Federal Register / Vol. 62, No. 22 / Monday, February 3, 1997 / Proposed Rules 4959

Plans and Policy, 601 North Fairfax

Street, Alexandria, VA 22314–2007.

2. No later than April 15 of each evennumbered year, the Secretary (or

designee) of each Military Department

shall forward to the address above a

report of the Military Department’s

review of newspapers and magazines.

This report shall include summary data

on total number of newspapers and

magazines, along with a listing of the

information indicated at attachment 1 to

this appendix.

3. One information copy of each issue

of all DoD newspapers and magazines

shall be forwarded on publication date

to the address in paragraph H.1. of this

appendix.

4. Information copies of CE contracts

shall be forwarded to the address in

paragraph H.1. of this appendix, upon

request.

5. Administrative Instructions shall be

issued by the Director, AFIS, for the

annual review and reporting of

newspapers and magazines.

Attachment 1 to Appendix E to Part

247—Newspaper and Magazine

Reporting Data

As required by section H. of this

appendix, the following information

shall be provided biennially regarding

newspapers and magazines:

A. Name of newspaper or magazine.

B. Publishing command and mailing

address.

C. Printing arrangement:

1. Government equipment.

2. Government contract with

commercial printer.

3. CE contract with commercial

publisher (give name, mailing address,

and phone number of commercial

publisher).

D. Automation capabilities (desktop

publishing, computer bulletin board,

etc.)

E. Frequency and number of issues

per year.

F. Number of copies printed and

estimated readership.

G. Paper size (metro, tabloid, or

magazine/newsletter) and average

number of pages per issue.

H. Size of publication staff, listed as

full time, part time, and contractorprovided.

Dated: January 21, 1997.

L.M. Bynum,

Alternate OSD Federal Register Liaison

Officer, Department of Defense.

[FR Doc. 97–2079 Filed 1–31–97; 8:45 am]

BILLING CODE 5000–04–M

FEDERAL COMMUNICATIONS

COMMISSION

47 CFR Parts 25, 26, 73, 76 and 100

[MM Docket No. 95–176; FCC 97–4]

Closed Captioning of Video

Programming

AGENCY: Federal Communications

Commission.

ACTION: Proposed rule.

SUMMARY: The Telecommunications Act

of 1996, Public Law 104–104, 110 Stat.

56 (1996), added a new provision,

Section 713, to the Communications Act

of 1934, as amended, which requires the

Commission to prescribe, by August 8,

1997, rules and implementation

schedules for captioning of video

programming. The Commission requests

comment on proposed rules and

timetables for mandatory closed

captioning of video programming, as

outlined in the Notice of Proposed

Rulemaking (‘‘NPRM’’). The intended

effect of this NPRM is to promote the

accessibility of video programming to

persons with hearing disabilities. Our

proposals are based on comments and

information submitted in response to a

Notice of Inquiry (‘‘NOI’’) in this

proceeding and additional data gathered

by the Commission for our Report to

Congress on video accessibility that was

issued on July 29, 1996.

DATES: Comments are due on or before

February 28, 1997, and reply comments

are due on or before March 24, 1997.

Written comments by the public on the

proposed information collections are

due on or before February 28, 1997.

Written comments must be submitted by

the Office of Management and Budget

(OMB) on the proposed collections on

or before April 4, 1997.

ADDRESSES: Federal Communications

Commission, Washington, D.C. 20554.

In addition to filing comments with the

Secretary, a copy of any comments on

the information collections contained

herein should be submitted to Dorothy

Conway, Federal Communications

Commission, Room 234, 1919 M Street,

N.W., Washington, D.C. 20554, or via

the Internet to dconway@fcc.gov, and to

Timothy Fain, OMB Desk Officer, 10236

NEOB, 725—17th Street, N.W.,

Washington, DC 20503 or via the

Internet to fainlt@al.eop.gov.

FOR FURTHER INFORMATION CONTACT:

Marcia Glauberman, John Adams or

Alexis Johns, Cable Services Bureau,

(202) 418–7200, TTY (202) 418–7172.

For additional information concerning

the information collections contained in

this NPRM, contact Dorothy Conway at

202–418–0217, or via the Internet at

dconway@fcc.gov.

SUPPLEMENTARY INFORMATION: This is a

synopsis of the Commission’s Notice of

Proposed Rulemaking, MM Docket No.

95–176, FCC 97–4, adopted January 9,

1997, and released January 17, 1997.

The full text of this decision is available

for inspection and copying during

normal business hours in the FCC

Reference Center (room 239), 1919 M

Street, NW, Washington, D.C. 20554,

and may be purchased from the

Commission’s copy contractor,

International Transcription Service,

(202) 857–3800, TTY (202) 293–8810,

1919 M Street, N.W., Washington, D.C.

20554. For copies in alternative formats,

such as braille, audio cassette, or large

print, please contact Sheila Ray at

International Transcription Service.

Paperwork Reduction Act

This NPRM contains proposed

information collections. The

Commission, as part of its continuing

effort to reduce paperwork burdens,

invites the general public and the Office

of Management and Budget (OMB) to

comment on the information collections

contained in this NPRM, as required by

the Paperwork Reduction Act of 1995.

Public and agency comments are due at

the same time as other comments on

this NPRM; OMB notification of action

is due 60 days from date of publication

of this NPRM in the Federal Register.

Comments should address: (a) whether

the proposed collections of information

are necessary for the proper

performance of the functions of the

Commission, including whether the

information shall have practical utility;

(b) the accuracy of the Commission’s

burden estimates; (c) ways to enhance

the quality, utility, and clarity of the

information collected; and (d) ways to

minimize the burden of the collections

of information on the respondents,

including the use of automated

collection techniques or other forms of

information technology.

OMB Approval Number: 3060–XXXX

Approval number to be assigned.

Title: Closed Captioning of Video

Programming.

Type of Review: New collection.

Respondents: Individuals or

households; businesses and other forprofit entities.

Number of Respondents: 23,342.

(3,000 complainants + 20,342 program

providers)

Estimated Time Per Response: 1–10

hours estimated as follows: We estimate

that program providers will initiate 100

waivers/petitions each year requesting

exemption from closed captioning

requirements. At this time, we estimate
4960 Federal Register / Vol. 62, No. 22 / Monday, February 3, 1997 / Proposed Rules

that the average burden to complete

each waiver/petition process will be 5

hours. We estimate that 50% of program

providers will use in-house assistance.

We estimate that 50% of program

providers will use outside legal

assistance to complete waivers/

petitions. These program providers will

undergo an average burden of 2 hours

for each waiver/petition to coordinate

information with outside legal

assistance. 50 (50% of program

providers using in-house assistance) ×5

hours=250 hours. 50 (50% of program

providers using outside legal assistance)

×2 hours=100 hours.

Estimated annual burden to

complainants and program providers for

the complaint process: We estimate

there will be 3,000 annual complaints

filed by viewers at the local level. The

average burden for each complaint and

response is estimated to be 1 hour per

complainant and 1 hour per program

provider. 3,000 viewer complaints × 1

hour and 3,000 program provider

responses × 1 hour=6,000 hours.

We estimate that the majority of

complaints will be resolved at the local

level and assume that approximately

600 (20% of 3,000) will go unresolved,

resulting in complaints and responses

being filed with the Commission. The

average burden for each complaint and

response in this instance is estimated to

be 2 hours per complainant and 4 hours

per program provider. 600 viewer

complaints × 2 hours and 600 program

provider responses × 4 hours=3,600

hours. We estimate the average annual

burden for recordkeeping and making

information available upon request to

viewers will be 10 hours for each

program provider. The estimated

number of program providers is 20,342

as follows: 11,200 cable television

systems, 1,532 commercial and noncommercial television stations, 137

national cable video networks, 3 open

video system (‘‘OVS’’) operators, 8

direct broadcast satellite (‘‘DBS’’)

operators, 30 home satellite dish

(‘‘HSD’’) program packagers, 5,200

satellite master antenna television

systems (‘‘SMATVs’’), 200 wireless

cable operators, and 2,032 instructional

television fixed service (‘‘ITFS’’)

providers. 20,342×10=203,420 hours.

Total Annual Burden: 213,370 hours.

(250+100+6,000+ 3,600+203,420)

Estimated Costs for Respondents:

$90,684 estimated as follows: Program

providers will use outside legal

assistance paid at $150 per hour to

complete approximately 50 waivers/

petitions. 50 waivers × 5 hours per

waiver × $150 per hour=$37,500.

Postage and stationery costs for waivers

are estimated at an average of $5 per

waiver. 100 waivers × $5=$500. Postage

and stationary costs for filing

complaints is estimated as follows:

3,000 viewer complaints filed at the

local level × $1=$3,000. 3,000 program

provider responses × $1=$3,000. 600

viewer complaints filed at the

Commission × $5 per complaint

(increased postage for mailing video

logs or tapes)=$3,000. 600 program

provider responses × $5=$3,000. Postage

and stationery costs for recordkeeping

and making records available upon

request are estimated at an average of $2

per program provider.

20,342×$2=$40,684. Total

costs=$37,500+ $500+$3,000

+$3,000+$3,000+$3,000

+$40,684=$90,684.

Needs and Uses: This NPRM is

adopted pursuant to Section 713 of the

Communications Act of 1934, as

amended. The requirements set forth in

Section 713 are intended to further

Congress’ goal to ‘‘ensure that all

Americans ultimately have access to

video services and programs,

particularly as video programming

becomes an increasingly important part

of the home, school and workplace.’’

The requirements will be used to ensure

that video programming is accessible to

individuals with hearing disabilities

through closed captioning, regardless of

the delivery mechanism used to reach

consumers.

Synopsis of the Notice of Proposed

Rulemaking

1. Closed captioning is an assistive

technology designed to provide access

to television for persons with hearing

disabilities. Closed captioning is similar

to subtitles. Captions also identify

speakers, sound effects, music and

laughter. Currently, programming

accessible to persons with hearing

disabilities through closed captioning is

the result of the voluntary efforts of

program producers and providers,

although the Commission has

encouraged these efforts in several

previous actions.

2. Section 305 of the

Telecommunications Act of 1996 (‘‘1996

Act’’), Public Law 104–104, 110 Stat. 56

(1996), added a new Section 713, Video

Programming Accessibility, to the

Communications Act of 1934, as

amended (‘‘Communications Act’’), 47

U.S.C. 613. Section 713 requires the

Commission to prescribe, by August 8,

1997, rules and implementation

schedules for captioning of video

programming. In this NPRM, the

Commission discusses and seeks

comment on proposals intended to

maximize the amount of closed

captioned programming, with

appropriate exemptions and

implementation schedules that take into

account the relevant technical and costs

issues involved. Our proposals are

based on comments and information

submitted in response to the NOI in this

proceeding, summarized at 60 FR 65052

(December 18, 1995), and additional

data gathered by the Commission for our

Report to Congress on video

accessibility that was issued on July 29,

1996, summarized at 61 FR 42249

(August 14, 1996), pursuant to the

requirements of Section 713(a).

3. At the outset, we note that the

provisions of Section 713 apply to all

types of video programming delivered

electronically to consumers, regardless

of the entity that provides the

programming or the category of

programming. We consider over-the-air

broadcast television service (both

commercial and noncommercial), and

all multichannel video programming

distributors (‘‘MVPDs’’), including:

cable television, direct-to-home

(‘‘DTH’’) satellite services, including

DBS and HSD services; wireless cable

systems using the multichannel

multipoint distribution service

(‘‘MMDS’’), ITFS, or local multipoint

distribution (‘‘LMDS’’); SMATV

systems; and OVS. Also, as required by

Section 713, we consider all sources of

video programming distributed by these

technologies, including programming

from commercial and noncommercial

broadcast television networks, basic and

premium cable networks, syndicated

programming, and locally or regionally

produced broadcast and cable

programming.

4. Throughout this NPRM, we seek

comment on our proposed closed

captioning requirements. We also invite

commenters to provide alternative

proposals that will fulfill the

congressional mandate to ensure video

accessibility to individuals with hearing

disabilities.

5. Responsibility for Compliance with

Captioning Requirements. In order to

implement any closed captioning

requirements that we may adopt, we

must determine where the responsibility

lies for ensuring that video

programming is closed captioned, and

which parties shall be required to

comply with those requirements.

Section 713(b)(1) focuses on the result

that new programming be closed

captioned, rather than who is

responsible for accomplishing this goal,

while Section 713(b)(2) refers to both

video programming providers and

program owners as being responsible for

captioning of library programming. Our

tentative proposal is to require those

entities that deliver video programming
Federal Register / Vol. 62, No. 22 / Monday, February 3, 1997 / Proposed Rules 4961

directly to consumers (i.e., television

broadcasters and MVPDs) to be

ultimately responsible for the rules we

adopt. Although we propose to place the

compliance obligations on video

programming providers, we recognize,

from a practical standpoint, that

captioning is most efficient at the

production stage. Thus, we believe that

producers generally will have the

responsibility for captioning

programming, regardless of who has the

obligation to comply with our rules.

6. Transition Rules for New

Programming. Section 713(b)(1) requires

the Commission to adopt rules to ensure

that all non-exempt video programming

first published or exhibited after the

effective date of the our closed

captioning rules (‘‘new programming’’)

is fully accessible through the provision

of closed captions. Section 713(c)

further requires that the Commission’s

rules include an appropriate schedule of

deadlines by which non-exempt video

programming must be closed captioned.

We propose to require that all nonexempt, new programming be closed

captioned within eight years. We

propose to phase in this captioning

requirement by increasing the amount of

required captioning by 25% every two

years. Thus, we would require 25% of

such programming to be captioned at

the end of the second year, 50% at the

end of the fourth year, 75% at the end

of the sixth year, and to have all nonexempt, new programming captioned at

the end of the eighth year. Alternatively,

we seek comment on a ten year period,

with 25% of new programming

captioned after three years, 50% after

five years, 75% after seven years, and

100% after ten years. With respect to

MVPDs, we propose to apply the

percentages of programming that must

be captioned on a system-wide basis.

However, we also solicit comment on

whether the percentages of

programming that must be captioned

should apply to each program service or

channel transmitted by an MVPD. We

ask whether the determination that a

percentage requirement has been met

should be based on the amount of

programming with captioning that has

been shown over a month, a week, or

some other period of time. We seek

comment on what the period of time

should be if we apply the percentages

on a system-wide basis, and what it

should be if we apply the percentages

on a per-channel basis.

7. Transition Rules For Library

Programming. With respect to

programming that was first published or

exhibited before the effective date of our

rules (‘‘library programming’’), Section

713(b)(2) requires that our rules ensure

that video programming providers or

owners maximize the accessibility of

such programming through closed

captioning. In considering closed

captioning requirements for library

programming, we do not believe that the

statute requires that all such

programming be captioned, given the

distinction between new programming

(‘‘fully accessible’’) and library

programming (‘‘maximize accessibility’’)

evident in the statutory language of

Sections 713 (b)(1) and (b)(2). We ask

whether we should require that a

percentage of library programming (e.g.,

75%) ultimately be captioned. We also

seek comment on what deadline should

apply to captioning of library

programming and what the relevant

time frames for the transition period

should be. Some commenters assert that

captioning of previously published

programming is increasing, and thus it

may be unnecessary to require

completion of closed captioned video

libraries by a date certain. We ask that

commenters who support this approach

indicate how the Commission would

ensure that video programming

providers or owners ‘‘maximize the

accessibility’’ of previously published

programming, as required by Section

713(b)(2).

8. Exemptions Based on Economic

Burden. Section 713(d)(1) provides for

the exemption of classes of video

programming or video providers where

the requirement to close caption

programming would be economically

burdensome. While Section 713 and its

legislative history do not define the term

‘‘economic burden,’’ we interpret this

provision to permit us to exempt those

classes of programming where the

economic burden of captioning these

programming types outweighs the

benefits to be derived from captioning

and, in some cases, the complexity of

adding the captions. We seek to

establish a general classification or a

number of general classifications of

programming for which captioning

would be economically burdensome.

Thus, we need to determine when a

closed captioning requirement would be

economically burdensome, and we seek

comment on whether a definition of

economic burden should be based on

relative market size, degree of

distribution, audience ratings or share,

relative programming budgets or

revenue base, lack of repeat value, or a

combination of factors. We specifically

discuss whether the following types of

programming should be included in our

own general exemptions: foreign

language programs; programs which are

primarily textual; cable access

programs; instructional programs;

advertising; home shopping; interstitials

and promotional advertisements;

political advertising; noncommercial

broadcasters’ fundraising activities;

music programs; weather programs; and

sports programs.

9. While the statute also allows us to

exempt classes of video providers, we

believe that a blanket exemption even

for very small providers is unnecessary,

because the various providers distribute

the same types of programming to

consumers, and all classes of providers

appear to have the technical capability

to deliver closed captioning to viewers

intact.

10. Exemptions Based on Existing

Contracts. Section 713(d)(2) exempts

programming from any closed

captioning requirements we may adopt,

if applying such requirements would be

‘‘inconsistent’’ with a contract in

existence as of February 8, 1996, the

enactment date of the 1996 Act. We

tentatively conclude that contracts

which affirmatively prohibit closed

captioning would fall within this

exemption and we seek comment on

this conclusion. Such contracts do not

appear to be typical but may be entered

into when the program creator wishes to

maintain total creative control over the

product involved. However, we

recognize that it is possible that

contracts may contain more general

language, not explicitly mentioning

closed captioning, that might

nonetheless be inconsistent with

captioning. We seek comment on the

types of provisions that might be

contained in programming contracts

that would be inconsistent with a

captioning requirement.

11. Exemptions Based on Undue

Burden. Section 713(d)(3) provides for a

program owner or provider of video

programming to petition the

Commission for an exemption from the

closed captioning requirements based

on a showing of undue burden. In

determining whether closed captioning

requirements would be an undue

burden, the statute indicates that the

factors the Commission must consider

include: (1) the nature and cost of the

closed captions for the programming; (2)

the impact on the operation of the

provider or program owner; (3) the

financial resources of the provider or

program owner; and (4) the type of

operations of the provider or program

owner. The Commission seeks comment

on how to apply these factors and

whether there are any other factors

which should be considered when

determining that closed captioning

would result in an undue burden for an

individual programming provider.
4962 Federal Register / Vol. 62, No. 22 / Monday, February 3, 1997 / Proposed Rules

Commenters are also asked to address

whether or not we should require

parties to provide specific facts or meet

objective tests to prove an undue burden

or whether petitioners should have

wider discretion in demonstrating that

under their specific circumstances, the

closed captioning requirements would

constitute an undue burden. We also

seek comment on what specific

information petitioners should provide

in order to demonstrate the factors

needed to prove an undue burden. In

addition, we request comment on a

proposal to use standard ‘‘special relief’’

or waiver-type procedures for these

types of requests.

12. Standards for Quality and

Accuracy. Section 713 does not require

the Commission to adopt rules or

standards for the accuracy or quality of

closed captioning. However, in the NOI,

we sought comment on these issues

based on reported problems with

existing closed captions. We propose to

extend to other programming providers

the rule (47 CFR 76.606) that requires

cable operators to deliver existing

closed captions intact. However, we

tentatively conclude that we should not

adopt standards for the non-technical

aspects of captioning, including

accuracy of transcription, spelling,

placement and style, at the start of our

phase in period for closed captioning.

We propose to monitor the closed

captioning that results from our

requirements and, if necessary, revisit

this issue at a later date. We also do not

propose to establish minimum

credentials for captioners or to place

any limits on the method used to create

captions.

13. The Enforcement Process. We

propose to rely on complaints as a

primary enforcement mechanism for the

rules we adopt. Further, all complaints

would initially be directed to the

program provider in an attempt to

resolve problems privately within a

specified time period in order to

minimize administrative resources

devoted to matters that are better

resolved through informal processes.

We also seek comment on other

methods or information needed to verify

compliance, such as a requirement that

each entity responsible for compliance

with the rules retain in its files, or have

available upon appropriate request,

records sufficient to verify compliance.

Initial Regulatory Flexibility Analysis

14. Pursuant to Section 603 of the

Regulatory Flexibility Act (‘‘RFA’’), 5

U.S.C. 603, as amended, the

Commission has prepared the following

initial regulatory flexibility analysis

(‘‘IRFA’’) of the expected impact of

these proposed policies and rules on

small entities. Written public comments

are requested on the IRFA. These

comments must be filed in accordance

with the same filing deadlines as

comments on the rest of the NPRM but

they must have a separate and distinct

heading designating them as responses

to the IRFA. The Secretary shall cause

a copy of this NPRM to be sent to the

Chief Counsel for Advocacy of the Small

Business Administration (‘‘SBA’’) in

accordance with Section 603(a) of the

RFA, 5 U.S.C. 603(a).

15. Reason for Action and Objectives

of the Proposed Rule. The 1996 Act

requires the Commission to promulgate

rules designed to maximize the

availability of closed captioned

programming. 47 U.S.C. 613. The

Commission is issuing this NPRM to

seek comment on proposed rules

intended to implement this provision of

the 1996 Act.

16. Legal Basis. This NPRM is adopted

pursuant to Sections 4(i), 4(j) and 713 of

the Communications Act of 1934, as

amended, 47 U.S.C. 154(i), 154(j), 613.

17. Description and Number of Small

Entities Affected. The Regulatory

Flexibility Act defines the term ‘‘small

entity’’ as having the same meaning as

the terms ‘‘small business,’’ ‘‘small

organization,’’ and ‘‘small business

concern’’ under Section 3 of the Small

Business Act, 5 U.S.C. 601(3). A small

business concern is one which: (1) is

independently owned and operated; (2)

is not dominant in its field of operation;

and (3) satisfies any additional criteria

established by the SBA. 15 U.S.C. 632.

18. Small MVPDs. SBA has developed

a definition of a small entity for cable

and other pay television services, which

includes all such companies generating

$11 million or less in annual receipts,

13 CFR 121.201 (SIC 4841). This

definition includes cable system

operators, closed circuit television

services, DBS services, MMDS systems,

SMATV systems and subscription

television services. According to the

Bureau of the Census, there were 1423

such cable and other pay television

services generating less than $11 million

in revenue that were in operation for at

least one year at the end of 1992. We

will address each service individually to

provide a more succinct estimate of

small entities. We seek comment on the

tentative conclusions below.

19. Cable Systems. The Commission

has developed its own definition of a

small cable company for the purposes of

rate regulation. Under the Commission’s

rules, a ‘‘small cable company,’’ is one

serving fewer than 400,000 subscribers

nationwide. 47 CFR 76.901(e). Based on

our most recent information, we

estimate that there were 1,439 cable

operators that qualified as small cable

companies at the end of 1995. Since

then, some of those companies may

have grown to serve over 400,000

subscribers, and others may have been

involved in transactions that caused

them to be combined with other cable

operators. Consequently, we estimate

that there are fewer than 1,439 small

entity cable system operators that may

be affected by the decisions and rules

proposed in this NPRM.

20. The Communications Act also

contains a definition of a small cable

system operator, which is ‘‘a cable

operator that, directly or through an

affiliate, serves in the aggregate fewer

than 1% of all subscribers in the United

States and is not affiliated with any

entity or entities whose gross annual

revenues in the aggregate exceed

$250,000,000.’’ 47 U.S.C. 543(m)(2). The

Commission has determined that there

are 61,700,000 subscribers in the United

States. Therefore, we found that an

operator serving fewer than 617,000

subscribers shall be deemed a small

operator, if its annual revenues, when

combined with the total annual

revenues of all of its affiliates, do not

exceed $250 million in the aggregate. 47

CFR 76.1403(b). Based on available data,

we find that the number of cable

operators serving 617,000 subscribers or

less totals 1,450. Although it seems

certain that some of these cable system

operators are affiliated with entities

whose gross annual revenues exceed

$250,000,000, we are unable at this time

to estimate with greater precision the

number of cable system operators that

would qualify as small cable operators

under the definition in the

Communications Act.

21. MMDS. The Commission refined

the definition of ‘‘small entity’’ for the

auction of MMDS as an entity that

together with its affiliates has average

gross annual revenues that are not more

than $40 million for the preceding three

calendar years. 47 CFR 21.961(b)(1).

This definition of a small entity in the

context of the Commission’s Report and

Order, summarized at 60 FR 36524 (July

17, 1995), concerning MMDS auctions

that has been approved by the SBA.

22. The Commission completed its

MMDS auction in March 1996 for

authorizations in 493 basic trading areas

(‘‘BTAs’’). Of 67 winning bidders, 61

qualified as small entities. Five bidders

indicated that they were minorityowned and four winners indicated that

they were women-owned businesses.

MMDS is an especially competitive

service, with approximately 1,573

previously authorized and proposed

MMDS facilities. Information available
Federal Register / Vol. 62, No. 22 / Monday, February 3, 1997 / Proposed Rules 4963

to us indicates that no MDS facility

generates revenue in excess of $11

million annually. We tentatively

conclude that for purposes of this IRFA,

there are approximately 1634 small

MMDS providers as defined by the SBA

and the Commission’s auction rules.

23. ITFS. There are presently 2,032

ITFS licensees. All but one hundred of

these licenses are held by educational

institutions. Educational institutions are

included in the definition of a small

business. 5 U.S.C. 601(5). However, we

do not collect annual revenue data for

ITFS licensees, and are not able to

ascertain how many of the 100 noneducational licensees would be

categorized as small under the SBA

definition. Thus, we tentatively

conclude that at least 1932 licensees are

small businesses.

24. DBS. As of December 1996, there

were eight DBS licensees. However, the

Commission does not collect annual

revenue data for DBS and, therefore, is

unable to ascertain the number of small

DBS licensees that could be impacted by

these proposed rules. Although DBS

service requires a great investment of

capital for operation, we acknowledge

that there are several new entrants in

this field that may not yet have

generated $11 million in annual

receipts, and therefore may be

categorized as a small business, if

independently owned and operated.

25. HSD. The market for HSD service

is difficult to quantify. Indeed, the

service itself bears little resemblance to

other MVPDs. HSD owners have access

to more than 265 channels of

programming placed on C-band

satellites by programmers for receipt

and distribution by MVPDs, of which

115 channels are scrambled and

approximately 150 are unscrambled.

HSD owners can watch unscrambled

channels without paying a subscription

fee. To receive scrambled channels,

however, an HSD owner must purchase

an integrated receiver-decoder from an

equipment dealer and pay a

subscription fee to an HSD

programming packager. Thus, HSD

users include: (1) Viewers who

subscribe to a packaged programming

service, which affords them access to

most of the same programming provided

to subscribers of other MVPDs; (2)

viewers who receive only nonsubscription programming; and (3)

viewers who receive satellite

programming services illegally without

subscribing. Because scrambled

packages of programming are most

specifically intended for retail

consumers, these are the services most

relevant to this discussion.

26. According to the most recently

available information, there are

approximately 30 program packagers

nationwide offering packages of

scrambled programming to retail

consumers. These program packagers

provide subscriptions to approximately

2,314,900 subscribers nationwide. This

is an average of about 77,163 subscribers

per program packager. This is

substantially smaller than the 400,000

subscribers used in the Commission’s

definition of a small MSO. Furthermore,

because this an average, it is likely that

some program packagers may be

substantially smaller. We seek comment

on these tentative conclusions.

27. OVS. The Commission has

certified three OVS operators. On

October 17, 1996, Bell Atlantic received

approval for its certification to convert

its Dover, New Jersey Video Dialtone

(‘‘VDT’’) system to OVS. Bell Atlantic

subsequently purchased the division of

Futurevision which had been the only

operating program package provider on

the Dover system, and has begun

offering programming on this system

using these resources. Metropolitan

Fiber Systems was granted certifications

on December 9, 1996, for the operation

of OVS systems in Boston and New

York, both of which are being used to

provide programming. On October 10,

1996, Digital Broadcasting Open Video

Systems received approval to offer OVS

service in southern California. Because

these services have been introduced so

recently, little financial information is

available. Bell Atlantic and

Metropolitan Fiber Systems have

sufficient revenues to assure us that

they do not qualify as small business

entities. Digital Broadcasting Open

Video Systems however is a general

partnership just beginning operations.

Accordingly, we tentatively conclude

that one OVS licensee qualifies as a

small business concern.

28. SMATVs. Industry sources

estimate that approximately 5200

SMATV operators were providing

service as of December 1995. Other

estimates indicate that SMATV

operators serve approximately 1.05

million residential subscribers as of

September 1996. The ten largest

SMATV operators together pass 815,740

units. If we assume that these SMATV

operators serve 50% of the units passed,

the ten largest SMATV operators serve

approximately 40% of the total number

of SMATV subscribers. Because these

operators are not rate regulated, they are

not required to file financial data with

the Commission. Furthermore, we are

not aware of any privately published

financial information regarding these

operators. Based on the estimated

number of operators and the estimated

number of units served by the largest

ten SMATVs, we tentatively conclude

that a substantial number of SMATV

operators qualify as small entities.

29. LMDS. Unlike the above pay

television services, LMDS technology

and spectrum allocation will allow

licensees to provide wireless telephony,

data, and/or video services. A LMDS

provider is not limited in the number of

potential applications that will be

available for this service. Therefore, the

definition of a small LMDS entity may

be applicable to both cable and other

pay television (SIC 4841) and/or

radiotelephone communications

companies (SIC 4812). The SBA

definition for cable and other pay

services is defined above. A small

radiotelephone entity is one with 1,500

employees or less. 13 CFR § 121.201.

However, for the purposes of this NPRM

on closed captioning, we include only

an estimate of LMDS video service

providers.

30. LMDS is a service that is expected

to be auctioned by the FCC in 1997. The

vast majority of LMDS entities

providing video distribution could be

small businesses under the SBA’s

definition of cable and pay television

(SIC 4841). However, in the Third

NPRM, CC Docket No. 92–297,

summarized at 60 FR 43740 (July 23,

1995), we proposed to define a small

LMDS provider as an entity that,

together with affiliates and attributable

investors, has average gross revenues for

the three preceding calendar years of

less than $40 million. We have not yet

received approval by the SBA for this

definition.

31. There is only one company,

CellularVision, that is currently

providing LMDS video services.

Although the Commission does not

collect data on annual receipts, we

assume that CellularVision is a small

business under both the SBA definition

and our proposed auction rules. We

tentatively conclude that a majority of

the potential LMDS licensees will be

small entities, as that term is defined by

the SBA.

32. Small Broadcast Stations. The

SBA defines small television

broadcasting stations as television

broadcasting stations with $10.5 million

or less in annual receipts. 13 CFR

121.201.

33. Estimates Based on Census and

BIA Data. According to the Bureau of

the Census, in 1992, 1155 out of 1478

operating television stations reported

revenues of less than $10 million for

1992. This represents 78% of all

television stations, including

noncommercial stations. The Bureau of
4964 Federal Register / Vol. 62, No. 22 / Monday, February 3, 1997 / Proposed Rules

the Census does not separate the

revenue data by commercial and

noncommercial stations in this report.

Neither does it allow us to determine

the number of stations with a maximum

of 10.5 million dollars in annual

receipts. Census data also indicates that

81% of operating firms (that owned at

least one television station) had

revenues of less than $10 million.

34. We also have performed a separate

study based on the data contained in the

BIA Publications, Inc. Master Access

Television Analyzer Database, which

lists a total of 1141 full power

commercial television stations. It should

be noted that, using the SBA definition

of small business concern, the

percentage figures derived from the BIA

database may be underinclusive because

the database does not list revenue

estimates for noncommercial

educational stations, and these therefore

are excluded from our calculations

based on the database. The BIA data

indicate that, based on 1995 revenue

estimates, 440 full power commercial

television stations had an estimated

revenue of $10.5 million or less. That

represents 54% of full power

commercial television stations with

revenue estimates listed in the BIA

program. The database does not list

estimated revenues for 331 stations.

Using a worst case scenario, if those 331

stations for which no revenue is listed

are counted as small stations, there

would be a total of 771 stations with an

estimated revenue of 10.5 million

dollars or less, representing

approximately 68% of the 1141 full

power commercial television stations

listed in the BIA data base.

35. Alternatively, if we look at owners

of commercial television stations as

listed in the BIA database, there are a

total of 488 owners. The database lists

estimated revenues for 60% of these

owners, or 295. Of these 295 owners,

156 or 53% had annual revenues of less

than $10.5 million. Using a worst case

scenario, if the 193 owners for which

revenue is not listed are assumed to be

small, of small entities would constitute

72% of the total number of owners.

36. In summary, based on the

foregoing worst case analysis using

Bureau of the Census data, we estimate

that our rules will apply to as many as

1150 commercial and noncommercial

television stations (78% of all stations)

that could be classified as small entities.

Using a worst case analysis based on the

data in the BIA data base, we estimate

that as many as approximately 771

commercial television stations (about

68% of all commercial televisions

stations) could be classified as small

entities. As we noted above, these

estimates are based on a definition that

we tentatively believe greatly overstates

the number of television broadcasters

that are small businesses. Further, it

should be noted that under the SBA’s

definitions, revenues of affiliates that

are not television stations should be

aggregated with the television station

revenues in determining whether a

concern is small. The estimates

overstate the number of small entities

since the revenue figures on which they

are based do not include or aggregate

such revenues from nontelevision

affiliated companies.

37. Program Producers and

Distributors. The Commission has not

developed a definition of small entities

applicable to producers or distributors

of television programs. Therefore, we

will utilize the SBA classifications of

Motion Picture and Video Tape

Production (SIC 7812—‘‘Establishments

primarily engaged in the production of

theatrical and nontheatrical motion

pictures and video tapes for exhibition

or sale,’’ including ‘‘establishments

engaged in both production and

distribution’’), Motion Picture and

Video Tape Distribution (SIC 7822—

‘‘Establishments primarily engaged in

the distribution * * * of theatrical and

nontheatrical motion picture films or in

the distribution of video tapes and

disks, except to the general public’’),

and Theatrical Producers (Except

Motion Pictures) and Miscellaneous

Theatrical Services (SIC 7922—

‘‘Establishments primarily engaged in

providing live theatrical presentations,’’

including ‘‘producers of * * * live

television programs.’’). These SBA

definitions provide that a small entity in

the television programming industry is

an entity with $21.5 million or less in

annual receipts for SIC 7812 and 7822,

and $5 million or less in annual receipts

for SIC 7922. 13 CFR § 121.201. The

1992 Bureau of the Census data

indicates the following: (1) there were

7265 U.S. firms classified as Motion

Picture and Video Production (SIC

7812), and that 6987 of these firms had

$16,999 million or less in annual

receipts and 7002 of these firms had

$24,999 million or less in annual

receipts; (2) there were 1139 U.S. firms

classified as Motion Picture and Tape

Distribution (SIC 7822), and that 1007 of

these firms had $16,999 million or less

in annual receipts and 1013 of these

firms had $24,999 million or less in

annual receipts; and (3) there were 5671

U.S. firms classified as Theatrical

Producers and Services (SIC 7922), and

that 5627 of these firms had less than $5

million in annual receipts. The Census

data does not include a category for

$21.5 million; therefore, we have

reported the closest increment below

and above the $21.5 million threshold.

38. Each of these SIC categories are

very broad and includes firms that may

be engaged in various industries

including television. We tentatively

conclude that cable networks that are

essentially program distributors are

included in this category. Specific

figures are not available as to how many

of these firms exclusively produce and/

or distribute programming for television

or how many are independently owned

and operated. Consequently, we

tentatively conclude that there are

approximately 6987 small entities that

produce and distribute taped television

programs, 1013 small entities primarily

engaged in the distribution of taped

television programs, and 5627 small

producers of live television programs

that may be affected by the proposed

rules in this NPRM.

39. Reporting, Recordkeeping and

Compliance Requirements. The NPRM

tentatively proposes requiring video

programming providers (including

broadcast licensees and MVPDs) to

substantially increase the volume of

closed captioned video programming

carried over a period of time. Virtually

all future programming and a gradually

increasing volume of previously

released programming is expected to be

captioned over time. If this proposal is

adopted, video programming providers

may be choose to maintain records of

the volume of closed captioned

programming carried in order to resolve

any disputes which may arise regarding

compliance.

40. In addition to seeking comment on

a complaint process, the Commission

invites comments regarding alternative

enforcement procedures including a

requirement that video programming

providers their compliance with by

placing information regarding the

amount of closed captioning they

distribute in a public file. The

Commission invites commenters to

address the possible effectiveness of this

alternative enforcement mechanisms

and how it might be implemented.

41. Federal Rules Which Overlap,

Duplicate or Conflict With the

Commission’s Proposal. None.

42. Any Significant Alternatives

Minimizing the Impact On Small

Entities and Consistent With the Stated

Objectives. The statutory language

provides for exemptions from any

closed captioning requirements the

Commission may adopt, when imposing

those requirements would create an

economic burden. 47 U.S.C. 613(e).

Consistent with this directive, the

NPRM seeks comment on several
Federal Register / Vol. 62, No. 22 / Monday, February 3, 1997 / Proposed Rules 4965

mechanisms which would allow small

entities to be exempt in whole or in part

from the closed captioning

requirements. These measures are

intended, in part, to minimize the

regulatory impact on small entities.

43. Section 713(d)(1) provides that the

Commission may exempt classes of

video programming or video providers

where closed captioning would be

economically burdensome. Pursuant to

this provision, the Commission

proposes to establish a general

classification or a number of

classifications of programming for

which captioning would be

economically burdensome. Thus, the

Commission seeks comment on whether

a definition of economic burden should

be based on relative size, degree of

distribution, audience ratings or share,

relative programming budgets or

revenue base, lack of repeat value, or a

combination of factors.

44. Section 713(d)(3) permits video

programming providers or program

owners to petition the Commission for

an exemption where our video

captioning requirements would

constitute an undue burden. 47 U.S.C.

613(d)(3). Section 713(d)(3) further

provides specific factors to be

considered when resolving such

petitions. Accordingly, the Commission

seeks comment on how to apply these

factors and whether there are any factors

which should be considered when

determining if a requirement for closed

captioning results in an undue burden

for an individual video programming

provider or program owner.

Ex Parte

45. Ex parte Rules—Non-Restricted

Proceeding. This is a non-restricted

notice and comment rulemaking

proceeding. Ex parte presentations are

permitted, except during the Sunshine

Agenda period, provided that they are

disclosed as provided in the

Commission’s rules. See generally, 47

CFR 1.1202, 1.1203, and 1.1206(a).

Comment Dates

46. Pursuant to applicable procedures

set forth in Sections 1.415 and 1.419 of

the Commission’s rules, interested

parties may file comments on or before

February 28, 1997, and reply comments

on or before March 24, 1997. To file

formally in this proceeding, you must

file an original plus six copies of all

comments, reply comments, and

supporting comments. If you would like

each Commissioner to receive a

personal copy of your comments and

reply comments, you must file an

original plus 11 copies. You should

send comments and reply comments to

the Office of the Secretary, Federal

Communications Commission, 1919 M

Street, NW., Washington, DC 20554.

Comments and reply comments will be

available for public inspection during

regular business hours in the FCC

Reference Center, Room 239, Federal

Communications Commission, 1919 M

Street, NW., Washington, DC 20554.

Ordering Clauses

47. Authority for this proposed

rulemaking is contained in Sections 4(i),

4(j), and 713 of the Communications Act

of 1934, as amended, 47 U.S.C. 154(i),

154(j) and 613.

48. It is ordered that the Secretary

shall send a copy of the Notice of

Proposed Rulemaking, including the

Regulatory Flexibility Analysis, to the

Chief Counsel for Advocacy of the Small

Business Administration, in accordance

with paragraph 603(a) of the Regulatory

Flexibility Act, Public Law No. 96–354,

94 Stat. 1164, 5 U.S.C. 601 et seq.

(1981).

List of Subjects

47 CFR Part 25

Communications common carriers,

Reporting and recordkeeping

requirements, Satellites.

47 CFR Part 26

Communications common carriers,

Reporting and recordkeeping

requirements, Satellites.

47 CFR Part 73

Education, Political candidates,

Reporting and recordkeeping

requirements, Television.

47 CFR Part 76

Cable television, Political candidates,

Reporting and recordkeeping

requirements.

47 CFR Part 100

Satellites.

Federal Communications Commission.

William F. Caton,

Acting Secretary.

[FR Doc. 97–2535 Filed 1–31–97; 8:45 am]

BILLING CODE 6712–01–P

47 CFR Part 63

[CC Docket No. 97–11; FCC 97–6]

Implementation of Section 402(b)(2)(A)

of the Telecommunications Act of 1996

AGENCY: Federal Communications

Commission.

ACTION: Proposed rule.

SUMMARY: The Commission is issuing a

Notice of Proposed Rulemaking

(‘‘NPRM’’) to seek comment on the

scope of the statutory exemption under

Section 402(b)(2)(A) of the

Telecommunications Act of 1996.

Section 402(b)(2)(A) provides that

common carriers are exempt from the

requirements of Section 214 of the

Communications Act of 1934, as

amended (‘‘the Act’’) ‘‘for the extension

of any line.’’ The Commission seeks

comment on how ‘‘extension of any

line’’ should be defined. It tentatively

concludes that an ‘‘extension of a line’’

is a line that allows the carrier to

expand its service into a geographic

territory that it is eligible to serve, but

that its network does not currently

reach. The Commission also proposes to

forbear, under Section 401 of the 1996

Act (47 U.S.C. 160), from exercising

Section 214 authority over ‘‘new’’ lines

with respect to local exchange carriers

(‘‘LECs’’) subject to price cap regulation,

LECs that are considered average

schedule companies, and domestic

carriers deemed non-dominant, whether

they are offering local or domestic, long

distance services. In addition, the

Commission proposes to grant Section

214 blanket authority for small projects

undertaken by carriers to construct new

lines. Further, it seeks comment on

other alternatives, including whether to

treat price cap LECs which have elected

a ‘‘no-sharing’’ X-factor differently from

other price-cap LECs and whether to

forbear altogether from applying Section

214 to small carriers. The intended

effect of this action is to implement

Section 402(b)(2)(A).

DATES: Comments are due on or before

February 24, 1997 and Reply Comments

are due on or before March 17, 1997.

Written comments must be submitted by

the Office of Management and Budget

(OMB) on the proposed and/or modified

information collections on or before

April 4, 1997.

ADDRESSES: Office of the Secretary,

Federal Communications Commission,

1919 M Street, N.W. Room 222,

Washington, D.C. 20554. Secretary,

Network Services Division, Common

Carrier Bureau, 2000 M Street, N.W.,

Room 235, Washington, D.C. 20554.

International Transcription Services,

Inc., 2100 M Street, N.W., Suite 140,

Washington, D.C. 20037. Dorothy

Conway, Federal Communications

Commission, Room 234, 1919 M Street,

N.W., Washington, D.C. 20554, or via

the Internet dconway@fcc.gov. Timothy

Fain, OMB Desk Officer, 10236 NEOB,

725–17th Street, N.W., Washington, D.C.

20503 or via the Internet

fainlt@al.eop.gov.

FOR FURTHER INFORMATION CONTACT:

Marty Schwimmer, Attorney, Network