[Federal Register Volume 89, Number 26 (Wednesday, February 7, 2024)]
[Proposed Rules]
[Pages 8385-8391]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-02097]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 76

[MB Docket No. 24-20; FCC 24-2; FR ID 198390]


Customer Rebates for Undelivered Video Programming During 
Blackouts

AGENCY: Federal Communications Commission

ACTION: Notice of proposed rulemaking.

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SUMMARY: In this document, the Federal Communications Commission

[[Page 8386]]

(Commission) seeks comment on whether to require cable operators and 
direct broadcast satellite (DBS) providers to give their subscribers 
rebates when those subscribers are deprived of video programming they 
expect to receive during programming blackouts that result from failed 
retransmission consent negotiations or failed non-broadcast carriage 
negotiations. When such blackouts occur, subscribers often pay the same 
monthly subscription fee for a service package that does not include 
all of the channels for which they signed up to receive. In other 
words, consumers are paying for a service that they are no longer 
receiving in full. This proceeding seeks comment on whether and how we 
should address this customer service shortcoming. We also seek comment 
on how the market addresses this issue currently.

DATES: Submit comments on or before March 8, 2024. Submit reply 
comments on or before April 8, 2024.

ADDRESSES: You may submit comments, identified by MB Docket No. 24-20, 
by any of the following methods:
    <bullet> Electronic Filers. Comments may be filed electronically by 
accessing ECFS at: http://apps.fcc.gov/ecfs/. Follow the instructions 
for submitting comments.
    <bullet> Paper Filers. Parties who choose to file by paper must 
file an original and one copy of each filing. Paper filings can be sent 
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.
    [cir] Commercial overnight mail (other than U.S. Postal Service 
Express Mail and Priority Mail) must be sent to 9050 Junction Drive, 
Annapolis Junction, MD 20701.
    [cir] U.S. Postal Service first-class, Express, and Priority mail 
must be addressed to 45 L Street NE, Washington, DC 20554.
    [cir] Effective March 19, 2020, and until further notice, the 
Commission no longer accepts any hand or messenger delivered filings.
    <bullet> People With Disabilities: Contact the FCC to request 
reasonable accommodations (accessible format documents, sign language 
interpreters, CART, etc.) by email: <a href="/cdn-cgi/l/email-protection#c4828787f1f4f084a2a7a7eaa3abb2"><span class="__cf_email__" data-cfemail="276164641217136741444409404851">[email protected]</span></a> or phone: 202-418-
0530 or TTY: 202-418-0432.
    In addition to filing comments with the Secretary, a copy of any 
comments on the Paperwork Reduction Act proposed information collection 
requirements contained herein should be submitted to the Federal 
Communications Commission via email to <a href="/cdn-cgi/l/email-protection#2d7d7f6c6d4b4e4e034a425b"><span class="__cf_email__" data-cfemail="8fdfddcecfe9ececa1e8e0f9">[email protected]</span></a> and to Cathy 
Williams, FCC, via email to <a href="/cdn-cgi/l/email-protection#4f0c2e3b27366118262323262e223c0f292c2c61282039"><span class="__cf_email__" data-cfemail="743715001c0d5a231d18181d151907341217175a131b02">[email protected]</span></a>.

FOR FURTHER INFORMATION CONTACT: For additional information on this 
proceeding, contact Brendan Murray, <a href="/cdn-cgi/l/email-protection#1a58687f747e7b7434576f68687b635a7c7979347d756c"><span class="__cf_email__" data-cfemail="df9dadbab1bbbeb1f192aaadadbea69fb9bcbcf1b8b0a9">[email protected]</span></a>, of the 
Policy Division, Media Bureau, (202) 418-1573.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Notice 
of Proposed Rulemaking, (NPRM) FCC 24-2, adopted on January 10, 2024, 
and released on January 17, 2024. These documents will be available via 
ECFS (http://www.fcc.gov/cgb/ecfs/). (Documents will be available 
electronically in ASCII, Word, and/or Adobe Acrobat.) To request these 
documents in accessible formats for people with disabilities, send an 
email to <a href="/cdn-cgi/l/email-protection" class="__cf_email__" data-cfemail="fc9a9f9fc9ccc8bc9a9f9fd29b938a">[email protected]</a> or call the Commission's Consumer and 
Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432 
(TTY).
    Background. The Communications Act of 1934, as amended (the Act), 
requires that cable operators and satellite TV providers obtain a 
broadcast TV station's consent to lawfully retransmit the signal of a 
broadcast station to subscribers. Commercial stations may either demand 
carriage pursuant to the Commission's must carry rules or elect 
retransmission consent and negotiate for compensation in exchange for 
carriage. If a station elects retransmission consent but is unable to 
reach agreement for carriage, or the parties to an existing 
retransmission consent agreement do not extend, renew, or revise that 
agreement prior to its expiration, the cable operator or DBS provider 
loses the right to carry the signal. The same is true if a cable 
operator or DBS provider cannot negotiate for carriage with a non-
broadcast network. In both cases, the result is a blackout of that 
existing programming on the platform. When these blackouts occur, the 
cable operator or DBS provider's subscribers typically lose access to 
the station or network's entire signal on the platform, including both 
the national and local programming provided by the broadcaster, unless 
and until the parties are able to reach an agreement.
    Over the past decade, data indicates that the number of blackouts 
resulting from unsuccessful retransmission consent negotiations has 
increased dramatically. These blackouts often frustrate subscribers 
because they lose access to programming from their cable operator or 
DBS provider that they had previously received. A leading cause of 
these disputes is disagreements over per-subscriber programming fees. 
However, subscribers may not see rebates or bill reductions during the 
carriage dispute when the cable operator or DBS provider does not carry 
the broadcast TV station, even though many cable operators and DBS 
providers charge a fee on subscribers' bills that purportedly pays 
programmers for subscriber access to the broadcast signal or network.
    Discussion. We seek comment on whether and how to require cable 
operators and DBS providers to give their subscribers rebates when they 
blackout a channel due to a retransmission consent dispute or a failed 
negotiation for carriage of a non-broadcast channel. In the event that 
we adopt such a requirement, we seek comment below on (i) how to apply 
the rule, (ii) whether to specify the method that cable operators and 
DBS providers use to offer the rebates and if so, how they should issue 
rebates, (iii) our authority to adopt a rebate rule, (iv) how to 
enforce a rebate rule, (v) the costs and benefits of such a rule, and 
(vi) the effects that such a rule would have on digital equity and 
inclusion. We also invite comment on any other proposals to ensure that 
subscribers are made whole when they lose access to programming that 
they expected to receive in exchange for paying a monthly subscription 
fee when they signed up for service.
    We seek comment on this proposal at this time because, as discussed 
above, data indicates that the number of blackouts has increased 
dramatically in the last several years. Why is this? Is increased 
consolidation in either the broadcaster or MVPD market leading to an 
increase in blackouts? Has the proliferation of streaming services, 
including live linear streaming services (vMVPDs) impacted the amount 
or duration of blackouts, as these services may provide subscribers 
with alternative viewing options during a carriage dispute? Are 
broadcasters or programmers with certain categories of programming 
(e.g. sports) more likely to have negotiations that result in 
blackouts? Are there certain broadcasters or MVPDs whose negotiations 
result in blackouts more frequently than others? Are there proposals we 
should consider to incentivize both broadcasters/programmers and 
distributors to limit programming blackouts?
    Applicability. We seek comment on whether to require cable 
operators and DBS providers to provide rebates if they blackout video 
channels due to a

[[Page 8387]]

retransmission consent dispute or a failed negotiation for carriage of 
a non-broadcast channel. Below, we seek comment on whether various 
provisions of the Act give us authority to require cable operators and 
DBS providers to give their subscribers rebates when the operator or 
providers ceases to carry a channel due to a retransmission consent or 
program carriage dispute; given that the authority upon which we base 
this proposal is cable and DBS-specific, are those the only entities to 
which this proposal should apply? If we were to require cable operators 
and DBS providers to give rebates to subscribers who are deprived of 
programming they expected to receive, should the rule apply to any 
channel that is blacked out? What if the parties never reach an 
agreement for carriage? Would subscribers be entitled to rebates in 
perpetuity and how would that be calculated? Or should the rebate end 
when the subscriber renews the contract if the channel is still blacked 
out at the time of renewal? Similarly, if a subscriber initiates 
service during a blackout, would that subscriber be entitled to a 
rebate or a lower rate? Does the ``good faith'' negotiation requirement 
in section 325 of the Act confer unique status on broadcast channels 
that provides a basis to distinguish broadcast and broadcast-affiliated 
channels (that is, those channels that are owned by a company that also 
holds or controls broadcast licenses) from non-broadcast or independent 
channels? That is, does the ``good faith'' negotiation requirement make 
an eventual carriage agreement more likely, and therefore suggest that 
a rebate would be temporary? If so, should this affect whether the 
rebate policy should apply to such entities, and why? To the extent 
that the existing terms of service between a cable operator or DBS 
provider and its subscriber specify that the cable operator or DBS 
provider is not liable for credits or refunds in the event that 
programming becomes unavailable, we seek comment on whether to deem 
such provisions unenforceable if we were to adopt a rebate requirement.
    Rebates. We seek comment on how cable operators and DBS providers 
currently handle this issue. Are there providers who currently provide 
subscribers with rebates or credits during a programming blackout? If 
so, does the provider proactively grant that rebate or credit to all 
subscribers affected, or is the subscriber required to affirmatively 
request it? How is the rebate or credit calculated? Are there providers 
who grant rebates or credits for the blackout of certain channels, but 
not of others? What are the deciding factors in such a case? Are there 
providers who do not grant rebates or credits during blackouts? If so, 
what is their rationale? How would requiring cable operators and DBS 
providers to provide rebates or credits change providers' current 
customer service relations during a blackout?
    We seek comment on how to calculate the rebate to which a 
subscriber is entitled after a channel is blacked out and what 
methodology should be used. Would it be reasonable to require a cable 
operator or DBS provider to rebate the cost that it paid to the 
programmer to retransmit or carry the channel prior to the carriage 
impasse? We understand that carriage contracts can be complex; for 
example, rates may depend on the number of subscribers reached and the 
number of bundled channels being carried, video service providers can 
receive advertising time in exchange for carriage, providers' profits 
for specific channels may vary depending on the packages and bundles 
that they offer, and specific per-subscriber rates may be confidential. 
Given these complexities, are there specific nuances that we could 
adopt as part of a rule to ensure that subscribers are made whole when 
they lose access to a channel? Should we instead simply require cable 
operators and DBS providers to provide a rebate or credit to the 
consumer that in good faith approximates the value of the consumer's 
access to the channel? Should the Commission specify the method for 
providing the rebate?
    Authority. We tentatively conclude that sections 335 and 632 of the 
Act provide us with authority to require cable operators and DBS 
providers to issue a rebate to their subscribers when they blackout a 
channel. The Commission has relied on this authority to propose and 
adopt cable customer service regulations for decades, and recently 
proposed to use this authority to adopt a customer service rule that 
would apply to DBS as well as cable.
    We tentatively conclude that the broad authority we have to adopt 
``public interest or other requirements for providing video 
programming'' under section 335(a) permits us to require DBS providers 
to give subscribers rebates for blackouts. Section 335(a) authorizes 
the Commission to impose on DBS providers public interest requirements 
for providing video programming. Although section 335(a) requires the 
Commission to adopt certain statutory political broadcasting 
requirements for DBS providers, the statute is clear that this list is 
not exhaustive. We tentatively find that requiring rebates for service 
interruptions due to blackouts pertains to the ``provi[sion] of video 
programming'' and is in the public interest because the proposed rule 
would prevent DBS subscribers from being charged for services for the 
period that they did not receive them. Moreover, we tentatively find 
that a rebate requirement would ensure that DBS subscribers are made 
whole when they face interruptions of service that are outside their 
control. Accordingly, we tentatively conclude that we have authority 
under section 335(a) to apply our proposed rule to DBS providers. We 
seek comment on these tentative findings and conclusions. We also seek 
comment on whether there are alternative or additional statutes or 
arguments that provide a legal basis for our authority to adopt these 
requirements for DBS providers. For example, do we have authority under 
other provisions of Title III?
    We also seek comment on whether we have--and should exercise--
ancillary authority under section 4(i) of the Act to extend our 
proposed rule to DBS providers and whether it is necessary to undertake 
this regulation for the Commission to effectively perform its 
responsibilities under the foregoing primary sources of statutory 
authority. Applying the rebate requirement to such providers would 
ensure uniformity of regulation between and among cable operators 
(regulated under Title VI and by various state consumer protection laws 
and local franchising provisions) and DBS providers (under Title III), 
thereby preventing DBS from gaining a competitive advantage over their 
competitors because they will not be required to provide rebates to 
their subscribers for loss of service due to blackouts.
    We tentatively conclude that section 632--which directs the 
Commission to ``establish standards by which cable operators may 
fulfill their customer service requirements''--grants us the authority 
to adopt a rebate requirement that would apply to cable operators. 
Sections 632(b)(2) and (b)(3) direct the Commission to establish 
standards governing ``outages'' and ``communications between the cable 
operator and the subscriber (including standards governing bills and 
refunds).'' Although the statute does not define the term ``outages,'' 
we tentatively find that Congress intended that term to apply not only 
to a complete system failure but to broadly cover any interruption of 
service under the requirements of 632(b)(2). Moreover, because our 
proposed rules seek to address cable operators' billing and refund 
practices

[[Page 8388]]

concerning blacked out programming, we tentatively conclude that these 
are customer service matters within the meaning of section 632(b)(3). 
We tentatively find that this interpretation is supported by the 
legislative history. Specifically, when Congress adopted section 632, 
it directed us to ``provide guidelines governing the provision of 
rebates and credits to customers due to system failures or other 
interruptions of service.'' From a subscriber's perspective, when a 
cable operator blacks out a signal over failed carriage negotiations, 
we tentatively find it to be an interruption of service--that is an 
``outage'' within the meaning of (b)(2): the subscriber is paying for a 
service in exchange for a particular package of channels, and that 
particular package of channels is no longer available in full for a 
period of time. Regardless of whether the outage is due to a technical 
issue, a breakdown in retransmission consent negotiations, or for some 
other reason, we tentatively find that the subscriber's service 
interruption may be regulated under (b)(2), and entitled to a rebate. 
We tentatively find that we are also authorized under (b)(3) to require 
the cable operator to provide a rebate to the affected subscriber for 
the service loss during that period. In addition, we tentatively find 
that we may regulate blackout-related rebates under our general 
authority in 632(b) to establish ``customer service'' standards. 
Although the term ``customer service'' is not defined in the statute, 
the legislative history defines the term ``customer service'' to mean 
``in general'' ``the direct business relation between a cable operator 
and a subscriber,'' and goes on to explain that ``customer service 
requirements'' include requirements related to ``rebates and credits to 
consumers.'' We tentatively conclude that the proposed rebate 
requirement satisfies the definition of a ``customer service 
requirement'' because billing practices governing an interruption of 
service, such as blackouts, involve the ``direct business relation 
between a cable operator and a subscriber.'' Furthermore, the list of 
topics Congress required the Commission to address in terms of customer 
service was not exhaustive. We tentatively conclude that blackout-
related rebates are precisely the type of customer service concerns 
that Congress meant to address when it enacted section 632. Thus, we 
tentatively find that our proposed rules are within the statute's grant 
of authority. We seek comment on this analysis.
    We acknowledge that section 623 of the Act limits our authority to 
regulate rates for cable service in areas where effective competition 
exists, and that nearly all cable operators now face effective 
competition and are not subject to rate regulation. However, there is 
no such limitation in section 632's customer service provision. 
Furthermore, the availability of other service providers offering video 
programming in the franchise area may provide some prospective options 
for subscribers, or some deterrent effect for the conduct we aim to 
address, but we tentatively find that does not prevent a cable operator 
offering services under an existing contract from charging a subscriber 
for a channel that carries no programming due to a business dispute 
that is at least somewhat within the purview of the cable operator to 
resolve. We tentatively conclude that a rebate requirement for 
interruption of service due to blackouts would not be rate regulation. 
The statute does not define the term ``rates'' or explain the meaning 
of the phrase ``rates for the provision of cable service'' for purposes 
of section 623. Recent court decisions distinguish prohibited rate 
regulations from regulations similar to the one we propose here that 
provide basic protections for cable customers. In Spectrum Northeast, 
LLC v. Frey, the First Circuit upheld a Maine regulation that requires 
cable operators to issue prorated credits or rebates for the days 
remaining in a billing period after a subscriber terminates cable 
service. The court determined that the federal preemption of cable rate 
regulation ``did not extend to the regulation of termination rebates'' 
and concluded that the Maine law is not a law governing ``rates for the 
provision of cable service'' but rather is a ``consumer protection 
law'' that is not preempted. The New Jersey Supreme Court also recently 
upheld a similar New Jersey statute. In Matter of Altice, the Supreme 
Court of New Jersey concluded that a requirement that cable operators 
issue refunds for the remaining days in a billing cycle is not rate 
regulation because ``the plain and ordinary meaning of rate regulation 
. . . is not so broad as to encompass all laws that affect or concern 
cable prices.'' Both cases involved requirements that addressed cable 
operator charges to subscribers for services that were no longer being 
provided to the subscriber. Here, too, our proposed requirement would 
prohibit cable operators from charging subscribers for the period of 
time that particular programming is not being provided by the cable 
operator. That contrasts with our common understanding of rate 
regulation, which is when the government sets ``the amount charged for 
a particular product . . . as defined by a particular unit of 
measurement in relation to the product.'' Our proposal contains no 
limits on the amount that a cable operator may charge for a channel; 
rather, it would simply require the operator to rebate the amount it 
charges if it does not deliver the product. Accordingly, we tentatively 
conclude that the courts' logic in Spectrum Northeast, LLC v. Frey and 
Matter of Altice applies to the rebate requirements for blackouts. We 
seek comment on this analysis.
    We also tentatively conclude that our proposal to require rebates 
in the event of a blackout is consistent with Section 624(f) of the 
Act, which provides that ``[a]ny Federal agency . . . may not impose 
requirements regarding the provision or content of cable services, 
except as expressly provided in this subchapter.'' As an initial 
matter, we tentatively conclude that our proposed rebate requirement is 
authorized by Section 632, as noted above. In any event, we note that 
courts have interpreted Section 624(f) to prohibit regulations that are 
based on the content of cable programming (e.g., requirements to carry 
or not carry certain programming). Because the blackout rebate proposal 
is not content-based (that is, it does not require the cable operator 
to carry or not carry certain programming), we tentatively conclude it 
does not violate Section 624(f). We seek comment on this analysis.
    As noted above, based on the language and structure of section 632, 
Congress authorized the Commission to establish customer service 
requirements for cable operators, and franchising authorities to adopt 
additional laws above and beyond the Commission's baseline 
requirements. Therefore, we tentatively find that our proposed rule for 
cable operators would not preempt state and local laws applied to cable 
operators that require rebates for blackouts or otherwise exceed the 
requirements we adopt in this proceeding, so long as they are not 
inconsistent with Commission regulations. We seek comment on this 
analysis.
    Enforcement. The Commission shares authority over cable customer 
service issues under the Act: ``the Commission sets baseline customer 
service requirements at the federal level, and state and local 
governments tailor more specific customer service regulations based on 
their communities' needs.'' Given the bifurcated authority we share 
with state and local governments, we

[[Page 8389]]

seek comment on how best to enforce a rebate rule. Do state and local 
authorities have adequate resources to effectively enforce these rules? 
If not, is the Commission best equipped to enforce a rebate requirement 
based on consumer complaints? Is there a better enforcement mechanism 
to ensure that subscription video providers provide their subscribers 
with rebates or credit? Given our shared jurisdiction over cable 
customer service issues, we seek specific comment from State and local 
authorities regarding their local subscriber complaints and regulation 
experiences with respect to service interruptions due to blackouts. 
What is the most effective way to enforce a requirement applicable to 
DBS providers?
    Cost/Benefit Analysis. We invite commenters to address the costs 
and benefits of requiring cable operators and DBS providers to offer 
rebates to their subscribers when those subscribers are deprived of 
video programming for which they paid. What are the burdens and costs 
of providing rebates? Would the benefits to subscribers outweigh any 
such costs and burdens? Are the costs and benefits different for small 
cable entities, and if so, should we impose different obligations on 
those entities? How would requiring cable operators and DBS providers 
to offer rebates affect carriage negotiations with broadcast stations 
and non-broadcast programmers? Specifically, how would this policy 
affect the likelihood of blackouts, the duration of blackouts if they 
were to occur, and the carriage fee ultimately negotiated?
    Digital Equity and Inclusion. Finally, the Commission, as part of 
its continuing effort to advance digital equity for all, including 
people of color, persons with disabilities, persons who live in rural 
or Tribal areas, and others who are or have been historically 
underserved, marginalized, or adversely affected by persistent poverty 
or inequality, invites comment on any equity-related considerations and 
benefits (if any) that may be associated with the proposals and issues 
discussed herein. Specifically, we seek comment on how our proposals 
may promote or inhibit advances in diversity, equity, inclusion, and 
accessibility, as well the scope of the Commission's relevant legal 
authority.
    Procedural Matters. Ex Parte Rules--Permit-But-Disclose. The 
proceeding this NPRM initiates shall be treated as a ``permit-but-
disclose'' proceeding in accordance with the Commission's ex parte 
rules. 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. Memoranda must contain a summary of the substance of 
the ex parte presentation and not merely a listing of the subjects 
discussed. More than a one or two sentence description of the views and 
arguments presented is generally required. 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 section 1.1206(b) of the rules. In 
proceedings governed by section 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.
    Providing Accountability Through Transparency Act. The Providing 
Accountability Through Transparency Act requires each agency, in 
providing notice of a rulemaking, to post online a brief plain-language 
summary of the proposed rule. Accordingly, the Commission will publish 
the required summary of this Notice of Proposed Rulemaking on: https://www.fcc.gov/proposed-rulemakings.
    Filing Requirements--Comments and Replies. Pursuant to sections 
1.415 and 1.419 of the Commission's rules, 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).
    Electronic Filers: Comments may be filed electronically using the 
internet by accessing the ECFS: http://apps.fcc.gov/ecfs/.
    Paper Filers: Parties who choose to file by paper must file an 
original and one copy of each filing.
    Filings can be sent 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.
    Commercial overnight mail (other than U.S. Postal Service Express 
Mail and Priority Mail) must be sent to 9050 Junction Drive, Annapolis 
Junction, MD 20701.
    U.S. Postal Service first-class, Express, and Priority mail must be 
addressed to 45 L Street NE, Washington, DC 20554.
    Effective March 19, 2020, and until further notice, the Commission 
no longer accepts any hand or messenger delivered filings. This is a 
temporary measure taken to help protect the health and safety of 
individuals, and to mitigate the transmission of COVID-19.
    Regulatory Flexibility Act. The Regulatory Flexibility Act of 1980, 
as amended (RFA), requires that an agency prepare a regulatory 
flexibility analysis for notice and comment rulemakings, unless the 
agency certifies that ``the rule will not, if promulgated, have a 
significant economic impact on a substantial number of small 
entities.'' Accordingly, we have prepared an Initial Regulatory 
Flexibility Analysis (IRFA) concerning the possible/potential impact of 
the rule and policy changes contained in this Notice of Proposed 
Rulemaking. Written public comments are requested on the IRFA. Comments 
must have a separate and distinct heading designating them as responses 
to the IRFA and must be filed by the deadlines for comments on the 
first page of this document.
    As required by the Regulatory Flexibility Act of 1980, as amended, 
the Commission has prepared this IRFA of the possible significant 
economic impact on a substantial number of small entities by the 
policies and rule changes proposed in the Notice of Proposed Rulemaking 
(NPRM). Written public comments are requested on this IRFA. Comments 
must be identified as responses to the IRFA and must be filed by the 
deadlines for comments specified in the NPRM. The Commission will send 
a copy of the NPRM, including this IRFA, to the Chief Counsel for 
Advocacy

[[Page 8390]]

of the Small Business Administration (SBA).
    Need for, and Objectives of, the Proposed Rules. In the NPRM, we 
address whether subscriber rebates should be offered by cable operators 
or direct broadcast satellite (DBS) providers in instances where those 
operators and providers fail to agree on carriage terms with a 
broadcaster or programming network and, as a result of the dispute, 
subscribers lose access to the channels over which the parties are 
negotiating. At present, the resulting subscriber blackouts lead to 
subscribers often paying the same monthly subscription fee for a 
service package that does not include all of the channels that expected 
to receive when signing up for service. The NPRMaims to address that 
customer service shortcoming, as well as address how such a rebate 
program could be implemented in a manner that does not create undue 
economic hardship to small and other entities in their efforts at 
compliance with the rules proposed in the NPRM, should they be adopted.
    Legal Basis. The proposed action is authorized pursuant to sections 
1, 4(i), 4(j), 303, 335(a), and 632(b) of the Communications Act of 
1934, as amended, 47 U.S.C. 151, 154(i), 154(j), 303, 335(a), and 
552(b).
    Description and Estimate of the Number of Small Entities to Which 
the Proposed Rules Will Apply. The RFA directs agencies to provide a 
description of, and, where feasible, an estimate of the number of small 
entities that may be affected by the proposed rules, if adopted. The 
RFA generally defines the term ``small entity'' as having the same 
meaning as the terms ``small business,'' ``small organization,'' and 
``small governmental jurisdiction.'' In addition, the term ``small 
business'' has the same meaning as the term ``small business concern'' 
under the Small Business Act. A small business concern is one which: 
(1) is independently owned and operated; (2) is not dominant in its 
field of operation; and (3) satisfies any additional criteria 
established by the Small Business Act. Below, we provide a description 
of the impacted small entities, as well as an estimate of the number of 
such small entities, where feasible.
    Cable Companies and Systems (Rate Regulation Standard). 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. Based on industry data, there are about 420 cable companies 
in the U.S. Of these, only seven have more than 400,000 subscribers. In 
addition, under the Commission's rules, a ``small system'' is a cable 
system serving 15,000 or fewer subscribers. Based on industry data, 
there are about 4,139 cable systems (headends) in the U.S. Of these, 
about 639 have more than 15,000 subscribers. Accordingly, the 
Commission estimates that the majority of cable companies and cable 
systems are small.
    Cable System Operators (Telecom Act Standard). The Communications 
Act of 1934, as amended, contains a size standard for a ``small cable 
operator,'' which is ``a cable operator that, directly or through an 
affiliate, serves in the aggregate fewer than one 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.'' For purposes of the Telecom Act Standard, the 
Commission determined that a cable system operator that serves fewer 
than 498,000 subscribers, either directly or through affiliates, will 
meet the definition of a small cable operator based on the cable 
subscriber count established in a 2001 Public Notice. Based on industry 
data, only six cable system operators have more than 498,000 
subscribers. Accordingly, the Commission estimates that the majority of 
cable system operators are small under this size standard. We note, 
however, that the Commission neither requests nor collects information 
on whether cable system operators are affiliated with entities whose 
gross annual revenues exceed $250 million. Therefore, 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.
    Direct Broadcast Satellite (DBS) Service. DBS service is a 
nationally distributed subscription service that delivers video and 
audio programming via satellite to a small parabolic ``dish'' antenna 
at the subscriber's location. DBS is included in the Wired 
Telecommunications Carriers industry which 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 combination of technologies. Establishments in 
this industry use the wired telecommunications network facilities that 
they operate to provide a variety of services, such as wired telephony 
services, including VoIP services, wired (cable) audio and video 
programming distribution; and wired broadband internet services. By 
exception, establishments providing satellite television distribution 
services using facilities and infrastructure that they operate are 
included in this industry.
    The SBA small business size standard for Wired Telecommunications 
Carriers classifies firms having 1,500 or fewer employees as small. 
U.S. Census Bureau data for 2017 show that 3,054 firms operated in this 
industry for the entire year. Of this number, 2,964 firms operated with 
fewer than 250 employees. Based on this data, the majority of firms in 
this industry can be considered small under the SBA small business size 
standard. According to Commission data however, only two entities 
provide DBS service, DIRECTV and DISH Network, which require a great 
deal of capital for operation. DIRECTV and DISH Network both exceed the 
SBA size standard for classification as a small business. Therefore, we 
must conclude based on internally developed Commission data, in general 
DBS service is provided only by large firms.
    Description of Projected Reporting, Recordkeeping, and Other 
Compliance Requirements for Small Entities. The NPRM does not 
specifically propose any new or modified reporting or record keeping 
requirements for small entities, although comments we receive in 
response to the NPRM may potentially lead to new compliance 
requirements in the future. The NPRM seeks comment on whether to 
require cable operators and DBS providers to give subscribers rebates 
for channels that are not provided due to a breakdown in retransmission 
consent negotiations. If subscriber rebates are implemented, the 
Commission will need to determine how small and other entities may 
comply with any adopted rules, what the method used to offer rebates 
should be, and how such rebates could be issued to their subscribers.
    In assessing the cost of compliance for small entities, at this 
time the Commission is not in a position to determine whether, if 
adopted, our proposals and the matters upon which we seek comment will 
require small entities to hire professionals to comply with the 
proposed rules in the NPRM, and cannot quantify the operational and 
implementation costs of compliance with the potential rule changes 
discussed herein. To help the Commission more fully evaluate the cost 
of compliance, in the NPRM we seek comment on the costs and benefits of 
these proposals. We expect the comments that we receive from the

[[Page 8391]]

parties in the proceeding, including cost and benefit analyses, will 
help the Commission identify and evaluate compliance costs and burdens 
for small entities.
    Steps Taken to Minimize the Significant Economic Impact on Small 
Entities and Significant Alternatives Considered. The RFA requires an 
agency to describe any significant, specifically small business, 
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 and reporting requirements under the rule for such small 
entities; (3) the use of performance, rather than design, standards; 
and (4) an exemption from coverage of the rule, or any part thereof, 
for such small entities.''
    At this time, the Commission is not aware of any revisions or new 
requirements that, if adopted, would impose a significant economic 
impact or burdens on small entities. The NPRM invites comment on how to 
accommodate entities for which compliance with the proposed rules would 
pose an undue hardship.
    The Commission expects to more fully consider the economic impact 
and alternatives for small entities following the review of comments 
and costs and benefits analyses filed in response to the NPRM. The 
Commission's evaluation of this information will shape the final 
alternatives it considers, the final conclusions it reaches, and any 
final actions it ultimately takes in this proceeding to minimize any 
significant economic impact that may occur on small entities.
    Federal Rules that May Duplicate, Overlap, or Conflict with the 
Proposed Rules. None.
    Paperwork Reduction Act. This document may contain proposed new and 
modified information collection requirements. 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 any information collection requirements contained in this document, 
as required by the Paperwork Reduction Act of 1995, Public Law 104-13. 
In addition, pursuant to the Small Business Paperwork Relief Act of 
2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4), we seek specific 
comment on how we might further reduce the information collection 
burden for small business concerns with fewer than 25 employees.
    People with Disabilities: To request materials in accessible 
formats for people with disabilities (braille, large print, electronic 
files, audio format), send an email to <a href="/cdn-cgi/l/email-protection" class="__cf_email__" data-cfemail="e1878282d4d1d5a1878282cf868e97">[email protected]</a> or call the 
Consumer & Governmental Affairs Bureau at 202-418-0530 (voice).
    Accordingly, it is ordered that, pursuant to the authority 
contained in sections 1, 4(i), 4(j), 303, 335(a), 632(b) of the 
Communications Act of 1934, as amended, 47 U.S.C. 151, 154(i), 154(j), 
303, 335(a), and 552(b) this Notice of Proposed Rulemaking is adopted. 
It is further ordered that the Commission's Office of the Secretary 
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.

Federal Communications Commission.
Marlene Dortch,
Secretary.
[FR Doc. 2024-02097 Filed 2-6-24; 8:45 am]
BILLING CODE 6712-01-P


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