August 11, 1997

Contact:
Craig D'Ooge (202) 707-9189

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Copyright Office Issues Report on the Cable and Satellite Compulsory Licenses

Register of Copyrights Marybeth Peters acknowledges a continued need for the compulsory licensing scheme governing the retransmission of broadcast signals, at least for the immediate future, in a report delivered to Congress on August 1, 1997.

A compulsory license is a statutory copyright licensing scheme whereby copyright owners are required to license their works to users at a fixed price under terms and conditions set by the government. The cable and satellite compulsory licenses allow cable systems and satellite carriers to retransmit broadcast signals to their subscribers without incurring the costs associated with the negotiations to clear the rights to retransmit the copyrighted programming carried on the signals.

The Copyright Office submitted its report in response to a February 6, 1997, letter from Senator Orrin Hatch, chairman of the Senate Judiciary Committee, who requested a thorough review of the copyright licensing regimes governing the retransmission of over-the-air radio and television broadcast signals. The request targeted key issues for study, starting with whether the licensing scheme should continue to exist, or in the case of the satellite compulsory license created by the Satellite Home Viewer Acts of 1988 and 1994, whether it should be extended beyond its December 31, 1999, sunset date. In addition, the Copyright Office considered the possible extension of the current cable compulsory license to new technologies, such as open video systems and the Internet, the advisability of allowing satellite carriers to retransmit local signals, and the creation of new markets for public television.

Although the Copyright Office recommends the continuation of a compulsory licensing scheme, this recommendation rests upon a determination that the rate structure for the cable compulsory license needs adjustment. Specifically, the Office recommends that the current complex mechanism for determining a cable system's royalty payment, which is tied to certain 1976 FCC rules no longer in existence, be replaced with a flat per subscriber, per signal fee based on fair market value. The Office makes this recommendation because it would more closely align the rates paid by the cable systems with those paid by the satellite carriers and it would simplify the filing process for the filer and the Copyright Office.

The study also proposes a new approach to the problems encountered by subscribers to a satellite service who sign up thinking that they will receive the network signals from the satellite carrier, when in fact they are not eligible to receive these signals under the current law because they purportedly can receive the local network affiliate over- the-air. To ameliorate this problem, the Office recommends that satellite carriers, and their distributors, inform a potential subscriber as to whether he or she is eligible to receive the network signals. Those who live in a certain geographical area would be eligible to receive the signal (the green zone), and those who live outside the area would not (the red zone). This approach would replace the current reliance on the Grade B signal intensity test, which purportedly is too expensive to administer. The Office also supports a temporary surcharge to subscribers located in a "red zone," who nonetheless wish to receive the network service.

The Office also carefully considered the emerging technologies in the field of telecommunication and their place, if any, in the compulsory licensing scheme. Satellite carriers had reported that the industry was capable of retransmitting local broadcast signals within a defined geographic area and had requested a clarification of the satellite compulsory license so that it would be clear that such retransmissions fall within the scope of the license; a suggestion that the Office endorses in its report. The Office, however, did not accept the arguments put forth by the Internet service providers and rejected their request to extend the cable compulsory license to their operations or recommend a new compulsory license for their industry.

As part of the study, the Copyright Office convened three days of public meetings to listen to the concerns of the industries and the copyright owners. Twenty-four witnesses, representing the motion picture industry, cable television, the broadcasting industry, local television, sports associations, Internet audio services, performing rights societies, satellite carriers, small-business interests, and the telephone industry, presented testimony to the Register of Copyrights and her staff. The Office also solicited written comments and reply comments from all interested parties. Forty-three parties filed comments in response to a Notice of Inquiry from the Office, and 35 parties filed reply comments. The commenters' views and suggestions are discussed at length in the final report.

Copies of the executive summary are available from the Office of the Copyright General Counsel, Library of Congress, James Madison Building, Room 403, 101 Independence Avenue S.E., Washington, DC 20540; and copies of the full report are posted on the Internet site for the Library of Congress at http://www.loc.gov/copyright/ under the heading "What's New."

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PR 97-129
8/11/97
ISSN 0731-3527