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105TH CONGRESS

1ST SESSION S. 1422

To amend the Communications Act of 1934 to promote competition in the

market for delivery of multichannel video programming and for other

purposes.

IN THE SENATE OF THE UNITED STATES

NOVEMBER 7, 1997

Mr. MCCAIN (for himself, Mr. BURNS, Mr. CONRAD, and Mr. DORGAN) introduced the following bill; which was read twice and referred to the Committee on Commerce, Science, and Transportation

A BILL

To amend the Communications Act of 1934 to promote competition in the market for delivery of multichannel video

programming and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Federal Communica5 tions Commission Satellite Carrier Oversight Act’’.

6 SEC. 2. FINDINGS.

7 (a) The Congress finds that:

8 (1) Signal theft represents a serious threat to

9 direct-to-home satellite television. In the Tele-
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1 communications Act of 1996, Congress confirmed

2 the applicability of penalties for unauthorized

3 decryption of direct-to-home satellite services. Never4 theless, concerns remain about civil liability for such

5 unauthorized decryption.

6 (2) In view of the desire to establish competi7 tion to the cable television industry, Congress au8 thorized consumers to utilize direct-to-home satellite

9 systems for viewing video programming through the

10 Cable Communications Policy Act of 1984.

11 (3) Congress found in the Cable Television

12 Consumer Protection and Competition Act of 1992

13 that without the presence of another multichannel

14 video programming distributor, a cable television op15 erator faces no local competition and that the result

16 is undue market power for the cable operator as

17 compared to that of consumers and other video pro18 grammers.

19 (4) The Federal Communications Commission,

20 under the Cable Television Consumer Protection and

21 Competition Act of 1992, has the responsibility for

22 reporting annually to the Congress on the state of

23 competition in the market for delivery of multi24 channel video programming.
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1 (5) In the Cable Television Consumer Protec2 tion and Competition Act of 1992, Congress stated

3 its policy of promoting the availability to the public

4 of a diversity of views and information through cable

5 television and other video distribution media.

6 (6) Direct-to-home satellite television service is

7 the fastest growing multichannel video programming

8 service with approximately 8 million households sub9 scribing to video programming delivered by satellite

10 carriers.

11 (7) Direct-to-home satellite television service is

12 the service that most likely can provide effective

13 competition to cable television service.

14 (8) Through the compulsory copyright license

15 created by Section 119 of the Satellite Home Viewer

16 Act of 1988, satellite carriers have paid a royalty fee

17 per subscriber, per month to retransmit network and

18 superstation signals by satellite to subscribers for

19 private home viewing.

20 (9) Congress set the 1988 fees to equal the av21 erage fees paid by cable television operators for the

22 same superstation and network signals.

23 (10) Effective May 1, 1992, the royalty fees

24 payable by satellite carriers were increased through

25 compulsory arbitration to $0.06 per subscriber per
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1 month for retransmission of network signals and

2 $0.175 per subscriber per month for retransmission

3 of superstation signals, unless all of the program4 ming contained in the superstation signal is free

5 from syndicated exclusivity protection under the

6 rules of the Federal Communications Commission, in

7 which case the fee was decreased to $0.14 per sub8 scriber per month. These fees were 40–70 percent

9 higher than the royalty fees paid by cable television

10 operators to retransmit the same signals.

11 (11) On October 27, 1997, the Librarian of

12 Congress adopted the recommendation of the Copy13 right Arbitration Royalty Panel and approved rais14 ing the royalty fees of satellite carriers to $0.27 per

15 subscriber per month for both superstation and net16 work signals, effective January 1, 1998.

17 (12) The fees adopted by the Librarian are 270

18 percent higher for superstations and 900 percent

19 higher for network signals than the royalty fees paid

20 by cable television operators for the exact same sig21 nals.

22 (13) To be an effective competitor to cable, di23 rect-to-home satellite television must have access to

24 the same programming carried by its competitors

25 and at comparable rates. In addition, consumers liv-
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1 ing in areas where over-the-air network signals are

2 not available rely upon satellite carriers for access to

3 important news and entertainment.

4 (14) The Copyright Arbitration Royalty Panel

5 did not adequately consider the adverse competitive

6 effect of the differential in satellite and cable royalty

7 fees on promoting competition among multichannel

8 video programming providers and the importance of

9 evaluating the fees satellite carries pay in the con10 text of the competitive nature of the multichannel

11 video programming marketplace.

12 (15) If the recommendation of the Copyright

13 Arbitration Royalty Panel is allowed to stand, the

14 direct-to-home satellite industry, whose total sub15 scriber base is equivalent in size to approximately 11

16 percent of all cable households, will be paying royal17 ties that equal half the size of the cable royalty pool,

18 thus giving satellite subscribers a disproportionate

19 burden for paying copyright royalties when com20 pared to cable television subscribers.

21 SEC. 3. DBS SIGNAL SECURITY.

22 (a) Section 605(d) of the Communications Act of

23 1934 (47 U.S.C. 605) is amended by adding after ‘‘sat24 ellite cable programming,’’ the following: ‘‘or direct-to25 home satellite services,’’.
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1 SEC. 4. PROCEEDING ON RETRANSMISSION OF DISTANT

2 BROADCAST SIGNALS; REPORT ON EFFECT

3 OF INCREASED ROYALTY FEES FOR SAT4 ELLITE CARRIERS ON COMPETITION IN THE

5 MARKET FOR DELIVERY OF MULTICHANNEL

6 VIDEO PROGRAMMING.

7 (a) Section 628 of the Communications Act of 1934

8 (47 U.S.C. 548) is amended—

9 (1) by adding at the end of subsection (g):

10 ‘‘The Commission shall, within 180 days of enact11 ment of this amendment initiate a notice of inquiry

12 to determine the best way in which to facilitate the

13 retransmission of distant broadcast signals such that

14 it is more consistent with the 1992 Cable Act’s goal

15 of promoting competition in the market for delivery

16 of multichannel video programming and the public

17 interest. The Commission also shall within 180 days

18 of enactment report to Congress on the effect of the

19 increase in royalty fees paid by satellite carriers pur20 suant to the decision by the Librarian of Congress

21 on competition in the market for delivery of multi22 channel video programming and the ability of the di23 rect-to-home satellite industry to compete.’’.

24 SEC. 5. EFFECTIVE DATE OF INCREASED ROYALTY FEES.

25 (a) Notwithstanding any other provision of law, the

26 Copyright Office shall be prohibited from implementing,
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1 enforcing, collecting or awarding copyright royalty fees,

2 and no obligation or liability for copyright royalty fees

3 shall accrue pursuant to the decision of the Librarian of

4 Congress on October 27, 1997, which established a royalty

5 fee of $0.27 per subscriber per month for the retrans6 mission of distant broadcast signals by satellite carriers,

7 before January 1, 1999.

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