6544 Federal Register / Vol. 65, No. 28 / Thursday, February 10, 2000 / Rules and Regulations

the file and the worksheet or

spreadsheet page or cell. Where relevant

and material matter offered in evidence

is embraced in a document containing

other matter not material or relevant or

not intended to be put in evidence, the

participant offering the same shall

plainly designate the matter offered

excluding the immaterial or irrelevant

parts. If other matter in such document

is in such bulk or extent as would

unnecessarily encumber the record, it

may be marked for identification, and,

if properly authenticated, the relevant

and material parts may be read into the

record, or, if the Commission or

presiding officer so directs, a true copy

of such matter in proper form shall be

received in evidence as an exhibit.

Copies of documents shall be delivered

by the participant offering the same to

the other participants or their attorneys

appearing at the hearing, who shall be

afforded an opportunity to examine the

entire document and to offer in

evidence in like manner other material

and relevant portions thereof.

* * * * *

(c) Commission’s files. Except as

otherwise provided in § 3001.31(e), in

case any matter contained in a report or

other document on file with the

Commission is offered in evidence, such

report or other document need not be

produced or marked for identification,

but may be offered in evidence by

specifying the report, document, or

other file containing the matter so

offered.

* * * * *

(e) Designation of evidence from other

Commission dockets. Participants may

request that evidence received in other

Commission proceedings be entered

into the record of the current

proceeding. These requests shall be

made by motion, shall explain the

purpose of the designation, and shall

identify material by page and line or

paragraph number. Absent

extraordinary justification, these

requests must be made at least 28 days

before the date for filing the

participant’s direct case. Oppositions to

motions for designations and/or

requests for counter-designations shall

be filed within 14 days. Oppositions to

requests for counter-designations are

due within seven days. At the time

requests for designations and counterdesignations are made, the moving

participant must submit two copies of

the identified material to the Secretary

of the Commission.

(f) Form of prepared testimony and

exhibits. Unless the presiding officer

otherwise directs, the direct testimony

of witnesses shall be reduced to writing

and offered either as such or as an

exhibit. All prepared testimony and

exhibits of a documentary character

shall, so far as practicable, conform to

the requirements of § 3001.10(a) and (b).

* * * * *

(k) * * *

(3) * * *

(i) * * *

(d) A hard copy of all data bases;

(e) For all source codes,

documentation sufficiently

comprehensive and detailed to satisfy

generally accepted software

documentation standards appropriate to

the type of program and its intended use

in the proceeding;

(f) The source code in hardcopy form;

* * * * *

(i) An expert on the design and

operation of the program shall be

provided at a technical conference to

respond to any oral or written questions

concerning information that is

reasonably necessary to enable

independent replication of the program

output. Machine-readable data files and

program files shall be provided in the

form of a compact disk or other media

or method approved in advance by the

Administrative Office of the Postal Rate

Commission. Any machine-readable

data file or program file so provided

must be identified and described in

accompanying hardcopy

documentation. In addition, files in text

format must be accompanied by hardcopy instructions for printing them.

Files in machine code must be

accompanied by hardcopy instructions

for executing them.

* * * * *

(4) Expedition. The offeror shall

expedite responses to requests made

pursuant to this section. Responses shall

be served on the requesting party, and

notice thereof filed with the Secretary in

accordance with the provisions of

§ 3001.12, no later than 14 days after a

request is made.

22. Amend § 3001.43 as follows:

a. Revise paragraphs (e)(4)

introductory text and (e)(4)(i),

b. Revise paragraph (g)(1)(iii), and

c. Revise paragraph (g)(2)(iii).

§ 3001.43 Public attendance at

Commission meetings.

* * * * *

(e) * * *

(4) The public announcement

required by this section may consist of

the Secretary:

(i) Publicly posting a copy of the

document in the office of the Secretary

of the Commission at 1333 H Street,

NW., Suite 300, Washington, DC 20268–

0001;

* * * * *

(g) * * *

(1) * * *

(iii) Ten copies of such requests must

be received by the office of the Secretary

no later than three working days after

the issuance of the notice of meeting to

which the request pertains. Requests

received after that time will be returned

to the requester with a statement that

the request was untimely received and

that copies of any nonexempt portions

of the transcript or minutes for the

meeting in question will ordinarily be

available in the office of the Secretary

10 working days after the meeting.

* * * * *

(2) * * *

(iii) Ten copies of such requests

should be filed with the office of the

Secretary as soon as possible after the

issuance of the notice of meeting to

which the request pertains. However, a

single copy of the request will be

accepted. Requests to close meetings

must be received by the office of the

Secretary no later than the time

scheduled for the meeting to which

such a request pertains.

* * * * *

[FR Doc. 00–3026 Filed 2–7–00; 1:08 pm]

BILLING CODE 7710–FW–P

FEDERAL COMMUNICATIONS

COMMISSION

47 CFR Part 73

[MM Docket No. 97–247; FCC 99–362]

Fees for Ancillary or Supplementary

Use of Digital Television Spectrum

AGENCY: Federal Communications

Commission.

ACTION: Final rule.

SUMMARY: This document denies

Petitions for Reconsideration of the

Report and Order in this proceeding. It

reaffirms the previously established fee

of five percent of gross revenues

received from feeable ancillary or

supplementary services provided by

DTV stations. It also reaffirms the

conclusion that home shopping,

infomercial, and direct marketing

services are not feeable.

EFFECTIVE DATE: January 15, 1999.

FOR FURTHER INFORMATION CONTACT:

Mania Baghdadi, Policy and Rules

Division, Mass Media Bureau (202) 418–

2120.

SUPPLEMENTARY INFORMATION: This is a

summary of the Commission’s

Memorandum Opinion and Order,

(‘‘MO&O’’), FCC 99–362, adopted

November 19, 1999 and released

November 24, 1999. The full text of this

Federal Register / Vol. 65, No. 28 / Thursday, February 10, 2000 / Rules and Regulations 6545

Commission MO&O is available for

inspection and copying during normal

business hours in the FCC Dockets

Branch (Room TW–A306), 445 12 St.

SW, Washington, DC, 20554. The

complete text of this MO&O may also be

purchased from the Commission’s copy

contractor, International Transcription

Services (202) 857–3800, 1231 20th

Street, NW, Washington, DC 20036.

Synopsis of Report and Order

I. Introduction

1. In our Report and Order (‘‘R&O’’)

in this proceeding, (63 FR 69208,

December 14, 1998), we implemented

Section 201 of the Telecommunications

Act of 1996 (‘‘1996 Act’’) which adopted

Section 336 of the Communications Act

of 1934, requiring broadcast television

licensees to pay a fee if they provide

certain types of ancillary or

supplementary services on their digital

television (‘‘DTV’’) bitstream. Based on

the criteria set forth in Section 201, we

adopted rules to require DTV licensees

to pay a fee of five percent of the gross

revenues received from the provision of

such ‘‘feeable’’ ancillary or

supplementary services. We also

provided guidance on which services

are subject to this fee and specifically

concluded that home shopping,

infomercial, and direct marketing

services would not be feeable.

2. The National Association of

Broadcasters and the Association for

Maximum Service Television have filed

a joint petition (the ‘‘NAB/MSTV

Petition’’) asking us to set the fee at two

percent of gross revenues rather than

five percent. The Office of

Communication Inc. of the United

Church of Christ, the Benton

Foundation, the Center for Media

Education, the Civil Rights Forum and

Media Access Project have filed a joint

petition (the ‘‘UCC, et al. Petition’’)

asking us to hold that home shopping,

infomercials, and direct marketing

services are subject to fees. We deny

both petitions for reconsideration.

II. Background

3. Pursuant to the 1996 Act, the

Commission has assigned each existing

broadcast television station an

additional channel to convert to digital

technology. We are requiring

broadcasters to provide on their DTV

bitstream at least one over-the-air video

program signal at no direct charge to

viewers. 47 CFR 73.624(b). Aside from

this requirement, we have given

broadcasters great flexibility in the

services they provide over their DTV

bitstream. They may offer a wide range

of ancillary or supplementary services

such as computer software distribution,

data transmission, teletext, interactive

materials, aural messages, paging

services, audio signals, and subscription

video.

4. The 1996 Act requires broadcasters

to pay a fee to the U.S. Treasury to the

extent they use their DTV bitstream to

provide ancillary or supplementary

services—

(A) For which the payment of a

subscription fee is required in order to

receive such services, or

(B) For which the licensee directly or

indirectly receives compensation from a

third party in return for transmitting

material furnished by such a third party

(other than commercial advertisements

used to support broadcasting for which

a subscription fee is not required). 47

U.S.C. 336(e)(1).

The 1996 Act directed the

Commission to establish a program to

assess and collect this fee based on the

following three objectives:

• ‘‘To recover for the public a portion

of the value of the public spectrum

resource made available for such

commercial use’’;

• ‘‘To avoid unjust enrichment

through the method employed to permit

such uses of that resource’’;

• To ‘‘recover for the public an

amount that, to the extent feasible,

equals but does not exceed (over the

term of the license) the amount that

would have been recovered had such

services been licensed pursuant to [the

competitive bidding process.]’’ 47

U.S.C. 336(e)(2).

5. In the R&O, we established a fee

program that requires broadcasters to

pay a fee of five percent of the gross

revenues they receive from feeable

ancillary or supplementary services

offered on their DTV bitstream. We

reasoned that this fee is consistent with

the three objectives set forth in the Act.

It also represented a reasonable fee in

light of the record in the proceeding, in

which some parties argued for a very

low or nominal fee and others for a fee

of more than ten percent.

III. The NAB/MSTV Petition

6. NAB/MSTV argue that we failed to

consider two studies they submitted

that they believe call for a fee of two

percent of gross revenues rather than

five percent. The first study, prepared

by Jerry Hausman, purports to establish

‘‘the low and declining value of

comparable spectrum,’’ and also that

digital ancillary or supplementary

services ‘‘face significant business and

technological uncertainty.’’ The second

study, prepared by Kent Anderson,

describes several surveys of technology

licensing fees in the private sector. The

Association of Local Television Stations

(‘‘ALTV’’) submitted comments

supporting the NAB/MSTV Petition.

The National Cable Television

Association (‘‘NCTA’’) filed an

opposition to the petition.

7. Contrary to NAB/MSTV’s

suggestion, we did consider the two

studies in reaching our decision in the

R&O. Indeed, consistent with a

recommendation in the Hausman Study,

we declined to impose an upfront or

hybrid fee on DTV licensees that

provide feeable services. Although we

rejected arguments based on the two

studies to set the fee lower than five

percent, we explained in the R&O our

reasons for doing so. We reaffirm this

decision and amplify our reasons below.

8. The Anderson Study describes

several surveys of royalty rates used in

licensing various technologies in the

private sector. Although we did not cite

the Anderson Study explicitly and our

discussion of the issue was brief, the

R&O did reject arguments that we

should set a lower fee based on

analogies to copyright royalty rates. We

declined to do so because the policy

concerns and economic considerations

involved in setting a fee for ancillary or

supplementary services appear to be

different from the considerations

involved in negotiations over private

licensing rights. We have more closely

examined the Anderson Study and are

not persuaded that we should alter our

decision. Indeed, the Anderson Study

itself acknowledges that ‘‘[e]ach

licensing negotiation has unique

characteristics, making it very difficult

to demonstrate that the royalty observed

for any one licensing agreement

reasonably applies to another.’’ This

statement confirms our reluctance in the

R&O to directly base the fee required

under Section 336(e) on analogies to

private licensing arrangements.

9. Aside from this concern, the

Anderson Study can actually be read to

support a fee of five percent of gross

revenues. The NAB/MSTV Petition, at 5,

argues that the Anderson Study ‘‘found

that licensing rates for unproven

technologies without ‘highly favorable

economics’ tended to be very low.’’ But

the full sentence in the Anderson Study

that is cited to support this statement

states: ‘‘For ‘minor’ innovations the

range [of running royalty rates] is 1 to

5 percent, and for ‘major’ innovations it

is 3 to 8 percent. Only in the case of

innovations characterized as

‘revolutionary’ (i.e., suggesting highly

favorable economics) do the rates rise to

the 5 to 10 percent range.’’ The five

percent fee we have established thus

falls somewhere in the middle of these

reported ranges and could even be

6546 Federal Register / Vol. 65, No. 28 / Thursday, February 10, 2000 / Rules and Regulations

characterized as falling within the range

of royalty rates for ‘‘minor innovations.’’

More generally, Anderson summarizes

the overall results of his research as

‘‘show[ing] that some technologies earn

royalties on the order of 2 to 3 percent

or less, most earn royalties of 5 percent

or less, and only those technologies

with unusually favorable economics

receive rates of more than 10 percent.’’

Again, this places a five percent fee

squarely in the average range, which we

believe is reasonable. This is especially

the case since we are not imposing an

upfront or hybrid fee on DTV licensees.

By comparison, a fair number of the

royalty arrangements described in the

Anderson Study appear to involve

upfront payments in addition to royalty

fees. Taking these upfront payments

into account suggests that the five

percent fee we have established may

actually fall toward the low end of the

total licensing payments (royalties plus

upfront fees) surveyed in the Anderson

Study.

10. We now turn to the Hausman

Study. Based on an econometric study

of the FCC’s previous auctions,

Hausman reports that prices for

spectrum auctioned by the Commission

have been decreasing over time on a per

megahertz per population basis. He also

posits that there will be significant sunk

cost investments required to provide

DTV ancillary or supplementary

services, and also significant business

and technological uncertainty facing

these services. Hausman concludes that

‘‘the combination of overall declining

auction results over time and the

significant business and technological

uncertainty with respect to sunk costs

would lead to an expected outcome of

relatively low auction results for

spectrum used for ancillary services.’’

Noting that the Notice had sought

comment on setting the fee in the range

of one to ten percent, Hausman

recommends ‘‘that the Commission

initially begin with a fee toward the low

end of the range.’’

11. As an initial matter, we question

a number of the underlying assertions

made in the Hausman Study. Even

assuming it is true that there is a

downward trend in per megahertz, per

population prices for the spectrum

auctions the Commission has previously

held, this does not necessarily mean

that an auction of the spectrum used for

DTV ancillary or supplementary

services would follow this trend. As we

stated in the R&O, the auction values

realized by the Commission in

conducting a particular spectrum

auction reflect factors that are specific to

the particular spectrum being auctioned.

These factors include the anticipated

demand for the telecommunications

services provided using the particular

spectrum and the technological

uncertainty associated with the

application. The R&O pointed to

evidence that suggests that the broadcast

spectrum that will be used to provide

DTV ancillary or supplementary

services could command higher prices

than predicted by the trend described in

the Hausman Study. In particular, we

noted that the sales values of broadcast

properties have increased sharply over

the past several years, reflecting the

increasing value of their spectrum

licenses. The NAB/MSTV Petition faults

the R&O for focusing on this evidence

and for not placing greater weight on the

value of non-broadcast spectrum

because most ancillary or

supplementary services will be nonbroadcast in nature. But we think it is

reasonable to expect that the prices

investors pay for television stations

reflect not only the anticipated profits

from providing broadcast video

programming on the station but also the

projected profits from ‘‘non-broadcast’’

ancillary or supplementary services that

they can now provide on the station’s

DTV bitstream. The recent sales prices

for television stations thus shed some

light on the value of the spectrum used

to provide the ancillary or

supplementary services.

12. In addition, we question the

Hausman Study’s assertions regarding

the degree of uncertainty and sunk costs

DTV licensees will face in providing

ancillary or supplementary services.

Whether or not they choose to provide

ancillary or supplementary services,

DTV licensees will need to invest in

DTV facilities in order to provide a free,

over-the-air digital broadcast service.

Given this, it would appear that the

incremental or marginal cost of

providing any feeable ancillary or

supplementary services may not be as

significant as Hausman and NAB/MSTV

suggest. The most substantial costs

incurred by broadcasters, such as

transmitters and towers, will be sunk or

fixed costs that are already incurred in

connection with the provision of

nonfeeable services, thus minimizing

the additional investment required to

provide feeable services. We

consequently agree with NCTA that the

risk associated with offering ancillary or

supplementary services will be

diminished by the fact that DTV

licensees will be providing nonfeeable

broadcast services.

13. We also think Hausman and NAB/

MSTV overstate the level of uncertainty

broadcasters face in developing

ancillary or supplementary services. We

fully recognize developing and

implementing these services will entail

challenges and risks. But broadcasters

are not venturing into completely

uncharted territory. They have been

authorized to provide ancillary services

on parts of their analog signals for years,

although these services have been

limited due to the lack of capacity on

analog channels. Broadcasters have also

become increasingly involved over the

years in developing and selling

programming carried on cable networks,

and they can translate this experience

into providing subscription

programming over their DTV bitstream

should that appear profitable to them.

More recently, a number of broadcasters

have invested in internet-related

companies, suggesting that the internet’s

interactive and datacasting applications,

which potentially could also be offered

over the DTV bitstream, may prove

profitable.

14. Aside from the questions we have

about some of the Hausman Study’s

underlying assertions, we have a more

fundamental objection to the conclusion

NAB/MSTV seek to draw from it. In

particular, neither NAB/MSTV nor

Hausman provides a persuasive basis to

conclude that Hausman’s assertions,

even taken at face value, require us to

set the fee at two percent rather than

five percent of gross revenues. The

Hausman Study seems to acknowledge

this in that it has no firm

recommendation on the level of the fee,

only suggesting that the FCC initially set

the fee ‘‘toward the low end of the

range’’ and that the Commission ‘‘might

consider’’ initially setting the fee at one

percent or less. For its part, the NAB/

MSTV Petition argues that the studies it

has submitted ‘‘provide [ ] strong

support for the Commission to set a low

initial fee’’ and concludes that the fee

should be two percent of gross revenues,

yet it provides no rationale why a ‘‘low

fee’’ necessarily means a fee of two

percent as opposed to five percent.

15. We continue to think that a fee of

five percent of gross revenues is

reasonable in light of the criteria set

forth in Section 336(e). A central theme

underlying NAB/MSTV’s arguments and

the studies they have submitted is that

we should set the fee so as not ‘‘to

discourage the development of new

ancillary and supplementary services’’

and to ‘‘promote [ ] the efficient use of

digital spectrum.’’ We agree that this is

a worthy goal and, indeed, Section 1 of

the Communications Act states that one

of the Act’s purposes is to promote an

‘‘efficient’’ radio communication

service. 47 U.S.C. 151. But this general

policy cannot trump the specific

statutory criteria set forth in Section

336(e)(2) for establishing the fee, none

Federal Register / Vol. 65, No. 28 / Thursday, February 10, 2000 / Rules and Regulations 6547

of which require that the fee be

designed to maximize efficiency.

Indeed, taken to its logical conclusion,

the goal of maximizing efficiency and

encouraging ancillary or supplementary

services would mean that the fee should

be set at zero or some nominal

percentage rate as this would eliminate

any influence the fee would have on a

DTV licensee’s decision to provide

ancillary or supplementary services as

opposed to nonfeeable broadcast video

programming. But clearly this is not

what Congress intended. A fee system

that raised no or only nominal revenue

from licensees that provide ‘‘feeable’’

ancillary or supplementary services

would (quite literally) make Congress’s

enactment of Section 336(e) all for

naught.

16. In the end, implementing Section

336(e) is not, to paraphrase one of the

parties, an exact science. NAB/MSTV

acknowledge that the Commission has

‘‘broad discretion under the Act in

setting the fee level.’’ In exercising this

discretion, we have sought to promote

the efficient use of the spectrum and the

development of innovative ancillary or

supplementary services by DTV

licensees. But this discretion is bounded

by Section 336(e), which requires us to

design the fee not only to approximate

the revenue that would have been

received had these services been

licensed through an auction, but also to

recover a portion of the value of the

spectrum used for these services and

avoid ‘‘unjust enrichment’’ of DTV

licensees who have been given the

exclusive right to apply for DTV

channels without having to bid for them

at an auction. Weighing these factors

and the comments submitted in the

proceeding—some of which argued for a

fee of less than one percent while others

argued for a fee of over ten percent—we

established a fee of five percent of gross

revenues generated from feeable

ancillary or supplementary services.

The amount raised by this fee will vary

with the gross revenues from these

services, i.e., with the willingness of

consumers to pay for such services. As

a consequence, if the consumer value

for these services is low, the fee

payment will be small. Given this, and

the record in this proceeding and the

criteria set forth in Section 336(e), we

continue to believe this is a reasonable

fee and consistent with the statute, and

therefore deny the NAB/MSTV Petition.

IV. The UCC, et al. Petition

17. In the R&O, we decided not to

impose fees on revenues received from

home shopping, infomercial or direct

marketing services. We reasoned that:

[t]he purpose of this proceeding is not to

exact fees from existing broadcasters for

existing services but, rather, to design a

program for the assessment of fees on

ancillary or supplementary services which

will be provided on the DTV bitstream. We

agree with the commenters who argued that

home shopping and infomercials are

commercial advertisements, excluded by

statute from the scope of ancillary and

supplementary services as they are video

services received by viewers without a fee.

[Footnote omitted.] We therefore find that

home shopping channels and infomercials

are free, over-the-air television services,

supported by commercial advertisements,

and not subject to a fee.

18. UCC, et al. ask the Commission to

reconsider this decision. They interpret

the 1996 Act as requiring us to impose

fees on home shopping, infomercial,

and direct marketing services. NAB,

MSTV, ALTV, and Home Shopping

Network (‘‘HSN’’) and ValueVision

International (‘‘ValueVision’’) have

opposed UCC, et al.’s petition for

reconsideration and argue that the

Commission was correct in concluding

that these services are not subject to

fees.

19. UCC, et al. interpret the R&O as

basing this conclusion on two

rationales: (1) That home shopping,

infomercials, and direct marketing

services are ‘‘existing’’ services, and

therefore grandfathered from the fee

requirements in the Act; and (2) that

these services are ‘‘commercial

advertisements’’ rather than

programming services, and

consequently fall within Section

336(e)(1)(B), which exempts from fees

‘‘commercial advertisements used to

support broadcasting for which a

subscription fee is not required.’’ As to

the first rationale, UCC, et al. argue that

the 1996 Act does not give the

Commission authority to grandfather

existing services from the new statutory

fee requirements. As to the second

rationale, UCC, et al. maintain that it is

arbitrary and capricious to categorize

home shopping and similar services as

‘‘commercial advertisements’’ exempt

under Section 336(e)(1)(B) because

Congress, the Commission, and the

broadcast industry have consistently

characterized these services as

programming not as commercial

advertisements.

20. We think UCC, et al. have

misconstrued the R&O on these points.

Our decision was not intended to

grandfather existing services. Nor was it

based on whether home shopping and

similar services should be categorized as

‘‘commercial advertisements’’ or

‘‘programming.’’ We recognize that the

R&O, may have been unclear on this

point in that it referred to these services

as ‘‘commercial advertisements.’’ But

we did not intend this characterization

to be the basis for our decision not to

impose fees on these services. Rather,

we based this decision on what we see

as a threshold criterion in the statute:

only ancillary or supplementary

services are subject to fees under the

Act. Because traditional home shopping,

infomercial and direct marketing

services are free, over-the-air, video

services and therefore do not qualify as

ancillary or supplementary services as

we have defined that term in our rules,

47 CFR 73.624(c), they are not subject to

fees. Or, as we put it in the R&O, these

services are ‘‘excluded by statute from

the scope of ancillary and

supplementary services as they are

video services received by viewers

without a fee.’’ We take this opportunity

to elaborate on this reasoning.

21. Section 336(e)(1), which defines

the ‘‘services to which fees apply,’’

speaks only in terms of ‘‘ancillary or

supplementary services’’ in delineating

in subsections (A) and (B) the two types

of such services that are subject to fees.

In doing so, it necessarily excludes from

the fees requirement services that are

not ‘‘ancillary or supplementary’’ to

begin with. Although the Act does not

define the phrase ‘‘ancillary or

supplementary services,’’ the

Commission did so in implementing

Section 336 in its DTV rulemaking

proceeding, Fifth R&O in MM 87–268,

(62 FR 26966, May 16, 1997). In that

proceeding, we adopted § 73.624(c) of

our rules, which provides an illustrative

list of ancillary or supplementary

services: they include, but are not

limited to, ‘‘computer software

distribution, data transmissions,

teletext, interactive materials, aural

messages, paging services, audio signals,

subscription video, and any other

services that do not derogate DTV

broadcast stations’ obligations’’ to

‘‘transmit at least one over-the-air video

program signal at no direct charge to

viewers.’’ 47 CFR 73.624 (b) and (c).

Section 73.624(c) goes on to state ‘‘that

any video broadcast signal provided at

no direct charge to viewers shall not be

considered ancillary or supplementary.’’

22. Traditional home shopping,

infomercial, or direct marketing services

are video broadcast signals and are

offered at no direct charge to viewers.

As such, they fall outside the scope of

our definition of ‘‘ancillary or

supplementary services,’’ and therefore

are not subject to fees under Section

336(e)(1) of the Act. We think this is

consistent with Congress’s intent in

enacting Section 336(e)(1). To be sure,

we adopted our definition of ‘‘ancillary

or supplementary services’’ after

6548 Federal Register / Vol. 65, No. 28 / Thursday, February 10, 2000 / Rules and Regulations

enactment of the 1996 Act. But as HSN

and ValueVision state, ‘‘the Act’s

specific instruction that fees were to be

assessed only on ‘ancillary and

supplementary’ digital services was

arrived at in the context of the

Commission’s contemporaneous

consideration of [its then pending DTV

rulemaking proceeding], in which the

Commission repeatedly and consistently

made clear that ‘ancillary and

supplementary’ services are separate

and distinct from existing, traditional

over-the-air broadcast services.’ We

believe Congress drew the same

distinction in enacting Section 336,

excluding free, over-the-air broadcast

video programming service from fees.

Traditional home shopping,

infomercials, and direct marketing

services have long been a free, over-theair broadcast service, or, in § 73.624(c)’s

rubric, a ‘‘video broadcast signal

provided at no direct charge to

viewers.’’ It follows that in enacting

Section 336 Congress did not intend to

include these existing services within

the phrase ‘‘ancillary or supplementary

services’’ and subject them to fees.

23. Further evidence of this can be

found in Section 336(b)(3), which states,

among other things, that ‘‘no ancillary

or supplementary service shall have any

rights to carriage under section 614 or

615,’’ i.e., the statutory ‘‘must carry’’

rights broadcast television stations have

to be carried on cable systems in their

local area. 47 U.S.C. 336(b)(3). If a free,

over-the-air home shopping broadcast

service is considered an ‘‘ancillary or

supplementary service,’’ stations

carrying such programming would be

rendered ineligible for must carry rights

under Section 336(b)(3). We do not

think Congress could have intended

such a result given that, in Section 4(g)

of the Cable Television Consumer

Protection and Competition Act of 1992

(the ‘‘1992 Cable Act’’), it directed the

FCC to determine whether home

shopping stations served the public

interest and were entitled to must carry

rights. It would make little sense for

Congress to charge us with this duty,

and then four years later preclude home

shopping stations from must carry rights

under Section 336(b)(3) without a

mention, either in the 1996 Act or its

legislative history, of Section 4(g) of the

1992 Cable Act. A basic principle of

statutory construction is to seek to

construe statutory provisions so that

they are consistent with each other. We

think the most reasonable way to square

Section 336 and Section 4(g) of the 1992

Cable Act is not to treat traditional

home shopping, infomercials, and direct

marketing services as ancillary or

supplementary services.

24. We do not agree with UCC, et al.’s

suggestion that our decision not to

apply fees to home shopping,

infomercials and direct marketing

services means any service provided

without charge to the viewer is exempt

from fees regardless of whether a third

party compensates a broadcaster for

carriage. Nor do we agree with UCC, et

al.’s argument that our decision

effectively nullifies Section 336(e)(1)(B),

which requires us to impose fees on

ancillary or supplementary services ‘‘for

which the licensee directly or indirectly

receives compensation from a third

party in return for transmitting material

furnished by such third party (other

than commercial advertisements used to

support broadcasting for which a

subscription fee is not required).’’ Our

decision today does not exempt, for

example, payments made to a DTV

licensee by a stock broker to transmit

stock quote data to the broker’s clients

even though the clients pay no direct fee

for this service. This clearly would be

an ‘‘ancillary or supplementary service’’

that is feeable under Section

336(e)(1)(B).

25. But where, as here, the service is

a video broadcast signal provided at no

direct charge to viewers, it is not

feeable, even though the broadcaster

may be receiving compensation from a

third party to carry the service. As HSN

and ValueVision point out, to hold

otherwise would mean that ‘‘all the

affiliates of the ABC, CBS and NBC

broadcast television networks arguably

would be subject to fees for their free,

over-the-air broadcast services because

they receive compensation from their

networks for airing network

programming.’’ These are video

broadcast signals provided to viewers at

no direct charge, and therefore are not

ancillary or supplementary services and

are not subject to fees. We consequently

deny UCC, et al.’s Petition.

26. We make one final note. Our

decision in the R&O, like our decision

today, applies only to traditional home

shopping, infomercials, direct marketing

and similar services with no interactive

or ‘‘clickable’’ elements and which can

entail viewers purchasing products by

calling a telephone number identified

during the broadcast. We recognize that

it may be possible in the future for these

purchases to be made via an interactive

system provided by the licensee on its

DTV bitstream. For example, a DTV

viewer may be able to purchase a

product shown on a home shopping

program by clicking a special icon

displayed on the screen and

transmitting a purchase order via the

licensee’s DTV bitstream. In reply

comments submitted in the initial round

of comments of this proceeding,

ValueVision and HSN stated that such

an interactive purchase order system

was being explored and argued that

revenues generated from this sort of

system should be exempt from fees.

Because such services are only at a

nascent stage and the particular

circumstances are unclear at this point,

we decline to decide whether they

would constitute an ancillary or

supplementary service subject to a fee

under Section 336(e)(1)(B).

V. Administrative Matters

27. The action contained herein has

been analyzed with respect to the

Paperwork Reduction Act of 1995 and

found to impose no new or modified

reporting and record-keeping

requirements or burdens on the public.

In addition, the Final Regulatory

Flexibility Act Analysis set forth in the

R&O in this proceeding remains

unchanged.

28. Accordingly, pursuant to the

authority granted by 47 U.S.C. 4(i), 303,

336(e), and 47 CFR 1.429, the Petition

for Reconsideration filed jointly by the

National Association of Broadcasters

and the Association for Maximum

Service Television, and the Petition for

Reconsideration filed jointly by the

Office of Communication Inc. of the

United Church of Christ, the Benton

Foundation, the Center for Media

Education, the Civil Rights Forum and

Media Access Project, are both hereby

denied.

1. This proceeding is terminated.

List of Subjects in 47 CFR Part 73

Television, television broadcasting.

Federal Communications Commission.

Magalie Roman Salas,

Secretary.

[FR Doc. 00–3068 Filed 2–9–00; 8:45 am]

BILLING CODE 6712–01–P

FEDERAL COMMUNICATIONS

COMMISSION

47 CFR Part 97

[WT Docket No. 98–143, RM–9148, RM–

9150, RM–9196; FCC 99–412]

Amateur Service Rules

AGENCY: Federal Communications

Commission.

ACTION: Final rule.

SUMMARY: This document revises the

Amateur Radio Service rules to simplify

the Amateur Radio Service operator

license structure; streamlines the