[Senate Report 106-42]
[From the U.S. Government Publishing Office]





                                                        Calendar No. 24

106th Congress                                                   Report
  1st Session                    SENATE                          106-42

=======================================================================



 
                SATELLITE HOME VIEWERS IMPROVEMENTS ACT

                                _______
                                

                 April 13, 1999.--Ordered to be printed

                                _______


Mr. Hatch, from the Committee on the Judiciary, submitted the following

                              R E P O R T

                         [To accompany S. 247]

    The Committee on the Judiciary, to which was referred the 
bill (S. 247) to amend title 17, United States Code, to reform 
the copyright law with respect to satellite retransmissions of 
broadcast signals, and for other purposes, having considered 
the same, reports favorably thereon, with an amendment, and 
recommends that the bill, as amended, do pass.

                                CONTENTS

                                                                   Page
   I. Purpose.....................................................     4
  II. Legislative history.........................................     5
 III. Discussion..................................................     9
  IV. Vote of the Committee.......................................    11
   V. Section-by-section analysis.................................    11
  VI. Cost estimate...............................................    15
 VII. Regulatory impact statement.................................    18
VIII. Changes in existing law.....................................    18


    The bill, as amended, is as follows:

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Satellite Home Viewers Improvements 
Act''.

SEC. 2. LIMITATIONS ON EXCLUSIVE RIGHTS; SECONDARY TRANSMISSIONS BY 
                    SATELLITE CARRIERS WITHIN LOCAL MARKETS.

    (a) In General.--Chapter 1 of title 17, United States Code, is 
amended by adding after section 121 the following new section:

``Sec. 122. Limitations on exclusive rights; secondary transmissions by 
                    satellite carriers within local markets

    ``(a) Secondary Transmissions of Television Broadcast Stations by 
Satellite Carriers.--A secondary transmission of a primary transmission 
of a television broadcast station into the station's local market shall 
be subject to statutory licensing under this section if--
          ``(1) the secondary transmission is made by a satellite 
        carrier to the public;
          ``(2) the secondary transmission is permissible under the 
        rules, regulations, or authorizations of the Federal 
        Communications Commission; and
          ``(3) the satellite carrier makes a direct or indirect charge 
        for the secondary transmission to--
                  ``(A) each subscriber receiving the secondary 
                transmission; or
                  ``(B) a distributor that has contracted with the 
                satellite carrier for direct or indirect delivery of 
                the secondary transmission to the public.
    ``(b) Reporting Requirements.--
          ``(1) Initial lists.--A satellite carrier that makes 
        secondary transmissions of a primary transmission made by a 
        network station under subsection (a) shall, within 90 days 
        after commencing such secondary transmissions, submit to that 
        station a list identifying (by name and street address, 
        including county and zip code) all subscribers to which the 
        satellite carrier currently makes secondary transmissions of 
        that primary transmission.
          ``(2) Subsequent lists.--After the list is submitted under 
        paragraph (1), the satellite carrier shall, on the 15th of each 
        month, submit to the station a list identifying (by name and 
        street address, including county and zip code) any subscribers 
        who have been added or dropped as subscribers since the last 
        submission under this subsection.
          ``(3) Use of subscriber information.--Subscriber information 
        submitted by a satellite carrier under this subsection may be 
        used only for the purposes of monitoring compliance by the 
        satellite carrier with this section.
          ``(4) Requirements of stations.--The submission requirements 
        of this subsection shall apply to a satellite carrier only if 
        the station to whom the submissions are to be made places on 
        file with the Register of Copyrights a document identifying the 
        name and address of the person to whom such submissions are to 
        be made. The Register shall maintain for public inspection a 
        file of all such documents.
    ``(c) No Royalty Fee Required.--A satellite carrier whose secondary 
transmissions are subject to statutory licensing under subsection (a) 
shall have no royalty obligation for such secondary transmissions.
    ``(d) Noncompliance With Reporting Requirements.--Notwithstanding 
subsection (a), the willful or repeated secondary transmission to the 
public by a satellite carrier into the local market of a television 
broadcast station of a primary transmission made by that television 
broadcast station and embodying a performance or display of a work is 
actionable as an act of infringement under section 501, and is fully 
subject to the remedies provided under sections 502 through 506 and 
509, if the satellite carrier has not complied with the reporting 
requirements of subsection (b).
    ``(e) Willful Alterations.--Notwithstanding subsection (a), the 
secondary transmission to the public by a satellite carrier into the 
local market of a television broadcast station of a primary 
transmission made by that television broadcast station and embodying a 
performance or display of a work is actionable as an act of 
infringement under section 501, and is fully subject to the remedies 
provided by sections 502 through 506 and sections 509 and 510, if the 
content of the particular program in which the performance or display 
is embodied, or any commercial advertising or station announcement 
transmitted by the primary transmitter during, or immediately before or 
after, the transmission of such program, is in any way willfully 
altered by the satellite carrier through changes, deletions, or 
additions, or is combined with programming from any other broadcast 
signal.
    ``(f) Violation of Territorial Restrictions on Statutory License 
for Television Broadcast Stations.--
          ``(1) Individual violations.--The willful or repeated 
        secondary transmission to the public by a satellite carrier of 
        a primary transmission made by a television broadcast station 
        and embodying a performance or display of a work to a 
        subscriber who does not reside in that station's local market, 
        and is not subject to statutory licensing under section 119, is 
        actionable as an act of infringement under section 501 and is 
        fully subject to the remedies provided by sections 502 through 
        506 and 509, except that--
                  ``(A) no damages shall be awarded for such act of 
                infringement if the satellite carrier took corrective 
                action by promptly withdrawing service from the 
                ineligible subscriber; and
                  ``(B) any statutory damages shall not exceed $5 for 
                such subscriber for each month during which the 
                violation occurred.
          ``(2) Pattern of violations.--If a satellite carrier engages 
        in a willful or repeated pattern or practice of secondarily 
        transmitting to the public a primary transmission made by a 
        television broadcast station and embodying a performance or 
        display of a work to subscribers who do not reside in that 
        station's local market, and are not subject to statutory 
        licensing under section 119, then in addition to the remedies 
        under paragraph (1)--
                  ``(A) if the pattern or practice has been carried out 
                on a substantially nationwide basis, the court shall 
                order a permanent injunction barring the secondary 
                transmission by the satellite carrier of the primary 
                transmissions of that television broadcast station (and 
                if such television broadcast station is a network 
                station, all other television broadcast stations 
                affiliated with such network), and the court may order 
                statutory damages not exceeding $250,000 for each 6-
                month period during which the pattern or practice was 
                carried out; and
                  ``(B) if the pattern or practice has been carried out 
                on a local or regional basis with respect to more than 
                one television broadcast station (and if such 
                television broadcast station is a network station, all 
                other television broadcast stations affiliated with 
                such network), the court shall order a permanent 
                injunction barring the secondary transmission in that 
                locality or region by the satellite carrier of the 
                primary transmissions of any television broadcast 
                station, and the court may order statutory damages not 
                exceeding $250,000 for each 6-month period during which 
                the pattern or practice was carried out.
    ``(g) Burden of Proof.--In any action brought under subsection (d), 
(e), or (f), the satellite carrier shall have the burden of proving 
that its secondary transmission of a primary transmission by a 
television broadcast station is made only to subscribers located within 
that station's local market.
    ``(h) Geographic Limitations on Secondary Transmissions.--The 
statutory license created by this section shall apply to secondary 
transmissions to locations in the United States, and any commonwealth, 
territory, or possession of the United States.
    ``(i) Exclusivity With Respect to Secondary Transmissions of 
Broadcast Stations by Satellite to Members of the Public.--No provision 
of section 111 or any other law (other than this section and section 
119) shall be construed to contain any authorization, exemption, or 
license through which secondary transmissions by satellite carriers of 
programming contained in a primary transmission made by a television 
broadcast station may be made without obtaining the consent of the 
copyright owner.
    ``(j) Definitions.--In this section--
          ``(1) The term `distributor' means an entity which contracts 
        to distribute secondary transmissions from a satellite carrier 
        and, either as a single channel or in a package with other 
        programming, provides the secondary transmission either 
        directly to individual subscribers or indirectly through other 
        program distribution entities.
          ``(2) The term `local market' for a television broadcast 
        station has the meaning given that term under rules, 
        regulations, and authorizations of the Federal Communications 
        Commission relating to carriage of television broadcast signals 
        by satellite carriers.
          ``(3) The terms `network station', `satellite carrier' and 
        `secondary transmission' have the meaning given such terms 
        under section 119(d).
          ``(4) The term `subscriber' means an entity that receives a 
        secondary transmission service by means of a secondary 
        transmission from a satellite and pays a fee for the service, 
        directly or indirectly, to the satellite carrier or to a 
        distributor.
          ``(5) The term `television broadcast station' means an over-
        the-air, commercial or noncommercial television broadcast 
        station licensed by the Federal Communications Commission under 
        subpart E of part 73 of title 47, Code of Federal 
        Regulations.''.
    (b) Technical and Conforming Amendments.--The table of sections for 
chapter 1 of title 17, United States Code, is amended by adding after 
the term relating to section 121 the following:

``122. Limitations on exclusive rights; secondary transmissions by 
satellite carriers within local market.''.

SEC. 3. EXTENSION OF EFFECT OF AMENDMENTS TO SECTION 119 OF TITLE 117, 
                    UNITED STATES CODE.

    Section 4(a) of the Satellite Home Viewer Act of 1994 (17 U.S.C. 
119 note; Public Law 103-369; 108 Stat. 3481) is amended by striking 
``December 31, 1999'' and inserting ``December 31, 2004''.

SEC. 4. COMPUTATION OF ROYALTY FEES FOR SATELLITE CARRIERS.

    Section 119(c) of title 17, United States Code, is amended by 
adding at the end the following new paragraph:
          ``(4) Reduction.--
                  ``(A) Superstation.--The rate of the royalty fee in 
                effect on January 1, 1998, payable in each case under 
                subsection (b)(1)(B)(i) shall be reduced by 30 percent.
                  ``(B) Network.--The rate of the royalty fee in effect 
                on January 1, 1998, payable under subsection 
                (b)(1)(B)(ii) shall be reduced by 45 percent.
          ``(5) Public broadcasting service as agent.--For purposes of 
        section 802, with respect to royalty fees paid by satellite 
        carriers for retransmitting the Public Broadcasting Service 
        satellite feed, the Public Broadcasting Service shall be the 
        agent for all public television copyright claimants and all 
        Public Broadcasting Service member stations.''.

SEC. 5. DEFINITIONS.

    Section 119(d) of title 47, United States Code, is amended by 
striking paragraph (10) and inserting the following:
          ``(10) Unserved household.--The term `unserved household', 
        with respect to a particular television network, means a 
        household that cannot receive, through the use of a 
        conventional outdoorrooftop receiving antenna, an over-the-air 
signal of grade B intensity (as defined by the Federal Communications 
Commission of primary network station affiliated with that network.''.

SEC. 6. PUBLIC BROADCASTING SERVICE SATELLITE FEED.

    (a) Secondary Transmissions.--Section 119(a)(1) of title 17, United 
States Code, is amended--
          (1) by striking the paragraph heading and inserting ``(1) 
        Superstations and pbs satellite feed.--'';
          (2) by inserting ``or by the Public Broadcasting Service 
        satellite feed'' after ``superstation''; and
          (3) by adding at the end the following: ``In the case of the 
        Public Broadcasting Service satellite feed, subsequent to 
        January 1, 2001, or the date on which local retransmissions of 
        broadcast signals are offered to the public, whichever is 
        earlier, the statutory license created by this section shall be 
        conditioned on the Public Broadcasting Service certifying to 
        the Copyright Office on an annual basis that its membership 
        supports the secondary transmission of the Public Broadcasting 
        Service satellite feed, and providing notice to the satellite 
        carrier of such certification.''.
    (b) Definition.--Section 119(d) of title 17, United States Code, is 
amended by adding at the end the following:
          ``(12) Public Broadcasting Service Satellite Feed.--The term 
        Public Broadcasting Service satellite feed' means the national 
        satellite feed distributed by the Public Broadcasting Service 
        consisting of educational and informational programming 
        intended for private home viewing, to which the Public 
        Broadcasting Service holds national terrestrial broadcast 
        rights.''.

SEC. 7. APPLICATION OF FEDERAL COMMUNICATIONS COMMISSION REGULATIONS.

    Section 119(A) of title 17 United States Code, is amended
          (1) in paragraph (1), by inserting ``is permissible under the 
        rules, regulations, and authorizations of the Federal 
        Communications Commission,'' after ``satellite carrier to the 
        public for private home viewing''; and
          (2) in paragraph (2), by inserting ``is permissible under the 
        rules, regulations, and authorizations of the Federal 
        Communications Commission,'' after ``satellite carrier to the 
        public for private home viewing,''.

SEC. 8. EFFECTIVE DATE.

    This Act and the amendments made by this Act shall take effect on 
January 1, 1999, except the amendments made by section 4 shall take 
effect on July 1, 1999.

                               I. Purpose

    The satellite compulsory license found at section 119 of 
the Copyright Act is scheduled to expire on December 31, 1999. 
This legislation is necessary to extend the expiration of that 
license to enable satellite carriers to continue to retransmit 
over-the-air television broadcast stations, to provide more 
competition in the market for multichannel video delivery 
services, to reduce the royalty fees payable under that license 
to make them more competitive with cable television services, 
which enjoy their own compulsory license, and to provide 
satellite with a permanent, royalty-free compulsory license to 
provide retransmissions of local television stations.

                        II. Legislative History

    The Satellite Home Viewer Act (SHVA) was enacted in 1988 
1 to expand access to high quality and affordable 
television programming for rural and other households that were 
unserved by over-the-air or cable television and to provide a 
clear cut statutory framework for the delivery of broadcast 
programming to home satellite dish owners. It did so by 
creating a 6-year statutory compulsory license, embodied in 
section 119 of the Copyright Act, that provided satellite 
carriers similar copyright status with cable operators by 
enabling them, upon payment of a predetermined fee, to 
retransmit broadcast signals to home satellite dish owners for 
their private home viewing.
---------------------------------------------------------------------------
    \1\ Act of Nov. 16, 1988, Public Law No. 100-667, 102 Stat. 3935 
(1988).
---------------------------------------------------------------------------
    The 1988 Act was designed as a transitional measure to 
facilitate competition and the marketplace's ability to meet 
the needs and demands of home satellite dish 
owners.2 In 1991, Senators DeConcini and Hatch, then 
the Chairman and Ranking Member of the Subcommittee on Patents, 
Copyrights, and Trademarks, asked the Register of Copyrights to 
conduct a review of the Copyright Act's cable and satellite 
compulsory licenses.3 In his 1992 report responding 
to that request, the Register concluded that the satellite 
compulsory license had functioned well.4 In its 
first 2 years of the license's operation, the number of home 
satellite dish owners nearly doubled, and satellite carriers' 
deposits with the Copyright Office for distribution to 
copyright owners exceeded $6 million. 5 Moreover, 
according to the Register, the objectives of the satellite 
license were being achieved without the administrative 
difficulties of its sister cable compulsory 
license.6
---------------------------------------------------------------------------
    \2\ See H.R. Rep. No. 887 (Part II), 100th Cong., 2d sess. 15 
(1988), reprinted in 1988 U.S.C.C.A.N. 5638, 5644.
    \3\ See Letter from the Honorable Dennis DeConcini, Chairman, and 
the Honorable Orrin G. Hatch, Ranking Member, Judiciary Subcommittee on 
Patents, Copyright and Trademarks, U.S. Senate, to Ralph Oman, Register 
of Copyrights (Oct. 22, 1991) (available in Register of Copyrights, 
``The Cable and Satellite Carrier Compulsory Licenses: An Overview and 
Analysis'', 1 app. (1992) (letter of request)).
    \4\ Register of Copyrights, ``The Cable and Satellite Carrier 
Compulsory Licenses: An Overview and Analysis'', 157 (1992).
    \5\ Id. at 111.
    \6\ Id. at 157.
---------------------------------------------------------------------------
    In response to both the Copyright Office report and cable 
television legislation then being considered in the Senate, the 
Subcommittee on Patents, Copyrights, and Trademarks held 2 days 
of oversight hearings on the cable compulsory license on April 
6 and 29, 1992. Although the focus of the hearings was on the 
cable license, a general consensus emerged that the satellite 
license was functioning well, and several witnesses called for 
its extension. Based upon the success of the satellite license, 
its continued importance to rural and other consumers, the lack 
of a marketplace solution to the uncertainties of full 
copyright liability for satellite carriers, and the continued 
availability of a permanent license for cable operators, 
legislation to extend the satellite license for an additional 5 
years was subsequently introduced in both the House and Senate 
in the 104th Congress.7 Similar legislation to 
extend the satellite license for an additional 5 years was 
enacted as the Satellite Home Viewer Act of 1994 on October 18, 
1994.8
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    \7\ See H.R. 1103, 104th Cong., 1st sess. (1993); S. 1485, 104th 
Cong., 1st sess. (1993).
    \8\ Public Law 103-369, 108 Stat. 3477 (1994).
---------------------------------------------------------------------------
    Since the enactment of the Satellite Home Viewer Act of 
1994, the satellite home viewer market has continued to expand. 
As technology has progressed and the satellite industry has 
moved from a predominately need-based rural niche service to a 
full service video delivery competitor in both rural and urban 
markets, a number of difficulties have arisen. For example, the 
inability of satellite providers to deliver local network 
signals to many of their subscribers has created a significant 
impediment to the satellite industry's ability to serve as a 
full-fledged competitor to cable. Other difficulties, such as 
the implementation of the 1994 Act's ``unserved household'' 
restriction based on the FCC's traditional Grade B signal rules 
and related rules regarding satellite subscribers' eligibility 
to receive distant network signals, in particular, have led to 
a great deal of consumer confusion and even litigation. By 
1996, it had become clear to Chairman Hatch, the Ranking 
Member, Senator Leahy, and others, that a reform of the act, as 
well as renewal would be necessary.
    As a result, on February 6, 1997, Chairman Hatch requested 
the Copyright Office to conduct a global review of the 
Copyright Act's compulsory licensing provisions governing the 
retransmission of over-the-air broadcast signals. Specifically, 
the Copyright Office was asked to review whether the satellite 
compulsory license should be extended, the difficulties 
stemming from the implementation of the license and the distant 
signal eligibility rules, the relationship and possible 
harmonization of the cable and satellite licenses, and whether 
those licenses should be extended to new technologies, such as 
to allow the satellite retransmission of local signals, 
Internet retransmission of broadcast signals, and 
retransmission of broadcast signals by local telephone 
companies. The Copyright Office was asked to respond with its 
findings, policy options, and legislative recommendations by 
May 1, 1997, which deadline was subsequently extended to August 
1, 1997.
    In May 1997, the Copyright Office conducted 3 days of 
public hearings at which it heard testimony from 
representatives of the motion picture, satellite, cable, and 
broadcasting industries.9 On August 1, 1997, the 
Copyright Office submitted its findings and recommendations in 
response to Chairman Hatch's request.10 Among other 
things, the Copyright Office recommended that the cable and 
satellite compulsory licenses be retained, that the satellite 
license be extended so long as the cable license remains in 
effect, that differences between the two licenses be minimized 
where possible to promote a competitive balance between the 
satellite and cable industries, and that the satellite license 
be amended to permit the satellite retransmission of local 
network signals to local subscribers.11 The 
Copyright Office supplemented its report by submitting proposed 
legislation to the Judiciary Committee in September 1997.
---------------------------------------------------------------------------
    \9\ See Notice of Public Meetings and Request for Comments, 62 Fed. 
Reg. 13,396 (1997).
    \10\ Register of Copyrights, ``A Review of the Copyright Licensing 
Regimes Covering Retransmission of Broadcast Signals'' (1997).
    \11\ Id. at 135-37.
---------------------------------------------------------------------------
    In a parallel proceeding beginning in March 1997, the 
Librarian of Congress convened a Copyright Arbitration Royalty 
Panel (CARP) pursuant to the 1994 Satellite Home Viewer Act to 
adjust the copyright royalty rates that had been in effect 
since 1992 for the satellite retransmission of network 
broadcast and superstation signals.12 The CARP 
submitted its recommendations to the Copyright Office in August 
1997, which included a significant increase in the per 
subscriber per month royalty rates for satellite retransmission 
of both network signals and superstations.13 The 
Librarian of Congress adopted the CARP recommendation on 
October 28, 1997,14 sparking a series of 
unsuccessful efforts in Congress and in the courts to reverse 
or delay implementation of the CARP determination.15
---------------------------------------------------------------------------
    \12\ See Initiation of Arbitration, 62 Fed. Reg. 9,212 (1997).
    \13\ The CARP recommended an upward adjustment of copyright rates 
for retransmissions of both network and superstation signals to a 
uniform fee of 27 cents per subscriber, per month. Under the rates in 
effect since the 1992 rate adjustment, satellite carriers paid 
royalties equal to six cents per subscriber, per month for network 
signals and a two-tiered 14/17.5 cents per subscriber, per month for 
superstation signals.
    \14\ See Final Rule and Order, 62 Fed. Reg. 55,742 (1997) (to be 
codified at 37 C.F.R. pt. 258).
    \15\ See Satellite Broadcasting & Comm. Ass'n. v. Librarian of 
Congress, 1999 U.S. App. LEXIS 2411 (DC Cir. 1999) (denying petition 
for review); S. 1422, 105th Cong., 1st sess., Sec. 5 (1997); H.R. 2921, 
105th Cong., 1st sess., Sec. 3 (1997).
---------------------------------------------------------------------------
    On November 12, 1997, the Judiciary Committee conducted a 
hearing to review the findings and recommendations of the 
Copyright Office's report.16 The Register of 
Copyrights, Ms. Marybeth Peters, testified on behalf of the 
Copyright Office. The Committee also heard testimony from Mr. 
Fritz Attaway, senior vice president and Washington general 
counsel of the Motion Picture Association of America, Mr. 
William F. Sullivan, vice president of Cordillera 
Communications, Inc., Mr. Charles C. Hewitt, president of the 
Satellite Broadcasting and Communications Association of 
America, and Mr. Decker Anstrom, president and chief executive 
officer of the National Cable Television Association. At that 
hearing, Chairman Hatch and the Ranking Member, Senator Leahy, 
agreed to work together to resolve these matters.
---------------------------------------------------------------------------
    \16\ ``The Copyright Office Report on Compulsory Licensing of 
Broadcast Signals: Hearings before the Senate Judiciary Committee,'' 
105th Cong., 1st sess. (1997).
---------------------------------------------------------------------------
    Discussions continued in the months that followed the 
hearing, including discussions of the draft legislation 
submitted by the Copyright Office. On March 5, 1998, Chairman 
Hatch, joined by the Ranking Member, Senator Leahy, and the 
Ranking Member of the Subcommittee on Antitrust, Business 
Rights, and Competition, Senator Kohl, introduced S. 1720, the 
``Copyright Compulsory License Improvement Act of 1998.'' 
17 The bill sought to implement many of the 
Copyright Office's recommendations, including putting satellite 
carriers on a more equal footing with cable operators by 
extending the satellite license without a sunset provision, by 
allowing satellite carriers to deliver local network signals 
within the local market at a zero copyright rate, by 
eliminating the 90-day waiting period for cable subscribers to 
become eligible to receive network programming by satellite, 
and by creating substantial regulatory parity between the 
satellite and cable industries. The bill also proposed reforms 
to the CARP system to make rate determinations and 
distributions more efficient and less expensive.
---------------------------------------------------------------------------
    \17\ S. 1720, 105th Cong., 2d sess. (1998). See 144 Cong. Rec. 
S1449 (daily ed. Mar. 5, 1998) (introductory remarks of Senators Hatch, 
Leahy, and Kohl).
---------------------------------------------------------------------------
    Following the introduction of S. 1720, Chairman Hatch and 
the Chairman of the Senate Commerce Committee, Senator McCain, 
engaged in a series of discussions facilitated by the Majority 
Leader, Senator Lott, regarding issues of overlapping 
jurisdiction. As a result of these discussions Chairman Hatch 
and Chairman McCain, along with the Ranking Members, Senator 
Leahy and Senator Hollings, agreed that the Committees would 
work together on a comprehensive and cooperative reform 
package, with the Judiciary Committee retaining jurisdiction 
over copyright issues relating to the licensing of satellite 
retransmissions of broadcast signals and the Commerce Committee 
overseeing the revision of the related communications law 
provisions. Shortly thereafter, on September 17, 1998, Chairman 
McCain, together with Senators Hatch, Leahy, DeWine, and Kohl, 
introduced S. 2494, the ``Multichannel Video Competition Act of 
1998,'' which sought to address satellite-related 
communications law issues as anticipated in the discussions 
between the Judiciary and Commerce Committees.18 S. 
2494 was referred to the Commerce Committee, which held 
hearings on the bill on October 1, 1998.
---------------------------------------------------------------------------
    \18\ S. 2494, 105th Cong., 2d sess. (1998). See 144 Cong. Rec. 
S10524 (daily ed. Sept. 17, 1998) (introductory remarks of Senators 
McCain and Kohl).
---------------------------------------------------------------------------
    On October 1, 1998, the Judiciary Committee met in 
executive session to consider S. 1720. An amendment in the 
nature of a substitute was offered by Chairman Hatch, together 
with the Ranking Member, Senator Leahy, and Senators DeWine, 
Kohl, and Durbin, to refine the underlying bill's copyright 
provisions and delete the communications law related reforms, 
which had become the focus of S. 2494 in the Commerce 
Committee. The substitute amendment was adopted by unanimous 
consent and the bill, as amended, was then ordered favorably 
reported to the full Senate by unanimous consent. No further 
action was taken on the bill, however, prior to the adjournment 
of the 105th Congress on October 21, 1998.
    In the 106th Congress, Chairman Hatch, joined again by the 
Ranking Member, Senator Leahy, the Chairman of the Commerce 
Committee, Senator McCain, the Chairman and Ranking Member of 
the Judiciary Committee's Subcommittee on Antitrust, Business 
Rights, and Competition, Senators DeWine and Kohl, and the 
Majority Leader, Senator Lott, introduced S. 247, the 
``Satellite Home Viewers Improvements Act'' on January 19, 
1999.19 Senators Jeffords, Cochran, Feinstein, 
Feingold, and Collins were later added as additional cosponsors 
of S. 247. As was the case with the bill reported by the 
Judiciary Committee in the 105th Congress, S. 247 addresses the 
copyright issues relating to the satellite retransmission of 
broadcast signals, including granting satellite carriers a 
permanent copyright license to deliver local network signals 
within the local market at a zero copyright rate, extending the 
current satellite distant signal license for 5 years, 
eliminating the 90-day waiting period for cable subscribers to 
become eligible to receive network programming by satellite, 
cutting the copyright rate set by the 1997 CARP proceeding, and 
providing for a national PBS satellite feed. The bill again 
presumes a complementary communications law package to be 
produced by the Commerce Committee, as agreed by Chairman Hatch 
and Commerce Committee Chairman McCain. Chairman McCain 
introduced his companion bill, the ``Satellite Television Act 
of 1999,'' on January 25, 1999.20
---------------------------------------------------------------------------
    \19\ S. 247, 106th Cong., 1st sess. (1999). See 145 Cong. Rec. S698 
(daily ed. Jan. 19, 1999) (introductory statement of Senators Hatch and 
Leahy).
    \20\ S. 303, 106th Cong., 1st sess. (1999). See 145 Cong. Rec. S976 
(daily ed. Jan. 25, 1999) (introductory statement of Senator McCain).
---------------------------------------------------------------------------
    A hearing on S. 247 was held in the Judiciary Committee on 
January 28, 1999. The Committee heard testimony from Bruce T. 
Reese, president and chief executive officer of Bonneville 
International Corporation in Salt Lake City, UT, Charles E. 
Meinkey, owner of the Satellite TV Warehouse in St. George, UT, 
Michael Peterson, executive director of the Utah Rural Electric 
Association, and PeterMartin, general manager of WCAX-TV in 
Burlington, VT. Each of the witnesses voiced their strong support for 
the bill and encouraged the Committee to move quickly to enact the 
reforms contained therein.
    On February 25, 1999, the Judiciary Committee met in 
executive session to consider the bill. The Committee 
considered and accepted by unanimous consent a technical 
amendment offered by Chairman Hatch, together with the Ranking 
Member, Senator Leahy. The bill, as amended, was then ordered 
favorably reported to the full Senate by unanimous consent.

                            III. Discussion

    When Congress passed the Satellite Home Viewer Act in 1988, 
few Americans were familiar with satellite television. Those 
who were typically resided in rural areas of the country where 
the only means of receiving television programming was through 
use of a large, backyard C-band satellite dish. Congress 
recognized the importance of providing these people with access 
to broadcast programming, and created a compulsory copyright 
license in the Satellite Home Viewer Act that enabled satellite 
carriers to easily license the copyrights to the broadcast 
programming that they retransmitted to their subscribers.
    The 1988 act fostered a boom in the satellite television 
industry. Coupled with the development of high-powered 
satellite service, or DSS, which delivers programming to a 
satellite dish as small as 18 inches in diameter, the satellite 
industry now serves homes nationwide with a wide range of high 
quality programming. Satellite is no longer a rural service, 
for it offers an attractive alternative to other providers of 
multichannel video programming; in particular, cable 
television. Because satellite can provide direct competition 
with the cable industry, it is in the interest of Congress to 
ensure that satellite operates under a copyright framework that 
permits it to be an effective competitor.
    The compulsory copyright license created by the 1988 act 
was limited to a 5-year period to enable Congress to consider 
its effectiveness and renew it where necessary. The license was 
renewed in 1994 for an additional 5 years, and amendments made 
that were intended to increase the enforcement of the network 
territorial restrictions of the compulsory license. Two-year 
transitional provisions were created to enable local network 
broadcasters to challenge satellite subscribers' receipt of 
satellite network service where the local network broadcaster 
had reason to believe that these subscribers received an 
adequate off-the-air signal from the broadcaster. The 
transitional provisions were minimally effective and caused 
much consumer confusion and anger regarding receipt of 
television network stations.
    The satellite license is slated to expire at the end of 
this year, requiring Congress to again consider the copyright 
licensing regime for satellite retransmissions of over-the-air 
television broadcast stations. In passing this legislation, the 
Committee was guided by several principles. First, the 
Committee believes that promotion of competition in the 
marketplace for delivery of multichannel video programming is 
an effective policy to reduce costs to consumers. To that end, 
it is important that the satellite industry be afforded a 
statutory scheme for licensing television broadcast programming 
similar to that of the cable industry. At the same time, the 
practical differences between the two industries must be 
recognized and accounted for.
    Second, the Committee reasserts the importance of 
protecting and fostering the system of television networks as 
they relate to the concept of localism. It is well recognized 
that television broadcast stations provide valuable programming 
tailored to local needs, such as news, weather, special 
announcements and information related to local activities. To 
that end, the Committee has structured the copyright licensing 
regime for satellite to encourage and promote retransmissions 
by satellite of local television broadcast stations to 
subscribers who reside in the local markets of those stations.
    Third, perhaps most importantly, the Committee is aware 
that in creating compulsory licenses, it is acting in 
derogation of the exclusive property rights granted by the 
Copyright Act to copyright holders, and that it therefore needs 
to act as narrowly as possible to minimize the effects of the 
Government's intrusion on the broader market in which the 
affected property rights and industries operate. In this 
context, the broadcast television market has developed in such 
a way that copyright licensing practices in this area take into 
account the national network structure, which grants exclusive 
territorial rights to programming in a local market to local 
stations either directly or through affiliation agreements. The 
licenses granted in this legislation attempt to hew as closely 
to those arrangements as possible. For example, these 
arrangements are mirrored in the section 122 ``local-to-local'' 
license, which grants satellite carriers the right to 
retransmit local stations within the station's local market, 
and does not require a separate copyright payment because the 
works have already been licensed and paid for with respect to 
viewers in those local markets. By contrast, allowing the 
importation of distant or out-of-market network stations in 
derogation of the local stations' exclusive right--bought and 
paid for in market-negotiated arrangements--to show the works 
in question undermines those market arrangements. Therefore, 
the specific goal of the 119 license, which is to allow for a 
life-line network television service to those homes beyond the 
reach of their local television stations, must be met by only 
allowing distant network service to those homes which cannot 
receive the local network television stations. Hence, the 
``unserved household'' limitation that has been in the license 
since its inception. While the Committee is also mindful and 
respectful of the communications policy of ``localism'' 
outlined above, primary emphasis falls necessarily on property 
rights considerations in copyright law.
    Finally, although the legislation promotes satellite 
retransmissions of local stations, the Committee recognizes the 
continued need to monitor the effects of distant signal 
importation by satellite. To that end, the compulsory license 
for retransmission of distant signals is extended for a period 
of 5 years, to afford Congress the opportunity to evaluate the 
effectiveness and continuing need for that license at the end 
of the 5-year period.

                       IV. Vote of the Committee

    The Senate Committee on the Judiciary, with a quorum 
present, met on Thursday, February 26, 1999, at 10 a.m., to 
consider the Satellite Home Viewers Improvements Act. The 
Committee considered and accepted by unanimous consent an 
amendment offered by the Chairman (for himself and Mr. Leahy) 
to make technical corrections to the bill. The Committee then 
ordered the Satellite Home Viewer Improvements Act reported 
favorably to the Senate, as amended, by unanimous consent, with 
a recommendation that the bill do pass.

                     V. Section-by-Section Analysis


Section 1.--Short title

    The title of the bill is the ``Satellite Home Viewers 
Improvements Act.''

Section 2.--Limitations on exclusive rights; secondary transmissions by 
        satellite carriers within local markets

    Section 2 of the bill creates a new, permanent compulsory 
license, found at section 122 of the Copyright Act of 1976, for 
the retransmission of television broadcast stations by 
satellite carriers to subscribers located within the local 
markets of those stations.
    Creation of a new compulsory license for retransmission of 
local signals is necessary because the current section 119 
license is limited to the retransmission of distant signals by 
satellite. The section 122 license allows satellite carriers 
for the first time to provide their subscribers with the TV 
signals they want most: their local stations. A carrier may 
retransmit the signal of a network station (or superstation) to 
all subscribers who reside within the local market of that 
station, without the burden of determining whether the 
subscriber resides in an unserved household. The local market 
for a television station will be determined by the Federal 
Communications Commission, and it is anticipated the market 
will correspond to the zone established by the Commission for 
mandatory carriage by satellite of local signals.
    Because the section 122 license is permanent, subscribers 
may obtain their local networks and superstations without fear 
that their broadcast service may be turned off at a future 
date. In addition, satellite carriers may deliver local 
stations to commercial establishments as well as homes, as the 
cable industry does under its license. These amendments create 
parity between the satellite and cable industries in the 
provision of local television broadcast stations.
    In order for a satellite carrier to be eligible for this 
license, the carrier must be in full compliance with all 
applicable rules and regulations of the Federal Communications 
Commission, including any must-carry or programming exclusivity 
requirements that the Commission may adopt by regulation or 
law. Failure to fully comply with Commission rules with respect 
to retransmission of one or more stations in the local market 
precludes the carrier from making use of the section 122 
license for all local retransmissions in that market. Thus, for 
example, if a satellite carrier fails to carry a local station 
as required by Commission rule or regulation, then the carrier 
loses the section 122 license for the stations that it is 
retransmitting in the local market of those stations.
    Because the copyrighted programming contained on local 
broadcast programming is already licensed with the expectation 
that all viewers in the local market will be able to view the 
programming, the section 122 license is a royalty-free license. 
Satellite carriers must, however, provide local broadcasters 
with lists of their subscribers receiving local stations so 
that broadcasters may verify that satellite carriers are making 
proper use of the license. The subscriber information supplied 
to broadcasters is for verification purposes only, and may not 
be used by broadcasters for other reasons.
    Satellite carriers are liable for copyright infringement, 
and subject to the full remedies of the Copyright Act, if they 
violate one or more of the following requirements of the 
section 122 license. First, satellite carriers may not in any 
way willfully alter the programming contained on a local 
broadcast station.
    Second, satellite carriers may not use the section 122 
license to retransmit a television broadcast station to a 
subscriber located outside the local market of the station. 
Retransmission of a station to a subscriber located outside the 
station's local market is covered by section 119, provided that 
all conditions of that license are satisfied. If a carrier 
willfully or repeatedly violates this limitation on a 
nationwide basis, then the carrier may be enjoined from 
retransmitting that signal. If the broadcast station involved 
is a network station, then the carrier could lose the right to 
retransmit any network stations affiliated with that same 
network. If the willful or repeated violation of the 
restriction is performed on a local or regional basis, then the 
right to retransmit the station (or, if a network station, then 
all other stations affiliated with that network) can be 
enjoined on a local or regional basis, depending upon the 
circumstances. In addition to termination of service on a 
nationwide or local or regional basis, statutory damages are 
available up to $250,000 for each 6-month period during which 
the pattern or practice of violations was carried out. 
Satellite carriers have the burden of proving that they are not 
improperly making use of the section 122 license to serve 
subscribers outside the local markets of the television 
broadcast stations they are providing.
    The section 122 license is limited in geographic scope to 
locations in the United States, including any commonwealth, 
territory, or possession of the United States. In addition, the 
bill makes it clear that local retransmissions of television 
broadcast stations to subscribers for viewing is governed 
solely by the section 122 license, and that no provision of the 
section 111 cable compulsory license should be interpreted to 
allow satellite carriers to make local retransmissions of 
television broadcast stations under that license. Likewise, no 
provision of the section 119 license (or any other law) should 
be interpreted as authorizing local-into-local retransmissions 
by satellite, since the section 119 license is limited to 
retransmission by satellite of distant television broadcast 
signals. As with all compulsory licenses, these explicit 
limitations are consistent with the general rule that, because 
compulsory licenses are in derogation of the exclusive rights 
granted under the Copyright Act, they should be interpreted 
narrowly.
    The Committee acknowledges that authorization and 
encouragement of local signals on satellite will result in a 
proliferation of the number of television stations that will be 
uplinked and available on satellites that serve the United 
States. The Committee does not intend, however, that the 
section 122 license be construed in such a way as to prevent 
stations that are uplinked principally for delivery as local 
signals under section 122 be prohibited from also being 
delivered as distant signals under section 119, provided that 
all the requirements of section 119 are met. If a satellite 
carrier uplinks a station and delivers it to a subscriber 
located in that station's local market, then the carrier may 
make use of the section 122 license. The carrier may also 
retransmit that same station to subscribers in distant markets 
under the section 119 license, provided that all the 
requirements of section 119 are met.

Section 3.--Extension of effect of amendments to section 119 of title 
        17, United States Code

    The section 119 satellite compulsory license is extended 
for a period of 5 years by changing the expiration date of the 
legislation from December 31, 1999, to December 31, 2004. It is 
understood that should the section 119 license be allowed to 
expire in 2004, it shall do so at midnight on December 31, 
2004, so that the license will cover the entire period of the 
second accounting period of 2004.
    The Committee also believes that the advent of digital 
terrestrial broadcasting will necessitate additional review and 
reform of the distant signal license. And responsibility to 
oversee the development of the nascent local station satellite 
service may also militate for review of the status of the 
distant signal in the future. For all of these reasons, it 
seems prudent for the Committee to establish a period for 
review in 5 years.

Section 4.--Computation of royalty fees for satellite carriers

    S. 247 reduces the royalty fees currently paid by satellite 
carriers for the retransmission of network and superstations by 
45 percent and 30 percent, respectively. These are reductions 
of the 27-cent royaltyfees made effective by the Librarian of 
Congress on January 1, 1998. The reductions take effect on July 1, 
1999, which is the beginning of the second accounting period for 1999, 
and apply to all accounting periods for the 5-year extension of the 
section 119 license. The Committee has drafted this provision such 
that, if the section 119 license is renewed after 2004, the 45-percent 
and 30-percent reductions of the 27-cent fee will remain in effect, 
unless altered by legislative amendment.
    In addition, section 119(c) of title 17 is amended to 
clarify that in royalty distribution proceedings conducted 
under section 802 of the Copyright Act, the Public Broadcasting 
Service may act as agent for all public television copyright 
claimants and all Public Broadcasting Service member stations.

Section 5.--Definition

    The ``unserved household'' definition of section 119 of 
title 17 is amended to eliminate the 90-day waiting period for 
satellite subscribers to wait after termination of their cable 
service until they are eligible for satellite service of 
network signals (provided that they do not receive over-the-air 
network signals of Grade B intensity).

Section 6.--Public broadcasting service satellite feed

    S. 247 extends the section 119 license to cover the 
copyrighted programming carried on the Public Broadcasting 
Service's national satellite feed. The national satellite feed 
is treated as a superstation for compulsory license purposes, 
thereby avoiding the unserved household restriction applicable 
to network signals. Also, the bill requires that PBS must 
certify to the Copyright Office on an annual basis that the PBS 
membership continues to support retransmission of the national 
satellite feed under the section 119 compulsory license.

Section 7.--Application of Federal Communications Commission 
        regulations

    The section 119 license is amended to clarify that 
satellite carriers must comply with all rules, regulations, and 
authorizations of the Federal Communications Commission in 
order to obtain the benefits of the section 119 license. This 
would include any programming exclusivity provisions that the 
Commission may adopt by law or regulation. Thus, for example, 
if a satellite carrier retransmitted a network station to a 
subscriber or subscribers in violation of FCC network 
nonduplication rules, then the carrier could not claim that it 
had a copyright compulsory license to make such 
retransmissions.

Section 8.--Effective date

    The amendments made by S. 247 become effective on January 
1, 1999, with the exception of the provisions of section 4 of 
the bill which become effective on July 1, 1999.

                           VI. Cost Estimate

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, March 8, 1999.
Hon. Orrin G. Hatch,
Chairman, Committee on the Judiciary,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 247, the Satellite 
Home Viewers Improvements Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Mark Hadley 
(for federal costs), and Hester Grippando (for revenues).
            Sincerely,
                                          Dan L. Crippen, Director.
    Enclosure.

S. 247--Satellite Home Viewers Improvements Act

    Summary: Pursuant to the Satellite Home Viewer Act of 1988, 
satellite carriers (companies that use satellite transmissions 
to provide television signals directly to consumers) pay a 
monthly royalty fee for each subscriber to the U.S. Copyright 
Office for the right to retransmit network and superstation 
signals by satellite to subscribers for private home viewing. 
The Copyright Office later distributes these fees to those who 
own copyrights on the material retransmitted by satellite.
    S. 247 would allow satellilte carriers to retransmit the 
signals of local television broadcast stations into the local 
markets of those stations. The bill would eliminate a 90-day 
waiting period for households that switch from cable to 
satellite service. The bill also would extend the requirement 
that satellite carriers pay royalty fees to the federal 
government until December 31, 2004. Finally, the bill would 
reduce the current fees charged to superstations by 30 percent, 
to $0.19 per subscriber per channel per month, and the fees 
paid by network stations by 45 percent to $0.15, beginning July 
1, 1999.
    CBO estimates that enacting S. 247 would result in a net 
increase in revenues of $477 million over the 2000-2004 period 
and of $76 million in fiscal year 2005. After review by an 
arbitration panel, royalty fees are paid to copyright owners, 
along with accrued interest earnings. With higher royalty 
collections, the payments to copyright holders would also be 
higher under S. 247, by an estimated $152 million over the 
2000-2004 period, and by another $432 million over the 
following five years. Because S. 247 would affect both revenues 
and direct spending, it would be subject to pay-as-you-
procedures. Assuming appropriation of the necessary amounts, 
CBO also estimates that issuing conforming regulations would 
cost the Copyright Office about $500,000 in 2000.
    The bill would impose 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 S. 247 is shown in the following table. For 
purposes of this estimate, CBO assumes the bill will be enacted 
before the end of fiscal year 1999. CBO also assumes that 
payments from the federal government to copyright holders for 
satellite transmissions would follow historical patterns. The 
costs of this legislation fall within budget function 370 
(commerce and housing credit).

----------------------------------------------------------------------------------------------------------------
                                                                       By fiscal year, in millions of dollars--
                                                                    --------------------------------------------
                                                                       2000     2001     2002     2003     2004
----------------------------------------------------------------------------------------------------------------
Receipts and spending under current law:
    Estimated revenues \1\.........................................      185      118      112      107      101
    Estimated budget authority \2\.................................      281      219      142      131      121
    Estimated outlays..............................................      207      259      264      220      182
Proposed changes:
    Estimated revenues.............................................       17       92      107      122      139
    Estimated budget authority.....................................       18       97      116      136      155
    Estimated outlays..............................................        0        4       19       35       94
    Net increase or decrease (-) in surplus........................       17       88       88       87       45
Receipts and spending under S. 247:
    Estimated revenues \1\.........................................      202      210      219      229      240
    Estimated budget authority \2\.................................      299      316      258      267      276
    Estimated outlays..............................................      207      263      283      255      276
----------------------------------------------------------------------------------------------------------------
\1\ Includes royalty fee collections from cable television stations, satellite carriers, and digital audio
  devices.
\2\ Payments to copyright owners include interest earnings on securities held by the Copyright Office.

Note: In addition to the effects shown above, S. 247 would increase spending subject to appropriation by about
  $500,000 in fiscal year 2000.


    Basis of estimate: S. 247 would allow a satellite carrier 
to make secondary transmissions of local television broadcasts, 
eliminate the waiting period for switching from cable to 
satellite service, reduce the rates of copyright royalty fees, 
and extend those fees through 2004. All of these provisions 
would affect payments by satellite carriers to the federal 
government and payments by the federal government to copyright 
holders. Assuming enactment of the bill before the end of 
fiscal year 1999, CBO estimates that S. 247 would increase 
revenues by $477 million and increase spending by $152 million 
over the 2000-2004 period.
    Secondary transmission.--Section 2 of S. 247 would allow 
satellite carriers to retransmit the signals of local 
television broadcast stations into the local markets of those 
stations. Section 5 would eliminate a provision of current law 
that requires households to wait 90 days between ending cable 
service and beginning satellite service. These provisions would 
make the services provided by satellite carriers more 
attractive. As a result, CBO expects that the number of 
subscribers to satellite services would increase more rapidly 
than under current law. Based on information from the Copyright 
Office, CBO estimates that under S. 247 the annual change in 
the volume of satellite services would increase from a 
projected rate of 10 percent a year to an average of about 15 
percent a year. Because these provisions could increase the 
incentives for choosing satellite service over cable service, 
they might lead to a loss in revenues from cable fees. However, 
based on information from the Copyright Office and the cable 
and satellite industries, CBO estimates that any such reduction 
in revenues would not be significant.
    S. 247 would result in a small discretionary cost for the 
Copyright Office to issue conforming regulations. CBO estimates 
that the cost of issuing those regulations would be about 
$500,000, subject to the availability of appropriated funds.
    Reduction in the copyright royalty fee.--A rule issued on 
October 28, 1997, by the Librarian of Congress, increased the 
royalty fee to $0.27 per subscriber per month. S. 247 would 
reduce the royalty fee on superstations by 30 percent to $0.19 
per subscriber per channel per month and the rates on network 
stations by 45 percent to $0.15, effective July 1, 1999. Based 
on information from the Copyright Office, CBO estimates that 
this provision would reduce revenues by $26 million in fiscal 
year 2000, when the fees would expire under current law. But 
this deduction would be more than offset by extending the 
copyright royalty fees from January 1, 2000, to December 31, 
2004.
    Extension of copyright royalty fees.--Under current law, 
the royalty fees for satellite carriers expire on December 31, 
1999. S. 247 would extend royalty fees through December 31, 
2004, increasing both revenue from satellite carriers and 
payments to copyright holders (including interest) during the 
2000-2004 period. In fiscal year 2000, the net change in 
estimated revenues would be relatively small--$17 million--
because the additional revenue from extending the fees ($43 
million) would be partially offset by a reduction in fee 
payments due early in the year under current law. By 2004, CBO 
expects additional revenues to total $139 million because of 
the fee extension.
    Payments to copyright holders.--S. 247 would result in 
additional spending because all revenues are eventually paid to 
copyright holders with interest. Historical spending patterns 
indicate that copyright holders may receive the fees and 
interest up to 10 years after the Copyright Office has 
collected the revenues. Thus, CBO estimates a significant lag 
between changes in revenues and the eventual changes in outlays 
that stem from copyright fees.
    Pay-as-you-go considerations: The Balanced Budget and 
Emergency Deficit Control Act sets up pay-as-you-go procedures 
for legislation affecting direct spending or receipts. The net 
changes in outlays and governmental receipts that are subject 
to pay-as-you-go procedures are shown in the following table. 
For the purposes of enforcing pay-as-you-go procedures, only 
the effects in the current year, the budget year, and the 
succeeding four years are counted.

----------------------------------------------------------------------------------------------------------------
                                                       By fiscal year, in millions of dollars--
                                    ----------------------------------------------------------------------------
                                      1999   2000   2001   2002   2003   2004   2005   2006   2007   2008   2009
----------------------------------------------------------------------------------------------------------------
Changes in outlays.................      0      0      4     19     35     94    108    108    117     75     24
Changes in receipts................      0     17     92    107    122    139     76      0      0      0      0
----------------------------------------------------------------------------------------------------------------

    Intergovernmental and private-sector impact: S. 247 would 
impose no intergovernmental or private-sector mandates as 
defined in UMRA. However, the bill would have two effects on 
the future royalty fees paid by satellite carriers and later 
distributed to copyright holders, which include some state and 
local government entities. First, the bill would reduce the 
rates that satellite carriers must pay to retransmit the 
signals of local television broadcast stations. Second, the 
bill would extend the fees (at the lower rate) from the end of 
calendar year 1999 to the end of calendar year 2004. The 
increase in payments to copyright holders would be $152 million 
over the 2001-2004 period.
    Estimate prepared by: Federal costs: Mark Hadley; Revenues: 
Hester Grippando; Impact on State, local, and tribal 
governments: Theresa Gullo; Impact on the private sector: Jean 
Wooster.
    Estimated approved by: Robert A. Sunshine, Deputy Assistant 
Director for Budget Analysis.

                    VII. Regulatory Impact Statement

    In compliance with paragraph 11(b)(1), rule XXVI of the 
Standing Rules of the Senate, the Committee, after due 
consideration, concludes that S. 247 will not have significant 
regulatory impact.

                     VIII. Changes in Existing Law

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
S. 247, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, and existing law in which no 
change is proposed is shown in roman):

UNITED STATES CODE

           *       *       *       *       *       *       *


TITLE 17--COPYRIGHTS

           *       *       *       *       *       *       *


            CHAPTER 1--SUBJECT MATTER AND SCOPE OF COPYRIGHT

Sec.
101. Definitions.
     * * * * * * *
122. Limitations on exclusive rights; secondary transmissions by 
          satellite carriers within local market.
     * * * * * * *

Sec. 119. Limitations on exclusive rights: Secondary transmissions of 
                    superstations and network stations for private home 
                    viewing

    (a) Secondary Transmissions by Satellite Carriers.--
          [(1) Superstations.--] (1) Superstations and PBS 
        Satellite Feed._Subject to the provisions of paragraphs 
        (3), (4), and (6) of this subsection and section 
        114(d), secondary transmissions of a primary 
        transmission made by a superstation or by the Public 
        Broadcasting Service satellite feed and embodying a 
        performance or display of a work shall be subject to 
        statutory licensing under this section if the secondary 
        transmission is made by a satellite carrier to the 
        public for private home viewing, is permissible under 
        the rules, regulations, and authorizations of the 
        Federal Communications Commission, and the carrier 
        makes a direct or indirect charge for each 
        retransmission service to each household receiving the 
        secondary transmission or to a distributor that has 
        contracted with the carrier for direct or indirect 
        delivery of the secondary transmission to the public 
        for private home viewing. In the case of the Public 
        Broadcasting Service satellite feed, subsequent to 
        January 1, 2001, or the date on which local 
        retransmissions of broadcast signals are offered to the 
        public, whichever is earlier, the statutory license 
        created by this section shall be conditioned on the 
        Public Broadcasting Service certifying to the Copyright 
        Office on an annual basis that its membership supports 
        the secondary transmission of the Public Broadcasting 
        Service satellite feed, and providing notice to the 
        satellite carrier of such certification.
          (2) Network Stations.--
                  (A) In general.--Subject to the provisions of 
                subparagraphs (B) and (C) of this paragraph and 
                paragraphs (3), (4), (5), and (6) of this 
                subsection and section 114(d), secondary 
                transmissions of programming contained in a 
                primary transmission made by a network station 
                and embodying a performance or display of a 
                work shall be subject to statutory licensing 
                under this section if the secondary 
                transmission is made by a satellite carrier to 
                the public for private home viewing, is 
                permissible under the rules, regulations, and 
                authorizations of the Federal Communications 
                Commission, and the carrier makes a direct or 
                indirect charge for such retransmission service 
                to each subscriber receiving the secondary 
                transmission.

           *       *       *       *       *       *       *

    (c) Adjustment of Royalty Fees.--
          (1) Applicability and determination of royalty 
        fees.--The rate of the royalty fee payable under 
        subsection (b)(1)(B) shall be effective unless a 
        royalty fee is established under paragraph (2) or (3) 
        of this subsection.

           *       *       *       *       *       *       *

          (4) Reduction.--
                  (A) Superstation.--The rate of the royalty 
                fee in effect on January 1, 1998, payable in 
                each case under subsection (b)(1)(B)(i) shall 
                be reduced by 30 percent.
                  (b) Network.--The rate of the royalty fee in 
                effect on January 1, 1998, payable under 
                subsection (b)(1)(B)(ii) shall be reduced by 45 
                percent.
          (5) Public broadcasting service as agent.--For 
        purposes of section 802, with respect to royalty fees 
        paid by satellite carriers for retransmitting the 
        Public Broadcasting Service satellite feed, the Public 
        Broadcasting Service shall be the agent for all public 
        television copyright claimants and all Public 
        Broadcasting Service member stations.

           *       *       *       *       *       *       *

    (d) Definitions.--As used in this section--
          (1) Distributor.--The term ``distributor'' means an 
        entity which contracts to distribute secondary 
        transmissions from a satellite carrier and, either as a 
        single channel or in a package with other programming, 
        provides the secondary transmission either directly to 
        individual subscribers for private home viewing or 
        indirectly through other program distribution entities.

           *       *       *       *       *       *       *

          [(10) Unserved household.--The term ``unserved 
        household'', with respect to a particular television 
        network, means a household that--
                  [(A) cannot receive, through the use of a 
                conventional outdoor rooftop receiving antenna, 
                an over-the-air signal of grade B intensity (as 
                defined by the Federal Communications 
                Commission) of a primary network station 
                affiliated with that network, and
                  [(B) has not, within 90 days before the date 
                on which that household subscribes, either 
                initially or on renewal, to receive secondary 
                transmissions by a satellite carrier of a 
                network station affiliated with that network, 
                subscribed to a cable system that provides the 
                signal of a primary network station affiliated 
                with that network.]
          (10) Unserved household.--The term ``unserved 
        household'', with respect to a particular television 
        network, means a household that cannot receive, through 
        the use of a conventional outdoor rooftop receiving 
        antenna, an over-the-air signal of grade B intensity 
        (as defined by the Federal Communications Commission) 
        of a primary network station affiliated with that 
        network.

           *       *       *       *       *       *       *

          (12) Public broadcasting service satellite feed.--The 
        term ``Public Broadcasting Service satellite feed'' 
        means the national satellite feed distributed by the 
        Public Broadcasting Service consisting of educational 
        and informational programming intended for private home 
        viewing, to which the Public Broadcasting Service holds 
        national terrestrial broadcast rights.

           *       *       *       *       *       *       *


                     HISTORICAL AND STATUTORY NOTES


                         termination of section

    Section 4(a) of Pub. L. 103-369 provided that: ``Section 
119 of title 17, United States Code [this section], as amended 
by section 2 of this Act, ceases to be effective on [December 
31, 1999] December 31, 2004.''

           *       *       *       *       *       *       *


Sec. 122. Limitations on exclusive rights; secondary transmissions by 
                    satellite carriers within local markets

    (a) Secondary Transmissions of Television Broadcast 
Stations by Satellite Carriers.--A secondary transmission of a 
primary transmission of a television broadcast station into the 
station's local market shall be subject to statutory licensing 
under this section if--
          (1) the secondary transmission is made by a satellite 
        carrier to the public;
          (2) the secondary transmission is permissible under 
        the rules, regulations, or authorizations of the 
        Federal Communications Commission; and
          (3) the satellite carrier makes a direct or indirect 
        charge for the secondary transmission to--
                  (A) each subscriber receiving the secondary 
                transmission; or
                  (B) a distributor that has contracted with 
                the satellite carrier for direct or indirect 
                delivery of the secondary transmission to the 
                public.
    (b) Reporting Requirements.--
          (1) Initial lists.--A satellite carrier that makes 
        secondary transmissions of a primary transmission made 
        by a network station under subsection (a) shall, within 
        90 days after commencing such secondary transmissions, 
        submit to that station a list identifying (by name and 
        street address, including county and zip code) all 
        subscribers to which the satellite carrier currently 
        makes secondary transmissions of that primary 
        transmission.
          (2) Subsequent lists.--After the list is submitted 
        under subparagraph (1), the satellite carrier shall, on 
        the 15th of each month, submit to the station a list 
        identifying (by name and street address, including 
        county and zip code) any subscribers who have been 
        added or dropped as subscribers since the last 
        submission under this subsection.
          (3) Use of subscriber information.--Subscriber 
        information submitted by a satellite carrier under this 
        subsection may be used only for the purposes of 
        monitoring compliance by the satellite carrier with 
        this section.
          (4) Requirements of stations.--The submission 
        requirements of this subsection shall apply to a 
        satellite carrier only if the station to whom the 
        submissions are to be made places on file with the 
        Register of Copyrights a document identifying the name 
        and address of the person to whom such submissions are 
        to be made. The Register shall maintain for public 
        inspection a file of all such documents.
    (c) Royalty Fee Required.--A satellite carrier whose 
secondary transmissions are subject to statutory licensing 
under subsection (a) shall have no royalty obligation for such 
secondary transmissions.
    (d) Noncompliance With Reporting Requirements.--
Notwithstanding subsection (a), the willful or repeated 
secondary transmission to the public by a satellite carrier 
into the local market of a television broadcast station of a 
primary transmission made by that television broadcast station 
and embodying a performance or display of a work is actionable 
as an act of infringement under section 501, and is fully 
subject to the remedies provided under sections 502 through 506 
and 509, if the satellite carrier has not complied with the 
reporting requirements of subsection (b).
    (e) Willful Alterations.--Notwithstanding subsection (a), 
the secondary transmission to the public by a satellite carrier 
into the local market of a television broadcast station of a 
primary transmission made by that television broadcast station 
and embodying a performance or display of a work is actionable 
as an act of infringement under section 501, and is fully 
subject to the remedies provided by sections 502 through 506 
and sections 509 and 510, if the content of the particular 
program in which the performance or display is embodied, or any 
commercial advertising or station announcement transmitted by 
the primary transmitter during, or immediately before or after, 
the transmission of such program, is in any way willfully 
altered by the satellite carrier through changes, deletions or 
additions, or is combined with programming from any other 
broadcast signal.
    (f) Violation of Territorial Restrictions on Statutory 
License for Television Broadcast Stations.--
          (1) Individual violations.--The willful or repeated 
        secondary transmission to the public by a satellite 
        carrier of a primary transmission made by a television 
        broadcast station and embodying a performance or 
        display of a work to a subscriber who does not reside 
        in that station's local market, and is not subject to 
        statutory licensing under section 119, is actionable as 
        an act of infringement under section 501 and is fully 
        subject to the remedies provided by sections 502 
        through 506 and 509, except that--
                  (A) no damages shall be awarded for such act 
                of infringement if the satellite carrier took 
                corrective action by promptly withdrawing 
                service from the ineligible subscriber; and
                  (B) any statutory damages shall not exceed $5 
                for such subscriber for each month during which 
                the violation occurred.
          (2) Pattern of violations.--If a satellite carrier 
        engages in a willful or repeated pattern or practice of 
        secondarily transmitting to the public a primary 
        transmission made by a television broadcast station and 
        embodying a performance or display of a work to 
        subscribers who do not reside in that station's local 
        market, and are not subject to statutory licensing 
        under section 119, then in addition to the remedies 
        under paragraph (1)--
                  (A) if the pattern or practice has been 
                carried out on a substantially nationwide 
                basis, the court shall order a permanent 
                injunction barring the secondary transmission 
                by the satellite carrier of the primary 
                transmissions ofthat television broadcast 
station (and if such television broadcast station is a network station, 
all other television broadcast stations affiliated with such network), 
and the court may order statutory damages not exceeding $250,000 for 
each 6-month period during which the pattern or practice was carried 
out; and
                  (B) if the pattern or practice has been 
                carried out on a local or regional basis with 
                respect to more than one television broadcast 
                station (and if such television broadcast 
                station is a network station, all other 
                television broadcast stations affiliated with 
                such network), the court shall order a 
                permanent injunction barring the secondary 
                transmission in that locality or region by the 
                satellite carrier of the primary transmissions 
                of any television broadcast station, and the 
                court may order statutory damages not exceeding 
                $250,000 for each 6-month period during which 
                the pattern or practice was carried out.
    (g) Burden of Proof.--In any action brought under 
subsection (d), (e), or (f), the satellite carrier shall have 
the burden of proving that its secondary transmission of a 
primary transmission but a television broadcast station is made 
only to subscribers located within that station's local market.
    (h) Geographic Limitations on Secondary Transmissions.--The 
statutory license created by this section shall apply to 
secondary transmissions to locations in the United States, and 
any commonwealth, territory, or possession of the United 
States.
    (i) Exclusivity With Respect to Secondary Transmissions of 
Broadcast Stations by Satellite to Members of the Public.--No 
provision of section 111 or any other law (other than this 
section and section 119) shall be construed to contain any 
authorization, exemption, or license through which secondary 
transmissions by satellite carriers of programming contained in 
a primary transmission made by a television broadcast station 
may be made without obtaining the consent of the copyright 
owner.
    (j) Definitions.--In this section--
          (1) The term ``distributor'' means an entity which 
        contracts to distribute secondary transmissions from a 
        satellite carrier and, either as a single channel or in 
        a package with other programming, provides the 
        secondary transmission either directly to individual 
        subscribers or indirectly through other program 
        distribution entities.
          (2) The term ``local market'' for a television 
        broadcast station has the meaning given that term under 
        rules, regulations, and authorizations of the Federal 
        Communications Commission relating to carriage of 
        television broadcast signals by satellite carriers.
          (3) The terms ``network station'', ``satellite 
        carrier'', and ``secondary transmission'' have the 
        meaning given such terms under section 119(d).
          (4) The term ``subscriber'' means an entity that 
        receives a secondary transmission service by means of a 
        secondary transmission from a satellite and pays a fee 
        for the service, directly or indirectly, to the 
        satellite carrier or to a distributor.
          (5) The term ``television broadcast station'' means 
        an over-the-air, commercial or noncommercial television 
        broadcast station licensed by the Federal 
        Communications Commission under subpart E of part 73 of 
        title 47, Code of Federal Regulations.

                                
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