[Congressional Record Volume 143, Number 155 (Friday, November 7, 1997)]
[Senate]
[Pages S12007-S12012]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. McCAIN (for himself, Mr. Burns, Mr. Conrad, and Mr. 
        Dorgan):
  S. 1422. A bill to amend the Communications Act of 1934 to promote 
competition in the market for delivery of multichannel video 
programming and for other purposes; to the Committee on Commerce, 
Science, and Transportation.


 the federal communications commission satellite carrier oversight act

  Mr. McCAIN. Madam President, today I am introducing the Federal 
Communications Commission Satellite Carrier Oversight Act. This bill 
will do a number of things to promote competition in the multichannel 
video marketplace. I wish to thank Senator Burns for his support on 
this bill.
  Congress has had a longstanding interest in promoting competition in 
the multichannel video marketplace so as to enable consumers to have a 
choice of video providers at competitive rates. However, a recent 
regulatory action threatens the ability of direct-to-home [DTH] 
satellite television operators to compete effectively with cable 
operators.
  On October 27, 1997, the Librarian of Congress adopted a Copyright 
Arbitration Royalty Panel's recommendation of a precipitous and wholly 
unjustified increase in the copyright fees satellite carriers pay for 
superstation and network affiliate signals delivered to satellite TV 
households. This action will result in a rate increase for satellite 
television subscribers and have a detrimental effect on the ability of 
DTH operators to compete with cable.
  This bill will ensure that this rate increase does not take effect as 
scheduled on January 1, 1998. It delays the effective date of the rate 
increase to January 1, 1999. The 7.5 million U.S. households who 
currently subscribe to satellite television deserve to have Congress 
examine the effect of this copyright fee increase on video competition 
and to consider changes to the law that would ensure a less arbitrary 
and more consumer friendly result. This delay will give the FCC an 
opportunity to determine what impact the increased copyright fees will 
have on satellite's ability to compete with cable, and it will give 
Congress an opportunity to evaluate the FCC's report and respond 
accordingly.
  The current satellite copyright rates are 14 cents per subscriber per 
month for each superstation signal and 6 cents per subscriber per month 
for each network signal. Cable operators currently pay an average of 
9.7 cents for the exact same superstations and 2.7 cents for the exact 
same network signals. At the 27-cent rate adopted by the Librarian, 
satellite carriers will be paying almost 270 percent more than cable 
for the exact same superstations and 900 percent more for the exact 
same network signals.
  This creates an enormous disparity in the copyright fees paid for the 
same signals and will result in rate increases to satellite 
subscribers, which in turn will have a negative impact on competition 
between cable and satellite. Such a result is directly contrary to the 
intent of Congress to give consumers a choice of video providers at 
competitive rates.
  The bill also addresses an issue of continuing concern to the DTH 
industry. Signal theft represents a serious threat to DTH operators. In 
the Telecommunications Act of 1996, Congress confirmed the 
applicability of penalties for unauthorized decryption of DTH satellite 
services. The amendment we propose would confirm the judicial 
interpretation that civil suits may be brought by DTH operators for 
signal theft.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1422

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Federal Communications 
     Commission Satellite Carrier Oversight Act''.

     SEC. 2. FINDINGS.

       (a) The Congress finds that:
       (1) Signal theft represents a serious threat to direct-to-
     home satellite television. In the Telecommunications Act of 
     1996, Congress confirmed the applicability of penalties for 
     unauthorized decryption of direct-to-home satellite services. 
     Nevertheless, concerns remain about civil liability for such 
     unauthorized decryption.
       (2) In view of the desire to establish competition to the 
     cable television industry, Congress authorized consumers to 
     utilize direct-to-home satellite systems for viewing video 
     programming through the Cable Communications Policy Act of 
     1984.
       (3) Congress found in the Cable Television Consumer 
     Protection and Competition Act of 1992 that without the 
     presence of another multichannel video programming 
     distributor, a cable television operator faces no local 
     competition and that the result is undue market power for the 
     cable operator as compared to that of consumers and other 
     video programmers.
       (4) The Federal Communications Commission, under the Cable 
     Television Consumer Protection and Competition Act of 1992, 
     has the responsibility for reporting annually to the Congress 
     on the state of competition in the market for delivery of 
     multichannel video programming.
       (5) In the Cable Television Consumer Protection and 
     Competition Act of 1992, Congress stated its policy of 
     promoting the availability to the public of a diversity of

[[Page S12012]]

     views and information through cable television and other 
     video distribution media.
       (6) Direct-to-home satellite television service is the 
     fastest growing multichannel video programming service with 
     approximately 8 million households subscribing to video 
     programming delivered by satellite carriers.
       (7) Direct-to-home satellite television service is the 
     service that most likely can provide effective competition to 
     cable television service.
       (8) Through the compulsory copyright license created by 
     Section 119 of the Satellite Home Viewer Act of 1988, 
     satellite carriers have paid a royalty fee per subscriber, 
     per month to retransmit network and superstation signals by 
     satellite to subscribers for private home viewing.
       (9) Congress set the 1988 fees to equal the average fees 
     paid by cable television operators for the same superstation 
     and network signals.
       (10) Effective May 1, 1992, the royalty fees payable by 
     satellite carriers were increased through compulsory 
     arbitration to $0.06 per subscriber per month for 
     retransmission of network signals and $0.175 per subscriber 
     per month for retransmission of superstation signals, unless 
     all of the programming contained in the superstation signal 
     is free from syndicated exclusivity protection under the 
     rules of the Federal Communications Commission, in which case 
     the fee was decreased to $0.14 per subscriber per month. 
     These fees were 40-70 percent higher than the royalty fees 
     paid by cable television operators to retransmit the same 
     signals.
       (11) On October 27, 1997, the Librarian of Congress adopted 
     the recommendation of the Copyright Arbitration Royalty Panel 
     and approved raising the royalty fees of satellite carriers 
     to $0.27 per subscriber per month for both superstation and 
     network signals, effective January 1, 1998.
       (12) The fees adopted by the Librarian are 270 percent 
     higher for superstations and 900 percent higher for network 
     signals than the royalty fees paid by cable television 
     operators for the exact same signals.
       (13) To be an effective competitor to cable, direct-to-home 
     satellite television must have access to the same programming 
     carried by its competitors and at comparable rates. In 
     addition, consumers living in areas where over-the-air 
     network signals are not available rely upon satellite 
     carriers for access to important news and entertainment.
       (14) The Copyright Arbitration Royalty Panel did not 
     adequately consider the adverse competitive effect of the 
     differential in satellite and cable royalty fees on promoting 
     competition among multichannel video programming providers 
     and the importance of evaluating the fees satellite carriers 
     pay in the context of the competitive nature of the 
     multichannel video programming marketplace.
       (15) If the recommendation of the Copyright Arbitration 
     Royalty Panel is allowed to stand, the direct-to-home 
     satellite industry, whose total subscriber base is equivalent 
     in size to approximately 11 percent of all cable households, 
     will be paying royalties that equal half the size of the 
     cable royalty pool, thus giving satellite subscribers a 
     disproportionate burden for paying copyright royalties when 
     compared to cable television subscribers.

     SEC. 3. DBS SIGNAL SECURITY.

       (a) Section 605(d) of the Communications Act of 1934 (47 
     U.S.C. 605) is amended by adding after ``satellite cable 
     programming,'' the following: ``or direct-to-home satellite 
     services,''.

     SEC. 4. PROCEEDING ON RETRANSMISSION OF DISTANT BROADCAST 
                   SIGNALS; REPORT ON EFFECT OF INCREASED ROYALTY 
                   FEES FOR SATELLITE CARRIERS ON COMPETITION IN 
                   THE MARKET FOR DELIVERY OF MULTICHANNEL VIDEO 
                   PROGRAMMING.

       (a) Section 628 of the Communications Act of 1934 (47 
     U.S.C. 548) is amended--
       (1) by adding at the end of subsection (g): ``The 
     Commission shall, within 180 days of enactment of this 
     amendment initiate a notice of inquiry to determine the best 
     way in which to facilitate the retransmission of distant 
     broadcast signals such that it is more consistent with the 
     1992 Cable Act's goal of promoting competition in the market 
     for delivery of multichannel video programming and the public 
     interest. The Commission also shall within 180 days of 
     enactment report to Congress on the effect of the increase in 
     royalty fees paid by satellite carriers pursuant to the 
     decision by the Librarian of Congress on competition in the 
     market for delivery of multichannel video programming and the 
     ability of the direct-to-home satellite industry to 
     compete.''

     SEC. 5. EFFECTIVE DATE OF INCREASED ROYALTY FEES.

       (a) Notwithstanding any other provision of law, the 
     Copyright Office shall be prohibited from implementing, 
     enforcing, collecting or awarding copyright royalty fees, and 
     no obligation or liability for copyright royalty fees shall 
     accrue pursuant to the decision of the Librarian of Congress 
     on October 27, 1997, which established a royalty fee of $0.27 
     per subscriber per month for the retransmission of distant 
     broadcast signals by satellite carriers, before January 1, 
     1999.
                                 ______