted signals. 

Scrambling presented several concerns, 

including whether it would impede the 

free flow of copyrighted works and 

whether it took satellite carriers out of 

the passive carrier exemption since it 

represented direct control over the 

receipt of signals. At the same time, 

several lawsuits were pending against 

certain satellite carriers who claimed to 

operate under Section 111. In 1992, the 

Copyright Office decided that satellite 

carriers were not cable systems within 

the meaning of Section 111, 

notwithstanding an 11th Circuit Court 

of Appeals decision holding otherwise. 

See 57 FR 3284 (1992), citing National 

Broadcasting Company, Inc. v. Satellite 

Broadcast Networks, 940 F.2d 1467 

(11th Cir. 1991). 

The satellite statutory license under 

Section 119 was enacted in 1988 to 

respond to these concerns and to ensure 

the availability of programming 

comparable to that offered by cable 

systems (i.e., an affiliate of each of the 

broadcast television networks, 

superstations, and non–broadcast 

programming services) to satellite 

subscribers until a market developed for 

that distribution medium. See Satellite 

Home Viewer Act (‘‘SHVA’’), Pub. L. 

No. 100–667 (1988); H.R. Rep. No. 887, 

Part I, 100th Cong., 2d Sess. 8–14 

(1988). Section 119 was created at a 

time when there was no competition to 

cable operators in the provision of 

multichannel video programming and 

there were no rules in effect mandating 

the cable carriage of local broadcast 

signals.7

The Section 119 statutory license 

created by the SHVA was scheduled to 

expire at the end of 1994 at which time 

satellite carriers were expected to be 

able to license the rights to all broadcast 

programming that they retransmitted to 

their subscribers. However, in 1994, 

Congress decided to reauthorize Section 

119 for an additional five years and 

made two significant changes to the 

terms of the license. See Pub. L. No. 

103–369, 108 Stat. 3477 (1994). First, in 

reaction to complaints against satellite 

carriers concerning wholesale violations 

of the unserved household provision, 

the 1994 Act instituted a transitional 

signal strength testing regime in an 

effort to identify and terminate the 

network service of subscribers who did 

not reside in unserved households. 

Second, in order to assist the process of 

ultimately eliminating the Section 119 

license, Congress provided for a 

Copyright Arbitration Royalty Panel 

proceeding to adjust the royalty rates 

paid by satellite carriers for the 

retransmission of network station and 

superstation signals. Unlike cable 

systems which pay royalty rates 

adjusted only for inflation, Congress 

mandated that satellite carrier rates 

should be adjusted to reflect 

marketplace value. It was thought that 

by compelling satellite carriers to pay 

statutory royalty rates that equaled the 

rates they would most likely pay in the 

open marketplace, there would be no 

need to further renew the Section 119 

license and it could expire in 1999. 

The period from 1994 to 1999, 

however, was the most eventful in the 

history of the Section 119 license. The 

satellite industry grew considerably 

during this time and certain satellite 

carriers provided thousands of 

subscribers with network station signals 

in violation of the unserved household 

limitation. Broadcasters sued certain 

satellite carriers and many satellite 

subscribers lost access to the signals of 

distant network stations. These 

aggrieved subscribers, in turn, 

complained to Congress about the 

unfairness of the unserved household 

limitation. In the meantime, the Library 

of Congress conducted a CARP 

proceeding to adjust the royalty rates 

paid by satellite carriers. Applying the 

new marketplace value standard as it 

was required to do, the CARP raised the 

rates considerably. 

To address these events, Congress 

enacted the Satellite Home Viewer 

Improvement Act of 1999 (‘‘SHVIA’’). 

Pub. L. No. 106–113, 113 Stat. 1501 

(1999). The SHVIA, inter alia, permitted 

satellite carriers to retransmit non–

network signals to all served and 

unserved households in all markets. In 

reaction to industry complaints about 

the 1997 CARP proceeding that raised 

the Section 119 royalty rates, Congress 

abandoned the concept of marketplace–

value royalty rates and reduced the 

CARP–established royalty fee for the 

retransmission of network station 

signals by 45 percent and the royalty fee 

for superstation signals by 30 percent. 

More importantly, the SHVIA instituted 

a new statutory licensing regime for the 

retransmission of local broadcast station 

signals by satellite carriers. By 1999, 

satellite carriers were beginning to 

implement local service in some of the 

major television markets in the United 

States. In order to further encourage this 

development, Congress created a new, 

royalty–free license under Section 122 

of the Copyright Act permitting the 

retransmission of local television 

signals. The SHVIA extended the 

revised Section 119 statutory license for 

five years until the end of 2004. 

Congress also made several changes to 

the unserved household limitation 

itself. The FCC was directed to conduct 

a rulemaking to set specific standards 

whereby a satellite subscriber’s 

eligibility to receive service of a network 

station could accurately be predicted 

(based on new signal strength 

measurements). For those subscribers 

that were not eligible for distant 

network service, a process was codified 

whereby they could seek a waiver of the 

unserved household limitation from 


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Federal Register / Vol. 72, No. 72 / Monday, April 16, 2007 / Notices 19047 

8Pursuant to SHVERA, satellite carriers were 

granted the right to retransmit out–of–market 

significantly viewed station signals to subscribers in 

the community in which the station is deemed 

significantly viewed, provided the local station 

affiliated with the same network as the significantly 

viewed station is offered to subscribers. Satellite 

carriers are not required to carry out–of–market 

significantly viewed signals, and, if they do carry 

them, retransmission consent is required. 

their local network station. In addition, 

three categories of subscribers were 

exempted from the unserved household 

limitation: (1) owners of recreational 

vehicles and commercial trucks, 

provided that they supplied certain 

required documentation; (2) subscribers 

receiving network service which was 

terminated after July 11, 1998, but 

before October 31, 1999, and did not 

receive a strong (Grade A) over–the–air 

signal from their local network 

broadcaster; and (3) subscribers using 

large C–band satellite dishes. 

The most recent authorization of 

Section 119 occurred in 2004 with the 

enactment of the SHVERA. Until the 

end of 2009, satellite carriers are 

authorized to retransmit distant network 

station signals to unserved households 

and superstation signals to all 

households, without retransmission 

consent, but with the requirement to 

pay royalties. In the SHVERA, Congress 

adopted a complex set of rules to further 

limit the importation of distant network 

station signals into local television 

markets. For example, the law requires 

satellite carriers to phase out the 

retransmission of distant signals in 

markets where they offer local–into–

local service. Generally, a satellite 

carrier will be required to terminate 

distant station service to any subscriber 

that elected to receive local–into–local 

service and would be precluded from 

providing distant network station 

signals to new subscribers in markets 

where local–into–local service is 

available. It also provided for the 

delivery of superstation signals to 

commercial establishments and for the 

delivery of television station signals 

from adjacent markets that have been 

determined by the FCC to be 

‘‘significantly viewed’’ in the local 

market (so long as the satellite carrier 

provides local–into–local service to 

those subscribers under the Section 122 

statutory license).8

Moreover, for the first time, the law 

distinguished between the 

retransmission of signals in an analog 

format and those transmitted in a digital 

format. SHVERA expanded the 

copyright license to make express 

provision for digital signals. In general, 

if a satellite carrier offers local–into–

local digital signals in a market, it is not 

allowed to provide distant digital 

signals to subscribers in that market, 

unless it was offering such digital 

signals prior to commencing local–into–

local digital service. If a household is 

predicted to be unserved by the analog 

signals of a network station, it can 

qualify for the digital signal of the 

distant network station with which the 

station is affiliated if it is offered by the 

subscriber’s satellite carrier. If the 

satellite carrier offers local–into–local 

analog service, a subscriber must receive 

that service in order to qualify for 

distant digital signals. A household that 

qualifies for distant digital signal service 

can receive only signals from stations 

located in the same time zone or in a 

later time zone, not in an earlier time 

zone. 

SHVERA also provides for signal 

testing at a household to determine if it 

is ‘‘served’’ by a digital signal over–the–

air. In some cases, if a household is 

shown to be unserved, it would be 

eligible for distant digital signals, 

provided the household subscribes to 

local–into–local analog service, if it is 

offered. However, this digital testing 

option was not available until April 30, 

2006, in the top 100 television markets, 

and will be available by July 15, 2007, 

in all other television markets. Such 

digital tests also are subject to waivers 

that the FCC may issue for stations that 

meet specified statutory criteria. Unlike 

SHVIA, SHVERA did not determine the 

royalty rates during the five–year 

extension because representatives of 

satellite carriers and copyright owners 

of broadcast programming negotiated 

new rates for the retransmission of 

analog and digital broadcast station 

signals. See infra. A procedure was 

created to implement these negotiated 

rates and they were adopted by the 

Librarian of Congress in 2005. 

Section 122. The Section 122 license 

was enacted eleven years after the 

Section 119 license and was intended to 

make the satellite industry more 

competitive by permitting the 

retransmission of local television signals 

on a royalty–free basis. The license is 

permanent and its history is relatively 

non–controversial. In fact, satellite 

carriers have increasingly relied upon 

the license in the last seven years to 

provide local television signals to their 

subscribers in over 150 local markets. 

See n. 8, supra. 

Issues. As illustrated above, the 

statutory licenses were enacted by 

Congress, at various times, to respond to 

historical events and in response to 

technological developments. The key 

difference between the licenses is the 

relative rigidity of the applicable 

statutory language. Section 111 has 

effectively locked the cable industry 

into a royalty scheme tied to antiquated 

FCC rules (i.e. the local and distant 

signal carriage regulations in effect in 

1976, but later repealed). On the other 

hand, Congress has been able to modify 

Section 119 to reflect current 

marketplace and legal developments 

because the license must be renewed 

every five years. We seek comment on 

the accuracy of our historical overview 

and ask if there are any other historical 

differences among the licenses that 

merit discussion. 

b. Technological Differences 

Cable systems and satellite carriers 

are technologically and functionally 

very different. Cable systems deliver 

video and audio (in analog, digital, and 

high definition formats), voice, and 

broadband services through fiber and 

coaxial cable to households, apartment 

buildings, hotels, mobile home parks, 

and local businesses. The cable industry 

has invested billions of dollars to 

upgrade transmission facilities over the 

last ten years so that cable systems are 

able to provide the services described 

above. Currently, cable operators offer 

separate tiers of traditional analog 

channels and newer digital channels to 

their subscribers, as well as premium 

services and video–on–demand. Despite 

system upgrades, some cable systems 

still lack channel capacity to offer all of 

the new programming services 

available. Although there are many large 

cable operators, each system is 

franchised to a discrete geographical 

area. Local or state franchise authorities 

have authority to condition a franchise 

grant on the operator’s offering, see 47 

U.S.C. 541, and most cable headends 

serve specific geographic regions. A 

cable system’s terrestrial–based 

technology has allowed cable operators 

to specifically tailor delivery of distant 

broadcast signals to the needs of their 

subscriber base. 

Satellite carriers 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. Satellite carriers 

digitally compress each signal they 

carry and do not sell separate analog 

and digital tiers as most cable operators 

now do. They have nationwide 

footprints and a finite amount of 

transponder space which currently 

limits the number of program services 

carried. To make the most use of 

available channel capacity, satellite 

carriers have begun to use spot beam 

technology to deliver local television 

signals into local markets, but they do 

not have the level of technical 

sophistication to provide distant station 


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19048 Federal Register / Vol. 72, No. 72 / Monday, April 16, 2007 / Notices 

9 In the context of analog broadcast signal 

carriage, it has been the FCC’s view that the 

Communications Act contemplates there be one 

basic service tier. In the context of digital carriage, 

the FCC found that it is consistent with Section 623 

of the Communications Act to require that a 

broadcaster’s digital signal must be available on a 

basic tier such that all broadcast signals are 

available to all cable subscribers at the lowest 

priced tier of service, as Congress envisioned. 

According to the FCC, the basic service tier, 

including any broadcast signals carried, will 

continue to be under the jurisdiction of the local 

franchising authority, and as such, will be rate 

regulated if the local franchising authority has been 

certified under Section 623 of the Act. The FCC 

noted, however, that if a cable system faces effective 

competition under one of the four statutory tests 

found in Section 623, and is deregulated pursuant 

to an FCC order, the cable operator is free to place 

a broadcaster’s digital signal on upper tiers of 

service or on a separate digital service tier. See 

Carriage of Digital Television Broadcast Signals, 16 

FCC Rcd 2598, 2643 (2001). 

signals on the same basis as cable 

operators. In any event, satellite carriers 

have recently launched, or plan to 

launch, new satellites in order to 

increase channel capacity and to offer 

much more high definition television 

programming to subscribers across the 

country. Because satellite television is a 

space–based technology, carriers are 

technically unable to provide the 

bundle of video, voice, and data in the 

same manner as cable systems. We seek 

comment on these and other 

technological differences relevant to this 

discussion. 

c. Regulatory Differences 

Copyright Act. There are a host of 

regulatory differences between the cable 

and satellite statutory licenses. As stated 

elsewhere in this NOI, Section 111 is 

grounded in old FCC rules while the 

regulatory structure of Section 119 has 

evolved every time it has been renewed. 

Cable operators are required to pay 

royalties based on gross receipts while 

satellite carriers pay a flat fee on a per 

subscriber basis. Also important to 

consider is that Section 119 does not 

make any distinction based on the size 

of the satellite carrier. Section 111, on 

the other hand, purposefully 

differentiates between large and small 

cable systems based upon the dollar 

amount of receipts a cable operator 

receives from subscribers for the 

carriage of broadcast signals. In 1976, 

Congress determined that the 

retransmission of copyrighted works by 

smaller cable systems whose gross 

receipts from subscribers were below a 

certain dollar amount deserved special 

consideration because they provide 

broadcast retransmissions to more rural 

areas. Therefore, in effect, the cable 

statutory license subsidizes smaller 

systems and allows them to follow a 

different, lower–cost royalty 

computation. Large systems, on the 

other hand, pay in accordance with a 

highly technical formula, principally 

dependent on how the FCC regulated 

the cable industry in 1976. Aside from 

these differences, and those noted 

elsewhere in this NOI, we seek input on 

other notable variations which are 

integral in this analysis. 

Communications Act and FCC Rules. 

At this juncture, it is important to note 

the differences between Section 122 of 

the Copyright Act and Section 338 of 

the Communications Act (the local–

into–local regulatory paradigm) and the 

local broadcast signal carriage 

requirement for cable operators under 

the Communications Act. A satellite 

carrier has a general obligation to carry 

all television station signals in a market, 

if it carries one station signal 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. See 47 

U.S.C. 534(b)(1)(B). A cable system is 

also obligated to carry a certain number 

of qualified local noncommercial 

educational television stations above the 

one–third cap. See 47 U.S.C. 535(a). 

Further, only cable operators, and not 

satellite carriers, have a legal obligation 

to have a basic service tier that all 

subscribers must purchase. See 47 

U.S.C. 543(b)(7).9 But, Section 338(d) 

does requires satellite carriers to 

position local broadcast station signals 

on contiguous channels and are 

permitted to sell local television station 

signals on an a la carte basis. 

The FCC has adopted a host of rules 

governing the exclusivity of 

programming carried by television 

broadcast stations. For example, the 

FCC’s network non–duplication rules 

protect a local commercial or non–

commercial broadcast television 

station’s right to be the exclusive 

distributor of network programming 

within a specified zone, and require 

programming subject to the rules to be 

blacked out when carried on another 

station’s signal imported by an MVPD 

into the local station’s zone of 

protection. The FCC’s syndicated 

exclusivity rules are similar in operation 

to the network non–duplication rules, 

but they apply to exclusive contracts for 

syndicated programming, rather than for 

network programming. The FCC’s sports 

blackout rule protects a sports team’s or 

sports league’s distribution rights to a 

live sporting event taking place in a 

local market. As with the network non–

duplication and syndicated exclusivity 

rules, the sports blackout rule applies 

only to the extent the rights holder has 

contractual rights to limit viewing of 

sports events. The SHVIA required the 

FCC to extend its cable exclusivity 

rules, including syndicated exclusivity, 

to satellite carriers but only with respect 

to the retransmission of nationally 

distributed superstations; however, the 

sports blackout rules apply to both 

superstations and network stations. See 

SHVIA § 1008, creating 17 U.S.C. 339(b). 

We note that in the Copyright Office’s 

Section 110 Report, there was 

considerable discussion concerning the 

fact that the syndicated exclusivity 

rules, sports blackout rules, and 

network non–duplication rules, do not 

apply to the retransmission of network 

station signals to unserved households 

by satellite carriers under Section 119. 

The Copyright Office found that a 

copyright owner’s right to license its 

programming in a local market is 

threatened in the absence of these 

requirements. For this reason, the 

Copyright Office proposed that these 

rules extend beyond just superstations 

to also include the retransmission of 

network station signals to unserved 

households. See Satellite Home Viewer 

Extension and Reauthorization Act 

§ 110 Report, A Report of the Register of 

Copyrights (February 2006) at vii. 

We seek comment on these and other 

regulatory differences between cable 

operators and satellite carriers regarding 

the retransmission of broadcast station 

signals. How do these communications 

law–related requirements affect the 

royalties collected under the Sections 

111 and 119 statutory licenses? 

Copyright Office. The Copyright 

Office has implemented the royalty fee 

structures of Sections 111 and 119 by 

adopting substantive and procedural 

rules in the Code of Federal Regulations. 

Section 201.11 of title 37 contains the 

licensing requirements for satellite 

carriers while Section 201.17 of title 37 

contains the licensing requirements for 

cable operators. The Copyright Office 

has also adopted separate statement of 

account forms for satellite carriers and 

cable operators that comport with its 

rules. While Congress did not 

specifically request an analysis of the 

Copyright Office’s rules and statement 

of account forms under Section 109, we 

seek comment on the structure and 

substance of the requirements and their 

effect on the competition between 

satellite carriers and cable operators. 

3. Competitive Disadvantages 

Congress asked for an analysis of 

whether the cable or satellite industry is 

placed in a competitive disadvantage 


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Federal Register / Vol. 72, No. 72 / Monday, April 16, 2007 / Notices 19049 

10We note that both Paxson Communications and 

the NCTA have filed separate requests for 

clarification and rulemaking, respectively, on the 

scope of the network station definition under 

Section 111(f) of the Act. The Copyright Office has 

opened a proceeding to address Paxson’s petition. 

See 65 FR 6946 (Feb. 11, 2000). The Copyright 

Office will soon be issuing a new NOI to elicit 

comment on NCTA’s petition and to update the 

record on this subject. 

due to the above–stated terms, 

conditions or circumstances. We first 

ask whether there are certain provisions 

found in Section 119, and not in Section 

111, that affect competition between 

satellite carriers and cable operators. For 

example, cable operators, but not 

satellite carriers, may retransmit distant 

station signals without regard to 

whether its subscribers are able to 

receive local broadcast stations over–

the–air. Does Section 119’s unserved 

household limitation competitively 

disadvantage satellite carriers against 

cable operators? If so, should Congress 

correct this imbalance? 

We also note that Section 119’s 

unserved household limitation has 

given rise to significant litigation 

between Echostar and the broadcast 

television networks. The case began 

nearly nine years ago and arose out of 

claims that Echostar was delivering 

network station signals to subscribers 

who were not eligible to receive such 

stations under Section 119. In May 

2006, the United States Court of 

Appeals for the Eleventh Circuit upheld 

the district court’s determination that 

Echostar had engaged in a ‘‘pattern or 

practice’’ of violating the unserved 

household limitation and found that, as 

a matter of law, it was required to issue 

a permanent injunction barring Echostar 

from delivering network station signals 

to any subscribers (served or unserved) 

pursuant to the Section 119 license. CBS 

v. Echostar, 450 F.3d 505 (11th Cir. 

2006). The appellate court’s decision 

specifically directed the district court to 

issue the required injunction. 

In August, 2006, after its efforts to 

appeal the Eleventh Circuit’s ruling 

were rejected (but before the district 

court had implemented the appellate 

court’s order), Echostar entered into a 

$100 million post–judgment settlement 

agreement with the affiliates of ABC, 

NBC, and CBS under which Echostar 

would, notwithstanding the appellate 

court’s decision, be permitted to 

continue to provide network station 

signals to legitimately ‘‘unserved’’

customers. However, Fox did not join in 

the settlement and filed a motion with 

the district court demanding that it 

reject the settlement and implement the 

injunction as directed by the Court of 

Appeals. 

The district court agreed with Fox and 

rejected the post–judgment settlement. 

The court stated that it was bound by 

the Eleventh Circuit’s decision and 

lacked the discretion to alter that court’s 

clear mandate. The court emphasized 

the fact that, as the Eleventh Circuit 

found, Section 119 requires the issuance 

of a permanent nationwide injunction 

where it has been determined that a 

satellite carrier engaged in a ‘‘pattern or 

practice’’of statutory violations. The 

court also rejected Echostar’s claim that 

the issuance of a permanent nationwide 

injunction preventing the delivery of 

distant affiliates of any of the Big Four 

networks (ABC, CBS, NBC, and Fox), 

even to households that could not 

receive over–the–air network station 

signals, would ‘‘work a manifest 

injustice on consumers.’’ According to 

the court, Congress made the 

determination in Section 119 that a 

permanent injunction is the appropriate 

remedy for the illegal acts committed by 

Echostar. The district court issued an 

order directing Echostar to cease all 

retransmissions of distant broadcast 

station signals affiliated with ABC, CBS, 

NBC, and Fox, effective December 1, 

2006. See CBS v. Echostar, ll F.Supp. 

2d ll, 2006 WL 4012199 (S.D. Fla. 

Oct. 20, 2006). We seek comment on the 

effect that the court’s injunction has had 

on Echostar and its subscribers. For 

example, how many subscribers has 

Echostar lost to a competing satellite 

carrier or to a local cable operator 

because it can no longer provide distant 

network station signals to its 

subscribers? Do any Echostar 

subscribers currently receive distant 

network station signals through a third 

party provider? Are subscribers 

disadvantaged because of the Echostar 

injunction or are there other options? 

We seek comment on other significant 

court cases, or pending litigation, that 

are relevant to our inquiry here. 

There are certain provisions found in 

Section 111, and not Section 119, that 

disadvantage satellite carriers. For 

example, are satellite carriers 

disadvantaged because they are unable 

to carry radio station signals under the 

Section 119 statutory license? Would it 

be appropriate for Congress to establish 

a satellite carrier statutory license for 

the retransmission of terrestrial radio 

station signals? Who would be harmed 

if Congress amended Section 119 to 

include the retransmission of local radio 

station signals? Alternatively, is there a 

continuing need for Section 111 to cover 

the retransmission of radio station 

signals? Are there any other provisions 

in Section 111, but not in Section 119, 

that create a competitive disparity 

between cable operators and satellite 

carriers? 

We ask whether cable operators are 

hobbled by the terms of Section 111 that 

are not found in, or are different from, 

Section 119. As noted elsewhere, 

Section 111 contains definitions, terms, 

and conditions that are based on the 

FCC’s old carriage requirements. The 

term ‘‘network station’’ under Section 

111, for example, is part of a regulatory 

construct from 30 years ago when ABC, 

CBS, and NBC were the only networks, 

while the ‘‘network station’’ definition 

found in Section 119 is more current 

and comparable to the FCC’s current 

definitions.10 Fox, for example, is 

considered a network station for Section 

119 purposes, but it is unclear whether 

it can be considered a network station 

for Section 111 purposes. Cable 

operators currently have to pay higher 

royalties for the retransmission of 

distant Fox station signals, as 

‘‘independent stations,’’ than it would 

for distant ABC, NBC, or CBS station 

signals, that are ‘‘network stations.’’

Does this result disadvantage cable 

operators? Are there other terms in 

Section 111, and not Section 119, that 

competitively burden cable operators? 

C. Necessity of the Licenses 

Congress has asked us to analyze 

whether the statutory licenses are still 

justified by their initial purposes. In this 

section, we describe the different 

purposes behind each license and ask if 

they are still valid today. We also seek 

comment on whether the licenses have 

been successful in furthering the goals 

they were designed to achieve. 

Section 111. As discussed earlier, 

before the Copyright Act was amended 

in 1976, cable operators had no 

copyright liability, and paid no fees at 

all, for the retransmission of either local 

or distant broadcast station signals. At 

the time, the FCC, the courts, and 

Congress, recognized the public benefits 

inherent in the delivery of distant 

signals by cable systems, but also 

recognized the property rights of the 

owners of content transmitted by 

broadcast stations. As such, the 1976 

Copyright Act imposed liability for the 

first time, but it also provided cable 

operators an important and limited right 

to retransmit broadcast station signals 

without requiring the consent of 

copyright owners. Section 111 was 

enacted to respond to the needs of cable 

operators, who were much smaller at 

the time, and their subscribers, who 

valued the content transmitted by 

distant broadcast stations. In so doing, 

Congress recognized ‘‘that it would be 

impractical and unduly burdensome to 

require every cable system to negotiate 

with every copyright owner whose work 

was transmitted by a cable system.’’


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H.R. Rep. No. 1476, 94th Cong., 2d Sess. 

89 (1976). 

Section 119. The satellite statutory 

license, adopted by Congress in the 

1988 SHVA, was created to facilitate the 

delivery of broadcast network 

programming by satellite to (mostly 

rural) subscribers who, because of 

distance or terrain, were unable to 

receive a signal of at least Grade B 

intensity from a local television station 

affiliated with a particular television 

network. See, e.g., 134 Cong. Rec. 

28,582 (1988) (‘‘The goal of the bill...is 

to place rural households on a more or 

less equal footing with their urban 

counterparts.’’) (remarks of Rep. 

Kastenmeier); 134 Cong. Rec. 28,585 

(1988) (‘‘This legislation will increase 

television viewing choices for many 

rural Americans.’’) (remarks of Rep. 

Slattery). 

Section 119 of the Act had the dual 

purpose of: (1) enabling households 

located beyond the reach of a local 

affiliate to obtain access to broadcast 

network programming by satellite and 

(2) protecting the existing network/ 

affiliate distribution system. H.R. Rep. 

No. 100–887, Part 1 on H.R. 2848, 100th 

Cong., 2d Sess., at 8 (Aug. 18, 1988). 

Congressional intent, as expressed in 

the House Judiciary Committee Report 

on the 1988 bill, stated, ‘‘The bill rests 

on the assumption that Congress should 

impose a compulsory license only when 

the marketplace cannot suffice.’’ Id. at 

15. Similarly, the House Energy and 

Commerce Committee Report called the 

satellite carrier license ‘‘a temporary, 

transitional statutory license to bridge 

the gap until the marketplace can 

function effectively.’’ H.R. Rep. No. 887, 

Part 2, 100th Cong. 2d Sess. 15 (1988). 

In 1994, the satellite carrier license was 

extended for another five years on the 

basis that ‘‘a marketplace solution for 

clearing copyrights in broadcast 

programming retransmitted by satellite 

carriers is still not available.’’ S. Rep. 

No. 407, 103d Cong. 2d Sess. 8 (1994). 

Section 119 was extended in 1999 and 

2004 through the SHVIA and SHVERA, 

respectively, as described above. 

Section 122, which was enacted as 

part of the 1999 SHVIA, created a 

royalty–free statutory license for 

satellite carriers who wanted to carry 

the signals of local television stations. 

The provision was designed to promote 

competition among multichannel video 

programming distributors (i.e., satellite 

carriers and cable operators) while, at 

the same time, increase the 

programming choices available to 

consumers. See 145 Cong. Rec. H11811 

(Nov. 9, 1999). 

Statutory licenses are an exception to 

the copyright principle of exclusive 

rights for authors of creative works, and, 

historically, the Copyright Office has 

only supported the creation of statutory 

licenses when warranted by special 

circumstances. With respect to the cable 

license, the special circumstance was 

initially the apparent difficulty and 

expense of clearing the rights to all 

program content carried by distant 

television stations. We seek comment on 

whether the circumstances that 

warranted creation of Section 111, as 

reflected in its legislative history, still 

exist. If so, how? With regard to the 

Section 119 satellite carrier license, we 

note that the special circumstance 

warranting its creation was to provide 

rural and unserved households with 

valuable broadcast service. Has this goal 

been met? If so, how? As for Section 

122, its primary mission was to 

strengthen satellite’s competitive 

position against the incumbent cable 

industry. Has this goal been met? If so, 

how? If the licenses are no longer 

justified upon the bases for which they 

were created, what should Congress do 

with them? Alternatively, are there any 

new justifications for the retention of 

the statutory licenses for cable and 

satellite carriers? 

D. Effect on Subscribers 

1. Rate Increases 

Section 109 of the SHVERA requires 

us to analyze the correlation, if any, 

between the royalties, or lack thereof, 

under Sections 111, 119, and 122 and 

the fees charged to cable and satellite 

subscribers. This is an area that we have 

not fully explored in any of our past 

reports on the statutory licenses. Thus, 

the novel threshold issue is how to 

properly gauge subscriber rate increases 

if any, due to Sections 111, 119, and 

122. We therefore seek comment on the 

appropriate methodologies to perform 

this type of analysis. As noted above, 

cable operators, depending on size, 

generally pay anywhere between .4%

and 1.5% of their gross receipts as 

royalties to copyright owners. We seek 

comment on whether cable operators are 

passing off these costs to subscribers as 

programming cost increases. While we 

do not have specific cost figures for 

satellite carriers, we similarly ask 

whether they too are passing off the 

royalties paid under Section 119 to their 

subscribers. We reiterate here that all 

broadcast station signals must be carried 

on a cable system’s basic service tier 

that must be purchased by all cable 

subscribers. Satellite subscribers, on the 

other hand, are not required by law to 

purchase a package of local or distant 

station signals. How does this 

circumstance affect the analysis here? 

We also seek comment on whether cable 

operators or satellite carriers are offering 

any distant broadcast station signals on 

an a la carte basis so that only those 

subscribers who wish to purchase them 

bear the cost of any possible rate 

increase arising under the royalty fee 

structure. 

2. Rate Savings 

Section 109 also requires us to 

address whether cable and satellite 

companies have passed to subscribers 

any savings realized as a result of the 

royalty structure and amounts under 

such sections. 

On this point, we note that our 

endeavor here is a difficult one because 

neither cable operators nor satellite 

carriers have been required to provide 

the Copyright Office with information 

regarding the costs of retransmitting 

distant broadcast station signals. 

Without such information, a 

determination as to whether ‘‘savings’’

are passed onto subscribers is hard to 

quantify. Further, the concept of 

‘‘savings’’ is nonspecific and assumes a 

difference between actual and perceived 

cost. If what is meant by ‘‘savings’’ is 

the lesser fees that the cable and 

satellite industry pay by virtue of 

enjoying statutory licenses as opposed 

to negotiating private licenses, it must 

be remembered there are no private 

licenses precisely because of these 

licenses. In other words, it is difficult 

for us to determine what satellite 

carriers and cable operators might be 

paying for distant broadcast signals if 

they did not have statutory licensing. 

Without knowing the current 

marketplace rates for the retransmission 

of distant broadcast signals for cable and 

satellite, it is difficult to measure the 

value of ‘‘savings’’ that these industries 

enjoy as a result of statutory licensing. 

We do know, however, that any 

increases in the cost of local signals 

delivered by satellite carriers cannot be 

due to Section 122 because it is a 

royalty–free license. Given these 

circumstances, we seek comment on 

how to define the term ‘‘savings’’ and 

how to calculate if any ‘‘savings’’ have 

occurred under the existing regulatory 

structure, or may occur, through any 

proposed change in the licenses at issue. 

On this point, we seek comment on 

whether cable subscribers may realize 

‘‘savings’’ if Congress were to adopt a 

flat fee structure or other change in the 

way royalties are calculated under 

Section 111. Further, is there any way 

to change the Section 119 license so that 

satellite subscribers may see a cost 

savings, if such are not evident today? 

E. Application to Digital Signals 


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Section 109 of the SHVERA requires 

us to analyze issues that may arise with 

respect to the application of the licenses 

to the secondary transmissions of the 

primary transmissions of network 

stations and superstations that originate 

as digital signals, including issues that 

relate to the application of the unserved 

household limitations under Section 

119, and to the determination of 

royalties of cable systems and satellite 

carriers. 

At this juncture, it is important to 

recognize the differences between 

analog television and digital television. 

Analog television technology, which has 

been available to consumers for over 

sixty years, essentially permits a 

television broadcast station to transmit 

a single stream of video programming 

and accompanying audio. Digital 

television technology, on the other 

hand, enables a television station to 

broadcast an array of quality high–

definition digital television signals 

(‘‘HD’’), standard–definition digital 

television signals (‘‘SD’’), and many 

different types of ancillary programming 

and data services. In 1997, the FCC 

adopted its initial rules governing the 

transition of the broadcast television 

industry from analog to digital 

technology, and authorized each 

individual television station licensee to 

broadcast in a digital format. Advanced 

Television Systems and Their Impact on 

Existing Television Broadcast Service, 

12 FCC Rcd. 12809 (1997). Since that 

time, hundreds of television stations 

have been transmitting both analog and 

digital signals from their broadcast 

facilities, and television stations may 

choose to broadcast in a ‘‘digital–only’’

mode of operation, pursuant to FCC 

authorization. See, e.g., Second Periodic 

Review of the Commission’s Rules and 

Policies Affecting the Conversion to 

Digital Television, 19 FCC Rcd 18279, 

18321–22 (2004). This dual mode of 

broadcast television operation will soon 

end as Congress has established 

February 17, 2009 as the date for the 

completion of the transition from analog 

to digital broadcast television. See Pub. 

L. No. 109–171, Section 3002(a), 120 

Stat. 4 (2006). 

In 2006, the Copyright Office sought 

comment on several issues associated 

with the secondary transmission of 

digital television signals by cable 

operators under Section 111 of the 

Copyright Act. The Copyright Office 

initiated a Notice of Inquiry to address 

matters raised in a Petition for 

Rulemaking, filed jointly by several 

copyright owner groups, including the 

Motion Picture Association of America 

and sports rights holders. See 71 FR 

54948 (Sept. 20, 2006) (‘‘Digital Signals 

NOI’’). Specifically, the copyright 

owners requested that the Copyright 

Office address recordkeeping and 

royalty calculation issues that have 

arisen in connection with the 

simultaneous retransmission of the 

signals of digital and analog broadcast 

stations by cable operators and whether 

and how cable operators should report 

the carriage of digital multicast 

programming streams on their SOAs. 

For example, they urged the Copyright 

Office to clarify that, if a cable operator 

chooses to carry a television broadcast 

station’s analog and digital signals 

(either in high definition or as a 

multicast) that the cable operator should 

identify those signals separately in 

Space G on its SOA The Digital Signal 

NOI also sought comment on cable 

operator marketing and sales practices 

and equipment issues associated with 

the retransmission of digital broadcast 

signals that may result in possible 

changes to the Copyright Office’s 

existing rules and the cable statements 

of account forms. For example, 

copyright owners requested that the 

Copyright Office clarify that a cable 

operator must include in its gross 

receipts any revenues from the tiers of 

service consumers must purchase in 

order to receive HDTV or other digital 

broadcast signals notwithstanding 

that the operator may market its offering 

of such digital signals as ‘‘free.’’

Comments and reply comments have 

been filed in the Digital Signals 

proceeding and the Copyright Office is 

currently analyzing the facts and legal 

arguments raised and addressed by the 

parties. In the Digital Signal NOI, the 

Copyright Office did conclude however, 

without relying on input from the 

parties, that there is nothing in the 

Copyright Act, its legislative history, or 

the Office’s implementing rules, which 

expressly limits the cable statutory 

license to only analog broadcast signals. 

We find that the issues discussed in 

this proceeding, regarding the 

retransmission of distant digital signals 

by cable operators, are essentially the 

same type of issues Congress has 

directed us to address in the Section 109 

Report. As such, we do not believe it is 

necessary to seek comment on those 

same issues here. Rather, we will 

incorporate by reference the issues and 

arguments raised by the parties in the 

pending proceeding as we move forward 

with the Report. However, if any party, 

for any reason, missed the opportunity 

to file comments in response to the 

Digital Signals NOI, or would like to 

clarify certain points already raised, 

they may do so in this proceeding or in 

response to any further notices that the 

Copyright Office may issue in the future 

pertaining to the retransmission of 

digital television signals. 

There are, however, some new 

questions we would like to raise here. 

For example, are digital television 

signals worth more or less in the 

marketplace? If so, how much and why? 

How should Congress treat the 

retransmission of digital low power and 

digital translator television station 

signals under Section 111? Should the 

language of Section 111 be substantially 

modified to take the retransmission of 

digital signals into account? Are there 

any other associated issues not yet 

addressed? 

With regard to Section 119, we note 

that in 2005, the Copyright Office 

codified an agreement reached between 

satellite carriers and copyright owners 

setting rates for the secondary 

transmission of digital television 

broadcast station signals under Section 

119 of the Copyright Act. The agreement 

set rates for the private home viewing of 

distant superstation and network station 

signals for the 2005–2009 period, as 

well as the viewing of superstations in 

commercial establishments. See 37 CFR 

258.4. The agreement specified that 

distant superstations and network 

stations that are significantly viewed, as 

determined by the FCC, do not require 

a royalty payment under certain 

conditions, in compliance with 17 

U.S.C. 119(a)(3), as amended. In 

addition, the agreement proposed that, 

in the case of multicasting of digital 

superstations and network stations, each 

digital stream that is retransmitted by a 

satellite carrier must be paid for at the 

prescribed rate but no royalty payment 

is due for any program–related material 

contained in the stream within the 

meaning of WGN v. United Video, Inc., 

693 F.2d 622, 626 (7th Cir. 1982) and 

Carriage of Digital Television Broadcast 

Signals, 20 FCC Rcd 4516 (2005) at 44 

& n.158. See 70 FR 39178 (July 7, 2005). 

We seek comment on whether there 

are any new issues that we should be 

aware of regarding Section 119 and the 

retransmission of digital television 

signals. For example, how is the 

unserved household provision affected 

by the above agreement? What affect has 

the Echostar litigation had on the 

retransmission of distant digital 

television signals. What affect will the 

end of the digital transition in 2009 

have on satellite carriers and the Section 

119 statutory license? Given that 

Section 119 will expire about eleven 

months after the digital transition is 

scheduled to end, should the current 

version of the license be repealed in its 

entirety and replaced with one focusing 

only on the retransmission of distant 

digital television signals? 


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11There are currently 65 million U.S. households 

that subscribe to cable television. See http:// 

ncta.com/nctalcom/PDFs/ 

NCTAAnnual%20Report4-06FINAL.pdf. But see, 

Steve Donohue, Cable Penetration Hits 17-Year 

Low, Multichannel News, March 19, 2007(stating 

that there are 68.3 million cable television 

households according to Nielsen Media Research 

data). In comparison, there are about 29 million 

satellite television households. See http:// 

www.directv.com (DirecTV has over 16 million 

subscribers) and http://www.dishnetwork.com 

(Echostar has have 13 million subscribers). 

As for Section 122, we believe that the 

digital transition will not significantly 

affect the operation of this license. 

However, it may well affect the ‘‘carry–

one carry–all’’ provisions of Section 338 

of the Communications Act. In January 

2001, the FCC sought comment on what 

type of digital carriage rules it should 

apply to satellite carriers under Section 

338. See Carriage of Digital Television 

Broadcast Signals, 16 FCC Rcd 2598, 

2658 (2001). This matter has been 

pending before the FCC for the last six 

years. We cannot gauge the effect a 

digital ‘‘carry–one carry–all’’ will have 

on the Section 122 statutory licenses 

until the FCC establishes policy in this 

area. 

F. The Future of the Statutory 

Licenses 

While not specifically enumerated in 

the language of Section 109, the statute’s 

legislative history instructs the 

Copyright Office, based on an analysis 

of the differences among the three 

licenses, to consider whether they 

should be eliminated, changed, or 

maintained with the goal of 

harmonizing their operation. We now 

seek comment on the future of the 

statutory licenses. As detailed above, 

the cable statutory license, enacted in 

1976, represents a number of 

compromises and requirements 

necessitated by the technological and 

regulatory framework in existence at 

that time. Since 1976, it is generally 

recognized that the cable industry has 

grown considerably larger,11 and the 

video marketplace has evolved. It is also 

axiomatic that the license is based upon 

a defunct regulatory structure 

promulgated by the FCC in the 1970s. 

The Section 119 license, first enacted in 

1988, was designed to allow satellite 

carriers to provide services comparable 

to cable to subscribers on the fringes of 

television markets. Congress intended 

for the license to sunset after a period 

of five years, but it has been renewed 

three times since 1988. Interestingly, 

rather than being phased out, the license 

has been significantly expanded over 

the years (e.g., more restrictions and 

conditions on the retransmission of 

network station signals to unserved 

households, the retransmission of 

significantly viewed signals, application 

to digital television signals, etc.) while 

DirecTV and Echostar have dramatically 

increased subscribership in non–rural 

areas of the country. Based on the 

preceding, and taking into consideration 

the issues outlined below, we ask 

whether Section 111 and Section 119 

should be retained in their current state, 

restructured, or discarded altogether. 

Retention. If retention is the proper 

option, we seek comment on why this 

would be the best approach. On this 

point, we note that while the cable and 

satellite industries have grown 

substantially over the last decade, 

neither has any control over the 

particular programs that broadcast 

stations provide to the public or how 

such programs are scheduled. Further, 

there are hundreds more television 

stations today, including analog and 

digital stations (with some splitting 

their signal into as many as five 

individual multicasts) than there were 

thirty years ago. In addition, there are 

now significantly more television 

stations and networks targeting the 

nation’s growing Latino population. Is 

the public’s interest in continued access 

to a variety of diverse distant broadcast 

signals a significant consideration that 

merits retention? Are smaller cable 

operators who serve less populated and/ 

or lower income households still in 

need of the license? Are there any other 

facts supporting retention? Section 119 

requires satellite carriers to phase out 

the retransmission of network station 

signals to unserved households in 

markets where they offer local–into–

local service. Generally, a satellite 

carrier will be required to terminate 

network station service (to unserved 

households) to any subscriber that 

elected to receive local–into–local 

service and would be precluded from 

providing network station signals (to 

unserved households) to new 

subscribers in markets where local–

into–local service is available. See 17 

U.S.C. 119(a)(4). Assuming that Section 

122 is retained, does it make sense to 

also retain Section 119, when in 2009, 

most television markets likely will be 

provided with local–into–local service 

by Echostar and DirecTV? 

Modification. If Section 111 were to 

be amended, we seek comment in 

support of this approach and on the 

scope of the proposed changes. On this 

point, we note that in 2006, the 

Copyright Office sought comment on 

several issues associated with cable 

operator reporting practices under the 

Copyright Office’s regulations found in 

37 CFR 201.17. The Copyright Office 

initiated a Notice of Inquiry to address 

matters raised in a Petition for 

Rulemaking filed jointly by several 

copyright owner groups. The Notice of 

Inquiry sought comment on proposals 

requiring additional information to be 

reported on a cable operator’s SOA, 

particularly information relating to gross 

receipts, service tiers, subscribers, 

headend locations, and cable 

communities. The Notice of Inquiry also 

sought comment on the need for 

regulatory clarification regarding the 

effect of cable operator’’ interest 

payments that accompany late-filed 

SOAs or amended SOAs. Finally, the 

Notice of Inquiry sought comment on 

the need to clarify the definition of the 

term cable ‘‘community’’ in its 

regulations to comport with the 

meaning of ‘‘cable system’’ as defined in 

Section 111. See 71 FR 45749 (Aug. 8, 

2006). Comments and reply comments 

have been filed in response to this NOI 

and the docket remains pending. 

In this context, we ask whether the 

entire section should be amended to 

reflect the current marketplace (such as 

the advent of digital television 

described above) and the existing 

regulatory framework established by the 

FCC? Alternatively, should the 

amendments be limited to certain 

subject matter, such as the royalty fee 

structure? For example, should the 

royalty payment scheme of the license, 

based upon each cable system’s gross 

receipts for the retransmission of 

broadcast signals, be simplified so as to 

remove reliance upon the old FCC 

rules? Under the Section 111 license, 

distant network station signals are 

currently paid for at a lower royalty rate 

(.25 DSE) than distant independent 

station signals (1.0 DSE). Should this 

disparity be eliminated, so that all 

stations are paid for at the same rate? 

Should Congress enact a flat fee royalty 

system for cable operators like that in 

place for satellite carriers? If so, how 

could Congress build into the flat fee 

structure a surrogate for the 3.75 percent 

rate for additional non–permitted 

distant signal retransmissions? Should 

the gross receipts requirements in the 

cable license be eliminated under a flat 

fee approach? Would a flat rate structure 

for determining royalties under Section 

111 have any adverse consequences for 

copyright owners? Would such a 

restructuring be more disruptive than 

beneficial? 

Small cable operators may experience 

a significant increase in royalty 

payments under a flat fee system. This 

increase in turn could lead to a loss of 

broadcast service for rural cable 

subscribers that lack the variety of 

broadcast stations found in the top 100 

television markets. We ask whether 


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these concerns are justified. Are lower 

rates still needed as an inducement for 

small cable systems to retransmit distant 

signals to communities unserved or 

underserved by local broadcast stations? 

If not, should Congress eliminate the 

historical disparities between small and 

large cable systems contained within the 

Section 111 regulatory structure? For 

example, should the SA1–2 rate be 

aligned with the minimum SA–3 rate? 

Should the distinction between SA1–2 

and SA–3 be eliminated? Is it possible 

for Congress to modify the subsidy for 

small cable systems under Section 111 

in a way that is fair and equitable for 

both cable operators and copyright 

owners? 

The cable industry has experienced 

considerable marketplace change since 

1997. The FCC’s examination of the 

state of the cable industry in the last 

several years demonstrates that the 

cable industry has become far more 

concentrated and integrated. See 

Annual Assessment of the Status of 

Competition in the Market for the 

Delivery of Video Programming, 21 FCC 

Rcd 2503 (2006). Given this trend, 

should the cable statutory license be 

amended to address the significant 

amount of mergers and acquisitions in 

the cable industry over the last thirty 

years? At the same time, cable 

franchising authority has become more 

concentrated as well. We note that 

several states, such as California, have 

enacted new laws that transfer 

franchising authority from local 

governments to state governments. See 

Corey Boles, Verizon Gets California 

Video Franchise, Wall Street Journal, 

March 9, 2007, at B4. We ask whether 

and how statewide franchises affect the 

Section 111 license. 

Since the implementation of the cable 

statutory license by the Copyright Office 

in 1978, the cable industry has raised 

concerns about the ‘‘cable system’’

definition found in Section 111(f) of the 

Act. Recently, the NCTA petitioned the 

Copyright Office to commence a 

rulemaking proceeding to address cable 

copyright royalty anomalies arising from 

the current ‘‘cable system’’ definition as 

it has been implemented by the 

Copyright Office. In its Petition, NCTA 

states that where two independently 

built and operated systems subsequently 

come under common ownership due to 

a corporate acquisition or merger, the 

Copyright Office’s rules require that the 

two systems be reported as one. 

Similarly, where a system builds a line 

extension into an area contiguous to 

another commonly–owned system, the 

line extension can serve as a ‘‘link’’ in 

a chain that combines several 

commonly–owned systems into one 

entity for copyright purposes. NCTA 

asserts that, in either of these cases, 

dramatically increased royalties can 

result. NCTA states that royalty 

obligations may increase as a result of 

the Copyright Office’s policy of 

attributing carriage of a signal to all 

parts of a cable system, whether or not 

the station is actually carried 

throughout the system. In NCTA’s view, 

a ‘‘phantom signal’’ event arises when a 

cable system pays royalties based on the 

carriage of the signals of distant 

broadcast stations after a cable system 

merger, even if those signals are not, 

and even may not be, delivered to all 

subscribers in the communities served 

by the cable system. Industry concerns 

about phantom signals have steadily 

increased as cable operators have 

merged and grown. While we may open 

an inquiry into this issue in the future, 

we nevertheless seek comment on 

whether Congress should amend 

Section 111 and provide a legislative 

solution to the problem. 

In 1997, the Copyright Office 

recommended that Congress amend 

Section 111(f) to define when two cable 

systems under common ownership or 

control are, in fact, one system for 

purposes of Section 111 in light of 

technological advances in headends and 

for other reasons. If a flat, per subscriber 

fee is not adopted, the same part of 

Section 111(f) should also be amended 

to calculate cable rates only on those 

subscriber groups that actually receive a 

particular broadcast signal. The 

Copyright Office believed that this 

recommendation would help eliminate 

the ‘‘phantom signal’’ problem. See 

1997 Report at 46–47. 

We ask whether the cable license 

should be subject to renewal every 

certain number of years, perhaps in 

synchronization with the renewal of the 

satellite carrier statutory license. This 

would allow Congress to update Section 

111 on a periodic basis and examine, in 

tandem with Section 119, whether the 

licenses are serving their intended 

purposes. Are there any drawbacks 

related to this proposal? 

With regard to reforming Section 119, 

we ask what particular sections should 

be modified. For example, should the 

unserved household provision be 

amended? Should the provision account 

for the recent distant network signal 

injunction involving Echostar? If so, 

how? The current satellite carrier 

license will expire at the end of 2009. 

Assuming that Section 119 remains a 

standalone provision, should the license 

be extended on a permanent basis, or is 

temporary extension still an appropriate 

solution? As discussed above, should 

the provisions directed at the 

retransmission of distant analog signals 

be replaced with ones directed at the 

retransmission of distant digital signals? 

Section 122 is a relatively 

noncontroversial provision that has 

served satellite carriers, broadcasters, 

and consumers well. In any event, we 

seek comment on whether this license 

should be modified, and if so, how? For 

example, does it need to be amended to 

reflect the retransmission of digital 

television signals? Could the license be 

improved to function better? 

Uniform License. We seek comment 

on whether Congress should instead 

adopt a uniform statutory license 

encompassing the retransmission of 

local and distant signals by both cable 

operators and satellite carriers. If such a 

license is recommended, how should it 

be structured? Would a uniform rate for 

the retransmission of distant broadcast 

signals, applicable to both cable 

operators and satellite carriers, 

effectively level competition among the 

providers? Would reporting of cable 

royalties be easier and less intrusive? 

What are the barriers regarding the 

formation of a single license? How 

would Section 122’s provisions fit into 

a uniform license? 

Expansion. Content delivery 

technology has evolved and changed at 

an incredibly rapid pace since 1997 

when the Copyright Office last 

examined the cable and satellite 

statutory licenses. Whereas ten years 

ago, the Copyright Office was concerned 

about open video systems and the 

Section 111 license, See 1997 Report at 

62–76, today that delivery system and 

the concerns it generated seems 

antiquated. Currently, video 

programming streamed or downloaded 

through the Internet to computers, 

mobile devices, and digital television 

sets, are commanding the attention of 

the media and content industries. Given 

that we are obliged to provide Congress 

with recommendations based on current 

circumstances, we seek comment on 

whether the current statutory licensing 

schemes should be expanded to include 

the delivery of broadcast programming 

over the Internet or through any video 

delivery system that uses Internet 

Protocol. In the alternative, we ask 

whether licensing of discrete broadcast 

programming should be allowed to 

evolve in the marketplace. It is 

important to note here, that unlike cable 

systems and satellite carriers, Internet 

video providers do not own any 

transmission facilities; rather, they host 

and distribute video programming 

through software, servers, and 

computers connected to the Internet. 

There are currently three different 

technological paradigms for openly 


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12One company recently petitioned the FCC to 

declare that the Commission has no authority to 

regulate the distribution of video content over the 

Internet. See Network2 Petition for Declaratory 

Ruling That Internet Video is not Subject to 

Regulation Under Title III or Title VI of the 

distributing video programming, 

including broadcast content, over the 

Internet. One method is to stream video 

content that may be accessed by anyone 

with an Internet connection. Youtube, 

Yahoo, MSN, AOL are the most popular 

distributors of streamed video content. 

The second method to deliver video 

content to end users is through server 

downloads. This type of delivery system 

has been used by such firms’ as Apple’s 

iTunes, CinemaNow, and MovieLink. 

The last method is peer–to–peer video 

delivery. This involves the sharing and 

delivery of user specified files among 

groups of people who are logged on to 

a file sharing network. BitTorrent and 

Joost deliver video content in such a 

manner. There are two prevailing 

business models that reign over these 

distribution technologies. Internet video 

programming distributors may adopt a 

download–to–own (or rent) model 

where users pay a fee to access content. 

Alternatively, they may provide content 

to end users under an ad–supported 

model, just like traditional commercial 

broadcast television. See Todd Spangler, 

BitTorrent Goes Legit With Online Store, 

Multichannel News, March 12, 2007, at 

32. 

We recognize that the Internet is not 

analogous to the technologies originally 

licensed under Section 111, 119, and 

122, but the move toward technological 

convergence and the advent of broadcast 

quality video over the Internet during 

the last five years calls for a close re–

examination of the licenses at issue 

here. For example, Virtual Digital Cable 

(‘‘VDC’’), a new Internet video 

programming provider, currently offers 

multiple channels of video 

programming to subscribers across the 

United States and plans to carry local 

broadcast television stations as part of 

its service offerings. See http:// 

www.vdc.com.; see also Bid to Put 

Local TV Signals Online Tests Internet 

Broadcast Rights, Communications 

Daily, July 19, 2006, at 6. Given the 

advent of VDC, and similar outlets such 

as TVU Networks (http:// 

www.tvunetworks.co/index.htm), we 

seek comment on whether a new 

statutory license should be created to 

cover the delivery of broadcast signals 

over the Internet. If so, how could this 

be achieved? Could the availability of 

broadcast content distributed over the 

Internet be considered a 

‘‘retransmission’’ as that term has been 

used in the Copyright Act? Would the 

answer to this question be different if 

the owner of the broadcast content, such 

as the television network, is delivering 

the content rather than a third party 

website? Would the retransmission of a 

broadcast station’s signal implicate the 

reproduction right under Section 106 of 

the Copyright Act, in addition to the 

performance right, given that Internet 

retransmissions require the making of 

temporary copies on servers necessary 

for retransmission? Is there any 

evidence of marketplace failure 

requiring a statutory license to ensure 

the public availability of broadcast 

programming? 

There are also video programming 

distribution systems that use Internet 

Protocol technology (‘‘IPTV’’) to deliver 

video content through a closed system 

available only to subscribers for a 

monthly fee. AT&T, for example, 

currently uses IPTV to provide 

multichannel video service in 

competition with incumbent cable 

operators and satellite carriers. We seek 

comment on whether new types of 

video retransmission services, such as 

IPTV–based services offered by AT&T, 

may avail themselves of any of the 

existing statutory licenses. Must a new 

license be created, instead? We also seek 

comment on whether a statutory license 

for IPTV–based services, if confined to 

a closed system available only to 

subscribers in the United States, would 

violate any international agreements 

and treaty obligations. 

Recent advances in wireless 

technology have enabled the reception 

of video content on mobile telephones 

and similar devices. For example, 

Verizon Wireless, in partnership with 

MediaFLO USA, has recently 

introduced V Cast Mobile TV service in 

several markets across the United States. 

This service features a full complement 

of eight channels available to Verizon 

Wireless voice customers for an 

additional fee. Programming on V Cast 

Mobile TV is provided by CBS, NBC, 

Fox, ESPN, and others. AT&T’s Cingular 

Wireless has announced that it too will 

offer mobile television service, in 

addition to wireless voice service, in the 

near future. See Rhonda Wickham, V 

Cast Mobile TV Goes Live, 

WirelessWeek, March 1, 2007; see also, 

Mike Shields, CBS, NBC and ESPN 

Unveil Plethora of New Mobile Content, 

Mediaweek, March 27, 2007. The 

mobile phone industry, including 

Verizon and AT&T, have not announced 

any plans to retransmit local or distant 

television station signals over their 

wireless networks. Nevertheless, we 

seek comment on whether Sections 111, 

119, and 122 should be expanded to 

include the retransmission of broadcast 

signals over wireless networks and to 

mobile reception devices. Should there 

be a single new statutory license that 

encompasses the retransmission of 

broadcast signals for use by cable, 

satellite, IPTV, the Internet, and 

wireless networks/mobile devices? Or, 

do the examples provided above 

demonstrate that the video marketplace 

is functioning smoothly and there is no 

need for a statutory license at all? 

Elimination. We seek comment on 

whether the licenses should be 

eliminated rather than expanded. As 

noted above, the cable industry has 

grown significantly since 1976, in terms 

of horizontal ownership as well as 

subscribership, and generally has the 

market power to negotiate favorable 

program carriage agreements. Given 

these facts, has Section 111 served its 

purpose and is no longer necessary? Do 

these factors alone merit the elimination 

of the license? DirecTV and Echostar 

did not serve any customers in 1988, but 

now count at least 27 million 

subscribers among the both of them. 

They, too, have the market power and 

bargaining strength to negotiate 

favorable program carriage agreements. 

Given these developments, should 

Section 119 also be phased out? A year 

ago, we concluded that the Section 119 

license harms copyright owners because 

the current statutory rates do not reflect 

fair market value of the signals being 

transmitted. See Satellite Home Viewer 

Extension and Reauthorization Act 

§ 110 Report, A Report of the Register of 

Copyrights (February 2006) at 44–45. Is 

this an additional reason to eliminate 

Section 119? 

On the content side, we note that 

broadcast television networks, such as 

Fox and NBC, have begun to offer 

streamed network video content on their 

owned and operated websites. See Mike 

Shields, YouTube Faces Challenge, 

Mediaweek, March 22, 2007 (describing 

News Corp. and NBC Universal’s new 

partnership to launch an Internet video 

distribution channel). Moreover, some 

affiliates of Fox plan to stream network 

and local content over the Internet into 

their local markets. See Harry Jessell, 

Affils To Offer Fox Shows On Local Web 

Sites, TVNEWSDAY, March 1, 2007. We 

seek comment on whether there are 

similar streaming arrangements being 

planned by other television broadcast 

networks. Is there any evidence that this 

type of video distribution model will 

become ubiquitous? If so, we ask 

whether statutory licenses are necessary 

when anyone with an Internet 

connection may watch broadcast 

television content without the need to 

subscribe to an MVPD.12


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Communications Act, filed March 20, 2007. The 

Petition did not raise for comment whether Internet 

video programming distributors may still avail 

themselves of the statutory licenses under the 

Copyright Act. 

13One cable operator appears to advocate the 

replacement of retransmission consent with a new 

statutory license covering the cable retransmission 

of local broadcast television signals. See Ted Hearn, 

Willner Calls for Tax to Aid TV Stations, 

Multichannel News, March 13, 2007 (Insight 

Communications CEO Michael Willner has 

proposed a ‘‘TV tax’’ to replace retransmission 

consent that would fund a ‘‘federal royalty pool’’

‘‘similar to the one used to compensate sports 

leagues and Hollywood studios’’). 

In the absence of the statutory 

licenses, cable operators, satellite 

carriers, and copyright owners would 

have to negotiate the rights to carry 

programs according to marketplace 

rates, terms, and conditions. As stated 

earlier, cable operators and satellite 

carriers have successfully negotiated the 

right to carry local television broadcast 

signals of the major broadcast networks 

under the retransmission consent 

provisions found in Section 325 of the 

Communications Act. We seek comment 

on whether we should recommend to 

Congress that Sections 111 and 119 be 

repealed and superceded by Section 325 

so that distant broadcast stations can 

freely negotiate signal carriage rights 

with cable operators and satellite 

carriers without reference to a statutory 

license.13 Could retransmission consent 

perform the same payment functions as 

Section 111 and Section 119? In other 

words, is there any way a 

retransmission consent agreement can 

be structured so that the monetary value 

of the underlying content is collected by 

broadcast stations and then paid to the 

copyright owners of the programs that 

are retransmitted? Is there any reason 

why retransmission consent would not 

work for the retransmission of distant 

television signals? Are there any 

contractual impediments, such as 

network–station affiliation 

arrangements, that would preclude the 

retransmission of distant television 

signals under a privately negotiated 

agreement? Are there any legal 

impediments, such as the FCC’s 

network non–duplication rules, that 

would frustrate private agreements? Is it 

difficult for small cable operators to 

negotiate the rights necessary to carry 

the signals of distant television stations? 

Would the elimination of the statutory 

licenses cause harm to cable or satellite 

subscribers? If so, how? 

III. CONCLUSION 

We hereby seek comment from the 

public on the legal and factual matters 

identified herein associated with the 

retention, reform, or elimination of 

Sections 111, 119, and 122 of the 

Copyright Act. If there are any 

additional issues not discussed above, 

we encourage interested parties to bring 

those matters to our attention. 

Dated: April 11, 2007 

Marybeth Peters, 

Register of Copyrights. 

[FR Doc. E7–7207 Filed 4–13–07; 8:45 am] 

BILLING CODE 1410–30–S 

NATIONAL FOUNDATION ON THE 

ARTS AND THE HUMANITIES 

Meetings of Humanities Panel 

AGENCY: The National Endowment for 

the Humanities. 

ACTION: Notice of meetings. 

SUMMARY: Pursuant to the provisions of 

the Federal Advisory Committee Act 

(Pub. L. 92–463, as amended), notice is 

hereby given that the following 

meetings of Humanities Panels will be 

held at the Old Post Office, 1100 

Pennsylvania Avenue, NW., 

Washington, DC 20506. 

FOR FURTHER INFORMATION CONTACT: 

Heather C. Gottry, Acting Advisory 

Committee Management Officer, 

National Endowment for the 

Humanities, Washington, DC 20506; 

telephone (202) 606–8322. Hearingimpaired individuals are advised that 

information on this matter may be 

obtained by contacting the 

Endowment’s TDD terminal on (202) 

606–8282. 

SUPPLEMENTARY INFORMATION: The 

proposed meetings are for the purpose 

of panel review, discussion, evaluation 

and recommendation on applications 

for financial assistance under the 

National Foundation on the Arts and the 

Humanities Act of 1965, as amended, 

including discussion of information 

given in confidence to the agency by the 

grant applicants. Because the proposed 

meetings will consider information that 

is likely to disclose trade secrets and 

commercial or financial information 

obtained from a person and privileged 

or confidential and/or information of a 

personal nature the disclosure of which 

would constitute a clearly unwarranted 

invasion of personal privacy, pursuant 

to authority granted me by the 

Chairman’s Delegation of Authority To 

Close Advisory Committee Meetings, 

dated July 19, 1993, I have determined 

that these meetings will be closed to the 

public pursuant to subsections (c) (4) 

and (6) of section 552b of Title 5, United 

States Code. 

1. Date: May 1, 2007. 

Time: 9 a.m. to 5 p.m. 

Room: 315. 

Program: This meeting will review 

applications for Landmarks of American 

History and Culture, submitted to the 

Division of Education Programs, at the 

March 15, 2007 deadline. 

2. Date: May 2, 2007. 

Time: 8:30 a.m. to 5:30 p.m. 

Room: 415. 

Program: This meeting will review 

applications for Radio Projects: 

Development and Production Grants, 

submitted to the Division of Public 

Programs, at the March 20, 2007 

deadline. 

3. Date: May 2, 2007. 

Time: 9 a.m. to 5 p.m. 

Room: 315. 

Program: This meeting will review 

applications for Landmarks of American 

History and Culture, submitted to the 

Division of Education Programs at the 

March 15, 2007 deadline. 

4. Date: May 24, 2007. 

Time: 9 a.m. to 5 p.m. 

Room: 315. 

Program: This meeting will review 

applications for Digital Humanities 

Start-Up Grants, submitted in response 

to the Endowment’s Digital Humanities 

Initiative at the April 3, 2007 deadline. 

5. Date: May 29, 2007. 

Time: 9 a.m. to 5 p.m. 

Room: 315. 

Program: This meeting will review 

applications for Digital Humanities 

Start-Up Grants, submitted in response 

to the Endowment’s Digital Humanities 

Initiative at the April 3, 2007 deadline. 

6. Date: April 31, 2007. 

Time: 9 a.m. to 5 p.m. 

Room: 315. 

Program: This meeting will review 

applications for Digital Humanities 

Start-Up Grants, submitted in response 

to the Endowment’s Digital Humanities 

Initiative at the April 3, 2007 deadline. 

Heather C. Gottry, 

Acting Advisory Committee Management 

Officer. 

[FR Doc. E7–7197 Filed 4–13–07; 8:45 am] 

BILLING CODE 7536–01–P 

NUCLEAR REGULATORY 

COMMISSION 

[Docket Nos.: 50–155; 72–043; License No. 

DPR–06] 

In the Matter of: Consumers Energy 

Company (Big Rock Point Facility); 

Order Approving Transfer of License 

and Conforming Amendment 

I. 

Consumers Energy Company 

(Consumers) is the holder of Facility 


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