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106th Congress Report
SENATE
1st Session 106-51
_______________________________________________________________________
Calendar No. 120
SATELLITE TELEVISION ACT OF 1999
__________
R E P O R T
of the
COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
on
S. 303
together with
MINORITY VIEWS
May 20, 1999.--Ordered to be printed
__________
U.S. GOVERNMENT PRINTING OFFICE
69-010 WASHINGTON : 1999
SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
one hundred sixth congress
first session
JOHN McCAIN, Arizona, Chairman
TED STEVENS, Alaska ERNEST F. HOLLINGS, South Carolina
CONRAD BURNS, Montana DANIEL K. INOUYE, Hawaii
SLADE GORTON, Washington JOHN D. ROCKEFELLER IV, West
TRENT LOTT, Mississippi Virginia
KAY BAILEY HUTCHISON, Texas JOHN F. KERRY, Massachusetts
OLYMPIA SNOWE, Maine JOHN B. BREAUX, Louisiana
JOHN ASHCROFT, Missouri RICHARD H. BRYAN, Nevada
BILL FRIST, Tennessee BYRON L. DORGAN, North Dakota
SPENCER ABRAHAM, Michigan RON WYDEN, Oregon
SAM BROWNBACK, Kansas MAX CLELAND, Georgia
Mark Buse, Staff Director
Martha P. Allbright, General Counsel
Ivan A. Schlager, Democratic Chief Counsel and Staff Director
Kevin Kayes, Democratic General Counsel
(ii)
Calendar No. 120
106th Congress Report
SENATE
1st Session 106-51
======================================================================
SATELLITE TELEVISION ACT OF 1999
_______
May 20, 1999.--Ordered to be printed
_______
Mr. McCain, from the Committee on Commerce, Science, and
Transportation, submitted the following
R E P O R T
together with
MINORITY VIEWS
[To accompany S. 303]
The Committee on Commerce, Science, and Transportation, to
which was referred the bill (S. 303) ``A bill to amend the
Communications Act of 1934 to enhance the ability of direct
broadcast satellite and other multichannel video providers to
compete effectively with cable television systems, and for
other purposes'', having considered the same, reports favorably
thereon with an amendment (in the nature of a substitute) and
recommends that the bill (as amended) do pass.
Purpose of the Bill
The purpose of the bill is to amend the Communications Act of
1934 to promote competition in the provision of multichannel
video service while protecting the availability of free, local
over-the-air television.
Background and Needs
Cable rates have increased more than 20 percent since the
enactment of the 1996 Telecommunications Act, far exceeding
other consumer price increases. Even the Federal Communications
Commission (FCC) has recognized that cable rates have risen
excessively in recent years notwithstanding the agency's
implementation of cable rate regulation rules.
Regulation of most tiers of cable television service ceased
on April 1, 1999. This regulatory ``sunset'' date was enacted
into law based on the belief that, by that date, cable
television operators would face competition from a number of
other multichannel video services, including direct-to-home
satellite television, wireless cable, and telephone company-
provided video dialtone systems.
This anticipated competition failed to develop as expected.
Technical and operational problems resulted in financial
difficulties for wireless cable systems, telephone companies
concentrated their efforts on voice and data delivery rather
than on video, and direct-to-home satellite service struggled
due to a series of statutorily-imposed limitations on the
nature and terms of the service it could offer.
Despite these adverse occurrences, the cable rate regulation
sunset took place as required by statute on April 1. Therefore,
under current circumstances, most cable television systems have
become virtually unregulated providers of a monopoly service,
with unconstrained power to raise consumer rates due to the
lack of an effectively competitive alternative provider of
multichannel video service.
Recognizing this fact, the cable industry has volunteered to
hold future subscriber rate increases to around 5 percent
annually. This, however, would still be more than twice the
projected inflation rate, and no voluntary commitment, however
sincerely intentioned, can actually be enforced.
Return to a prescriptive rate regulation regime would not be
a satisfactory alternative. Experience shows that cable rate
regulation is ineffective in holding cable rates down without
also hurting investment in cable service. In 1992 the FCC
reduced cable rates 17 percent and imposed limits on subsequent
rate increases. Investment in programming and in cable plant
improvements was immediately and sharply curtailed. Total
capital investment plunged from $8.17 billion in 1989 to $1.9
billion in 1993. In contrast, with rate deregulation slated to
take effect on April 1, capital flow from debt, equity, and
other sources has increased 25 percent each year since 1996.
And because many cable systems are making the substantial
investment needed to provide high-speed cable modem service,
reimposition of rate regulation now would impede cable's
capital flow at precisely the time it is most needed.
Conversely, experience shows that competition is effective in
constraining cable rates without harming cable service. In
fact, it has been shown to produce improved service at lower
rates. Testimony before the Committee last year showed that
head-to-head competition between cable systems typically caused
the incumbent cable operator to increase the number of channels
offered while cutting monthly rates dramatically, in one case
almost in half. Effective competition from other providers of
multichannel video service remains the only workable antidote
to cable rate increases.
Direct-to-home satellite service, commonly referred to as
Direct Broadcast Service (DBS), \1\ is currently the best
potential competitor to cable television. DBS systems are the
fastest-growing consumer electronics product in history: the
number of DBS subscribers jumped an astonishing 97 percent in
1996 and another 30 percent the following year. However,
despite this growth, some current statutes and regulations
impede DBS's ability to compete with cable.
---------------------------------------------------------------------------
\1\ For purposes of this report, unless otherwise indicated, the
terms ``direct-to-home satellite service'', ``DBS'', and ``satellite
television'' are used interchangeably and synonymously.
---------------------------------------------------------------------------
Satellite television companies are prohibited under the terms
of the Satellite Home Viewer Act (SHVA) and the Copyright Act
from providing their subscribers with signals from local
network stations as a component of their satellite television
service. Cable television providers, however, face no such
prohibitions. They can, and do, provide local television
stations to their customers.
Direct-to-home satellite service providers' inability to
offer local television stations as part of an integrated
service package puts it at a significant competitive
disadvantage to cable television service. When the FCC surveyed
people who ``investigated'' DBS systems but did not buy them,
55 percent of these people reported that they did not buy a DBS
system because of a lack of local television networks.
Therefore, to compete effectively with cable television
systems, DBS must be allowed to provide local television
stations to subscribers.
Under current law, satellite television providers are also
prohibited from providing distant network signals to a
subscriber unless that subscriber resides in an area considered
to be ``unserved'' by the local television station.
``Unserved'' areas are in turn defined as being those beyond
the local television station's predicted Grade B contour.
The area closest to the television station is referred to as
the station's ``Grade A'' contour. This area is where the
television station's over-the-air signal strength is likely to
be strongest and is the core of the local television station's
market.
The Grade B contour extends beyond the Grade A contour. The
Grade B contour was adopted by the FCC in the 1950's to prevent
interference between two television stations at the outer
limits of their signal coverage areas. It was not intended to
define whether a given consumer actually receives a
satisfactory television signal. As a result, satellite
television subscribers within a station's Grade B contour can
find their off-air reception unsatisfactory, yet still be
ineligible to receive distant network signals under the terms
of SHVA.
As a result, many consumers who subscribed to direct-to-home
satellite service believed that, because they got poor
reception of their local stations off-air, they lived in an
``unserved'' area and were entitled to receive distant network
signals from their satellite television provider. It has been
estimated that over 2,000,000 satellite television subscribers
received distant network signals although they resided in the
local television station's predicted Grade A and Grade B
contours, and therefore were ineligible to receive them under
the terms of SHVA.
In 1997 and 1998, a number of lawsuits were brought under
SHVA by broadcasters against satellite carriers, alleging that
the satellite carriers were distributing the signals of distant
network-affiliated television broadcast stations to subscribers
that were not unserved households within the meaning of SHVA.
Perhaps the most far-reaching of these was brought before the
United States District Court for the Southern District of
Florida in Miami by CBS, Fox, and several affiliates against
PrimeTime 24.
Finding that PrimeTime 24 had willfully provided distant
network programming to served households in violation of SHVA,
the Miami court issued a preliminary and, later, a permanent
injunctionordering PrimeTime 24 not to deliver CBS or Fox
television network programming to any customer living in a ``served''
household. The court further enjoined PrimeTime 24 from providing
distant network signals to any house predicted by a computer model to
be served without first either: (1) obtaining the written consent of
the affected stations; or (2) providing the affected station with
copies of a signal intensity test showing that the household in
question is actually unserved.
The preliminary injunction took effect on February 28, 1999,
and the permanent injunction was to have taken effect on April
30, 1999. The preliminary injunction has resulted in the
termination of network signals to the estimated 700,000 to one
million subscribers nationwide who subscribed to PrimeTime 24
after the networks filed their lawsuit on March 11, 1997. The
permanent injunction, which applies to the PrimeTime 24
customers who subscribed before March 11, 1997, could affect an
additional 1.5 million subscribers nationwide. The total number
of PrimeTime 24 subscribers affected by the Miami injunctions
could therefore reach 2.2-2.5 million.
In a similar lawsuit, a federal district court in North
Carolina ruled against PrimeTime 24, and in favor of a local
ABC affiliate. This court found a pattern and practice of
willful copyright infringement, and therefore enjoined
transmission of ABC network programming within the Raleigh,
North Carolina region. PrimeTime 24 has provided network
services to as many as 35,000 households in the ABC affiliates
Raleigh/Durham market.
In addition to the PrimeTime 24 proceedings, several other
lawsuits have been filed by broadcasters and satellite carriers
in the federal courts. In Amarillo, Texas, an NBC affiliate has
sued PrimeTime 24 in federal district court. EchoStar, another
satellite carrier, filed suit against the networks and network-
owned or affiliated stations in a federal district court in
Colorado, asking the court for a declaratory ruling that it is
not in violation of SHVA. The broadcast interests have in turn
filed a suit against EchoStar before the district court in
Miami, and the Miami court has joined EchoStar in the Miami
proceeding.
In July and August 1998, EchoStar and the National Rural
Telecommunications Cooperative filed petitions with the Federal
Communications Commission asking the FCC to take various
actions with respect to its definition of Grade B intensity.
Specifically, these parties asked the Commission to: (1) adjust
the values of Grade B intensity to better reflect which
households actually receive adequate signals; (2) endorse a
predictive model arguably more accurate than that adopted by
the Miami court; and (3) revise its procedures for measuring
broadcast signal strength at the home. These proposals were
opposed by the broadcast industry.
The FCC conducted a rulemaking and received comments from
various interested parties. In January 1999, the FCC released
its Grade B Order, in which it made several decisions with
respect to Grade B intensity. The FCC found, first, that it has
no authority to adopt a higher value for Grade B intensity
specifically for SHVA purposes. Second, it adopted new testing
procedures for measuring television signal intensity at
individual households. Third, the FCC endorsed the so-called
Individual Location Longley-Rice (ILLR) model for predicting
whether or not individual households can receive signals of
Grade B intensity. Finally, it identified several options for
improving SHVA and the Communications Act to better serve
customers, including: confirming that copyright law allows
satellite companies to provide local television stations to
local markets; finding a better, but still objective, standard
for determining which households are unserved; repealing the
90-day waiting period for former cable customers; and providing
for a clear statutory acceptance of predictive models and loser
pays mechanisms.
While the FCC's actions were helpful in resolving certain
technical questions with respect to the implementation of its
Grade B standard, and the Miami federal court modified its
injunction orders to reflect the rulings of the FCC, the FCC
itself acknowledged that its action could not definitively
resolve the problems associated with the implementation of
SHVA. Indeed, in its Notice of Proposed Rulemaking, the FCC
noted:
The SHVA limits the proposals we can make to address
the petitions. Further, we do not appear to have the
statutory authority to prevent most of PrimeTime 24's
subscribers from losing their network service under the
Miami preliminary injunction (and under a possible
permanent injunction). The evidence in the Miami and
Raleigh court cases strongly suggests that many, if not
most, of those subscribers do not live in unserved
households under any interpretation of that term.
Directelevision and the networks have recently announced an
agreement that incorporates several of the standards announced
in the FCC's Grade B Order. This agreement settles litigation
before the Miami federal court, under which the networks had
obtained a restraining order imposing on Directelevision the
court's earlier PrimeTime 24 injunctions. Under the agreement,
Directelevision will temporarily restore distant CBS and Fox
network signals to its estimated 700,000 customers who lost
network service on February 28. However, subscribers predicted
(using the FCC's ILLR predictive model) to receive a Grade A
signal would be disconnected from distant network service on
June 30, 1999. Those predicted to receive a Grade B signal will
have distant network service cut off on December 31, 1999.
These cut-off households can have their service restored if
actual signal measurements show them to be unable to receive a
Grade B signal. The settlement also requires Directelevision to
provide its cut-off subscribers a substantial discount on
outdoor over-the-air antennas.
While it may serve as a partial stop-gap measure, that
agreement does not lessen the need for congressional action to
avoid the disenfranchising of millions of consumers. This
agreement does not change the fact that, as a result of the
litigation, millions of satellite television subscribers stand
to lose the distant network stations that they have enjoyed
receiving for some time. Many will be required to go to the
trouble and expense of installing off-air antennas to improve
their reception of local television signals. For those
satellite television subscribers living at the fringes of the
predicted Grade B contour, these measures may still not allow
for reception of television signals that these viewers consider
acceptable.
The direct-to-home satellite service providers argue that
consumers should not be arbitrarily deprived of channels that
enablethem to enjoy decent network television signals and more
program options, and whose carriage has not appeared to injure local
television stations. Many consumers agree. However, broadcasters argue
that satellite television companies should not be rewarded for breaking
the law, that the Grade B contour does in fact predict adequate
television service, that satellite carriage of distant network stations
is, in fact, harming local network television stations, and that local
stations give television subscribers sufficient access to network
programming.
Legislative History
S. 303, the Satellite Television Act of 1999, was
introduced by Senator McCain on January 25, 1999, and referred
to the Committee on Commerce, Science, and Transportation. A
full Committee hearing was held on the bill on February 23,
1999. By a vote of 12-8 on March 10, 1999, the Committee
ordered S. 303 reported to the Senate with an amendment in the
nature of a substitute.
Summary of Major Provisions
This bill removes statutory impediments to direct-to-home
satellite service providers' ability to compete with cable
television. This will benefit consumers by increasing the
competitive pressures on ever-escalating cable rates. The
bill's approach recognizes the legitimate but competing
interests of the satellite television operators and the local
television stations and strikes a balance between them. It also
affords satellite television subscribers who face losing their
distant network signals sufficient time to install off-air
reception devices or secure necessary authorization to continue
receiving them.
The bill authorizes direct-to-home satellite service
providers to offer their subscribers local television station
broadcasts. Providing local stations will enable satellite
television operators to offer a service package combining
broadcast and nonbroadcast channels comparable to that offered
by cable television operators, thus allowing satellite
television to compete more effectively with incumbent cable
television systems.
To assure that satellite television subscribers have the same
access to local off-air television stations as cable television
systems, the bill would also require direct-to-home satellite
service providers to comply with the must-carry rules that
apply to cable television operators no later than January 1,
2002.
To implement a better way of determining whether prospective
satellite television subscribers receive a Grade B-strength
signal from a local television station, the bill requires the
use of the ILLR methodology. For those consumers who may
disagree with an ILLR measurement showing they receive Grade B
service, the bill sets out the elements of a consumer-friendly
waiver process and directs
the FCC to complete a single rulemaking within 90 days to adopt
implementing rules. These provisions will give consumers who
perceive their off-air local television reception to be
unsatisfactory a timely way to have their concerns addressed.
With regard to satellite television subscribers who are
currently receiving distant network signals inconsistent with
the terms of SHVA, the bill allows this distant signal carriage
to continue until December 31, 1999. This will allow additional
time for consumers to be tested under the ILLR methodology, the
FCC to develop its waiver process, and for consumers to seek a
waiver.
Local network affiliates argue strenuously that this existing
distant signal carriage is harming them. However,
notwithstanding a series of hearings the Committee has had on
this issue, they have failed to present convincing evidence to
show that the current degree of distant signal carriage poses
any realistic threat to the maintenance of a healthy, local
over-the-air broadcasting system. We therefore find that the
interest of satellite television consumers in not being
suddenly and arbitrarily deprived of existing service outweighs
the interests of local broadcasters in summary deletion.
After December 31, 1999, satellite television consumers
residing in a local network affiliate's Grade A contour will
not be eligible to receive distant stations affiliated with the
same network unless an ILLR analysis shows that an individual
consumer is in reality unserved or unless the consumer receives
a waiver from the local network station. As stated previously,
the Grade A contour is commonly considered to be the core of
the local station's market. Just as important, it is the area
where signal reception is normally very good, and where local
audiences are more oriented towards local stations and less
likely to need distant signals in order to receive network
television service. On balance, therefore, we find that at the
end of the current year subscribers in this area whose
reception is Grade B or better and who do not receive waivers
grandfathering the distant station carriage would not be
materially harmed by the cessation of distant signal carriage.
After December 31, 1999, satellite television consumers
residing in a local network affiliate's predicted Grade B
contour may continue to receive distant network signals. These
subscribers, unlike those within the Grade A contour, are not
in the core of the local station's market and are more likely
to experience inadequate off-air reception. It is estimated
that the majority of illegal distant signal carriage is
occurring within the Grade A contour, not the Grade B contour.
Therefore, given the absence of any demonstrable harm to local
broadcasting from illegal signal carriage in both the Grade A
and Grade B contours, the Committee finds it unlikely that
substantial harm will occur if distant signal carriage is
permitted to continue to the minority of DBS subscribers
receiving it who reside within the Grade B contour.
Nevertheless, the Committee remains aware that,
notwithstanding the failure of local broadcasters to
demonstrate harm as a general matter, there may be individual
stations or markets where the continuation of distant network
signal carriage even within the Grade B contour could cause
cognizable harm to a local affiliate. To assure that we have
struck the correct balance, the bill directs the FCC to
institute rulemaking proceedings to examine whether distant
signal carriage within this outer-market area should be subject
to any of its existing program exclusivity rules.
Direct-to-home satellite service providers have argued that
the imposition of exclusivity rules on their distant network
signal carriage would be onerous at best and impossible at
worst. While the precise nature and extent of these
difficulties has not been determined, the Committee does not
find it necessary to do so. The Committee finds that the local
broadcasters' failure to produce any verifiable evidence that
existing distant network signal carriage is causing substantial
harm warrants our not imposing these requirements in the
legislation itself, but rather requiring the Commission, as the
expert agency, to impose any such requirements.
In view of the lack of evidence of existing harm to
broadcasters, and the possibility that imposing such
requirements on satellite carriers could seriously impact their
operations, the Commission's rulemaking authority is carefully
circumscribed. The bill states that the Commission may not
impose any such rules unless it finds it technically and
economically feasible to do so, and is otherwise required by
the public interest.
The bill continues to allow all consumers outside the Grade B
contour, i.e. the unserved areas, to continue to receive
distant network signals. Because DBS subscribers in these areas
by definition do not receive off-air service from one or more
local network stations, distant network signal carriage in
unserved areas would not be subject to any exclusivity rules
the FCC might ultimately adopt.
Constitutional Analysis
The bill does not create any new constitutional issues. The
Supreme Court has already ruled that must-carry rules are
constitutional. (Turner Broadcasting vs. The Federal
Communications Commission, 520 U.S. 180, 137 L. Ed. 2d 369, 117
S.Ct. 1174 (1997)). Specifically, the Supreme Court held that
the ``must-carry'' provisions of the Cable Television Consumer
Protection Act of 1992 are consistent with the free speech
guarantees of the federal Constitution's First Amendment. The
court recognized that content-neutral regulations are subject
to a less rigorous intermediate scrutiny test because content-
neutral regulations do not pose the same inherent dangers to
free expression as content-based regulations. The Court held
that the ``must-carry'' provisions advanced important
government interests such as preserving the benefits of free
over-the-air local broadcast television, and did not burden
substantially more speech than was necessary to further those
interests.
Estimated Costs
In accordance with paragraph 11(a) of rule XXVI of the
Standing Rules of the Senate and section 403 of the
Congressional Budget Act of 1974, the Committee provides the
following cost estimate, prepared by the Congressional Budget
Office:
U.S. Congress,
Congressional Budget Office,
Washington, DC, April 12, 1999.
Hon. John McCain,
Chairman, Committee on Commerce, Science, and Transportation,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 303, the Satellite
Television Act of 1999.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contacts are Mark Hadley
(for federal costs), Hester Grippando (for revenues), and Jean
Wooster (for the private-sector impact).
Sincerely,
Barry B. Anderson
(For Dan L. Crippen, Director).
Enclosure.
CONGRESSIONAL BUDGET OFFICE COST ESTIMATE
S. 303--Satellite Television Act of 1999
Summary: S. 303 would allow a local broadcast station to
require, by January 1, 2002, satellite carriers that serve
customers in its market to transmit its signal. (Satellite
carriers are companies that use satellite transmissions to
provide television signals directly to consumers.) This
provision is similar to the requirements now faced by the cable
industry. S. 303 would require satellite carriers that
knowingly and willfully provide distant network signals to
customers in violation of the Communications Act of 1934 to
forfeit $50,000 per day per violation. Also, the bill would
require the Federal Communications Commission (FCC) to conduct
several rulemakings and issue a report.
As of April 30, 1999, a permanent injunction issued by a
federal district court will prohibit Prime Time 24 from
transmitting CBS and FOX network broadcasts to about two
million customers. However, S. 303 would allow Primetime 24 to
transmit CBS and FOX programs to those customers through
December 31, 1999.
CBO estimates that enacting S. 303 would increase revenues
from royalty fees paid by Prime Time 24 by about $3 million in
2000. With higher royalty collections, the payments to
copyright holders would also be higher under S. 303, by an
estimated $3 million over the 2000-2004 period. The bill also
would increase forfeiture payments to the government, but CBO
estimates that such payments would be less than $500,000 each
year. Because S. 303 would affect both revenues and direct
spending, it would be subject to pay-as-you-go procedures.
Assuming availability of appropriated funds, CBO estimates
implementing S. 303 would cost the FCC less than $500,000 in
2000.
S. 303 would impose a private-sector mandate, as defined by
the Unfunded Mandates Reform Act (UMRA), on satellite carriers.
The cost of the mandate would not exceed the annual threshold,
established by UMRA, for private-sector mandates ($100 million
in 1996, adjusted for inflation). S. 303 contains no
intergovernmental mandates as defined in UMRA and would impose
no costs on state, local or tribal governments.
Estimated cost to the Federal Government: The estimated
budgetary impact of S. 303 is shown in the following table. The
costs of this legislation fall within budget function 370
(commerce and housing credit).
----------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
-----------------------------------------------------------------
1999 2000 2001 2002 2003 2004
----------------------------------------------------------------------------------------------------------------
REVENUES AND DIRECT SPENDING \1\
Receipts and Spending Under Current Law:
Estimated Revenues \2\.................... 244 185 118 112 107 101
Estimated Budget Authority \3\............ 272 281 219 142 131 121
Estimated Outlays......................... 209 207 259 264 220 182
Proposed Changes:
Estimated Revenues........................ 0 3 (\4\) (\4\) (\4\) (\4\)
Estimated Budget Authority................ 0 3 (\4\) (\4\) (\4\) 0
Estimated Outlays......................... 0 0 1 0 2 0
Net Increase or Decrease (-) in Surplus... 0 3 -1 (\4\) -2 (\4\)
Receipts and Spending Under S. 303:
Estimated Revenues \2\.................... 244 188 118 112 107 101
Estimated Budget Authority \3\............ 272 284 219 142 131 121
Estimated Outlays......................... 209 207 260 264 222 182
----------------------------------------------------------------------------------------------------------------
\1\ In addition to the effects shown in the table, S. 303 would increase spending subject to appropriation by
about $500,000 in fiscal year 2000.
\2\ Includes royalty fee collections from cable television stations, satellite carriers, and digital audio
devices.
\3\ Payments to copyright owners include interest earnings on securities held by the Copyright Office.
\4\ Less than $500,000.
Basis of estimate: For purposes of this estimate, CBO
assumes the bill will be enacted by June 30, 1999. CBO also
assumes that payments from the federal government to copyright
holders for satellite transmissions would follow historical
patterns.
Revenues
Pursuant to the Satellite Home Viewer Act of 1988,
satellite carriers pay a monthly royalty fee for each
subscriber to the U.S. Copyright Office for the right to
retransmit network and superstation signals by satellite to
subscribers for private home viewing. The Copyright Office
later distributes the fees to those who own copyrights on the
material retransmitted by satellite. Under current law,
satellite carriers send payments to the U.S. Copyright Office
in January for those fees accrued during the previous six
months. The requirement for satellite carriers to pay royalty
fees is set to expire on December 31, 1999, so the last payment
will be in January 2000.
S. 303 would allow the PrimeTime 24--a satellite carrier--
to retransmit the signal of a distant station, which is a CBS
affiliate, and a Fox network signal to about two million
customers. PrimeTime 24 entered into a private contract with
Fox, so PrimeTime 24's transmissions of the Fox signal are not
subject to royalty fees. Thus, under S. 303, PrimeTime 24 would
pay the royalty fee for each of the two million customers that
would receive the CBS affiliate's signal each month. Based on
information from the satellite industry, CBO estimates that
revenues from that royalty fee would be about $3 million in
2000.
S. 303 also would require satellite carriers that knowingly
and willfully provide distant network signals to customers in
violation of the Communications Act of 1934 to forfeit $50,000
per violation. Such forfeiture payments are recorded as
governmental receipts (revenues). Based on information from the
FCC, CBO estimates that any such receipts would be less than
$500,000 in any year.
Payments to copyrights holders
After review by an arbitration panel, royalty fees are paid
by the federal government to copyright owners, along with
accrued interest earnings; therefore, S. 303 would result in
additional spending. Historical spending patterns indicate that
copyright holders may receive the fees and interest up to 10
years after the Copyright Office has collected the revenues.
CBO estimates that most of the $3 million in additional
royalties would be disbursed between 2001 and 2003.
Spending subject to appropriation
S. 303 would require the FCC to conduct four rulemaking
proceedings concerning technical and business relationships
between satellite carriers and local broadcast stations. The
billalso would require the FCC to report on methods for
facilitating the delivery of local signals in local markets, especially
small markets. Based on information from the FCC, CBO estimates that
implementing S. 303 would cost the commission less than $500,000 in
2000, subject to the availability of appropriated funds.
Pay-as-you-go considerations: The Balanced Budget and
Emergency Deficit Control Act sets up pay-as-you-go procedures
for legislation affecting direct spending or receipts. The net
changes in outlays and governmental receipts that are subject
to pay-as-you-go procedures are shown in the following table.
For the purposes of enforcing pay-as-you-go procedures, only
the effects in the current year, the budget year, and the
succeeding four years are counted.
----------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
----------------------------------------------------------------------------
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
----------------------------------------------------------------------------------------------------------------
Changes in outlays................. 0 0 1 0 2 0 0 0 0 0 0
Changes in receipts................ 0 3 0 0 0 0 0 0 0 0 0
----------------------------------------------------------------------------------------------------------------
Estimated impact on State, local, and tribal governments:
S. 303 contains no intergovernmental mandates as defined in
UMRA and would impose no costs on state, local, or tribal
governments.
Estimated impact on the private sector: S. 303 would impose
a private-sector mandate, as defined by the UMRA, on satellite
carriers. The cost of the mandate would not exceed the annual
threshold, established by UMRA, for private-sector mandates
($100 million in 1996, adjusted for inflation).
Satellite carriers would be required to use the Individual
Location Longley-Rice (ILLR) methodology to determine if a new
subscriber would be eligible to receive distant network
signals. In February 1999, the FCC recommended the use of this
model to determine the signal strength for a specific house
rather than a general area. This mandate would affect five
satellite carriers. Based on information from those carriers,
CBO expects that most of them will be using the ILLR model by
the time this bill would be enacted. Those who have not
implemented the model would be required to do so. CBO estimates
that the additional costs that the satellite carriers would
incur would be negligible, and thus, significantly below the
annual threshold for private-sector mandates ($100 million in
1996, adjusted for inflation).
Previous CBO estimates: On March 8, 1999, CBO transmitted a
cost estimate for S. 247, the Satellite Home Viewers
Improvements Act, as ordered reported by the Senate Committee
on the Judiciary on February 25, 1999. That bill would reduce
the royalty fee and extend the requirement that satellite
carriers pay royalty fees until December 31, 2004. On April 7,
1999, CBO transmitted an estimate for H.R. 851, the Satellite
Competition and Consumer Protection Act, as ordered reported by
the House Committee on Commerce on March 24, 1999. That bill
would reduce the royalty fee and permanently extend the
requirement that satellite carriers pay royalty fees. Thus, CBO
estimated that S. 247 and H.R. 851 would each have a
significant impact on revenues and direct spending, in contrast
to the much more limited effects estimated for S. 303.
Estimate prepared by: Federal costs--Mark Hadley;
revenues--Hester Grippando; impact on the private sector--Jean
Wooster.
Estimate approved by: Robert A. Sunshine, Deputy Assistant
Director for Budget Analysis.
Regulatory Impact Statement
In accordance with paragraph 11(b) of rule XXVI of the
Standing Rules of the Senate, the Committee provides the
following evaluation of the regulatory impact of the
legislation, as reported:
number of persons covered
The Committee believes that the bill will not subject any
individuals or businesses affected by the bill to any
additional regulation.
economic impact
After full implementation of the bill, individuals and
businesses will benefit from increased opportunities for
competition in the provision of multichannel video services.
Consumers will benefit from new choices in the multichannel
video marketplace, competitive pricing and product offerings
from both cable and satellite carriers. Increased competition,
and the resulting choices in the marketplace will provide
consumers with better and more product for their dollar, as
well as potentially freeing up their resources for other
pursuits.
Local stations and businesses that advertise on them will
find their market reach as wide as ever, if not increased due
to increased numbers of consumers able to clearly watch their
programming. For those viewers residing in the Grade B contour
and denied access to distant network signals, S. 303's simpler
and more predictable waiver process will ensure that those
legitimately unserved viewers will finally have access to
watchable network television. The networks will benefit, at no
detriment to local stations not being watched due to poor
signal reception, as network viewership increases, providing a
larger audience to national advertisers.
Finally, CBO's analysis indicates increased payments to
copyright holders as a result of increased access to
copyrighted programs for multichannel video service providers.
These benefits will be realized at a negligible cost to the
federal government, with no cost to State, local, and tribal
governments.
privacy
There will be no impact on personal privacy as a result of
this legislation.
paperwork
The paperwork resulting from this legislation will be
primarily due to the FCC proceedings to develop a consumer
waiver process and to determine whether any distant signal
carriage should be made permanent.
Section-by-Section Analysis
Section 1. Short Title
This section provides a short title of the reported bill, the
``Satellite Television Act of 1999.''
Section 2. Findings
This section provides Congressional findings. These findings
recite that, notwithstanding the passage of the 1996
Telecommunications Act, cable rates have increased because
cable television services still do not face adequate effective
competition. The findings then cite the inability of direct-to-
home satellite service providers to carry local television
stations as a major impediment to their ability to compete with
cable. However, the findings also recognize that maintaining
free over-the-air-television is a preeminent public interest
and that all multichannel video subscribers should be able to
receive at least one affiliate of each of the major broadcast
networks. The findings therefore conclude that it is in the
public interest to allow direct-to-home satellite service
providers to continue existing carriage of a distant network
affiliate station's signal where: (1) there is no local network
affiliate; (2) the local network affiliate cannot be adequately
received off-air; or (3) continued carriage would not harm the
local network station.
Section 3. Purpose
This section states the purpose of the reported bill, which
is to promote competition in the provision of multichannel
video services while protecting the viability of free, local,
over-the-air television.
Section 4. Must-Carry for Satellite Carriers Retransmitting Television
Broadcast Signals Carriage of Local Stations by Satellite
Carriers
The bill requires that the mandatory carriage or ``must
carry'' provisions of Sections 614 and 615 of the Act will
apply for all local stations, both commercial and non-
commercial, no later than January 1, 2002. Given the tremendous
number of satellite transponders that would be required to
enable direct-to-home satellite service providers to beam all
local signals into the markets they serve today, requiring
satellite television providers to comply with must-carry rules
now would impose an impossible burden incompatible with their
ability to continue to compete in the multichannel video
marketplace.
The date January 1, 2002, was selected because it is the
earliest date estimated by which Capitol Broadcasting, a
company formed by broadcasters for the express purpose of
making local broadcast signals available to direct-to-home
satellite service providers for satellite carriage into local
markets, will be able to offer its proposed service.
Until satellite television must-carry rules take effect,
satellite television service providers may offer any package of
local television signals they wish, or none at all.
The cost of providing a good quality signal to the satellite
carrier's designated receive facility is to be borne by the
television broadcast station. However, the satellite carrier is
prohibited from selecting a receive facility that would
effectively frustrate the must-carry provisions. The FCC is
directed to adopt rules within 180 days that implement this
section in a way that does not impose any undue economic burden
on either broadcasters or direct-to-home satellite service
providers.
The bill stipulates that the must carry provisions do not
apply to the carriage of digital signals of television
broadcast stations by cable television systems.
Provision of Distant Television Stations By Direct-to-Home
Satellite Service Providers
Section 338 of the bill contains different provisions with
regard to distant network signal carriage by direct-to-home
satellite service providers, depending on whether the
subscriber is a new or existing one, and, if an existing
subscriber, on where in the local television market the
subscriber resides.
For new subscribers, defined as those initially subscribing
after July 10, 1998, the bill provides that satellite
television operators are permitted to provide at least one
affiliate of each television network. As explained more fully
below, this minimum four-network affiliate provision will apply
to consumers who became DBS subscribers after July 10, 1998,
and who receive Grade B or better signal strength from each
local affiliate of the ABC, CBS, FOX, and NBC television
networks. Allowing DBS providers to offer at least one
affiliate of each of the major national networks will enable
DBS to compete more effectively with cable television.
The cut-off date of July 10, 1998, was selected because it is
the date of the preliminary injunction issued by the U.S.
District Court in Miami in the CBS et al. v. PrimeTime 24
Partners case. The Committee finds that, in light of the
widespread attention given to this development, after July 10,
1998, all DBS providers should have known that they needed to
take more care in determining prospective subscribers'
eligibility for distant network signal packages before signing
them up for service. This cut-off date avoids rewarding
companies for what can be considered to be reckless violation
of the law.
In order to determine the eligibility of new satellite
subscribers to receive distant network signal service, the
provision creates a new eligibility regime. Under the bill a
new subscriber can receive one or more distant signals from
stations affiliated with ABC, CBS, FOX or NBC, if the
subscriber cannot receive an off-air signal of Grade B
intensity from the corresponding local network station by using
a conventional rooftop antenna. The methodology to be used is
the Individual Location Longley-Rice (ILLR) predictive
methodology recommended by the Commission in Docket 98-201.
A post-July 10, 1998, DBS subscriber who cannot receive a
signal of Grade B intensity from a local network station is not
limited to receiving only one distant station affiliated with
the same network. As noted previously, this subscriber, by
definition, is not ``served'' by the local affiliate. The local
affiliate therefore cannot, as a practical matter, count that
subscriber as a part of its audience and revenue base. Thus, it
is immaterial how many duplicating distant network affiliates
an unserved DBS subscriber receives. The local affiliate need
not incur programming expenses on behalf of that subscriber,
nor should it include that subscriber in its revenue base.
As stated previously, the Grade B standard was originally
developed decades ago by the FCC to measure interference
levels, not the quality of the signal the viewer actually
receives. Thus, for purposes of SHVA, the Grade B standard is
being used to define something that it was not originally
intended to define: the quality of over-the-air reception from
the consumer's perspective. As a result, many consumers,
particularly those at the outer edge of a television station's
service area, are not satisfied with their local off-air
reception, and even less satisfied with being advised that it
is considered acceptable enough under the law to bar them from
getting superior service from a distant network station offered
as part of a DBS package.
Despite its unsuitability for the purposes for which it is
being used in SHVA, the fact remains that the Grade B standard
has been used by broadcasters for many years to define the
practical limits of their local markets. To change that
standard now, even where the case is as strong as it is here,
would be to introduce an uncertainty into local broadcast
operations that would have unpredictable ramifications beyond
the issue of DBS distant signal carriage.
Because of this, the bill does not redefine what constitutes
adequate off-air service, but instead provides a process
through which consumers can seek a waiver and receive a distant
network signal if they do not feel that they are truly
``served,'' or if they have other special needs or
circumstances, or even if they just want the added program
diversity.
The FCC is directed to develop and adopt such a consumer
waiver process within 90 days of the bill's enactment. To
guarantee that the rules primarily reflect the interests of the
consumers affected by this problem, the bill specifies that
this process shall not impose any unnecessary burdens on a
subscriber seeking a waiver. To balance the competing interests
of direct-to-home satellite service providers and broadcasters,
the bill also requires that the FCC fairly allocate
responsibilities between these two industries. To make sure
that consumers' waiver requests do not languish without action
by the responsible parties, the bill mandates time limits. To
encourage the DBS and broadcast industries to work as
cooperatively as possible with consumers and not ``game'' the
process by encouraging potential subscribers to pursue waiver
requests they know to be without merit, the bill provides that
the costs of testing to determine whether a subscriber meets
the waiver standard will be paid by the local television
station if the consumer's signal does not meet the minimum
standard, and by the DBS provider if it does.
To deter DBS providers from deliberately ignoring the law and
to underscore the importance of preserving local broadcasting,
the bill also provides that any satellite television provider
that knowingly and willfully provides one or more distant
network signals to ineligible subscribers shall be liable for
forfeiture in the amount of $50,000 per day, per violation.
The most difficult issue to resolve in the course of
considering the bill was the issue of what should be done about
distant network signal carriage that predated July 10, 1998.
There is no question that DBS companies violated the law by
providing distant network signals to consumers who reside
within a local television station's Grade B contour. However,
DBS subscribers purchased their satellite service in good
faith. For many of these subscribers, distant signals provide
the only source of adequate network television reception. This
is particularly true in rural areas. Yet, despite the fact that
DBS subscribers are customers, not accomplices, of the
companies that actually broke the law, and despite the fact
that local broadcasters have not been able to show that they
are suffering any substantial harm as a result, the court
orders requiring DBS providers to delete their distant network
signals effectively requires these consumers to pay the
consequences of the DBS operators' actions.
An amendment to the bill protects consumers who received
distant network signals before January 1, 1999, from disruptive
summarysignal termination. Under the bill, all consumers who
reside in the local affiliate's Grade A or Grade B contour and received
distant network signals before January 1, 1999, may continue receiving
these signals until December 31, 1999. This will allow time for DBS
providers to apply the Longley-Rice method and authoritatively
determine which of its existing subscribers are actually outside the
Grade B contour and thus eligible to continue receiving distant
signals. The moratorium on distant signal termination will also enable
DBS subscribers who reside within the Grade B contour, but are not
satisfied with the quality of their over-the-air reception, to apply
for a waiver under the new consumer waiver process.
After December 31, 1999, a satellite television subscriber in
the Grade A contour will no longer be grandfathered unless a
Longley-Rice analysis determines that the subscriber is
``unserved.'' Because it considers factors such as terrain, the
Longley-Rice analysis may determine that the local topography
prevents a subscriber located in a Grade A contour from
receiving the local over-the-air signal. In such a case, the
subscriber will be allowed to continue receiving the
satellite's distant network signal. Because that subscriber is
not within the local affiliate's audience, any program
exclusivity rules adopted by the FCC would not apply, and the
DBS provider may offer that subscriber other distant stations
affiliated with the same network. A subscriber in the Grade A
contour may also continue to receive the distant network signal
if the subscriber applies for and receives a waiver from the
local broadcast station under the new subscriber waiver
process.
The bill would, therefore, terminate distant signal carriage
after December 31, 1999, for those satellite television
subscribers in the Grade A contour who fail to qualify for
distant signal coverage under a Longley-Rice analysis, or who
cannot obtain a waiver from the local affiliate of the distant
stations at issue. As explained previously, the Grade A contour
defines the area closest to the local television station; it is
typically the core of the local station's market for audience
support and advertiser revenue and the area the local station
is presumed to cover with a strong, clear off-air signal. For
these reasons it is also the area in which satellite television
companies' carriage of distant network signals is most likely
to have been a deliberate flouting of the law, the area where
the distant signals' continued carriage would have a
particularly adverse effect on the local broadcaster, and the
area satellite television subscribers would likely find local
stations to be acceptable substitutes for the distant ones
given their proximity to the local stations' community of
license.
In contrast, the area outside of the Grade A contour, but
within the Grade B contour, is the area in which subscribers
most often find their local signal's off-air reception
subjectively unsatisfactory. Thus, summary deletion of the
distant signals is likely to be much more objectionable to
these subscribers.
For these reasons, the bill does not require the termination
of distant signals for DBS subscribers who reside between the
margins of the local station's predicted Grade A and Grade B
contours. It instead directs the FCC to complete a rulemaking
within 180 days that would determine whether, and to what
extent, this distant signal carriage should be subject to any
of the FCC's current program exclusivity rules. These rules
variously require cable television system operators to delete
the network, syndicated, and sports programming broadcast on
distant stations that duplicates programming that a local
station is licensed to carry.
Although the cable television industry is currently subject
to the program exclusivity rules, the Committee recognizes that
there are fundamental differences between program distribution
by cable and program distribution by a satellite service.
Programming delivered to all subscribers within a cable
operator's local franchise area is controlled at the cable
operator's head-end and can be easily blacked out throughout
the franchised area. However, satellite television providers
would face a much more complex problem. Satellite television
providers could be overwhelmed by the complexity involved in
providing alternative programming to blacked-out areas while
still providing the original programming to areas not subject
to the blackout. In addition, the sheer volume of potentially
thousands of requests for blackouts from across the nation on a
daily basis could prove impossible to manage. Thus, there may
be unreasonable technical, economic, and administrative burdens
imposed on DBS providers if they were required to comply with
program exclusivity rules on the same individual-household
basis as cable television system operators, and the Committee
requires that they should be taken into account when the
Commission conducts its proceeding. Thus, the Committee has
prohibited the Commission from imposing program exclusivity
rules on DBS providers unless the Commission finds that it
would be technically and economically feasible to do so, and
otherwise in the public interest.
Technical feasibility is required because of the extent of
the burden that DBS providers would have to incur to comply
with these rules. Economic feasibility is required to avoid
imposing regulatory burdens that would stifle the very
competitiveness of the DBS industry that this legislation seeks
to enhance.
Finally, in the context of this section, the term ``public
interest'' has a very specific meaning. It means that, even if
the FCC were to ultimately find that imposing program black-out
rules were technically and economically feasible, it must still
make a further finding, based on substantial evidence in the
record, that imposing any such rules would be necessary to
assure the continued vitality of local over-the-air television
service. The ``public interest'' standard as used in this
Section confers no authority on the Commission to impose any
conditions or adopt any other requirements whatsoever with
regard to DBS providers' carriage of distant network signals.
Finally, the bill specifies that any no provision of this
bill prohibits a local broadcast station from authorizing the
provision of distant network signals. And the bill clarifies
that DBS providers may continue to provide distant network
signals to a subscriber who is outside the Grade B contour, and
is thus ``unserved,'' or if the signal carriage is consistent
with rules adopted by the FCC.
Section 5. Retransmission Consent
This section generally restates the existing law governing
retransmission consent, but makes several changes. Section 5
modifies the retransmission consent provision of the
Communications Act. Section 325(b) modifies an existing
exemption from theretransmission consent provision of the
Communications Act. Currently, section 325(b) exempts from the
retransmission consent requirement the so-called ``superstations'' that
have been distributed nationally by satellite carriers for cable, DBS
and home use. But this exemption precludes exempt ``superstations''
from being owned, operated, or affiliated with a network. Some
superstations have become affiliates of newly-emerging networks like WB
and UPN. This threatens to nullify the exemption and defeat
Congressional intent that popular superstation signals remain available
to consumers. The amendment to section 325(b)(2) allows viewers
continued access to current superstations that have become network
stations since 1991. At the same time, the amendment limits the
exemption to those stations that still are distributed nationally by
satellite carriers pursuant to section 119 of title 17, United States
Code.
Additionally, under current law local non-commercial stations
cannot opt to negotiate for retransmission consent. This
section amends the current retransmission consent statute to
extend the retransmission consent option to noncommercial
stations. This change will allow public television stations to
negotiate carriage arrangements with satellite television
service carriers.
Section 6. Designated Market Areas
This section allows the FCC to revise the designated market
areas or to reassign those areas if the revision or
reassignment is done in the same manner and to the same extent
as applies in the context of the Commission's cable television
mandatory carriage rules.
Section 7. Severability
This section constitutes a standard severability clause,
providing that if any provision of the legislation or any
provision of an amendment made by the legislation, or the
application thereof to particular persons or circumstances, is
held to be unconstitutional, any remaining provisions or the
application thereof to other persons or circumstances shall
remain unaffected.
Section 8. Secondary Transmissions
This section amends section 119 of Title 17 to permit
continued secondary transmissions of the remaining superstation
signals pursuant to the statutory license in that section even
if the superstation has affiliated with a network.
Section 9. Definitions
This section conforms definitions preexisting in the
Communications Act to those provided in the Satellite
Television Act.
Rollcall Votes in Committee
In accordance with paragraph 7(c) of rule XXVI of the
Standing Rules of the Senate, the Committee provides the
following description of the record votes during its
consideration of S. 303:
Senator Hollings offered an amendment in the nature of a
substitute. By a rollcall vote of 8 yeas and 12 nays, the
amendment was defeated:
YEAS--8-- NAYS--12
Mr. Stevens \1\ Mr. McCain
Mr. Ashcroft \1\- Mr. Burns \1\
Mr. Hollings- Mr. Gorton
Mr. Inouye \1\ - Mr. Lott \1\
Mr. Kerry \1\- Mrs. Hutchison
Mr. Dorgan-- Ms. Snowe
Mr. Wyden-- Mr. Frist \1\
Mr. Cleland-- Mr. Abraham \1\---
Mr. Brownback---
Mr. Rockefeller---
Mr. Breaux \1\ ---
Mr. Bryan
\1\ By proxy.
Changes in Existing Law
In compliance with paragraph 12 of rule XXVI of the Standing
Rules of the Senate, changes in existing law made by the bill,
as reported, are shown as follows (existing law proposed to be
omitted is enclosed in black brackets, new material is printed
in italic, existing law in which no change is proposed is shown
in roman):
Communications Act of 1934
Title III--Provisions Relating to Radio
PART I. GENERAL PROVISIONS
SEC. 325. FALSE DISTRESS SIGNALS; REBROADCASTING; STUDIOS OF FOREIGN
STATIONS.
(a) No person within the jurisdiction of the United States
shall knowingly utter or transmit, or cause to be uttered or
transmitted, any false or fraudulent signals of distress, or
communication relating thereto, nor shall any broadcasting
station rebroadcast the program or any part thereof of another
broadcasting station without the express authority of the
originating station.
[(b)(1) Following the date that is one year after the date of
enactment of the Cable Television Consumer Protection and
Competition Act of 1992, no cable system or other multichannel
video programming distributor shall retransmit the signal of a
broadcasting station, or any part thereof, except--
[(A) with the express authority of the originating
station; or
[(B) pursuant to section 614, in the case of a
station electing, in accordance with this subsection,
to assert the right to carriage under such section.
[(2) The provisions of this subsection shall not apply to--
[(A) retransmission of the signal of a noncommercial
broadcasting station;
[(B) retransmission directly to a home satellite
antenna of the signal of a broadcasting station that is
not owned or operated by, or affiliated with, a
broadcasting network, if such signal was retransmitted
by a satellite carrier on May 1, 1991;
[(C) retransmission of the signal of a broadcasting
station that is owned or operated by, or affiliated
with, a broadcasting network directly to a home
satellite antenna, if the household receiving the
signal is an unserved household; or
[(D) retransmission by a cable operator or other
multichannel video programming distributor of the
signal of a superstation if such signal was obtained
from a satellite carrier and the originating station
was a superstation on May 1, 1991.
[For purposes of this paragraph, the terms ``satellite
carrier'', ``superstation'', and ``unserved household'' have
the meanings given those terms, respectively, in section 119(d)
of title 17, United States Code, as in effect on the date of
enactment of the Cable Television Consumer Protection and
Competition Act of 1992.
[(3)(A) Within 45 days after the date of enactment of the
Cable Television Consumer Protection and Competition Act of
1992, the Commission shall commence a rulemaking proceeding to
establish regulations to govern the exercise by television
broadcast stations of the right to grant retransmission consent
under this subsection and of the right to signal carriage under
section 614, and such other regulations as are necessary to
administer the limitations contained in paragraph (2). The
Commission shall consider in such proceeding the impact that
the grant of retransmission consent by television stations may
have on the rates for the basic service tier and shall ensure
that the regulations prescribed under this subsection do not
conflict with the Commission's obligation under section
623(b)(1) to ensure that the rates for the basic service tier
are reasonable. Such rulemaking proceeding shall be completed
within 180 days after the date of enactment of the Cable
Television Consumer Protection and Competition Act of 1992.
[(B) The regulations required by subparagraph (A) shall
require that television stations, within one year after the
date of enactment of the Cable Television Consumer Protection
and Competition Act of 1992 and every three years thereafter,
make an election between the right to grant retransmission
consent under this subsection and the right to signal carriage
under section 614. If there is more than one cable system which
services the same geographic area, a station's election shall
apply to all such cable systems.
[(4) If an originating television station elects under
paragraph (3)(B) to exercise its right to grant retransmission
consent under this subsection with respect to a cable system,
the provisions of section 614 shall not apply to the carriage
of the signal of such station by such cable system.
[(5) The exercise by a television broadcast station of the
right to grant retransmission consent under this subsection
shall not interfere with or supersede the rights under section
614 or 615 of any station electing to assert the right to
signal carriage under that section.
[(6) Nothing in this section shall be construed as modifying
the compulsory copyright license established in section 111 of
title 17, United States Code, or as affecting existing or
future video programming licensing agreements between
broadcasting stations and video programmers.]
(b)(1) No cable system or other multichannel video
programming distributor shall retransmit the signal of a
broadcasting station, or any part thereof, except--
(A) with the express authority of the station; or
(B) pursuant to section 614 or section 615, in the
case of a station electing, in accordance with this
subsection, to assert the right to carriage under that
section.
(2) The provisions of this subsection shall not apply to--
(A) retransmission of the signal of a television
broadcast station outside the station's local market by
a satellite carrier directly to subscribers if--
(i) that station was a superstation on May 1,
1991;
(ii) as of July 1, 1998, such station's
signal was transmitted under the compulsory
license of section 119 of title 17, United
States Code, by satellite carriers directly to
at least 250,000 subscribers; and
(iii) the satellite carrier complies with any
program exclusivity rules that may be adopted
by the Federal Communications Commission
pursuant to section 338.
(B) retransmission of the distant signal of a
broadcasting station that is owned or operated by, or
affiliated with, a broadcasting network directly to a
home satellite antenna, if the subscriber resides in an
unserved household; or
(C) retransmission by a cable operator or other
multichannel video programming distributor (other than
by a satellite carrier direct to its subscribers) of
the signal of a television broadcast station outside
the station's local market, if that signal was obtained
from a satellite carrier and--
(i) the originating station was a
superstation on May 1, 1991; and
(ii) the originating station was a network
station on December 31, 1997, and its signal
was retransmitted by a satellite carrier
directly to subscribers.
(3) Any term used in this subsection that is defined in
section 337(d) of this Act has the meaning given to it by that
section.
* * * * * * *
SEC. 338. CARRIAGE OF LOCAL TELEVISION STATIONS BY SATELLITE CARRIERS.
(a) Application of Mandatory Carriage to Satellite
Carriers.--The mandatory carriage provisions of sections 614
and 615 of this Act will apply in a local market no later than
January 1, 2002, to satellite carriers retransmitting any
television broadcast station in that local market pursuant to
the compulsory license provided by section 122 of title 17,
United States Code.
(b) Good Signal Required.--
(1) Costs.--A television broadcast station eligible
for carriage under subsection (a) may be required to
bear the costs associated with delivering a good
quality signal to the designated local receive facility
of the satellite carrier. The selection of a local
receive facility by a satellite carrier shall not be
made in a manner that frustrates the purposes of this
Act. The Commission shall implement the requirements of
this section without imposing any undue economic burden
on any party.
(2) Rulemaking required.--The Commission shall adopt
rules implementing paragraph (1) within 180 days after
the date of enactment of the Satellite Television Act
of 1999.
(c) Cable Television System Digital Signal Carriage Not
Covered.--Nothing in this section applies to the carriage of
the digital signals of television broadcast stations by cable
television systems.
(d) Definitions.--In this section:
(1) Television broadcast station.--The term
``television broadcast station'' means a full power
local television broadcast station, but does not
include a low-power or translator television broadcast
station.
(2) Network station.--The term ``network station''
means a television broadcast station that is owned or
operated by, or affiliated with, a broadcasting
network.
(3) Broadcasting network.--The term ``broadcasting
network'' means a television network in the United
States 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.
(4) Distant television station.--The term ``distant
television station'' means any television broadcast
station that is not licensed and operating on a channel
regularly assigned to the local television market in
which a subscriber to a direct-to-home satellite
service is located.
(5) Local market.--The term ``local market'' means
the designated market area in which a station is
located. For a noncommercial educational television
broadcast station, the local market includes any
station that is licensed to a community within the same
designated market area as the noncommercial educational
television broadcast station.
(6) Satellite carrier.--The term ``satellite
carrier'' has the meaning given it by section 119(d) of
title 17, United States Code.
SEC. 339. CARRIAGE OF DISTANT TELEVISION STATIONS BY SATELLITE
CARRIERS.
(a) Provisions Relating to New Subscribers.--
(1) In general.--Except as provided in subsection
(d), direct-to-home satellite service providers shall
be permitted to provide the signals of 1 affiliate of
each television network to any household that initially
subscribed to direct-to-home satellite service on or
after July 10, 1998.
(2) Eligibility determination.--The determination of
a new subscriber's eligibility to receive the signals
of one or more distant network stations as a component
of the service provided pursuant to paragraph (a) shall
be made by ascertaining whether the subscriber resides
within the predicted Grade B service area of a local
network station. The Individual Location Longley-Rice
methodology described by the Commission in Docket 98-
201 shall be used to make this determination. A direct-
to-home satellite service provider may provide the
signal of a distant network station to any subscriber
determined by this method to be unserved by a local
station affiliated with that network.
(3) Rulemaking Required.--
(A) Within 90 days after the date of
enactment of the Satellite Television Act of
1999, the Commission shall adopt procedures
that shall be used by any direct-to-home
satellite service subscriber requesting a
waiver to receive one or more distant network
signals. The waiver procedures adopted by the
Commission shall--
(i) impose no unnecessary burden on
the subscriber seeking the waiver;
(ii) allocate responsibilities fairly
between direct-to-home satellite
service providers and local stations;
(iii) prescribe mandatory time limits
within which direct-to-home satellite
service providers and local stations
shall carry out the obligations imposed
upon them; and
(iv) prescribe that all costs of
conducting any measurement or testing
shall be borne by the direct-to-home
satellite service provider, if the
local station's signal meets the
prescribed minimum standards, or by the
local station, if its signal fails to
meet the prescribed minimum standards.
(4) Penalty for violation.--Any direct-to-home
satellite service provider that knowingly and willfully
provides the signals of 1 or more distant television
stations to subscribers in violation of this section
shall be liable for forfeiture in the amount of $50,000
per day per violation.
(b) Provisions Relating to Existing Subscribers.--
(1) Moratorium on termination.--Until December 31,
1999, any direct-to-home satellite service may continue
to provide the signals of distant television stations
to any subscriber located within predicted Grade A and
Grade B contours of a local network station who
received those distant network signals before July 11,
1998.
(2) Continued carriage.--Direct-to-home satellite
service providers may continue to provide the signals
of distant television stations to subscribers located
between the outside limits of the predicted Grade A
contour and the predicted Grade B contour of the
corresponding local network stations after December 31,
1999, subject to any limitations adopted by the
Commission under paragraph (3).
(3) Rulemaking Required.--
(A) Within 180 days after the date of
enactment of the Satellite Television Act of
1999, the Commission shall conclude a single
rulemaking, compliant with subchapter II of
chapter 5 of title 5, United States Code, to
examine the extent to which any existing
program exclusivity rules should be imposed on
distant network stations provided to
subscribers under paragraph (2).
(B) The Commission shall not impose any
program exclusivity rules on direct-to-home
satellite service providers pursuant to
subparagraph (A) unless it finds that it would
be both technically and economically feasible
and otherwise in the public interest to do so.
(c) Waivers Not Precluded.--Notwithstanding any other
provision in this section, nothing shall preclude any network
station from authorizing the continued provision of distant
network signals inunaltered form to any direct-to-home
satellite service subscriber currently receiving them.
(d) Certain Signals.--Providers of direct-to-home satellite
service may continue to carry the signals of distant network
stations without regard to subsections (a) and (b) in any
situation in which--
(1) a subscriber is unserved by the local station
affiliated with that network;
(2) a waiver is otherwise granted by the local
station under subsection (c); or
(3) if the carriage would otherwise be consistent
with rules adopted by the Commission in CS Docket 98-
201.
(e) Report Required.--Within 180 days after the date of
enactment of the Satellite Television Act of 1999, the
Commission shall report to Congress on methods of facilitating
the delivery of local signals in local markets, especially
smaller markets.
* * * * * * *
Title 17, United States Code
Chapter 1. Subject Matter and Scope of Copyright
Sec. 119. Limitations on exclusive rights: Secondary transmissions of
superstations and network stations for private home
viewing
(a) Secondary Transmissions by Satellite Carriers.--
(1) Superstations.--Subject to the provisions of
paragraphs (3), (4), and (6) of this subsection and
section 114(d), secondary transmissions of a primary
transmission made by a superstation and embodying a
performance or display of a work shall be subject to
statutory licensing under this section if the secondary
transmission is made by a satellite carrier to the
public for private home viewing, and the carrier makes
a direct or indirect charge for each retransmission
service to each household receiving the secondary
transmission or to a distributor that has contracted
with the carrier for direct or indirect delivery of the
secondary transmission to the public for private home
viewing.
(2) Network stations.--
(A) In general.--Subject to the provisions of
subparagraphs (B) and (C) of this paragraph and
paragraphs (3), (4), (5), and (6) of this
subsection and section 114(d), secondary
transmissions of programming contained in a
primary transmission made by a network station
and embodying a performance or display of a
work shall be subject to statutory licensing
under this section if the secondary
transmission is made by a satellite carrier to
the public for private home viewing, and the
carrier makes a direct or indirect charge for
such retransmission service to each subscriber
receiving the secondary transmission.
[(B) Secondary transmissions to unserved
households.--The statutory license provided for
in subparagraph (A) shall be limited to
secondary transmissions to persons who reside
in unserved households.]
(B) Secondary transmissions to unserved
households.--Except as provided in paragraph
(5)(E) of this subsection, the license provided
for in subparagraph (A) shall be limited to
secondary transmissions to persons who reside
in unserved households.
(C) Submission of subscriber lists to
networks.--A satellite carrier that makes
secondary transmissions of a primary
transmission made by a network station pursuant
to subparagraph (A) shall, 90 days after
commencing such secondary transmissions, submit
to the network that owns or is affiliated with
the network station a list identifying (by name
and street address, including county and zip
code) all subscribers to which the satellite
carrier currently makes secondary transmissions
of that primary transmission. Thereafter, on
the 15th of each month, the satellite carrier
shall submit to the network a list identifying
(by name and street address, including county
and zip code) any persons who have been added
or dropped as such subscribers since the last
submission under this subparagraph. Such
subscriber information submitted by a satellite
carrier may be used only for purposes of
monitoring compliance by the satellite carrier
with this subsection. The submission
requirements of this subparagraph shall apply
to a satellite carrier only if the network to
whom the submissions are to be made places on
file with the Register of Copyrights a document
identifying the name and address of the person
to whom such submissions are to be made. The
Register shall maintain for public inspection a
file of all such documents.
(3) Noncompliance with reporting and payment
requirements.--Notwithstanding the provisions of
paragraphs (1) and (2), the willful or repeated
secondary transmission to the public by a satellite
carrier of a primary transmission made by a
superstation or a network station and embodying a
performance or display of a work is actionable as an
act of infringement under section 501, and is fully
subject to the remedies provided by sections 502
through 506 and 509, where the satellite carrier has
not deposited the statement of account and royalty fee
required by subsection (b), or has failed to make the
submissions to networks required by paragraph (2)(C).
(4) Willful alterations.--Notwithstanding the
provisions of paragraphs (1) and (2), the secondary
transmission to the public by a satellite carrier of a
primary transmission made by a superstation or a
network station and embodying a performance or display
of a work is actionable as an act of infringement under
section 501, and is fully subject to the remedies
provided by sections 502 through 506 and sections 509
and 510, if the content of the particular program in
which the performance or display is embodied, or any
commercial advertising or station announcement
transmitted by the primary transmitter during, or
immediately before or after, the transmission of such
program, is in any way willfully altered by
the satellite carrier through changes, deletions, or
additions, or is combined with programming from any other
broadcast signal.
(5) Violation of territorial restrictions on
statutory license for network stations.--
(A) Individual violations.--The willful or
repeated secondary transmission by a satellite
carrier of a primary transmission made by a
network station and embodying a performance or
display of a work to a subscriber who does not
reside in an unserved household is actionable
as an act of infringement under section 501 and
is fully subject to the remedies provided by
sections 502 through 506 and 509, except that--
(i) no damages shall be awarded for
such act of infringement if the
satellite carrier took corrective
action by promptly withdrawing service
from the ineligible subscriber, and
(ii) any statutory damages shall not
exceed $5 for such subscriber for each
month during which the violation
occurred.
(B) Pattern of violations.--If a satellite
carrier engages in a willful or repeated
pattern or practice of delivering a primary
transmission made by a network station and
embodying a performance or display of a work to
subscribers who do not reside in unserved
households, then in addition to the remedies
set forth in subparagraph (A)--
(i) if the pattern or practice has
been carried out on a substantially
nationwide basis, the court shall order
a permanent injunction barring the
secondary transmission by the satellite
carrier, for private home viewing, of
the primary transmissions of any
primary network station affiliated with
the same network, and the court may
order statutory damages of not to
exceed $250,000 for each 6-month period
during which the pattern or practice
was carried out; and
(ii) if the pattern or practice has
been carried out on a local or regional
basis, the court shall order a
permanent injunction barring the
secondary transmission, for private
home viewing in that locality or
region, by the satellite carrier of the
primary transmissions of any primary
network station affiliated with the
same network, and the court may order
statutory damages of not to exceed
$250,000 for each 6-month period during
which the pattern or practice was
carried out.
(C) Previous subscribers excluded.--
Subparagraphs (A) and (B) do not apply to
secondary transmissions by a satellite carrier
to persons who subscribed to receive such
secondary transmissions from the satellite
carrier or a distributor before November 16,
1988.
(D) Burden of proof.--In any action brought
under this paragraph, the satellite carrier
shall have the burden of proving that its
secondary transmission of a primary
transmission by a network station is for
private home viewing to an unserved household.
(E) Exception.--The secondary transmission by
a satellite carrier of a primary transmission
made by a network station to subscribers who do
not reside in unserved households shall not be
an act of infringement if--
(i) that station was a superstation
on May 1, 1991; and
(ii) that station was lawfully
retransmitted by satellite carriers
directly to at least 250,000
subscribers as of July 1, 1998.
(6) Discrimination by a satellite carrier.--
Notwithstanding the provisions of paragraph (1), the
willful or repeated secondary transmission to the
public by a satellite carrier of a primary transmission
made by a superstation or a network station and
embodying a performance or display of a work is
actionable as an act of infringement under section 501,
and is fully subject to the remedies provided by
sections 502 through 506 and 509, if the satellite
carrier unlawfully discriminates against a distributor.
(7) Geographic limitation on secondary
transmissions.--The statutory license created by this
section shall apply only to secondary transmissions to
households located in the United States.
(8) Transitional signal intensity measurement
procedures.--
(A) In general.--Subject to subparagraph (C),
upon a challenge by a network station regarding
whether a subscriber is an unserved household
within the predicted Grade B Contour of the
station, the satellite carrier shall, within 60
days after the receipt of the challenge--
(i) terminate service to that
household of the signal that is the
subject of the challenge, and within 30
days thereafter notify the network
station that made the challenge that
service to that household has been
terminated; or
(ii) conduct a measurement of the
signal intensity of the subscriber's
household to determine whether the
household is an unserved household
after giving reasonable notice to the
network station of the satellite
carrier's intent to conduct the
measurement.
(B) Effect of measurement.--If the satellite
carrier conducts a signal intensity measurement
under subparagraph (A) and the measurement
indicates that--
(i) the household is not an unserved
household, the satellite carrier shall,
within 60 days after the measurement is
conducted, terminate the service to
that household of the signal that is
the subject of the challenge, and
within 30 days thereafter notify the
network station that made the challenge
that service to that household has been
terminated; or
(ii) the household is an unserved
household, the station challenging the
service shall reimburse the satellite
carrier for the costs of the signal
measurement within 60 days after
receipt of the measurement results and
a statement of the costs of the
measurement.
(C) Limitation on measurements.--
(i) Notwithstanding subparagraph (A),
a satellite carrier may not be required
to conduct signal intensity
measurements during any calendar year
in excess of 5 percent of the number of
subscribers within the network
station's local market that have
subscribed to the service as of the
effective date of the Satellite Home
Viewer Act of 1994.
(ii) If a network station challenges
whether a subscriber is an unserved
household in excess of 5 percent of the
subscribers within the network's
station local market within a calendar
year, subparagraph (A) shall not apply
to challenges in excess of such 5
percent, but the station may conduct
its own signal intensity measurement of
the subscriber's household after giving
reasonable notice to the satellite
carrier of the network station's intent
to conduct the measurement. If such
measurement indicates that the
household is not an unserved household,
the carrier shall, within 60 days after
receipt of the measurement, terminate
service to the household of the signal
that is the subject of the challenge
and within 30 days thereafter notify
the network station that made the
challenge that service has been
terminated. The carrier shall also,
within 60 days after receipt of the
measurement and a statement of the
costs of the measurement, reimburse the
network station for the cost it
incurred in conducting the measurement.
(D) Outside the predicted grade b contour.--
(i) If a network station challenges
whether a subscriber is an unserved
household outside the predicted Grade B
Contour of the station, the station may
conduct a measurement of the signal
intensity of the subscriber's household
to determine whether the household is
an unserved household after giving
reasonable notice to the satellite
carrier of the network station's intent
to conduct the measurement.
(ii) If the network station conducts
a signal intensity measurement under
clause (i) and the measurement
indicates that--
(I) the household is not an
unserved household, the station
shall forward the results to
the satellite carrier who
shall, within 60 days after
receipt of the measurement,
terminate the service to the
household of the signal that is
the subject of the challenge,
and shall reimburse the station
for the costs of the
measurement within 60 days
after receipt of the
measurement results and a
statement of such costs; or
(II) the household is an
unserved household, the station
shall pay the costs of the
measurement.
(9) Loser pays for signal intensity measurement;
recovery of measurement costs in a civil action.--In
any civil action filed relating to the eligibility of
subscribing households as unserved households--
(A) a network station challenging such
eligibility shall, within 60 days after receipt
of the measurement results and a statement of
such costs, reimburse the satellite carrier for
any signal intensity measurement that is
conducted by that carrier in response to a
challenge by the network station and that
establishes the household is an unserved
household; and
(B) a satellite carrier shall, within 60 days
after receipt of the measurement results and a
statement of such costs, reimburse the network
station challenging such eligibility for any
signal intensity measurement that is conducted
by that station and that establishes the
household is not an unserved household.
(10) Inability to conduct measurement.--If a network
station makes a reasonable attempt to conduct a site
measurement of its signal at a subscriber's household
and is denied access for the purpose of conducting the
measurement, and is otherwise unable to conduct a
measurement, the satellite carrier shall within 60 days
notice thereof, terminate service of the station's
network to that household.
(b) Statutory License for Secondary Transmissions for Private
Home Viewing.--
(1) Deposits with the register of copyrights.--A
satellite carrier whose secondary transmissions are
subject to statutory licensing under subsection (a)
shall, on a semiannual basis, deposit with the Register
of Copyrights, in accordance with requirements that the
Register shall prescribe by regulation--
(A) a statement of account, covering the
preceding 6-month period, specifying the names
and locations of all superstations and network
stations whose signals were transmitted, at any
time during that period, to subscribers for
private home viewing as described in
subsections (a)(1) and (a)(2), the total number
of subscribers that received such
transmissions, and such other data as the
Register of Copyrights may from time to time
prescribe by regulation; and
(B) a royalty fee for that 6-month period,
computed by--
(i) multiplying the total number of
subscribers receiving each secondary
transmission of a superstation during
each calendar month by 17.5 cents per
subscriber in the case of superstations
that as retransmitted by the satellite
carrier include any program which, if
delivered by any cable system in the
United States, would be subject to the
syndicated exclusivity rules of the
Federal Communications Commission, and
14 cents per subscriber in the case of
superstations that are syndex-proof as
defined in section 258.2 of title 37,
Code of Federal Regulations;
(ii) multiplying the number of
subscribers receiving each secondary
transmission of a network station
during each calendar month by 6 cents;
and
(iii) adding together the totals
computed under clauses (i) and (ii).
(2) Investment of fees.--The Register of Copyrights
shall receive all fees deposited under this section
and, after deducting the reasonable costs incurred by
the Copyright Office under this section (other than the
costs deducted under paragraph (4)), shall deposit the
balance in the Treasury of the United States, in such
manner as the Secretary of the Treasury directs. All
funds held by the Secretary of the Treasury shall be
invested in interest-bearing securities of the United
States for later distribution with interest by the
Librarian of Congress as provided by this title.
(3) Persons to whom fees are distributed.--The
royalty fees deposited under paragraph (2) shall, in
accordance with the procedures provided by paragraph
(4), be distributed to those copyright owners whose
works were included in a secondary transmission for
private home viewing made by a satellite carrier during
the applicable 6-month accounting period and who file a
claim with the Librarian of Congress under paragraph
(4).
(4) Procedures for distribution.--The royalty fees
deposited under paragraph (2) shall be distributed in
accordance with the following procedures:
(A) Filing of claims for fees.--During the
month of July in each year, each person
claiming to be entitled to statutory license
fees for secondary transmissions for private
home viewing shall file a claim with the
Librarian of Congress, in accordance with
requirements that the Librarian of Congress
shall prescribe by regulation. For purposes of
this paragraph, any claimants may agree among
themselves as to the proportionate division of
statutory license fees among them, may lump
their claims together and file them jointly or
as a single claim, or may designate a common
agent to receive payment on their behalf.
(B) Determination of controversy;
distributions.--After the first day of August
of each year, the Librarian of Congress shall
determine whether there exists a controversy
concerning the distribution of royalty fees. If
the Librarian of Congress determines that no
such controversy exists, the Librarian of
Congress shall, after deducting reasonable
administrative costs under this paragraph,
distribute such fees to the copyright owners
entitled to receive them, or to their
designated agents. If the Librarian of Congress
finds the existence of a controversy, the
Librarian of Congress shall, pursuant to
chapter 8 of this title, convene a copyright
arbitration royalty panel to determine the
distribution of royalty fees.
(C) Withholding of fees during controversy.--
During the pendency of any proceeding under
this subsection, the Librarian of Congress
shall withhold from distribution an amount
sufficient to satisfy all claims with respect
to which a controversy exists, but shall have
discretion to proceed to distribute any amounts
that are not in controversy.
(c) Adjustment of Royalty Fees.--
(1) Applicability and determination of royalty
fees.--The rate of the royalty fee payable under
subsection (b)(1)(B) shall be effective unless a
royalty fee is established under paragraph (2) or (3)
of this subsection.
(2) Fee set by voluntary negotiation.--
(A) Notice of initiation of proceedings.--On
or before July 1, 1996, the Librarian of
Congress shall cause notice to be published in
the Federal Register of the initiation of
voluntary negotiation proceedings for the
purpose of determining the royalty fee to be
paid by satellite carriers under subsection
(b)(1)(B).
(B) Negotiations.--Satellite carriers,
distributors, and copyright owners entitled to
royalty fees under this section shall negotiate
in good faith in an effort to reach a voluntary
agreement or voluntary agreements for the
payment of royalty fees. Any such satellite
carriers, distributors, and copyright owners
may at any time negotiate and agree to the
royalty fee, and may designate common agents to
negotiate, agree to, or pay such fees. If the
parties fail to identify common agents, the
Librarian of Congress shall do so, after
requesting recommendations from the parties to
the negotiation proceeding. The parties to each
negotiation proceeding shall bear the entire
cost thereof.
(C) Agreements binding on parties; filing of
agreements.--Voluntary agreements negotiated at
any time in accordance with this paragraph
shall be binding upon all satellite carriers,
distributors, and copyright owners that are
parties thereto. Copies of such agreements
shall be filed with the Copyright Office within
30 days after execution in accordance with
regulations that the Register of Copyrights
shall prescribe.
(D) Period agreement is in effect. The
obligation to pay the royalty fees established
under a voluntary agreement which has been
filed with the Copyright Office in accordance
with this paragraph shall become effective on
the date specified in the agreement, and shall
remain in effect until December 31, 1999, or in
accordance with the terms of the agreement,
whichever is later.
(3) Fee set by compulsory arbitration.--
(A) Notice of initiation of proceedings.--On
or before January 1, 1997, the Librarian of
Congress shall cause notice to be published in
the Federal Register of the initiation of
arbitration proceedings for the purpose of
determining a reasonable royalty fee to be paid
under subsection (b)(1)(B) by satellite
carriers who are not parties to a voluntary
agreement filed with the Copyright Office in
accordance with paragraph (2). Such arbitration
proceeding shall be conducted under chapter 8.
(B) Establishment of royalty fees.--In
determining royalty fees under this paragraph,
the copyright arbitration royalty panel
appointed under chapter 8 shall establish fees
for the retransmission of network stations and
superstations that most clearly represent the
fair market value of secondary transmissions. In
determining the fair market value, the panel shall
base its decision on economic, competitive, and
programming information presented by the
parties, including--
(i) the competitive environment in
which such programming is distributed,
the cost of similar signals in similar
private and compulsory license
marketplaces, and any special features
and conditions of the retransmission
marketplace;
(ii) the economic impact of such fees
on copyright owners and satellite
carriers; and
(iii) the impact on the continued
availability of secondary transmissions
to the public.
(C) Period during which decision of
arbitration panel or order of Librarian
effective.--The obligation to pay the royalty
fee established under a determination which--
(i) is made by a copyright
arbitration royalty panel in an
arbitration proceeding under this
paragraph and is adopted by the
Librarian of Congress under section
802(f), or
(ii) is established by the Librarian
of Congress under section 802(f), shall
become effective as provided in section
802(g) or July 1, 1997, whichever is
later.
(D) Persons subject to royalty fee.--The
royalty fee referred to in subparagraph (C)
shall be binding on all satellite carriers,
distributors, and copyright owners, who are not
party to a voluntary agreement filed with the
Copyright Office under paragraph (2).
(d) Definitions.--As used in this section--
* * * * * * *
(2) Network station.--The term ``network station''
means--
(A) a television broadcast station, including
any translator station or terrestrial satellite
station that rebroadcasts all or substantially
all of the programming broadcast by a network
station, that is owned or operated by, or
affiliated with, one or more of the television
networks in the United States which offer an
interconnected program service on a regular
basis for 15 or more hours per week to at least
25 of its affiliated television licensees in 10
or more States; or
(B) a noncommercial educational broadcast
station (as defined in section 397 of the
Communications Act of 1934.
(3) Primary network station.--The term ``primary
network station'' means a network station that
broadcasts or rebroadcasts the basic programming
service of a particular national network.
* * * * * * *
(9) Superstation.--The term ``superstation'' means a
television broadcast station, other than a network
station, licensed by the Federal Communications
Commission that is secondarily transmitted by a
satellite carrier.
(10) Unserved household.--The term ``unserved
household'', with respect to a particular television
network, means a household that--
(A) cannot receive, through the use of a
conventional outdoor rooftop receiving antenna,
an over-the-air signal of Grade B intensity (as
defined by the Federal Communications
Commission) of a primary network station
affiliated with that network; and
(B) has not, within 90 days before the date
on which that household subscribes, either
initially or on renewal, to receive secondary
transmissions by a satellite carrier of a
network station affiliated with that network,
subscribed to a cable system that provides the
signal of a primary network station affiliated
with that network.
(e) Exclusivity of This Section With Respect to Secondary
Transmissions of Broadcast Stations by Satellite to Members of
the Public.--No provision of section 111 of this title or any
other law (other than this section) shall be construed to
contain any authorization, exemption, or license through which
secondary transmissions by satellite carrier for private home
viewing of programming contained in a primary transmission made
by a superstation or a network station may be made without
obtaining the consent of the copyright owner.
Minority Views of Senator Hollings, Senator Stevens, Senator Kerry, and
Senator Cleland
We support a majority of the significant public policy
objectives furthered by this bill as reported out of Committee.
We object, however, to the legislation's treatment of one
critically important issue, and therefore feel compelled to
file minority views. In brief, we oppose provisions in the
legislation that sanction the illegal behavior of direct
broadcast satellite service providers. These provisions
permanently grandfather the transmission of distant network
signals to subscribers residing outside of the Grade A contour,
but within the Grade B contour, regardless of whether those
subscribers may actually be able to receive clear over-the-air
broadcast signals from their local stations. These provisions
put Congress squarely in the position of sanctioning illegal
behavior. The role of Congress is to enact sound laws, not to
condone the actions of those who break the laws we enact.
Competition has not developed in the cable television
marketplace as rapidly as Congress had envisioned. Therefore,
we support policies that promote viable competitors to cable in
the multichannel video programming market. DBS's ability to
become a viable competitor to cable is hampered by the current
regulatory landscape which imposes outdated limits on the
provision of DBS service. Therefore, legislation that
ultimately passes the U.S. Senate should permit satellite
providers to transmit local broadcast signals into local
markets, and eliminate the 90 day waiting period for existing
cable subscribers who wish to switch to satellite service. We
also support the implementation of full must-carry by January
1, 2002, as required by the legislation reported by this
Committee. Absent these pivotal changes in the law, DBS will
continue to be hamstrung in its efforts to compete with cable.
In order to provide some protection to DBS subscribers, we
support the compromise contained in the Committee reported bill
that permits a temporary continuance of satellite transmission
of distant network signals for existing subscribers within the
Grade A contour. This compromise, which permits the
transmission of those signals until December 31, 1999, would
permit consumers to receive signals temporarily while the FCC
develops an orderly and fair waiver process so that citizens
who cannot in fact receive their local broadcast stations may
legally receive distant network signals. This compromise also
appropriately provides a date certain for termination of the
transmission of distant network signals to served customers
within the Grade A contour in recognition of the overwhelming
likelihood that the transmission of such signals is in fact
illegal.
While we favor these significant and constructive changes in
the law, we opposed one significant aspect of the substitute
amendment approved during the Committee's consideration of S.
303 for the simple reason that it ignores the legal framework
that governs the relationship between local broadcasters,
satellite providers, and customers. Under SHVA, satellite
companies, through the use of a copyright compulsory license,
can deliver distant network signals to unserved households.
Satellite providers are not permitted under SHVA to provide
distant network signals to served households. Under the
approach adopted by the Commerce Committee, however, existing
satellite subscribers who reside between the Grade A and Grade
B contour lines, and who qualify as served customers, may
continue to receive their distant network signals indefinitely.
Such an approach cannot be justified simply by its proponents'
unsupported contention that all DBS subscribers purchased their
satellite service in good faith. Nor is the sanctioning of such
illegality supported by the argument, voiced in the Majority
views, that ``local broadcasters have not been able to show
that they are suffering any substantial harm as a result'' of
the illegal transmission of distant network signals within the
Grade B contour. Laws are often broken ``in good faith''
without causing ``substantial harm,'' but the U.S. Congress
does not normally sanction such illegal activity. Moreover,
when Congress has allowed conduct to be grandfathered in the
past, our actions were premised on a change in the law that
necessitated protecting prior legal behavior. The grandfather
provision approved by this Committee, however, protects the
prior illegal behavior of the satellite providers.
We also note with interest the fact that the permanent
grandfather approach goes well beyond a settlement that was
recently agreed to by representatives of the broadcast and
satellite industries. The settlement terminates, for over 2
million consumers, the delivery of distant network signals into
the Grade B contour at the end of this year. Finally,
permitting the permanent transmission of distant network
signals within the Grade B contour completely ignores the legal
rules governing the satellite industry--as set forth in the
Satellite Home Viewer Act and interpreted in recent federal
district court opinions--that prohibit the sending of such
signals to served households.
Perhaps in recognition of its significant departure from
governing statutory and federal court authority, the
legislation does attempt to address the adverse impact it could
have on the many local broadcasters whose markets include
thousands of customers within the Grade B contour.
Specifically, the legislation requires the FCC to determine
whether to apply program exclusivity rules to distant network
stations' signals that are provided to existing subscribers
residing between the Grade A and Grade B contours. The
legislation directs the FCC, however, not to apply such program
exclusivity rules unless it finds that it would ``be both
technically and economically feasible and otherwise in the
public interest to do so.''
The trouble with this approach is multifaceted. First, the
FCC may determine that the application of exclusivity rules to
distant network signals is in fact warranted. In that event,
subscribers who would at first be grandfathered under the bill
could subsequently have their distant network programming
blacked out to a significant degree. Such a result would place
Congress in a posture similar to that in which it finds itself
today--inundated with thousands of consumer complaints that
satellite network signals are being terminated. Although we
recognize the importance of exclusivity rules in protecting
local broadcasters from the transmission of distant network
signals into their markets, we cannot agree with an approach
that could place us unnecessarily in the cross hairs of
thousands of angry constituents yet again.
Moreover, the legislation reported by the Committee grants
the FCC the discretion to refrain from applying program
exclusivity rules even if such application might protect local
broadcasters from the entrance of distant network signals into
their local market. Indeed, the FCC could decide not to apply
exclusivity rules at all under the legislation as it stands
today. Such a determination by the FCC, however, would result
in the permanent grandfathering of the illegal transmission of
distant network signals--an outcome that this Congress should
not endorse.
What makes the approach taken in this legislation all the
more imponderous, is its alleged distinction between illegal
behavior involving Grade A satellite subscribers and illegal
behavior involving Grade B subscribers. With respect to the
satellite carriers' transmission of distant network signals to
Grade A subscribers, the legislation requires that the illegal
transmission should be terminated by a date certain. Yet, with
respect to served subscribers residing between the Grade A and
Grade B contours, the legislation could legalize the
transmission of distant network signals.
We simply cannot support that approach as the best means for
helping consumers who may otherwise have had their network
signals terminated. Instead, we advocated an alternative during
the Committee's consideration of the legislation that we
thought provided a better balance in addressing the competing
concerns of satellite providers, broadcasters, and consumers.
That alternative would have permitted subscribers between the
outlines of the Grade A and B contours to continue to receive
distant network signals by satellite--regardless of whether
they are considered served or unserved--until December 31,
1999. During this grace period, the FCC would have been
required to develop a fair and orderly waiver process so that
consumers who could not receive local signals would be granted
a prompt waiver to permit the delivery of distant network
signals by satellite.
Those subscribers deemed to be served under the refined
Individual Location Longely-Rice (ILLR) methodology would have
their signals terminated as of December 31, 1999. Well before
this date, they would receive ample notice of such termination,
and their DBS provider would have a significant incentive to
retain them as customers. Therefore, they would likely inform
subscribers about obtaining over-the-air antennas. Customers
deemed to be unserved under the new ILLR model would be
permitted to continue to receive their distant network signals
after the December 31, 1999, cutoff date.
While our approach provides a date certain for termination of
illegally transmitted network signals, it also gives the
satellite consumer the proverbial three bites at the apple.
First, the utilization of the revised ILLR predictive model
will more accurately determine which customers are likely to be
able to receive their local network programming over the air.
Those deemed unable to receive such programming would be able
to continue to receive distant network signals via satellite.
Second, those customers who are deemed served by the new model,
but who cannot in fact receive clear signals from their local
broadcasters, would be afforded access to an orderly waiver
process through which they could continue to receive network
programming through their satellite provider. Finally, if the
request for a waiver is denied, the customer could request
testing (to be paid for by industry) at the home to provide a
more accurate determination of his or her ability to receive
local broadcast signals. This alternative approach provides
ample opportunity for consumers who truly cannot receive their
local network stations to continue to receive distant network
signals. In contrast, the approach approved by the Commerce
Committee would either: permanently grandfather the illegal
transmission of distant network signals by satellite providers;
or facilitate the blacking out of such signals through the
imposition of exclusivity rules by the FCC.
In offering these dissenting views, we do not wish to suggest
that Congress ignore the necessity for a federal solution to
two important problems: (1) the absence of a viable,
sustainable competitor to cable in the multichannel video
programming marketplace; and (2) the need for a national
solution to the ongoing fight between satellite providers and
broadcasters over consumers receiving network programming. If
these problems remain unaddressed, the multichannel video
programming consumer will continue to suffer as cable rates
rise and further litigation threatens additional terminations
of network programming transmitted by satellites. The agreement
on the need to address these problems in the immediate future
provided the justification for the Committee to report S. 303
favorably. The disagreement as to how to help customers who may
have their network programming terminated in the future
required the filing of these minority views.
Max Cleland.
John Kerry.
Ernest Hollings.
Ted Stevens.
