Federal Register / Vol. 77, No. 32 / Thursday, February 16, 2012 / Proposed Rules 9187 

title XVIII of the Act to which the 

person, after applicable reconciliation, 

is not entitled under such title. 

Person means a provider (as defined 

in § 400.202) or a supplier (as defined in 

§ 400.202). 

§ 401.305 Requirements for reporting and 

returning of overpayments. 

(a) General. (1) If a person has 

identified that it has received an 

overpayment the person must report 

and return the overpayment in the form 

and manner set forth in this section. 

(2) A person has identified an 

overpayment if the person has actual 

knowledge of the existence of the 

overpayment or acts in reckless 

disregard or deliberate ignorance of the 

existence of the overpayment. 

(b) Deadline for reporting and 

returning overpayments. (1) A person 

with an identified overpayment must 

report and return the overpayment by 

the later of either of the following: 

(i) The date which is 60 days after the 

date on which the overpayment was 

identified. 

(ii) The date any corresponding cost 

report is due, if applicable. 

(2) The deadline for returning 

overpayments will be suspended when 

either of the following occurs: 

(i) OIG acknowledges receipt of a 

submission to the OIG Self-Disclosure 

Protocol until such time as a settlement 

agreement is entered, the person 

withdraws from the OIG Self-Disclosure 

Protocol, or the person is removed from 

the OIG Self-Disclosure Protocol. 

(ii) CMS acknowledges receipt of a 

submission to the Self-Referral 

Disclosure Protocol until such time as a 

settlement agreement is entered, the 

person withdraws from the Self-Referral 

Disclosure Protocol, or the person is 

removed from the Self-Referral 

Disclosure Protocol. 

(c) Applicable reconciliation. (1) The 

applicable reconciliation occurs when a 

cost report is filed; and 

(2) In instances when the provider— 

(i) Receives more recent CMS 

information on the SSI ratio, the 

provider is not required to return any 

overpayment resulting from the updated 

information until the final 

reconciliation of the provider’s cost 

report occurs; or 

(ii) Knows that an outlier 

reconciliation will be performed, the 

provider is not required to estimate the 

change in reimbursement and return the 

estimated overpayment until the final 

reconciliation of that cost report. 

(d) Contents of report. An 

overpayment required to be reported 

under this section to a Medicare 

contractor must be made in writing and 

must contain all of the following: 

(1) Person’s name. 

(2) Person’s tax identification number. 

(3) How the error was discovered. 

(4) The reason for the overpayment. 

(5) The health insurance claim 

number, as appropriate. 

(6) Date of service. 

(7) Medicare claim control number, as 

appropriate. 

(8) Medicare National Provider 

Identification (NPI) number. 

(9) Description of the corrective action 

plan to ensure the error does not occur 

again. 

(10) Whether the person has a 

corporate integrity agreement with the 

OIG or is under the OIG Self-Disclosure 

Protocol. 

(11) The timeframe and the total 

amount of refund for the period during 

which the problem existed that caused 

the refund. 

(12) If a statistical sample was used to 

determine the overpayment amount, a 

description of the statistically valid 

methodology used to determine the 

overpayment. 

(13) A refund in the amount of the 

overpayment. A person may request an 

extended repayment schedule as that 

term is defined in § 401.603. 

(e) Reporting. (1) A person must use 

the self-reported overpayment refund 

process set forth by the applicable 

Medicare contractor to report and return 

overpayments except as provided in 

paragraph (e)(2) of this section. 

(2) A person satisfies the reporting 

obligations of this section by making a 

disclosure under the OIG’s SelfDisclosure Protocol resulting in a 

settlement agreement using the process 

described in the OIG Self-Disclosure 

Protocol. 

(f) Enforcement. Any overpayment 

retained by a person after the deadline 

for reporting and returning the 

overpayment specified in paragraph (b) 

of this section is an obligation for 

purposes of 31 U.S.C. 3729. 

(g) Lookback period. An overpayment 

must be reported and returned in 

accordance with § 401.305 only if a 

person identifies the overpayment 

within 10 years of the date the 

overpayment was received. 

Subpart F—Claims Collection and 

Compromise 

§ 401.607 [Amended] 

3. In § 401.607(c)(2)(i), the definition 

of ‘‘Hardship’’ is amended by removing 

the phrase ‘‘outstanding overpayments 

(principal and interest)’’ and adding in 

its place the phrase ‘‘outstanding 

overpayments (principal and interest 

and including overpayments reported in 

accordance with §§ 401.301 through 

401.305.)’’ 

PART 405—FEDERAL HEALTH 

INSURANCE FOR THE AGED AND 

DISABLED 

4. The authority for part 405 

continues to read as follows: 

Authority: Secs. 1102, 1862, and 1871 of 

the Social Security Act as amended (42 

U.S.C.1302, 1395y, and 1395hh). 

5. Section 405.980 is amended by 

adding paragraph (b)(6) to read as 

follows: 

§ 405.980 Reopenings of initial 

determinations, redeterminations, and 

reconsiderations, hearings and reviews. 

* * * * * 

(b) * * * 

(6) Within 10 years from the date of 

initial determination or redetermination 

if the overpayment is reported in 

accordance with § 401.305. 

* * * * * 

(Catalog of Federal Domestic Assistance 

Program No. 93.773, Medicare—Hospital 

Insurance; and Program No. 93.774, 

Medicare—Supplementary Medical 

Insurance Program) 

Dated: August 18, 2011. 

Donald M. Berwick, 

Administrator, Centers for Medicare & 

Medicaid Services. 

Approved: February 10, 2012. 

Kathleen Sebelius, 

Secretary, Department of Health and Human 

Services. 

[FR Doc. 2012–3642 Filed 2–14–12; 8:45 am] 

BILLING CODE 4120–01–P 

FEDERAL COMMUNICATIONS 

COMMISSION 

47 CFR Part 76 

[CS Docket No. 98–120; FCC 12–18] 

Carriage of Digital Television 

Broadcast Signals: Amendment to the 

Commission’s Rules 

AGENCY: Federal Communications 

Commission. 

ACTION: Proposed rule. 

SUMMARY: This Fourth FNPRM seeks 

comment on whether it would be in the 

public interest to extend the viewability 

rule and the HD carriage exemption, 

both of which are currently scheduled 

to sunset on June 12, 2012. First, we 

seek comment on whether to extend, in 

its current form, the ‘‘viewability’’ rule, 

which implements the statutory 

requirement that all cable subscribers, 

including those with analog equipment, 

be able to view must carry television 

signals. Second, given the apparent 

widespread reliance of small cable 


sroberts on DSK5SPTVN1PROD with PROPOSALS
9188 Federal Register / Vol. 77, No. 32 / Thursday, February 16, 2012 / Proposed Rules 

1 47 CFR 1.1200 et seq. 

2See generally Carriage of Digital Television 

Broadcast Signals, CS Docket No 98–120, Third 

Report and Order and Third Further Notice of 

Proposed Rulemaking, 73 FR 6043, 22 FCC Rcd 

21064 (2007) (‘‘Viewability Order’’ or ‘‘Third 

FNPRM’’). As discussed below, the DTV transition 

was finalized on June 12, 2009. 

3 ‘‘Must-carry’’ stations are those stations subject 

to mandatory cable carriage (unless they elect to be 

carried only with their consent). These include both 

commercial (47 U.S.C. 534(a)) and non-commercial 

educational (47 U.S.C. 535(a)) full-power television 

stations. 

4See 47 U.S.C. 534(b)(7) (‘‘Signals carried in 

fulfillment of the requirements of this section [i.e., 

commercial must-carry signals] shall be provided to 

every subscriber of a cable system. Such signals 

shall be viewable via cable on all television 

receivers of a subscriber which are connected to a 

cable system by a cable operator or for which a 

cable operator provides a connection’’); 47 U.S.C. 

535(h) (‘‘Signals carried in fulfillment of the 

carriage obligations of a cable operator under this 

section [i.e., non-commercial must-carry signals] 

shall be available to every subscriber’’). 

5 47 CFR 76.56(d)(3). 

6 47 CFR 76.56(d)(5) (‘‘The requirements set forth 

in paragraph (d)(3) of this section shall cease to be 

effective three years from the date on which all fullpower television stations cease broadcasting analog 

signals, unless the Commission extends the 

requirements in a proceeding to be conducted 

during the year preceding such date.’’). 

operators on the HD exemption, we 

propose to extend it for an additional 

three years, but ask whether this should 

be the final extension. We note that both 

rule and exemption would have expired 

on February 17, 2012 if the DTV 

transition had not been delayed by 

Congress. The Commission is therefore 

concurrently issuing a Declaratory 

Order clarifying that both the 

viewability rule and the HD Carriage 

Exemption will sunset on June 12, 2012, 

absent Commission action to extend 

them. 

DATES: Submit comments on or before 

March 12, 2012. Submit replies on or 

before March 22, 2012. 

FOR FURTHER INFORMATION CONTACT: Lyle 

Elder, Lyle.Elder@fcc.gov, or Steven 

Broeckaert, Steven.Broeckaert@fcc.gov 

of the Media Bureau, Policy Division, at 

(202) 418–2120. 

SUPPLEMENTARY INFORMATION: The 

proceeding this Fourth FNPRM initiates 

shall be treated as a ‘‘permit-butdisclose’’ proceeding in accordance 

with the Commission’s ex parte rules.1

Persons making ex parte presentations 

must file a copy of any written 

presentation or a memorandum 

summarizing any oral presentation 

within two business days after the 

presentation (unless a different deadline 

applicable to the Sunshine period 

applies). Persons making oral ex parte 

presentations are reminded that 

memoranda summarizing the 

presentation must (1) list all persons 

attending or otherwise participating in 

the meeting at which the ex parte 

presentation was made, and (2) 

summarize all data presented and 

arguments made during the 

presentation. If the presentation 

consisted in whole or in part of the 

presentation of data or arguments 

already reflected in the presenter’s 

written comments, memoranda or other 

filings in the proceeding, the presenter 

may provide citations to such data or 

arguments in his or her prior comments, 

memoranda, or other filings (specifying 

the relevant page and/or paragraph 

numbers where such data or arguments 

can be found) in lieu of summarizing 

them in the memorandum. Documents 

shown or given to Commission staff 

during ex parte meetings are deemed to 

be written ex parte presentations and 

must be filed consistent with 

§ 1.1206(b). In proceedings governed by 

§ 1.49(f) or for which the Commission 

has made available a method of 

electronic filing, written ex parte 

presentations and memoranda 

summarizing oral ex parte 

presentations, and all attachments 

thereto, must be filed through the 

electronic comment filing system 

available for that proceeding, and must 

be filed in their native format (e.g., .doc, 

.xml, .ppt, searchable .pdf). Participants 

in this proceeding should familiarize 

themselves with the Commission’s ex 

parte rules. Pursuant to §§ 1.415 and 

1.419 of the Commission’s rules, 47 CFR 

1.415, 1.419, interested parties may file 

comments and reply comments on or 

before the dates indicated on the first 

page of this document. Comments may 

be filed using the Commission’s 

Electronic Comment Filing System 

(ECFS). See Electronic Filing of 

Documents in Rulemaking Proceedings, 

63 FR 24121 (1998). 

D Electronic Filers: Comments may be 

filed electronically using the Internet by 

accessing the ECFS: http:// 

fjallfoss.fcc.gov/ecfs2/. 

D Paper Filers: Parties who choose to 

file by paper must file an original and 

one copy of each filing. If more than one 

docket or rulemaking number appears in 

the caption of this proceeding, filers 

must submit two additional copies for 

each additional docket or rulemaking 

number. 

Filings can be sent by hand or 

messenger delivery, by commercial 

overnight courier, or by first-class or 

overnight U.S. Postal Service mail. All 

filings must be addressed to the 

Commission’s Secretary, Office of the 

Secretary, Federal Communications 

Commission. 

D All hand-delivered or messengerdelivered paper filings for the 

Commission’s Secretary must be 

delivered to FCC Headquarters at 445 

12th St. SW., Room TW–A325, 

Washington, DC 20554. The filing hours 

are 8 a.m. to 7 p.m. All hand deliveries 

must be held together with rubber bands 

or fasteners. Any envelopes and boxes 

must be disposed of before entering the 

building. 

D Commercial overnight mail (other 

than U.S. Postal Service Express Mail 

and Priority Mail) must be sent to 9300 

East Hampton Drive, Capitol Heights, 

MD 20743. 

D U.S. Postal Service first-class, 

Express, and Priority mail must be 

addressed to 445 12th Street SW., 

Washington, DC 20554. 

People with Disabilities: To request 

materials in accessible formats for 

people with disabilities (braille, large 

print, electronic files, audio format), 

send an email to fcc504@fcc.gov or call 

the Consumer & Governmental Affairs 

Bureau at 202–418–0530 (voice), 202– 

418–0432 (tty). 

Availability of Documents. 

Comments, reply comments, and ex 

parte submissions will be available for 

public inspection during regular 

business hours in the FCC Reference 

Center, Federal Communications 

Commission, 445 12th Street SW., CY– 

A257, Washington, DC 20554. These 

documents will also be available via 

ECFS. Documents will be available 

electronically in ASCII, Microsoft Word, 

and/or Adobe Acrobat. 

Summary of the Final Rule 

I. Introduction 

1. In 2007, the Commission adopted 

certain rules to protect consumers as the 

transition to digital television (DTV) 

approached.2 Specifically, in order to 

ensure that cable operators continued to 

comply with the statutory obligation to 

make must-carry television stations 3

‘‘viewable’’ to all subscribers,4 the 

Commission adopted a rule providing 

cable operators two options to comply 

with the viewability requirement: (1) 

Carry the digital signal in analog format 

to all analog cable subscribers, or (2) 

carry the signal only in digital format, 

provided that all subscribers have the 

necessary equipment to view the 

broadcast content.5 In order to retain 

flexibility to deal with concerns arising 

after the DTV transition, the 

Commission stated that the viewability 

rule would sunset three years after the 

transition, subject to review during the 

last year of this period to determine if 

it should be extended, revised, or 

allowed to sunset.6 This rule will 

therefore expire on June 12, 2012 unless 

we take action to extend it. 


sroberts on DSK5SPTVN1PROD with PROPOSALS
Federal Register / Vol. 77, No. 32 / Thursday, February 16, 2012 / Proposed Rules 9189 

7As discussed in detail in Section V, infra. 

8 47 U.S.C. 534(b)(4)(B). 

9Carriage of the Transmissions of Digital 

Television Broadcast Stations: Amendment to Part 

76 of the Commission’s Rules, CS Docket No. 98– 

120, Notice of Proposed Rulemaking, 13 FCC Rcd 

15092, 15093, paras. 1–2 (1998). 

10See generally Viewability Order. 

11 Viewability Order at para. 4. 

12See generally, Carriage of Digital Television 

Broadcast Signals, CS Docket No. 98–120, Fourth 

Report and Order, 23 FCC Rcd 13618 (2008) 

(‘‘Fourth Report & Order’’). 

13 Viewability Order at para. 16; Fourth Report & 

Order at para. 12. 

14 Viewability Order at para. 15. 

15 Viewability Order at para. 34. 

16Carriage of Digital Television Broadcast 

Signals, CS Docket No. 98–120, Second Further 

Notice of Proposed Rulemaking, 22 FCC Rcd 8803 

(2007) (‘‘Second FNPRM’’). 

17 Implementation of the Cable Television 

Consumer Protection and Competition Act of 1992, 

etc., MM Docket No. 92–259, Report and Order, 8 

FCC Rcd. 2965, 2974 (1993) (‘‘Analog Must Carry 

Report and Order’’). 

18We note that although Sections 614(b)(7) 

(commercial) and 615(h) (noncommercial) of the 

Act use different language, the Commission 

consistently has treated them as imposing identical 

obligations with regard to viewability. See e.g., 

Analog Must Carry Report and Order, 8 FCC Rcd. 

at 2974, at para. 32 (noting that all must-carry 

signals must be available to all subscribers); see also 

Implementation of Section 302 of the 

Telecommunications Act of 1996: Open Video 

Systems, CS Docket No. 96–46, Second Report and 

Order, 11 FCC Rcd 18223, 18308, at para. 162 

(1996) (‘‘Pursuant to Section 614(b)(7) and 615(h), 

the operator of a cable system is required to ensure 

that signals carried in fulfillment of the must-carry 

requirements are provided to every subscriber of the 

system.’’). 

19 Viewability Order at para. 55. 

20The Commission has long held, and the 

Supreme Court has agreed, that cable subscribers’ 

use of an ‘‘A/B switch’’ to access over-the-air 

signals is not a legitimate replacement for access to 

those signals on the cable system itself. Turner 

Broadcasting System, Inc. v. FCC, 520 U.S. 180 at 

219–221 (1997) (‘‘Turner Two’’). An ‘‘A/B switch’’ 

is a method of manually toggling between cable and 

broadcast programming without changing the 

viewing device. 

21 Viewability Order at para. 31. 

22 Viewability Order at para. 15; see also e.g., 

para. 22 (the digital viewability requirement is 

‘‘based on a straightforward reading of the relevant 

statutory text’’); para. 24 (‘‘this language reflects 

Congress’s unambiguous determination that 

broadcast signals must be viewable by all cable 

subscribers’’); para. 34 (‘‘[i]f we declined to enforce 

the viewability requirement it would render the 

Continued 

2. Also in 2007, the Commission 

adopted a related rule regarding the 

prohibition on material degradation of 

broadcast signals when carried by cable 

systems. One aspect of this rule is the 

requirement that any signal broadcast in 

high definition (‘‘HD’’) also be carried 

by cable operators in HD. In response to 

concerns from commenters about cost 

and technical capacity, the Commission 

granted a three-year exemption from 

this HD carriage rule to the operators of 

certain small cable systems. As with the 

viewability rule, the Commission held 

that the small cable HD exemption 

would sunset in three years absent 

action by the Commission to revise or 

extend it. Thus, this exemption will also 

expire on June 12, 2012 unless the 

Commission takes action to extend it. 

3. We initiate this Fourth Further 

Notice of Proposed Rulemaking (Fourth 

FNPRM) in the DTV cable carriage 

docket to determine whether it would 

be in the public interest to extend this 

rule and exemption. For the reasons 

described below, we seek comment on 

whether to extend the ‘‘viewability’’ 

rule for three more years to ensure that 

all cable subscribers, including those 

with analog equipment, continue to 

have access to must carry television 

signals. Given the apparent widespread 

reliance of small cable operators on the 

HD exemption, we propose to extend it 

for an additional three years, but ask 

whether this should be the final 

extension. We note that both rule and 

exemption would have expired on 

February 17, 2012 if the DTV transition 

had not been delayed by Congress. The 

Commission is therefore concurrently 

issuing a Declaratory Order clarifying 

that both the viewability rule and the 

HD Carriage Exemption will sunset on 

June 12, 2012, absent Commission 

action to extend them.7

II. Background 

4. Pursuant to Section 614(b)(4)(B) of 

the Communications Act of 1934, as 

amended (the ‘‘Act’’),8 the Commission 

initially opened this docket in 1998 to 

address the responsibilities of cable 

television operators with respect to 

carriage of digital broadcast stations in 

light of the nation’s transition to digital 

television.9 The 2007 Viewability Order, 

among other things, established a rule 

ensuring the viewability of must-carry 

signals on cable systems, as required by 

statute.10 That order also established the 

requirement for cable systems to carry 

HD broadcast signals in HD, in order for 

the signals to be carried without 

material degradation.11 Based on further 

comments, the follow-up Fourth Report 

& Order granted an exemption from this 

latter requirement for the operators of 

certain small cable systems.12 As 

mentioned above, both the viewability 

rule and the HD carriage exemption 

were scheduled to sunset three years 

after the conclusion of the full-power 

transition, subject to review during the 

last year of this period to determine 

whether they should be extended, 

revised, or allowed to sunset.13

III. Viewability Rule 

5. In the Viewability Order, the 

Commission found that ‘‘viewability’’ of 

must-carry digital signals was mandated 

by the Communications Act just as it 

had been for must-carry analog signals, 

and adopted a rule to ensure that these 

signals would be available to all cable 

subscribers.14 The Commission 

recognized the need for flexibility in 

enforcing ‘‘the most fundamental 

interest expressed in the must carry 

rules,’’15 and that it is bound by statute 

to ensure that must-carry signals are 

actually viewable by all subscribers. 

This review provides an opportunity for 

us to determine whether extending the 

current rule is necessary to fulfill that 

statutory mandate, given the current 

state of technology and the marketplace. 

6. Since passage of the 1992 Cable 

Act, the Commission has consistently 

found that ‘‘mere transmission of the 

must-carry signal is not sufficient to 

meet the requirements’’ of the statute.16

As explained in 1993: 

We believe that the 1992 Act is clear in its 

requirement that all local commercial 

television stations carried in fulfillment of 

the must-carry requirements must be 

provided to every cable subscriber and must 

be viewable on all television sets that are 

connected to the cable system by a cable 

operator for which the cable operator 

provides a connection. The Act does not give 

the Commission authority to exempt any 

class of subscribers from this requirement.17

Therefore, must-carry stations must be 

viewable.18 After the DTV transition, 

‘‘the signals of must-carry stations 

[would have been] completely 

unavailable to analog cable subscribers’’ 

absent Commission action.19 That is, 

because after the transition these signals 

are broadcast only in digital, cable 

subscribers that do not own a digital 

television or subscribe to a digital tier 

(and therefore lease or own a digital 

navigation device) would no longer be 

able to view these stations through their 

cable operator. Although the digital 

signals of these must-carry stations 

could theoretically be accessed over-theair with the use of a digital converter 

box, the statute does not require 

subscribers to take that approach.20

Moreover, even were the law to 

contemplate that approach, we note 

that, as a technical matter, not all analog 

cable subscribers are covered by the 

signals from their local must-carry 

stations or even own an antenna that 

would permit them to receive the signal 

if it were available. As stated in 2007, 

we remain ‘‘bound by statute to ensure 

that commercial and non-commercial 

mandatory carriage stations are actually 

viewable by all cable subscribers,’’21

and ‘‘[t]hese statutory requirements 

plainly apply to cable carriage of digital 

broadcast signals.’’22


sroberts on DSK5SPTVN1PROD with PROPOSALS
9190 Federal Register / Vol. 77, No. 32 / Thursday, February 16, 2012 / Proposed Rules 

regime almost meaningless, contrary to the clearly 

expressed will of the Congress as upheld by the 

Supreme Court’’). 

23 Id. at para. 55 (internal citations omitted). 

24 Id. 

25 Id. at n. 131. 

26 47 CFR 76.56(d)(3). 

27Under this rule, in combination with the 

material degradation rule, discussed infra, a 

‘‘hybrid’’ system (providing both analog and digital 

service) would also have to carry an HD broadcast 

signal in HD. As the Commission has previously 

explained, ‘‘there should be no perceivable 

difference between’’ SD digital and analog picture 

quality, so ‘‘our rules do not require cable operators 

* * * to carry an SD digital version of a broadcast 

station’s signal, in addition to the analog version’’ 

as long as all subscribers can view the channel. See 

supra n. 12, Fourth Report & Order at para. 5. 

28 If we decide to extend the term of the 

viewability rule, we propose that the Commission 

should conduct a further review of this rule prior 

to June 12, 2015, and if the Commission does not 

act to extend it by that date, the viewability rule 

will sunset. 

29 Viewability Order at para. 16. 

30The data upon which we rely includes data 

gathered by the Commission via the Annual Cable 

Operator Report and the annual Cable Price Survey, 

and commercially produced data such as that 

provided by SNL Kagan. See e.g., infra notes 31– 

34. 

31 Viewability Order at note 3. 

32NCTA Industry Data, http://www.ncta.com/ 

Statistics.aspx, http://www.ncta.com/Stats/ 

CableAvailableHomes.aspx, http://www.ncta.com/ 

Stats/BasicCableSubscribers.aspx, visited 2/9/12. 

33As of the third quarter of 2011, Kagan indicates 

that there are more than 58 million cable 

subscribers, of whom approximately 46 million are 

digital cable subscribers. Q3 video subscriber trends 

improve but still lack real strength, Broadband 

Technology (SNL Kagan, Charlottesville, VA), 

November 25, 2011, at 2. The vast majority of these 

digital cable subscribers are served by hybrid, rather 

than all-digital, systems. Staff analysis of 2010 

Annual Cable Operator Report (Form 325) 

(indicating fewer than eight million cable 

subscribers were served by all-digital systems). 

34Staff analysis of 2010 Annual Cable Operator 

Report (Form 325) (indicating fewer than eight 

million cable subscribers were served by all-digital 

systems). The Viewability Order stated that ‘‘[t]o 

assist the Commission in this review, we will 

include questions in our annual Cable Price Survey 

to assess, for example, digital cable penetration, 

cable deployment of digital set-top boxes with 

various levels of processing capabilities, and cable 

system capacity constraints.’’ Id. at n. 39. Based on 

data submitted to the Commission as part of the 

2010 Cable Price Survey, only 9.4% of subscribers 

are served by all-digital systems. 

35A recent survey indicates that 31 percent of 

homes do not have a digital television. See CES: 

Over Two Thirds of U.S. Homes Have HDTVs, 

Broadcasting & Cable tvfax, Jan. 5, 2012, at 4–5 

(discussing the results of a survey conducted by the 

Leichtman Research Group, Inc.). 

36See In the Matter of TiVo, Inc, 26 FCC Rcd 

12743, 12747 (2011) (‘‘NCTA notes, however, that 

although the cable industry has significantly 

increased the penetration of its digital services 

since the Commission adopted the Digital Plug and 

Play Order in 2003, many cable systems ‘continue 

to carry substantial numbers of channels only in 

analog,’ and ‘even on systems that simulcast all 

channels in digital, some customers may subscribe 

only to analog service.’’’) (NCTA Comments at 2– 

3). 

7. As the Commission also made clear 

in 2007, viewability of broadcast signals 

is not only mandated by statute, but is 

also of vital importance to the broadcast 

stations that rely on the Commission’s 

‘‘must carry’’ rules and to all consumers 

of television programming. The 

Commission noted that, 

[i]f cable operators did not downconvert the 

digital signals, broadcasters would stand to 

lose an audience of millions of households 

that are analog cable subscribers and the 

concomitant advertising revenues, thus 

jeopardizing their continued health and 

viability. Should these stations deteriorate or 

cease to exist, the impact of these lost 

programming options would fall most 

heavily on those that most need them: The 

roughly fifteen percent of Americans who 

rely solely on over-the-air television, which 

disproportionately consist of low-income and 

minority households.23

Furthermore, the Commission found 

that, without action, ‘‘analog cable 

subscribers and households that rely 

solely on over-the-air broadcast 

television may well face ‘a reduction in 

the number of media voices’ and the 

loss of ‘the widest possible 

dissemination of information from 

diverse and antagonistic sources.’’’ 24

The Commission, in the Viewability 

Order, explained that at the time half of 

all consumers relied on the analog 

tuners in the equipment that they 

owned, and that the welfare of those 

consumers ‘‘drives the Commission’s 

decisions on viewability.’’ 25 Thus, in 

adopting the Viewability Order, the 

Commission acted in light of both the 

statutory directive and the important 

governmental interests of preserving the 

benefits of free, over-the-air local 

broadcast television for analog cable 

subscribers and over-the-air viewers 

alike, and promoting the widespread 

dissemination of information from a 

multiplicity of sources. 

8. In order to ensure that digital 

signals would be actually viewable by 

all subscribers, the Commission adopted 

a two-part rule and allowed systems to 

choose how they would comply. Section 

76.56(d)(3) of the Commission’s rules 

provides: 

(3) The viewability and availability 

requirements of this section require that, after 

the broadcast television transition from 

analog to digital service for full power 

television stations cable operators must 

either: 

(i) Carry the signals of commercial and 

non-commercial must-carry stations in 

analog format to all analog cable subscribers, 

or 

(ii) For all-digital systems, carry those 

signals in digital format, provided that all 

subscribers, including those with analog 

television sets, that are connected to a cable 

system by a cable operator or for which the 

cable operator provides a connection have 

the necessary equipment to view the 

broadcast content.26

This rule ensures that all subscribers 

are able to view must-carry 

programming, while still providing 

flexibility to operators who have been, 

and continue to be, transitioning to an 

all-digital system on their own 

schedules.27 Once a particular cable 

operator has begun transmitting its 

content exclusively in a digital format, 

all subscribers will have access to 

digital broadcast signals via the digital 

equipment necessary to view all of the 

other programming offered by the cable 

operator. Thus, under the current rule, 

an all-digital cable operator can comply 

by transmitting all of its content in a 

digital format to all of its subscribers. 

9. We seek comment on whether we 

should extend the viewability rule or 

permit it to sunset.28 The proceeding we 

begin today provides an opportunity for 

us to consider whether extending this 

rule best fulfills the statutory mandate, 

by reviewing it ‘‘in light of the potential 

cost and service disruption to 

consumers, and the state of technology 

and the marketplace.’’ 29 As discussed 

below, the available market evidence 

seems to indicate that the viewability 

requirements remain important to 

consumers.30 In 2007 there were 

approximately 40 million analog-only 

cable subscribers,31 and there are still 

millions today. According to data 

provided by NCTA, the rate at which 

customers switch to digital has slowed 

since the DTV transition,32 and as of the 

third quarter of 2011, more than twelve 

million cable households were reliant 

on analog cable delivery.33 Moreover, 

the vast majority of cable subscribers are 

served by ‘‘hybrid’’ systems that provide 

both analog and digital service, even if 

they receive digital service to one or 

more television sets.34 A number of 

these digital subscribers still rely on 

analog cable for second televisions in 

the home, meaning that there are 

potentially millions more subscribers 

who rely on analog to some extent.35 We 

seek comment on whether the figures 

discussed above reflect the current 

market for cable service and how that 

should impact the Commission’s 

decision on whether to allow the 

viewability rule to sunset. 

10. The sunset of the viewability rule 

would potentially impact millions of 

subscribers, and the broadcasters who 

would be unable to reach them.36 There 

are hundreds of broadcast stations that 

rely on the must carry rules to ensure 

carriage on cable systems—in 2010, 

almost 40 percent of all broadcast 

stations elected or defaulted to must 

carry rather than electing retransmission 


sroberts on DSK5SPTVN1PROD with PROPOSALS
Federal Register / Vol. 77, No. 32 / Thursday, February 16, 2012 / Proposed Rules 9191 

37Staff analysis of 2010 Annual Cable Operator 

Report (Form 325) (indicating approximately 780 of 

approximately 2000 stations elected or defaulted to 

must carry). Based on data submitted to the 

Commission as part of the 2010 Cable Price Survey, 

over 96% of cable systems carry at least one mustcarry station, and, on average, each system carries 

more than seven must-carry stations. 

38Subscribers to Direct Broadcast Satellite 

systems must have boxes for all televisions in the 

home; this requirement was not changed as a result 

of the DTV transition. Similarly, subscribers to alldigital cable systems must either have a box for 

each set, or own equipment capable of displaying 

digital signals without a box. In this case, 

subscribers face no additional expense or effort to 

receive must-carry signals in digital. 

39Turner Two, supra n. 21. 40Carriage complaints may only be filed by the 

affected station, not by viewers or other parties. 47 

CFR 76.61. 

41 Viewability Order, at paras. 26–35. 

42 Viewability Order, at para. 26. 

43The bandwidth that must be allotted (due to the 

related prohibition on material degradation, 

discussed infra) increases only slightly if the mustcarry station is broadcasting in high definition, due 

to the efficiencies of digital carriage. 

44 Viewability Order, at para. 36. 

45 Viewability Order, at para. 35. 

46Basic Service Tier Encryption; Compatibility 

Between Cable Systems and Consumer Electronics 

Equipment, FCC 11–153, Notice of Proposed 

Rulemaking, 26 FCC Rcd 14870, 14876, para.8 

(2011). 

47 Viewability Order, at para. 20. 

48 Viewability Order, at para. 39. 

49For instance, Entravision, licensee of a number 

of commercial broadcast stations, proposed 

Continued 

consent.37 Without the viewability rule, 

many cable subscribers would be 

required to pay more for access to mustcarry broadcast stations, by replacing 

existing and still-functional analog 

equipment with digital equipment or 

leasing set top boxes to view the 

complete service they currently pay for 

and receive in analog.38 As the Supreme 

Court has made clear, ‘‘preserving the 

benefits of free, over the air local 

broadcast television’’ is an ‘‘important 

governmental interest’’ at the very heart 

of the must-carry regime.39 In this 

regard, we seek comment on how the 

sunset of the viewability requirement 

would impact the financial resources of 

must carry stations. We seek specific 

information that will allow us to build 

a solid record that supports either the 

retention or the sunset of the viewability 

rule. Also, given that ‘‘viewability’’ of 

must-carry digital signals is mandated 

by the Communications Act, we seek 

comment on whether it is necessary to 

extend the rule in its current form as 

opposed to relying on stations to file 

carriage complaints to enforce 

compliance with the statutory 

mandate.40

11. As discussed in the Viewability 

Order, compliance with this rule may 

result in some costs to cable operators.41

In some cases operators may be required 

to carry more than one version of a 

channel, using more bandwidth than 

they would if they carried only a single 

version, and in some cases they may be 

required to down-convert a broadcast 

signal to make the additional version 

available to analog subscribers. At the 

time of the Viewability Order, however, 

these costs were not only determined to 

be necessary to carry out the statutory 

‘‘viewability’’ directive, but were 

determined to be outweighed by the 

benefits of the viewability rule. 

Although many broadcast stations elect 

must-carry status, a cable system carries 

many more non-broadcast channels. The 

Commission explained that the 

comparatively small number of mustcarry stations carried by any given 

system meant that the incremental 

additional bandwidth consumed by 

compliance with this requirement 

would be ‘‘negligible’’ 42 even for hybrid 

systems, which are required by this rule 

to devote at least one 6 MHz channel to 

each must-carry station.43 We seek 

comment on the extent to which these 

conclusions still hold true today. 

12. Furthermore, the Commission 

affirmed in the Viewability Order that 

the ‘‘one-third carriage cap,’’ under 

which cable operators need dedicate no 

more than one-third of their channel 

capacity to commercial broadcast 

stations, remains in effect in the digital 

carriage context, and that all versions of 

a signal would count toward this cap.44

As a result, no cable system need ever 

dedicate more than one-third of their 

bandwidth to carriage of commercial 

broadcast stations, and may choose 

which signals not to carry if they ever 

reach this cap. We seek comment on 

whether the situation has changed 

regarding bandwidth usage, and 

whether any cable system has reached 

the one-third carriage cap. Regarding the 

cost of downconversion, some 

commenters in the 2007 viewability 

proceeding claimed they would face 

large costs to down-convert broadcast 

signals.45 The Commission was 

skeptical of at least some of these 

claims, all of which concerned up-front 

expenses. Given the up-front nature of 

the claimed expenses, they presumably 

would have already been incurred by 

now and would not impose an 

additional cost. We seek comment on 

the accuracy of this presumption in the 

current marketplace. Would retention of 

the viewability rule impose any 

additional expenses on cable operators? 

If so, we request a detailed description 

of any claimed expenditures and 

associated cost information. 

13. We note that some cable operators, 

such as RCN and BendBroadband, 

transmit only digital signals and have 

eliminated analog service in all of their 

systems.46 As discussed above, these 

providers can comply fully with their 

viewability obligations by simply 

carrying a must-carry signal in digital, 

often in the same manner as it is 

provided by the broadcast station. We 

therefore also seek comment about costs 

associated with transitioning to an alldigital system, rather than carrying 

analog versions of must-carry signals. 

According to information in the 2007 

record, virtually all cable operators are 

planning to eventually transition to alldigital systems, regardless of our 

decision on the viewability rule.47 How 

many hybrid systems plan to go alldigital in the near future, and how many 

subscribers will be impacted by this 

shift? What is the range of costs per 

digital box for cable operators, and the 

range of rental fees charged to 

subscribers who are first-time digital 

subscribers? How has the rate at which 

consumers voluntarily drop analog 

service changed in the time since the 

DTV transition? What is the current rate 

at which they are doing so? We seek 

comment on the business environment 

in which hybrid systems operate. Are 

competitive pressures on these systems 

such that they are transitioning to alldigital service at a faster rate than 

customers are switching on their own? 

Are any cable operators considering 

transitioning to an all-digital system 

more quickly than originally planned 

specifically because of the viewability 

obligations? What additional costs 

would be associated with an early 

transition? Commenters stating that they 

intend to or know of cable systems that 

intend to transition early due to the 

viewability rule should provide a 

detailed description of the claimed 

expenditures and cost information that 

they would face as the result of this 

early transition. 

14. We seek comment on whether to 

extend the existing viewability rule. To 

the extent the Commission decides to 

retain the rule, we seek comment on 

whether it should be retained for 

another three years or a different period 

of time. Is three years too long or is a 

sunset at some later date more 

advisable? The Commission considered 

possible alternative rules in the 

Viewability Order, but each was 

rejected. The alternatives were rejected 

in each case because the Commission 

did ‘‘not believe we have the authority 

to exempt any class of subscribers from 

this requirement,’’ 48 and each of these 

alternative approaches would result in 

some subscribers losing access to mustcarry signals.49


sroberts on DSK5SPTVN1PROD with PROPOSALS
9192 Federal Register / Vol. 77, No. 32 / Thursday, February 16, 2012 / Proposed Rules 

requiring all must-carry stations to be provided in 

analog to all of a cable system’s subscribers until 

85 percent of the served population had the means 

to view a digital signal. At that point, the operator 

could drop the analog version of all must-carry 

signals. Viewability Order at para. 39. The 

Commission rejected this proposal because it 

concluded that its statutory authority precluded the 

exemption of any class of subscribers from the 

viewability rule no matter how small that class 

might be. Id. Comcast and other cable operators 

proposed a rule that would allow them to carry 

must-carry signals in digital so long as they made 

equipment available for lease or sale to subscribers 

that would allow the subscribers to view the digital 

signal. Id. at para. 22. The Commission rejected this 

proposal because it would essentially require 

current analog subscribers to pay extra for the 

digital tier to watch must-carry signals they have a 

statutory right to receive on every tier of service, 

noting that ‘‘[f]or every receiver ‘connected to a 

cable system by a cable operator or for which a 

cable operator provides a connection,’ that operator 

must ensure that the broadcast signals in question 

are actually viewable on their subscribers’ 

receivers.’’ Id., citing 47 U.S.C. 534(b)(7). The 

National Association of Broadcasters proposed a 

rule that would require all broadcast signals to be 

carried in the same manner by a cable system—that 

is, ‘‘if one must carry station is carried in analog, 

all broadcasters, whether carried pursuant to 

retransmission consent or must carry, would be 

carried in analog.’’ Id. at para. 21. A system could 

therefore decline to provide any broadcast signals 

in analog without violating this comparative rule, 

even if that disenfranchised all of its analog 

subscribers. In each of the proposals outlined 

above, there is the potential, if not a certainty, that 

must-carry signals would not be viewable by analog 

subscribers. 

50 Viewability Order at para. 38. 

51See e.g., 47 CFR 73.622(e). 

52To the extent we retain the rule for a specified 

period, we believe that it is appropriate to again 

consider the state of the marketplace before 

allowing the rule to sunset. 

53 Viewability Order, 22 FCC Rcd at 21083–21099. 

54 47 U.S.C. 534(b)(7); 47 U.S.C. 535(h). 

55See 47 U.S.C. 534(b)(4)(A) (‘‘The signals of 

local commercial television stations that a cable 

operator carries shall be carried without material 

degradation. The Commission shall adopt carriage 

standards to ensure that, to the extent technically 

feasible, the quality of signal processing and 

carriage provided by a cable system for the carriage 

of local commercial television stations will be no 

less than that provided by the system for carriage 

of any other type of signal.’’) and 535(g)(2) (‘‘A 

cable operator shall provide each qualified local 

noncommercial educational television station 

whose signal is carried in accordance with this 

section with bandwidth and technical capacity 

equivalent to that provided to commercial 

television broadcast stations carried on the cable 

system and shall carry the signal of each qualified 

local noncommercial educational television station 

without material degradation.’’). 

56 Viewability Order, at para. 4. 

57See 47 CFR 76.62. 

58Third FNPRM at para. 80, citing the Second 

FNPRM at para. 12. 

59See generally Fourth Report & Order. 

60National Cable & Telecommunications 

Association Comments at 12 (March 3, 2008). 

61Fourth Report & Order at paras. 6–7. 

62Fourth Report & Order at para. 18. 

63Fourth Report & Order at para. 11. 

15. Unlike the alternatives proposed, 

the rule the Commission adopted in 

2007 ensures viewability by all 

subscribers, while simultaneously 

giving cable operators the flexibility to 

choose the best option for complying 

with their viewability obligations.50 We 

seek comment on whether this rule is 

still necessary to ensure subscriber 

access to must-carry signals and support 

the continued viability of must-carry 

stations. What are the costs and benefits, 

for subscribers, broadcasters, and cable 

operators, of retaining this rule for 

another three years? To the extent 

feasible, commenters should quantify in 

dollars any asserted costs or benefits. 

We have not received any complaints 

under this rule, nor have we received 

any requests to waive it, from cable 

systems large or small. This speaks well 

of the compliance efforts of operators. It 

also seems to indicate that the burden 

of compliance has been relatively 

minimal and that the actual costs of 

compliance have likely not been 

onerous. We seek comment on whether 

this observation is accurate. How many 

subscribers, particularly those with 

some digital service, still rely in part on 

analog cable service? We seek comment 

generally on the cost and service 

disruption to consumers if the current 

rule was allowed to sunset. In 

particular, we seek comment on the 

number of cable subscribers whose 

residences lie outside the digital noise 

limited service contour of their local 

broadcast must-carry stations and 

therefore would have difficulty 

receiving a quality broadcast signal over 

the air.51 Further, we seek comment on 

the number of cable subscribers that 

own antennas capable of receiving their 

local broadcast must-carry stations 

where such signals are available. 

16. Finally, we seek comment on any 

other proposals that would achieve the 

results necessary to assure the 

viewability of must-carry signals 

through an approach different than that 

of our existing rule. To the extent any 

parties find the current rule 

burdensome, we seek comment on 

proposals that will satisfy the statute in 

a less burdensome manner. Is any rule 

necessary to effectuate the statutory 

intent? If so, any proposals for an 

alternative rule to ensure the actual 

viewability of must-carry signals should 

include specific proposed wording, as 

well as an analysis of how the proposal 

is consistent with the statute.52 In the 

Viewability Order, we previously 

determined that the viewability rule was 

consistent with constitutional 

requirements.53 We seek comment on 

any marketplace or other changes that 

have since occurred that may impact 

our analysis of the constitutional issues. 

To the extent that we allow the rule to 

sunset, we seek comment on how, as a 

legal and technical matter, the 

Commission would ensure cable 

operators’ compliance with the statutory 

requirement to make all must-carry 

broadcast signals actually viewable to 

all subscribers.54

IV. HD Carriage Exemption 

17. The Act also requires that cable 

operators carry broadcast signals 

‘‘without material degradation.’’ 55 As 

the Commission has interpreted the Act 

in the context of carriage of digital 

signals, this requirement has two parts: 

Cable operators may not discriminate in 

their carriage between broadcast and 

non-broadcast signals, and HD broadcast 

signals must be carried to viewers in 

HD.56 In the Third FNPRM, the 

Commission sought comment on 

alternatives to these rules 57 that would 

‘‘minimize the economic impact for 

small cable operators while still 

complying with the statutory 

requirements.’’ 58

18. Based on the comments received 

in response to the Third FNPRM, and in 

consideration of the effect of this 

requirement on operators of small cable 

systems, the Fourth Report & Order 

adopted a temporary exemption from 

the HD carriage requirement for certain 

small systems.59 Commenters in that 

proceeding argued that, without an 

exemption from the material 

degradation rules, ‘‘small systems 

[would] be forced to absorb or impose 

significant and unsustainable price 

increases, or in some instances to shut 

down altogether.’’ 60 This is because 

some small systems did not have the 

technical capability or system capacity 

to carry high definition digital signals, 

and in some cases had so few 

subscribers that per-subscriber costs to 

upgrade to that capacity would be so 

high as to make it not worthwhile to 

continue operating the system.61 The 

exemption adopted by the Commission 

applies to operators of cable systems 

with 2,500 or fewer subscribers that are 

not affiliated with a cable operator 

serving more than 10 percent of all 

MVPD subscribers, and to those with an 

activated channel capacity of 552 MHz 

or less. It permits such systems to carry 

broadcast signals in standard definition 

(SD) digital or analog, even if the signals 

are provided in HD.62

19. The exemption was not intended 

to be permanent, however. The 

Commission instead provided it for a 

three-year window, in order to give 

small systems ‘‘a clear opportunity to 

come into compliance with the rules by 

spreading their effort and costs over an 

extended period.’’ 63 Recognizing the 

connection to the viewability rule, 


sroberts on DSK5SPTVN1PROD with PROPOSALS
Federal Register / Vol. 77, No. 32 / Thursday, February 16, 2012 / Proposed Rules 9193 

64 Id. at para. 12. 

65We propose to have the Commission conduct 

a further review of this exemption during the last 

year of the three year period (between June 12, 2014 

and June 12, 2015), and if the Commission does not 

decide to extend it, the exemption will sunset. 

66Fourth Report & Order at para. 11. 

67Staff analysis of 2010 Annual Cable Operator 

Report (Form 325). 

68Approximately 99% of non-eligible cable 

systems are carrying at least one HD signal. Staff 

analysis of 2010 Annual Cable Operator Report 

(Form 325). 

69See infra Appendix B (discussing our analysis 

of FCC Form 325 data). 

70Fourth Report & Order at para. 11. 

71See supra para. 16. 

72See infra Appendix B. 

73Fourth Report & Order at para. 7. 

74Fourth Report & Order, at para. 11. 

75Full-Power TV Broadcasters Go All-Digital, 

Federal Communications Commission, Press 

Release (June 13, 2009). 

which was adopted at the same time as 

the HD carriage requirement and also 

has an impact on cable carriage of 

broadcast signals, the Commission 

determined that this exemption should 

be reviewed in conjunction with that 

rule.64

20. We tentatively conclude that it is 

in the public interest to extend the 

small-system HD exemption for another 

three years because the number of 

systems relying on the exemption 

indicates that three years did not 

provide sufficient time for some small 

systems to come into compliance in a 

cost-effective way.65 As discussed 

above, the Commission originally 

declined to make this exemption 

permanent in order to retain flexibility, 

and in order to have an opportunity to 

review the state of the marketplace 

several years after the digital broadcast 

transition.66 Although the Commission 

anticipated that the three year 

exemption would give small systems an 

opportunity to come into compliance by 

making relatively large expenditures 

over a longer period of time, based on 

the most recent available data from the 

Annual Cable Operator Report, 37 

percent of small systems that reported 

data, and that would be eligible for the 

exemption, were still not providing any 

HD service.67 To the extent that most 

markets have at least one station 

broadcasting in HD, a system is almost 

certainly relying on the exemption if it 

is not carrying any signals in HD.68

Thus, the Form 325 data indicate that a 

large number of small systems are 

relying on the exemption.69 Form 325 

does not provide information about why 

these small systems are not providing 

HD service, but at the time the 

exemption was adopted the Commission 

anticipated that the most likely reason 

would be the savings from not 

upgrading the cable plant to provide 

digital signals. We seek comment on 

this analysis. How many small cable 

operators are currently relying on this 

exemption? We seek comment on why 

they are doing so, rather than offering 

HD programming to their subscribers. 

We seek comment on the business 

environment in which these systems 

operate; are competitive pressures from 

direct broadcast satellite providers and 

over builders on these systems such that 

they would be carrying broadcast 

signals in HD if it were cost effective? 

As we stated we would in the Fourth 

Report & Order, we seek comment on 

the ‘‘cost and service disruption to 

consumers’’ who subscribe to these 

cable systems and do not receive any 

high definition programming, and on 

any disruptions that would occur if we 

retain the exemption. Have any 

broadcasters or cable operators received 

viewer complaints concerning the lack 

of HD programming from subscribers to 

such systems? 

21. As noted above, the central 

purpose of the exemption was to 

provide small systems with additional 

time to upgrade and, where necessary, 

expand their systems to come into full 

compliance with the material 

degradation provisions of the carriage 

rules by carrying HD versions of all HD 

broadcast signals without making 

relatively large expenditures over a 

short period of time.70 Have systems 

taken, or are systems taking, the 

opportunity to do so? As discussed 

above, commenters cited in the Fourth 

Report & Order argued that the costs of 

providing digital service were simply 

too high for some systems to bear.71 Will 

any of these systems still lack sufficient 

opportunity to upgrade if the exemption 

is extended for three years? Given that 

not all eligible systems are taking 

advantage of the exemption,72 and no 

non-eligible system has sought an 

exemption from this requirement, 

should the definition of ‘‘small system’’ 

for the purposes of this exemption be 

narrowed? Are there any systems 

providing some HD service but not 

carrying all broadcast signals in high 

definition? Should we consider revising 

the exemption such that stations would 

be required to carry all local broadcast 

signals in HD if they provide any HD 

service? We particularly seek data 

regarding any systems that have taken 

advantage of the exemption, but either 

already have begun or have firm plans 

to begin providing HD broadcast signals 

in HD. We also seek comment more 

generally on the costs and benefits of 

the exemption, for subscribers, 

broadcasters, and small cable operators. 

For example, has the exemption 

benefited small cable system operators 

by allowing them to direct capital 

expenditures to upgrade or introduce 

new services? Conversely, has the 

exemption unnecessarily allowed small 

cable operators simply to delay 

compliance with their material 

degradation obligations, thereby 

denying subscribers access to HD 

broadcast signals? To the extent feasible, 

commenters should quantify in dollars 

any asserted costs or benefits. 

22. Comments at the time of the initial 

grant of this exemption indicated that it 

was necessary to protect the economic 

health of some small systems, and 

indeed that some systems might become 

too expensive to continue operation 

without the exemption.73 We seek 

comment on whether and to what extent 

this remains the situation today. We 

seek comment more generally on ‘‘the 

state of technology and the 

marketplace’’ as they relate to this 

exemption. Finally, we seek comment 

on whether the benefits to the operators 

of small cable systems of extending this 

exemption for three years would 

outweigh the costs to subscribers and 

broadcasters. In proposing to extend the 

HD carriage exemption, we are guided 

by the Commission’s determination in 

the Fourth Report and Order that ‘‘[a] 

three-year sunset provides the 

Commission with the opportunity after 

the transition to review these rules in 

light of the potential cost and service 

disruptions to consumers, and the state 

of technology and the marketplace.’’ 74

We are unaware of any marketplace 

changes that would make extension of 

the exemption for three additional years 

inadvisable. However, we assume the 

need for this exemption will not be 

permanent; if we extend the exemption, 

should we clarify that the Commission 

will not consider another extension? If 

the proposal to extend for three more 

years is adopted, small systems will 

have had a total of six additional years 

to come into compliance with the HD 

carriage requirement. We seek comment 

on whether three years is an appropriate 

amount of time, or if the HD carriage 

exemption should be retained for a 

different period of time. 

V. Declaratory Order 

23. Subsequent to the Commission’s 

adoption of the Viewability Order and 

the Fourth Report and Order, the fullpower transition was successfully 

completed on June 12, 2009, after 

Congress chose to delay it from the 

originally scheduled conclusion on 

February 17, 2009.75 When adopting the 

Viewability Order, the Commission 


sroberts on DSK5SPTVN1PROD with PROPOSALS
9194 Federal Register / Vol. 77, No. 32 / Thursday, February 16, 2012 / Proposed Rules 

76 Viewability Order at para. 16. 

77Fourth Report & Order at paras. 11–12. 

78 Id. at paras. 12, 18. 

79See Viewability Order, at para. 16; Fourth 

Report and Order, at para. 11. 

80Paperwork Reduction Act of 1995 (‘‘PRA’’), 

Public Law 104–13, 109 Stat 163 (1995) (codified 

in Chapter 35 of Title 44 U.S.C.). 

81See 5 U.S.C. 603. The RFA, see 5 U.S.C. 601– 

612, has been amended by the Small Business 

Regulatory Enforcement Fairness Act of 1996 

(‘‘SBREFA’’), Public Law 104–121, Title II, 110 Stat. 

857 (1996). 

82See 5 U.S.C. 603(a). 

83See id. 

84 5 U.S.C. 603(b)(3). 

85 5 U.S.C. 601(b). 

86 5 U.S.C. 601(3) (incorporating by reference the 

definition of ‘‘small-business concern’’ in the Small 

Business Act, 15 U.S.C. 632). Pursuant to 5 U.S.C. 

601(3), the statutory definition of a small business 

applies ‘‘unless an agency, after consultation with 

the Office of Advocacy of the Small Business 

Administration and after opportunity for public 

comment, establishes one or more definitions of 

such term which are appropriate to the activities of 

the agency and publishes such definition(s) in the 

Federal Register.’’ 

87 15 U.S.C. 632. 

88 See 13 CFR 121.201, NAICS Code 515120 

(2007). 

89 Id. This category description continues, ‘‘These 

establishments operate television broadcasting 

studios and facilities for the programming and 

transmission of programs to the public. These 

stated that, barring later action, the 

sunset of the viewability rule would 

occur ‘‘three years from the date on 

which all full-power television stations 

cease broadcasting analog signals,’’ 

which will be June 12, 2012.76 The HD 

carriage exemption was intended to be 

‘‘in force for three years from the date 

of the digital transition’’ and reviewed 

‘‘simultaneously with the viewability 

rule[ ].’’ 77 The Commission stated that 

the exemption would therefore be in 

force ‘‘from February 18, 2009 through 

February 17, 2012,’’ or three years after 

the originally scheduled conclusion of 

the transition.78 The Commission 

expressed a clear intent to have the HD 

carriage exemption and viewability 

sunsets running in parallel, and did not 

at the time anticipate the subsequent 

congressionally mandated extension of 

analog broadcasting. It is clear from the 

text of the Viewability Order and the 

Fourth Report and Order that the 

Commission intended the rule/ 

exemption to remain in effect 3 full 

years from the conclusion of the 

transition, and thus having them sunset 

four months early in February 2012 

would be contrary to the stated intent of 

the Commission.79 Therefore, we hereby 

issue this Declaratory Order that the HD 

carriage exemption, like the viewability 

rule, will be in effect up to and until 

June 12, 2012, absent further 

Commission action. 

VI. Procedural Matters 

A. Initial Paperwork Reduction Act of 

1995 Analysis 

24. The Fourth FNPRM has been 

analyzed with respect to the Paperwork 

Reduction Act of 1995 (‘‘PRA’’).80 This 

document does not contain new or 

modified information collection 

requirements subject to the PRA, Public 

Law 104–13. In addition, therefore, it 

does not contain any new or modified 

‘‘information collection burden for 

small business concerns with fewer than 

25 employees,’’ pursuant to the Small 

Business Paperwork Relief Act of 2002, 

Public Law 107–198, see 44 U.S.C. 

3506(c)(4). 

B. Initial Regulatory Flexibility Analysis 

25. As required by the Regulatory 

Flexibility Act of 1980, as amended 

(‘‘RFA’’) 81 the Commission has 

prepared this Initial Regulatory 

Flexibility Analysis (‘‘IRFA’’) of the 

possible economic impact on a 

substantial number of small entities by 

the policies and rules proposed in this 

Fourth Notice of Proposed Rulemaking 

(‘‘Fourth FNPRM’’). Written public 

comments are requested on this IRFA. 

Comments must be identified as 

responses to the IRFA and must be filed 

by the deadlines for comments on the 

Fourth FNPRM as indicated on its first 

page. The Commission will send a copy 

of the Fourth FNPRM, including this 

IRFA, to the Chief Counsel for Advocacy 

of the Small Business Administration 

(‘‘SBA’’).82 In addition, the Fourth 

FNPRM and IRFA (or summaries 

thereof) will be published in the Federal 

Register.83

1. Need for, and Objectives of, the 

Proposals 

26. This Fourth FNPRM seeks 

comment on rules relating to the 

manner in which broadcast DTV content 

will be displayed when it is carried by 

a cable system. The current viewability 

rule and the exemption from the HD 

carriage rule for certain small systems 

were both intended to expire three years 

after the conclusion of the transition, 

subject to a simultaneous review during 

the prior year. This Fourth FNPRM 

seeks comment on whether to extend for 

three years the current viewability rule, 

which requires that cable operators 

must either carry the signals of 

commercial and non-commercial mustcarry stations in analog format to all 

analog cable subscribers, or, for alldigital systems, carry those signals in 

digital format, provided that all 

subscribers, including those with analog 

television sets, that are connected to a 

cable system by a cable operator or for 

which the cable operator provides a 

connection have the necessary 

equipment to view the broadcast 

content. Viewability of must-carry 

signals is required by the 

Communications Act, and as a result the 

current rule must be extended or 

replaced by an alternative that provides 

the same level of subscriber access to 

must-carry programming. The Fourth 

FNPRM also proposes to extend for 

three years the HD carriage exemption, 

which exempts certain small systems 

from the obligation to carry HD 

broadcast signals in HD. The exemption 

applies to operators of cable systems 

with 2,500 or fewer subscribers that are 

not affiliated with a cable operator 

serving more than 10% of all MVPD 

subscribers, and to those with an 

activated capacity of 552 MHz or less. 

The Fourth FNPRM seeks comment on 

the exemption’s impact and importance. 

2. Legal Basis 

27. The authority for the action 

proposed in this rulemaking is 

contained in Sections 4, 303, 614, and 

615 of the Communications Act of 1934, 

as amended, 47 U.S.C. 154, 303, 534, 

and 535. 

3. Description and Estimate of the 

Number of Small Entities to Which the 

Proposals Will Apply 

28. The RFA directs the Commission 

to provide a description of and, where 

feasible, an estimate of the number of 

small entities that will be affected by the 

proposed rules if adopted.84 The RFA 

generally defines the term ‘‘small 

entity’’ as having the same meaning as 

the terms ‘‘small business,’’ ‘‘small 

organization,’’ and ‘‘small governmental 

jurisdiction.’’ 85 In addition, the term 

‘‘small business’’ has the same meaning 

as the term ‘‘small business concern’’ 

under the Small Business Act.86 A 

‘‘small business concern’’ is one which: 

(1) Is independently owned and 

operated; (2) is not dominant in its field 

of operation; and (3) satisfies any 

additional criteria established by the 

Small Business Administration (SBA).87

The rule changes proposed herein will 

directly affect small television broadcast 

stations and small cable operators. A 

description of these small entities, as 

well as an estimate of the number of 

such small entities, is provided below. 

29. Television Broadcasting. The SBA 

defines a television broadcasting station 

as a small business if such station has 

no more than $14.0 million in annual 

receipts.88 Business concerns included 

in this industry are those ‘‘primarily 

engaged in broadcasting images together 

with sound.’’ 89 The Commission has 


sroberts on DSK5SPTVN1PROD with PROPOSALS
Federal Register / Vol. 77, No. 32 / Thursday, February 16, 2012 / Proposed Rules 9195 

establishments also produce or transmit visual 

programming to affiliated broadcast television 

stations, which in turn broadcast the programs to 

the public on a predetermined schedule. 

Programming may originate in their own studios, 

from an affiliated network, or from external 

sources.’’ Separate census categories pertain to 

businesses primarily engaged in producing 

programming. See Motion Picture and Video 

Production, NAICS code 512110; Motion Picture 

and Video Distribution, NAICS Code 512120; 

Teleproduction and Other Post-Production 

Services, NAICS Code 512191; and Other Motion 

Picture and Video Industries, NAICS Code 512199. 

90See News Release, ‘‘Broadcast Station Totals as 

of December 31, 2009,’’ 2010 WL 676084 (F.C.C.) 

(dated Feb. 26, 2010) (‘‘Broadcast Station Totals’’); 

also available at http://hraunfoss.fcc.gov/ 

edocs_public/attachmatch/DOC–296538A1.pdf. 

91We recognize that this total differs slightly from 

that contained in Broadcast Station Totals, supra 

note 83; however, we are using BIA’s estimate for 

purposes of this revenue comparison. 

92See Broadcast Station Totals, supra note 83. 

93 ‘‘[Business concerns] are affiliates of each other 

when one concern controls or has the power to 

control the other or a third party or parties controls 

or has to power to control both.’’ 13 CFR 

121.103(a)(1). 

94U.S. Census Bureau, 2007 NAICS Definitions, 

‘‘517110 Wired Telecommunications Carriers’’ 

(partial definition), http://www.census.gov/naics/ 

2007/def/ND517110.HTM#N517110. 

95 13 CFR 121.201, NAICS code 517110 (2007). 

96U.S. Census Bureau, 2007 Economic Census, 

Subject Series: Information, Table 5, Employment 

Size of Firms for the United States: 2007, NAICS 

code 5171102 (issued Nov. 2010). 

97See id. 

98See 47 CFR 76.901(e). The Commission 

determined that this size standard equates 

approximately to a size standard of $100 million or 

less in annual revenues. See Implementation of 

Sections of the 1992 Cable Television Consumer 

Protection and Competition Act: Rate Regulation, 

MM Docket Nos. 92–266, 93–215, Sixth Report and 

Order and Eleventh Order on Reconsideration, 10 

FCC Rcd 7393, 7408 para. 28 (1995). 

99These data are derived from R.R. Bowker, 

Broadcasting & Cable Yearbook 2006, ‘‘Top 25 

Cable/Satellite Operators,’’ pages A–8 & C–2 (data 

current as of June 30, 2005); Warren 

Communications News, Television & Cable 

Factbook 2006, ‘‘Ownership of Cable Systems in the 

United States,’’ pages D–1805 to D–1857. 

100See 47 CFR 76.901(c). 

101Warren Communications News, Television & 

Cable Factbook 2006, ‘‘U.S. Cable Systems by 

Subscriber Size,’’ page F–2 (data current as of Oct. 

2005). The data do not include 718 systems for 

which classifying data were not available. 

102 47 U.S.C. 543(m)(2); see also 47 CFR 76.901(f) 

& nn.1–3. 

103 47 CFR 76.901(f); see FCC Announces New 

Subscriber Count for the Definition of Small Cable 

Operator, Public Notice, 16 FCC Rcd 2225 (Cable 

Services Bureau 2001). 

104These data are derived from R.R. Bowker, 

Broadcasting & Cable Yearbook 2006, ‘‘Top 25 

Cable/Satellite Operators,’’ pages A–8 & C–2 (data 

current as of June 30, 2005); Warren 

Communications News, Television & Cable 

Factbook 2006, ‘‘Ownership of Cable Systems in the 

United States,’’ pages D–1805 to D–1857. 

105The Commission does receive such 

information on a case-by-case basis if a cable 

operator appeals a local franchise authority’s 

finding that the operator does not qualify as a small 

cable operator pursuant to 76.901(f) of the 

Commission’s rules. 

estimated the number of licensed 

commercial television stations to be 

1,392.90 According to Commission staff 

review of the BIA/Kelsey, MAPro 

Television Database (‘‘BIA’’) as of April 

7, 2010, about 1,015 of an estimated 

1,380 commercial television stations 91

(or about 74 percent) have revenues of 

$14 million or less and, thus, qualify as 

small entities under the SBA definition. 

The Commission has estimated the 

number of licensed noncommercial 

educational (NCE) television stations to 

be 390.92 We note, however, that, in 

assessing whether a business concern 

qualifies as small under the above 

definition, business (control) 

affiliations 93 must be included. Our 

estimate, therefore, likely overstates the 

number of small entities that might be 

affected by our action, because the 

revenue figure on which it is based does 

not include or aggregate revenues from 

affiliated companies. The Commission 

does not compile and otherwise does 

not have access to information on the 

revenue of NCE stations that would 

permit it to determine how many such 

stations would qualify as small entities. 

30. In addition, an element of the 

definition of ‘‘small business’’ is that the 

entity not be dominant in its field of 

operation. We are unable at this time to 

define or quantify the criteria that 

would establish whether a specific 

television station is dominant in its field 

of operation. Accordingly, the estimate 

of small businesses to which rules may 

apply do not exclude any television 

station from the definition of a small 

business on this basis and are therefore 

over-inclusive to that extent. Also, as 

noted, an additional element of the 

definition of ‘‘small business’’ is that the 

entity must be independently owned 

and operated. We note that it is difficult 

at times to assess these criteria in the 

context of media entities and our 

estimates of small businesses to which 

they apply may be over-inclusive to this 

extent. 

31. Cable and Other Program 

Distribution. Since 2007, these services 

have been defined within the broad 

economic census category of Wired 

Telecommunications Carriers; that 

category is defined as follows: ‘‘This 

industry comprises establishments 

primarily engaged in operating and/or 

providing access to transmission 

facilities and infrastructure that they 

own and/or lease for the transmission of 

voice, data, text, sound, and video using 

wired telecommunications networks. 

Transmission facilities may be based on 

a single technology or a combination of 

technologies.’’ 94 The SBA has 

developed a small business size 

standard for this category, which is: All 

such firms having 1,500 or fewer 

employees.95 According to Census 

Bureau data for 2007, there were a total 

of 955 firms in this previous category 

that operated for the entire year.96 Of 

this total, 939 firms had employment of 

999 or fewer employees, and 16 firms 

had employment of 1000 employees or 

more.97 Thus, under this size standard, 

the majority of firms can be considered 

small and may be affected by rules 

adopted pursuant to the Fourth FNPRM. 

32. Cable Companies and Systems. 

The Commission has developed its own 

small business size standards, for the 

purpose of cable rate regulation. Under 

the Commission’s rules, a ‘‘small cable 

company’’ is one serving 400,000 or 

fewer subscribers, nationwide.98

Industry data indicate that, of 1,076 

cable operators nationwide, all but 

eleven are small under this size 

standard.99 In addition, under the 

Commission’s rules, a ‘‘small system’’ is 

a cable system serving 15,000 or fewer 

subscribers.100 Industry data indicate 

that, of 7,208 systems nationwide, 6,139 

systems have under 10,000 subscribers, 

and an additional 379 systems have 

10,000–19,999 subscribers.101 Thus, 

under this second size standard, most 

cable systems are small and may be 

affected by rules adopted pursuant to 

the Fourth FNPRM. 

33. Cable System Operators. The Act 

also contains a size standard for small 

cable system operators, which is ‘‘a 

cable operator that, directly or through 

an affiliate, serves in the aggregate fewer 

than 1 percent 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.’’ 102 The Commission has 

determined that an operator serving 

fewer than 677,000 subscribers shall be 

deemed a small operator, if its annual 

revenues, when combined with the total 

annual revenues of all its affiliates, do 

not exceed $250 million in the 

aggregate.103 Industry data indicate that, 

of 1,076 cable operators nationwide, all 

but ten are small under this size 

standard.104 We note that the 

Commission neither requests nor 

collects information on whether cable 

system operators are affiliated with 

entities whose gross annual revenues 

exceed $250 million,105 and therefore 

we are unable to estimate more 

accurately the number of cable system 

operators that would qualify as small 

under this size standard. 

34. Open Video Services. The open 

video system (‘‘OVS’’) framework was 

established in 1996, and is one of four 

statutorily recognized options for the 

provision of video programming 


sroberts on DSK5SPTVN1PROD with PROPOSALS
9196 Federal Register / Vol. 77, No. 32 / Thursday, February 16, 2012 / Proposed Rules 

106 47 U.S.C. 571(a)(3)–(4). See Annual 

Assessment of the Status of Competition in the 

Market for the Delivery of Video Programming, MB 

Docket No. 06–189, Thirteenth Annual Report, 24 

FCC Rcd 542, 606 para. 135 (2009) (‘‘Thirteenth 

Annual Cable Competition Report’’). 

107See 47 U.S.C. 573. 108U.S. Census Bureau, 2007 NAICS Definitions, 

‘‘517110 Wired Telecommunications Carriers’’; 

http://www.census.gov/naics/2007/def/ 

ND517110.HTM#N517110. 109U.S. Census Bureau, 2007 Economic Census, 

Subject Series: Information, Table 5, Employment 

Size of Firms for the United States: 2007, NAICS 

code 5171102 (issued Nov. 2010). 110See id. 111A list of OVS certifications may be found at 

http://www.fcc.gov/mb/ovs/csovscer.html. 112See Thirteenth Annual Cable Competition 

Report, 24 FCC Rcd at 606–07 para. 135. BSPs are 

newer firms that are building state-of-the-art, 

facilities-based networks to provide video, voice, 

and data services over a single network. 113 5 U.S.C. 603(c)(1)–(c)(4). 

services by local exchange carriers.106

The OVS framework provides 

opportunities for the distribution of 

video programming other than through 

cable systems. Because OVS operators 

provide subscription services,107 OVS 

falls within the SBA small business size 

standard covering cable services, which 

is ‘‘Wired Telecommunications 

Carriers.’’ 108 The SBA has developed a 

small business size standard for this 

category, which is: All such firms 

having 1,500 or fewer employees. 

According to Census Bureau data for 

2007, there were a total of 3,188 firms 

in this previous category that operated 

for the entire year.109 Of this total, 3,144 

firms had employment of 999 or fewer 

employees, and 44 firms had 

employment of 1,000 employees or 

more.110 Thus, under this size standard, 

most cable systems are small and may 

be affected by rules adopted pursuant to 

the Fourth FNPRM. In addition, we note 

that the Commission has certified some 

OVS operators, with some now 

providing service.111 Broadband service 

providers (‘‘BSPs’’) are currently the 

only significant holders of OVS 

certifications or local OVS franchises.112

The Commission does not have 

financial or employment information 

regarding the entities authorized to 

provide OVS, some of which may not 

yet be operational. Thus, again, at least 

some of the OVS operators may qualify 

as small entities. 

4. Description of Projected Reporting, 

Recordkeeping, and Other Compliance 

Requirements for Small Entities 

35. The Fourth FNPRM seeks 

comment on a rule revision that would 

extend for three years the existing 

viewability rule, which would affect 

small television broadcast stations and 

cable operators by requiring cable 

systems to continue to make must-carry 

broadcast signals viewable in analog on 

hybrid systems, or in digital on alldigital systems. This should impose no 

compliance burden on small cable 

systems, because they will simply be 

continuing current practices, and 

should continue to have a positive 

impact on small television broadcast 

stations. The Fourth FNPRM also seeks 

comment on extending the HD carriage 

exemption, which would affect small 

television broadcast stations and cable 

operators. It is beneficial to small cable 

operators by providing them with 

flexibility, and imposes no compliance 

burden on small television broadcast 

stations who need take no action as a 

result of this proposed extension. 

5. Steps Taken To Minimize Significant 

Economic Impact on Small Entities, and 

Significant Alternatives Considered 

36. The RFA requires an agency to 

describe any significant alternatives that 

it has considered in reaching its 

proposed approach, which may include 

the following four alternatives (among 

others): (1) The establishment of 

differing compliance or reporting 

requirements or timetables that take into 

account the resources available to small 

entities; (2) the clarification, 

consolidation, or simplification of 

compliance or reporting requirements 

under the rule for small entities; (3) the 

use of performance, rather than design, 

standards; and (4) an exemption from 

coverage of the rule, or any part thereof, 

for small entities.113 We seek comment 

on the applicability of any of these 

alternatives to affected small entities. 

37. The requirements proposed in the 

Fourth FNPRM would in most cases 

create minimal economic impact on 

small entities, and in some cases would 

provide positive impact. The 

viewability requirement has been 

mandated by Congress, and 

continuation of the current rule could 

minimize economic impact on small 

cable systems and television broadcast 

stations by maintaining the status quo 

and not requiring any additional 

investment in engineering or legal 

services. The HD carriage exemption 

does not impose a negative economic 

impact on any small cable operator, and 

provides a positive economic impact to 

any operator of a system that chooses to 

take advantage of the exemption. The 

exemption does not impose any 

significant burdens on small television 

stations. We invite small entities to 

submit comment on the impact of 

extension or sunset of the viewability 

rule and the HD carriage exemption, and 

on how the Commission could further 

minimize potential burdens on small 

entities. 

6. Federal Rules That May Duplicate, 

Overlap, or Conflict With the Proposed 

Rules 

38. None. 

VII. Ordering Clauses 

39. It is ordered that, pursuant to 

sections 4, 303, 614, and 615 of the 

Communications Act of 1934, as 

amended, 47 U.S.C. 154, 303, 534, and 

535, this Fourth Further Notice Of 

Proposed Rulemaking and Declaratory 

Order is adopted. 

40. It is further ordered that, pursuant 

to sections 5(d) of the Administrative 

Procedure Act, Sections 4, 303, 614, and 

615 of the Communications Act of 1934, 

as amended, and 1.2 of the 

Commission’s rules, 5 U.S.C. 554(e); 47 

U.S.C. 154, 303, 534, 535; 47 CFR 1.2, 

the viewability rule and the HD Carriage 

exemption will be in effect up to and 

until June 12, 2012, absent further 

Commission action. 

41. It is ordered that the Reference 

Information Center, Consumer and 

Governmental Affairs Bureau, shall send 

a copy of this Notice of Proposed 

Rulemaking, including the Initial 

Regulatory Flexibility Analysis, to the 

Chief Counsel for Advocacy of the Small 

Business Administration. 

List of Subjects in 47 CFR Part 76 

Administrative practice and 

procedure, Cable television, Equal 

employment opportunity, Political 

candidates, Reporting and 

recordkeeping requirements. 

Federal Communications Commission. 

Marlene H. Dortch, 

Secretary. 

For the reasons discussed in the 

preamble, the Federal Communications 

Commission proposes to amend 47 CFR 

part 76 as follows: 


sroberts on DSK5SPTVN1PROD with PROPOSALS
Federal Register / Vol. 77, No. 32 / Thursday, February 16, 2012 / Proposed Rules 9197 

PART 76—MULTICHANNEL VIDEO 

AND CABLE TELEVISION SERVICE 

1. The authority citation for part 76 

continues to read as follows: 

Authority: 47 U.S.C. 151, 152, 153, 154, 

301, 302, 302a, 303, 303a, 307, 308, 309, 312, 

315, 317, 325, 339, 340, 341, 503, 521, 522, 

531, 532, 534, 535, 536, 537, 543, 544, 544a, 

545, 548, 549, 552, 554, 556, 558, 560, 561, 

571, 572, 573. 

2. Section 76.56 is amended by 

revising paragraph (d)(5) to read as 

follows: 

§ 76.56 Signal carriage obligations. 

* * * * * 

(d) * * * 

(5) The requirements set forth in 

paragraph (d)(3) of this section shall 

cease to be effective June 12, 2015, 

unless the Commission extends the 

requirements prior to that date. 

* * * * * 

The following pages will not appear 

in the Code of Federal Regulations. 

Appendix 

325 Data Analysis for Viewability Sunset 

1. The FCC collects data from cable 

operators annually on the ‘‘Annual Report of 

Cable Systems’’ also called ‘‘Form 325.’’ 

Through this form, the FCC collects basic 

operational information from cable television 

systems nationwide, including data about 

their architecture, capacity and number of 

subscribers. Each year the FCC designates a 

sample of cable systems having fewer than 

20,000 subscribers and all systems having 

20,000 or more subscribers to file Form 325. 

Staff performed an analysis of the Form 325 

data from the 2010 filing year for use in the 

viewability proceeding. 

Must Carry/Retransmission Consent 

2. Filers of Form 325 report information on 

the channels carried, including for broadcast 

channels whether the channel is carried 

pursuant to a must-carry designation or a 

retransmission consent agreement. Staff 

analyzed the 2010 filings and found that 

approximately 780 of 2000 full-service and 

low-power stations elected or defaulted to 

must carry. 

3. To make this approximation, staff first 

extracted from the Form 325 database all 

records where a cable operator marked a 

channel as either retransmission-consent or 

must-carry. A single broadcast station often 

has multiple entries on the Form 325 if the 

operator carried multiple versions to comply 

with the viewability requirements or if the 

operator chose to carry multicast streams of 

a single station. For example, WXXX–TV was 

reported 92 times by 25 cable systems with 

7 different spellings. 

WXXX 

WXXX WEATHER NOW 

WXXX 7 

WXXX–TV 

WXXX WEATHER 

WXXX HD 

WXXX RETRO TV NETWORK 

4. Next, the staff reduced the number of 

entries per cable system to one by 

considering that if at any one of those entries 

was marked as must-carry, then that station 

was must-carry on that cable system. The 

dataset for WXXX was then reduced to one 

report for each of the 25 cable systems. If any 

one of the entries for a cable system was 

marked as must-carry, the report for that 

cable system was must-carry. 

5. Due to either different elections on 

different cable systems or accidental 

misreporting by cable operators, many 

stations had a mixture of must-carry and 

retransmission-consent reports. 

Must-Carry 

RetransmissionConsent 

WXXX ............... 2 23 

6. The staff aggregated the reports, and if 

operators reported a station as must-carry as 

or more often as operators reported that 

station as retransmission-consent, the staff 

considered that station to prefer must-carry. 

In this case, the majority of cable systems 

reports retransmission consent, so WXXX 

was assigned a single preference: 

WXXX ....................... RetransmissionConsent 

7. The process was repeated for each of the 

approximately 2000 broadcast stations listed 

in the 325 reports. In the event of an equal 

number of systems reporting must-carry and 

retransmission consent, the station was 

considered to have chosen must-carry. 

Subscribers Served by Hybrid Cable Systems 

8. Staff analyzed the ‘‘number of digital 

channels activated’’ and ‘‘number of analog 

channels activated’’ data fields in the Form 

325 reports from filing year 2010. A hybrid 

system has at least one activated analog 

channel and at least one activated digital 

channel. As the Form 325 is collected by a 

sample of cable systems, staff performed the 

below analysis to determine that 56.8 million 

of the 62 million cable subscribers are on 

hybrid systems. 

9. Of the 565 systems that reported more 

than 20,000 subscribers, 542 were hybrid 

systems, with those systems serving 46.6 

million subscribers. No scaling factor was 

necessary as reports must be filed by all 

systems with more than 20,000 subscribers. 

10. Of the 249 systems that reported 

between 5,000 and 20,000 subscribers, 233 

were hybrid systems serving 2.7 million 

subscribers. A representative sample of 

systems with between 5,000 and 20,000 is 

asked to file reports each year. Based on 

previous years’ Form 325 reports and other 

research, staff estimated that there are 451 

such systems in total. When the data was 

extrapolated, staff estimated that 422 of the 

451 systems are hybrid. Thus, the 2.7 million 

subscribers were scaled by a multiple of 

(422/233), yielding an estimated total of 4.9 

million subscribers. 

11. Of the 154 systems that reported fewer 

than 5000 subscribers, 91 were hybrid 

systems serving 184 thousand subscribers. A 

representative sample of systems with fewer 

than 5000 subscribers is asked to file reports 

each year. Based on previous years’ Form 325 

reports and other research, staff estimated 

that there are 4450 such systems in total. 

When the data was extrapolated, staff 

estimated that 2630 of the 4450 systems are 

hybrid. When scaled by a multiple of (2630/ 

91), staff estimated that there are a total of 

5.3 million subscribers served by these 

systems. 

12. Staff summed the total number of 

subscribers served by hybrid systems and 

came up with a result of 56.8 million such 

subscribers (46.6 million + 4.9 million + 5.3 

million). 

Staff used a similar process as described 

above to estimate the total number of cable 

subscribers in the U.S. as approximately 62 

million. This total is close to other publicly 

available estimates of cable subscribers. 

[FR Doc. 2012–3703 Filed 2–15–12; 8:45 am] 

BILLING CODE 6712–01–P 


sroberts on DSK5SPTVN1PROD with PROPOSALS