[Federal Register Volume 66, Number 15 (Tuesday, January 23, 2001)]
[Rules and Regulations]
[Pages 7410-7432]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-1186]



[[Page 7410]]

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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 76

[CS Docket No. 00-96; FCC 00-417]


Implementation of the Satellite Home Viewer Improvement Act of 
1999: Broadcast Signal Carriage Issues/Retransmission Consent Issues

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: This document implements certain aspects of the Satellite Home 
Viewer Improvement Act of 1999, which was enacted on November 29, 1999. 
Among other things, the act authorizes satellite carriers to add more 
local and national broadcast programming to their offerings and seeks 
to place satellite carriers on an equal footing with cable operators 
with respect to availability of broadcast programming. This document 
implements regulations regarding the carriage of local television 
stations in markets where satellite carriers offer local television 
service to their subscribers.

DATES: Effective January 23, 2001. Written comments by the public on 
the new and/or modified information collections are due March 26, 2001.

ADDRESSES: Federal Communications Commission, 445 12th Street, SW., 
Washington, DC 20554. In addition to filing comments with the 
Secretary, a copy of any comments on the information collections 
contained herein should be submitted to Judy Boley, Federal 
Communications Commission, 445 12th Street, SW, Washington, DC 20554, 
or via the Internet to <a href="/cdn-cgi/l/email-protection#6208000d0e071b220401014c050d14"><span class="__cf_email__" data-cfemail="9ff5fdf0f3fae6dff9fcfcb1f8f0e9">[email protected]</span></a>, and to Edward Springer, OMB Desk 
Officer, 10236 NEOB, 725--17th Street, NW., Washington, DC 20503 or via 
the Internet to <a href="/cdn-cgi/l/email-protection#1f5a7b687e6d7b314c6f6d7671787a6d5f70727d317a706f31787069"><span class="__cf_email__" data-cfemail="d396b7a4b2a1b7fd80a3a1babdb4b6a193bcbeb1fdb6bca3fdb4bca5">[email protected]</span></a>.

FOR FURTHER INFORMATION CONTACT: Ben Golant at (202) 418-7111 or via 
internet at via internet at <a href="/cdn-cgi/l/email-protection#9bf9fcf4f7faf5efdbfdf8f8b5fcf4ed"><span class="__cf_email__" data-cfemail="9cfefbf3f0fdf2e8dcfaffffb2fbf3ea">[email protected]</span></a>. For additional information 
concerning the information collection(s) contained in this document, 
contact Judy Boley at 202-418-0214, or via the Internet at 
<a href="/cdn-cgi/l/email-protection#cea4aca1a2abb78ea8adade0a9a1b8"><span class="__cf_email__" data-cfemail="ea808885868f93aa8c8989c48d859c">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Report 
and Order (``Order''), FCC 00-417, adopted November 29, 2000; released 
November 30, 2000. The full text of the Commission's Order is available 
for inspection and copying during normal business hours in the FCC 
Reference Center (Room CY-A257) at its headquarters, 445 12th Street, 
SW., Washington, DC 20554, or may be purchased from the Commission's 
copy contractor, International Transcription Service, Inc., (202) 857-
3800, 1231 20th Street, NW., Washington, DC 20036, or may be reviewed 
via internet at http://www.fcc.gov/csb/. This Report and Order contains 
new or modified information collections(s) subject to the Paperwork 
Reduction Act of 1995 (PRA), Public Law 104-13. It will be submitted to 
the Office of Management and Budget (OMB) for review under section 
3507(d) of the PRA. OMB, the general public, and other Federal agencies 
are invited to comment on the new or modified information collection(s) 
contained in this proceeding.

Synopsis of the Report and Order

I. Introduction

    1. Section 338 of the Communications Act of 1934 (``Act''), adopted 
as part of the Satellite Home Viewer Improvement Act of 1999 
(``SHVIA'') requires satellite carriers, by January 1, 2002, ``to carry 
upon request all local television broadcast stations'' signals in local 
markets in which the satellite carriers carry at least one television 
broadcast station signal,'' subject to the other carriage provisions 
contained in the Act. Until January 1, 2002, satellite carriers are 
granted a royalty-free copyright license to retransmit television 
broadcast signals on a station-by-station basis, subject to obtaining a 
broadcaster's retransmission consent. This transition period is 
intended to provide the satellite industry with time to begin providing 
local television signals into local markets, otherwise known as 
``local-into-local'' satellite service. In this Report and Order, we 
adopt rules to implement the provisions contained in section 338.
    2. In a separate proceeding, the Commission has implemented new 
amendments to section 325 of the Act per the instructions set forth in 
the SHVIA. Good faith negotiation regulations and the prohibition on 
retransmission consent exclusivity are among the requirements the 
Commission has already adopted. However, the Commission deferred 
adopting rules concerning the satellite retransmission consent/
mandatory carriage election cycle until we considered all of the rules 
necessary for a local broadcast station to gain carriage on a satellite 
carrier under both sections 325 and 338 of the Act. Thus, we adopt 
herein, election cycle rules and related policies for satellite 
broadcast signal carriage.

II. Satellite Broadcast Signal Carriage

A. Commencing Satellite Broadcast Signal Carriage

    3. Satellite carriers have had the right to retransmit local 
television stations without first obtaining retransmission consent, and 
without a mandatory carriage obligation, for a six month period from 
November 29, 1999 to May 28, 2000. Beginning on May 29, 2000 and 
continuing until December 31, 2001, satellite carriers may carry local 
television stations on a station-by-station basis if a retransmission 
consent agreement has been reached. As of January 1, 2002, satellite 
carriers will have an obligation to carry all local television stations 
seeking carriage in any market in which they provide local-into-local 
service. This requirement is not absolute as satellite carriers 
generally need not carry duplicative television stations in the same 
market. In addition, a television station in a market where local-into-
local service is provided must submit a request to the satellite 
carrier to gain carriage. Commercial television stations must make an 
election between retransmission consent and mandatory carriage when 
requesting carriage. Noncommercial television stations do not have to 
make an election because they do not have retransmission consent 
rights. However, a noncommercial television station and a satellite 
carrier may enter into a voluntary carriage agreement apart from the 
requirements contained in the Act.
    4. We find that section 338 provides a satellite carrier with two 
options for carrying local television broadcast signals. If a satellite 
carrier provides its subscribers with the signals of local television 
stations through reliance on the statutory copyright license, they will 
have the obligation to carry all of the commercial television signals 
in that particular market that request carriage. If a satellite carrier 
provides local television signals pursuant to private copyright 
arrangements, the section 338 carriage obligations do not apply. In 
this context, we note that a retransmission consent agreement, in most 
instances, is not analogous to a private copyright arrangement. 
Retransmission consent permits an MVPD to retransmit a station's 
signal, but it does not generally grant copyright clearance for the 
program content carried by that station. To obtain private clearances 
for material carried by a particular station, the copyright holders of 
each of the programs, advertisements, and music

[[Page 7411]]

aired by that station must consent to the retransmission. In some 
cases, however, a television station may have permission from the 
copyright holders to provide clearances on their behalf. We therefore 
conclude that unless the retransmission contract clearly provides for 
all copyright clearances, a carrier retransmitting television stations 
electing retransmission consent would be subject to the compulsory 
license and be required to carry all other local market television 
stations under the provisions set forth in section 338.
1. Election Cycle
    5. In Implementation of the Satellite Home Viewer Improvement Act 
of 1999--Retransmission Consent Issues, Report and Order, the 
Commission promulgated good faith and anti-exclusivity requirements per 
the provisions amending section 325 of the Act. Retransmission consent 
and mandatory carriage election cycle requirements for satellite 
carriers were discussed in the Notice in that docket. The 
Retransmission Consent Notice requested comment on whether the 
Commission should employ the same rules and procedures the Commission 
adopted in response to the 1992 Cable Act or adopt a different election 
cycle with different procedures to implement section 325(b)(3)(C)(i). 
The Notice in this proceeding sought comment on how the carriage 
provisions of section 338 would work with the revised section 325 
provisions regarding retransmission consent. Because the issues of 
retransmission consent and mandatory carriage are intertwined, we 
believe that a coherent election regime is best effectuated by 
consolidating the election cycle record from that proceeding with the 
instant proceeding and determining the unresolved issues here.
    6. The SHVIA amended section 325 to provide that no cable system or 
other multichannel video program distributor shall transmit the signal 
of a broadcasting station, or any part thereof, except: (A) With the 
express authority of the originating station; (B) pursuant to section 
614, in the case of a station electing to assert the right to carriage 
by a cable operator; or (C) pursuant to section 338, in the case of a 
station electing to assert the right to carriage by a satellite 
carrier. The SHVIA also amended section 325(b) by adding new paragraph 
(3)(C)(i), which directs the Commission to adopt regulations which 
shall ``establish election time periods that correspond with those 
regulations adopted under subparagraph (B) of this paragraph * * *''
    7. Section 325(b)(3)(C)(i) instructs the Commission to establish 
regulations and procedures governing the election process for 
retransmission consent and mandatory carriage that correspond, as much 
as possible, with existing section 325(b)(3)(B) of the Act. We find 
that the length of the first election cycle shall be for a four-year 
period commencing on January 1, 2002 and ending December 31, 2005. We 
believe that a four-year timeframe is necessary to align the election 
cycles among satellite carriers and cable operators so that local 
television stations would be making retransmission consent/mandatory 
carriage elections for cable and for satellite on the same cycle. This 
conclusion is also consistent with many commenters that advocated a 
synchronized cycle.
    8. ALTV, for example, proposed an alternative that would ultimately 
synchronize the cable and satellite cycles, but by beginning with a 
one-year cycle, followed by a three year cycle. We find that a four-
year cycle is less burdensome for both broadcasters and satellite 
carriers. We note that certain broadcast interests argue against 
parallel election cycles because it would be overly burdensome to 
simultaneously negotiate carriage among cable operators and satellite 
carriers. We do not believe that the need to negotiate with the limited 
number of satellite carriers will place an undue burden on 
broadcasters. We also believe that simultaneous election cycles most 
effectively equalizes the obligation for satellite carriers and cable 
operators negotiating retransmission consent.
    9. Echostar and DirecTV also favor synchronizing the cable and 
satellite cycles but note that regulations developed for the cable 
industry would not sufficiently take into account the distinctive 
aspects of retransmission consent/mandatory carriage elections for the 
satellite industry. EchoStar urges the Commission to give satellite 
carriers at least six months between new retransmission consent/
carriage election dates and their respective effective dates. We agree 
that a satellite carrier needs ample time to commence carriage prior to 
the first election cycle because of the logistics of adding hundreds of 
local television stations to its channel line-up. We therefore provide 
satellite carriers with six months, from July 1, 2001 to December 31, 
2001, to complete the carriage process. The election cycle and 
notification timeframes established for the first cycle, as described 
are designed to accommodate the initial implementation of section 338. 
After satellite carriers commence carriage on January 1, 2002, the 
rationales for extended timeframes no longer apply. Thus, the second 
election cycle, and all cycles thereafter, shall be for a period of 
three years (e.g. January 1, 2006 through December 31, 2008).
    10. In terms of procedure and timing for the second election cycle 
and all subsequent cycles, commercial television broadcast stations 
should make their election by October 1st for the election cycle 
beginning the following January 1st. Satellite carriers shall have 90 
days prior to the new election cycle, beginning October 1st and ending 
December 31st, to negotiate retransmission consent agreements. These 
are the same timeframes as those established under the cable election 
rules. If a satellite carrier begins providing local-into-local service 
in a new market during an election cycle, the carrier and the 
commercial television stations in that market have 90 days to complete 
their retransmission consent discussions. In this situation, the 
election cycle starts at the date a satellite carrier begins local-
into-local service and ends on the date the cycle ends under our rules.
    11. Under the SHVIA, satellite carriers taking advantage of the 
compulsory copyright license for local signals are required to carry 
television broadcast stations ``upon request.'' We note that cable 
carriage under the Act is an immediate right that vests without 
request. That is why we initially adopted a default rule in the cable 
context. We find, however, that there can be no default mandatory 
carriage requirement under section 338 because a commercial television 
station must expressly request carriage. Rather, if a commercial 
television station does not make an election, it defaults to 
retransmission consent. In this context, we also recognize that 
carriers need some measure of control in configuring their satellite 
systems to meet their statutory obligations. Therefore, if an existing 
television station fails to request carriage by the established 
deadlines, it is not entitled to mandatory carriage under 338 for the 
duration of the election cycle. This policy does not apply to new 
television stations to which different substantive and procedural rules 
apply.
    12. Consistent Retransmission Consent/Carriage Elections. Section 
76.64(g) requires that broadcasters make consistent retransmission 
consent/must carry elections between cable operators where franchise 
areas of cable systems overlap. While the SHVIA does not expressly 
require such action in the satellite context, in the Retransmission 
Consent Notice we requested comments on whether broadcasters should be

[[Page 7412]]

subject to a consistent election requirement between satellite carrier 
and cable operators. Broadcast industry commenters argue that the SHVIA 
does not require Commission expansion of the consistent election 
requirements to satellite carriers as well as cable systems. DirecTV, 
on the other hand, argues that a consistent election rule should be 
adopted to prevent broadcasters from unfairly disadvantaging one MVPD 
competitor over another. We find that section 325, amended by the 
SHVIA, makes no reference to expanding the consistent election 
requirement to the satellite context, notwithstanding the fact that the 
obligation was imposed in the cable context. Absent express statutory 
language to the contrary, we believe that a consistent election 
requirement between a cable operator and a satellite carrier should not 
be imposed.
    13. While the absence of statutory language guides our 
determination, we also note that the service area differences between 
satellite carriers and cable operators also counsels against 
implementing such a rule. Television broadcast stations elect 
retransmission consent or mandatory carriage on a system-by-system 
basis under the cable carriage requirements. There are many cable 
systems in a television market. Sometimes, a television broadcast 
station may choose retransmission consent on one cable system, but 
select mandatory carriage for a system in an adjacent area. A satellite 
carrier's service area for local-into-local purposes, on the other 
hand, encompasses television market areas that are substantially 
broader in scope. When a television station is carried by a satellite 
carrier, it is either a retransmission consent station or a mandatory 
carriage station in the local market area. Given these facts, it is 
difficult to require consistency between the two MVPDs without also 
requiring a station to make a uniform election for all local market 
cable systems in order to match the election choice the station made 
with regard to the satellite carrier.
2. Initiating Carriage
    14. In the Notice, we discussed the framework and procedural rules 
that should be established for implementing section 338. We sought 
comment regarding the meaning of the phrase ``carry upon request'' and 
noted that in the cable context, the Commission initially required the 
cable operator to contact all local broadcast television stations, in 
writing, on matters relating to their carriage rights. We asked 
commenters whether we should adopt a similar rule requiring satellite 
carriers to notify all local broadcasters, in writing, of their 
carriage rights once any local station in a particular market is being 
carried. The Notice also pointed out that broadcast television stations 
requesting mandatory carriage as part of the election process must make 
such carriage requests in writing. The Commission sought comment on 
whether similar provisions should be adopted in the satellite carriage 
context.
    15. ALTV and others assert that a local television station that 
elects mandatory carriage under section 338 should be considered to 
have requested carriage as well. ALTV argues that the additional 
requirement of a formal carriage request is unnecessary where a local 
television station already has notified a satellite carrier of its 
choice between retransmission consent and mandatory carriage. We agree 
with ALTV. An election made by the television broadcast station shall 
be treated as the request for carriage. The procedural policy we adopt 
here is necessary to reduce the paperwork lag time that would impede 
satellite carriers from complying with its section 338 obligations by 
January 1, 2002.
    16. Commenters propose different approaches to the carriage 
obligations of satellite carriers and the responsibilities of 
television broadcast stations when local-into-local service is provided 
in a television market. Broadcasters generally argue that because a 
satellite carrier's carriage obligations are triggered only when the 
carrier decides to avail itself of the local-into-local statutory 
copyright license, it is appropriate for the carrier to notify local 
stations, in writing, if it decides to rely on such a license. NAB 
asserts that imposing an affirmative notification requirement on 
satellite carriers will help prevent disputes about whether parties 
understood the other's intentions. Conversely, DirecTV asserts that 
section 338 places an affirmative burden on television broadcast 
stations to ``request'' carriage on the satellite carrier's system. 
EchoStar similarly contends that broadcasters should be required to 
contact satellite carriers in the first instance, in writing, to 
request mandatory carriage because broadcasters have actual notice of 
the satellite carriers providing local-into-local service in their 
market.
    17. We find that television stations have the burden of initiating 
satellite carriage. DirecTV and Echostar are the only satellite 
carriers currently operating and providing local-into-local service. It 
is reasonable to conclude that a television station has actual notice 
of the local presence of these carriers since satellite subscribers 
already have access to certain local television stations and a 
satellite carrier's programming activities are well publicized.
    18. We also find that a television broadcast station must notify a 
satellite carrier, by July 1, 2001, of its carriage intentions if it is 
located in a market where local-into-local service is provided. 
Commercial television stations are required to choose between 
retransmission consent and mandatory carriage on this date. NCE 
stations must simply request carriage. We believe that a six month 
timeframe provides satellite carriers with sufficient time to plan for 
receive facility accommodations and channel line-up changes before 
January 1, 2002. To facilitate the carriage process, we also find that 
a satellite carrier must respond to a television station's carriage 
request by August 1, 2001, and state whether it accepts or denies the 
carriage request. If the satellite carrier denies the request, it must 
state the reasons why. In this context, some valid reasons for not 
commencing carriage of a television station are: (i) Poor quality 
television signal; (ii) substantial duplication; (iii) non-local 
station requesting carriage; and (iv) the satellite carrier is offering 
local-into-local service via private copyright agreements. If the 
television station's request for carriage is rejected, it may file a 
complaint pursuant to the rules established in the Remedies section.
    19. With regard to the notification procedure, the request made by 
the television station must be in writing and sent to the satellite 
carrier's principal place of business, as listed on the carriers' 
website or official correspondence. The notification must be sent by 
certified mail, return receipt requested. A station's written 
notification should include the name of the appropriate station contact 
person as well as the station's: (i) Call sign; (ii) address for 
purposes of receiving official correspondence; (iii) community of 
license; (iv) DMA assignment; and (v) affirmative carriage election. 
These notification elements are necessary to ensure that a satellite 
carrier has the base information it needs to commence the carriage of 
local television stations.
    20. New Local-Into-Local Service. In the Notice, we requested 
comment on whether separate procedures should be established for new 
satellite carriers and whether such rules should be similar to those 
established for cable carriage. Broadcast commenters favor notification 
requirements for new market entrants. While generally objecting to a 
notification burden being placed on satellite carriers, DirecTV submits 
that if one is adopted, the requirement should

[[Page 7413]]

only apply to markets in which a satellite carrier commences service 
after January 1, 2002. We find that a new satellite carrier must notify 
all local television stations in a given market when it plans to 
provide local service. Similarly, an existing satellite carrier must 
provide notice when it provides local-into-local service in a new 
market. We note that requiring carriers to provide notice in these 
circumstances is less burdensome because there are far fewer television 
stations to contend with, at the same time, than in markets with 
existing local-into-local service. We also believe that advance notice 
in these situations ensures a level competitive playing field in two 
respects: (i) all local television stations will know, at the same 
time, when local-into-local service will be provided in a market and 
(ii) all local television stations will be able to exercise their 
carriage rights at the same time.
    21. We therefore adopt procedural provisions that substantially 
replicate the existing requirements for new cable systems under 
Sec. 76.64. However, we craft the rules in a slightly different manner 
recognizing that satellite carriers provide a national service. The 
carriage procedures also provide carriers with adequate preparation 
time while not unduly delaying the provision of full local-into-local 
service in a market. We adopt the following guidelines for both new 
satellite carriers and carriers that offer new local-into-local service 
for the first time on or after July 1, 2001. First, satellite carriers 
shall notify local television stations, in writing, at least 60 days 
before the date it intends to provide new satellite service or intends 
to enter into a new market. At the same time, the satellite carrier 
should provide the location of the local receive facility in that 
particular market. A local television station then must provide its 
election, in writing, no more than 30 days after receipt of the 
satellite carrier's notice. If a satellite carrier finds that the 
television station meets the criteria for carriage under section 338 
and our rules, it shall then have 90 days after the election letter was 
received to negotiate carriage, resolve local receive facility issues, 
reconfigure its system and channel line-up, notify subscribers of the 
change in service, and commence carriage of the local television 
station. If the satellite carrier finds that the station is not 
qualified for carriage for any of the reasons stated, it shall notify 
the local station in writing of the reason for such refusal within 30 
days of the receipt of the station's election. The television station 
may either accept the satellite carrier's conclusion or file a carriage 
complaint.
    22. New Television Stations. Section 338 requires carriage of cal 
stations in local markets regardless of when such stations begin 
broadcasting. Given this statutory directive, we find that new 
television broadcast stations licensed and providing over-the-air 
service have carriage rights under the SHVIA. Those stations licensed 
to provide over-the-air service for the first time on or after July 1, 
2001 will be considered new television broadcast stations for satellite 
carriage purposes. We believe it appropriate to require a new 
television station to make its initial election between 60 days before 
commencing broadcast and 30 days after commencing broadcast. This 
requirement is similar to the cable rules regarding new television 
stations. If the station meets all of the requirements under section 
338 and our rules, the satellite carriers shall commence carriage 
within 90 days of receiving a carriage request from the television 
broadcast station or whenever the new television station provides over-
the-air service. If the satellite carrier believes that the station is 
not qualified, it must notify the station of such a determination with 
30 days of receiving the election notice. An aggrieved television 
station may then file a complaint for non-carriage in the appropriate 
forum under the guidelines established in section 338.

B. Market Definitions

    23. Section 338(h)(3) defines the term, ``local market,'' as having 
the meaning it has under section 122(j) of title 17, United States 
Code. Section 122(j)(2)(A) defines the term, ``local market,'' in the 
case of both commercial and noncommercial television broadcast 
stations, to mean the designated market area in which a station is 
located, and--(i) in the case of a commercial television broadcast 
station, all commercial television broadcast stations licensed to a 
community within the same designated market area are within the same 
local market; and (ii) in the case of a noncommercial educational 
television broadcast station, the market includes any station that is 
licensed to a community within the same designated market area as the 
noncommercial educational television broadcast station.'' In addition 
to the area described in paragraph (A), a station's local market 
includes the county in which the station's community of license is 
located. Section 122(j)(2)(C) defines the term, designated market area 
to mean the market area, as determined by Nielsen Media Research and 
published in the 1999-2000 Nielsen Station Index Directory and Nielsen 
Station Index United States Television Household Estimates or any 
successor publication.''
    24. We did not receive comments interpreting these provisions. 
DirecTV, however, did suggest that the Commission adopt a rule 
expressly allowing satellite carriers, at their discretion, to limit a 
television station's carriage coverage area to its predicted Grade B 
service contour within its DMA. ALTV and NAB respond that DirecTV's 
proposal is antithetical to the language and purpose of the SHVIA. NAB 
asserts that the geographic scope of the mandatory carriage obligation 
is precisely the same as the scope of the compulsory license granted by 
Congress--namely, the ``local market,'' which generally means the DMA.
    25. We find that the term ``local market,'' as it is used for 
satellite carriage purposes, includes all counties within a market, as 
well as the home county of the television station if that county is not 
physically located in the DMA. We believe that the satellite compulsory 
license includes not only television stations licensed to a local 
market, but also extends to stations licensed in one market but 
assigned by Nielsen to another market. For example, a television 
station licensed to a community in Jefferson County, Missouri, which is 
in the Paducah DMA, but assigned by Nielsen to the St. Louis DMA, would 
be considered within the St. Louis market under section 338. In this 
case, Jefferson County is the home county, and such a county should be 
treated as part of the St. Louis DMA for satellite carriage purposes. 
Moreover, since this station is licensed to a community in the Paducah 
market, it may assert its carriage rights in that market as well, if 
satellite carriers decide to provide local-into-local service there. If 
there happens to be another television station licensed to a community 
in Jefferson County, that station will also be considered in the St. 
Louis DMA and eligible to assert its right to carriage against a 
satellite carrier. In addition, if a station is licensed to a community 
that is inside one DMA, but is assigned to another DMA by Nielsen, the 
station could assert its right to carriage in the market where its 
community of license is located. For example, KNTV is licensed to San 
Jose, CA, which is in the San Francisco DMA, but is assigned by Nielsen 
to the Salinas-Monterey DMA. In this case, KNTV can assert its carriage 
rights in the San Francisco DMA because that is where its community of 
license is located. These interpretations are consistent with the 
SHVIA's goals of

[[Page 7414]]

preserving over-the-air broadcasting and providing satellite 
subscribers with a full complement of local station signals.
    26. Timing of Revisions to Market Definitions. We sought comment on 
when to change the reference to the 1999-2000 Nielsen publications to 
reflect changes in market structure and market conditions. We noted, in 
the cable context, that the rules account for a market update every 
three years. We asked whether the rules we implement under this section 
should be updated on a triennial basis or at another interval. We also 
noted that cable operators are required to use the 1997-98 Nielsen 
publications to determine local markets for broadcast signal carriage 
purposes up until January 1, 2003, yet satellite carriers are obliged 
to use the 1999-2000 Nielsen publications for carriage purposes. We 
asked whether satellite carriers and cable operators should be required 
to use the same annual Nielsen market publications so that both may 
rely on the same market definition.
    27. Our goals here are threefold. We intend to: (i) Implement the 
language of section 338; (ii) establish comparable timelines and 
requirements for satellite carriers and cable operators; and (iii) 
reduce procedural and administrative burdens. BellSouth argues for an 
extended period between updates to allow for satellite carriers' 
difficulties in accessing and tuning the satellite equipment used to 
transport television signals. ALTV and NCTA argue that the Commission 
should adopt rules allowing for the use of the same Nielsen data by 
cable systems and satellite carriers as quickly as practicable. NAB 
asserts that the 1999-2000 lists are the correct ones for the 
Commission to use to determine markets for the first election cycle 
commencing in January 1, 2002.
    28. We will require satellite carriers to use Nielsen's 1999-2000 
DMA market assignments to initially determine their carriage 
obligations. Satellite carriers and television broadcast stations have 
been on notice since November 29, 1999, that the 1999-2000 Nielsen 
publications will be used for section 338 purposes. To avoid 
overburdening satellite carriers, we will not require market boundaries 
to be updated on an annual basis. However, we do believe that 
television markets should be updated triennially, for each election 
cycle, to better reflect new market conditions and viewership patterns. 
Satellite carriers may, nevertheless, voluntarily adjust markets based 
upon county additions found in annual editions of Nielsen DMA market 
assignment publications. On this point, we agree with DirecTV when it 
states that section 122(j)(2) allows a local market originally defined 
in the 1999-2000 Nielsen market assignment to be expanded in accordance 
with later issues of the relevant Nielsen publications. Satellite 
carriers may add counties to the markets in which they now provide 
local-into-local service by referring to the Nielsen 2000-2001 DMA 
market assignments and future assignments. By adopting this approach, a 
satellite carrier is able to serve new communities on the basis of each 
yearly Nielsen DMA market change, if that is what is desirable. 
Counties that are removed from a market in subsequent Nielsen 
publications should remain in the market for satellite carriage 
purposes so that satellite subscribers will not lose local-into-local 
service. This policy fulfills the SHVIA's goal of furthering the 
availability of local-into-local service and providing effective 
competition to incumbent cable systems.
    29. Market Modifications. In the Notice, we pointed out that a 
statutory device exists to expand or contract the size of a local 
television market for cable carriage purposes and sought opinion on 
whether the Commission has the authority to implement a market 
modification mechanism for satellite carriage purposes. Certain 
broadcast commenters assert that implementing a market modification 
mechanism is necessary to promote Congress' goal of protecting free 
television service, placing satellite and cable on equal terms, and 
preserve localism by ensuring that satellite carriage markets actually 
reflect what is truly local. However, BellSouth and DirecTV state that 
the Commission has no authority to add communities to a broadcaster's 
television market. They believe that section 122(j) limits a station's 
satellite carriage rights to the DMA that includes its community of 
license. DirecTV argues, however, that the Commission can and should 
adopt market modification procedures that allow a satellite carrier to 
remove a station from the market if it can demonstrate that the station 
does not serve the relevant market. Paxson, in contrast, argues that 
had Congress intended to grant the Commission market modification 
authority, it would have explicitly done so in the statute just as it 
did in the cable context.
    30. We find that the Act does not permit the Commission to change 
the shape of a television market. While we recognize the concerns 
raised, we note that the satellite compulsory license is coterminous 
with the market in which the satellite carrier provides local-into-
local service. Without express language in the Copyright Act or the 
Communications Act, any attempt to establish a market addition policy 
under our public interest authority would be moot because a satellite 
carrier cannot retransmit a local television station under section 338 
into another market without subjecting itself to copyright liability 
under section 122 of the Copyright Act. In addition, there is no 
explicit provision providing the Commission with the authority to 
modify markets in the manner permitted under section 614(h). Therefore, 
we cannot establish a market modification policy on our own motion. We 
note that the Senate version of the SHVIA had, at one point in time, a 
market modification provision. This subsection was not adopted by 
Congress. Thus, any attempt by the Commission to implement a market 
modification regime would run counter to the express intent of 
Congress.
    31. Coverage. Satellite carriers are currently developing spot beam 
technology where programming can be delivered to a discrete 
geographical location using a specialized satellite. Spot beam 
satellites have the potential to increase satellite system channel 
capacity through the re-use of transponders. DirecTV argues that 
satellite carriers should be permitted to use spot beams, when they are 
in operation, for local-into-local service even if the beam does not 
cover the entire market. We will permit carriers to use spot beam 
satellites in such a manner. We first observe that section 338 does not 
require a satellite carrier to serve each and every county in a 
television market. Rather, it requires that in the areas it does 
provide local-into-local service, it must carry all local television 
stations subject to carriage under the statute. In this context, we 
recognize that there are some markets, such as the Denver DMA 
encompassing counties in four states, that are geographically 
expansive. A spot beam may not be able to cover the entire DMA in these 
instances, and to make the satellite carrier reconfigure its spot beam 
may deprive it of capacity to serve additional markets with local-into-
local coverage.

C. Receive Facilities

    32. Section 338(b)(1) states that, ``A television broadcast station 
asserting its right to carriage under subsection (a) shall be required 
to bear the costs associated with delivering a good quality signal to 
the designated local receive facility of the satellite carrier or to 
another facility that is acceptable to at least one-half the stations 
asserting the right to carriage in the local market.''

[[Page 7415]]

Section 338(h)(2), in turn, defines the term ``local receive facility'' 
as ``the reception point in each local market which a satellite carrier 
designates for delivery of the signal of the station for purposes of 
retransmission.'' The Notice sought comment on the term ``local receive 
facility'' and on the parameters under which a satellite carrier may 
construct and designate a local receive facility. We noted that the 
statutory language could be read to permit the satellite carrier to 
establish a regional receive facility that would receive broadcast 
signals from other markets provided 50% of the relevant broadcasters 
agreed to the location. We also asked questions concerning the 
procedures by which a satellite carrier must inform local market 
television stations of the location of the receive facility, and 
whether there should be Commission procedures to resolve a 
broadcaster's complaint if it disputes the receive location selected by 
the majority of broadcasters.
    33. DirecTV agreed with the preliminary statement in the Notice 
that ``the most economically feasible means [of delivery of multiple 
local broadcast signals] is to aggregate signals in each local market 
at one point and deliver them over the facilities of an interstate 
telecommunications carrier to the uplink site(s)'' and co-locate at 
such a carrier's switching center. DirecTV provided comments detailing 
the process needed to establish a local receive facility, a process 
they have used to create 27 local receive sites to provide service to 
27 local-into-local markets served since the SHVIA was enacted at the 
end of November, 1999. According to DirecTV, the parameters for 
construction and designation of a local receive facility include: (i) 
Access to multiple long distance common carriers for DS-3 or other 
high-speed digital fiber circuits; (ii) access to at least one local 
common carrier that can provide TV1 quality digital fiber circuits to 
most, if not all, television broadcast stations [in the DMA], and/or 
local DS-3 circuits, microwave, and broadband analog service as local 
conditions may require; (iii) access to multiple long distance carriers 
that can provide a wide area data network up to 256kb/s as well as dial 
up voice service must also be available; (iv) access to building 
rooftop with connecting conduits to support, where needed, good quality 
over-the-air television reception, microwave links, and satellite 
reception; (v) access to a suitable area with connecting conduits to 
support a satellite downlink antenna; and (vi) access to a suitable 
area to install equipment to support all local collection, compression, 
monitoring, and transmission equipment. This area must be securable 
against unauthorized access and have stable power source and HVAC. 
DirecTV also states that local receive facilities must be planned 
twelve months in advance.
1. Local Receive Facilities
    34. In the definition of ``local receive facility'' in section 
338(h)(2), the satellite carrier is the entity authorized to designate 
the placement of a local receive facility. If the satellite carrier 
designates a local receive facility, the television broadcast stations 
are required by the statute to bear the costs of delivering a good 
quality signal to ``the designated local receive facility of the 
satellite carrier.'' We find that the statute expressly provides that 
the satellite carrier has the right to determine the location of the 
local receive facility. We disagree with the proposals offered by AAPTS 
and Network Affiliates to require a satellite carrier to locate a 
receive facility either within the Grade B contour or not more than 50 
miles from the community of license of each of the local stations in a 
market. We recognize that in some of the larger DMAs in the western 
United States, some broadcast stations may be required to provide their 
signals over hundreds of miles if the receive facility is located 
beyond a local commercial or non-commercial television station's Grade 
B signal. We believe this is the reason Congress provided for an 
alternative receive facility. But, we do not believe it would be 
consistent with statutory language, which requires the broadcast 
station to bear the cost of delivering a good quality signal, to 
require satellite carriers to bear the cost of erecting additional 
facilities to receive signals from stations that are more than 50 miles 
away from a designated receive point.
    35. With respect to the costs of erecting and maintaining the 
receive facility itself, we note that in the cable context, the cable 
operator pays the costs for signal processing at its principal headend. 
Given that the satellite carrier's local receive facility functions 
like a headend, and is under the carrier's control, we believe that the 
satellite carrier has the sole responsibility to pay for the costs of 
building and maintaining such a facility. We also find that the 
satellite carrier should pay for the costs of constructing and 
maintaining an alternative receive facility. This is appropriate 
particularly if the alternative facility is regional, and the satellite 
carrier benefits from having fewer facilities to build and maintain.
    36. We note that DirecTV and Echostar have already built facilities 
in a number of television markets where they now provide local-into-
local service. While DirecTV states that twelve months is the minimum 
amount of time necessary to establish a receive facility, we believe 
that the satellite carriers that are currently providing local-into-
local service should not experience any difficulties in carrying local 
television stations by January 1, 2002 due to buildout issues. In the 
future, satellite carriers that enter new markets with local-into-local 
service should be able to fulfill their carriage obligations because 
section 338 does not impose carriage obligations until the satellite 
carrier retransmits at least one local television station, which would 
necessitate that the carrier have a receive facility in place or under 
development before the carriage requirement is triggered.
    37. We also find, as AAPTS and others suggest, that a satellite 
carrier should designate the same receive facility for both 
retransmission consent and mandatory carriage television stations so as 
to avoid any opportunity to assign less convenient facilities to those 
stations seeking mandatory carriage.
2. Alternative Receive Facility
    38. The definition of local receive facility in section 338(h)(2) 
strongly suggests that Congress intended to permit carriers to 
designate a single point for all local-into-local stations to be 
received, processed and retransmitted. However, the second clause of 
section 338(b)(1) provides that, with respect to the costs of 
delivering a good quality signal, there may be ``another facility that 
is acceptable to at least one-half the stations'' to which the 
television broadcast station delivers a good quality signal. The Notice 
considered this other facility as a facility outside the local DMA, 
perhaps a facility serving a regional area. Some commenters agreed that 
this is the likely meaning of this clause. We note, however, that this 
is not the only possible meaning of ``another facility.'' As DirecTV 
suggests, the other facility could be an alternative facility, not 
necessarily a non-local or regional facility. Most of the comments on 
this subject assumed that the other facility would be a non-local, 
regional facility established by a satellite carrier and that is 
acceptable to at least one-half of the stations asserting the right to 
carriage. We focus here on this interpretation and the necessary rules 
to implement it, but we do not foreclose the possibility that the 
creation of an alternative site,

[[Page 7416]]

whether local or non-local, can also be consistent with the statutory 
language. An alternative local receive facility would be one selected 
after the satellite carrier has chosen its first designated local 
receive facility.
    39. AAPTS states that the consent of at least one local NCE station 
eligible for carriage in the market should be required before an 
alternate facility is chosen. Broadcast groups generally assert that 
non-local receive sites should not be selected unless the majority of 
stations in each affected market agree to the location of the facility. 
Echostar argues that it is significantly more burdensome for satellite 
carriers to seek the agreement of a majority of stations in each 
locality than the majority of stations in a particular region. ALTV 
states that a non-local receive facility may be established if half the 
local stations electing mandatory carriage, rather than retransmission 
consent, agree to the alternate site.
    40. Under our reading of the phrase ``that is acceptable to at 
least one-half the stations asserting the right to carriage in the 
local market,'' we find that an alternative receive facility may be 
established if 50% or more of those stations in a particular market 
consent to such a site. As the statute uses the term ``local,'' we find 
that the calculation should be based on the majority of stations 
entitled to carriage in each affected market, not the aggregate number 
of stations in all affected markets. Since the ``right to carriage'' 
under section 338 extends, at least initially, to all local television 
broadcasters, the calculation includes all stations, whether they elect 
mandatory carriage or retransmission consent. We disagree, in part, 
with ALTV, which asserts that a non-local receive facility may be 
established if half the local stations electing mandatory carriage, 
rather than retransmission consent, agree to the alternate site. Just 
as we decide that a satellite carrier should include both 
retransmission consent and mandatory carriage local stations on the 
same designated local receive facility, we do not distinguish between 
retransmission consent and mandatory carriage in the determination of 
an acceptable alternative receive facility. We note, however, that if a 
satellite carrier has both a designated local receive facility and a 
non-local or regional receive facility and can accommodate local 
stations for retransmission into their local markets at either one, the 
television station may choose whether to deliver its good quality 
signal to one or the other, and must notify the satellite carrier to 
which one of the facilities it will deliver its signal. Each local 
television broadcast station requesting carriage must bear the cost of 
delivering its good quality signal to the receive facility.
    41. All stations ``asserting a right to carriage,'' either through 
retransmission consent or mandatory carriage, may participate in the 
consideration of whether an alternative receive facility is acceptable. 
We note that television stations that substantially duplicate other 
local television stations may not ultimately be carried, but should, 
nevertheless, be counted in the 50% of stations that must find the 
alternative facility acceptable. For example, if there are 20 stations 
in a local market that may request carriage, but only 16 that must 
ultimately be carried, the satellite carrier must notify all 20 
stations of a proposed alternative receive site, and at least 10 must 
find the alternative site acceptable.
    42. As several commenters observed, a satellite carrier's local 
receive facility is the equivalent of a cable system's headend. We do 
not believe that the statute requires, nor that any party contemplates, 
that television stations can unilaterally select a site and force a 
satellite carrier to construct a facility or move its receive facility 
there. NAB asserts that the Act contemplates negotiations in which a 
carrier attempts to persuade more than half of the stations eligible 
for carriage to agree to deliver a good quality signal to a particular 
location outside the local market. We agree with NAB on this point. If 
the satellite carrier designates one local receive facility, 50% or 
more of the local stations may not demand or require that the satellite 
carrier provide an alternative receive facility. We find that Congress 
intended that the satellite carrier be part of the negotiation process 
concerning the establishment of an alternative receive facility. Given 
the costs and steps involved in creating a receive facility, the 
satellite carrier is to play a central role in such discussions. 
Indeed, we expect that in most cases, the satellite carrier will be the 
initiating party seeking to use a non-local or regional receive 
facility other than its designated local receive facility and to obtain 
the consent of at least 50% of the stations asserting the right to 
carriage.
    43. As noted, the statute assigns costs to the broadcaster when 
providing the satellite carrier with a good quality signal to either a 
local or alternative facility. We agree, therefore, with BellSouth that 
a satellite carrier is not obligated to carry a television broadcast 
station that refuses to pay for the costs of providing a good quality 
signal. For similar reasons, we disagree with Network Affiliates' 
proposal that if the carrier uses an alternative facility, which at 
least half of the local stations find acceptable, then the satellite 
carrier should pay the incremental costs of delivering each 
broadcaster's signal if the alternative facility is more than 50 miles 
from the reference point of the station's community of license.
3. Notification
    44. We conclude that a satellite carrier should provide local 
television stations with information on the location of an existing 
local receive facility, or where it plans to build a local or 
alternative receive facility, before the station makes its election. 
Advance notice of the receive point location is necessary because 
television stations must make arrangements for delivering good quality 
signals to the receive site. Advance notice is also desirable to enable 
the satellite carrier to negotiate with all the local television 
stations concerning alternative receive facilities. In the event a 
satellite carrier must select which duplicating station or NCE station 
to carry from among several that request carriage, nothing in the 
statute or our rules prevents the satellite carrier from taking into 
consideration which stations that find the satellite carrier's proposed 
alternative receive facility acceptable. As described, we consider this 
to be a fair subject for negotiation amongst the affected parties.
    45. We disagree with DirecTV's argument that satellite carriers not 
be required to inform local broadcast television stations of the 
location of the receive facility until after such stations have 
notified the carrier, in writing, that they wish to be carried pursuant 
to section 338, and it has been established that they are otherwise 
eligible for such carriage. We see no reason to keep the location of 
existing designated local receive facilities or planned sites a secret. 
We agree with the suggestion of other commenters that the satellite 
carrier should designate the local receive facility in its carriage 
agreements with local television stations or, in the mandatory carriage 
situation, provide notice to the affected stations as to the location 
of the local receive facility.
    46. Satellite carriers must be afforded a reasonable period of time 
to finalize arrangements for the location of the local receive facility 
in order to meet the January 1, 2002 deadline. Any delays by local 
television stations will work against a satellite carrier meeting its 
carriage obligations in a timely manner, which ultimately works against 
the television stations and viewers, as well. Therefore, when a 
satellite carrier has a

[[Page 7417]]

designated local receive facility to which local stations seeking 
carriage must deliver a good quality signal, the carrier must make the 
location of this facility known by June 1, 2001 for the first election 
cycle, and at least 120 days prior to the commencement of all election 
cycles thereafter. The means by which television stations are notified 
is left to the discretion of the satellite carrier.
    47. BellSouth suggests that a carrier should give local television 
stations 90 days notice before it moves a local receive facility in 
order to protect the legitimate interests of television stations and to 
avoid service disruption to subscribers. We agree, in principal, with 
BellSouth's proposal. Generally, a satellite carrier may relocate the 
designated local receive facility every three years coinciding with the 
election cycle. We believe that satellite carriers should have the 
flexibility to change their designated local receive facility or 
alternative facility, and will require 60 days advance notice to all 
local stations. We are concerned, however, that the relocation of a 
local receive facility may make it more difficult for some television 
stations to pay the costs of delivering a good quality signal. 
Therefore, if a satellite carrier decides to relocate the designated 
local receive facility during an election cycle, it should pay the 
television stations' costs to deliver a good quality signal to the new 
location. With respect to moving the alternative facility, the new 
location must be acceptable to at least half of the local stations 
entitled to carriage in the local market. Obtaining such agreement may 
require more than 60 days notice, and the satellite carrier may find it 
necessary to plan for a new alternative facility with additional 
advance notice. A satellite carrier may not require local stations to 
deliver their signals to a new alternative facility unless and until at 
least 50% of the stations agree to the new facility.
4. Process
    48. The Notice requested comment on the process by which broadcast 
television stations agree to the establishment and location of an 
alternative receive facility. NAB urges the Commission to establish a 
complaint process whereby stations in the minority of a determination 
of an acceptable alternative receive facility can protest if they 
believe the designation of a non-local receive facility site would 
undermine or evade the mandatory carriage requirements. BellSouth 
disagrees with this suggestion because under section 338(b)(1), the 
stations' vote decides the issue, and there is no statutory basis for 
Commission action to review or reverse this process. AAPTS responds by 
stating the Commission has the authority to create remedial processes 
that are not expressly mandated by statute.
    49. We decline to establish a special complaint standard or process 
for disputes concerning alternative receive facility disputes. To the 
extent a television broadcast station believes its right to carriage 
has been denied because fewer than 50% of the relevant stations agreed 
to an alternative site, such claims may be raised in a mandatory 
carriage complaint. If there is no dispute that 50% or more of the 
local stations that could assert mandatory carriage have agreed to an 
alternative site, then we see no issue that would require our 
intervention.
    50. We find that the negotiations and arrangements among local 
television broadcast stations and satellite carriers with respect to 
agreeing upon an alternative local receive facility are generally 
intended to be a voluntary process. We also decline to adopt a good 
faith test to be used in the context of receive point negotiations.
5. Good Quality Signal
    51. Standard. In the Notice, we inquired about the ``good quality 
signal'' mandate in section 338. Under the current cable carriage 
regime, television broadcast stations must deliver either a signal 
level of -45dBm for UHF signals or -49dBm for VHF signals at the input 
terminals of the signal processing equipment, to be considered eligible 
for carriage. We sought comment on whether the signal quality 
parameters under section 614 and the Commission's cable regulations are 
appropriate in the satellite carriage context.
    52. DirecTV states that the Commission should define ``good quality 
signal'' as one that will facilitate efficient MPEG compression of all 
channels. DirecTV proposes that the signal must meet the requirements 
of GR-338 CORE, TV1 for 20 route miles. It states that the ``20 route 
miles'' specification contains essential elements that are necessary 
for the digital video compression equipment used in DBS systems. 
DirecTV also argues that the Commission should require a television 
broadcast station to contract with a local telecommunications common 
carrier to lease a dedicated TV1-quality fiber circuit from the 
broadcast station to the satellite carrier's local receive facility. We 
decline to adopt DirecTV's good quality signal proposals for several 
reasons. First, we believe that the TV1 standard is too rigid a 
construct. Specifically, a signal-to-noise ratio of +67 dB cannot be 
easily implemented by most television broadcast stations. Broadcasters 
do not have to meet such exacting ratios and levels when delivering 
signals to a cable operator's headend to qualify for carriage. 
Moreover, as NAB points out, satellite carriers, such as Echostar, have 
been retransmitting local television signals that they have received 
over-the-air without much concern about signal quality. We also note 
that it would be prohibitively expensive for a small television station 
to lease a dedicated TV1 circuit from a telecommunications carrier. It 
is not our intention to impose inordinate costs on small television 
stations that would prevent them from being carried by a satellite 
carrier.
    53. We decide to apply the current good quality signal standards 
applicable in the cable context to satellite carriers, as suggested by 
ALTV. The standards that have been applied to cable operators have 
functioned well since the inception of the statutory cable carriage 
requirements seven years ago. No evidence has been presented suggesting 
the cable signal quality standard will not prove equally satisfactory 
in the satellite context. We believe that the application of the 
current good quality signal standards will provide parties with a 
workable, tested standard.
    54. Christian Television Network (``CTN'') argues that the good 
quality signal standard should not be premised on off-air signal 
strength, but should turn on the quality of the picture delivered by 
any means. AAPTS also states local stations that cannot provide a good 
quality signal to the local receive facility over-the-air should be 
permitted to deliver the signal in another way. We agree with these 
commenters that television stations may use any delivery method to 
improve the quality of their signals to the satellite carrier. A 
television station may use microwave transmissions, fiber optic cable, 
or telephone lines as long as they pay for the costs of such delivery 
mechanisms. Such alternative delivery methods are sanctioned under the 
cable carriage rules and should be applicable in the satellite carriage 
context.
    55. Carriage of Television Stations With Disputed Signal Quality. 
In the Notice, we recognized that a broadcaster not providing a good 
quality signal to a cable system headend is not qualified for carriage. 
In this situation, a cable system is under no obligation to carry such 
a signal, but the broadcaster has an opportunity to provide equipment 
necessary to improve its signal to the requisite level and gain 
carriage rights. We sought comment on whether

[[Page 7418]]

Congress intended the same result for broadcasters that do not provide 
a good quality signal to the local satellite receive facility.
    56. ALTV, AAPTS, and Network Affiliates agree that a satellite 
carrier may insist that a station cover the costs of delivering a good 
quality signal; they argue, however, that a satellite carrier cannot 
refuse to carry a television station just because its signal is less 
than adequate. NAB comments that satellite carriers operating under 
section 338, unlike cable systems operating under sections 614 and 615, 
do not have the option of holding a station's carriage ``hostage'' 
during a dispute about a good quality signal. It posits that even if 
the Commission had the power to allow carriers to do so, it should 
decline that invitation, since a litigious satellite carrier could, as 
a practical matter, unilaterally postpone the effective date of the 
section 338 requirements for long periods by dragging out Commission 
and court enforcement proceedings. Conversely, DirecTV and LTVS assert 
that a satellite carrier may refuse to carry a station that fails to 
provide a good quality signal to the local receive facility. LTVS adds 
that the satellite carrier should first notify the broadcast station of 
the deficient signal, including measurements and relevant data, and 
then discontinue carriage if the broadcaster fails to improve the 
signal quality.
    57. We disagree with the broadcast groups on this issue. We first 
observe that the statute does not affirmatively instruct satellite 
carriers to carry television stations that do not provide a good 
quality signal. Rather, section 338 only provides that a television 
station is responsible for the costs of delivering a good quality 
signal. Given the absence of a statutory directive, we must interpret 
section 338 in a manner that is both reasonable and consistent with 
current law. We also find that it would be contrary to the public 
interest to require satellite carriers to carry television stations 
that provide a poor quality signal. The principle reason underlying 
this decision is that satellite subscribers would not benefit from 
receiving a television signal that is of poor quality. In this 
instance, we believe that satellite subscribers would rather subscribe 
to cable or receive the signals over-the-air rather than pay for 
inadequate television signals retransmitted by a satellite carrier. 
Moreover, cable operators are not required to carry poor quality 
signals under sections 614 and 615 of the Act. Noting the SHVIA's 
directive in establishing comparable carriage requirements between 
satellite carriers and cable operators, we should not require the 
carriage of poor quality signals under section 338. We note that our 
findings here do not relieve the satellite carrier of its obligations 
to carry television signals where it provides local-into-local service. 
Rather, the satellite carrier does not have an obligation to carry 
television stations until they voluntarily pay and provide a good 
quality signal.
    58. Good Signal Quality Measurement and Testing. With respect to 
the manner of testing for a good quality signal, we note that the 
Commission has adopted a method for measuring signal strength in the 
cable carriage context. Generally, if a test measuring signal strength 
results in an initial reading of less than -51 dBm for a UHF station, 
at least four readings must be taken over a two-hour period. If the 
initial readings are between -51 dBm and -45 dBm, inclusive, readings 
must be taken over a 24-hour period with measurements not more than 
four hours apart to establish reliable test results. For a VHF station, 
if the initial readings are less than -55 dBm, at least four readings 
must be taken over a two-hour period. Where the initial readings are 
between -55 dBm and -49 dBm, inclusive, readings should be taken over a 
24-hour period, with measurements no more than four hours apart to 
establish reliable test results. The Commission stated that cable 
operators are further expected to employ sound engineering measurement 
practices when testing signal strength. We sought comment on whether we 
should require the same signal testing practices for measuring a 
broadcaster's signal strength in the satellite context.
    59. LTVS states that the signal testing practices used in the cable 
context should apply in the satellite context. NAB proposes adding 
``additional safeguards'' to the signal testing process, such as 
permitting local stations to observe measurement procedures and 
requiring use of independent engineers to conduct tests. NAB also 
advocates that the good quality signal requirements for satellite 
carriers should incorporate the various findings in Commission rulings 
in the cable context, such as the requirement that an operator use 
actual field measurements, rather than computer predictions, to measure 
a television station's signal. BellSouth argues that NAB provides no 
support for imposing more stringent requirements on satellite carriers 
than on cable systems. BellSouth also argues that like cable systems, 
satellite carriers should cooperate in testing the signal quality 
delivered by television stations to the satellite carrier's local 
receive facility.
    60. We believe that the signal testing practices in the cable 
carriage context should be generally applied in the satellite carriage 
context. The Commission developed its engineering standards through 
experience in adjudicating signal quality disputes between cable 
operators and television broadcast stations. In this instance, 
commenters have not provided any arguments or data suggesting that the 
cable practices and engineering standards would be unsuited for 
satellite carriers. As for NAB's call for additional safeguards, we 
find that such engineering and procedural processes should not be 
implemented as regulatory requirements. Instead, the parties should 
look to precedent as useful guidance. With regard to testing fees, we 
believe that the television broadcast station should pay for signal 
tests.
    61. At the same time, however, we note that the satellite carrier's 
local receive facility may not have a tower with broadcast station 
reception equipment mounted onto it like that is found at a cable 
system's principal headend. It has been standard practice among cable 
operators and broadcasters to test a television station's signal 
strength at the tower site. To remedy this situation, we strongly 
recommend that satellite carriers and broadcasters follow the testing 
procedures for field strength measurements found in Sec. 73.686(b)(2) 
of the Commission's rules, in addition to following the good 
engineering practices established in the cable context. These rules, we 
believe, will serve as an adequate proxy for conducting signal 
measurements in lieu of an actual tower.

D. Duplicating Signals

    62. Definition. Section 338(c)(1) states that:

    Notwithstanding subsection (a), a satellite carrier shall not be 
required to carry upon request the signal of any local commercial 
television broadcast station that substantially duplicates the 
signal of another local commercial television broadcast station 
which is secondarily transmitted by the satellite carrier within the 
same local market. * * *

In the Notice, we asked several definitional questions concerning this 
phrase.
    63. Section 614(b)(5) provides that a cable operator is not 
required to carry the signal of any local commercial television station 
that substantially duplicates the signal of another local commercial 
television station which is carried on its cable system, or to carry

[[Page 7419]]

the signals of more than one local commercial television station 
affiliated with a particular broadcast network. The Commission decided 
that, based on the legislative history of this section, two stations 
``substantially duplicate'' each other ``if they simultaneously 
broadcast identical programming for more than 50 percent of the 
broadcast week.'' For purposes of this definition, identical 
programming means the identical episode of the same program series. 
Section 615(e) provides that cable operator with cable system capacity 
of more than 36 usable activated channels, and carrying the signals of 
three qualified NCE stations, is not required to carry the signals of 
additional stations the programming of which substantially duplicates 
the programming broadcast by another qualified NCE station requesting 
carriage. The 1992 Cable Act states that substantial duplication was to 
be defined by the Commission in a manner that promotes access to 
distinctive noncommercial educational television services. The 
Commission concluded that an NCE station does not substantially 
duplicate the programming of another NCE station if at least 50 percent 
of its typical weekly programming is distinct from programming on the 
other station either during prime time or during hours other than prime 
time. We sought comment on whether the Commission should apply the 
cable carriage duplication definitions to satellite carriers under 
section 338.
    64. DirecTV proposes that the definition of ``substantial 
duplication,'' as employed in section 338(c), should include identical 
programming, whether broadcast simultaneously or not, of either 50 
percent or more of a television broadcast station's total weekly 
programming, or 50 percent or more of its prime-time programming. 
Network Affiliates argue that substantial duplication should be found 
only where there is an overlap in the Grade B contours of the stations 
in question. According to Network Affiliates, where there is no Grade B 
overlap between the stations, the stations' signals should not be 
deemed to substantially duplicate each other and should be entitled to 
carriage. We do not find that these commenters have presented 
persuasive evidence as to why the cable standard is not suited for 
satellite carriers. Their proposals are also contrary to the purpose of 
the Act. DirecTV's proposal would winnow away a television station's 
right to carriage and would unduly expand the substantial duplication 
exception beyond what was intended by Congress. If the Network 
Affiliates' suggestion were adopted, we believe that the statutory 
duplication provision would be eviscerated, as there would be no 
station in a particular market that would duplicate another.
    65. Accordingly, we will apply the duplication standards for 
commercial television stations, set forth in the cable operator 
context, to satellite broadcast signal carriage as suggested by ALTV, 
NCTA, and LTVS. That is, two commercial television stations 
substantially duplicate each other if they simultaneously broadcast 
identical programming for more than 50 percent of the broadcast week. 
The cable duplication provisions for commercial television stations 
have been in effect for the last seven years, without much controversy, 
and there is no reason to believe that they will be difficult to 
implement in the satellite carriage context.
    66. We note, however, that due to the fundamental operational 
differences between cable systems and satellite service, a satellite 
carrier may choose which duplicating signal it is not required to 
carry. This policy differs from the cable duplication rules where an 
operator must carry the station that is closest to its principal 
headend. Since there are no ``headends'' in the satellite carriage 
context, that are relevant to the question of which stations in a 
particular market to carry, comparable rules in this specific instance 
should not be implemented. Absent an analogous headend standard or 
statutory guidance, we believe the public interest is best served by 
permitting satellite carriers to determine which stations to offer 
their subscribers.
    67. DirecTV argues that, in addition to its ability to deny 
carriage of duplicative stations in the first instance, a satellite 
carrier should be permitted to remove a television broadcast station 
from its line-up if it begins to substantially duplicate its 
programming after carriage of the station has commenced. We agree with 
DirecTV on this point. If the substantial duplication criteria are 
satisfied, a satellite carrier is permitted to drop that television 
station from its channel line-up. If this situation arises, however, we 
require the satellite carrier to notify the station, and its 
subscribers, in a timely manner prior to its removal from the relevant 
local-into-local channel line-up. By the same token, we also find that 
a satellite carrier must begin carrying a television station that stops 
duplicating another local television station. When this circumstance 
presents itself, the station shall use the same procedures to establish 
carriage as permitted for new television stations under Sec. 76.66.
    68. We sought comment on the phrase, ``affiliated with a particular 
television network.'' In this situation, we asked what definition of 
``television network'' applies because that term is not specifically 
defined in section 338. We asked whether we should implement the 
definition of television network found in section 339 of the Act, the 
SHVIA's distant signal carriage provision, for the purposes of 
administering the section 338 duplication provision. BellSouth, NCTA, 
and LTVS all agree that the definition in section 339(d) is acceptable. 
Given the parties assent to the inclusion of the section 339 
definition, and the lack of opposition, we adopt this definition for 
the purpose of the substantial duplication analysis.
    69. We now turn to the second part of section 338(c)(1): 
``Notwithstanding subsection (a), a satellite carrier shall not be 
required to carry upon request the signal of any local commercial 
television broadcast station that substantially duplicates the signal 
of another local commercial television broadcast station which is 
secondarily transmitted by the satellite carrier within the same local 
market or to carry upon request the signals of more than one local 
commercial television broadcast station in a single local market that 
is affiliated with a particular television network unless such stations 
are licensed to communities in different states.'' We find that this 
part of the provision dictates three results. First, satellite carriers 
are not obligated to carry more than one network affiliate in a 
television market when both affiliates are licensed to communities in 
the same state, even if the affiliates do not substantially duplicate 
their programming. This is analogous to the cable rule stating that a 
cable system need only carry the network affiliate closest to the 
principal headend. In this context, a satellite carrier may select 
which network affiliate it wants to carry. Second, a satellite carrier 
must carry network affiliated television stations licensed to different 
states, but located in the same market, even if they meet the 
definition of substantial duplication under the Commission's rules. An 
example of this situation is WMUR and WCVB. Both are ABC network 
affiliates, but the former is licensed to Manchester, New Hampshire, 
while the latter is licensed to Boston, Massachusetts. Under section 
338(c)(1), the satellite carrier would be obligated to carry both. 
Third, if two television stations located in different states (but 
within the same ``local

[[Page 7420]]

market'') duplicate each other, but are not network affiliates, the 
satellite carrier only has to carry one. For example, if there are two 
Home Shopping Network station affiliates in the same market, but 
located in different states, the satellite carrier need not carry both 
because the Home Shopping Network is not a television network under our 
definitional rule.
    70. Different States Examples. In the Notice, we inquired about the 
application of the statutory phrase, ``communities in different 
states.'' Congress stated that this phrase addresses unique and limited 
cases, including such station pairs as WMUR (Manchester, New Hampshire) 
and WCVB (Boston, Massachusetts) in the Boston DMA (both ABC 
affiliates), as well as WPTZ (Plattsburg, New York) and WNNE (White 
River Junction, Vermont) in the Burlington-Plattsburg DMA (both NBC 
affiliates), in which mandatory carriage of both duplicating local 
stations upon request assures that satellite subscribers will not be 
precluded from receiving the network affiliate that is licensed to a 
community in the state in which they reside. We asked whether there 
were other similar situations that must be addressed and accounted for.
    71. According to DirecTV, Congress sought to create only a very 
narrow exception to the general rule that satellite carriers shall not 
be required to carry duplicative signals--one that applies in ``unique 
and limited cases.'' DirecTV argues that the Commission must implement 
this provision in the limited manner that Congress intended--in no case 
should the Commission infer additional authority to address ``similar 
situations.'' We infer no such additional authority. NAB asserts that 
there is no conflict between the Act and the Conference Report on this 
issue: the Act reaches any instance in which two affiliates of the same 
network are licensed to different states but within the same local 
market. According to NAB, while these instances are no doubt ``unique 
and limited,'' as the Conference Report indicates, the Act is not 
restricted to the particular examples mentioned in the Conference 
Report. We agree with NAB. The reference in the legislative history 
merely states known examples. It cannot be read to limit the phrase's 
application to only the noted examples.
    72. National Programming. DirecTV argues that it would make no 
sense for the Commission to mandate carriage of local affiliates if 
they substantially duplicate the programming provided by the same 
channel that is carried nationally. NAB argues that the term ``another 
local commercial television broadcast station'' in section 338's 
duplication provision cannot be read to mean a non-local TV station or 
non-broadcast satellite channel. We disagree with DirecTV's position 
here. The relevant statutory provision is specifically an intra-market 
exemption, directly referring to situations where ``local'' television 
stations duplicate each other. Congress did not intend for national 
programming to be considered in the duplication analysis, otherwise it 
would have so stated. If we were to adopt DirecTV's position, local 
television stations that carry Univision or Telemundo Spanish language 
programming, for example, would not have to be carried by satellite 
carriers because their national feeds are already carried. In so doing, 
we would obviate the statute's focus on localism.

E. Noncommercial Educational Television Station Carriage Issues

    73. Section 338(c)(2) states that: ``The Commission shall prescribe 
regulations limiting the carriage requirements under subsection (a) of 
satellite carriers with respect to the carriage of multiple local 
noncommercial television broadcast stations. To the extent possible, 
such regulation shall provide the same degree of carriage by satellite 
carriers of such multiple stations as is provided by cable systems 
under section 615.'' Section 615(l)(1), in turn, provides that a local 
noncommercial educational television (``NCE'') station qualifies for 
cable carriage rights if it is licensed by the Commission as an NCE 
station and if it is owned and operated by a public agency, nonprofit 
foundation, or corporation or association that is eligible to receive a 
community service grant from the Corporation for Public Broadcasting. 
For purposes of cable carriage, an NCE station is considered local if 
its community of license is within 50 miles of, or the station places a 
Grade B contour over, the principal headend of the cable system. Cable 
systems are required to carry local noncommercial educational 
television stations under a statutory provision based on a cable 
system's number of usable activated channels. As part of our inquiry 
regarding section 338's duplication provision, we sought comment on the 
scope of a satellite carrier's obligations with regard to noncommercial 
educational television stations. We also asked whether we should adopt 
procedural rules for the carriage of NCE television stations to mirror 
the cable carriage requirements.
    74. AAPTS argues that the duplication provision is the only 
limitation on local NCE station carriage contemplated by SHVIA. AAPTS 
argues that Congress intended for eligible local NCE stations to be 
carried whenever a satellite carrier system is providing local-into-
local service in a particular market. On the opposite side, DirecTV and 
Echostar assert that the Commission should limit satellite carriage of 
NCE stations in a manner consistent with a carrier's technical 
limitations and other factors that differentiate the satellite industry 
from the cable industry. For example, EchoStar argues that no more than 
2% of a satellite carrier's total channel capacity (i.e., 6 channels 
nationwide for a system of 300 channels) should be devoted to local 
noncommercial station carriage. DirecTV submits that satellite carriers 
should only be required to carry a number of NCE stations that would 
bring the total number of NCE channels (defined to include national 
educational channels) available in a local market to a maximum of four 
percent of the local required channels offered by the satellite carrier 
in the market. According to DirecTV, none of these channels should 
substantially duplicate programming that is offered on another channel 
already carried in the market.
    75. We find that the NCE carriage formulations proposed by DirecTV 
and Echostar would deprive satellite subscribers of access to local 
noncommercial television stations in those markets where local-into-
local service is offered. While we recognize that satellite carriers 
provide a national service, their proposals would vitiate the intent of 
Congress in promoting carriage of local NCE stations. Instead, we agree 
with AAPTS that the duplication provision is the only limitation on NCE 
carriage contemplated by Congress when it promulgated section 338. 
Therefore, a satellite carrier must carry all non-duplicative NCE 
stations in markets where they provide local-into-service. Section 338 
instructs the Commission to implement NCE station carriage requirements 
providing the same degree of carriage by satellite carriers as is 
required by cable systems under section 615 of the Act. Cable systems 
with more than 36 channels are required to carry all non-duplicative 
NCE stations. Given that satellite carriers have more than 36 channels, 
we hold that satellite carriers' NCE station carriage obligations 
should be comparable to the requirements imposed on cable operators.
    76. At the same time, we recognize that section 338 requires the 
Commission to limit the carriage of multiple NCE stations in markets 
where local-into-local service is provided. It is important to note 
that this instruction

[[Page 7421]]

was embedded in the NCE duplication provision of section 338. Against 
this backdrop, we adopt a limitation principle based upon duplicative 
programming. Using the NCE station duplication definition found in the 
cable context as a general model, we have developed a two step approach 
in defining substantial duplication in this context. First, a 
noncommercial television station substantially duplicates the 
programming of another noncommercial station if it simultaneously 
broadcasts the same programming as another noncommercial station for 
more than for more than 50 percent of prime time, as defined by 
Sec. 76.5(n), and more than 50 percent outside of prime time over a 
three month period. After three noncommercial television stations are 
carried, the test of duplication shall be whether more than 50 percent 
of prime time programming and more than 50 percent outside of prime 
time programming is duplicative on a non-simultaneous basis. As for the 
timeframe of when to measure duplication, we find that the amount of 
duplicative prime-time weekly programming broadcast should be examined 
over the course of three-month period. The end of the three-month 
period must fall within 30 days prior to the date the satellite carrier 
notifies the NCE station that it is denying or discontinuing carriage 
based on substantial duplication. The amount of duplicative weekly 
programming broadcast outside of prime time will be measured over the 
same period. Only if the station duplicates more than 50 percent of the 
other station's weekly programming in both of these respects can it be 
denied carriage. We believe this approach is a reasonable means of 
achieving the statutory goal of implementing an NCE carriage obligation 
for satellite carriers that parallels the existing cable carriage 
requirement, and takes into account, ``to the extent possible,'' the 
other relevant technical and legal constraints. In reaching this 
balance, we note in particular that, unlike satellite carriers, cable 
operators are generally required to carry up to three local 
noncommercial educational stations regardless of the duplication 
involved. However, unlike satellite carriers, cable operators need not 
carry all NCE stations licensed to communities in an expansive DMA, but 
need only carry those NCE stations within 50 miles of the cable system 
principal headend or which place a Grade B service contour over the 
principal headend. The rule adopted attempts to balance these 
differences in a practical way using the avoidance of duplication 
mechanism identified in section 338(c) of the SHVIA.
    77. Public Interest Set-Aside. DirecTV and BellSouth have suggested 
that local NCE station carriage should be capped by the 4 per cent set-
aside requirement pursuant to section 335 of the 1992 Cable Act and the 
Commission's rules. AAPTS urges the Commission to reject the DBS 
industry's attempt to use the national public interest set-aside 
requirement to limit NCE carriage obligations. According to AAPTS, the 
satellite carriers' attempt to cap their carriage requirements through 
their public interest obligations confuses two separate statutory 
schemes: (i) The DBS set-aside for national, noncommercial educational 
programming, designed primarily to satisfy DBS public interest 
obligations; and (ii) the satellite carriage obligations, triggered 
only when a satellite carrier offers local channels to its subscriber's 
pursuant to the compulsory license.
    78. We will not permit satellite carriers to include NCE stations, 
carried under section 338, in the calculation of the 4 per cent set-
aside. We agree with AAPTS that the carriage requirements of the SHVIA 
have different purposes from the set-aside requirements contained in 
the satellite public interest provisions. The section 338 provisions 
further the goals of localism and nondiscriminatory treatment of local 
television stations while section 335 furthers the goal of program 
diversity. In this regard, we are concerned that if a satellite carrier 
were permitted to satisfy the public interest set-aside with NCE 
stations, programming diversity would be diminished because all 
programming currently carried to satisfy the set-aside will likely be 
dropped in lieu of NCE station carriage. Section 335 would also be 
rendered a nullity if NCE stations, carried under a different statutory 
section, were allowed to satisfy the set-aside obligations. Moreover, 
public interest set-aside programming must be made available to all 
subscribers of a satellite carrier without additional charge. This is a 
condition that cannot be met through the carriage of NCE stations under 
the SHVIA because the compulsory license prohibits satellite carriers 
from offering a local NCE station signal to subscribers in a non-local 
market. In this context, it is also important to note that cable 
operators have carriage obligations under Title VI that are mutually 
exclusive. For example, cable operators have an obligation to establish 
public, educational, and government access (``PEG'') channels under 
section 611 of the Act and pursuant to a local franchising agreement. 
We note that in this context, a cable operator cannot unilaterally 
satisfy its PEG requirements by carrying NCE stations under section 
615.
    79. PBS Feed. KQED requests the Commission to clarify that 
satellite carriers may not avoid their local NCE station carriage 
obligations simply by carrying the national PBS satellite feed. 
According to KQED, the national PBS feed was intended as an interim 
measure to facilitate the satellite industry's ability to offer public 
television service to their subscribers while the industry organized to 
comply with section 338. On this point, we note that the statutory 
copyright license for the PBS feed expires on January 1, 2002. This 
expiration date coincides with the onset of the section 338 obligations 
for satellite carriers. The SHVIA purposefully instituted a phase-out 
and phase-in with regard to the two compulsory license provisions so 
that satellite subscribers, in markets with local-into-local service, 
would have continuous access to public broadcasting programming.

F. Channel Positioning

    80. Placement. Section 338(d) of the Communications Act states 
that:

    No satellite carrier shall be required to provide the signal of 
a local television broadcast station to subscribers in that 
station's local market on any particular channel number or to 
provide the signals in any particular order, except that the 
satellite carrier shall retransmit the signal of the local 
television broadcast stations to subscribers in the stations' local 
market on contiguous channels and provide access to such station's 
signals at a nondiscriminatory price and in a nondiscriminatory 
manner on any navigational device, on-screen program guide, or menu.

The Conference Report notes that the obligation to carry local stations 
on contiguous channels is to ensure that satellite carriers position 
local stations in a way that is convenient and practically accessible 
for consumers. We stated in the Notice that the statutory directive for 
channel positioning confirms that satellite carriers are required to 
present local broadcast channels to satellite subscribers in an 
uninterrupted series. We sought comment, however, on whether broadcast 
signals carried under retransmission consent must be contiguous with 
the television stations carried under section 338 or whether they may 
be presented to satellite subscribers in a non-contiguous manner.
    81. ALTV submits that the signals of all local television stations, 
including retransmission consent stations, must be

[[Page 7422]]

provided on contiguous channels. AAPTS argues that local broadcast 
signals are to be grouped together regardless of their regulatory 
status because such grouping makes all local signals more easily 
accessible to viewers. NAB suggests that all stations should appear on 
channel numbers that are in the order in which the stations appear to 
the over-the-air receiver. BellSouth argues against requiring 
contiguous channel location for retransmission consent stations. It 
also asserts that section 338(d) is explicit that a satellite carrier 
cannot be required to provide carry mandatory carriage stations in any 
particular order.
    82. DirecTV urges the Commission to interpret the term 
``contiguous'' as allowing satellite carriers to form channel 
``neighborhoods'' of local television broadcast stations which consist 
of contiguous channels, but some of which remain vacant. ALTV believes 
that this proposal is consistent with the contiguous channel 
requirement provided that all local stations' signals are carried in an 
uninterrupted series with no intervening channels of programming. NAB 
does not object to DirecTV's ``neighborhood'' proposal, provided that: 
(i) The neighborhood includes all the local television stations, 
including retransmission consent television stations; (ii) the 
television stations are listed in the same order as their over-the-air 
channel numbers, and (iii) the neighborhood includes only local TV 
stations.
    83. Based on the language of the statute, we find that the channel 
placement provision encompasses all local television stations. 
Therefore, a satellite carrier is obligated to carry both 
retransmission consent stations and mandatory carriage stations in a 
block on the satellite carrier's channel line-up. We find that 
DirecTV's neighborhood proposal is consistent with the statutory 
language as long as the local channel block is not interrupted by non-
local programming. We do not believe, however, that the statute 
requires a satellite carrier to place local television stations in any 
particular order. Such restrictive language is not found in section 
338(d).
    84. Nondiscriminatory Program Guide Treatment. In the Notice, we 
sought comment on the phrase, ``provide access to such station's 
signals * * * in a nondiscriminatory manner on any navigational device, 
on-screen program guide, or menu.'' We specifically sought comment on 
what rules the Commission should develop to ensure that television 
stations are accessible to satellite subscribers on nondiscriminatory 
terms. We asked whether there were any existing Commission rules that 
we may use as a model to develop regulations for this particular 
situation. We also sought comment on whether Congress meant that 
electronic program guide information concerning required television 
station signals should be presented to subscribers in the same fashion 
as other programming services provided by the satellite carrier.
    85. AAPTS urges the Commission to adopt nondiscrimination rules 
that parallel the open video system (``OVS'') requirements. It argues 
that such rules should ensure that all television broadcast stations, 
including NCE stations, are represented in a nondiscriminatory fashion 
on the electronic program guide, menu, and/or navigation device 
provided by the satellite carrier. NAB provides a list of suggestions 
regarding how satellite carriers should treat television stations to 
achieve the statute's objectives. One of those examples is to ``bar 
satellite carriers from requiring viewers to take extra steps (e.g., 
mouse or remote control clicks) to obtain access to particular local 
stations, or from placing `carry one, carry all' stations on different 
screens.'' We find that the broadcasters' suggestions are too 
restrictive to be implemented. The open video system model, as 
BellSouth points out, is a statutory creation with unique requirements 
and characteristics not meant to be transferred to other contexts. The 
open video system requirements address access to a video delivery 
platform where two-thirds of system capacity must be made available at 
a nondiscriminatory price to outside programmers. The OVS provisions do 
not directly address concerns involved here, such as nondiscriminatory 
treatment on an electronic program guide. We also find that NAB's 
proposals involve too much detail to be implemented as rules. We do not 
believe that Congress meant to bar satellite carriers from requiring 
viewers to take extra steps to reach a local television station on an 
electronic program guide, when it promulgated the SHVIA.
    86. In this context, we hold that a satellite carrier should treat 
all local television stations on EPGs in the same manner. Program guide 
presentation and information about a local independent television 
station, or an NCE station, should be similar to that given to a local 
network affiliate carried under retransmission consent. This 
requirement is similar to the statute's treatment of television station 
picture quality under the material degradation provisions.
    87. Nondiscriminatory Price. In the Notice, we inquired about the 
statutory phrase, ``provide access to such station's signals at a 
nondiscriminatory price,'' and asked whether Congress meant that 
television station signals carried pursuant to mandatory carriage 
requests may cost no more per channel to subscribers than packages of 
retransmission consent television station signals or other satellite 
service packages. In response to this inquiry, ALTV and NAB assert that 
all local signals should be included in a single package. AAPTS asserts 
that NCE mandatory carriage television stations should be offered as 
part of the existing local broadcast signal package without any 
additional cost to the subscriber. BellSouth argues that a satellite 
carrier has the right to place local television signals on a pay tier, 
an enhanced service tier, or any other tier of service, as long as all 
local television stations are on this tier and the viewing of no one 
station costs the viewer more than the viewing of any other station in 
the DMA. Echostar comments that one of the crucial differences between 
cable and satellite carriers is that the latter do not have obligations 
as to the tier in which local signals are to be offered. It states that 
channel placement requirements of section 338 cannot be used as a lever 
to impose such obligations on satellite carriers.
    88. We do not believe that the statute requires satellite carriers 
to sell all local television stations as one package to subscribers. As 
Echostar points out, Congress did not intend to establish a basic 
service tier-type requirement for satellite carriers when it 
implemented section 338. Nor did Congress explicitly prohibit the sale 
of local television station signals on an a la carte basis. Rather, 
section 338's anti-discrimination language prohibits satellite carriers 
from implementing pricing schemes that effectively deter subscribers 
from purchasing some, but not all, local television station signals. 
Thus, we find that a satellite carrier must offer local television 
signals, as a package or a la carte, at comparable rates.
    89. ALTV and NAB asks the Commission to rule that no new equipment 
should be required to access some, but not all of the local signals in 
a market. According to ALTV, such a pronouncement is necessary to 
prevent discriminatory treatment of mandatory carriage television 
stations. NAB also suggests that satellite carriers should be barred 
from placing mandatory carriage television stations on any satellite 
that would require a subscriber to purchase another dish to receive 
such signals. BellSouth agrees in principle noting that

[[Page 7423]]

the channel placement provisions of section 338 were designed to ensure 
that dominant stations in a DMA receive no better carriage treatment 
than other stations. On the other hand, Echostar comments that one of 
the obligations advocated by the NAB--that the local stations be 
available from the same orbital location--is tantamount to a provision 
that had been included in draft legislation prior to the passage of 
SHVIA. Echostar states that such provision, which was dropped from the 
final version of section 338, would have barred satellite carriers from 
transmitting local stations in a manner that would require additional 
reception equipment. Echostar argues that the Commission cannot 
implement a rule similar to this provision when Congress decided not to 
include such a requirement in the SHVIA.
    90. We find that the language of section 338(d) covers the 
additional equipment concerns raised by the parties and bars satellite 
carriers from requiring subscribers to purchase additional equipment 
when television stations from one market are segregated and carried on 
separate satellites. However, we are not prohibiting a satellite 
carrier from requiring a subscriber to pay for an additional dish in 
order to receive all television stations from a single market. For 
example, DirecTV may require an additional dish to receive all 
television stations from the Baltimore market, but it may not require 
subscribers to purchase the same to receive some Baltimore stations 
where the others are available using existing equipment.

G. Content To Be Carried

    91. Programming in the Vertical Blanking Interval. Section 338(g) 
states that, ``The regulations prescribed [under section 338] shall 
include requirements on satellite carriers that are comparable to the 
requirements on cable operators under sections 614(b)(3) * * * and 
615(g)(1).'' Section 614(b)(3) states that:

    A cable operator shall carry in its entirety, on the cable 
system of that operator, the primary video, accompanying audio, and 
line 21 closed caption transmission of each of the local commercial 
television stations carried on the cable system and, to the extent 
technically feasible, program-related material carried in the 
vertical blanking interval [``VBI''] or on subcarriers. 
Retransmission of other nonprogram-related material (including 
teletext and other subscription and advertiser supported information 
services) shall be at the discretion of the cable operator. Where 
appropriate and feasible, operators may delete signal enhancements, 
such as ghost canceling, from the broadcast signal and employ such 
enhancements at the system headend or headends.

Section 615(g)(1), which is the noncommercial equivalent of the 
commercial television station provision in section 614(b)(3), states 
that:

    A cable operator shall retransmit in its entirety the primary 
video, accompanying audio, and line 21 closed caption transmission 
of each qualified local noncommercial educational television station 
whose signal is carried on the cable system, and, to the extent 
technically feasible, program-related material carried in the 
vertical blanking interval, or on subcarriers, that may be necessary 
for receipt of programming by handicapped persons or educational or 
language purposes. Retransmission of other material in the vertical 
blanking interval or on subcarriers shall be within the discretion 
of the cable operator.

We sought comment on the applicability of these two similar cable 
requirements in the satellite carriage context, especially in light of 
the term ``comparable'' contained in section 338(g). We note that the 
VBI contained in a television broadcast's signal is composed of many 
lines of information. Our concern here is with those lines of the VBI 
where certain types of data, such as closed captioning information, are 
found. We also note that a satellite carrier does not retransmit VBI 
information as it is received. Rather, it converts the data from an 
analog to a digital form and carries such data as a digital stream to 
the subscriber's home. The set-top box then converts the digital stream 
and makes the data available for subscriber use.
    92. Several commenters argue that the Commission should apply the 
applicable cable provisions to satellite carriers. NAB comments that 
satellite carriers should carry whatever information the broadcaster 
may have embedded in its analog VBI. BellSouth, however, seeks to limit 
the content-to-be-carried requirements for satellite carriers to only 
closed captioning information until the technical feasibility of other 
applications can be tested and agreed to on a case-by-case basis. We 
will apply the current cable content-to-be-carried requirements to 
satellite carriers. We are not persuaded that satellite carriers are 
unable to carry the relevant data currently contained in the VBI. Nor 
has any satellite carrier proffered a credible argument as to why we 
should treat them differently from cable operators in this context. We 
therefore require satellite carriers to carry the same program-related 
vertical blanking information as cable operators, including but not 
limited to, closed captioning, Nielsen rating codes, V-chip information 
and for NCE stations, material necessary for the receipt of programs by 
people with disabilities as well as education and language-related 
material. We believe our decisions here will further the goals of the 
SHVIA and are consistent with the cable television requirements.
    93. Program-Related. In the Broadcast Signal Carriage Order, the 
Commission decided that the factors enumerated in WGN Continental 
Broadcasting, Co. v. United Video Inc. (``WGN'') provide useful 
guidance for what constitutes program-related material. The WGN case 
addressed the extent to which the copyright on a television program 
also included program material in the VBI of the signal. Under the 
cable carriage rules, all program-related broadcast material must be 
carried. We sought comment on whether the WGN program-related analysis 
applies in the context of satellite broadcast signal carriage. Very few 
parties provided comments on this issue. Of those who did, there were 
no negative arguments made. BellSouth, for example, has no objection to 
use of the WGN criteria to determine what content is program related 
and must be carried. Given the dearth of opposition to the WGN factors 
and our cable program-related decisions, we hereby incorporate all 
Commission policies and references regarding the term ``program-
related'' into the satellite carriage context. This measure, again, 
serves to align the carriage requirements imposed both on cable 
operators and satellite carriers. Moreover, since the WGN case centered 
on copyright law, and the SHVIA and section 338 are also copyright-
based, we believe that adopting such a policy for satellite carriers is 
reasonable and appropriate.
    94. In the Notice, we recognized that the Commission has not 
specifically defined ``primary video'' in the rules and has instead 
relied on the language of section 614(b)(3)(B) to clarify the scope of 
the term for purposes of cable broadcast signal carriage. In view of 
this history, we sought comment on whether a specific definition of 
primary video is required for satellite carriers to fulfill the 
requirements contained in section 338. Network Affiliates state that a 
specific definition of primary video need not be adopted for the 
satellite carriage rules. Network Affiliates assert that the term has 
proved self-explanatory and non-controversial as applied to cable 
carriage of analog signals and should be equally so in the satellite 
context. AAPTS asserts that the Commission has not further defined 
primary video for the cable carriage rules, and in the seven years that 
the rules have been in effect, this lack of definition has not been a 
problem. We

[[Page 7424]]

agree that the primary video concept has worked in the cable carriage 
context. We therefore incorporate the cable version of primary video 
into the satellite broadcast signal carriage rules. Given these 
indicia, and the fact that implementing the cable definition will 
further the Congressional goal of comparability, we believe our finding 
serves the public interest. We note that the Act also mandates that, in 
addition to primary video, accompanying audio must be carried. 
Therefore, satellite carriers are required to carry the secondary audio 
programming (``SAP'') material that accompanies many broadcast 
television programs.
    95. Technical Feasibility. With regard to the ``technical 
feasibility'' of the carriage of program-related material in the VBI or 
on subcarriers, the Commission stated in the Broadcast Signal Carriage 
Order that such carriage should be considered ``technically feasible'' 
if it does not require the cable operator to incur additional expenses 
and to change or add equipment in order to carry such material. The 
Commission noted that it would consider signal carriage to be 
``technically feasible'' if only nominal costs, additions or changes of 
equipment are necessary. We sought comment on whether the consideration 
of technical feasibility should be different in the context of 
satellite broadcast signal carriage.
    96. AAPTS states that there is no technical impediment to the 
carriage of VBI material over satellite; it is simply a question of 
capacity. LTVS asserts that it is technically possible for a satellite 
carrier to carry closed captioning information, audience measurement 
and/or ratings data, and SAP audio. While BellSouth does not dispute 
that satellite carriers can and do carry, without significant expense, 
the program-related material which television stations currently 
deliver through the VBI, it argues that requiring carriage of 
different, additional or future VBI-carried information may be 
expensive and may impose significant spectrum capacity burdens. DirecTV 
asserts that ``billions of dollars'' of additional investment would be 
required to retrofit its satellite system so that it could carry 
additional material on the VBI and allow consumers to view the 
additional material. AAPTS asserts that, given the widely divergent 
viewpoints on this issue within the satellite industry, the Commission 
cannot accept DirecTV's contention that it is not technically feasible 
for carriers to retransmit program-related material in the VBI. AAPTS 
further asserts that DirecTV's satellite systems are already being 
designed to deliver data and that even the first DBS receivers had both 
a wide-band and a low-speed data port.
    97. Based on the arguments presented, we find that it is 
technically feasible for satellite carriers to carry the current 
program-related material contained in a television station's VBI. 
DirecTV has not provided detailed evidence to support its claim that it 
will incur financial hardship if it were required to carry such program 
content. We also find it significant that LTVS, a future satellite 
carrier, admits that it would have no difficulty in carrying VBI 
information. With regard to BellSouth's argument, there could be new 
kinds of program-related data in the VBI that would cause the satellite 
carrier to incur inordinate expenses and to change or add a substantial 
amount of equipment. We will address such issues on a case-by-case 
basis in the future.
    98. In this context, DirecTV and LTVS also urge the Commission to 
recognize that satellite systems must be designed and constructed far 
in advance of the date for commencement of service. They state that 
once the systems are deployed in orbit, few changes can be made without 
necessitating the complete replacement of the satellite systems at 
issue. While we understand the challenges involved in constructing, 
designing, and launching new satellites, the arguments expressed by the 
satellite carriers' are unrelated to our discussion here. The 
underlying concern of the carriers is that the carriage of VBI 
information requires channel capacity. On this point, Congress was 
cognizant of channel capacity concerns when the SHVIA was being 
drafted, yet it still instructed the Commission to apply the cable 
content-to-be carried requirements to satellite carriers. We cannot 
relieve satellite carriers of the carriage obligations Congress imposed 
in the SHVIA in this instance.

H. Material Degradation

    99. Picture Quality. Section 338(g) states that, ``The regulations 
prescribed [by the Commission under section 338] shall include 
requirements on satellite carriers that are comparable to the 
requirements on cable operators under sections 614(b)(4) * * * and 
615(g)(2).'' Section 614(b)(4)(A) states that:

    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.

Section 615(g)(2), which is the noncommercial equivalent of the 
commercial television station provision in section 614(b)(4), states 
that:

    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.

    100. When implementing the material degradation provision for cable 
carriage, the Commission relied on the technical standards as updated 
in the Cable Television Technical and Operational Requirements Report 
and Order, in defining the scope of the requirement. The Cable 
Technical Report and Order specifically addressed the issue of 
preventing material degradation of local television signals carried on 
cable systems by adopting a number of technical standards and providing 
that cable operators must make reasonable efforts and use good 
engineering practices and proper equipment to guard against unnecessary 
degradation in the signal received and delivered to the cable 
subscriber. The Commission stated that the standards adopted in the 
Cable Technical Report and Order were sufficient to satisfy the 
material degradation requirements contained in the 1992 Cable Act. In 
declining to adopt regulations in addition to those found in the Cable 
Technical Report and Order, the Commission stated that further rules 
may have the unwarranted effect of impeding technological advances and 
experimentation in the cable industry. Standards specific to digital 
transmission were not adopted. We sought comment on whether reliance on 
Commission precedent in the cable carriage context regarding material 
degradation was appropriate and whether technical standards mirroring 
those in the cable television field would be warranted. We also asked 
whether there were certain compression ratios or encoding techniques 
that should be prohibited because their use would result in material 
degradation.
    101. Commenters have proposed a variety of ways to determine 
picture quality standards. LTVS argues that the definition of material 
degradation should include any instance where a television broadcast 
station freezes, tiles, or looks ``dirty'' due to a satellite carrier's 
choice of encoding and compression techniques. AAPTS advocates a rule 
requiring satellite carriers to maintain local television stations at a 
TASO Grade 2 level to

[[Page 7425]]

avoid material degradation of these signals. DirecTV urges the 
Commission to refrain from setting standards for material degradation 
until two industry committees devoted to video picture quality, IEEE G-
2.1.6 and ITU VQEG, complete their work. HBO argues that because of the 
rapid changes in digital technology, there is significant danger that 
any standards adopted today would quickly be obsolete, or worse, would 
prevent beneficial changes in transmission parameters as technology 
improves. We decline to adopt specific picture quality standards at 
this time. As we stated in the Notice, analog degradation standards for 
the cable industry were developed over the course of several years and 
evolved as technology changed and improved. The Commission has not had 
a significant opportunity to evaluate satellite delivery of broadcast 
signals. We agree with DirecTV that it would be premature for the 
Commission to adopt specific picture quality standards at this time.
    102. The Conference Report noted that because of constraints on the 
use of satellite spectrum, satellite carriers may initially be limited 
in their ability to deliver must carry signals into multiple markets. 
According to the Conference Report: ``New compression technologies, 
such as video streaming, may help overcome these barriers, and if 
deployed, could enable satellite carriers to deliver must carry signals 
into many more markets than they could otherwise.'' The Commission was 
urged, pursuant to its obligations under section 338, or in any other 
related proceedings, ``to not prohibit satellite carriers from using 
reasonable compression, reformatting, or similar technologies to meet 
their carriage obligations, consistent with existing authority.''
    103. ALTV argues that those technical means of enhancing capacity, 
but degrading picture quality, should be prohibited. ALTV argues that 
the Conference Report language on signal processing techniques should 
not be read to eviscerate the material degradation prohibition. AAPTS 
argues that the compression techniques a satellite carrier employs 
should not degrade a local broadcast signal such that, to the average 
viewer, the signal appears materially inferior to what the viewer might 
receive over the air. BellSouth argues that the Commission should 
decline to adopt signal quality standards that would contravene 
Congress's mandate to not prohibit satellite carriers from using 
reasonable compression, reformatting, or similar technologies to meet 
their carriage obligations. DirecTV argues against prohibiting any 
encoding techniques, compression ratios or the use of similar 
technologies that would impede technical innovation that Congress 
specifically sought to foster.
    104. At the outset, we note that our concerns here revolve around 
the satellite carrier's treatment of the broadcast signal on the 
equipment it controls or authorizes. Thus, our focus does not involve 
picture quality issues that may arise because of the type of television 
receiver used since the satellite carrier has little control over the 
use of these devices. We also note that the satellite carrier should 
not be responsible for a poor quality picture delivered to the local 
receive facility. Rather, the broadcast station is responsible for 
ensuring that its signal is delivered in good quality. Moreover, our 
analysis of material degradation recognizes that dish placement on or 
near the subscriber's premises can affect the quality of the picture 
received, but that the satellite carrier cannot control how and where 
dishes are installed.
    105. It is important to note the technical steps in the digital 
conversion process affecting the material degradation analysis. In 
satellite digital television systems, such as those implemented by 
DirecTV and Echostar, there are four layers of the system where video 
quality may be affected. The first layer, known as the picture layer, 
is where decisions are made regarding the use of progressive or 
interlace scanning techniques as well as whether the picture will be 
produced in a standard definition or high definition format. The 
choices made in this layer will not likely affect the quality of 
retransmitted analog broadcasts. In the second layer, the compression 
layer, decisions are made regarding the types of compression techniques 
used. The relevant digital standard, MPEG-2, supports a wide range of 
compression ratios and data rates. At this layer, the satellite carrier 
attempts to maximize the number of channels carried on each transponder 
and there is an effort to place a limit on the maximum data rate of 
each channel. Limiting the data rate may cause the picture quality to 
degrade, especially when certain video scenes involve rapid motion 
images or there is a greater degree of camera panning and zooming. The 
third layer is known as the transport layer and this is where the data 
are structured and organized into data packets. Since most digital 
video systems use the MPEG packet structure, there is little likelihood 
that any type of degradation would occur at this level. The final layer 
is the transmission layer and this is where data are modulated on to a 
carrier for transmission. Satellite carriers use quadrature phase-shift 
keying or ``QPSK''--as the principal format when transmitting video 
programming. The use of high efficiency modulation techniques, such as 
the cable industry's QAM standard, permit greater data rate throughput. 
QPSK, however, is a lower order modulation and requires satellite 
carriers to limit the data rate or increase channel bandwidth. The 
chances for degradation to occur at this level are tied to the limiting 
data rate technique in the compression layer.
    106. We specifically note that degradation may result when the 
satellite carrier encodes an analog broadcast signal and readies it for 
digital retransmission. During the encoding process, certain artifacts 
may be introduced into the original material that would have an effect 
on picture quality. The most dominant artifact is quantization noise in 
the picture. This effect is often visible on edges of subjects and 
textured areas of the image. It is caused when there is a high amount 
of picture detail along with a high degree of picture activity and 
levels of quantization are restricted due to data rate reduction. 
Random noise can also be introduced into the source video. This can 
result in activity or ``busyness'' in detail areas of the picture and 
tiling or flicker in other areas of the picture. Such effects are 
caused by the encoder attempting to encode random noise. During the 
encoding process of rapidly moving images, certain data reduction 
techniques can result in another artifact known as ``dirty window,'' 
where noise appears stationary while images behind it are moving.
    107. To satisfy the material degradation principles in the Act, we 
will adopt a simple comparability rule. That is, a satellite carrier 
should treat all local television stations in the same manner with 
regard to picture quality. The signal processing, compression and 
encoding techniques a satellite carrier uses to carry retransmission 
consent stations should also be used for mandatory carriage stations. 
This rule comports with the non-discriminatory thrust of section 338 
and the SHVIA. As long as all local television stations are treated 
equally, and the degradation resulting from processing these stations 
does not exceed the level for the lowest quality non-broadcast video 
service provided by the carrier, we will refrain from prohibiting 
compression methods. We recognize that compression technology is 
rapidly evolving and we do not want to impede innovation by proscribing 
certain techniques. We also believe that new compression methods may 
benefit subscribers as satellite

[[Page 7426]]

carriers could offer more services, particularly those involving 
broadband applications.
    108. Measurement. In the Notice, we sought suggestions for 
measurement standards that may be used to address broadcast signal 
degradation by satellite carriers. We found it necessary to request 
such information because the Commission has had relatively little 
experience in evaluating quality in the context of the analog to 
digital to analog conversion of the type involved in satellite 
broadcast signal carriage. LTVS states that subjective criteria should 
be used to measure broadcast signal degradation and suggests that the 
Commission consider the International Telecommunications Union's 
recommendations for broadcast video evaluation. NAB, however, proposes 
the use of three objective criteria--(i) carrier-to-noise (C/N) ratio, 
(ii) bit error rates (BER), and (iii) bit rate allocation for each 
channel--that collectively provide a method for checking whether a 
satellite carrier is ``materially degrading'' a local station's signal 
in comparison to other channels. We decline to adopt, as a rule, any 
one specific technique for measuring degradation. Both LTVS and NAB 
present worthy proposals, but they are untested in the field of 
satellite broadcast signal carriage. The more reasonable approach here 
is to develop a uniform measurement technique over time. After some 
experience with satellite broadcast signal carriage, broadcasters and 
satellite carriers will be able to apply such a technique for analog-
to-digital degradation measurements. At some future point, the 
Commission will be in a better position to scrutinize the techniques 
used and establish standards, if necessary.

I. Compensation for Carriage

    109. Section 338(e) states:

    A satellite carrier shall not accept or request monetary payment 
or other valuable consideration in exchange either for carriage of 
local television broadcast stations in fulfillment of the 
requirements of this section or for channel positioning rights 
provided to such stations under this section, except that any such 
station may be required to bear the costs associated with delivering 
a good quality signal to the local receive facility of the satellite 
carrier.

We noted that this provision largely parallels provisions applicable to 
cable operators that are found in sections 614(b)(10) and 615(i) of the 
Act that are implemented in Sec. 76.60 of the Commission's rules. In 
the cable context, commercial broadcasters elect either must carry or 
retransmission consent to obtain carriage of their signals. If 
mandatory carriage is selected, there are no specific terms for 
carriage that must be requested, other than choosing the relevant 
channel positioning options available to broadcasters under the Act. If 
retransmission consent is selected, the operator may receive 
compensation from the broadcaster in exchange for carriage. We assumed 
the same general policy was intended for satellite carriers and that a 
broadcaster seeking carriage rather than requesting carriage ``in 
fulfillment of the requirements of [section 338]'' would simply 
negotiate carriage provisions, including payment terms, in the context 
of a retransmission consent negotiation. We sought comment on this 
interpretation. We also sought comment on the policy underlying this 
provision and its purpose in the statutory scheme.
    110. Network Affiliates agree that the compensation rules 
applicable to satellite carriers pursuant to section 338(e) of the Act 
should parallel the provisions applicable to cable operators. LTVS 
comments that there is no reason why the parties cannot themselves 
reach agreement on reasonable compensation for carriage in a 
retransmission consent agreement. In the context of mandatory carriage, 
LTVS asserts that satellite carriers cannot charge local television 
stations for carriage of their signals. We find that the current 
compensation rules applicable to cable operators should likewise apply 
to satellite carriers. That is, a station must bear the costs 
associated with delivering a good quality signal and a satellite 
carrier may accept payments from stations pursuant to a retransmission 
consent agreement. No one commented that there should be different 
rules between the industries nor can we find any valid reason to impose 
different rules. We therefore implement the language of section 338 as 
presented in the statute.

J. Remedies

    111. Section 338(a)(2) states that the remedies for any failure to 
meet the obligations under subsection (a) (carriage obligations) shall 
be available exclusively under section 501(f) of title 17, United 
States Code. New section 501(f)(1) states:

    With respect to any secondary transmission that is made by a 
satellite carrier of a performance or display of a work embodied in 
a primary transmission and is actionable as an act of infringement 
under section 122, a television broadcast station holding a 
copyright or other license to transmit or perform the same version 
of that work shall, for purposes of subsection (b) of this section, 
be treated as a legal or beneficial owner if such secondary 
transmission occurs within the local market of that station.

New section 501(f)(2) further provides that: ``A television broadcast 
station may file a civil action against any satellite carrier that has 
refused to carry television broadcast signals, as required under 
section 122(a)(2), to enforce that television broadcast station's 
rights under section 338(a) of the Communications Act of 1934.''
    112. Section 338(f)(1) states:

    Whenever a local television broadcast station believes that a 
satellite carrier has failed to meet its obligations under 
subsections (b) through (e) of this section [(b) good signal 
required, (c) duplication not required, (d) channel positioning, and 
(e) compensation for carriage], such station shall notify the 
carrier, in writing, of the alleged failure and identify its reasons 
for believing that the satellite carrier failed to comply with such 
obligations. The satellite carrier shall, within 30 days after such 
written notification, respond in writing to such notification and 
comply with such obligations or state its reasons for believing that 
it is in compliance with such obligations. A local television 
broadcast station that disputes a response by a satellite carrier 
that it is in compliance with such obligations may obtain review of 
such denial or response by filing a complaint with the Commission. 
Such complaint shall allege the manner in which such satellite 
carrier has failed to meet its obligations and the basis for such 
allegations.

In addition, section 338(f)(2) states:

    ``The Commission shall afford the satellite carrier against 
which a complaint is filed under paragraph (1) an opportunity to 
present data and arguments to establish that there has been no 
failure to meet its obligations under this section. Section 
338(f)(3) then states that: ``Within 120 days after the date a 
complaint is filed under paragraph (1), the Commission shall 
determine whether the satellite carrier has met its obligations 
under subsections (b) through (e). If the Commission determines that 
the satellite carrier has failed to meet such obligations, the 
Commission shall order the satellite carrier to take appropriate 
remedial action. If the Commission determines that the satellite 
carrier has fully met the requirements of such subsections, the 
Commission shall dismiss the complaint.'' At the outset, we find 
that the procedural provisions contained in section 338(f)(1-3), 
concerning the steps required to file a carriage complaint, are 
plain on their face. We adopt the statutory procedures without 
change. With regard to the substantive issues raised in the Notice, 
we address each one in turn.

    113. In the Notice, the Commission discussed the parameters of its 
enforcement authority regarding the carriage obligation rules under 
SHVIA. We sought to reconcile forum disputes that may arise if a 
satellite carrier fails to carry a local television station that

[[Page 7427]]

has requested carriage in a market in which it provides local-into-
local service. In addition, we sought to determine whether disputes 
concerning the non-carriage of broadcast station signals by satellite 
carriers because of signal quality problems should be within the domain 
of the courts, the Commission, or shared by the different 
jurisdictions. ALTV states that the outright failure to carry a station 
entitled to carriage under section 338 should be grounds for an 
infringement of copyright suit in federal court. DirecTV asserts that 
the remedy available to a broadcaster in the event of a compulsory 
carriage dispute is to file a civil action against the satellite 
carrier that has refused carriage and that the Commission does not have 
jurisdiction to remedy non-carriage of broadcast station signals by 
satellite carriers. On the one hand, the statute provides that the 
remedies for any failure to meet the carriage obligations of section 
338(a) shall be available exclusively under section 501(f) of the 
Copyright Act, which directs complainants to an appropriate United 
States District Court. On the other hand, sections 338(b)-(e) clearly 
contemplate the Commission making determinations that, in appropriate 
circumstances, require carriage. We find that if a television station 
is not being carried and seeks damages and other specific forms of 
monetary or injunctive relief under either section 338(a) of the Act or 
section 501(f) of the Copyright Act, then the United States District 
Court is the exclusive forum for adjudicating the complaint. If the 
television station seeks a finding on the facts and a resulting 
determination of whether it is entitled to carriage pursuant to 
Sec. 76.66 of our rules, then it may file a complaint with the 
Commission. In arriving at this determination, we do not believe that 
Congress intended to deprive the Commission of the right to enforce the 
regulations the statute specifically directs us to adopt under section 
338.
    114. We find that the Commission should have primary jurisdiction 
over issues concerning: (1) Good quality signal; (2) substantial 
duplication; (3) channel positioning; and (4) compensation matters. We 
adopt this position to ensure the rapid and timely implementation of 
section 338. The Commission has the technical expertise to review and 
address such matters. The institutional knowledge the Commission has 
developed in adjudicating cable-broadcast disputes will be helpful in 
processing satellite carriage cases in an efficient manner.
    115. In response to questions we raised in the Notice, several 
commenters addressed the issue of whether broadcasters should be 
permitted to file complaints with the Commission against a satellite 
carrier for non-compliance with the content-to-be-carried and material 
degradation provisions of the SHVIA, specifically referenced in section 
338(g). A number of broadcast commenting parties assert that the 
Commission's jurisdiction should be extended to allow consideration and 
resolution of complaints relating to content-to-be-carried and material 
degradation issues. Network Affiliates and LTVS, for example, state 
that such disputes rest squarely within the Commission's expertise and 
excluding such disputes from the complaint procedures would be 
inconsistent with section 338(g), which requires the Commission to 
implement regulations regarding material degradation and content-to-be-
carried in the satellite context that mirror those in the cable 
context. DirecTV however, argues that section 338(f) does not provide 
for broadcaster complaints against a satellite carrier for non-
compliance with provisions concerning content-to-be-carried or material 
degradation. Consistent with the general authority invested in the 
Commission to implement section 338, we will adjudicate complaints 
concerning the material degradation and content-to-be-carried 
provisions under the same procedural framework established for the 
other satellite carriage provisions of the Act. For the reasons 
outlined, we will also assert primary jurisdiction over these matters.
    116. We adopt a date certain for when a complaint must be filed 
with the Commission. Consistent with the procedural rule for cable 
carriage complaints, we will not consider a complaint brought by a 
television station if it is filed later than 60 days after a satellite 
carrier denies the station's carriage request. In this context, the 
denial can be in the affirmative, as in a rejection letter, or by 
silence, where a carrier does not respond to a carriage request within 
30 days of its receipt. We implement this requirement, pursuant to 
section 338(f) of the Act, to facilitate the carriage process and 
ensure that television broadcast stations do not delay in enforcing 
their rights to the detriment of the satellite carrier.
    117. Other Actions. In the Notice, we requested comment on 
additional enforcement actions the Commission may impose. Some 
broadcasters have stated that the Commission should take into account 
any failure to comply with the local carriage requirements when 
considering license renewals for satellite carriers. We find that this 
issue is a matter better suited for discussion in the context of a 
satellite licensing proceeding, not within the confines of a rulemaking 
implementing the SHVIA's carriage requirements. We therefore decline to 
rule on the merits of the broadcasters' suggestion at this time.
    118. ALTV proposes that the Commission require satellite carriers 
to file semi-annual reports detailing their efforts to achieve 
compliance with section 338 by January 1, 2002. We find that the 
statute does not mandate such a requirement. Nevertheless, carriage 
compliance information will be useful in updating Congress on the 
implementation of the SHVIA. We therefore plan to ask questions 
concerning the implementation of section 338 in the Commission's Notice 
of Inquiry, preceding the Annual Competition Report to be issued in 
2002.

I. Procedural Matters

    119. Final Regulatory Flexibility Analysis. As required by the 
Regulatory Flexibility Act (``RFA''), see 5 U.S.C. 603, an Initial 
Regulatory Flexibility Analysis (``IRFA'') was incorporated into both 
the Notice and the Retransmission Consent Notice. The Commission sought 
written public comments on the possible significant economic impact of 
the proposed policies and rules on small entities in the Notice and the 
Retransmission Consent Notice, including comments on the IRFAs. 
Pursuant to the RFA, see 5 U.S.C. 604, a Final Regulatory Flexibility 
Analysis is contained in this document.
    120. Paperwork Reduction Act of 1995 Analysis. This Report and 
Order contains new or modified information collection(s) subject to the 
Paperwork Reduction Act of 1995 (``PRA''), Public Law 104-13. It will 
be submitted to the Office of Management and Budget (``OMB'') for 
review under section 3507(d) of the PRA. OMB, the general public, and 
other Federal agencies are invited to comment on the new or modified 
information collection(s) contained in this proceeding.

Final Regulatory Flexibility Analysis

    a. As required by the Regulatory Flexibility Act (``RFA''), an 
Initial Regulatory Flexibility Analysis (``IRFA'') was incorporated in 
the Notice of Proposed Rulemaking in CS Docket No. 00-96, FCC 00-195 
(``Notice'') and in the Notice of Proposed Rulemaking in CS Docket No. 
99-363, FCC 99-406 (``Retransmission Consent Notice''). The Commission 
sought written public comments on the proposals in both

[[Page 7428]]

Notices, including comment on the IRFAs. No specific comments were 
received on the IRFAs. This Final Regulatory Flexibility Analysis 
(``FRFA'') conforms to the RFA.
    b. Need for, and Objectives of, this Report and Order. Section 
338(g) of the Communications Act of 1934, as amended (``Act''), 47 
U.S.C. 338(g), directed the Commission, within one year of enactment of 
the Satellite Home Viewer Improvement Act of 1999, to ``issue 
regulations implementing this section following a rulemaking 
proceeding.'' The relevant provisions concern the carriage of all local 
television broadcast station signals by satellite carriers commencing 
on January 1, 2002. Section 325(b)(3)(C) of the Act, 47 U.S.C. 
325(b)(3)(C), also directs the Commission to complete all actions 
necessary to prescribe election cycle regulations within one year of 
enactment of the Satellite Home Viewer Improvement Act of 1999.
    c. Summary of Significant Issues Raised by Public Comments in 
Response to the IRFAs. We did not receive any comments in direct 
response to the IRFA in CS Docket 00-96. The American Cable Association 
commented on the IRFA in CS Docket No. 99-363, but those comments were 
directed at the SHVIA's good faith and exclusivity provisions, and did 
not concern the election cycle addressed herein.
    d. Description and Estimate of the Number of Small Entities to 
Which the 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. The RFA 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 Section 3 of the 
Small Business Act. 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 Administration 
(``SBA''). The rules we adopt affect television station licensees and 
satellite carriers.
    e. Television Stations: The rules and policies will apply to 
television broadcasting licensees, and potential licensees of 
television service. The SBA defines a television broadcasting station 
that has no more than $10.5 million in annual receipts as a small 
business. Television broadcasting stations consist of establishments 
primarily engaged in broadcasting visual programs by television to the 
public, except cable and other pay television services. Included in 
this industry are commercial, religious, educational, and other 
television stations. Also included are establishments primarily engaged 
in television broadcasting and which produce taped television program 
materials. Separate establishments primarily engaged in producing taped 
television program materials are classified under another SIC number.
    f. 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 SBA 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.''
    g. 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 estimates that follow 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. An additional element of the definition of 
``small business'' is that the entity must be independently owned and 
operated. As discussed further, we could not fully apply this 
criterion, and our estimates of small businesses to which rules may 
apply may be over-inclusive to this extent. The SBA's general size 
standards are developed taking into account these two statutory 
criteria. This does not preclude us from taking these factors into 
account in making our estimates of the numbers of small entities.
    h. There were 1,509 television stations operating in the nation in 
1992. That number has remained fairly constant as indicated by the 
approximately 1,616 operating television broadcasting stations in the 
nation as of September 1999. For 1992, the number of television 
stations that produced less than $10.0 million in revenue was 1,155 
establishments. Thus, the new rules will affect approximately 1,616 
television stations; approximately 77%, or 1,230 of those stations are 
considered small businesses. These estimates may overstate the number 
of small entities since the revenue figures on which they are based do 
not include or aggregate revenues from non-television affiliated 
companies.
    i. Small Multichannel Video Program Distributors (MVPDs): SBA has 
developed a definition of small entities for cable and other pay 
television services, which includes all such companies generating $11 
million or less in annual receipts. This definition includes cable 
system operators, direct broadcast satellite services, multipoint 
distribution systems, satellite master antenna systems and subscription 
television services. According to the Census Bureau data from 1992, 
there were 1,758 total cable and other pay television services and 
1,423 had less than $11 million in revenue. We address services 
individually to provide a more precise estimate of small entities.
    j. DBS: There are four licensees of DBS services under Part 100 of 
the Commission's Rules. Three of those licensees are currently 
operational. Two of the licensees that are operational have annual 
revenues which may be in excess of the threshold for a small business. 
The Commission, however, does not collect annual revenue data for DBS 
and, therefore, is unable to ascertain the number of small DBS 
licensees that could be impacted by these proposed rules. DBS service 
requires a great investment of capital for operation, and we 
acknowledge that there are entrants in this field that may not yet have 
generated $11 million in annual receipts, and therefore may be 
categorized as a small business, if independently owned and operated.
    k. Home Satellite Delivery (``HSD''): The market for HSD service is 
difficult to quantify. Indeed, the service itself bears little 
resemblance to other MVPDs. HSD owners have access to more than 265 
channels of programming placed on C-band satellites by programmers for 
receipt and distribution by MVPDs, of which 115 channels are scrambled 
and approximately 150 are unscrambled. HSD owners can watch unscrambled 
channels without paying a subscription fee. To receive scrambled 
channels, however, an HSD owner must purchase an integrated receiver-
decoder from an equipment dealer and pay a subscription fee to an HSD 
programming package. Thus, HSD users include: (1) Viewers who subscribe 
to a packaged programming service, which affords them access to most of 
the same programming provided to subscribers of other MVPDs; (2) 
viewers who receive only non-subscription programming; and (3) viewers 
who receive satellite programming services illegally without 
subscribing. Because scrambled packages of programming are most 
specifically intended for retail

[[Page 7429]]

consumers, these are the services most relevant to this discussion.
    l. According to the most recently available information, there are 
approximately 30 program packagers nationwide offering packages of 
scrambled programming to retail consumers. These program packagers 
provide subscriptions to approximately 2,314,900 subscribers 
nationwide. This is an average of about 77,163 subscribers per program 
package. This is substantially smaller than the 400,000 subscribers 
used in the commission's definition of a small MSO. Furthermore, 
because this is an average, it is possible that some program packagers 
may be smaller.
    m. Description of Projected Reporting, Recordkeeping and other 
Compliance Requirements. In order to implement the Satellite Home 
Viewer Improvement Act of 1999, the Commission will add new rules. We 
have adopted a regulatory framework for substantive rules and 
procedures concerning satellite broadcast signal carriage similar to, 
but separate from, the broadcast signal carriage rules for cable 
operators. There are certain compliance requirements involving the 
satellite broadcast signal carriage process. Foremost is that satellite 
carriers will have to carry all local television stations in a given 
market, subject to certain limited exceptions, if it decides to carry 
at least one signal in a market. There will be costs relating to the 
time and effort involved in carrying these local broadcast signals.
    n. In terms of recordkeeping, entities will likely have to keep a 
record of their election status and entities may be required to 
maintain such information within their business environment and may 
also have to file such information with the Commission. These records 
are uncomplicated and are inexpensive to produce and maintain.
    o. Steps Taken to Minimize Significant Impact on Small Entities, 
and Significant Alternatives Considered. 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: (i) The establishment of differing 
compliance or reporting requirements or timetables that take into 
account the resources available to small entities; (ii) the 
clarification, consolidation, or simplification of compliance or 
reporting requirements under the rule for small entities; (iii) the use 
of performance, rather than design, standards; and (iv) an exemption 
from coverage of the rule, or any part thereof, for small entities.
    p. As indicated, the Report and Order implements certain aspects of 
the Satellite Home Viewer Improvement Act of 1999. Among other things, 
the new legislation requires satellite carriers to carry all local 
television broadcast stations in a market, if it carries any local 
market television stations, by January 1, 2002. This document also 
discusses implementing regulations relating to the scope and substance 
of local broadcast signal carriage by satellite carriers, including the 
establishment of an election cycle process for broadcasters vis-a-vis 
satellite carriers. The rules adopted were required by Congress. Where 
there was discretion to consider alternatives, as in the case of 
notification requirements to commence carriage, the Commission chose to 
place the notice burden on broadcast stations rather than satellite 
carriers. In making this decision, the Commission recognized that there 
are only two affected satellite carriers while there are almost 500 
television stations at issue. This legislation applies to small 
entities and large entities equally.
    q. Report to Congress: The Commission will send a copy of the 
Report and Order, including this FRFA, in a report to be sent to 
Congress pursuant to the Congressional Review Act. In addition, the 
Commission will send a copy of the Report and Order, including the 
FRFA, to the Chief Counsel for Advocacy of the SBA. A copy of the 
Report and Order and FRFA (or summaries thereof) will be published in 
the Federal Register.

Paperwork Reduction Act

    This Report and Order contains a new or modified information 
collection. The Commission, as part of its continuing effort to reduce 
paperwork burdens, invites the general public to comment on the 
information collection(s) contained in this Report and Order as 
required by the Paperwork Reduction Act of 1995, Public Law 104-13. 
Public and agency comments are due March 26, 2001. Comments should 
address: (a) Whether the new or modified collection of information is 
necessary for the proper performance of the functions of the 
Commission, including whether the information shall have practical 
utility; (b) the accuracy of the Commission's burden estimates; (c) 
ways to enhance the quality, utility, and clarity of the information 
collected; and (d) ways to minimize the burden of the collection of 
information on the respondents, including the use of automated 
collection techniques or other forms of information technology.
    OMB Control Number: 3060-xxxx.
    Title: Implementation of the Satellite Home Viewer Improvement Act 
of 1999: Broadcast Signal Carriage Issues/Retransmission Consent 
Issues.
    Type of Review: New collection or revision of existing collection.
    Respondents: Business or other for-profit entities.
    Number of Respondents: Satellite carriers and television broadcast 
licensees: 900.
    Estimated Time Per Response: 1 hour.
    Total Annual Burden: 2700 hours.
    Cost to Respondents: $14,400.00.
    Needs and Uses: Congress directed the Commission to adopt 
regulations that apply broadcast signal carriage requirements to 
satellite carriers pursuant to the changes outlined in the Satellite 
Home Viewer Improvement Act of 1999. The availability of such 
information will serve the purpose of informing the public of the 
method of broadcast signal carriage. In addition, the information is 
needed so that local broadcast stations can assert their carriage 
rights within their local markets.

IV. Ordering Clauses

    121. Pursuant to sections 4(i) 4(j), 303(r), 325, 338, 614, and 615 
of the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 
154(j), 303(r), 325, 338, 534, and 535, the Commission's rules are 
hereby amended as set forth in this document.
    122. The Consumer Information Bureau, Reference Information Center 
shall send a copy of this Report and Order, including the Final 
Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of 
the Small Business Administration.
    123. The rules adopted in this Report and Order shall take effect 
January 23, 2001.

List of Subject in 47 CFR Part 76

    Cable television, Multichannel video and cable television service.

Federal Communications Commission.
Shirley Suggs,
Chief, Publications Group.

Rule Changes

    For the reasons discussed in the preamble, the Federal 
Communications Commission amends 47 CFR part 76 as follows:

PART 76--MULTICHANNEL VIDEO AND CABLE TELEVISION SERVICE

    1. The authority citation for part 76 is revised to read as 
follows:

    Authority: 47 U.S.C. 151, 152, 153, 154, 301, 302, 303, 303a, 
307, 308, 309, 312, 315, 317, 325, 338, 339, 503, 521, 522, 531, 
532,

[[Page 7430]]

533, 534, 535, 536, 537, 543, 544, 544a, 545, 548, 549, 552, 554, 
556, 558, 560, 561, 571, 572, 573.


    2. Section 76.66 is added to Subpart D to read as follows:


Sec. 76.66  Satellite Broadcast Signal Carriage.

    (a) Definitions.--(1) Satellite carrier. A satellite carrier is an 
entity that uses the facilities of a satellite or satellite service 
licensed by the Federal Communications Commission, and operates in the 
Fixed-Satellite Service under part 25 of title 47 of the Code of 
Federal Regulations or the Direct Broadcast Satellite Service under 
part 100 of title 47 of the Code of Federal Regulations, to establish 
and operate a channel of communications for point-to-multipoint 
distribution of television station signals, and that owns or leases a 
capacity or a service on a satellite in order to provide such point-to-
multipoint distribution, except to the extent that such entity provides 
such distribution pursuant to tariff under the Communications Act of 
1934, other than for private home viewing.
    (2) Secondary transmission. A secondary transmission is the further 
transmitting of a primary transmission simultaneously with the primary 
transmission.
    (3) Subscriber. A subscriber is a person who receives a secondary 
transmission service from a satellite carrier and pays a fee for the 
service, directly or indirectly, to the satellite carrier or to a 
distributor.
    (4) Television broadcast station. A television broadcast station is 
an over-the-air commercial or noncommercial television broadcast 
station licensed by the Commission under subpart E of part 73 of title 
47, Code of Federal Regulations, except that such term does not include 
a low-power or translator television station.
    (5) Television network. For purposes of this section, a television 
network is an entity which offers an interconnected program service on 
a regular basis for 15 or more hours per week to at least 25 affiliated 
broadcast stations in 10 or more States.
    (6) Local-into-local television service. A satellite carrier is 
providing local-into-local service when it retransmits a local 
television station signal back into the local market of that television 
station for reception by subscribers.
    (b) Signal carriage obligations. (1) Each satellite carrier 
providing, under section 122 of title 17, United States Code, secondary 
transmissions to subscribers located within the local market of a 
television broadcast station of a primary transmission made by that 
station, shall carry upon request the signals of all television 
broadcast stations located within that local market, subject to section 
325(b) of title 47, United States Code, and other paragraphs in this 
section.
    (2) No satellite carrier shall be required to carry local 
television broadcast stations, pursuant to this section, until January 
1, 2002.
    (c) Election cycle. In television markets where a satellite carrier 
is providing local-into-local service, a commercial television 
broadcast station may elect either retransmission consent, pursuant to 
section 325 of title 47 United States Code, or mandatory carriage, 
pursuant to section 338, title 47 United States Code.
    (1) The first retransmission consent-mandatory carriage election 
cycle shall be for a four-year period commencing on January 1, 2002 and 
ending December 31, 2005.
    (2) The second retransmission consent-mandatory carriage election 
cycle, and all cycles thereafter, shall be for a period of three years 
(e.g. the second election cycle commences on January 1, 2006 and ends 
at midnight on December 31, 2008).
    (3) A commercial television station must notify a satellite 
carrier, by July 1, 2001, of its retransmission consent-mandatory 
carriage election for the first election cycle commencing January 1, 
2002.
    (4) Except as provided in paragraphs (d)(2) and (d)(3) of this 
section, local commercial television broadcast stations shall make 
their retransmission consent-mandatory carriage election by October 1st 
of the year preceding the new cycle for all election cycles after the 
first election cycle.
    (5) A noncommercial television station must request carriage by 
July 1, 2001 for the first election cycle and must renew its carriage 
request at the same time a commercial television station must make its 
retransmission consent-mandatory carriage election for all subsequent 
cycles.
    (d) Carriage procedures. (1) Carriage requests. (i) A 
retransmission consent-mandatory carriage election made by a television 
broadcast station shall be treated as a request for carriage for 
purposes of this section.
    (ii) A carriage request made by a television station must be in 
writing and sent to the satellite carrier's principal place of 
business, by certified mail, return receipt requested.
    (iii) A television station's written notification shall include 
the:
    (A) Station's call sign;
    (B) Name of the appropriate station contact person;
    (C) Station's address for purposes of receiving official 
correspondence;
    (D) Station's community of license;
    (E) Station's DMA assignment; and
    (F) For commercial television stations, its election of mandatory 
carriage or retransmission consent.
    (iv) Within 30 days of receiving a television station's carriage 
request, a satellite carrier shall notify in writing:
    (A) those local television stations it will not carry, along with 
the reasons for such a decision; and
    (B) those local television stations it intends to carry.
    (v) A satellite carrier is not required to carry a television 
station, for the duration of the election cycle, if the station fails 
to assert its carriage rights by the deadlines established in this 
section.
    (2) New local-into-local service. (i) A new satellite carrier or a 
satellite carrier providing local service in a market for the first 
time on or after July 1, 2001, must notify local television stations of 
its intent to provide local-into-local service at least 60 days before 
it intends to provide service or decides to enter into a new television 
market. This notification shall include information on the location of 
the satellite carrier's designated local receive facility in that 
particular market.
    (ii) A local television station shall make its request for 
carriage, in writing, no more than 30 days after receipt of the 
satellite carrier's notice.
    (iii) A satellite carrier shall have 90 days, from the receipt of a 
request for carriage, to commence carriage of a local television 
station.
    (iv) A satellite carrier shall notify a local television station in 
writing of its reasons for refusing carriage within 30 days of the 
station's carriage request.
    (3) New television stations. (i) A television station providing 
over-the-air service in a market for the first time on or after July 1, 
2001, shall be considered a new television station for satellite 
carriage purposes.
    (ii) A new television station shall make its request for carriage 
between 60 days prior to commencing broadcasting and 30 days after 
commencing broadcasting.
    (iii) A satellite carrier shall commence carriage within 90 days of 
receiving the request for carriage from the television broadcast 
station or whenever the new television station provides over-the-air 
service.
    (iv) A satellite carrier shall notify a new television station in 
writing of its reasons for refusing carriage within 30 days of the 
station's carriage request.
    (e) Market definitions. (1) A local market, in the case of both 
commercial

[[Page 7431]]

and noncommercial television broadcast stations, is the designated 
market area in which a station is located, and (i) in the case of a 
commercial television broadcast station, all commercial television 
broadcast stations licensed to a community within the same designated 
market area within the same local market; and
    (ii) in the case of a noncommercial educational television 
broadcast station, the market includes any station that is licensed to 
a community within the same designated market area as the noncommercial 
educational television broadcast station.
    (2) A designated market area is the market area, as determined by 
Nielsen Media Research and published in the 1999-2000 Nielsen Station 
Index Directory and Nielsen Station Index United States Television 
Household Estimates or any successor publication.
    (3) A satellite carrier shall use the 1999-2000 Nielsen Station 
Index Directory and Nielsen Station Index United States Television 
Household Estimates to define television markets for the first 
retransmission consent-mandatory carriage election cycle commencing on 
January 1, 2002 and ending on December 31, 2005. The 2003-2004 Nielsen 
Station Index Directory and Nielsen Station Index United States 
Television Household Estimates shall be used for the second 
retransmission consent-mandatory carriage election cycle commencing 
January 1, 2006 and ending December 31, 2008, and so forth for each 
triennial election pursuant to this section. Provided, however, that a 
county deleted from a market by Nielsen need not be subtracted from a 
market in which a satellite carrier provides local-into-local service, 
if that county is assigned to that market in the 1999-2000 Nielsen 
Station Index Directory or any subsequent issue of that publication.
    (4) A local market includes all counties to which stations assigned 
to that market are licensed.
    (f) Receive facilities. (1) A local receive facility is the 
reception point in each local market which a satellite carrier 
designates for delivery of the signal of the station for purposes of 
retransmission.
    (2) A satellite carrier may establish another receive facility to 
serve a market if the location of such a facility is acceptable to at 
least one-half the stations with carriage rights in that market.
    (3) Except as provided in 76.66(d)(2), a satellite carrier 
providing local-into-local service must notify local television 
stations of the location of the receive facility by June 1, 2001 for 
the first election cycle and at least 120 days prior to the 
commencement of all election cycles thereafter.
    (4) A satellite carrier may relocate its local receive facility at 
the commencement of each election cycle. A satellite carrier is also 
permitted to relocate its local receive facility during the course of 
an election cycle, if it bears the signal delivery costs of the 
television stations affected by such a move. A satellite carrier 
relocating its local receive facility must provide 60 days notice to 
all local television stations carried in the affected television 
market.
    (g) Good quality signal. (1) A television station asserting its 
right to carriage shall be required to bear the costs associated with 
delivering a good quality signal to the designated local receive 
facility of the satellite carrier or to another facility that is 
acceptable to at least one-half the stations asserting the right to 
carriage in the local market.
    (2) To be considered a good quality signal for satellite carriage 
purposes, a television station shall deliver to the local receive 
facility of a satellite carrier either a signal level of -45dBm for UHF 
signals or -49dBm for VHF signals at the input terminals of the signal 
processing equipment.
    (3) A satellite carrier is not required to carry a television 
station that does not agree to be responsible for the costs of 
delivering a good quality signal to the receive facility.
    (h) Duplicating signals. (1) A satellite carrier shall not be 
required to carry upon request the signal of any local television 
broadcast station that substantially duplicates the signal of another 
local television broadcast station which is secondarily transmitted by 
the satellite carrier within the same local market, or the signals of 
more than one local commercial television broadcast station in a single 
local market that is affiliated with a particular television network 
unless such stations are licensed to communities in different States.
    (2) A satellite carrier may select which duplicating signal in a 
market it shall carry.
    (3) A satellite carrier may select which network affiliate in a 
market it shall carry.
    (4) A satellite carrier is permitted to drop a local television 
station whenever that station meets the substantial duplication 
criteria set forth in this paragraph. A satellite carrier must add a 
television station to its channel line-up if such station no longer 
duplicates the programming of another local television station.
    (5) A satellite carrier shall provide notice to its subscribers, 
and to the affected television station, whenever it adds or deletes a 
station's signal in a particular local market pursuant to this 
paragraph.
    (6) A commercial television station substantially duplicates the 
programming of another commercial television station if it 
simultaneously broadcasts the identical programming of another station 
for more than 50 percent of the broadcast week.
    (7) A noncommercial television station substantially duplicates the 
programming of another noncommercial station if it simultaneously 
broadcasts the same programming as another noncommercial station for 
more than 50 percent of prime time, as defined by Sec. 76.5(n), and 
more than 50 percent outside of prime time over a three month period, 
Provided, however, that after three noncommercial television stations 
are carried, the test of duplication shall be whether more than 50 
percent of prime time programming and more than 50 percent outside of 
prime time programming is duplicative on a non-simultaneous basis.
    (i) Channel positioning. (1) No satellite carrier shall be required 
to provide the signal of a local television broadcast station to 
subscribers in that station's local market on any particular channel 
number or to provide the signals in any particular order, except that 
the satellite carrier shall retransmit the signal of the local 
television broadcast stations to subscribers in the stations' local 
market on contiguous channels.
    (2) The television stations subject to this paragraph include those 
carried under retransmission consent.
    (3) All local television stations carried under mandatory carriage 
in a particular television market must be offered to subscribers at 
rates comparable to local television stations carried under 
retransmission consent in that same market.
    (4) Within a market, no satellite carrier shall provide local-into-
local service in a manner that requires subscribers to obtain 
additional equipment at their own expense or for an additional carrier 
charge in order to obtain one or more local television broadcast 
signals if such equipment is not required for the receipt of other 
local television broadcast signals.
    (5) All television stations carried under mandatory carriage, in a 
particular market, shall be presented to subscribers in the same manner 
as television stations that elected retransmission consent, in that 
same market, on any navigational device, on-

[[Page 7432]]

screen program guide, or menu provided by the satellite carrier.
    (j) Manner of carriage. (1) Each television station carried by a 
satellite carrier, pursuant to this section, shall include in its 
entirety the primary video, accompanying audio, and closed captioning 
data contained in line 21 of the vertical blanking interval and, to the 
extent technically feasible, program-related material carried in the 
vertical blanking interval or on subcarriers. For noncommercial 
educational television stations, a satellite carrier must also carry 
any program-related material that may be necessary for receipt of 
programming by persons with disabilities or for educational or language 
purposes. Secondary audio programming must also be carried. Where 
appropriate and feasible, satellite carriers may delete signal 
enhancements, such as ghost-canceling, from the broadcast signal and 
employ such enhancements at the local receive facility.
    (2) A satellite carrier, at its discretion, may carry any ancillary 
service transmission on the vertical blanking interval or the aural 
baseband of any television broadcast signal, including, but not limited 
to, multichannel television sound and teletext.
    (k) Material degradation. Each local television station whose 
signal is carried under mandatory carriage shall, to the extent 
technically feasible and consistent with good engineering practice, be 
provided with the same quality of signal processing provided to 
television stations electing retransmission consent. A satellite 
carrier is permitted to use reasonable digital compression techniques 
in the carriage of local television stations.
    (l) Compensation for carriage. (1) A satellite carrier shall not 
accept or request monetary payment or other valuable consideration in 
exchange either for carriage of local television broadcast stations in 
fulfillment of the mandatory carriage requirements of this section or 
for channel positioning rights provided to such stations under this 
section, except that any such station may be required to bear the costs 
associated with delivering a good quality signal to the receive 
facility of the satellite carrier.
    (2) A satellite carrier may accept payments from a station pursuant 
to a retransmission consent agreement.
    (m) Remedies. (1) Whenever a local television broadcast station 
believes that a satellite carrier has failed to meet its obligations 
under this section, such station shall notify the carrier, in writing, 
of the alleged failure and identify its reasons for believing that the 
satellite carrier failed to comply with such obligations.
    (2) The satellite carrier shall, within 30 days after such written 
notification, respond in writing to such notification and comply with 
such obligations or state its reasons for believing that it is in 
compliance with such obligations.
    (3) A local television broadcast station that disputes a response 
by a satellite carrier that it is in compliance with such obligations 
may obtain review of such denial or response by filing a complaint with 
the Commission, in accordance with Sec. 76.7 of title 47, Code of 
Federal Regulations. Such complaint shall allege the manner in which 
such satellite carrier has failed to meet its obligations and the basis 
for such allegations.
    (4) The satellite carrier against which a complaint is filed is 
permitted to present data and arguments to establish that there has 
been no failure to meet its obligations under this section.
    (5) The Commission shall determine whether the satellite carrier 
has met its obligations under this section. If the Commission 
determines that the satellite carrier has failed to meet such 
obligations, the Commission shall order the satellite carrier to take 
appropriate remedial action. If the Commission determines that the 
satellite carrier has fully met the requirements of this section, it 
shall dismiss the complaint.
    (6) The Commission will not accept any complaint filed later than 
60 days after a satellite carrier, either implicitly or explicitly, 
denies a television station's carriage request.

[FR Doc. 01-1186 Filed 1-22-01; 8:45 am]
BILLING CODE 6712-01-U


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