[Federal Register: October 31, 2007 (Volume 72, Number 210)]
[Proposed Rules]
[Page 61590-61603]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr31oc07-33]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 76
[MB Docket No. 07-198; FCC 07-169]
Review of the Commission's Program Access Rules and Examination
of Programming Tying Arrangements
AGENCY: Federal Communications Commission.
ACTION: Proposed rule.
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SUMMARY: In this document, the Commission seeks comment on revisions to
the Commission's program access and retransmission consent rules and
whether it may be appropriate to preclude the practice of programmers
to tie desired programming with undesired programming. In the NPRM, the
Commission also seeks comment on whether to revise its procedures for
resolving program access complaints.
DATES: Comments for this proceeding are due on or before November 30,
2007; reply comments are due on or before December 17, 2007. Written
comments on the Paperwork Reduction Act proposed information collection
requirements must be submitted by the public, Office of Management and
Budget (OMB), and other interested parties on or before December 31,
2007.
ADDRESSES: You may submit comments, identified by MB Docket No. 07-198,
by any of the following methods:
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
Federal Communications Commission's Web site: http://www.fcc.gov/cgb/ecfs/.
Follow the instructions for submitting comments.
People with Disabilities: Contact the FCC to request
reasonable accommodations (accessible format documents, sign language
interpreters, CART, etc.) by e-mail: FCC504@fcc.gov or phone: 202-418-
0530 or TTY: 202-418-0432.
For detailed instructions for submitting comments and additional
information on the rulemaking process, see the SUPPLEMENTARY
INFORMATION section of this document.
FOR FURTHER INFORMATION CONTACT: For additional information on this
proceeding, contact Steven Broeckaert, Steven.Broeckaert@fcc.gov; David
Konczal,
David.Konczal@fcc.gov; or Katie Costello, Katie.Costello@fcc.gov; of the Media Bureau, Policy Division, (202)
418-2120. For additional information concerning the Paperwork Reduction
Act information collection requirements contained in this document,
contact
[[Page 61591]]
Cathy Williams at 202-418-2918, or via the Internet at PRA@fcc.gov.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Notice
of Proposed Rulemaking (NPRM), MB Docket No. 07-198, FCC 07-169,
adopted on September 11, 2007, and released on October 1, 2007. The
full text of this document is available for public inspection and
copying during regular business hours in the FCC Reference Center,
Federal Communications Commission, 445 12th Street, SW., CY-A257,
Washington, DC 20554. This document will also be available via ECFS
(http://www.fcc.gov/cgb/ecfs/). (Documents will be available
electronically in ASCII, Word 97, and/or Adobe Acrobat.) The complete
text may be purchased from the Commission's copy contractor, 445 12th
Street, SW., Room CY-B402, Washington, DC 20554. To request this
document in accessible formats (computer diskettes, large print, audio
recording, and Braille), send an e-mail to fcc504@fcc.gov or call the
Commission's Consumer and Governmental Affairs Bureau at (202) 418-0530
(voice), (202) 418-0432 (TTY).
In addition to filing comments with the Office of the Secretary, a
copy of any comments on the Paperwork Reduction Act proposed
information collection requirements contained herein should be
submitted to Cathy Williams, Federal Communications Commission, 445
12th St., SW., Room 1-C823, Washington, DC 20554, or via the Internet
at PRA@fcc.gov; and also to Nicholas A. Fraser of the Office of
Management and Budget (OMB), via Internet at
Nicholas_A._Fraser@omb.eop.gov or via fax at (202) 395-5167.
Initial Paperwork Reduction Act of 1995 Analysis
This document contains proposed information collection
requirements. The Commission, as part of its continuing effort to
reduce paperwork burdens, invites the general public and the Office of
Management and Budget (OMB) to comment on the information collection
requirements contained in this document, as required by the Paperwork
Reduction Act of 1995, Public Law 104-13. Public and agency comments
are due December 31, 2007. Comments should address: (a) Whether the
proposed collection of information is necessary for the proper
performance of the functions of the Commission, including whether the
information shall have practical utility; (b) the accuracy of the
Commission's burden estimates; (c) ways to enhance the quality,
utility, and clarity of the information collected; and (d) ways to
minimize the burden of the collection of information on the
respondents, including the use of automated collection techniques or
other forms of information technology. In addition, pursuant to the
Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44
U.S.C. 3506(c)(4), we seek specific comment on how we might ``further
reduce the information collection burden for small business concerns
with fewer than 25 employees.''
To view a copy of this information collection request (ICR)
submitted to OMB: (1) Go to the Web page http://www.reginfo.gov/public/do/PRAMain
, (2) look for the section of the Web page called ``Currently
Under Review,'' (3) click on the downward-pointing arrow in the
``Select Agency'' box below the ``Currently Under Review'' heading, (4)
select ``Federal Communications Commission'' from the list of agencies
presented in the ``Select Agency'' box, (5) click the ``Submit'' button
to the right of the ``Select Agency'' box, (6) when the list of FCC
ICRs currently under review appears, look for the title of this ICR (or
its OMB control number, if there is one) and then click on the ICR
Reference Number to view detailed information about this ICR.
OMB Number: 3060-0888.
Title: Section 76.7, Petition Procedures; Sec. 76.9,
Confidentiality Of Proprietary Information; Sec. 76.61, Dispute
Concerning Carriage; Sec. 76.914, Revocation Of Certification; Sec.
76.1003, Program Access Proceedings; Sec. 76.1302, Carriage Agreement
Proceedings; Sec. 76.1513, Open Video Dispute Resolution.
Form Number: N/A.
Type of Review: Revision of a currently approved collection.
Respondents: Businesses or other for-profit entities.
Number of Respondents: 600.
Estimated Time per Response: 4 to 60 hours.
Frequency of Response: On occasion reporting requirement; Third
party disclosure requirement.
Total Annual Burden: 19,200 hours.
Total Annual Costs: $240,000.
Nature of Response: Required to obtain or retain benefits.
Nature and Extent of Confidentiality: A party that wishes to have
confidentiality for proprietary information with respect to a
submission it is making to the Commission must file a petition pursuant
to the pleading requirements in Sec. 76.7 and use the method described
in Sec. Sec. 0.459 and 76.9 to demonstrate that confidentiality is
warranted.
Privacy Act Impact Assessment: None.
Needs and Uses: On September 11, 2007, the Commission adopted a
Report and Order and a Notice of Proposed Rulemaking In the Matter of
Implementation of the Cable Television Consumer Protection and
Competition Act of 1992--Development of Competition and Diversity in
Video Programming Distribution: Section 628(c)(5) of the Communications
Act: Sunset of Exclusive Contract Prohibition; Review of the
Commission's Program Access Rules and Examination of Programming Tying
Arrangements, MB Docket Nos. 07-29, 07-198, FCC 07-169. Section 628 of
the Communications Act proscribes a cable operator, a satellite cable
programming vendor in which a cable operator has an attributable
interest, or a satellite broadcast programming vendor from engaging in
unfair methods of competition and deceptive practices and directs the
Commission to, among other things, prescribe regulations to provide for
an expedited Commission review of any complaints made under this
section. Section 76.1003 contains the Commission's procedural rules for
resolving these program access complaints. The new proposed rules to
this information collection are 47 CFR 76.1003(e)(1) and 47 CFR
76.1003(j). Therefore, the rules for this information collection are as
follows:
47 CFR 76.1003(e)(1) requires a cable operator, satellite cable
programming vendor, or satellite broadcast programming vendor that
expressly references and relies upon a document in asserting a defense
to a program access complaint filed pursuant to Sec. 76.1003 or in
responding to a material allegation in a program access complaint filed
pursuant to Sec. 76.1003, to include such document or documents as
part of the answer.
47 CFR 76.1003(j) states in addition to the general pleading and
discovery rules contained in Sec. 76.7 of this part, parties to a
program access complaint may serve requests for discovery directly on
opposing parties, and file a copy of the request with the Commission.
The respondent shall have the opportunity to object to any request for
documents that are not in its control or relevant to the dispute. Such
request shall be heard, and determination made, by the Commission.
Until the objection is ruled upon, the obligation to produce the
disputed material is suspended. Any party who fails to timely provide
discovery requested by the opposing party to which it has not raised an
objection as described above, or who fails to respond to a Commission
order
[[Page 61592]]
for discovery material, may be deemed in default and an order may be
entered in accordance with the allegations contained in the complaint,
or the complaint may be dismissed with prejudice. This proposed rule
would add a new universe of filers to this information collection and
OMB approval is needed.
47 CFR Section 76.7. Pleadings seeking to initiate FCC action must
adhere to the requirements of Sec. 76.6 (general pleading
requirements) and Sec. 76.7 (initiating pleading requirements).
Section 76.7 is used for numerous types of petitions and special relief
petitions, including general petitions seeking special relief, waivers,
enforcement, show cause, forfeiture and declaratory ruling procedures.
47 CFR 76.9. A party that wishes to have confidentiality for
proprietary information with respect to a submission it is making to
the FCC must file a petition pursuant to the pleading requirements in
Sec. 76.7 and use the method described in Sec. Sec. 0.459 and 76.9 to
demonstrate that confidentiality is warranted. The petitions filed
pursuant to this provision are contained in the existing information
collection requirement and are not changed by the proposed rule
changes.
47 CFR 76.61. Section 76.61(a) permits a local commercial
television station or qualified low power television station that is
denied carriage or channel positioning or repositioning in accordance
with the must-carry rules by a cable operator to file a complaint with
the FCC in accordance with the procedures set forth in Sec. 76.7.
Section 76.61(b) permits a qualified local noncommercial educational
television station that believes a cable operator has failed to comply
with the FCC's signal carriage or channel positioning requirements
(Sec. Sec. 76.56 through 76.57) to file a complaint with the FCC in
accordance with the procedures set forth in Sec. 76.7.
47 CFR 76.914. Section 76.914(c) permits a cable operator seeking
revocation of a franchising authority's certification to file a
petition with the FCC in accordance with the procedures set forth in
Sec. 76.7.
47 CFR 76.1003. Section 76.1003(a) permits any multichannel video
programming distributor aggrieved by conduct that it believes
constitutes a violation of the FCC's competitive access to cable
programming rules to commence an adjudicatory proceeding at the FCC to
obtain enforcement of the rules through the filing of a complaint,
which must be filed and responded to in accordance with the procedures
specified in Sec. 76.7, except to the extent such procedures are
modified by Sec. 76.1003.
47 CFR 76.1302. Section 76.1302(a) permits any video programming
vendor or multichannel video programming distributor aggrieved by
conduct that it believes constitutes a violation of the FCC's
regulation of carriage agreements to commence an adjudicatory
proceeding at the FCC to obtain enforcement of the rules through the
filing of a complaint, which must be filed and responded to in
accordance with the procedures specified in Sec. 76.7, except to the
extent such procedures are modified by Sec. 76.1302.
47 CFR 76.1513. Section 76.1513(a) permits any party aggrieved by
conduct that it believes constitutes a violation of the FCC's
regulations or in section 653 of the Communications Act (47 U.S.C. 573)
to commence an adjudicatory proceeding at the Commission to obtain
enforcement of the rules through the filing of a complaint, which must
be filed and responded to in accordance with the procedures specified
in Sec. 76.7, except to the extent such procedures are modified by
Sec. 76.1513.
Summary of Notice of Proposed Rulemaking
I. Procedure for Shortening Term of Extension of Exclusive Contract
Prohibition
1. In light of the five-year extension of the exclusivity ban in
Sec. 76.1002(c)(6) adopted in the Report and Order in MB Docket No.
07-29 on September 11, 2007 (72 FR 56645, October 4, 2007), the
Commission seeks comment on whether it can establish a procedure that
would shorten the term of the extension if, after two years (i.e.,
October 5, 2009) a cable operator can show competition from new entrant
MVPDs has reached a certain penetration level in the DMA. We seek
comment on what this penetration level should be. And, we seek comment
on whether two years or some other time frame is the appropriate period
of time. Finally, we ask parties to comment on whether a market-by-
market analysis is appropriate as both a legal and policy matter.
II. Extending Program Access Rules to Terrestrially Delivered Cable-
Affiliated Programming
2. In comments on the Notice of Proposed Rulemaking in MB Docket
No. 07-29 (72 FR 9289, March 1, 2007), competitive MVPDs provided
various examples of withholding of terrestrially delivered cable-
affiliated programming. Moreover, in the Report and Order, we note the
Commission's previous findings that in two instances--Philadelphia and
San Diego--withholding of terrestrially delivered cable-affiliated
programming has had a material adverse impact on competition in the
video distribution market. As discussed in the Report and Order,
however, the Commission has previously concluded that terrestrially
delivered programming is ``outside of the direct coverage'' of the
exclusive contract prohibition in section 628(c)(2)(D). In the Report
and Order, we state our continued view that the plain language of the
definitions of ``satellite cable programming'' and ``satellite
broadcast programming'' as well as the legislative history of the 1992
Cable Act place terrestrially delivered programming beyond the scope of
section 628(c)(2)(D). Commenters, however, cite various other
provisions of the Communications Act as providing the Commission with
statutory authority to extend the program access rules, including an
exclusive contract prohibition, to terrestrially delivered cable-
affiliated programming, such as sections 4(i), 201(b), 303(r), 601(6),
612(g), 616(a), 628(b), and 706.
3. As demonstrated by the examples of withholding of regional
sports networks (RSNs) in San Diego and Philadelphia, we believe that
withholding of terrestrially delivered cable-affiliated programming is
a significant concern that can adversely impact competition in the
video distribution market. To address this concern, we seek comment on
whether it would be appropriate to extend our program access rules to
all terrestrially delivered cable-affiliated programming pursuant to
sections 4(i), 201(b), 303(r), 601(6), 612(g), 616(a), 628(b), or 706,
or any other provision under the Communications Act. See 47 U.S.C.
154(i); 47 U.S.C. 201(b); 47 U.S.C. 303(r); 47 U.S.C. 521(6); 47 U.S.C.
532(g); 47 U.S.C. 536(a); 47 U.S.C. 548(b); 47 U.S.C. 157 nt. In
particular, we note our previous conclusion that the ability to offer a
viable video service is ``linked intrinsically'' to broadband
deployment. See Local Franchising Report and Order, 72 FR 13189, March
21, 2007. We seek comment on whether the ability to offer terrestrially
delivered cable-affiliated programming is needed to offer a viable
video service and, accordingly, whether extending the program access
rules, including the prohibition on exclusive contracts, to
terrestrially delivered cable-affiliated programming would promote the
goal of section 706 to facilitate broadband deployment. In addition, we
note that the plain language of section 628(b), like
[[Page 61593]]
section 628(c)(2)(D), specifies ``satellite cable programming'' and
``satellite broadcast programming.'' See 47 U.S.C. 548(b);
548(c)(2)(D). We seek comment regarding whether we have the authority
to extend our program access rules to all terrestrially delivered
cable-affiliated programming by way of statutory provisions granting
general authority to the Commission, in light of the specific authority
in section 628 that limits their scope to satellite programming.
4. We also seek comment on the extent to which cable operators are
shifting delivery of affiliated programming from satellite delivery to
terrestrial delivery and whether such action is intended to evade the
program access rules. We note Verizon's claim that Cablevision's
programming subsidiary, Rainbow, has made standard definition feeds of
its RSNs available by satellite, but High Definition (HD) feeds
available terrestrially, thereby avoiding the program access rules,
including the exclusive contract prohibition, for HD feeds. We seek
comment on whether the program access rules should apply to all feeds
of the same programming, including both standard and HD feeds,
regardless of whether one feed is delivered terrestrially. We also seek
comment on whether shifting the HD feed of vertically integrated cable
programming to terrestrial delivery is an unfair method of competition
or an unfair or deceptive act in violation of section 628(b) of the
Communications Act. 47 U.S.C. 548(b). The Commission has stated ``there
may be circumstances where moving programming from satellite to
terrestrial delivery could be cognizable under section 628(b) as an
unfair method of competition or deceptive practice if it precluded
competitive MVPDs from providing satellite cable programming.''
III. Expanding the Exclusive Contract Prohibition to Non-Cable-
Affiliated Programming
5. We also seek comment on whether to expand the exclusive contract
prohibition to apply to non-cable-affiliated programming that is
affiliated with a different MVPD, principally a DBS provider. As
discussed above, to the extent that an MVPD meets the definition of a
``cable operator'' under the Communications Act, the exclusive contract
prohibition in section 628(c)(2)(D) already applies to its affiliated
programming. Moreover, as noted above, section 628(j) of the
Communications Act provides that any provision of section 628,
including the exclusive contract prohibition in section 628(c)(2)(D),
that applies to a cable operator also applies to any common carrier or
its affiliate that provides video programming. 47 U.S.C. 548(j).
Programming affiliated with other MVPDs, such as DBS providers, is
beyond the scope of the exclusive contract prohibition in section
628(c)(2)(D). We seek comment on whether to extend the exclusive
contract prohibition to non-cable-affiliated programming that is
affiliated with a different MVPD, principally a DBS provider, pursuant
to sections 4(i), 201(b), 303(r), 601(6), 612(g), 616(a), 628(b), or
706, or any other provision under the Communications Act.
IV. Tying of Desired Programming With Undesired Programming
6. Small and rural cable operators and other MVPDs have raised
concerns regarding tying of MVPDs' rights to carry broadcast stations
with carriage of other owned or affiliated broadcast stations in the
same or a distant market or one or more affiliated non-broadcast
network. For example, in 2002, the American Cable Association (ACA),
representing small cable operators, filed a Petition for Inquiry
stating that broadcast networks and station groups engage in unfair
retransmission tying arrangements. See American Cable Association's
Petition for Inquiry into Retransmission Consent Practices (filed
October 1, 2002) (ACA 2002 Petition). ACA explains that tying harms
small cable operators and their consumers by increasing the costs of
basic cable and reducing program choices. Small and rural cable
operators and other MVPDs, in addition to recent program access
complainants, have also raised concerns regarding the practice of
programmers to tie marquee programming, such as premium channels or
regional sports programming, with unwanted, or less desirable,
programming. For example, in their comments on the Notice of Proposed
Rulemaking in MB Docket No. 07-29, OPASTCO/ITAA, representing small and
rural MVPDs, cites the practice of programmers to require carriage of
less popular programming in specified (usually basic) tiers in return
for the right to carry popular programming as an onerous and
unreasonable condition that denies consumers choice and impedes entry
into the MVPD market.
7. When programming is available for purchase only through
programmer-controlled packages that include both desired and undesired
programming, MVPDs face two choices. First, the MVPD can refuse the
tying arrangement, thereby potentially depriving itself of desired, and
often economically vital, programming that subscribers demand and which
may be essential to attracting and retaining subscribers. Second, the
MVPD can agree to the tying arrangement, thereby incurring costs for
programming that its subscribers do not demand and may not want, with
such costs being passed on to subscribers in the form of higher rates,
and also forcing the MVPD to allocate channel capacity for the unwanted
programming in place of programming that its subscribers prefer. In
either case, the MVPD and its subscribers are harmed by the refusal of
the programmer to offer each of its programming services on a stand-
alone basis. We note that the competitive harm and adverse impact on
consumers would be the same regardless of whether the programmer is
affiliated with a cable operator or a broadcaster or is affiliated with
neither a cable operator nor a broadcaster, such as networks affiliated
with a non-cable MVPD or a non-affiliated independent network.
Moreover, we note that small cable operators and MVPDs are particularly
vulnerable to such tying arrangements because they do not have leverage
in negotiations for programming due to their smaller subscriber bases.
As discussed in more detail below, we seek comment on these various
types of tying arrangements. Given the problems associated with such
tying arrangements, we seek comment on whether it may be appropriate
for the Commission to preclude them. We also seek comment on the extent
to which these disparities in bargaining power are the result of media
consolidation, and, if so, what steps the Commission can and should
take to redress the imbalance.
8. Tying of Broadcast Programming. We seek comment on the tying of
MVPDs' rights to carry broadcast stations with carriage of other owned
or affiliated broadcast stations in the same or a distant market or one
or more affiliated non-broadcast networks. Section 325(b)(3)(C) of the
Communications Act obligates broadcasters and multichannel video
programming distributors to negotiate retransmission consent agreements
in good faith. 47 U.S.C. 325(b)(3)(C). Specifically, the Commission
must establish regulations that:
Until January 1, 2010, prohibit a television broadcast station
that provides retransmission consent from engaging in exclusive
contracts for carriage or failing to negotiate in good faith, and it
shall not be a failure to negotiate in good faith if the television
broadcast station enters into retransmission consent agreements
containing different terms and conditions, including price terms,
with different multichannel video programming distributors if such
different terms and
[[Page 61594]]
conditions are based on competitive marketplace considerations. 47
U.S.C. 325(b)(3)(C)(ii).
Pursuant to the Satellite Home Viewer Extension and Reauthorization
Act of 2004 (SHVERA), Congress extended 47 U.S.C. 325(b)(3)(C) until
2010 and amended that section to impose a reciprocal good faith
retransmission consent bargaining obligation on MVPDs. The Commission
adopted rules implementing section 207 of SHVERA. See Reciprocal
Bargaining Order, 70 FR 40216, July 13, 2005.
9. In its Good Faith Order, the Commission adopted rules
implementing the good faith negotiation provisions and the complaint
procedures for alleged rule violations. See Good Faith Order, 68 FR
52127, September 2, 2003. The Good Faith Order adopted a two-part test
for good faith. The first part of the test consists of a brief,
objective list of negotiations standards. First, a broadcaster may not
refuse to negotiate with an MVPD regarding retransmission consent.
Second, a broadcaster must appoint a negotiating representative with
authority to bargain on retransmission consent issues. Third, a
broadcaster must agree to meet at reasonable times and locations and
cannot act in a manner that would unduly delay the course of
negotiations. Fourth, a broadcaster may not put forth a single,
unilateral proposal. Fifth, a broadcaster, in responding to an offer
proposed by an MVPD, must provide considered reasons for rejecting any
aspects of the MVPD's offer. Sixth, a broadcaster is prohibited from
entering into an agreement with any party conditioned upon denying
retransmission consent to any MVPD. Finally, a broadcaster must agree
to execute a written retransmission consent agreement that sets forth
the full agreement between the broadcaster and the MVPD. The second
part of the good faith test is based on a totality of the circumstances
standard.
10. The Commission has held that ``[r]efusal by a Negotiating
Entity to put forth more than a single, unilateral proposal'' is a per
se violation of a broadcast licensee's good faith obligation. See 47
CFR 76.65(b)(1)(iv). The Commission has also indicated that such
requirement is not limited to monetary considerations, but also applies
to situations where a broadcaster is unyielding in its insistence upon
carriage of a secondary programming service undesired by the cable
operator as a condition of granting its retransmission consent:
``Take it or leave it'' bargaining is not consistent with an
affirmative obligation to negotiate in good faith. For example, a
broadcaster might initially propose that, in exchange for carriage
of its signal, an MVPD carry a cable channel owned by, or affiliated
with, the broadcaster. The MVPD might reject such offer on the
reasonable grounds that it has no vacant channel capacity and
request to compensate the broadcaster in some other way. Good faith
negotiation requires that the broadcaster at least consider some
form of consideration other than carriage of affiliated programming.
This standard does not, in any way, require a broadcaster to reduce
the amount of consideration it desires for carriage of its signal.
This standard only requires that the broadcaster be open to
discussing more than one form of consideration in seeking
compensation for retransmission of its signal by MVPDs.
11. As discussed above, ACA in 2002 filed a Petition for Inquiry
regarding the Commission's retransmission consent rules. See ACA 2002
Petition. This petition will be placed in the record of this
proceeding. ACA's Petition raises concerns about broadcasters' alleged
abuse of the retransmission consent process. ACA asserts that broadcast
networks and station groups engage in unfair retransmission tying
arrangements. ACA asserts that small cable operators have minimal
bargaining power during negotiations and are targets for abuse because
of their lack of resources to file complaints and engage in disputes.
We note that its Retransmission Consent and Exclusivity Rules: Report
to Congress Pursuant to Section 208 of the Satellite Home Viewer
Extension and Reauthorization Act of 2004 (September 8, 2005)
(available at http://www.fcc.gov/mb/policy/shvera.html), the Commission
addressed the tying issue. The Commission noted ``cable operators'
widespread concern that retransmission consent negotiations frequently
involve broadcasters tying carriage of their signals to numerous
affiliated non-broadcast programming networks.'' The Report noted that
``since the Commission's decision to deny broadcasters the ability to
assert dual and multicast must carry, broadcasters have begun using
their retransmission consent negotiations to negotiate carriage of
their digital signals, thus furthering the digital transition by
increasing the number of households with access to digital signals. If
broadcasters are limited in their ability to accept in-kind
compensation, they should be granted full carriage rights for digital
signals, including all free over-the-air digital multicast streams.
Should Congress consider proposals circumscribing retransmission
consent compensation, we encouraged review of related rules and
policies to maintain proper balance.''
12. We seek comment on the current status of carriage negotiations
in today's marketplace. We seek comment on whether broadcasters are
tying carriage of their broadcast signals to carriage of other owned or
affiliated broadcast stations in the same or a distant market or one or
more affiliated non-broadcast networks and, if so, how retransmission
consent negotiations are impacted. We ask if broadcast networks and
station groups engage in retransmission consent tying arrangements that
result in harm to small cable operators and their customers. We ask if
the Commission's good faith negotiation regulations provide enough
protection for small cable operators and small broadcasters in the
negotiation process, taking into account the administrative burdens and
costs of engaging in a contested case before the Commission. We seek
comment on whether and how the Commission's good faith negotiation
regulations should be modified to address these concerns. Also, we ask
what the effect of any modifications would be on the economic
underpinnings of broadcast-affiliated programmers.
13. We also seek comment on whether the Commission has the
jurisdiction to preclude tying arrangements by broadcasters, without
modification of the retransmission consent regime by Congress. The
legislative history of section 325 addresses the right of broadcasters
to seek carriage of additional channels as part of retransmission
consent transactions: ``Other broadcasters may not seek monetary
compensation, but instead negotiate other issues with cable systems,
such as joint marketing efforts, the opportunity to provide news
inserts on cable channels, or the right to program an additional
channel on a cable system. It is the Committee's intention to establish
a marketplace for the disposition of the rights to retransmit broadcast
signals; it is not the Committee's intention in this bill to dictate
the outcome of the ensuing marketplace negotiations.'' Congress
appeared to contemplate carriage of broadcast-affiliated cable channels
as part of legitimate retransmission consent negotiations.
14. In addition, we seek comment regarding whether there are
grounds for the Commission to depart from prior holdings that permitted
broadcasters to negotiate the carriage of affiliated channels as part
of retransmission consent negotiations. The Commission has stated that
examples of bargaining proposals ``presumptively * * * consistent with
competitive marketplace considerations and the good faith
[[Page 61595]]
negotiation requirement'' include ``proposals for carriage conditioned
on carriage of any other programming, such as a broadcaster's digital
signals, an affiliated cable programming service, or another broadcast
station either in the same or a different market.'' See Implementation
of the Satellite Home Viewer Improvement Act of 1999, 65 FR 15559,
March 23, 2000. We held that such a proposal contains ``presumptively
legitimate terms and conditions or forms of consideration'' and found
nothing to suggest that such a request is ``impermissible'' or anything
``other than a competitive marketplace consideration.'' In 2001, the
Commission considered but refused to adopt rules specifically
prohibiting tying arrangements. See Carriage of Digital Television
Broadcast Signals, 66 FR 16533, March 26, 2001. The Commission
concluded that such arrangements are permitted, but stated it would
continue to monitor the situation with respect to potential
anticompetitive conduct by broadcasters. We seek comment on whether
market circumstances and industry practices have changed to warrant a
different conclusion.
15. Lastly, we ask whether Commission action to preclude tying
arrangements is consistent with the First Amendment. On the one hand,
it could be argued that restricting such arrangements infringes the
right of broadcasters to express a message by packaging together
certain content. On the other hand, we note that the Supreme Court has
observed that ``the programming offered on various channels'' by video
distributors consists of ``individual, unrelated segments that happen
to be transmitted together for individual selection by members of the
audience.'' Unlike newspapers and magazines, the Court suggested that
these segments do not ``contribute something to a common theme''
expressed by the distributor to its subscribers.
16. Tying of Satellite Cable Programming. Small and rural MVPDs as
well as program access complainants have asserted that tying practices
by satellite cable programmers constitute ``unfair methods of
competition or unfair or deceptive acts or practices, the purpose or
effect of which is to hinder significantly or to prevent any [MVPD]
from providing satellite cable programming * * * to subscribers or
consumers'' in violation of section 628(b) of the Communications Act.
47 U.S.C. 548(b). At the time of the First Report and Order, 58 FR
27658, May 11, 1993, the Commission declined to adopt specific rules
under section 628(b) to address tying, while clearly reserving the
right to do so if necessary:
Neither the record of this proceeding nor the legislative
history offer much insight into the types of practices that might
constitute a violation of the statute with respect to the
unspecified ``unfair practices'' prohibited by section 628(b) * * *
The objectives of the provision, however, are clearly to provide a
mechanism for addressing those types of conduct, primarily
associated with horizontal and vertical concentration within the
cable and satellite cable programming field, that inhibit the
development of multichannel video distribution competition.
* * * * *
Thus, although the types of conduct more specifically referenced
in the statute, i.e., exclusive contracting, undue influence among
affiliates, and discriminatory sales practices, appear to be the
primary areas of congressional concern, section 628(b) is a clear
repository of Commission jurisdiction to adopt additional rules or
to take additional actions to accomplish the statutory objectives
should additional types of conduct emerge as barriers to competition
and obstacles to broader distribution of satellite cable * * *
programming.
17. We seek comment on the current status of carriage negotiations
in today's marketplace. We seek comment on whether satellite cable
programmers are tying carriage of their desirable channels to carriage
of other less desirable owned or affiliated channels. We ask whether
and how such tying arrangements affect small cable operators and their
customers. We seek comment on whether ``take-it-or-leave-it'' tying
arrangements (i.e., where the purchase of desired programming is
conditioned on the purchase of undesired programming) without any
alternative offer to provide the programming on a stand-alone basis are
prevalent in the industry; and if so, whether such an arrangement is a
violation of section 628(b). As discussed above, in such situations,
MVPDs are victims of an unfair method of competition that hinders
significantly or prevents MVPDs from providing satellite cable
programming to subscribers.
18. We also seek comment on whether the Commission has the
jurisdiction to preclude tying arrangements by satellite cable
programmers under section 628(b) or any other statutory authority. We
seek comment on whether section 628(b) requires satellite cable
programmers to offer each of their programming services on a stand-
alone basis to all MVPDs at reasonable rates, terms, and conditions.
Moreover, to the extent that we decide in this proceeding to extend the
Commission's program access rules to terrestrially delivered cable-
affiliated programming networks, we seek comment on whether we should
also require terrestrially delivered cable-affiliated programming
networks to be offered on a stand-alone basis to all MVPDs at
reasonable rates, terms, and conditions. Lastly, we ask whether
Commission action to preclude tying arrangements by satellite cable
programmers is consistent with the First Amendment.
19. Tying of Other Programming. We also seek comment on whether we
have the jurisdiction or authority to require networks that are
affiliated with neither a cable operator nor a broadcaster, such as
networks affiliated with a non-cable MVPD or a non-affiliated
independent network, to be offered on a stand-alone basis to all MVPDs
at reasonable rates, terms, and conditions. We seek comment on the
extent to which such programming networks have engaged in unfair tying
practices or other abusive practices that would require regulatory
intervention. We seek comment on whether it would be appropriate to
regulate these programming networks in such a manner pursuant to
sections 4(i), 201(b), 303(r), 601(6), 612(g), 616(a), and 706, or any
other provision under the Communications Act.
V. Program Access Concerns Raised by Small and Rural MVPDs
20. As discussed above, small and rural MVPDs raise additional
issues in their comments regarding obstacles they face in trying to
obtain access to programming. They ask the Commission to examine
various conditions they describe as onerous and unreasonable, which
they allege are imposed by programmers on small and rural MVPDs for
access to content, including restrictions on the use of shared headends
for receiving content. NTCA and OPASTCO/ITTA claim that use of a shared
headend is an economical means for multiple rural MVPDs to provide
video service in a high-cost area, but that programmers have expressed
concern with the potential for the use of shared headends to result in
unauthorized reception of programming. NTCA states that while shared
headend providers are currently negotiating with content providers to
resolve these issues, it is concerned that rural consumers served by
shared headends may lose access to programming if these negotiations
fail. In addition to the issue of shared headends, small and rural
MVPDs ask the Commission to examine other conditions imposed by
programmers, including (i) requiring MVPDs to enter into mandatory non-
disclosure agreements with programmers, which prevents small and rural
MVPDs from obtaining information about the market value of
[[Page 61596]]
programming; (ii) requiring small and rural MVPDs to provide
programmers with ``hundreds of advertising slots''; and (iii) mandating
unwarranted security requirements that extend beyond the legitimate
need to protect programming. OPASTCO/ITTA claim that all of these
conditions impede the entry of small and rural telephone companies into
the video distribution marketplace. We seek comment on the extent to
which such practices are occurring in the marketplace and, if so,
whether we should, and whether we have the authority to, take action to
address these practices.
VI. Modification of Program Access Complaint Procedures
21. Remedies for Violations. We seek comment on whether to add an
arbitration-type step as part of the Commission's determination of an
appropriate remedy for program access violations. We agree with
commenters that commercial arbitration requires parties to put forth
their best effort to resolve disputes or risk the arbitrator adopting
the opposing parties' proposals. In the Hughes Order, the Commission
concluded that final offer arbitration has the attractive ``ability to
induce two sides to reach their own agreement, lest they risk the
possibility that a relatively extreme offer of the other side may be
selected by the arbitrator.'' This type of pressure can encourage the
parties to resolve their differences through settlement. We believe
that a modified version of this method can encourage negotiation among
the parties. Therefore, we seek comment on whether, when feasible, the
Commission should request, as part of its evaluation of the appropriate
remedy to impose for program access violations, that the parties each
submit their best ``final offer'' proposal for the rates, terms, or
conditions under review. We seek comment on whether the Commission
should have the discretion to adopt one of the parties' proposals as
the remedy for the program access complaint.
22. Status of Existing Contract Pending Resolution of Program
Access Complaint. While we declined to adopt mandatory arbitration in
lieu of the Commission's complaint process in the Report and Order, we
issue this NPRM on the issue of a provision for complainants to request
a stay of any action or proposed action that would change an existing
program contract that is the subject of a program access complaint,
pending the resolution of the program access complaint. Some
competitive providers recommend a ``standstill'' requirement for pre-
existing carriage contracts during adjudication of program access
disputes, to preserve the status quo until the program access complaint
has been resolved. In a recent merger transaction, in adopting
conditions for arbitration of program access disputes, the Commission
required that an aggrieved MVPD have continued access to the
programming in question under the terms and conditions of the expired
contract, pending resolution of the dispute. Provision of the disputed
programming during the pendency of arbitration was not required in the
case of the first time requests for programming where no carriage
agreement had previously existed between the parties. Verizon supports
a five-month long standstill provision while complaints are being
resolved. BSPA, RCN, and USTelecom support a standstill provision
pending the resolution of the complaint, wherein carriage is continued
and the parties are subject to the same price, terms, and conditions of
the existing contract, with any new price arising out of resolution to
be applied retroactively to the date of the complaint. BSPA asserts
that vertically integrated programmers covered by the program access
rules have incentives to use temporary foreclosure strategies during
negotiations for programming and, therefore, standstill agreements
should be made part of the program access complaint procedures. Other
parties favoring a standstill provision include ACA, EchoStar, and
SureWest. EchoStar asserts that there can be no doubt that the
Commission has the authority to promulgate a standstill requirement as
a lesser interim remedy where interruption of carriage threatens to
cause irreparable injury to the public.
23. NCTA opposes any ``standstill'' provision and states that there
is no authority that allows the Commission to interfere in the right to
contract in this way. Time Warner asserts that the standstill
requirement would prohibit a network from de-authorizing carriage by an
MVPD, but would allow the MVPD to drop the network, creating an unfair
bargaining situation. Time Warner believes that any standstill
requirement would increase the likelihood of program access complaints
because the MVPD will have a strong incentive to file a complaint just
to protect the status quo and decrease the chances that parties will
resolve their disputes because the incentive of either party to
negotiate could be reduced once the status quo is protected. Comcast
and the Broadcast Networks also oppose any ``standstill'' requirement.
24. We agree that the threat of temporary foreclosure pending
resolution of a complaint may impair settlement negotiations and may
discourage parties from filing legitimate complaints. In the Adelphia
Order, the Commission discussed circumstances wherein temporary
foreclosure of programming service may be profitable even where
permanent foreclosure is not. By temporarily foreclosing supply of the
programming to an MVPD competitor or by threatening to engage in
temporary foreclosure, the integrated firm may improve its bargaining
position so as to be able to extract a higher price from the MVPD
competitor than it could have negotiated if it were a non-integrated
programming supplier. The Commission included, as a measure to
alleviate such foreclosure strategies, a requirement that, upon
receiving timely notice of an MVPD's intent to arbitrate, program
carriage be continued under the existing terms and conditions. We
request comment on whether the issuance of temporary stay orders would
encourage parties to resolve program access disputes and to make use of
the Commission's complaint procedures when needed. We request comment
on whether complainants must formally request such relief from the
Commission and must establish that they are likely to prevail on the
merits of their complaint; will suffer irreparable harm absent a stay;
that the balance of harms to the parties favors grant of a stay; and
that the public interest favors grant of the stay. We request comment
on whether, as part of a showing of irreparable harm, complainants may
discuss the likelihood that subscribers would switch MVPDs to obtain
the programming in dispute for a long enough period to make the
strategy profitable to the respondent. We request comment on whether
these stays should be routinely granted when the facts support their
issuance and that they will help to encourage settlement negotiations.
We request comment on the nature of the stay, that is, whether both the
complainant and the respondent will be subject to the stay order, and
required to fulfill their respective obligations under the terms and
conditions of the carriage contract in issue, while the stay is in
effect. We request comment on whether complainants will be permitted to
drop the programming that is the subject of the program access dispute
unless and until a request to dismiss the complaint with prejudice is
granted by the Commission. We request comment on whether the length of
the stay should be entirely discretionary. Finally, we request comment
on whether the Commission should include, as part of
[[Page 61597]]
its final order resolving the complaint or resolving damages,
adjustments to its remedies that make the terms of the new agreement
between the parties retroactive to the expiration date of the previous
agreement.
VII. Procedural Matters
A. Ex Parte Rules
25. Permit-But-Disclose. The NPRM in this proceeding will be
treated as ``permit-but-disclose'' subject to the ``permit-but-
disclose'' requirements under Sec. 1.1206(b) of the Commission's
rules. Ex parte presentations are permissible if disclosed in
accordance with Commission rules, except during the Sunshine Agenda
period when presentations, ex parte or otherwise, are generally
prohibited. Persons making oral ex parte presentations are reminded
that a memorandum summarizing a presentation must contain a summary of
the substance of the presentation and not merely a listing of the
subjects discussed. More than a one- or two-sentence description of the
views and arguments presented is generally required. Additional rules
pertaining to oral and written presentations are set forth in Sec.
1.1206(b).
B. Filing Requirements
26. Comment Information. Pursuant to Sec. Sec. 1.415 and 1.419 of
the Commission's rules, 47 CFR 1.415, 1.419, interested parties may
file comments and reply comments on or before the dates indicated on
the first page of this document. Comments may be filed using: (1) The
Commission's Electronic Comment Filing System (ECFS), (2) the Federal
Government's eRulemaking Portal, or (3) by filing paper copies. See
Electronic Filing of Documents in Rulemaking Proceedings, 63 FR 24121,
May 1, 1998.
Electronic Filers: Comments may be filed electronically
using the Internet by accessing the ECFS: http://www.fcc.gov/cgb/ecfs/ or the Federal eRulemaking Portal: http://www.regulations.gov. Filers
should follow the instructions provided on the website for submitting
comments.
For ECFS filers, if multiple docket or rulemaking numbers
appear in the caption of this proceeding, filers must transmit one
electronic copy of the comments for each docket or rulemaking number
referenced in the caption. In completing the transmittal screen, filers
should include their full name, U.S. Postal Service mailing address,
and the applicable docket or rulemaking number. Parties may also submit
an electronic comment by Internet e-mail. To get filing instructions,
filers should send an e-mail to ecfs@fcc.gov, and include the following
words in the body of the message, ``get form.'' A sample form and
directions will be sent in response.
Paper Filers: Parties who choose to file by paper must
file an original and four copies of each filing. If more than one
docket or rulemaking number appears in the caption of this proceeding,
filers must submit two additional copies for each additional docket or
rulemaking number.
Filings can be sent by hand or messenger delivery, by commercial
overnight courier, or by first-class or overnight U.S. Postal Service
mail (although we continue to experience delays in receiving U.S.
Postal Service mail). All filings must be addressed to the Commission's
Secretary, Office of the Secretary, Federal Communications Commission.
The Commission's contractor will receive hand-delivered or
messenger-delivered paper filings for the Commission's Secretary at 236
Massachusetts Avenue, NE., Suite 110, Washington, DC 20002. The filing
hours at this location are 8 a.m. to 7 p.m. All hand deliveries must be
held together with rubber bands or fasteners. Any envelopes must be
disposed of before entering the building.
Commercial overnight mail (other than U.S. Postal Service
Express Mail and Priority Mail) must be sent to 9300 East Hampton
Drive, Capitol Heights, MD 20743.
U.S. Postal Service first-class, Express, and Priority
mail must be addressed to 445 12th Street, SW., Washington, DC 20554.
People with Disabilities: To request materials in accessible
formats for people with disabilities (braille, large print, electronic
files, audio format), send an e-mail to fcc504@fcc.gov or call the
Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), 202-
418-0432 (tty).
27. Availability of Documents. Comments, reply comments, and ex
parte submissions will be available for public inspection during
regular business hours in the FCC Reference Center, Federal
Communications Commission, 445 12th Street, SW., CY-A257, Washington,
DC 20554. Persons with disabilities who need assistance in the FCC
Reference Center may contact Bill Cline at (202) 418-0267 (voice),
(202) 418-7365 (TTY), or bill.cline@fcc.gov. These documents also will
be available from the Commission's Electronic Comment Filing System.
Documents are available electronically in ASCII, Word 97, and Adobe
Acrobat. Copies of filings in this proceeding may be obtained from Best
Copy and Printing, Inc., Portals II, 445 12th Street, SW., Room CY-
B402, Washington, DC 20554; they can also be reached by telephone, at
(202) 488-5300 or (800) 378-3160; by e-mail at fcc@bcpiweb.com; or via
their Web site at http://www.bcpiweb.com. To request materials in
accessible formats for people with disabilities (Braille, large print,
electronic files, audio format), send an e-mail to fcc504@fcc.gov or
call the Consumer and Governmental Affairs Bureau at (202) 418-0531
(voice), (202) 418-7365 (TTY).
C. Initial Paperwork Reduction Act of 1995 Analysis
28. The NPRM has been analyzed with respect to the Paperwork
Reduction Act of 1995 (PRA), Public Law 104-13, and contains proposed
information collection requirements. The Commission, as part of its
continuing effort to reduce paperwork burdens, invites the general
public and the Office of Management and Budget (OMB) to comment on the
proposed information collection requirements contained in this NPRM, as
required by the PRA.
29. Written comments on the PRA proposed information collection
requirements must be submitted by the public, the OMB, and other
interested parties on or before December 31, 2007. Comments should
address: (a) Whether the proposed collection of information is
necessary for the proper performance of the functions of the
Commission, including whether the information shall have practical
utility; (b) the accuracy of the Commission's burden estimates; (c)
ways to enhance the quality, utility, and clarity of the information
collected; and (d) ways to minimize the burden of the collection of
information on the respondents, including the use of automated
collection techniques or other forms of information technology. In
addition, pursuant to the Small Business Paperwork Relief Act of 2002,
Public Law 107-198, see 44 U.S.C. 3506(c)(4), we seek specific comment
on how we might ``further reduce the information collection burden for
small business concerns with fewer than 25 employees.'' In addition to
filing comments with the Office of the Secretary, a copy of any
comments on the proposed information collection requirements contained
herein should be submitted to Cathy Williams, Federal Communications
Commission, 445 12th St., SW., Room 1-C823, Washington, DC 20554, or
via the Internet at PRA@fcc.gov; and also to Nicholas A. Fraser of the
Office of Management and Budget (OMB), via Internet at
[[Page 61598]]
Nicholas_A._Fraser@omb.eop.gov or via fax at (202) 395-5167.
30. Further Information. For additional information concerning the
PRA proposed information collection requirements contained in this
NPRM, contact Cathy Williams at 202-418-2918, or via the Internet at
PRA@fcc.gov.
D. Initial Regulatory Flexibility Analysis
31. As required by the Regulatory Flexibility Act, the Commission
has prepared an Initial Regulatory Flexibility Analysis (IRFA) of the
possible significant economic impact on a substantial number of small
entities of the proposals addressed in this NPRM. Written public
comments are requested on the IRFA. These comments must be filed in
accordance with the same filing deadlines for comments on the NPRM.
Comments must be identified as responses to the IRFA. The Commission
will send a copy of the NPRM, including this IRFA, to the Chief Counsel
for Advocacy of the Small Business Administration (SBA). In addition,
the NPRM and IRFA (or summaries thereof) will be published in the
Federal Register.
Need for, and Objectives of, the Proposed Rules
32. Overview. The NPRM considers Commission action with respect to
seven issues. First, the Commission is considering whether it can
establish a procedure that would shorten the term of the five-year
extension of the exclusive contract prohibition if, after two years
(i.e., October 5, 2009) a cable operator can show competition from new
entrant MVPDs has reached a certain penetration level in a Designated
Market Area. Second, the Commission is contemplating the extension of
its program access rules to terrestrially delivered cable-affiliated
programmers in order to facilitate competition in the video
distribution market. Third, the Commission is considering whether to
expand the exclusive contract prohibition to apply to non-cable-
affiliated programming that is affiliated with a different MVPD,
principally a Direct Broadcast Satellite (DBS) provider. Fourth, the
NPRM is contemplating whether it may be appropriate for the Commission
to preclude the practice of programmers to require multichannel video
programming distributors (MVPDs) to purchase and carry undesired
programming in return for the ability to purchase and carry desired
programming. The NPRM considers whether to instead require programmers
to offer each of their programming services on a stand-alone basis to
all MVPDs. Fifth, the NPRM contemplates action to address concerns
raised by small and rural MVPDs regarding conditions imposed by
programmers for access to content. The NPRM also contemplates revising
the Commission's program access complaint procedures in two respects.
First, the NPRM is considering whether to establish a process whereby a
program access complainant may seek a temporary stay of any proposed
changes to its existing programming contract pending resolution of a
complaint. Second, the NPRM contemplates revising the Commission's
program access complaint procedures by requiring parties to submit to
the Commission, when requested, ``final offer'' proposals as part of
the remedy phase of the complaint process. Each of these issues is
discussed in further detail below.
33. Procedure for Shortening Term of Extension of Exclusive
Contract Prohibition. Section 628(c)(2)(D) of the Communications Act
prohibits, in areas served by a cable operator, exclusive contracts for
satellite cable programming or satellite broadcast programming between
vertically integrated programming vendors and cable operators unless
the Commission determines that such exclusivity is in the public
interest. See 47 U.S.C. 548(c)(2)(D). In MB Docket 07-29, the
Commission decided to extend this prohibition for five years, until
October 5, 2012. In light of the five-year extension of the exclusivity
ban, the NPRM considers whether it can establish a procedure that would
shorten the term of the extension if, after two years (i.e., October 5,
2009), a cable operator can show competition from new entrant MVPDs has
reached a certain penetration level in the DMA. The NPRM contemplates
what this penetration level should be, whether two years or some other
time frame is the appropriate period of time, and whether a market-by-
market analysis is appropriate as both a legal and policy matter.
34. Terrestrially Delivered Cable-Affiliated Programming. Congress
enacted the program access provisions contained in section 628 of the
Communications Act of 1934, as amended, as part of the Cable Television
Consumer Protection and Competition Act of 1992 (1992 Act). The program
access provisions are intended to increase competition and diversity in
the multichannel video programming market, as well as to foster the
development of competition to traditional cable systems, by prescribing
regulations that govern the access by competing MVPDs to ``satellite
cable programming'' and ``satellite broadcast programming.'' The term
``satellite cable programming'' means ``video programming which is
transmitted via satellite and which is primarily intended for direct
receipt by cable operators for their retransmission to cable
subscribers,'' except that such term does not include satellite
broadcast programming. 47 U.S.C. 548(i)(1); 47 U.S.C. 605(d)(1); see
also 47 CFR 76.1000(h). The term ``satellite broadcast programming''
means ``broadcast video programming when such programming is
retransmitted by satellite and the entity retransmitting such
programming is not the broadcaster or an entity performing such
retransmission on behalf of and with the specific consent of the
broadcaster.'' 47 U.S.C. 548(i)(3); see also CFR 76.1000(f). The
Commission has previously concluded that terrestrially delivered
programming (i.e., programming transmitted or retransmitted by
satellite for direct reception by cable operators) is not covered by
the definitions of ``satellite cable programming'' and ``satellite
broadcast programming.'' See 2002 Extension Order, 67 FR 49247, July
30, 2002. Thus, terrestrially delivered programming is not subject to
the program access provisions. The Commission has previously found that
cable operators have withheld terrestrially delivered cable-affiliated
programming from competitive MVPDs and that this has resulted in a
material adverse impact on competition in the video distribution
market. See Adelphia Order, 21 FCC Rcd 8203. To remedy this concern,
the NPRM considers whether to extend the program access provisions to
all terrestrially delivered cable-affiliated programming pursuant to
various provisions of the Communications Act, such as sections 4(i),
201(b), 303(r), 601(6), 612(g), 616(a), 628(b), and 706. The Commission
also seeks information as to whether cable operators, again with anti-
competitive results, are shifting delivery of affiliated programming
from satellite delivery to terrestrial delivery and whether such action
is intended to evade the program access rules.
35. Expanding the Exclusive Contract Prohibition to Non-Cable-
Affiliated Programming. The NPRM is considering whether to expand the
exclusive contract prohibition to apply to non-cable-affiliated
programming that is affiliated with a different MVPD, principally a DBS
provider. To the extent that an MVPD meets the definition of a ``cable
operator'' under the Communications Act, the exclusive contract
prohibition in section
[[Page 61599]]
628(c)(2)(D) already applies to its affiliated programming. Moreover,
section 628(j) of the Communications Act provides that any provision of
section 628, including the exclusive contract prohibition in section
628(c)(2)(D), that applies to a cable operator also applies to any
common carrier or its affiliate that provides video programming. See 47
U.S.C. 548(j). Programming affiliated with other MVPDs, such as DBS
providers, is beyond the scope of the exclusive contract prohibition in
section 628(c)(2)(D). The NPRM is considering whether to extend the
exclusive contract prohibition to non-cable-affiliated programming that
is affiliated with a different MVPD, principally a DBS provider,
pursuant to sections 4(i), 201(b), 303(r), 601(6), 612(g), 616(a),
628(b), or 706, or any other provision under the Communications Act.
36. Tying. Various MVPDs have raised concerns regarding the
practice of some programmers to require MVPDs to purchase and carry
undesired programming in return for the right to carry desired
programming, referred to as ``tying.'' When presented with a tying
arrangement, MVPDs face two choices. First, the MVPD can refuse the
tying arrangement, thereby potentially depriving itself of desired, and
often economically vital, programming that subscribers demand and which
may be essential to attracting and retaining subscribers. Second, the
MVPD can agree to the tying arrangement, thereby incurring costs for
programming that its subscribers do not demand and may not want, with
such costs being passed on to subscribers in the form of higher rates,
and also forcing the MVPD to allocate channel capacity for the unwanted
programming in place of programming that its subscribers prefer. In
either case, the MVPD and its subscribers are harmed by the refusal of
the programmer to offer each of its programming services on a stand-
alone basis. The NPRM explains that small cable operators and MVPDs are
particularly vulnerable to such tying arrangements because they do not
have leverage in negotiations for programming due to their smaller
subscriber bases. Given the problems associated with such tying
arrangements, the NPRM is contemplating whether it may be appropriate
for the Commission to preclude them and to instead require each
programming service to be offered on a stand-alone basis to all MVPDs.
The NPRM considers precluding the tying practices of broadcasters,
satellite cable programmers, terrestrially delivered cable-affiliated
programmers, and programmers that are affiliated with neither a cable
operator nor a broadcaster, such as networks affiliated with a non-
cable MVPD or a non-affiliated independent programmer.
37. Concerns Raised by Small and Rural MVPDs. Small and rural MVPDs
have raised concerns regarding obstacles they face in trying to obtain
access to programming which impede competition in the video
distribution marketplace. These obstacles include (i) restrictions on
the use of shared headends for receiving content; (ii) requiring small
and rural MVPDs to enter into mandatory non-disclosure agreements with
programmers; (iii) requiring small and rural MVPDs to provide
programmers with advertising slots; and (iv) mandating unwarranted
security requirements. The NPRM contemplates Commission action to
address these practices.
38. Modification of Program Access Complaint Procedures. The NPRM
also contemplates revising the Commission's program access complaint
procedures in two respects. First, the NPRM contemplates adding an
arbitration-type step as part of the Commission's determination of an
appropriate remedy for program access violations. The NPRM is
considering whether, when feasible, the Commission should request, as
part of its evaluation of the appropriate remedy to impose for program
access violations, that the parties each submit their best ``final
offer'' proposal for the rates, terms or conditions under review. The
NPRM considers whether the Commission should have the discretion to
adopt one of the parties' proposals as the remedy for the program
access complaint. Second, the NPRM is considering whether to allow
complainants to request a stay of any action or proposed action that
would change an existing program contract that is the subject of a
program access complaint, pending the resolution of the program access
complaint. In the NPRM, the Commission agrees that the threat of
temporary foreclosure pending resolution of a complaint may impair
settlement negotiations and may discourage parties from filing
legitimate complaints. The NPRM thus contemplates whether the issuance
of temporary stay orders would encourage parties to resolve program
access disputes and to make use of the Commission's complaint
procedures when needed. The NPRM considers whether complainants should
be required to formally request such relief from the Commission and
establish that they are likely to prevail on the merits of their
complaint; will suffer irreparable harm absent a stay; that the balance
of harms to the parties favors grant of a stay; and that the public
interest favors grant of the stay. The NPRM also considers whether, as
part of a showing of irreparable harm, complainants may discuss the
likelihood that subscribers would switch MVPDs to obtain the
programming in dispute for a long enough period to make the strategy
profitable to the respondent. The NPRM further contemplates whether
these stays should be routinely granted when the facts support their
issuance and that they will help to encourage settlement negotiations.
The NPRM considers the nature of the stay, that is, whether both the
complainant and the respondent will be subject to the stay order, and
required to fulfill their respective obligations under the terms and
conditions of the carriage contract in issue, while the stay is in
effect. The NPRM also contemplates whether complainants will be
permitted to drop the programming that is the subject of the program
access dispute unless and until a request to dismiss the complaint with
prejudice is granted by the Commission. The NPRM considers whether the
length of the stay should be entirely discretionary. The NPRM also
considers whether the Commission should include, as part of its final
order resolving the complaint or resolving damages, adjustments to its
remedies that make the terms of the new agreement between the parties
retroactive to the expiration date of the previous agreement.
39. In the NPRM, the Commission seeks comment on the foregoing
issues. In particular, the NPRM invites comment on issues that may
impact small entities, including MVPDs and programmers.
Legal Basis
40. The authority for the action proposed in the rulemaking is
contained in section 4(i), 303, and 628 of the Communications Act of
1934, as amended, 47 U.S.C. 154(i), 303, and 548.
Description and Estimate of the Number of Small Entities to Which the
Proposed Rules Will Apply
41. The RFA directs agencies to provide a description of, and where
feasible, an estimate of the number of small entities that may be
affected by the proposed rules, if adopted. See 5 U.S.C. 603(b)(3). The
RFA generally defines the term ``small entity'' as having the same
meaning as the terms ``small business,'' ``small organization,''
[[Page 61600]]
and ``small governmental jurisdiction.'' See 5 U.S.C. 601(6). In
addition, the term ``small business'' has the same meaning as the term
``small business concern'' under the Small Business Act. See 5 U.S.C.
601(3). A ``small business concern'' is one which: (1) Is independently
owned and operated; (2) is not dominant in its field of operation; and
(3) satisfies any additional criteria established by the Small Business
Administration (SBA). See 15 U.S.C. 632.
42. Wired Telecommunications Carriers. The 2007 North American
Industry Classification System (NAICS) defines ``Wired
Telecommunications Carriers'' (2007 NAISC Code 517110) to include the
following three classifications which were listed separately in the
2002 NAICS: Wired Telecommunications Carriers (2002 NAICS Code 517110),
Cable and Other Program Distribution (2002 NAISC Code 517510), and
Internet Service Providers (2002 NAISC Code 518111). The 2007 NAISC
defines this category as follows: ``This industry comprises
establishments primarily engaged in operating and/or providing access
to transmission facilities and infrastructure that they own and/or
lease for the transmission of voice, data, text, sound, and video using
wired telecommunications networks. Transmission facilities may be based
on a single technology or a combination of technologies. Establishments
in this industry use the wired telecommunications network facilities
that they operate to provide a variety of services, such as wired
telephony services, including VoIP services; wired (cable) audio and
video programming distribution; and wired broadband Internet services.
By exception, establishments providing satellite television
distribution services using facilities and infrastructure that they
operate are included in this industry.'' The SBA has developed a small
business size standard for Wired Telecommunications Carriers, which is
all firms having 1,500 employees or less. According to Census Bureau
data for 2002, there were a total of 27,148 firms in the Wired
Telecommunications Carriers category (2002 NAISC Code 517110) that
operated for the entire year; 6,021 firms in the Cable and Other
Program Distribution category (2002 NAISC Code 517510) that operated
for the entire year; and 3,408 firms in the Internet Service Providers
category (2002 NAISC Code 518111) that operated for the entire year. Of
these totals, 25,374 of 27,148 firms in the Wired Telecommunications
Carriers category (2002 NAISC Code 517110) had less than 100 employees;
5,496 of 6,021 firms in the Cable and Other Program Distribution
category (2002 NAISC Code 517510) had less than 100 employees; and
3,303 of the 3,408 firms in the Internet Service Providers category
(2002 NAISC Code 518111) had less than 100 employees. Thus, under this
size standard, the majority of firms can be considered small.
43. Cable and Other Program Distribution. The 2002 NAICS defines
this category as follows: ``This industry comprises establishments
primarily engaged as third-party distribution systems for broadcast
programming. The establishments of this industry deliver visual, aural,
or textual programming received from cable networks, local television
stations, or radio networks to consumers via cable or direct-to-home
satellite systems on a subscription or fee basis. These establishments
do not generally originate programming material.'' This category
includes, among others, cable operators, direct broadcast satellite
(DBS) services, home satellite dish (HSD) services, satellite master
antenna television (SMATV) systems, and open video systems (OVS). The
SBA has developed a small business size standard for Cable and Other
Program Distribution, which is all such firms having $13.5 million or
less in annual receipts. According to Census Bureau data for 2002,
there were a total of 1,191 firms in this category that operated for
the entire year. Of this total, 1,087 firms had annual receipts of
under $10 million, and 43 firms had receipts of $10 million or more but
less than $25 million. Thus, under this size standard, the majority of
firms can be considered small.
44. Cable System Operators (Rate Regulation Standard). The
Commission has also developed its own small business size standards for
the purpose of cable rate regulation. Under the Commission's rules, a
``small cable company'' is one serving 400,000 or fewer subscribers
nationwide. As of 2006, 7,916 cable operators qualify as small cable
companies under this standard. In addition, under the Commission's
rules, a ``small system'' is a cable system serving 15,000 or fewer
subscribers. Industry data indicate that 6,139 systems have under
10,000 subscribers, and an additional 379 systems have 10,000-19,999
subscribers. Thus, under this standard, most cable systems are small.
45. Cable System Operators (Telecom Act Standard). The
Communications Act of 1934, as amended, also contains a size standard
for small cable system operators, which is ``a cable operator that,
directly or through an affiliate, serves in the aggregate fewer than 1
percent of all subscribers in the United States and is not affiliated
with any entity or entities whose gross annual revenues in the
aggregate exceed $250,000,000.'' There are approximately 65.4 million
cable subscribers in the United States today. Accordingly, an operator
serving fewer than 654,000 subscribers shall be deemed a small
operator, if its annual revenues, when combined with the total annual
revenues of all its affiliates, do not exceed $250 million in the
aggregate. Based on available data, we find that the number of cable
operators serving 654,000 subscribers or less totals approximately
7,916. We note that the Commission neither requests nor collects
information on whether cable system operators are affiliated with
entities whose gross annual revenues exceed $250 million. Although it
seems certain that some of these cable system operators are affiliated
with entities whose gross annual revenues exceed $250,000,000, we are
unable at this time to estimate with greater precision the number of
cable system operators that would qualify as small cable operators
under the definition in the Communications Act.
46. Direct Broadcast Satellite (DBS) Service. DBS service is a
nationally distributed subscription service that delivers video and
audio programming via satellite to a small parabolic ``dish'' antenna
at the subscriber's location. Because DBS provides subscription
services, DBS falls within the SBA-recognized definition of Cable and
Other Program Distribution. This definition provides that a small
entity is one with $13.5 million or less in annual receipts. Currently,
three operators provide DBS service, which requires a great investment
of capital for operation: DIRECTV, EchoStar (marketed as the DISH
Network), and Dominion Video Satellite, Inc. (Dominion) (marketed as
Sky Angel). All three currently offer subscription services. Two of
these three DBS operators, DIRECTV and EchoStar Communications
Corporation (EchoStar), report annual revenues that are in excess of
the threshold for a small business. The third DBS operator, Dominion's
Sky Angel service, serves fewer than one million subscribers and
provides 20 family and religion-oriented channels. Dominion does not
report its annual revenues. The Commission does not know of any source
which provides this information and, thus, we have no way of confirming
whether Dominion qualifies as a small business. Because DBS service
requires significant capital,
[[Page 61601]]
we believe it is unlikely that a small entity as defined by the SBA
would have the financial wherewithal to become a DBS licensee.
Nevertheless, given the absence of specific data on this point, we
recognize the possibility that there are entrants in this field that
may not yet have generated $13.5 million in annual receipts, and
therefore may be categorized as a small business, if independently
owned and operated.
47. Private Cable Operators (PCOs) also known as Satellite Master
Antenna Television (SMATV) Systems. PCOs, also known as SMATV systems
or private communication operators, are video distribution facilities
that use closed transmission paths without using any public right-of-
way. PCOs acquire video programming and distribute it via terrestrial
wiring in urban and suburban multiple dwelling units such as apartments
and condominiums, and commercial multiple tenant units such as hotels
and office buildings. The SBA definition of small entities for Cable
and Other Program Distribution Services includes PCOs and, thus, small
entities are defined as all such companies generating $13.5 million or
less in annual receipts. Currently, there are approximately 150 members
in the Independent Multi-Family Communications Council (IMCC), the
trade association that represents PCOs. Individual PCOs often serve
approximately 3,000-4,000 subscribers, but the larger operations serve
as many as 15,000-55,000 subscribers. In total, PCOs currently serve
approximately one million subscribers. Because these operators are not
rate regulated, they are not required to file financial data with the
Commission. Furthermore, we are not aware of any privately published
financial information regarding these operators. Based on the estimated
number of operators and the estimated number of units served by the
largest ten PCOs, we believe that a substantial number of PCOs may
qualify as small entities.
48. Home Satellite Dish (HSD) Service. Because HSD provides
subscription services, HSD falls within the SBA-recognized definition
of Cable and Other Program Distribution, which includes all such
companies generating $13.5 million or less in revenue annually. HSD or
the large dish segment of the satellite industry is the original
satellite-to-home service offered to consumers, and involves the home
reception of signals transmitted by satellites operating generally in
the C-band frequency. Unlike DBS, which uses small dishes, HSD antennas
are between four and eight feet in diameter and can receive a wide
range of unscrambled (free) programming and scrambled programming
purchased from program packagers that are licensed to facilitate
subscribers' receipt of video programming. There are approximately 30
satellites operating in the C-band, which carry over 500 channels of
programming combined; approximately 350 channels are available free of
charge, and 150 are scrambled and require a subscription. HSD is
difficult to quantify in terms of annual revenue. HSD owners have
access to program channels placed on C-band satellites by programmers
for receipt and distribution by MVPDs. Commission data shows that,
between June 2004 and June 2005, HSD subscribership fell from 335,766
subscribers to 206,358 subscribers, a decline of more than 38 percent.
The Commission has no information regarding the annual revenue of the
four C-Band distributors.
49. Broadband Radio Service and Educational Broadband Service.
Broadband Radio Service comprises Multichannel Multipoint Distribution
Service (MMDS) systems and Multipoint Distribution Service (MDS). MMDS
systems, often referred to as ``wireless cable,'' transmit video
programming to subscribers using the microwave frequencies of MDS and
Educational Broadband Service (EBS) (formerly known as Instructional
Television Fixed Service (ITFS)). We estimate that the number of
wireless cable subscribers is approximately 100,000, as of March 2005.
As previously noted, the SBA definition of small entities for Cable and
Other Program Distribution, which includes such companies generating
$13.5 million in annual receipts, appears applicable to MDS and ITFS.
50. The Commission has also defined small MDS (now BRS) entities in
the context of Commission license auctions. For purposes of the 1996
MDS auction, the Commission defined a small business as an entity that
had annual average gross revenues of less than $40 million in the
previous three calendar years. This definition of a small entity in the
context of MDS auctions has been approved by the SBA. In the MDS
auction, 67 bidders won 493 licenses. Of the 67 auction winners, 61
claimed status as a small business. At this time, the Commission
estimates that of the 61 small business MDS auction winners, 48 remain
small business licensees. In addition to the 48 small businesses that
hold BTA authorizations, there are approximately 392 incumbent MDS
licensees that have gross revenues that are not more than $40 million
and are thus considered small entities. MDS licensees and wireless
cable operators that did not receive their licenses as a result of the
MDS auction fall under the SBA small business size standard for Cable
and Other Program Distribution, which includes all such entities that
do not generate revenue in excess of $13.5 million annually.
Information available to us indicates that there are approximately 850
of these licensees and operators that do not generate revenue in excess
of $13.5 million annually. Therefore, we estimate that there are
approximately 850 small entity MDS (or BRS) providers, as defined by
the SBA and the Commission's auction rules.
51. Educational institutions are included in this analysis as small
entities; however, the Commission has not created a specific small
business size standard for ITFS (now EBS). We estimate that there are
currently 2,032 ITFS (or EBS) licensees, and all but 100 of the
licenses are held by educational institutions. Thus, we estimate that
at least 1,932 ITFS licensees are small entities.
52. Local Multipoint Distribution Service. Local Multipoint
Distribution Service (LMDS) is a fixed broadband point-to-multipoint
microwave service that provides for two-way video telecommunications.
The SBA definition of small entities for Cable and Other Program
Distribution, which includes such companies generating $13.5 million in
annual receipts, appears applicable to LMDS. The Commission has also
defined small LMDS entities in the context of Commission license
auctions. In the 1998 and 1999 LMDS auctions, the Commission defined a
small business as an entity that had annual average gross revenues of
less than $40 million in the previous three calendar years. Moreover,
the Commission added an additional classification for a ``very small
business,'' which was defined as an entity that had annual average
gross revenues of less than $15 million in the previous three calendar
years. These definitions of ``small business'' and ``very small
business'' in the context of the LMDS auctions have been approved by
the SBA. In the first LMDS auction, 104 bidders won 864 licenses. Of
the 104 auction winners, 93 claimed status as small or very small
businesses. In the LMDS re-auction, 40 bidders won 161 licenses. Based
on this information, we believe that the number of small LMDS licenses
will include the 93 winning bidders in the first auction and the 40
winning bidders in the re-auction, for a total of 133 small entity LMDS
providers as defined by the SBA and the Commission's auction rules.
[[Page 61602]]
53. Open Video Systems (OVS). The OVS framework provides
opportunities for the distribution of video programming other than
through cable systems. Because OVS operators provide subscription
services, OVS falls within the SBA-recognized definition of Cable and
Other Program Distribution Services, which provides that a small entity
is one with $13.5 million or less in annual receipts. The Commission
has approved approximately 120 OVS certifications with some OVS
operators now providing service. Broadband service providers (BSPs) are
currently the only significant holders of OVS certifications or local
OVS franchises, even though OVS is one of four statutorily-recognized
options for local exchange carriers (LECs) to offer video programming
services. As of June 2005, BSPs served approximately 1.4 million
subscribers, representing 1.49 percent of all MVPD households. Among
BSPs, however, those operating under the OVS framework are in the
minority. As of June 2005, RCN Corporation is the largest BSP and 14th
largest MVPD, serving approximately 371,000 subscribers. RCN received
approval to operate OVS systems in New York City, Boston, Washington,
DC and other areas. The Commission does not have financial information
regarding the entities authorized to provide OVS, some of which may not
yet be operational. We thus believe that at least some of the OVS
operators may qualify as small entities.
54. Cable and Other Subscription Programming. The Census Bureau
defines this category as follows: ``This industry comprises
establishments primarily engaged in operating studios and facilities
for the broadcasting of programs on a subscription or fee basis. * * *
These establishments produce programming in their own facilities or
acquire programming from external sources. The programming material is
usually delivered to a third party, such as cable systems or direct-to-
home satellite systems, for transmission to viewers.'' The SBA has
developed a small business size standard for firms within this
category, which is all firms with $13.5 million or less in annual
receipts. According to Census Bureau data for 2002, there were 270
firms in this category that operated for the entire year. Of this
total, 217 firms had annual receipts of under $10 million and 13 firms
had annual receipts of $10 million to $24,999,999. Thus, under this
category and associated small business size standard, the majority of
firms can be considered small.
55. Small Incumbent Local Exchange Carriers. We have included small
incumbent local exchange carriers in this present RFA analysis. A
``small business'' under the RFA is one that, inter alia, meets the
pertinent small business size standard (e.g., a telephone
communications business having 1,500 or fewer employees), and ``is not
dominant in its field of operation.'' The SBA's Office of Advocacy
contends that, for RFA purposes, small incumbent local exchange
carriers are not dominant in their field of operation because any such
dominance is not ``national'' in scope. We have therefore included
small incumbent local exchange carriers in this RFA, although we
emphasize that this RFA action has no effect on Commission analyses and
determinations in other, non-RFA contexts.
56. Incumbent Local Exchange Carriers (LECs). Neither the
Commission nor the SBA has developed a small business size standard
specifically for incumbent local exchange services. The appropriate
size standard under SBA rules is for the category Wired
Telecommunications Carriers. Under that size standard, such a business
is small if it has 1,500 or fewer employees. According to Commission
data, 1,307 carriers have reported that they are engaged in the
provision of incumbent local exchange services. Of these 1,307
carriers, an estimated 1,019 have 1,500 or fewer employees, and 288
have more than 1,500 employees. Consequently, the Commission estimates
that most providers of incumbent local exchange services are small
businesses.
57. Competitive Local Exchange Carriers, Competitive Access
Providers (CAPs), ``Shared-Tenant Service Providers,'' and ``Other
Local Service Providers.'' Neither the Commission nor the SBA has
developed a small business size standard specifically for these service
providers. The appropriate size standard under SBA rules is for the
category Wired Telecommunications Carriers. Under that size standard,
such a business is small if it has 1,500 or fewer employees. According
to Commission data, 859 carriers have reported that they are engaged in
the provision of either competitive access provider services or
competitive local exchange carrier services. Of these 859 carriers, an
estimated 741 have 1,500 or fewer employees and 118 have more than
1,500 employees. In addition, 16 carriers have reported that they are
``Shared-Tenant Service Providers,'' and all 16 are estimated to have
1,500 or fewer employees. In addition, 44 carriers have reported that
they are ``Other Local Service Providers.'' Of the 44, an estimated 43
have 1,500 or fewer employees and one has more than 1,500 employees.
Consequently, the Commission estimates that most providers of
competitive local exchange service, competitive access providers,
``Shared-Tenant Service Providers,'' and ``Other Local Service
Providers'' are small entities.
58. Electric Power Generation, Transmission and Distribution. The
Census Bureau defines this category as follows: ``This industry group
comprises establishments primarily engaged in generating, transmitting,
and/or distributing electric power. Establishments in this industry
group may perform one or more of the following activities: (1) Operate
generation facilities that produce electric energy; (2) operate
transmission systems that convey the electricity from the generation
facility to the distribution system; and (3) operate distribution
systems that convey electric power received from the generation
facility or the transmission system to the final consumer.'' The SBA
has developed a small business size standard for firms in this
category: ``A firm is small if, including its affiliates, it is
primarily engaged in the generation, transmission, and/or distribution
of electric energy for sale and its total electric output for the
preceding fiscal year did not exceed 4 million megawatt hours.''
According to Census Bureau data for 2002, there were 1,644 firms in
this category that operated for the entire year. Census data do not
track electric output and we have not determined how many of these
firms fit the SBA size standard for small, with no more than 4 million
megawatt hours of electric output. Consequently, we estimate that 1,644
or fewer firms may be considered small under the SBA small business
size standard.
59. Television Broadcasting. The SBA defines a television broadcast
station as a small business if such station has no more than $13.0
million in annual receipts. Business concerns included in this industry
are those ``primarily engaged in broadcasting images together with
sound.'' The Commission has estimated the number of licensed commercial
television stations to be 1,376. According to Commission staff review
of the BIA Financial Network, MAPro Television Database (BIA) on March
30, 2007, approximately 986 of an estimated 1,374 commercial television
stations (or approximately 72 percent) have revenues of $13.5 million
or less. We note, however, that, in assessing whether a business
concern qualifies as small under the above definition, business
(control) affiliations must be included. Our estimate,
[[Page 61603]]
therefore, likely overstates the number of small entities that might be
affected by our action, because the revenue figure on which it is based
does not include or aggregate revenues from affiliated companies. The
Commission has estimated the number of licensed NCE television stations
to be 380. The Commission does not compile and otherwise does not have
access to information on the revenue of NCE stations that would permit
it to determine how many such stations would qualify as small entities.
60. In addition, an element of the definition of ``small business''
is that the entity not be dominant in its field of operation. We are
unable at this time to define or quantify the criteria that would
establish whether a specific television station is dominant in its
field of operation. Accordingly, the estimate of small businesses to
which rules may apply do not exclude any television station from the
definition of a small business on this basis and are therefore over-
inclusive to that extent. Also, as noted, an additional element of the
definition of ``small business'' is that the entity must be
independently owned and operated. We note that it is difficult at times
to assess these criteria in the context of media entities and our
estimates of small businesses to which they apply may be over-inclusive
to this extent.
Description of Proposed Reporting, Recordkeeping and Other Compliance
Requirements
61. The rules ultimately adopted as a result of this NPRM may
contain new or modified information collections. We anticipate that
none of the changes would result in an increase to the reporting and
recordkeeping requirements of small entities. We invite small entities
to comment in response to the NPRM.
Steps Taken to Minimize Significant Impact on Small Entities and
Significant Alternatives Considered
62. The RFA requires an agency to describe any significant
alternatives that it has considered in proposing regulatory approaches,
which may include the following four alternatives (among others): (1)
The establishment of differing compliance or reporting requirements or
timetables that take into account the resources available to small
entities; (2) the clarification, consolidation, or simplification of
compliance or reporting requirements under the rule for small entities;
(3) the use of performance, rather than design, standards; and (4) an
exemption from coverage of the rule, or any part thereof, for small
entities. First, regarding the establishment of a procedure that would
shorten the five-year term of the extension of the exclusive contract
prohibition, the Commission may choose to establish such a procedure
or, in the alternative, it may not choose to do so. Second, regarding
the extension of the program access rules to terrestrially delivered
cable-affiliated programmers, the Commission may choose to extend these
rules to terrestrially delivered cable-affiliated programmers or, in
the alternative, it may choose not to extend these rules to such
programmers. Third, regarding expansion of the exclusive contract
prohibition to apply to non-cable-affiliated programming that is
affiliated with a different MVPD, principally a DBS provider, the
Commission may choose to extend the exclusive contract prohibition to
apply to such non-cable-affiliated programming or, in the alternative,
it may choose not to extend the exclusive contract prohibition to such
programming. Fourth, regarding the practice of programmers to engage in
tying of desired with undesired programming, the Commission may choose
to preclude all such tying arrangements or, in the alternative, it may
choose not to preclude any such arrangements or, in the alternative, it
may choose to preclude only certain tying arrangements. Fifth, with
respect to concerns raised by small and rural MVPDs regarding
conditions imposed by programmers for access to content, the Commission
may choose to take action to address some or all of these concerns or,
in the alternative, it may choose not to take action to address these
concerns. Sixth, regarding the establishment of a process whereby a
program access complainant may seek a temporary stay of any proposed
changes to its existing programming contract pending resolution of the
complaint, the Commission may establish such a process or, in the
alternative, it may choose not to establish such a process. Seventh,
regarding the requirement that parties submit to the Commission, when
requested, ``final offer'' proposals as part of the remedy phase of the
complaint process, the Commission may adopt such a requirement or, in
the alternative, it may choose not to adopt such a requirement. We
invite comment on the options the Commission is considering, or
alternatives thereto as referenced above, and on any other alternatives
commenters may wish to propose for the purpose of minimizing
significant economic impact on smaller entities.
Federal Rules Which Duplicate, Overlap, or Conflict With the
Commission's Proposals
63. None.
F. Additional Information
64. For additional information on this proceeding, contact Steven
Broeckaert,
Steven.Broeckaert@fcc.gov; David Konczal, David.Konczal@fcc.gov; or Katie Costello, Katie.Costello@fcc.gov; of
the Media Bureau, Policy Division, (202) 418-2120.
VIII. Ordering Clauses
65. Accordingly, it is ordered, pursuant to the authority found in
sections 4(i), 303(r), and 628 of the Communications Act of 1934, as
amended, 47 U.S.C. 154(i), 303(r), and 548, this Notice of Proposed
Rulemaking Is Adopted.
66. It is further ordered that the Commission's Consumer and
Governmental Affairs Bureau, Reference Information Center, shall send a
copy of this Notice of Proposed Rulemaking, including the Initial
Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of
the Small Business Administration.
Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. 07-5388 Filed 10-30-07; 8:45 am]
BILLING CODE 6712-01-P