[House Report 105-661]
[From the U.S. Government Publishing Office]



105th Congress                                            Rept. 105-661
                        HOUSE OF REPRESENTATIVES

 2d Session                                                      Part 1
_______________________________________________________________________


 
   MULTICHANNEL VIDEO COMPETITION AND CONSUMER PROTECTION ACT OF 1998

                                _______
                                

                 July 30, 1998.--Ordered to be printed

_______________________________________________________________________


  Mr. Bliley, from the Committee on Commerce, submitted the following

                              R E P O R T

                        [To accompany H.R. 2921]

      [Including cost estimate of the Congressional Budget Office]

      The Committee on Commerce, to whom was referred the bill 
(H.R. 2921) to amend the Communications Act of 1934 to require 
the Federal Communications Commission to conduct an inquiry 
into the impediments to the development of competition in the 
market for multichannel video programming distribution, having 
considered the same, report favorably thereon with an amendment 
and recommend that the bill as amended do pass.

                                CONTENTS

                                                                   Page
Amendment........................................................     1
Purpose and Summary..............................................     2
Background and Need for Legislation..............................     3
Hearings.........................................................     8
Committee Consideration..........................................     8
Rollcall Votes...................................................     8
Committee Oversight Findings.....................................     8
Committee on Government Reform and Oversight.....................     8
New Budget Authority, Entitlement Authority, and Tax Expenditures     9
Committee Cost Estimate..........................................     9
Congressional Budget Office Estimate.............................     9
Federal Mandates Statement.......................................    11
Advisory Committee Statement.....................................    11
Constitutional Authority Statement...............................    12
Applicability to Legislative Branch..............................    12
Section-by-Section Analysis of the Legislation...................    12
Changes in Existing Law Made by the Bill, as Reported............    13

                               AMENDMENT

  The amendment is as follows:
  Strike out all after the enacting clause and insert in lieu 
thereof the following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Multichannel Video Competition and 
Consumer Protection Act of 1998''.

SEC. 2. INQUIRY REQUIRED.

  Section 623 of the Communications Act of 1934 (47 U.S.C. 543) is 
amended by adding at the end the following new subsection:
  ``(o) Inquiry on Impediments to Development of Effective 
Competition.--
          ``(1) Inquiry required.--Within 30 days after the date of 
        enactment of this subsection, the Commission shall initiate an 
        inquiry on the extent to which the differential fee decision 
        constitutes an impediment to the development of effective 
        competition in the market for multichannel video programming 
        distribution from multichannel video programming distributors 
        described in subsection (l)(1)(B).
          ``(2) Report required.--Within 90 days after the date of 
        enactment of this subsection, the Commission shall submit a 
        report on the results of the inquiry to the Committee on 
        Commerce and the Committee on the Judiciary of the House of 
        Representatives and the Committee on Commerce, Science, and 
        Transportation and the Committee on the Judiciary of the 
        Senate.
          ``(3) Rulemaking.--Within 180 days after the date of 
        enactment of this subsection, the Commission shall complete any 
        actions necessary (including any reconsideration) to make such 
        changes as the Commission may determine to be necessary to its 
        regulations on the basis of the inquiry required by this 
        subsection.
          ``(4) Definition.--For the purposes of this subsection, the 
        term `differential fee decision' means the decision of the 
        Librarian of Congress on October 27, 1997, relating to the per 
        subscriber per month royalty fee for the retransmission of 
        superstation and distant network signals by direct-to-home 
        satellite service providers.''.

SEC. 3. DIRECT-TO-HOME SATELLITE PIRACY PREVENTION.

  Section 705(d)(6) of the Communications Act of 1934 (47 U.S.C. 
605(d)(6)) is amended by inserting ``or direct-to-home satellite 
services (as defined in section 303(v))'' after ``satellite cable 
programming''.

SEC. 4. STAY PENDING COMPLETION OF INQUIRY.

  During the period beginning January 1, 1998, and ending 275 days 
after the submission of the report required by section 623(o) of the 
Communications Act of 1934 (as added by section 2 of this Act), no 
officer or employee of the United States shall take any action to 
implement or enforce, and no obligation or liability shall accrue 
pursuant to, the differential fee decision described in paragraph (4) 
of such section.

                          Purpose and Summary

     The purpose of H.R. 2921, the Multichannel Video 
Competition and Consumer Protection Act of 1998, is to promote 
the competitive viability of satellite broadcast services, such 
as direct broadcast satellite (DBS) service and other direct-
to-home (DTH) satellite services (e.g., traditional ``C-band'' 
service) and, as a result, to promote competition in the market 
for multichannel video programming distribution.
    There are three key provisions to H.R. 2921. Section 2 of 
the bill would require the Federal Communications Commission 
(FCC) to conduct an inquiry into the effect the ``differential 
fee decision'' will have on the development of effective 
competition to cable. The ``differential fee decision'' is the 
decision by the Librarian of Congress on October 27, 1997, to 
increase the per subscriber, per month royalty fee paid by 
satellite broadcasters for the retransmission of superstation 
and distant network signals. Section 3 of the bill would 
clarify satellite broadcasters'' legal standing to sue those 
who pirate satellite broadcast signals. And Section 4 of the 
bill would stay enforcement of the ``differential fee 
decision''.

                  Background and Need for Legislation

Promoting competition to incumbent cable systems

     The FCC's recent report on the status of competition in 
the market for multichannel video programming competition found 
that non-cable competitors (e.g., satellite broadcasters, cable 
overbuilders, wireless cable) continue to experience 
substantial rates of growth.\1\ For example, the FCC estimates 
that about 9 million households (predominately in rural areas) 
subscribe to satellite broadcast service. But while non-cable 
competitors continue to grow, incumbent cable operators 
continue to retain a dominant position in the market for 
multichannel video programming distribution (MVPD), with about 
87 percent of American households that subscribe to video 
services still relying on the local incumbent cable operator 
for service. The FCC also found that cable operators increased 
their rates 8.5 percent for regulated programming and equipment 
over the 12-month period from July 1996 to July 1997.
---------------------------------------------------------------------------
    \1\ Annual Assessment of the Status of Competition in the Market 
for the Delivery of Video Programming, CS Dkt. No. 97-141, Fourth 
Annual Report, para. 55 (1998) (hereinafter ``1998 Report'') (noting 
that ``[s]ome industry analysts expect the [direct broadcast satellite 
service] industry growth to continue, reaching 15 million subscribers 
by 2001 (14.5% of the total television market')).
---------------------------------------------------------------------------
    The Committee is thus seeking ways to promote competition 
to cable. The FCC noted in its report that when incumbent cable 
operators face head-to-head competition, cable operators 
typically respond with a mix of increased programming choices, 
lower rates, and improved customer service. And given it has 
the second largest share of the MVPD market, the satellite 
broadcast industry still appears to be incumbent cable 
operators'' strongest competitor. Indeed, as the FCC stated in 
its most recent report, direct broadcast satellite (DBS) 
service in particular ``is widely available and constitutes the 
most significant alternative to cable television.''\2\
---------------------------------------------------------------------------
    \2\ 1998 Report, para. 11.
---------------------------------------------------------------------------
    The FCC additionally noted, however, that satellite 
broadcasters face several impediments (legal as well as 
technological) in their efforts to compete with cable. 
Satellite broadcasters, for example, are prohibited by law 
(and, to a certain degree, by technology) from retransmitting 
local broadcast signals to their subscribers. Because local 
broadcast signals typically attract the largest share of 
viewers, many consumers may treat satellite broadcast service 
as an imperfect substitute for cable television service, which 
can and does retransmit local broadcast signals.
    Thus, the purpose of this legislation is to identify and 
remove as many of the existing impediments to competition as 
possible. By approving H.R. 2921, the Committee reaffirms its 
traditional preference for competitive solutions. The Committee 
believes that it is through competition that consumers are best 
protected from increasing prices and poor service.

Protecting against piracy

    Like any other encrypted video system, satellite broadcast 
systems have experienced widespread piracy. The traditional C-
band systems, in particular, suffered substantial piracy in the 
late 1980s and into the early 1990s. It is estimated that, when 
C-band signal piracy was at its peak, as little as 25 percent 
of C-band subscribers were lawfully receiving service.
    Piracy undermined the satellite broadcast industry's 
ability to grow and innovate, and thus served as a serious 
impediment to competition in the MVPD market. While it is true 
that encryption technology in recent years has substantially 
reduced satellite signal piracy, it is conceivable that 
criminal elements will at some point be able to circumvent 
today's encryption technology. Indeed, DBS operators have 
indicated to the Committee that signal pirates never cease in 
attempting to decrypt their signals. The Committee views 
satellite signal piracy as a serious threat to the viability of 
satellite broadcast service and, hence, an impediment to 
competition in the MVPD market.

Differential fee decision

     In 1988, Congress enacted the Satellite Home Viewer Act 
(SHVA) (Public Law 101-667) to provide for a compulsory license 
and a copyright royalty payment mechanism for satellite 
broadcasters that retransmit superstation and distant network 
signals. Given the competitive relationship between satellite 
broadcast service and cable service in the market for 
multichannel video programming distribution, Congress intended 
then that the satellite compulsory license would be comparable 
to the cable compulsory license first established in 1976. 
Accordingly, Congress established that, through 1992, satellite 
broadcasters would pay copyright owners (via the Copyright 
Office) $0.03 per subscriber, per month for the retransmission 
of each distant network signal, and $0.12 per subscriber, per 
month for the retransmission of each superstation signal.
    In 1994, Congress extended the satellite compulsory license 
through the end of 1999 (Public Law 103-369). At the same time, 
Congress marginally increased the royalty rates through 1997 to 
$0.06 per subscriber, per month for each distant network 
signal, $0.14 per subscriber, per month for each so-called 
``syndex-proof'' superstation signal, and $0.175 per 
subscriber, per month for each ``non-syndex-proof'' 
superstation signal. In 1996, as the rates established by 
Congress in 1994 approached sunset, and in the absence of an 
arbitrated solution, the United States Copyright Office 
convened a copyright arbitration royalty panel (CARP) to 
determine the royalty rates for the remaining two years of the 
satellite compulsory license. On August 28, 1997, the CARP 
recommended to the Librarian of Congress that satellite 
broadcasters pay $0.27 per subscriber, per month for all 
broadcast signals (superstation and distant network signals 
alike). The Librarian of Congress accepted most of the CARP's 
recommendation on October 27, 1997, and established January 1, 
1998, as the effective date for the new royalty rates.
    Meanwhile, the statutorily prescribed royalty rate for 
cable retransmission remains, on average, $0.0245 per 
subscriber, per month for distant network signals, and $0.097 
cents per subscriber, per month for superstation signals. These 
cable royalty rates served as a benchmark for Congress when it 
first established the satellite compulsory license in 1988, and 
then again when Congress marginally increased the satellite 
royalty rates in 1994. The comparability of the cable and 
satellite royalty rates reflected Congress'' belief that, while 
not perfect substitutes, cable service and satellite broadcast 
service effectively compete in the same market for the same 
subscribers.
    The cable royalty rates, however, bear no relationship to 
the rates established by the CARP decision. (See Figure 1.) The 
Committee is concerned that, in establishing the new royalty 
rates, the CARP decision overlooks Congress' clear direction in 
SHVA to give consideration to the impact royalty rates would 
have on competition in the market for multichannel video 
programming distribution. Congress has always recognized the 
interrelationship between telecommunications policy and 
copyright law. Indeed, while the compulsory license is a tool 
of copyright law, it is used to promote certain goals related 
to telecommunications policy, namely the efficient distribution 
of cable and satellite programming.
    The CARP decision, however, appears to overlook the impact 
a royalty rate increase of as much as 350 percent will have on 
competition in the distribution of cable and satellite 
programming. The decision adds about $50 million to the annual 
costs of the satellite broadcast industry. The Committee views 
the CARP decision with great concern. The decision not only 
reduces the likelihood that satellite broadcasters will be able 
to effectively compete against incumbent cable operators, but 
it also means consumers will inevitably bear the cost of this 
government-mandated surcharge. (See Figure 2.) The Committee 
expects that, through enactment of H.R. 2921, the FCC will help 
to precisely identify the extent to which the CARP decision 
impedes effective competition to cable (as defined in the 
Communications Act of 1934), and to the extent possible, remove 
any barriers to competition through changes to its rules.


                                Hearings

    The Subcommittee on Telecommunications, Trade, and Consumer 
Protection held a legislative hearing on H.R. 2921 on 
Wednesday, April 1, 1998. The Subcommittee received testimony 
from: Mr. John Logan, Acting Bureau Chief, Cable Services 
Bureau, Federal Communications Commission; Mr. Dave Carson, 
General Counsel, Register of Copyright; Mr. Charles W. Ergen, 
CEO, EchoStar; Mr. James F. Goodmon, President & CEO, Capitol 
Broadcasting Co.; Mr. Larry Chapman, Executive Vice President, 
DIRECTV; Mr. Jack Valenti, President & CEO, Motion Picture 
Association of America, accompanied by Mr. Fritz Attaway, Vice 
President and General Counsel, Motion Picture Association of 
America; Mr. Gene Kimmelman, Co-Director, Consumers Union; Mr. 
Michael J. Guidry, General Manager, South Louisiana Electric 
Cooperative Association; Mr. H. Thomas Casey, President & CEO, 
PrimeTime 24; Mr. Decker Anstrom, President & CEO, National 
Cable Television Association; and Mr. James J. Popham, Vice 
President & General Counsel, Association of Local Television 
Stations.

                        Committee Consideration

    On June 17, 1998, the Subcommittee on Telecommunications, 
Trade, and Consumer Protection met in open markup session and 
approved H.R. 2921, the Multichannel Video Competition and 
Consumer Protection Act of 1998, for Full Committee 
consideration, without amendment, by a voice vote, a quorum 
being present. On June 24, 1998, the Committee on Commerce met 
in open markup session and ordered H.R. 2921 reported to the 
House, amended, by a voice vote, a quorum being present.

                             Rollcall Votes

    Clause 2(l)(2)(B) of rule XI of the Rules of the House 
requires the Committee to list the recorded votes on the motion 
to report legislation and amendments thereto. There were no 
recorded votes taken in connection with ordering H.R. 2921 
reported. An amendment by Mr. Tauzin to extend the stay of the 
copyright arbitration royalty panel (CARP) rate increase from 
seven months to one year, was agreed to by a voice vote. A 
motion by Mr. Bliley to order H.R. 2921 reported to the House, 
as amended, was agreed to by a voice vote, a quorum being 
present.

                      Committee Oversight Findings

    Pursuant to clause 2(l)(3)(A) of rule XI of the Rules of 
the House of Representatives, the Committee held a legislative 
hearing and made findings that are reflected in this report.

              Committee on Government Reform and Oversight

    Pursuant to clause 2(l)(3)(D) of rule XI of the Rules of 
the House of Representatives, no oversight findings have been 
submitted to the Committee by the Committee on Government 
Reform and Oversight.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 2(l)(3)(B) of rule XI of the 
Rules of the House of Representatives, the Committee finds that 
H.R. 2921, the Multichannel Video Competition and Consumer 
Protection Act of 1998, would result in no new or increased 
budget authority, entitlement authority, or tax expenditures or 
revenues.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                  Congressional Budget Office Estimate

    Pursuant to clause 2(l)(3)(C) of rule XI of the Rules of 
the House of Representatives, the following is the cost 
estimate provided by the Congressional Budget Office pursuant 
to section 402 of the Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                      Washington, DC, July 9, 1998.
Hon. Tom Bliley,
Chairman, Committee on Commerce,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 2921, the 
Multichannel Video Competition and Consumer Protection Act of 
1997.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Kim Cawley 
(for federal costs), Hester Grippando (for revenues), Pepper 
Santalucia (for the state and local impact), and Jean Wooster 
(for the private-sector impact).
            Sincerely,
                                         June E. O'Neill, Director.
            Enclosure.

H.R. 2921--Multichannel Video Competition and Consumer Protection Act 
        of 1997

    Summary: Through the compulsory copyright license created 
by the Satellite Home Viewer Act of 1988, satellite carriers 
pay a royalty fee per subscriber per month to the Copyright 
Office and may retransmit network and superstation signals by 
satellite to subscribers for private home viewing. The 
Copyright Office later distributes these fees to those who own 
copyrights on the material retransmitted by satellite.
    H.R. 2921 would delay for 18 months an increase that went 
into effect in January in royalty fees paid by satellite 
carriers to the federal government. Under current law, the 
Copyright Office expects to collect $114 million from satellite 
carriers for calendar year 1998 and $75 million for the first 
half of 1999. If H.R. 2921 is enacted, CBO estimates the Office 
would collect only $41 million for 1998 and $27 million for the 
first 6 months of 1999--a loss of $121 million in revenues over 
fiscal years 1998 and 1999. Following the review of an 
arbitration panel, the royalty fees will be paid to copyright 
owners in 2000 and 2001, along with accrued interest earnings. 
With lower collections, the payments in 2000 and 2001 will also 
be lower, by an estimated $130 million over those two years.
    We estimate that other provisions of the bill would not 
have a significant cost to the federal government. Because H.R. 
2921 would affect both revenues and direct spending, it would 
be subject to pay-as-you-go procedures. The bill contains no 
intergovernmental or private-sector mandates as defined in the 
Unfunded Mandates Reform Act (UMRA).
    Estimated cost to the federal government: The estimated 
budgetary impact of H.R. 2921 is shown in the following table. 
In addition to the revenue and direct spending effects shown in 
the table, section 2 of the bill would result in a small 
discretionary cost to complete a required report. CBO estimates 
that the cost of completing that report--within the required 90 
days after enactment--would be significantly less than 
$500,000. The costs of this legislation fall within budget 
function 370 (commerce and housing credit).

                                    [By fiscal year, in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                              1998     1999     2000     2001     2002     2003 
----------------------------------------------------------------------------------------------------------------
Receipts and Spending Under Current Law:                                                                        
    Estimated revenues \1\................................      210      240      215      175      178      182
    Estimated budget authority \2\........................      238      268      241      208      217      225
    Estimated outlays.....................................      347      250      250      250      216      205
Proposed Changes:                                                                                               
    Estimated revenues....................................      -34      -87        0        0        0        0
    Estimated budget authority............................        0        0      -78      -52        0        0
    Estimated outlays.....................................        0        0      -78      -52        0        0
Receipts and Spending Under H.R. 2921:                                                                          
    Estimated revenues \1\................................      176      153      215      175      178      182
    Estimated budget authority \2\........................      238      268      163      156      217      225
    Estimated outlays.....................................      347      250      172      198      216      205
----------------------------------------------------------------------------------------------------------------
\1\ Includes royalty collections from cable television stations, jukebox licenses, satellite carriers, and      
  digital audio devices.                                                                                        
\2\ Payments to copyright owners include interest earnings on securities held by the Copyright Office.          

    Basis of estimate: For purposes of this estimate, we assume 
the bill will be enacted in July 1998. The Copyright Office has 
mailed payment notices to satellite carriers for the first 6 
months of calendar 1998. If H.R. 2921 is enacted, we assume 
part of this money would be returned to satellite carriers 
before the end of fiscal year 1998. Based on information from 
the Copyright Office, CBO estimates that enacting the bill 
would reduce 1998 payments from satellite carriers (which are 
recorded as revenues) by $34 million in fiscal year 1998 and by 
$87 million in fiscal year 1999. Under the bill, the fee 
imposed on satellite carriers would revert to its current level 
starting in July 1999.
    We estimate that payments from the federal government to 
copyright holders for satellite transmissions would not occur 
until fiscal year 2000 for collections made for calendar year 
1998, and that these payments (including interest) would be 
about $78 million lower than under current law because H.R. 
2921 would delay the scheduled fee increase for a year and one-
half. Payments for collections made for calendar year 1999 
would occur in fiscal year 2001, and we estimate they would be 
about $52 million lower than under current law.
    Pay-as-you-go considerations: Section 252 of the Balanced 
Budget and Emergency Deficit Control Act of 1985 sets up pay-
as-you-go procedures for legislation affecting direct spending 
or receipts. The net changes in outlays and governmental 
receipts that are subject to pay-as-you-go procedures are shown 
in the following table. For the purposes of enforcing pay-as-
you-go procedures, only the effects in the current year, the 
budget year, and the succeeding four years are counted.

                                                        [By fiscal year, in millions of dollars]                                                        
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   1998    1999    2000    2001    2002    2003    2004    2005    2006    2007    2008 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Changes in outlays..............................................       0       0     -78     -52       0       0       0       0       0       0       0
Changes in receipts.............................................     -34     -87       0       0       0       0       0       0       0       0       0
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Previous CBO estimate: On March 26, 1998, CBO prepared a 
cost estimate for S. 1422, the Federal Communications 
Commission Satellite Carrier Oversight Act, as ordered reported 
by the Senate Committee on Commerce, Science, and 
Transportation on March 12, 1998. The House bill would postpone 
the scheduled increase in royalty fees paid by satellite 
carriers until July 1999--six months longer than the Senate 
bill. Consequently, the revenue loss and reduced spending 
associated with postponement of the royalty fee increase are 
about $50 million greater under H.R. 2921 than they would be 
under S. 1244.
    Intergovernmental and private-sector impact: This bill 
would impose no intergovernmental or private-sector mandates as 
defined in UMRA. However, the 18-month delay in the scheduled 
increase in copyright royalty fees would impose costs on the 
copyright holders, including some state and local government 
entities, while reducing costs of the satellite carriers 
compared to the current fee schedule. Satellite carriers pay 
copyright royalty fees to copyright holders through the 
Copyright Office to retransmit signals from local network 
affiliates and superstations. Because of this delay, the fees 
collected in 1998 and 1999 that the Copyright Office would 
distribute in 2000 and 2001 to the industry groups that 
represent copyright holders would be reduced by $130 million, 
including interest income.
    Estimate prepared by: Federal costs--Kim Cawley; Revenues--
Hester Grippando; impact on state, local, and tribal 
governments--Pepper Santalucia; impact on the private sector--
Jean Wooster.
    Estimate approved by: Paul N. Van de Water, Assistant 
Director for Budget Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                   Constitutional Authority Statement

    Pursuant to clause 2(l)(4) of rule XI of the Rules of the 
House of Representatives, the Committee finds that the 
Constitutional authority for this legislation is provided in 
Article I, section 8, clause 3, which grants Congress the power 
to regulate commerce with foreign nations, among the several 
States, and with the Indian tribes.

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

             Section-by-Section Analysis of the Legislation

Section 1. Short title

    Section 1 establishes the short title as the ``Multichannel 
Video Competition and Consumer Protection Act of 1998.''

Section 2. Inquiry required

    Section 2 of H.R. 2921 amends Section 623 of the 
Communications Act of 1934 (47 U.S.C. Sec. 543) to require the 
FCC to analyze and report to Congress on the impact of the CARP 
decision on the development of competition in the MVPD market. 
In particular, new subsection 623(o)(1) requires the FCC to 
initiate an inquiry within 30 days of enactment into the impact 
the CARP decision will have on the ability of satellite 
broadcasters to effectively compete (as defined in subsection 
623(l)(1)(B)) against incumbent cable operators. New subsection 
623(o)(2) requires the FCC to issue a report, within 90 days of 
enactment, on the results of its inquiry to the Committee on 
Commerce and the Committee on the Judiciary of the House of 
Representatives, and the Committee on Commerce, Science, and 
Transportation and the Committee on the Judiciary of the 
Senate. Finally, new subsection 623(o)(3) authorizes the FCC to 
make any changes to its rules it deems necessary on the basis 
of its findings from its inquiry required by new subsection 
623(o)(1).

Section 3. Direct-to-home satellite piracy prevention

    Section 705 of the Communications Act of 1934 (47 U.S.C. 
Sec. 605) provides a broad measure of protection against the 
unauthorized reception of various forms of radio 
communications, including satellite-delivered video programming 
services. Consistent with the intent of Section 705, the courts 
have construed the provision as affording both retail and 
wholesale distributors of satellite-delivered video programming 
networks (e.g., cable operators, cable programming networks, 
wireless cable operators, and direct-to-home satellite 
distributors) with a legal remedy against signal pirates, as 
well as those who assist pirates through the manufacturing or 
sale of devices that enable piracy.
    Section 3 of H.R. 2921, as reported by the Committee on 
Commerce, amends Section 705(d)(6) to clarify that the persons 
with standing to seek relief under this provision include not 
only retail and wholesale distributors of satellite programming 
that is primarily intended for direct receipt by cable 
operators for retransmission to their subscribers, but also 
retail and wholesale distributors of satellite programming that 
is intended primarily for retransmission to direct-to-home 
satellite service subscribers. In amending Section 705, it is 
the Committee's intent not to narrow the scope of the existing 
provision. Indeed, all communications that previously have been 
held to be covered under Section 705 will continue to be 
protected under the provision as amended.

Section 4. Stay pending completion of inquiry

    Section 4 of H.R. 2921 relates back to Section 2 in that it 
stays enforcement of the CARP decision during the period 
beginning January 1, 1998 (the effective date of the CARP 
decision pursuant to the Librarian's ruling), and ending 275 
days after the FCC submits its report as required under Section 
2. As previously stated, Section 2 requires the FCC to make any 
changes to its rules it deems necessary on the basis of its 
findings from its inquiry required by new subsection 623(o)(1). 
The Committee believes that it is necessary to give the FCC, 
and possibly Congress as well, enough time after the submission 
of the report to make any necessary changes to existing law. 
Indeed, to the extent the CARP decision impedes competition 
(and the Committee believes that it does), it is necessary to 
stay enforcement of the decision for a period long enough to 
both identify and amend the rules and/or laws that necessitate 
change.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3 of rule XIII of the Rules of the 
House of Representatives, changes in existing law made by the 
bill, as reported, are shown as follows (existing law proposed 
to be omitted is enclosed in black brackets, new matter is 
printed in italics, existing law in which no change is proposed 
is shown in roman):

COMMUNICATIONS ACT OF 1934

           *       *       *       *       *       *       *


TITLE VI--CABLE COMMUNICATIONS

           *       *       *       *       *       *       *


PART III--FRANCHISING AND REGULATION

           *       *       *       *       *       *       *


SEC. 623. REGULATION OF RATES.

  (a) * * *

           *       *       *       *       *       *       *

  (o) Inquiry on Impediments to Development of Effective 
Competition.--
          (1) Inquiry required.--Within 30 days after the date 
        of enactment of this subsection, the Commission shall 
        initiate an inquiry on the extent to which the 
        differential fee decision constitutes an impediment to 
        the development of effective competition in the market 
        for multichannel video programming distribution from 
        multichannel video programming distributors described 
        in subsection (l)(1)(B).
          (2) Report required.--Within 90 days after the date 
        of enactment of this subsection, the Commission shall 
        submit a report on the results of the inquiry to the 
        Committee on Commerce and the Committee on the 
        Judiciary of the House of Representatives and the 
        Committee on Commerce, Science, and Transportation and 
        the Committee on the Judiciary of the Senate.
          (3) Rulemaking.--Within 180 days after the date of 
        enactment of this subsection, the Commission shall 
        complete any actions necessary (including any 
        reconsideration) to make such changes as the Commission 
        may determine to be necessary to its regulations on the 
        basis of the inquiry required by this subsection.
          (4) Definition.--For the purposes of this subsection, 
        the term ``differential fee decision'' means the 
        decision of the Librarian of Congress on October 27, 
        1997, relating to the per subscriber per month royalty 
        fee for the retransmission of superstation and distant 
        network signals by direct-to-home satellite service 
        providers.

TITLE VII--MISCELLANEOUS PROVISIONS

           *       *       *       *       *       *       *


SEC. 705. UNAUTHORIZED PUBLICATION OF COMMUNICATIONS.

  (a) * * *

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  (d) For purposes of this section--
          (1) * * *

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          (6) the term ``any person aggrieved'' shall include 
        any person with proprietary rights in the intercepted 
        communication by wire or radio, including wholesale or 
        retail distributors of satellite cable programming, 
        and, in the case of a violation of paragraph (4) of 
        subsection (e), shall also include any person engaged 
        in the lawful manufacture, distribution, or sale of 
        equipment necessary to authorize or receive satellite 
        cable programming or direct-to-home satellite services 
        (as defined in section 303(v)).

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