7410 Federal Register / Vol. 66, No. 15 / Tuesday, January 23, 2001 / Rules and Regulations

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.

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 jboley@fcc.gov, and to

Edward Springer, OMB Desk Officer,

10236 NEOB, 725—17th Street, NW.,

Washington, DC 20503 or via the

Internet to

Edward.Springer@omb.eop.gov.

FOR FURTHER INFORMATION CONTACT: Ben

Golant at (202) 418–7111 or via internet

at via internet at bgolant@fcc.gov. For

additional information concerning the

information collection(s) contained in

this document, contact Judy Boley at

202–418–0214, or via the Internet at

jboley@fcc.gov.

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-bystation 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 localinto-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

Federal Register / Vol. 66, No. 15 / Tuesday, January 23, 2001 / Rules and Regulations 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 antiexclusivity 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

7412 Federal Register / Vol. 66, No. 15 / Tuesday, January 23, 2001 / Rules and Regulations

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 localinto-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-intolocal 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

Federal Register / Vol. 66, No. 15 / Tuesday, January 23, 2001 / Rules and Regulations 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 localinto-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 § 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-intolocal 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

7414 Federal Register / Vol. 66, No. 15 / Tuesday, January 23, 2001 / Rules and Regulations

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-intolocal 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 localinto-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.’’

Federal Register / Vol. 66, No. 15 / Tuesday, January 23, 2001 / Rules and Regulations 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,

7416 Federal Register / Vol. 66, No. 15 / Tuesday, January 23, 2001 / Rules and Regulations

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

Federal Register / Vol. 66, No. 15 / Tuesday, January 23, 2001 / Rules and Regulations 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

7418 Federal Register / Vol. 66, No. 15 / Tuesday, January 23, 2001 / Rules and Regulations

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

§ 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

Federal Register / Vol. 66, No. 15 / Tuesday, January 23, 2001 / Rules and Regulations 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 § 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

7420 Federal Register / Vol. 66, No. 15 / Tuesday, January 23, 2001 / Rules and Regulations

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 nonbroadcast 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 nonduplicative 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

Federal Register / Vol. 66, No. 15 / Tuesday, January 23, 2001 / Rules and Regulations 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

§ 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 nonsimultaneous 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 threemonth period. The end of the threemonth 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 setaside 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 nonlocal 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

7422 Federal Register / Vol. 66, No. 15 / Tuesday, January 23, 2001 / Rules and Regulations

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 overthe-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

Federal Register / Vol. 66, No. 15 / Tuesday, January 23, 2001 / Rules and Regulations 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-tobe-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 selfexplanatory 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

7424 Federal Register / Vol. 66, No. 15 / Tuesday, January 23, 2001 / Rules and Regulations

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 programrelated 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-bycase 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

Federal Register / Vol. 66, No. 15 / Tuesday, January 23, 2001 / Rules and Regulations 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

7426 Federal Register / Vol. 66, No. 15 / Tuesday, January 23, 2001 / Rules and Regulations

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 § 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

Federal Register / Vol. 66, No. 15 / Tuesday, January 23, 2001 / Rules and Regulations 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 § 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 cablebroadcast 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 noncompliance with the content-to-becarried 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-becarried 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-becarried 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

7428 Federal Register / Vol. 66, No. 15 / Tuesday, January 23, 2001 / Rules and Regulations

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 overinclusive 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

Federal Register / Vol. 66, No. 15 / Tuesday, January 23, 2001 / Rules and Regulations 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 forprofit 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,

7430 Federal Register / Vol. 66, No. 15 / Tuesday, January 23, 2001 / Rules and Regulations

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:

§ 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-tomultipoint distribution of television

station signals, and that owns or leases

a capacity or a service on a satellite in

order to provide such point-tomultipoint 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 overthe-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 localinto-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 consentmandatory 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 consentmandatory 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 consentmandatory 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 consentmandatory 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

Federal Register / Vol. 66, No. 15 / Tuesday, January 23, 2001 / Rules and Regulations 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 consentmandatory 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 localinto-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-intolocal 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 lineup 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

§ 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, onVerDate 11<MAY>2000 16:01 Jan 22, 2001 Jkt 194001 PO 00000 Frm 00033 Fmt 4700 Sfmt 4700 E:\FR\FM\23JAR1.SGM pfrm01 PsN: 23JAR1
7432 Federal Register / Vol. 66, No. 15 / Tuesday, January 23, 2001 / Rules and Regulations

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, programrelated 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 § 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