[Federal Register Volume 63, Number 152 (Friday, August 7, 1998)]
[Proposed Rules]
[Pages 42330-42348]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-21085]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 76

[CS Docket No. 98-120; FCC 98-153]


Carriage of the Transmissions of Digital Television Broadcast 
Stations

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: The Notice of Proposed Rulemaking (``NPRM'') addresses the 
carriage of digital broadcast television signals by cable operators. It 
seeks comment of the issues surrounding the interoperability of the 
digital television broadcast system, the cable system, and the digital 
receiver. It seeks comment on whether to amend the cable television 
broadcast signal carriage rules to accommodate the carriage of digital 
broadcast television signals. It also seeks comment on changes in other 
parts of the cable television rules that may be required because of the 
carriage of digital television signals.

DATES: Comments on the NPRM are due on or before September 17, 1998. 
Reply comments on the NPRM are due on or before October 30, 1998. 
Written comments by the public on the proposed information collection 
requirements contained should be submitted on or before September 17, 
1998. If you anticipate that you will be submitting comments on the 
proposed information collection requirements, but find it difficult to 
do so within the period of time allowed by this NPRM, you should advise 
the contact listed below as soon as possible.

ADDRESSES: A copy of any comments on the proposed information 
collection requirements contained herein should be submitted to Judy 
Boley, Federal Communications, Room 234, 1919 M St., N.W., Washington, 
DC 20554 or via internet to [email protected] and to Timothy Fain, Office 
of Management and Budget, Room 10236 NEOB, Washington, DC 20503, (202) 
395-3561 or via internet at [email protected].

FOR FURTHER INFORMATION CONTACT: For additional information concerning 
the NPRM contact Ben Golant at (202) 418-7111 or via internet at 
[email protected]. For additional information concerning the proposed 
information collection requirements contained in this NPRM contact Judy 
Boley at 202-418-0214 or via internet at [email protected].

PAPERWORK REDUCTION ACT: The requirements proposed in this NPRM have 
been analyzed with respect to the Paperwork Reduction Act of 1995 (the 
``1995 Act'') and would impose new information collection requirements 
on the public. The Commission, as part of its continuing effort to 
reduce paperwork burdens, invites the general public to take this 
opportunity to comment on the proposed information collection 
requirements contained in this NPRM, as required by the 1995 Act. 
Public comments are due on October 6,

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1998. Written comments must be submitted by the OMB on the proposed 
information collection requirements on or before October 6, 1998. 
Comments should address: (a) whether the proposed collection of 
information is necessary for the proper performance of the functions of 
the Commission, including whether the information shall have practical 
utility; (b) the accuracy of the Commission's burden estimates; (c) 
ways to enhance the quality, utility, and clarity of the information 
collected; and (d) ways to minimize the burden of the collection of 
information on the respondents, including the use of automated 
collection techniques or other forms of information technology.
    OMB Approval Number: 3060-XXXX (new collection).
    Title: Carriage of the Transmissions of Digital Television 
Broadcast Stations.
    Type of Review: New collection.
    Respondents: Businesses or other for-profit entities.
    Number of Respondents: 12,600.
    Estimated Time Per Response: 30 minutes to 40 hours, dependent upon 
the specific information collection requirement addressed in this 
collection.
    Frequency of Response: On occasion.
    Total Annual Burden to Respondents: 92,349 hours.
    Total Annual Cost to Respondents: $2,355,122.
    Needs and Uses: The proposed information collection requirements 
contained in this proceeding, if adopted, will be used by a variety of 
respondents to serve the following purposes. The purpose of the 
tentative digital must-carry/retransmission consent election process, 
market modification process, and digital must-carry complaint process 
is to enable broadcast licensees to exercise their possible must-carry/
retransmission consent rights in an effective manner. The purpose of 
the various broadcast licensee notification obligations contained in 
the Commission's program exclusivity rules is to protect the exclusive 
distribution rights afforded to such broadcast licensees. The purpose 
of the subscriber notification requirements placed upon cable operators 
is to protect subscribers' consumer rights by ensuring that cable 
operators notify them when new digital channels have been added to 
their channel line-ups and ensuring that cable operators notify them 
when cable systems carry channels that cannot be viewed via cable 
without a converter box.

Synopsis

I. Introduction

    1. The statutory provision triggering this rulemaking is found in 
Section 614(b)(4)(B) of the Act. This section requires that: ``At such 
time as the Commission prescribes modifications of the standards for 
television broadcast signals, the Commission shall initiate a 
proceeding to establish any changes in the signal carriage requirements 
of cable television systems necessary to ensure cable carriage of such 
broadcast signals of local commercial television stations which have 
been changed to conform with such modified standards.'' In our Fourth 
Further Notice of Proposed Rule Making in MM Docket 87-268, 60 FR 42130 
(August 15, 1995), we sought and received comments addressing digital 
broadcast television carriage issues. The Commission, however, 
indicated its intention to update the record and seek further comment 
on these issues. We issue this NPRM to seek additional comments to 
reflect our recent prescription of the modification of the standards 
for television broadcast signals in a digital broadcast format; to 
recognize the Commission's adoption of additional digital broadcast 
television policies and rules; to address advances in digital 
television technology in the last two years; to take into consideration 
recent legislative developments regarding the digital broadcast 
television buildout schedule as well as Congress' pronouncement that 
ancillary and supplementary digital television services do not have 
must carry status; and to recognize the Supreme Court's decision 
upholding the constitutionality of the existing analog must carry 
provisions. In addition, we are broadening this proceeding to consider 
technical compatibility issues and other changes in the Commission's 
rules, such as those concerning retransmission consent, program 
exclusivity and rate regulation, that may also be required to recognize 
the conversion of the existing broadcasting system to the new digital 
format and to a new table of allotments.

II. Legal Context

    2. Section 614(b)(4)(B) was adopted as part of a larger must carry/
retransmission consent scheme set forth in the Cable Television 
Consumer Protection and Competition Act of 1992. This statute amended 
the Act to provide television stations with certain carriage rights on 
local market cable television systems. Sections 614 and 615 of the Act 
contain the cable television ``must carry'' requirements. Section 325 
contains revised ``retransmission consent'' requirements pursuant to 
which cable operators may be obligated to obtain the consent of 
broadcasters before retransmitting their signals. Within local market 
areas, presently defined as Arbitron's Area of Dominant Influence 
(``ADI''), commercial television stations may elect cable carriage 
under either the retransmission consent or mandatory carriage 
requirements. Noncommercial television stations may only elect must 
carry under the Act. In addition, pursuant to Sections 653(c)(1)(B) and 
(c)(2) of the Act, adopted as part of the Telecommunications Act of 
1996, open video system operators are also subject to broadcast signal 
carriage requirements.
    3. With regard to the mandatory cable carriage provisions, Congress 
believed that laws were required to ensure: (1) the continued 
availability of free over-the-air television broadcast service; (2) the 
benefits derived from the local origination of programming from 
television stations; and (3) as it relates to noncommercial television 
stations, the continued distribution of unique, noncommercial, 
educational programming services. Congress reasoned that without 
mandatory carriage provisions in place, the economic viability of local 
broadcast television and its ability to originate quality local 
programming would be jeopardized. Congress also believed that because 
cable systems and broadcast stations compete for local advertising 
revenue and because cable operators have an interest in favoring their 
affiliated programmers, cable operators have an incentive to delete, 
reposition, or refuse to carry local television broadcast stations. 
These conclusions, and the carriage provisions themselves, were 
premised on findings made by Congress at the beginning of this decade 
that most subscribers to cable television systems do not or cannot 
maintain antennas to receive broadcast television services, do not have 
input selector switches to convert from a cable to an antenna reception 
system, or cannot otherwise receive broadcast television services. The 
retransmission consent provision was predicated on the finding that 
cable systems obtain ``great benefits from local broadcast signals,'' 
in the form of subscribership and increased audience for cable 
programming services, which they have previously been able to obtain 
without the consent of the broadcaster or any copyright liability.
    4. Under the mandatory carriage provisions, cable operators, 
subject to certain capacity based limitations, are generally required 
to carry local television stations on their cable

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systems. The Act states that systems with more than 12 usable activated 
channels must carry local commercial television stations, ``up to one-
third of the aggregate number of usable activated channels of such 
system[s].'' Beyond this requirement, the carriage of additional 
broadcast television stations is at the discretion of the cable 
operator. In addition, cable systems are obliged to carry local 
noncommercial educational television stations according to a different 
formula and based upon a cable system's number of usable activated 
channels. Low power television stations may request carriage if they 
meet six statutory criteria. A cable operator, however, cannot carry a 
low power station in lieu of a full power station.
    5. Cable operators are required to carry local television stations 
on a tier of service provided to every subscriber and on certain 
channel positions designated in the Act. Cable operators are prohibited 
from degrading the television station's signal but are not required to 
carry duplicative signals or video that is not considered primary. 
Television stations may file complaints with the Commission against 
cable operators for non-compliance with section 614 and section 615. In 
addition, both cable operators and television stations may file 
petitions with the Commission to either expand or contract a commercial 
television stations' market for broadcast signal carriage purposes. 
These statutory requirements were implemented by the Commission in 
1993, and are reflected in Secs. 76.56-64 of the Commission's rules.
    6. Section 336 of the Act, added as part of the Telecommunications 
Act of 1996, provides that if the Commission determines to issue 
additional licenses for advanced television services, the Commission 
should ``allow the holders of such licenses to offer such ancillary or 
supplementary services . . . as may be consistent with the public 
interest, convenience, and necessity.'' It then further provides that 
``no ancillary or supplementary service shall have any right to 
carriage under section 614 or 615.'' In the legislative history of this 
provision, Congress stated that it did not intend to ``confer must 
carry status on advanced television or other video services offered on 
designated frequencies'' adding that the ``issue is to be the subject 
of a Commission proceeding under section 614(b)(4)(B) of the 
Communications Act.''
    7. The Commission recently adopted rules establishing a 
transitional process for the conversion from an analog to a digital 
form of transmission. In broad outline, the rules and policies adopted 
make each existing analog television licensee or permittee eligible to 
apply to construct or operate a new digital station with a roughly 
comparable service area using 6 MHz of spectrum. The new digital 
station will transmit a signal consistent with the standards adopted in 
the Fourth Report and Order in MM Docket No. 87-268, 62 FR 14006 (March 
25, 1997), giving stations the flexibility to broadcast in a high 
definition mode, in a multiple program standard definition mode, or a 
mixture of both. During a transitional period, both the analog and 
digital television signals will be broadcast. At the end of the 
transition, the licensee will cease broadcasting an analog signal and 
will return to the government 6 MHz of spectrum. There are no federal 
digital cable transition requirements. Cable operators are 
transitioning to digital on a voluntary basis and in some instances, 
cable franchising agreements may require operators to upgrade their 
physical plant and offer digital services. Thus, as the transition to 
digital occurs, a significant level of complexity will arise due to the 
different time schedules followed by the nearly 1,600 television 
licensees and the approximately 11,000 U.S. cable systems with respect 
to the implementation of digital transmissions.
    8. The rules governing the transition from analog to digital 
broadcasting are found in the Fifth Report and Order in MM Docket No. 
87-268, 62 FR 26966 (May 16, 1997). This Order set forth a staggered 
implementation schedule for the introduction of digital broadcast 
television. Construction requirements vary depending on the size of the 
television market and other factors. In the first category, all 
stations in the top ten television markets that are affiliated with 
NBC, CBS, Fox, or ABC will have until May 1, 1999, to construct their 
digital facilities. In the second category, all stations in the top 30 
television markets not included above that are affiliated with NBC, 
CBS, Fox, or ABC will have until November 1, 1999, to construct their 
digital facilities. In the third category, all other commercial 
stations will have until May 1, 2002, to construct their digital 
broadcast television facilities. All noncommercial stations will have 
until May 1, 2003, to construct their digital broadcast television 
facilities. We note that 24 television station licensees have expressed 
to the Commission their intention to voluntarily expedite their 
schedules and complete construction and begin broadcasting by November, 
1998.
    9. Commencing April 1, 2003, digital broadcast television licensees 
and permittees must simulcast at least 50% of the video programming 
transmitted on their analog channel; commencing April 1, 2004, there 
will be a 75% simulcasting requirement; commencing April 1, 2005, there 
will be a 100% simulcasting requirement until the analog channel is 
terminated and returned to the Commission.
    10. Congress, in the Balanced Budget Act of 1997 (``BBA''), 
codified certain exceptions to the return of spectrum by the 2006 
target date established by the Commission. That statute established 
conditions under which the return may be extended beyond December 31, 
2006, upon the request of a television station. To retain its analog 
channel beyond that date, a television station will have to demonstrate 
that: ``(i) one or more of the stations in the relevant television 
market that are licensed to, or affiliated with, one of the four 
largest national television networks, is not broadcasting a digital 
television service signal, and the Commission finds that such station 
has exercised due diligence and satisfies the conditions for an 
extension of the Commission's applicable construction deadlines for 
digital television service in that market; (ii) digital-to-analog 
converter technology is not generally available in such market; or 
(iii) in any market in which an extension is not available under clause 
(i) or (ii), 15 percent or more of the television households in such 
market--(I) do not subscribe to a multichannel video programming 
distributor (as defined in section 602) that carries one of the digital 
television service programming channels of each of the television 
stations broadcasting such a channel in such market; and (II) do not 
have either--(a) at least one television receiver capable of receiving 
the digital television service signals of the television stations 
licensed in such market; or (b) at least one television receiver of 
analog television service signals equipped with digital-to-analog 
converter technology capable of receiving the digital television 
service signals of the television stations licensed in such market.'' 
As the statutory language indicates, the return of the analog spectrum 
is in part dependent on the carriage of digital television stations by 
cable operators and other multichannel video programming distributors 
(``MVPDs''). In the BBA's legislative history, Congress stated that it 
was ``not attempting to define the scope of any MVPD's `must carry' 
obligation for digital television signals'' and that the digital 
broadcast television must carry

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decision is ``for the Commission to make at some point in the future.''
    11. We read Section 614(b)(4)(B) of the 1992 Cable Act and Section 
309(j) of the Balanced Budget Act, along with their respective 
legislative histories, to give us broad authority to define the scope 
of a cable operator's signal carriage requirements during the period of 
change from analog to digital broadcasting. Given this intent, and 
noting the significant changes that are taking place in the broadcast 
and cable television industries, as well as in the development of 
television reception devices, we tentatively conclude that the 
Commission should have, and does have, the ability to develop rules to 
facilitate the transition process and to take into account the 
technical changes involved. We seek comment on this tentative 
conclusion.
    12. While we believe Congress has given the Commission discretion 
in exploring and deciding the complex issues involved in this 
proceeding, we take as our starting point the general framework 
governing the carriage of television stations currently found in 
Section 614, 615, and 325 of the Act. Section 614(b)(4)(B), and its 
legislative history, appears to support this approach as Congress 
intended that the Commission establish technical standards for the 
carriage of digital television signals. Based on the legislative 
history and the existing carriage provisions, we believe that the 
participation by the cable industry during the transition period is 
likely to be essential to the successful introduction of digital 
broadcast television and the rapid return of the analog spectrum to the 
Commission.
    13. We also realize, given the history of the must carry provisions 
and the litigation relating to them, that any rules adopted by the 
Commission must be carefully crafted to permit them to be sustained in 
the face of a constitutional challenge. Such rules must be consistent 
with the judicial decisions regarding the constitutional limitations 
applicable in this area and in particular with the Supreme Court's 
holding in Turner Broadcasting System v. FCC, 117 S.Ct. 1174 (1997) 
(``Turner II''). As the Supreme Court has noted in a previous decision 
reviewing the must carry provisions, ``[w]hen the Government defends a 
regulation on speech as a means to redress past harms or prevent 
anticipated harms, it must do more than simply `posit the existence of 
the disease sought to be cured.' . . . The government must demonstrate 
that the recited harms are real, not merely conjectural, and that the 
regulation will in fact alleviate these harms in a direct and material 
way.'' Turner Broadcasting System v. FCC, 512 U.S. at 664 (1995) 
(``Turner I''). In Turner II, the Supreme Court found the must carry 
provisions of the 1992 Cable Act to be content neutral regulations 
subject to intermediate First Amendment scrutiny. The Court emphasized 
that preserving the benefits of free, over-the-air broadcast 
television, promoting the widespread dissemination of information from 
a multiplicity of sources, and promoting fair competition in the market 
for television programming, were important governmental interests. The 
court noted that there was substantial evidence before Congress 
supporting the predictive judgment that local broadcasters denied 
carriage ``would suffer financial harm and possible ruin'' in the 
absence of carriage rules and the Government's assertion that ``the 
economic health of local broadcasting is in genuine jeopardy and in 
need of the protections afforded by must-carry'' was found to be 
reasonable and supported by the evidence. In addressing the question of 
whether the requirements ``burden substantially more speech that is 
necessary'' to further the governmental interest involved, the Court 
indicated that ``the actual effects are modest'' and that 
``[s]ignificant evidence indicates the vast majority of cable operators 
have not been affected in a significant manner by must-carry.'' The 
Court concluded that the requirements were not invalid based on a 
challenge that they are ``substantially broader than necessary to 
achieve the government's interest. Noting that Turner II did not 
address the mandatory carriage of the broadcaster's digital television 
signal, we ask how the Court's reasoning and conclusions would apply in 
the context of this proceeding.
    14. Given this background, we find it essential to build a record 
relating to the interests to be served by any digital broadcast signal 
carriage rules, the factual predicate on which they would be based, the 
harms to be prevented, and the burdens they would impose. Having an 
updated record is particularly important because of the many legal and 
technical developments that have taken place since the analog must 
carry provisions were enacted in 1992, and to take into account the 
differences brought about by the conversion to digital broadcasting and 
the parallel conversion to digital cable operations. For example, 
television reception via antennas has been made easier and more 
convenient than was the case earlier this decade. Legal barriers to 
over-the-air reception of broadcast signals, caused by restrictions on 
antenna placement, have been reduced because of the over the air 
reception device preemption provisions of the Telecommunications Act of 
1996. Input selector (``A/B'') switches, which allow the subscriber to 
switch between cable and an antenna, may now be built into television 
receivers and can be easily controlled from a TV remote control device. 
Some of the reception problems that made it difficult for certain 
consumers to receive over-the-air broadcast signals may be eliminated 
by the conversion to digital. Broadcasting may not be the only source 
of local programming as cable operators have developed local news 
channels and public, educational, and governmental access channels, 
which provide highly localized content, have multiplied in the past six 
years. We seek to develop through this proceeding, the facts and data 
necessary for a complete record and ask for the assistance of all 
parties in developing that record.

III. Digital Compatibility

    15. In this section, we address the compatibility issues 
recognizing that the introduction of DTV, and any carriage rules we may 
implement, will be most successful if all the components of the 
transmission path work together. Furthermore, an understanding how the 
different technical elements fit together is essential to a discussion 
of the core digital broadcast signal carriage issues. Here, we explain 
how digital transmission systems function and the means of transporting 
the DTV signal through the cable system to the subscriber. This 
discussion is particularly important in understanding the cable system 
channel capacity, channel position, and technical standards issues that 
are addressed at length throughout the document. Possible technical 
impediments preventing the reception of the DTV signal are raised, 
including matters that are integral to the discussion of material 
degradation in Section IV of the text.
    16. Cable carriage of television broadcast signals in the existing 
analog environment involves the need to coordinate multiple technical 
systems--a television broadcast station transmission, a cable 
television distribution system, and a television receiver. All three 
are standardized by regulation or custom to transmit, distribute, and 
display analog NTSC television pictures. Although issues sometimes 
arise as to how these parts fit together from a technical perspective, 
the basic elements are relatively standard and well known. In the new

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digital environment, however, neither law nor regulation standardizes 
every element. How the multiple technical systems will function in a 
digital environment remains to be seen. We note that the various 
technical elements involved in digital broadcast signal carriage are 
constantly in flux as technology advances. We set forth our basic 
current understanding of the applicable technical context and seek 
comment and updated information relating to this review.
    17. The digital television transmission system and related 
standards were established by the Advanced Television Systems Committee 
(``ATSC''). The components, or comprising layers, are the video/audio 
layer, compression layer, transport layer, and the transmission layer. 
At the top of the ATSC hierarchy is the uncompressed digital signal in 
one of the various video/audio formats. Under the ATSC's highly 
flexible standard, it is possible to transmit high definition pictures 
and high quality sound, multiple standard definition pictures, and 
other ancillary related or unrelated communications, with the mix of 
services changing dynamically from second to second. The video content 
may be transmitted in the progressive scan or in the interlaced 
transmission format. Pictures may be transmitted in a standard 
definition format, such as 480 progressive, or in a high definition 
format, such as 720 progressive or 1080 interlaced. The bitstream that 
corresponds with the video/audio layer is known as the elementary 
stream.
    18. At the next level down in the hierarchy is the compression 
layer. The purpose of this layer is to take the elementary stream from 
the layer above and compress it into a bitstream with a lower data 
rate. In the ATSC standard, MPEG-2 compression is used for the video 
and the Dolby AC-3 compression is used for the audio. The amount of 
compression depends upon the compression format chosen. Additional 
compression lowers the data rate, but at the possible loss of some 
video/audio quality.
    19. The compressed bitstream, in turn, may be packetized and 
multiplexed with other bitstreams into a higher data rate digital 
bitstream. This is done in what is referred to as the transport layer. 
This multiplexed bitstream may include multiple programs and/or 
multiple data signals. The ATSC standard uses the MPEG-2 transport 
protocol for this purpose.
    20. The lowest layer in the hierarchy is referred to as the 
transmission layer. Here, the multiplexed bitstream from the transport 
layer is modulated onto a radio frequency (``RF'') carrier. The ATSC 
set forth standards for two modulation modes using vestigial sideband 
modulation (``VSB''): a terrestrial broadcast mode (8 VSB) and a high 
data rate mode (16 VSB), which is said to be capable of reliably 
delivering approximately twice the data throughput in a 6 MHz cable 
television channel as the 8 VSB mode (38 Mbps as compared to 19 Mbps). 
The 8 VSB standard has been optimized for terrestrial broadcast 
television delivery where transmission errors and data loss are likely. 
The Commission has adopted VSB as part of the digital broadcast 
standard. The Commission, however, has not adopted a digital cable 
standard nor has the industry embraced the use of 16 VSB. Instead, 
cable operators plan to transmit digital communications, from the 
headend to the subscriber, using quadrature amplitude modulation 
(``QAM''), either 64 QAM or 256 QAM (which is closer to 16 VSB in terms 
of its data rate). Both 64 and 256 QAM likely will provide cable 
operators with a greater degree of operating efficiency than does 8 
VSB, and permits the carriage of a higher data rate, with less bits 
devoted to error correction, when compared with the digital broadcast 
system.
    21. The above description of the four layer hierarchy is based upon 
a sequence of events at the transmitting end of a digital television 
system. That is, it started with the elementary digital stream which is 
compressed in the compression layer, multiplexed in the transport layer 
and modulated onto an RF carrier in the transmission layer. The signal 
progresses from layer-to-layer down the protocol stack. At the 
receiving end, the process is reversed.
    22. While the conversion of television stations to a digital 
transmission mode is generally associated with greatly improved sound 
and picture quality in the high definition mode and with better and 
more flexible reception in the standard definition mode, the practical 
definition of ``digital'' in the cable context may vary from system to 
system. The fact that a portion of a cable system capacity is digital 
may mean only that more channels are offered with no fundamental 
enhancements in sound and picture quality. For example, a cable system 
making use of TCI's Headend in the Sky or ``HITS,'' would be 
distributing various packages of digitally compressed satellite-based 
programming to subscribers with an associated set top box. Current HITS 
technology allows for at least twelve digitally compressed channels to 
fit onto one analog cable channel. The programming content is 
compressed and bundled into discrete groups of programming services at 
TCI's satellite uplink so that it can be passed through by the system 
operator essentially without additional processing. However, there are 
cable operators that will be offering digital cable using QAM on an 
upgraded cable system. For example, in the case of a 750 MHz system, 
the 54 MHz to 550 MHz region of the cable system may be reserved for 
analog signals, while the 550 to 750 MHz area will carry dozens of 
digital signals. A critical distinction between the two is that systems 
subscribing to HITS may not necessarily have excess capacity to carry 
digital television stations while a 750 MHz QAM system may, in fact, 
have such capacity.
    23. A critical aspect of the digital television transmission path 
involves the digital cable set top boxes. Significant issues arise as 
to how set top boxes will interact with the distribution of both 
digital cable and digital broadcast signals. Digital cable set top 
boxes perform digital signal processing, decompression, and 
demultiplexing functions. The receiving device demodulates the carrier, 
i.e., it extracts the multiplexed bitstream from the carrier, in the 
transmission layer. The multiplexed bitstream is passed up to the 
transport layer where it is demultiplexed into its component 
bitstreams. The individual streams are, in turn, passed up to the 
compression layer where they are decompressed and passed up into the 
video/audio layer for decoding and display. The set top box also 
controls access to prevent theft of the service and makes compressed 
digital cable services available for reception on analog NTSC 
television receivers. In an entirely digital environment, the set top 
box and the digital receiver may work in tandem by trading off the 
digital processing function. For example, a set top box that lacks 
sufficient processing power and memory to uncompress a high definition 
signal could nevertheless deliver the compressed data stream to the 
receiver where it would be uncompressed. A variety of concerns have 
been raised regarding the set top box's ability to ``pass through'' the 
signals of digital broadcast stations, including in particular, high 
definition signals. The concern stems from three separate, but related, 
developments: (1) the possibility of shared functions between set top 
boxes and receivers; (2) the possible lack of processing power and 
memory in some set top boxes; and (3) the possibility of broadcast 
signals being passed directly through to

[[Page 42335]]

receivers without any processing by the set top box.
    24. ``Pass through,'' in one scenario, means that the signals in 
the VSB format would be passed through the set top box, without being 
processed, and sent directly into the receiver for display. If the 
signal was sent through the system in the proper format and the 
receiver was capable of displaying that signal, the set top box would 
create no obstacle since it was bypassed in the distribution chain. 
Under another scenario, the set top box would play a partial processing 
function by detecting, demodulating and demultiplexing the signal, but 
leave it compressed. The signal would then be passed to the receiver 
which would uncompress it. The reasons a box might be designed to 
function in this fashion is that extra memory and processing power are 
required to uncompress certain of the high definition formats and thus 
a less expensive box could be designed if the circuitry in the 
television receiver could be shared and used to address the compression 
issue.
    25. Another scenario is where the set top box converts the digital 
signal for display on NTSC television receivers. Conversion will allow 
cable subscribers to view digital television on their current analog 
television receivers. However, to process high definition video 
programs, the set top box would need sufficient memory and computing 
power, which would add to the cost of the equipment. Regardless of 
which techniques are used, electronic program guides and other 
interactive set top features may not work with signals that are not 
processed by the set top box. We seek comment updating and informing us 
on the current state of set top box technology as it relates to the 
carriage, pass through, and/or conversion of digital broadcast signals.
    26. It has been suggested that some of the digital broadcast-set 
top box processing issues could be addressed through the use of a 
digital bus, exemplified by a standard interface known as IEEE-1394. 
This interface could allow a digital set-top box to share some of the 
resources of other devices in terms of the processing of digital 
signals, such as the MPEG decoder in a digital television receiver. 
Thus, high definition signals can be processed and displayed on the 
digital television receiver through the bus even though the digital set 
top box could not perform the processing function. This interface is 
also important in the context of digital broadcast signal carriage 
because it may be needed to ensure that on-screen graphics and program 
guide capabilities are enabled for the digital broadcast signals that 
are being carried. We seek comment on whether a bus standard could in 
fact address some of the set top box interface issues raised above. We 
are aware that the relevant industries are developing an interface 
standard and we fully expect that they will move quickly to adopt this 
standard. Given this, we thus far have concluded that the goal of an 
effective interface can be met without regulatory action. Nonetheless, 
because of the importance of this issue and because of recent reports 
that the development of a standard may not be proceeding as 
expeditiously as previously thought, we ask if the Commission should 
consider rules, or other appropriate action, e.g., establishment of a 
deadline, to ensure that both the set top box and the digital receiver 
are 1394-compatible. If not, are there other devices or attachments on 
the market or being developed that would provide a simplified or more 
desirable interconnection between the set top and the digital receiver?
    27. It is difficult as this point in time to determine the 
technical abilities of the different digital set top boxes already 
distributed and in production, and how different cable operators will 
engage set top boxes in their business plans. At least one major system 
operator, TCI, has indicated that the set top boxes it will employ will 
ultimately be capable of passing through digital broadcast 
transmissions to the cable subscriber. This may involve simply 
providing a direct connection through the digital set top box to the 
digital television receiver. Although we do not want to impose 
unnecessary requirements, we seek comment on whether a mandate that set 
top boxes be designed to process all types of digital broadcast 
television formats is needed, and if so, what additional cost (to cable 
operators and at retail to consumers) would be involved. What effect 
would such a requirement have on the commercial availability of set top 
boxes? Would the remote control units used with the digital set top box 
also work with all digital receivers?
    28. Digital cable set top boxes may also perform certain other 
operations that may need to be considered, such as functions that are 
intended to assist program suppliers providing ``copy protection'' to 
their programming. The copy protection concern is that parties having 
access to the basic content of digital programming can make copies that 
are virtually as good as the original thus creating commercial 
incentives to withhold or delay the distribution of certain programming 
product. In February, 1998, five members of the ad hoc Copy Protection 
Technical Working Group presented a proposal aimed at protecting 
digital video and audio content riding on and between personal 
computers, digital receivers, set-tops, digital video cassette 
recorders and digital video disk players. Work is continuing on this 
effort. In this instance, we ask whether copy protection is a matter 
that the Commission should explore in further detail in this 
proceeding, in terms of the general issue of equipment compatibility.
    29. Receiver manufacturers are in the process of designing digital 
television sets. Their features are not standardized and the Commission 
has, to date, specifically declined to adopt digital television 
receiver standards. Moreover, the ATSC DTV standard does not specify 
requirements for a compliant receiver. In essence, DTV receiver designs 
are to be based on the specifications of the signal contained in the 
other portions of the standard. It appears, however, that all digital 
television receivers will be built to receive VSB transmissions and to 
process all 18 ATSC formats. Whether they will be capable of receiving 
QAM transmissions, and be built with a standard interface such as IEEE 
1394, is less certain. Regardless of how the digital television set is 
configured, it appears likely that there will be a considerable market 
for digital converter boxes that mediate between analog television 
receivers and digital transmission systems to lower the cost of digital 
reception. In this area, we seek comment on whether television 
receivers will be digital cable (QAM)-ready, or 1394 ready, and when 
such sets would be available to the public. Should the Commission take 
action to encourage the production of cable-ready receivers to 
facilitate the introduction of digital broadcast television? We also 
seek comment on whether the matters at issue in this proceeding suggest 
the need for an industry receiver standard. Is this the right 
proceeding to address these matters?

IV. Carriage and Retransmission Consent Issues

    30. Section 325 contains the Act's retransmission consent 
provisions. The law governing retransmission consent generally 
prohibits cable operators and other multichannel video programming 
distributors from retransmitting the signal of a commercial television 
station, radio station or low power station without the prior consent 
of the station whose signal is being transmitted, unless the 
broadcaster has chosen must carry. Every three years, commercial 
television stations must elect between pursuing their mandatory

[[Page 42336]]

carriage rights or their retransmission consent rights. Noncommercial 
television stations do not have retransmission consent rights.
    31. It has been estimated that approximately 80 percent of 
commercial television broadcasters elected retransmission consent on 
some cable systems, rather than must carry, during the 1993-1996 
election cycle. Thus, assuming this information is accurate, the 
question arises as to whether the general pattern will be repeated with 
respect to digital broadcast television stations during the transition 
period. There are reasons to believe it might not be because few cable 
subscribers will have digital receivers, at least initially. If it is 
repeated, however, it is possible that many of the transitional issues 
involved in this proceeding will be resolved through retransmission 
consent negotiations. Also, if the general retransmission consent 
pattern is repeated, the digital television stations scheduled to begin 
broadcasting in November 1998, May 1999, and November 1999, are most 
likely to exercise retransmission consent for the third election cycle 
currently scheduled to commence on January 1, 2000, even if there were 
digital must carry requirements in place. Television stations not 
affiliated with the four major networks and commercial television 
stations in smaller markets are those broadcasters most likely to 
exercise the must carry option, but a number of these stations will not 
commence digital operations until the year 2002, when they are required 
to do so under the Commission's rules. We seek comment on these general 
estimates and what effect these market factors would have on the need 
to implement must carry rules immediately. Moreover, what effect would 
not setting rules have on television stations, not affiliated with the 
top four networks, that want to build out earlier than 2002? We also 
seek comment on how retransmission consent, rather than must carry, 
will speed the transition to digital television. For example, a cable 
operator could agree to carry a broadcaster's ancillary and 
supplementary digital services, that are not subject to a must carry 
requirement, and the carriage of such services could spur consumers to 
purchase digital receivers.
    32. The advent of digital broadcast television raises certain 
potential retransmission consent procedural issues that need to be 
addressed. The Broadcasters had previously commented that the 
retransmission consent process should apply separately to the analog 
and digital broadcast signal. They argue that separate must carry/
retransmission consent elections should be allowed for each 
transmission mode. In this context, we first seek comment on whether 
analog and digital broadcasts constitute separate ``broadcasting 
stations'' for purposes of retransmission consent and digital broadcast 
signal carriage. Would the Broadcaster's approach be desirable because 
it permits the separation of two possibly unrelated issues? Conversely, 
we ask whether the Broadcasters' proposal would unbalance the 
negotiation process by divorcing decisions made by a single licensee 
during the transition to digital television.
    33. We further inquire as to whether a common retransmission/must 
carry election is required for the broadcaster's entire transmission or 
may the broadcaster select which of its channels or programming streams 
is deemed a must carry program stream and which is a retransmission 
consent program stream. We note that the Commission has stated in the 
analog context that ``any broadcast station that is eligible for must-
carry status, although it may be carried pursuant to a retransmission 
consent agreement must . . . be carried in the entirety, unless 
carriage of specific programming is prohibited . . . pursuant to our 
rules.'' Nonetheless, it may be desirable to allow partial carriage 
pursuant to the retransmission consent process if that is what the 
parties agree to. We seek comment on what countervailing policy would 
suggest a requirement for all of a station's digital broadcast output 
and whether changes in the policy described above are warranted.
    34. As stated previously, the Act requires local commercial 
television stations to elect either must carry or retransmission 
consent on a triennial basis. The first election cycle ended on 
December 31, 1996, and the second election cycle ends on December 31, 
1999. Assuming that there was some form of mandatory digital broadcast 
signal carriage rules in place during the transition period, we ask 
whether the current must carry/retransmission consent cycle should be 
shortened or otherwise changed to further accommodate the introduction 
of digital broadcast television? Are changes in the election cycle 
permitted under the Act? We note that new television stations can make 
their initial election anytime between 60 days prior to commencing 
broadcast and 30 days after commencing broadcast with the initial 
election taking effect 90 days after they are made. Instead of revising 
the election cycle, should we instead apply the current ``new station'' 
rule to digital broadcast television signals when they sign on-the-air? 
Alternatively, if there were no mandatory digital broadcast signal 
carriage rules in place, we seek comment on the procedural mechanisms 
necessary for digital television stations to enforce their 
retransmission consent rights against cable operators.
    35. Section 325(b)(2)(D) exempts cable operators from the 
obligation to obtain retransmission consent from superstations whose 
signals were available by a satellite or common carrier on May 1, 1991. 
The legislative history behind this provision states that an exemption 
from retransmission consent was necessary ``to avoid sudden disruption 
to established relationships'' between superstations and satellite 
carriers. United Video, in comments filed in response to the Fourth 
Further Notice in MM Docket No. 87-268, 60 FR 42130 (August 15, 1995), 
explains that the exemption permits it to continue to uplink 
superstations signals and transmit them to cable operators and other 
facilities-based multichannel video providers. We seek comment on 
whether the digital replacement stations for these analog superstations 
should be treated as new stations for purposes of the retransmission 
consent provisions or whether they should have the same status as the 
ones they replace.
    36. In the Must Carry Report and Order, MM Docket No. 92-259, 58 FR 
17350 (April 2, 1993), we specifically prohibited exclusive 
retransmission consent agreements between television broadcast stations 
and cable operators. This policy forbids a television station from 
making an agreement with one MVPD for carriage exclusive of other 
MVPDs. The Commission, however, indicated that while this restriction 
was desirable at least initially, it would reconsider the need for such 
a prohibition. We now seek comment on the continuing desirability of 
this prohibition. We ask what impact the introduction of digital 
television has on this policy and how the Commission's decision in this 
regard would hasten or slow down the transition period.
    37. We recognize that the most difficult issues arise during the 
transition because there will exist, for a temporary period, 
approximately twice as many stations as are now in operation or will be 
in operation after the transition and the return of the analog station 
licenses. Toward the end of the period, there will be an increasing 
redundancy of basic content between the analog and digital stations as 
the Commission's simulcasting requirements become applicable. These two 
developments have broad

[[Page 42337]]

implications for the cable industry. To the extent that the Commission 
imposes a digital must carry requirement, cable operators could be 
required to carry double the amount of television stations, that will 
eventually carry identical content, while having to drop various and 
varied cable programming services where channel capacity is limited. 
The central question addressed in this section is how must carry should 
be initiated during the transition to digital television.
    38. In previous comments, the cable industry, as well as cable 
equipment manufacturers, have argued that operators should not be 
required to carry both the analog television station and digital 
television station during the transition period. They assert that 
system and equipment requirements to meet an all channel carriage 
obligation would be prohibitively expensive. On the other hand, groups 
such as the Broadcasters and Electronics Industry Association (``EIA'') 
argue that a cable operator's must carry obligations extend to both the 
digital broadcast television transmission and the analog signal during 
the transition period. EIA argues that simultaneous retransmission will 
allow consumers to experience the qualitative difference between the 
two formats and promote digital broadcast television deployment. Some 
parties argued that mandatory carriage of additional digital television 
broadcast stations would also be contrary to the public interest 
because it may harm other video programmers. Viacom asserts that 
digital broadcast television must carry requirements should not operate 
in such a way as to preempt the carriage of some broadcast station 
transmissions in favor of one broadcast station's multiplexed program 
services. It refers to those situations where a cable operator's one-
third channel capacity signal carriage requirement may be met through 
the carriage of certain analog and digital stations, while another 
broadcaster in the market, with a right of carriage, does not get 
carried. The Alliance for Community Media argues that public, 
educational, and governmental access channels, as well as noncommercial 
television stations, be given preference over additional channels 
incumbent broadcasters may want carried, in order to maintain a diverse 
range of noncommercial voices on cable television. Below, we seek 
comment on several carriage options that address the needs of the 
broadcasters and the concerns of the cable operators as well as the 
timing of mandatory digital broadcast signal carriage rules. For each 
of these options, we seek comment on how they comport with the existing 
language in the statute. We also ask whether there are any other 
options that would serve the public interest and also be consistent 
with the statute.
    39. The Immediate Carriage Proposal. This first option would 
require all cable systems, regardless of channel capacity constraints, 
to carry, in addition to the existing analog television stations, all 
digital commercial television stations up to the one-third capacity 
limit and any additional digital noncommercial stations within the 
limits currently found in the statute. This approach would provide 
regulatory certainty to the television industry and provide assurance 
that investment in digital technology and programming will be fully 
realized. Moreover, digital broadcasters would be assured of reaching 
the audience they are licensed to serve. This option may also 
accelerate the transition period and thus, speed the recapture of the 
analog spectrum for auction by the Commission. At the same time, 
however, significant cable channel line-up disruptions may occur as 
cable operators, whose systems are channel-locked, would have to drop 
existing cable programming services to accommodate the carriage of 
digital television signals. This option may also result in cable rate 
increases, as explained more fully below, for digital broadcast 
services that the majority of subscribers will be unable to view, at 
least initially, because they did not make the significant investment 
in digital television sets necessary to receive such signals. We seek 
comment on this first proposal. Are there additional arguments for or 
against this option? For example, will broadcaster reliance on 
mandatory cable carriage discourage the development of antenna 
technology? Furthermore, would program diversity be adversely affected? 
How will this proposal, if implemented, alter retransmission consent 
negotiations? Would this approach discourage operators from investing 
in system upgrades? What effect would such a proposal have on 
television stations that have yet to build out their digital 
facilities? We also ask whether there should be exceptions to this 
proposal, perhaps for operators in large television markets where a 
high number of new digital television stations will commence operations 
at the same time.
    40. If this option is adopted, we ask when the digital broadcast 
television must carry requirement should take effect. There are several 
possible triggering events that are based on either the digital 
broadcast television buildout schedule, by rule, or through the 
enforcement process: (1) when the first digital television station is 
broadcasting in a given television market; (2) when the majority of 
stations in a given television market are broadcasting in a digital 
mode; (3) in tandem with the buildout schedule as set forth in the 5th 
Report and Order in MM Docket No. 87-268, 62 FR 26966 (May 16, 1997); 
(4) at the inception of the third must carry/retransmission consent 
election cycle on January 1, 2000; or (5) upon the Commission grant of 
a must carry complaint filed by the digital television broadcast 
station. We seek comment on which of these scenarios, or any other 
option, best reconciles the governmental interest in the rapid 
availability of digital broadcast television to cable subscribers with 
the other interests involved in this proceeding.
    41. In addition, we seek comment on whether this proposal, as well 
as others that include a mandatory carriage requirement, is consistent 
with Congressional intent. As previously noted, the continued 
availability of free over-the-air television broadcast service was one 
of the primary reasons Congress required mandatory cable carriage. 
Similarly, one Congressional goal cited in the discussion of the 
transition to digital broadcasting was the future competitiveness of 
free over-the-air broadcasting. If the mandatory carriage provisions 
and the transition to digital television share a common purpose--the 
continued availability of free over-the-air television broadcast 
service--should some form of must carry be required during the 
transition to digital television in order to satisfy the common purpose 
of the mandatory carriage and digital television provisions?
    42. The System Upgrade Proposal. An alternative proposal would 
require only higher channel capacity cable systems to add new digital 
television stations as they commence operations and initiate their 
digital over-the-air service during the transition period. As systems 
reach 750 MHz (approximately 120 analog six MHz channels), considerable 
flexibility will exist to add new television stations. For cable 
systems that are in the process of increasing their channel capacity 
through transmission plant upgrades, we would propose that new digital 
broadcast television stations must be carried by cable operators as 
they come on the air. We seek comment on this option in line with the 
questions delineated in the immediate carriage proposal, above. We are 
specifically interested in the impact this proposal would have on a 
cable operator's incentive to upgrade facilities and on facilities 
already upgraded. We seek

[[Page 42338]]

comment on the extent to which upgraded cable systems have no 
additional capacity to add new services.
    43. To provide a concise response to the above proposal, we seek 
comment on whether 750 MHz is the proper cutoff for defining an 
upgraded system or should a lower number, such as 450 MHz (54 
channels), be used instead. We note that approximately 19 percent of 
the current analog cable systems in the nation have 54 or more channels 
while the majority of cable systems, about 64 percent, have between 30-
53 channels. According to one report, some two-thirds of cable systems 
are currently channel-locked, meaning that they cannot add additional 
services without deleting another service or through technical system 
enhancements. However, this situation may change in the future as cable 
systems upgrade their physical plant and add new channel capacity. 
Thus, we also ask commenters to provide information on the expected 
growth rate for cable channel capacity between now and 2003, when all 
digital television stations are required to commence operation. In 
addition, we seek comment about cable programmer plans to convert to 
digital and what additional carriage needs these programmers would have 
in the future.
    44. The Phase-In Proposal. For cable systems that are not adding 
channel capacity or have only a limited ability to add channels and 
have no unoccupied channel capacity, a requirement to immediately 
commence carriage of all digital broadcast television stations when 
they come on-the-air would possibly be highly disruptive to cable 
subscribers, especially in those markets where a substantial number of 
stations are mandated to complete station construction by the same 
date. For example, stations affiliated with the top four networks in 
the top 30 markets are scheduled to have construction complete by 
November 1, 1999. The ten largest market have an average of 17 stations 
each with two markets having 22 stations. There are 43 markets that 
have ten or more stations. Under this option, we would require that all 
cable systems commence some carriage of digital broadcast stations as 
they come on-the-air, but that some limit on the number that must be 
added be included in the transitional rules to avoid substantial 
channel line-up disruptions. If this option is adopted, we would 
propose that three to five channels be added each year until all 
digital television stations are carried. These could be either must 
carry or retransmission consent stations. We seek comment on this 
schedule and its effects on the transition. We seek comment on whether 
there is another phase-in approach, such as adding three to five 
channels every six months, that would also further the rapid 
introduction of digital broadcast television while reducing, to the 
extent feasible, possible disruptions to the cable system's channel 
line-up. We also ask how we would determine which digital television 
stations have carriage priority on the cable system in cases where the 
quota has been satisfied.
    45. The Either-Or Proposal. Another proposal would be to require 
broadcasters to choose mandatory carriage for either the analog signal 
or the digital transmission, but not both, during the early years of 
the transition period. In the year 2005, when the 100 percent simulcast 
rule goes into effect, the mandatory carriage option will default to 
the digital transmission. This option would avoid causing channel line-
up disruptions but may have an adverse effect on the speed of the 
transition process. We seek comment on this approach and ask whether 
this proposal may be combined with any other transition option 
discussed. We also ask what effect this proposal would have on the 
economic viability of digital broadcasters, investment in digital 
broadcast technology, and on the sale of digital television receivers.
    46. The Equipment Penetration Proposal. Under this option, we ask 
whether a carriage obligation should be triggered before any 
significant number of consumers have receivers or digital-to-analog 
converter boxes that give them the ability to access digital 
transmissions. For example, should carriage obligations commence when 
some percentage of the public, e.g., 5 percent or 10 percent, have 
invested in receiving equipment? Such a requirement would recognize 
that in the cable context, the addition of new digital broadcast 
television transmissions will likely result in the deletion or absence 
of carriage of other services. The possibility of such a substitution 
is inherent in the whole mandatory carriage policy, but the general 
assumption under the existing analog rules is that at least all 
subscribers will have access to the new transmission in question and 
not just those who have invested in additional equipment.
    47. The Deferral Proposal. The sixth option is to defer the 
implementation of mandatory digital broadcast signal carriage rules for 
a certain period of time. One possible deferral date would be May 1, 
2002. This would coincide with the date that stations not affiliated 
with ABC, CBS, NBC, and Fox as well as digital commercial television 
stations in markets 31-212, are required to initiate service. Waiting 
to issue regulations until this time has certain advantages. For 
example, it would allow cable operators and broadcasters to find a 
successful business model for digital television. A deferral would also 
allow time for voluntary negotiations on cable carriage issues between 
the broadcasting and cable industries to settle some of the matters 
involved. It would allow time for technology to progress and for 
digital television receivers to come down in price. We seek comment on 
this proposal and its advantages and disadvantages as well as its 
impact on the transition period.
    48. The No Must Carry Proposal. The last option is that must carry 
does not apply at all for digital television stations during the 
transition period. Section 614(b)(4)(B) states that ``the Commission 
shall initiate a proceeding to establish any changes in the signal 
carriage requirements of cable television systems necessary to ensure 
cable carriage of such broadcast signals of local commercial television 
stations which have been changed to conform with such modified 
standards'' (emphasis added). NCTA argues that the phrase ``have been 
changed'' means that the television station's analog signal has ceased 
broadcasting and the station's digital signal has replaced it as the 
over the air service. Under this reading, digital broadcasters would 
not have must carry rights until the transition period is over. If this 
were the case, we would propose the following. For commercial 
television stations, retransmission consent would still apply. With 
regard to those commercial television stations that do not enforce 
their retransmission consent rights, or noncommercial television 
stations that lack retransmission consent rights, they are free to 
enter into voluntary carriage negotiations with cable operators. These 
broadcasters would be similarly situated with competing cable 
programming services in that they could pay to be placed on the cable 
system or negotiate other mutual beneficial arrangements with cable 
operators. We seek comment on this approach. We ask how this proposal 
would affect the economic viability of digital television stations as 
well as the rapid transition to DTV. Moreover, should we recommend to 
Congress that noncommercial television stations be vested with 
retransmission consent and program exclusivity rights in order to 
provide such entities with greater bargaining power vis-a-vis cable 
operators?

[[Page 42339]]

    49. With regard to those options where a must carry requirement is 
suggested, we note that the one-third capacity limit set forth in 
Section 614(b)(1)(B), is still applicable. When the one-third capacity 
limit has been reached, Section 614(b)(2) provides that ``the cable 
operator shall have discretion in selecting which such stations shall 
be carried on its cable system.'' We believe that this statutory 
directive would continue to apply in the digital context, if we 
conclude that mandatory digital signal carriage is necessary. We seek 
comment on this interpretation. In the alternative, we ask whether it 
would be desirable to adopt carriage priority rules. Would it be useful 
to accord priority to stations based on when they commence digital 
television broadcasting as a way of encouraging stations to speed up 
the transition process? Should carriage priority be given to stations 
geographically closer to the operator's principal headend to support 
the principal of localism? Alternatively, should priority be given to 
television stations that are not affiliated with the top four networks 
as these were the stations most likely to have chosen the must carry 
option in the analog context and also have less bargaining power 
relative to cable operators?
    50. We seek comment on whether digital broadcast television 
carriage requirements, during the transition and afterward, will impose 
unique burdens on small cable systems or small cable operators that 
warrant special consideration in the development of new digital 
broadcast signal carriage rules. The Broadcasters recognize that small 
cable systems may find it difficult to accommodate digital broadcast 
television signals. Therefore, they suggest that the Commission may 
consider adopting phase-in rules or policies for cable carriage of 
digital broadcast television signals but that such rules or policies 
should recognize cable's role in working with broadcasters to avail the 
public of the benefits of digital technology. Although small cable 
operators may be able to pass through a digital broadcast signal to 
subscribers, there still may be significant equipment costs and channel 
capacity loss involved in order for a cable operator to deliver digital 
broadcast television. Small cable operators may not be able to upgrade 
their systems, or invest in digital compression technology, due to 
financial constraints and thus, may delay their transition to digital. 
As such, these entities, that have been accorded special regulatory 
status by Congress and the Commission in other areas, such as rate 
regulation, may be the subjects of special treatment when it comes to 
the carriage of digital broadcast television transmissions.
    51. We seek comment on how to define small systems and small cable 
operators in the context of digital must carry. We see alternative 
definitions to choose from: those found in the must carry provisions of 
the Act and those found in the rate regulation context. We seek comment 
on which definition furthers the transition to digital broadcast 
television while, at the same time, recognizes the unique circumstances 
of the small cable operator. Are there other definitions that we have 
not considered? As for relief, we ask, for example, whether the 
Commission should decide that as long as the small system or small 
operator carries all of the local analog television signals, it need 
not carry the digital television transmissions as well. Alternatively, 
we ask whether the Commission should allow small cable operators to 
file petitions for special relief requesting a waiver of any digital 
broadcast television carriage rule if financial hardship is 
demonstrated. With regard to retransmission consent and its effect on 
small cable operators, we seek comment on whether the Commission should 
prohibit tying arrangements where an operator must carry the 
broadcaster's digital signal as a precondition for carriage of the 
analog signal. We seek comment on the scope of our statutory authority 
to redefine small cable operators and small systems and provide them 
with special relief.
    52. Section 653(c)(1) of the Act provides that any provision that 
applies to cable operators under Sections 614, 615 and 325, shall apply 
to open video system operators certified by the Commission. Section 
653(c)(2)(A) provides that, in applying these provisions to open video 
system operators, the Commission ``shall, to the extent possible, 
impose obligations that are no greater or lesser'' than the obligations 
imposed on cable operators. The Commission, in implementing the 
statutory language, held that there are no public policy reasons to 
justify treating an open video system operator differently from a cable 
operator in the same local market for purposes of broadcast signal 
carriage. Thus, OVS operators generally have the same requirements for 
the carriage of local television stations as do cable operators except 
that these entities are under no obligation to place television 
stations on a basic service tier. OVS operators are also obligated to 
abide by Section 325 and the Commission's rules implementing 
retransmission consent. We seek comment on the impact digital must 
carry and retransmission consent will have on OVS operators and whether 
and how rules for these entities should be different than the rules for 
cable operators.
    53. Sections 614 (a) and (h), and 615 (a) and (l) establish the 
qualifications for cable carriage eligibility as it pertains to full 
power commercial television stations (market based eligibility 
standards), low power commercial television stations (six statutory 
qualifications), and noncommercial television stations (mileage and 
technical based standards). At this time, we see no need to deviate 
from the existing eligibility requirements for these three categories 
of stations. We seek comment on this tentative conclusion.
    54. The issue of over-the-air signal reception quality at the 
headend of the cable system is also involved in this discussion as it 
defines which digital television stations, from a technical 
perspective, are eligible for carriage. Section 614(h)(1)(B)(iii) 
states that a television station that does not deliver a good quality 
signal to the cable operator's headend, and does not agree to pay for 
the equipment necessary to improve the signal, is not qualified to 
assert its must carry rights. Under the current regime, television 
broadcast stations must deliver either a signal level of -45dBm for UHF 
signals or -49dBm for VHF signals at the input terminals of the signal 
processing equipment, to be considered eligible for carriage. We seek 
comment on how the Act's signal quality exception test applies to 
digital transmissions. We have previously stated that, in order to ease 
the transition, and to be considered to have complied with the 
construction schedule, a broadcaster only initially needs to emit a 
digital transmission strong enough to encompass its community of 
license. We ask how this policy may affect the carriage of the digital 
television transmission. We seek comment on whether the Commission's 
analog signal strength standards are relevant to digital broadcast 
television or new good quality signal parameters, which include normal 
system processing degradations and account for bit rate error, are 
necessary.
    55. The language of Section 614(b)(4)(B) states that the Commission 
should initiate a proceeding to establish any changes in the signal 
carriage requirements of cable television systems are necessary ``to 
ensure cable carriage of such broadcast signals of local commercial 
television stations. . . .'' (emphasis added). The question here is

[[Page 42340]]

the nature and existence of carriage rights for noncommercial digital 
television stations, since they are not explicitly discussed in this 
section. We note that Section 615(a) of the Act states that ``each 
cable operator shall carry on the cable system of that cable operator, 
any qualified local noncommercial educational television station 
requesting carriage.'' APTS argues that this provision is broad enough 
to require cable operators to carry both the analog and digital signals 
of public television stations. We seek comment on the statutory 
language and on APTS' interpretation.
    56. Section 614(b)(1)(B) provides that a cable operator, with more 
than 12 usable activated channels, shall not have to devote more than 
``one-third of the aggregate number of usable activated channels'' to 
local commercial broadcast signal carriage purposes. Determining a 
cable operator's capacity when digital content is involved and 
therefore how many commercial television station signals must be 
carried, is thus an issue in this proceeding. The cable industry has 
commented that operators lack capacity to accommodate both the analog 
signal and digital transmission. Broadcasters, on the other hand, have 
asserted that cable operators are technically capable of fulfilling any 
digital broadcast television must carry requirement and that lack of 
capacity is a misleading argument. They state that one 6 MHz digital 
cable channel could carry at least 8 digitally compressed analog NTSC 
signals or two HDTV channels, or a compressed NTSC channel and 4 
multicast SDTV channels. Thus, while the Act provides that a cable 
operator should not have to devote more than ``one-third of aggregate 
number of usable activated channels'' to local broadcast signal 
carriage purposes, there is some dispute as to how capacity should be 
defined in a digital environment.
    57. Accordingly, we solicit comments on the definition of ``usable 
activated channels'' in the context of digital broadcast television 
carriage. Many cable operators now have, or soon will have, the 
technical ability to fit several analog programming services onto one 6 
MHz channel. Thus, in answering this question, we ask how advances in 
signal compression technology affect the definition of capacity. We 
also ask whether the one-third channel capacity requirement for digital 
broadcast television carriage purposes means one-third of a cable 
operator's digital channel capacity or one-third of all 6 MHz blocks, 
including both the analog and digital channels.
    58. We see three possible options in determining capacity: (1) each 
programming service counts as one channel; (2) each 6 MHz block of 
spectrum counts as one channel; or (3) the digital capacity should be 
by data throughput, i.e. bits per second of digital data. We seek 
comment on the benefits and drawbacks on each of these options. We also 
ask whether the Act permits the Commission to redefine the meaning of 
capacity in this context. We note, as discussed above, that the ability 
of cable operators to carry more than a single digital broadcast 
television signal in a 6 MHz channel is dependent on whether the 
transmission is carried in its original format or whether changes in 
format may be permitted, and ask commenters to address this distinction 
in discussing the capacity issue.
    59. We seek quantified estimates and forecasts of usable channel 
capacity. Are there differences in channel capacity that are based on 
franchise requirements, patterns of ownership, geographic location, or 
other factors? What is the average number of channels dedicated to 
various categories of programming, such as pay-per-view, leased access, 
local and non-local broadcast channels, and others that would assist us 
in understanding the degree to which capacity is, and will be, 
available over the next two, five, eight years, or beyond? What methods 
are appropriate to forecast the comparison between usable channel 
capacity and potential broadcast needs, nationally, during the 
transition (or other appropriate timeframe)?
    60. Section 614(b)(4)(A) of the Act, discussing the cable system's 
treatment and processing of analog broadcast station signals, provides 
that: ``The signals of local commercial television stations that a 
cable operator carries shall be carried without material degradation. 
The Commission shall adopt carriage standards to ensure that, to the 
extent technically feasible, the quality of the signal processing and 
carriage provided by a cable system for the carriage of local 
commercial television stations will be no less than that provided by 
the system for carriage of any other type of signal.''
    61. In the context of digital broadcast signal carriage, this 
raises two quite distinct questions. First, to what extent should this 
preclude cable operators from altering the digital format of digital 
broadcast television signal when the transmission is processed at the 
system headend or in customer premises equipment, such as the set top 
box, that is part of the cable system or is attached to it? And second, 
regardless of the transmission format, what standards and measurement 
tools are available to address disputes relating to the quality of the 
digital broadcast television signal?
    62. The first issue essentially has to do with tradeoffs between 
different modulation methods and transport specifications that may be 
optimized for different media and the savings involved in having a 
common receiver for signals or bitstreams received from different 
transmission paths. As described above, broadcasters are using 8 VSB 
while the cable industry has favored 64 or 256 QAM. The cable 
operators' selection of a transmission methodology other than 8 VSB 
reflect their ability to carry a higher data rate, and make more use of 
their capacity, than they would if they used the broadcast system.
    63. In comments in the previous phase of this proceeding, the 
broadcasters argue that the material degradation mandate should be 
strictly applied so that each cable system must carry the digital 
broadcast television signal in its original over-the-air format so that 
the public can receive the full extent of the station's capabilities, 
including the station's full high definition capabilities.
    64. The cable industry's concern in this area is that operators 
should be allowed to demodulate and repack the digital broadcast 
television signal into a higher bit-rate package because it would 
result in a more efficient use of cable network capacity than any 
broadcaster proposed engineering plan to merely pass-through the 
bitstream on an equivalent basis, i.e., a 6 MHz broadcast signal on a 6 
MHz cable channel.
    65. We recognize one important action that may constitute material 
degradation. It involves the cable operator's conversion of the 
broadcaster's digital transmission into another digital format, perhaps 
one with lower picture resolution. We seek comment on this possibility 
and whether such a conversion should be prohibited. Are there other 
degradation possibilities that we have not considered? Additionally, 
does the term ``material'' in the statute suggest that some ``de 
minimis'' amount of degradation is permissible?
    66. Aside from the matters discussed above, questions arise as to 
what standards and measurement techniques the Commission should employ 
where specific disputes as to digital broadcast signal quality develop. 
Picture and sound quality issues in a digital environment implicate 
standards and measurement techniques that are quite different than 
those that arise in the analog environment. In the analog

[[Page 42341]]

situation, issues involving signal strength, signal to noise ratios, 
and ghosting are the focus of concern. In the digital situation, 
picture resolution is still a concern but bit error rates and data 
throughput are also relevant. Moreover, the technical standards that 
are employed to evaluate cable analog picture quality were adopted and 
refined over the course of many decades. We tentatively conclude that 
it would be premature to attempt to replicate parallel digital 
standards before digital broadcasting has even commenced. In this 
regard, we seek suggestions for any standards that may be used in 
addressing signal degradation issues. How, and where, should 
degradation be measured? For example, should it be measured before the 
signal is processed by the set top box, if such a device is involved, 
or should it be measured at the input of the digital receiver? We 
recognize that, under the Act, the signal quality of a local commercial 
television station carried by a cable system will be no less than that 
provided by the system for carriage of any other type of signal. Does 
this mean that if an operator carried a cable programming service, such 
as HBO, in the 1080i HDTV format, then it must carry, without material 
degradation, all local commercial television stations that also provide 
1080i HDTV signals? Would such a channel comparison test be a viable 
degradation measurement technique, at least for HDTV picture quality? 
Alternatively, we ask whether degradation should be gauged through the 
use of bit error rate and signal-to-noise ratio measurements. In other 
words, it may be that as long as the bit error rate is minimal, then 
any conversion process cannot be said to materially degrade the signal.
    67. Section 614(b)(5) of the Communications Act provides that ``a 
cable operator shall not be required to carry the signal of any local 
commercial television station that substantially duplicates the signal 
of another local television station which is carried on the cable 
system * * *.'' Parallel provisions also apply to the carriage of 
noncommercial stations. Congress stated that these provisions were 
intended to preserve the cable operator's editorial discretion while 
ensuring that the public has access to diverse local signals. Because 
it is likely, and indeed mandated, that at some point in the transition 
process there be a duplication of program content between analog and 
digital broadcast transmissions, an integral part of the overall 
carriage question is the issue of how to treat duplicative programming.
    68. We see alternative approaches to defining ``duplication'' in 
the digital age. The first option would be modeled after the current 
approach for analog signal duplication and focus on the stations' 
program content so that the nonduplication provision would apply even 
though the signals were transmitted in different formats. In the analog 
signal context, the Commission has determined that two commercial 
television stations will be considered to substantially duplicate each 
other ``if they simultaneously broadcast identical programming for more 
than 50 percent of the broadcast week.'' Thus, if a broadcaster aired 
substantially the same material over its digital station, as it does 
over its analog station, the operator would not be obligated to carry 
both. Second, because they each use different transmission formats, the 
analog signal and digital bitstream could be considered not duplicative 
even if they contain identical program content. This would be most 
clearly the case where one of the broadcasts was in a high definition 
format and the other was not. Third, the substantial duplication 
requirement may not apply in the digital world because Congress may 
have intended that the provision be used where there were two different 
television stations involved, not the same licensee transmitting 
programming in both an analog and digital format. We seek comment on 
each of these possibilities. In answering this inquiry, we seek comment 
on the meaning of the term ``duplicative'' when applied to digital 
broadcast television signals. For example, should a multiplexed 
broadcast signal that includes cable programming that is already 
carried by the operator, be considered duplicative? Moreover, how 
should the term ``station'' be defined in this context? Does the term 
``another'' in the statute suggest that the signals in question must 
come from two different stations, not the same one? We also seek 
comment on whether a definition that requires carriage of identical 
analog and digital signals would result in other commercial broadcast 
programming not being carried because the one-third channel capacity 
has been reached.
    69. Section 614(b)(3)(A) of the Act requires cable operators to 
carry the ``primary video'' of each of the local commercial television 
stations carried on the cable system. A parallel provision exists for 
noncommercial educational television stations. The general question 
here is how to define ``primary video'' during the transition period 
when both an analog and digital signal will be broadcast. Could the 
analog signal be considered primary but not the digital signal since 
the former can be received by all cable subscribers with analog 
television sets? Moreover, broadcasters, under the digital television 
rules, have flexibility in choosing to broadcast either high definition 
or multiple standard definition television transmissions, or a mixture 
of both, over the course of a broadcast day. Thus, how should ``primary 
video'' be defined in the context of a digital service that broadcasts 
multiple streams of video programming. If the primary video includes 
less than all of the streams of programming broadcast, we seek comment 
on which video programming services provided by a licensee should be 
considered primary and should be entitled to carriage. Should the 
definition be flexible, allowing the broadcaster to alternate which of 
its transmissions would be considered primary over time? How do the 
answers to these questions reflect on the development of both digital 
broadcasting and on the services provided and rates charged by cable 
operators?
    70. Section 336 of the Act provides that ``no ancillary or 
supplementary service shall have any right to carriage under section 
614 or 615.'' Section 614(b)(3) of the Act requires cable operators to 
carry ``to the extent technically feasible, program-related material 
carried in the vertical blanking interval or on subcarriers'' but 
states that ``[r]etransmission of other material in the vertical 
blanking interval or other nonprogram-related material (including 
teletext and other subscription and advertiser-supported information 
services) shall be at the discretion of the cable operator.'' Our task 
here is to define what ``ancillary or supplementary'' mean in the 
context of digital broadcast television carriage. We seek comment on 
possible definitions that are consistent with the language of Section 
614(b)(3).
    71. We note that Section 336 of the 1996 Act also states that ``no 
ancillary or supplementary service shall * * * be deemed a multichannel 
video programming distributor for purposes of section 628.'' Section 
628 contains the program access requirements pursuant to which 
multichannel video programming distributors have rights to demand 
access to certain satellite delivered cable programming in which a 
cable operator has an attributable interest. We seek comment on whether 
the Act's language provides any insight as to the ancillary or 
supplementary service definition.

[[Page 42342]]

    72. Section 615(d) and 614(c)(2) of the Act provides that a cable 
operator required to add the signals of qualified local noncommercial 
educational stations and qualified low power television stations, 
respectively, may do so by placing such additional stations on unused 
public, educational or governmental (``PEG'') channels not in use for 
their designated purposes, subject to the approval of franchising 
authorities. Pursuant to Section 611 of the Act, the franchising 
authority determines how much of a cable operator's channel capacity, 
if any, will be set aside for PEG use. The Commission, when 
implementing the analog must carry rules, declined to adopt stringent 
requirements regarding the use of PEG channels for must carry purposes 
because we believed that these matters are more appropriately resolved 
by individual franchising authorities. We seek comment on whether the 
DTV signals of NCE stations and LPTV stations should be allowed on PEG 
channels under the same framework accorded analog television signals.
    73. Section 614(b)(7) provides that all commercial must-carry 
signals shall be provided to every subscriber of a cable system and 
shall be viewable on all television receivers of subscribers that are 
connected by the cable operator or for which the cable operator 
provides a connection. Section 615(h) provides that noncommercial 
educational stations, that are entitled to carriage, shall be 
``available to every subscriber as part of the cable system's lowest 
price service tier that includes the retransmission of local commercial 
television broadcast signals.'' We seek comment on whether the operator 
must place the broadcaster's digital transmissions on the same basic 
tier where the analog channels are found or whether a separate digital 
basic service tier could be established that would be available only to 
subscribers with the capacity to view the contents of the digital 
broadcast signals.
    74. During the transition period, there may be situations where the 
carriage of digital broadcast signals could properly be associated with 
the carriage of digital cable channels because of their similar digital 
picture or interactive characteristics, or may otherwise be provided 
only to subscribers capable of using digital video. By associating the 
digital broadcast and cable channels in terms of tier placement, 
subscribers that are equipped to receive digital signals will be 
assured of receiving digital broadcast signals and subscribers not so 
equipped would not be obliged to subscribe to services that they are 
not equipped to receive. We seek comment on this general concept or on 
other means whereby subscribers' reception capabilities could be 
matched with the tier package they are required by regulation to 
receive. Do we have the authority to implement such a proposal? 
Moreover, should there be parallel tier placement rules, one for analog 
cable systems that do not offer digital services, and one for cable 
systems that do offer digital services? We also seek comment on the 
legal issues that might be associated with having more than a single 
basic tier in order to accommodate the carriage of digital broadcast 
signals. Once the transition period ends, our tentative view is that 
the basic service tier would be required to include, at a minimum, 
digital broadcast signals and public, educational, and governmental 
access channels. This will satisfy the statute's directive of assuring 
that all cable subscribers are able to view broadcast material on the 
lowest priced tier available.
    75. Also pursuant to Section 614(b)(7), if a cable operator 
authorizes subscribers to install additional receiver connections, but 
does not provide the subscriber with such connections, the operator 
shall notify such subscribers of all broadcast stations carried on the 
cable system which cannot be viewed via cable without a converter box. 
In such cases, the cable operator shall offer to sell or lease a 
converter box to such subscribers at rates in accordance with the 
standards established by the Commission pursuant to Section 623(b)(3). 
We seek comment on the application of this provision to the carriage of 
digital broadcast television stations. We specifically ask whether this 
provision would require cable operators to offer converter boxes to 
every subscriber if digital broadcast television stations cannot be 
received without some set-top device facilitating reception of the 
stations' transmissions.
    76. In addition to tier position requirements, we also need to 
determine the specific channel rights digital broadcast television 
stations should have. Section 614(b)(6) provides for four channel 
positioning options for commercial television stations: (1) The channel 
number on which the station broadcasts over-the-air; (2) the channel on 
which the station was carried on July 19, 1985; (3) the channel on 
which it was carried on January 1, 1992; and (4) any other channel 
number as is mutually agreed upon by the station and the cable 
operator. Noncommercial television stations have three channel 
positioning options under Section 615(g)(5): (1) the channel number on 
which the station is broadcast over-the-air; (2) the channel on which 
the station was carried on July 19, 1985; and (3) any other channel 
number as is mutually agreed upon by the station and the cable 
operator. We seek comment on which of the statutory options remain 
applicable in a digital environment. Commenters should also focus their 
attention on the carriage of multiple SDTV programming streams and 
describe how channel positioning should vest in this situation.
    77. In earlier comments, the Broadcasters maintain that television 
stations should have the option of electing the channel on which the 
digital broadcast television signal is carried, so that each station 
would be able to retain its channel identity from cable system to cable 
system, and so that the analog and digital channels be found together 
on the cable system. They also maintain that the Congressional intent 
behind the Act's channel positioning mandate, i.e., to prevent the 
anticompetitive conduct of the cable operator placing the television 
station on an undesirable, higher cable channel, remains valid. We seek 
comment on this proposal.
    78. The new digital broadcast television table of allotments 
typically does not correspond to a television station's analog channel 
number but the advent of advanced programming retrieval systems and 
other channel selection devices may alleviate the need for specific 
channel positioning requirements as subscribers will be able to locate 
a television station with little degree of difficulty. Additionally, 
channel mapping protocols (``PSIP'') have been developed that will 
technically link the digital channel number with that assigned to the 
analog channel. Given these developments, we ask whether the Commission 
should refrain from promulgating new channel positioning requirements 
and allow technology, as discussed above, to resolve the matter. We 
seek comment on the extent to which PSIP is the subject of voluntary 
standards setting processes in the cable, broadcast, and consumer 
electronics industries and what the timing and outcome of such 
voluntary processes are likely to be. Moreover, recognizing that 
channel positioning is important to ensure the successful introduction 
of an individual digital television station on a cable system with 
dozens of other channels, we ask whether deference to technology to 
resolve the positioning issues here will be the appropriate solution. 
We also seek comment on whether this option would be consistent with 
the statutory channel positioning requirements.

[[Page 42343]]

    79. Another alternative would be to allow the operator to place the 
digital television transmission on any cable channel of its choice, 
subject to certain conditions, such as: (1) That the digital channel 
identification or PSIP information be clearly available for use by the 
subscriber's receiver; (2) that all analog and digital channel 
placement decisions must comply with tier placement requirements; and 
(3) once a station has been assigned a channel position, the cable 
operator may not move it from that position for at least three years 
except where a move is authorized by the broadcaster. These general 
requirements would give the operator greater leeway in configuring its 
channel line-up. We seek comment on this particular proposal and ask 
commenters to focus on the legal, technical, and economic issues 
involved.
    80. We also seek comment on whether advanced programming retrieval 
systems and other channel selection devices provided by cable operators 
which, in effect, filter and prioritize programming, present another 
series of challenges similar to those that gave rise to Congress' 
channel positioning requirements. If so, we ask whether any rules are 
necessary to ensure fair competition between electronic programming 
guides controlled by cable operators and those that are controlled by 
broadcasters.
    81. Television stations have carriage rights throughout the market 
to which they are assigned. Pursuant to Section 614(h)(1)(C), at the 
request of either a broadcaster or a cable operator, the Commission 
may, with respect to a particular television broadcast station, include 
additional communities within its television market or exclude 
communities from such station's television market to better effectuate 
the purposes of the Act's must carry provisions. The Commission's 
inclusion of additional communities within a station's ADI imposes new 
must carry requirements on cable operators subject to the modification 
request while the grant to exclude communities from a station's ADI 
removes a cable operator's obligation to carry a certain station's 
signal. In considering market modification requests, the Act provides 
that the Commission shall afford particular attention ``to the value of 
localism'' by taking into account such factors as--(1) Whether the 
station, or other stations located in the same area, have been 
historically carried on the cable system or systems within such 
community; (2) whether the television station provides coverage or 
other local service to such community; (3) whether any other television 
station that is eligible to be carried by a cable system in such 
community in fulfillment of the requirements of this section provides 
news coverage of issues of concern to such community or provides 
carriage or coverage of sporting and other events of interest to the 
community; and (4) evidence of viewing patterns in cable and noncable 
households within the areas served by the cable system or systems in 
such community. We seek comment on whether any change to the market 
modification process is warranted to accommodate the difference between 
analog and digital broadcasting and the fact that the signals in 
question have neither a history of carriage nor measured audience. We 
also seek comment on whether there are alternative means to resolve 
market structure issues for new digital broadcast television stations.
    82. We also inquire as to whether changes in signal strength and 
Grade B contour coverage, because of new digital television station 
channel assignments and power limits, will result in different carriage 
obligations for cable operators. We focus on those instances where the 
Commission has redefined an analog station's television market based, 
in part, on Grade B contour coverage and has either granted or denied a 
must carry complaint based on a analog station's signal strength 
measurements. Should the digital television station's technical 
characteristics have any bearing on the analog television station's 
market area, or vice versa?
    83. We previously held that television markets for must carry 
eligibility purposes are to be determined by Arbitron's ADIs through 
December 31, 1999, the end of the second must carry/retransmission 
consent election cycle, and by Nielsen's DMAs for all election cycles 
thereafter. Television markets for digital allocation purposes, 
however, are currently defined by DMAs rather than ADIs. Noting that 
digital broadcast television service in certain markets is to be 
introduced months earlier than the switch to DMAs, the situation now 
exists where carriage obligations commence under one set of standards 
(ADIs) and shortly thereafter shift to a new set of market definitions 
(DMAs). This two-step carriage process is likely to cause channel line-
up disruptions and subscriber confusion. We seek comment on this 
situation and the steps the Commission should take to lessen the 
possibility of channel line-up disruptions.
    84. Under current Commission rules, whenever a television station 
believes that a cable operator has failed to meet its must carry 
obligations, the station may file a complaint with the Commission. 
Section 614(d)(3) requires the Commission to adjudicate a must carry 
complaint within 120 days from the date it is filed. The Commission may 
grant the complaint and order the cable operator to carry the station 
or it may dismiss the complaint if it is determined that the cable 
operator has fully met its must carry obligations with regard to that 
station. We seek comment on whether the complaint process now set forth 
in part 76 is appropriate in the context of digital broadcasting 
stations. We specifically ask whether the Commission's rules need to be 
modified to recognize the broadcaster's transmission of programming 
streams rather than entire channels. We welcome any suggestions for 
streamlining the complaint process that would expedite the Commission's 
adjudication of the requested action.
    85. Various means of providing cable subscribers access to over-
the-air broadcast signals have been explored in years past. One 
recognized option was to require cable operators to provide subscribers 
with an input selector switch (commonly referred to as an A/B switch) 
that switches television receiver inputs from cable to an over-the-air 
antenna and to require cable system operators to educate subscribers as 
to the use of this device. Congress, however, subsequently abolished 
the Commission's A/B switch requirements when it passed the Cable Act 
of 1992, stating affirmatively that no cable operator should be 
required to provide or make available such a switch. It stated that an 
A/B switch is not an enduring or feasible method for the reception of 
television signals. In light of Section 614(b)(4)(B), and Congressional 
statements about the Commission's broad role in examining the digital 
broadcast television carriage issue, we ask whether we have the 
authority to address A/B switch issues, notwithstanding the existing 
prohibition.
    86. The availability of an input selector switch, in conjunction 
with television antennas, could be a means of increasing cable 
subscriber access to DTV signals, including ancillary and supplementary 
services that are not entitled to cable carriage. That does not 
necessarily mean that a regulatory requirement mandating the inclusion 
of such a device is needed. The basic hardware involved is readily 
available from retail outlets. Moreover, a switch mechanism is now 
incorporated into many television receivers (as well as into videotape 
recorders and DBS receivers) and new digital television receivers may 
have multiple input

[[Page 42344]]

possibilities fully selectable from remote control devices. We seek 
comment on these views and specifically ask whether A/B switches have 
evolved, from a technical perspective, in the last six years. Are they 
easier to use than they were when Congress made its findings for the 
1992 Cable Act? For example, has widespread use of remote control 
technology rather than manual operation made the use of A/B switches 
more effective? Are there widely accepted industry practices with 
regard to the manufacturing and inclusion of A/B switches? What plans, 
if any, do manufacturers have to incorporate electronic or diode-based 
A/B switches into television receivers and other devices? We also ask 
whether there are any actions that the Commission needs to take to make 
sure that subscribers have access to digital television signals that 
are not carried. Are there situations where regulatory intervention 
would be useful either to facilitate access as a technical matter or to 
overcome any residual ``gatekeeper'' control that cable system 
operators may retain with respect to such devices? Is the restriction 
in Section 614(b)(4)(B) on requirements applicable to cable operators 
equally applicable to requirements imposed on receiver manufacturers? 
Could the Commission, for example, require that all digital television 
equipment, not supplied by the cable operator, be manufactured with an 
A/B switch? We also seek comment on whether improvements in A/B switch 
technology and its availability undercut the need for mandatory digital 
broadcast signal carriage, if the justification for such a rule is to 
preserve free over the air broadcast television.
    87. As the above discussion indicates, the use and usefulness of 
antennas, both roof-top and indoor, is central to this proceeding. It 
appears likely that antennas will play a significant role in the 
reception of DTV. In this context, many questions arise about the 
efficacy of antennas for over-the-air reception of DTV and their use by 
cable and non-cable homes, alike. For example, do indoor antennas work 
better with digital television receivers than with analog receivers? 
How do weather conditions affect DTV television reception when an 
antenna is used? Are roof top antennas an economically efficient 
alternative to cable for the reception of DTV signals? Should the 
Commission encourage antenna technology in order to enhance the use of 
the valuable spectrum broadcasters use? How does the availability of 
better antennas affect the necessity of mandatory digital broadcast 
signal carriage rules?

V. Impact on Other Rules

    88. Digital broadcast signal carriage also has potential 
consequences for the cable television rate regulation process. Both 
jurisdictional and substantive rate level issues are involved. One of 
the issues addressed in this proceeding has to do with where, in terms 
of tier location, digital broadcast television signals would be placed 
on the cable systems involved. The answer to this question has 
jurisdictional consequences for the rate regulation process and 
substantive consequences in terms of the rate levels permitted by the 
Commission's rules. With respect to the jurisdictional question, rates 
for the basic service tier (``BST'') are subject to local franchise 
authority regulation and upper tier or cable programming service tiers 
(``CPST'') are subject to Commission regulation on a complaint basis.
    89. With respect to the substance of rate regulation, under the 
benchmark rate rules, once initial rates are established, cable 
operators are permitted to adjust their rates for changes in the number 
of regulated channels. Cable operators seeking to adjust regulated 
rates to reflect these changes had to be prepared to justify rate 
increases using the applicable forms. In justifying rate adjustments, 
operators use a channel adjustment methodology provided for under the 
rules. The rules also provide an adjustment process when channels are 
dropped and when channels are moved between tiers. An alternative 
``cost of service'' rate regulation process also is available to cable 
system operators that believe the benchmark process fails to adequately 
account for their costs. There are also cost pass-through mechanisms 
for defined categories of ``external'' costs, including franchise fees; 
certain local franchise costs; programming; retransmission consent; and 
copyright fees. Costs associated with compliance with mandatory 
broadcast signal carriage rules are not now included as external costs. 
Customer equipment that is used to receive the basic service tier, and 
any other service received with the same equipment, is subject to 
franchise authority jurisdiction under a separate set of rules. 
Additionally, subject to a number of conditions, cable operators may 
establish a category of cable programming service tiers, referred to as 
a ``new product tiers,'' that may be offered at prices they elect. New 
product tiers consist of programming not previously carried by the 
operator that is optional to subscribers and that is available without 
subscribing to any other cable programming service tier. It appears 
that most cable system operators that are adding separate tiers of 
digital cable programming may be doing so under the ``new product 
tier'' provisions of the rules.
    90. In our effort to establish a complete record in this area, and 
make an informed policy decision with regard to rate regulation, we 
seek comment on what, if any, changes in these rules may be necessary 
or desirable. We specifically seek comment on the processes and costs 
of delivering digital broadcast television to cable subscribers. This 
part of the inquiry is important because some operators, such as 
Intermedia, have said that mandating carriage of all digital broadcast 
television transmissions ``will financially devastate many cable 
operators.'' Broadcasters acknowledge that the transition to digital 
will be expensive for all parties involved. We note that the 
broadcaster is currently required to pay for the costs of delivering 
its analog signal to the cable operator's headend. Cable subscribers 
also have an interest given that rates may change if digital broadcast 
television stations must be carried by cable systems, and the 
Commission has a statutory responsibility to ensure reasonable rates to 
these subscribers. We also seek comment on whether existing rate levels 
already allow operators to recover the costs involved in any upgrading 
of their systems necessary for digital broadcast signal carriage.
    91. The ``costs of carriage'' issue has been generally addressed in 
prior comments. The broadcasters, for example, assert that they should 
not have to pay for cable upgrades in return for mandatory carriage. 
They state that cable operators will know what technical compatibility 
issues lie ahead and thus, any expenses incurred to ensure 
compatibility should be borne by those systems. The cable operators, on 
the other hand, argue that if they are required to carry any digital 
broadcast services before a cable system has become digital-capable, 
the cost to transmit such services should be borne by the broadcast 
station. We ask that commenters refresh the record on the specific 
technical modifications needed to enable cable systems to deliver 
digital broadcast television to subscribers. We ask what the costs will 
be for such modifications, particularly for new headend equipment and 
the delivery and installation of new digital set top boxes, if they are 
needed to comply with any carriage requirement. We also ask about the 
costs related to cable tower modifications as it may be necessary to

[[Page 42345]]

add additional digital broadcast television receiving antennas at the 
headend. To what extent should these additional costs be the 
responsibility of the broadcaster seeking carriage? We also seek 
comment on whether digital cable programming services are paying, or 
plan to pay, cable operator digital equipment costs as one way of 
obtaining carriage on the cable system. We ask if the advent of digital 
compression technology has, or will, lessen the cable operator's costs 
in bringing digital broadcast television signals into the home.
    92. Cable operators are required to notify subscribers of any 
changes in rates, programming services or channel positions. When the 
change involves the addition or deletion of channels, each channel 
added or deleted must be separately identified. We seek comment on how 
any new digital broadcast television carriage requirements will affect 
the notification provisions described above. For example, if an 
existing broadcaster switches to an HDTV format, would the cable 
operator be required to notify subscribers of the change? Moreover, if 
a television broadcasts multiple streams of programming, must the cable 
operator explain the broadcaster's offerings on each of these streams? 
We tentatively conclude that a cable operator would be required to 
notify subscribers whenever a new digital television transmission is 
added to the operator's channel line-up because these digital broadcast 
television substitutions could be considered new services affecting 
subscribers equipment and subscription choices. We also tentatively 
conclude that while the operator should state that multiple programming 
streams are available, it would be under no obligation to explain to 
subscribers the material found in each and every SDTV programming 
stream, if such material is carried, as such detail is not required by 
either the Act or our rules.
    93. The Commission's program exclusivity rules, as implemented in 
Secs. 76.92 and 76.151, protect exclusive distribution rights afforded 
to network programming and syndicated programming. Television broadcast 
station licensees are entitled to protect those kinds of programs for 
which they have contracted in a particular market by exercising 
blackout rights against distant television broadcast stations carried 
on cable systems that serve more than 1000 subscribers. Stations may 
assert their rights regardless of whether their signals are carried on 
the cable system in question.
    94. We seek comment on how the transition to digital television may 
affect these rules. We specifically ask how SDTV multiplexing impacts 
these rules and whether the cable operator will be able to accommodate 
such black-out requests on various programming streams. Finally, we ask 
whether these rules are applicable in the digital age, with or without 
must carry, and whether it would be possible to repeal these rules and 
instead rely on the retransmission consent provisions of Section 325 of 
the Act to protect the rights in question. Section 325 generally 
provides that distant stations may not be carried without the 
permission of the station involved. To the extent digital broadcast 
television stations will need to make new arrangements for programming, 
it may be possible for the rights now protected by the rules to be 
protected through private contractual relationships. A broadcaster, for 
example, could require a cable operator to blackout certain programming 
and monetary penalties could arise if the operator does not comply with 
the terms of the contract. This may be a more effective method of 
enforcing blackout rights than relying on the Commission's current 
complaint process. The rules in question, we note, were adopted prior 
to the changes in Section 325 that include the retransmission consent 
requirement.
    95. The Commission's cable television broadcast signals carriage 
rules and the copyright laws, through reference to the Commission's 
rules, contain a number of distinctions in their application based on 
whether a broadcast signal is ``local'' to the cable community. One 
measure of whether a station's signal is ``local'' involves using 
actual over-the-air viewership in the community as the standard. This 
``significantly viewed'' concept is defined in Sec. 76.5(i) of the 
rules and is applied in the contexts of syndicated exclusivity, sports 
broadcast, network nonduplication, and, through incorporation by 
reference, to the compulsory copyright licensing process. The 
significant viewing standard supplements the other ``local'' station 
definitions by permitting stations to be considered local both within 
their Grade B contours and outside of their Grade B contours and 
outside of their ADI or DMA-defined economic market areas based on 
viewing surveys that directly demonstrate that over-the-air viewers 
have access to the signals in question.
    96. Because digital broadcast television stations will not, in the 
early stages of their deployment, have significant over-the-air 
audience, we seek comment on methods to address the kinds of issues 
that the significant viewing standard addresses in the analog 
environment. Should, for example, a new measure be developed that 
measures viewing in places that are equipped with digital receivers? Or 
should the ``significant viewing'' status of analog stations be 
transferred to their digital replacements. It is our initial view that 
such transfer of rights may be the most efficient and equitable way to 
proceed based on the costs and problems associated with taking new 
measurements.
    97. We recognize that cable operators are frequently dependent on 
cable television relay service (``CARS'') stations to relay broadcast 
television signals. CARS stations distribute signals to microwave hubs 
where it may be physically impossible or too expensive to run actual 
cable wire. CARS stations are not used to distribute programming 
directly to subscribers. We seek comment on whether the introduction of 
digital broadcast television impacts CARS, and, if so, how.

VI. Procedural Matters

    98. Ex Parte Rules. This proceeding will be treated as a ``permit-
but-disclose'' proceeding subject to the ``permit-but-disclose'' 
requirements under 47 CFR 1.1206(b), as revised. Ex parte presentations 
are permissible if disclosed in accordance with Commission rules, 
except during the Sunshine Agenda period when presentations, ex parte 
or otherwise, are generally prohibited. Persons making oral ex parte 
presentations are reminded that a memorandum summarizing a presentation 
must contain a summary of the substance of the presentation and not 
merely a listing of the subjects discussed. More than a one or two 
sentence description of the views and arguments presented is generally 
required. See 47 CFR 1.1206(b)(2), as revised. Additional rules 
pertaining to oral and written presentations are set forth in 
1.1206(b).
    99. Filing of Comments and Reply Comments. Pursuant to applicable 
procedures set forth in 47 CFR 1.415 and 1.419, interested parties may 
file comments on or before September 17, 1998 and reply comments on or 
before October 30, 1998. To file formally in this proceeding, you must 
file an original plus four copies of all comments and reply comments. 
If you want each Commissioner to receive a personal copy of your 
comments and reply comments, you must file an original plus nine 
copies. You should send comments and reply comments to Office of the 
Secretary, Federal Communications Commission, 1919 M Street, N.W., 
Washington, D.C. 20554. Comments and reply comments will be available 
for public inspection during regular business hours in the FCC

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Reference Center, Room 239, Federal Communications Commission, 1919 M 
Street N.W., Washington D.C. 20554. The Cable Services Bureau contact 
for this proceeding is Ben Golant at 202-418-7111 or [email protected].
    100. Written comments must be submitted by the Office of Management 
and Budget (``OMB'') on the proposed information collections on or 
before September 17, 1998. In addition to filing comments with the 
Secretary, a copy of any comments on the information collections 
contained herein should be submitted to Judy Boley, Federal 
Communications Commission, Room 234, 1919 M Street, N.W., Washington, 
DC 20554, or via the Internet to [email protected] and to Timothy Fain, 
OMB Desk Officer, 10236 NEOB, 725--17th Street, N.W., Washington, DC 
20503 or via the Internet to [email protected].
    101. Parties are also asked to submit comments and reply comments 
on diskette, where possible. Such diskette submissions would be in 
addition to, and not a substitute for, the formal filing requirements 
addressed above. Parties submitting diskettes should submit them to Ben 
Golant of the Cable Services Bureau, 2033 M Street N.W., Room 703B, 
Washington, D.C. 20554. Such a submission should be on a 3.5 inch 
diskette formatted in an IBM compatible form using MS DOS 5.0 and 
WordPerfect 5.1 software. The diskette should be submitted in ``read 
only'' mode. The diskette should be clearly labelled with the party's 
name, proceeding, type of pleading (comments or reply comments), and 
date of submission. The diskette should be accompanied by a cover 
letter.
    102. Initial Regulatory Flexibility Act Analysis. As required by 
the Regulatory Flexibility Act (``RFA''), the Commission has prepared 
this present Initial Regulatory Flexibility Analysis (``IRFA'') of the 
possible significant economic impact on small entities by the policies 
and rules proposed in this NPRM. Written public comments are requested 
on this IRFA. Comments must be identified as responses to the IRFA and 
must be filed by the deadlines for comments on the NPRM provided above. 
The Commission will send a copy of the NPRM, including this IRFA, to 
the Chief Counsel for Advocacy of the Small Business Administration.
    103. Need for, and Objectives of, the Proposed Rule Changes. This 
NPRM seeks comment on several issues relating to the carriage of 
digital television broadcast stations. The objective of the NPRM is to 
propose broadcast signal carriage policy alternatives during the 
transition period, examine the changes in the Commission's current 
broadcast signal carriage rules that may be necessary in the digital 
age, and to ensure compatibility between digital broadcast television, 
cable systems, and related equipment.
    104. Legal Basis. The authority for the action proposed in this 
rulemaking is contained in Sections 1, 4(i) and (j), 325, 336, 614, and 
615 of the Communications Act of 1934, as amended, 47 U.S.C. 151, 
154(i) and (j), 325, 336, 534, and 535.
    105. Description and Estimate of the Number of Small Entities 
Impacted. The IRFA directs the Commission to provide a description of 
and, where feasible, an estimate of the number of small entities that 
will be affected by the proposed rules. The IRFA defines the term 
``small entity'' as having the same meaning as the terms ``small 
business,'' ``small organization,'' and ``small business concern'' 
under Section 3 of the Small Business Act. Under the Small Business 
Act, a small business concern is one which: (1) is independently owned 
and operated; (2) is not dominant in its field of operation; and (3) 
satisfies any additional criteria established by the Small Business 
Administration (``SBA''). The rules we propose in this NPRM will affect 
cable operators, OVS operators, cable programmers, and television 
station licensees.
    106. Small MVPDs. SBA has developed a definition of small entities 
for cable and other pay television services, which includes all such 
companies generating $11 million or less in annual receipts. This 
definition includes cable system operators, closed circuit television 
services, direct broadcast satellite services, multipoint distribution 
systems, satellite master antenna systems and subscription television 
services. According to the Census Bureau data from 1992, there were 
1,758 total cable and other pay television services and 1,423 had less 
than $11 million in revenue. We address below each service individually 
to provide a more precise estimate of small entities.
    107. Cable Systems. The Commission has developed, with SBA's 
approval, our own definition of a small cable system operator for the 
purposes of rate regulation. Under the Commission's rules, a ``small 
cable company'' is one serving fewer than 400,000 subscribers 
nationwide. Based on our most recent information, we estimate that 
there were 1439 cable operators that qualified as small cable companies 
at the end of 1995. Since then, some of those companies may have grown 
to serve over 400,000 subscribers, and others may have been involved in 
transactions that caused them to be combined with other cable 
operators. Consequently, we estimate that there are fewer than 1439 
small entity cable system operators that may be affected by the 
decisions and rules proposed in this NPRM.
    108. The Communications Act also contains a definition of a small 
cable system operator, which is ``a cable operator that, directly or 
through an affiliate, serves in the aggregate fewer than 1% of all 
subscribers in the United States and is not affiliated with any entity 
or entities whose gross annual revenues in the aggregate exceed 
$250,000,000.'' The Commission has determined that there are 61,700,000 
subscribers in the United States. Therefore, an operator serving fewer 
than 617,000 subscribers shall be deemed a small operator, if its 
annual revenues, when combined with the total annual revenues of all of 
its affiliates, do not exceed $250 million in the aggregate. Based on 
available data, we find that the number of cable operators serving 
617,000 subscribers or less totals approximately 1450. Although it 
seems certain that some of these cable system operators are affiliated 
with entities whose gross annual revenues exceed $250,000,000, we are 
unable at this time to estimate with greater precision the number of 
cable system operators that would qualify as small cable operators 
under the definition in the Communications Act.
    109. Open Video System (``OVS''). The Commission has certified 
eleven OVS operators. Of these eleven, only two are providing service. 
Bell Atlantic received approval for its certification to convert its 
Dover, New Jersey Video Dialtone (``VDT'') system to OVS. Affiliates of 
Residential Communications Network, Inc. (``RCN'') received approval to 
operate OVS systems in New York City and the Boston area. Bell Atlantic 
and RCN have sufficient revenues to assure us that they do not qualify 
as small business entities. Little financial information is available 
for the other entities authorized to provide OVS that are not yet 
operational. We believe that one OVS licensee may qualify as a small 
business concern. Given that other entities have been authorized to 
provide OVS service but have not yet begun to generate revenues, we 
conclude that at least some of the OVS operators qualify as small 
entities.
    110. Program Producers and Distributors. The Commission has not 
developed a definition of small entities applicable to producers or 
distributors of cable television programs. Therefore, we will use the 
SBA classifications of

[[Page 42347]]

Motion Picture and Video Tape Production (SIC 7812), Motion Picture and 
Video Tape Distribution (SIC 7822), and Theatrical Producers (Except 
Motion Pictures) and Miscellaneous Theatrical Services (SIC 7922). 
These SBA definitions provide that a small entity in the cable 
television programming industry is an entity with $21.5 million or less 
in annual receipts for SIC 7812 and SIC 7822, and $5 million or less in 
annual receipts for SIC 7922. Census Bureau data indicate the 
following: (a) there were 7,265 firms in the United States classified 
as Motion Picture and Video Production (SIC 7812), and that 6,987 of 
these firms had $16.999 million or less in annual receipts and 7,002 of 
these firms had $24.999 million or less in annual receipts; (b) there 
were 1,139 firms classified as Motion Picture and Video Tape 
Distribution (SIC 7822), and 1007 of these firms had $16.999 million or 
less in annual receipts and 1013 of these firms had $24.999 million or 
less in annual receipts; and (c) there were 5,671 firms in the United 
States classified as Theatrical Producers and Services (SIC 7922), and 
5627 of these firms had $4.999 million or less in annual receipts.
    111. Each of these SIC categories is very broad and includes firms 
that may be engaged in various industries, including cable programming. 
Specific figures are not available regarding how many of these firms 
exclusively produce and/or distribute programming for cable television 
or how many are independently owned and operated. Thus, we estimate 
that our rules may affect approximately 6,987 small entities primarily 
engaged in the production and distribution of taped cable television 
programs and 5,627 small producers of live programs that may be 
affected by the rules adopted in this proceeding.
    112. Television Stations. The proposed rules and policies will 
apply to television broadcasting licensees, and potential licensees of 
television service. The Small Business Administration defines a 
television broadcasting station that has no more than $10.5 million in 
annual receipts as a small business. Television broadcasting stations 
consist of establishments primarily engaged in broadcasting visual 
programs by television to the public, except cable and other pay 
television services. Included in this industry are commercial, 
religious, educational, and other television stations. Also included 
are establishments primarily engaged in television broadcasting and 
which produce taped television program materials. Separate 
establishments primarily engaged in producing taped television program 
materials are classified under another SIC number. There were 1,509 
television stations operating in the nation in 1992. That number has 
remained fairly constant as indicated by the approximately 1,579 
operating full power television broadcasting stations in the nation as 
of May 31, 1998. In addition, as of October 31, 1997 , there were 1,880 
LPTV stations that may also be affected by our rules. For 1992 the 
number of television stations that produced less than $10.0 million in 
revenue was 1,155 establishments.
    113. Thus, the proposed rules will affect many of the approximately 
1,579 television stations; approximately 1,200 of those stations are 
considered small businesses. These estimates may overstate the number 
of small entities since the revenue figures on which they are based do 
not include or aggregate revenues from non-television affiliated 
companies.
    114. In addition to owners of operating television stations, any 
entity who seeks or desires to obtain a television broadcast license 
may be affected by the proposals contained in this item. The number of 
entities that may seek to obtain a television broadcast license is 
unknown. We invite comment as to such number.
    115. Small Manufacturers. The SBA has developed definitions of 
small entity for manufacturers of household audio and video equipment 
(SIC 3651) and for radio and television broadcasting and communications 
equipment (SIC 3663). In each case, the definition includes all such 
companies employing 750 or fewer employees. Census Bureau data 
indicates that there are 858 U.S. firms that manufacture radio and 
television broadcasting and communications equipment, and that 778 of 
these firms have fewer than 750 employees and would be classified as 
small entities.
    116. Electronic Equipment Manufacturers. The Commission has not 
developed a definition of small entities applicable to manufacturers of 
electronic equipment. Therefore, we will use the SBA definition of 
manufacturers of Radio and Television Broadcasting and Communications 
Equipment. According to the SBA's regulations, a TV equipment 
manufacturer must have 750 or fewer employees in order to qualify as a 
small business concern. The Census Bureau category is very broad, and 
specific figures are not available as to how many of these firms are 
exclusive manufacturers of television equipment or how many are 
independently owned and operated. We conclude that there are 
approximately 778 small manufacturers of radio and television 
equipment.
    117. Electronic Household/Consumer Equipment. The Commission has 
not developed a definition of small entities applicable to 
manufacturers of electronic equipment used by consumers, as compared to 
industrial use by television licensees and related businesses. 
Therefore, we will use the SBA definition applicable to manufacturers 
of Household Audio and Visual Equipment. According to the SBA's 
regulations, a household audio and visual equipment manufacturer must 
have 750 or fewer employees in order to qualify as a small business 
concern. Census Bureau data indicates that there are 410 U.S. firms 
that manufacture radio and television broadcasting and communications 
equipment, and that 386 of these firms have fewer than 500 employees 
and would be classified as small entities. The remaining 24 firms have 
500 or more employees; however, we are unable to determine how many of 
those have fewer than 750 employees and therefore, also qualify as 
small entities under the SBA definition. Furthermore, the Census Bureau 
category is very broad, and specific figures are not available as to 
how many of these firms are exclusive manufacturers of television 
equipment for consumers or how many are independently owned and 
operated. We conclude that there are approximately 386 small 
manufacturers of television equipment for consumer/household use.
    118. Computer Manufacturers. The Commission has not developed a 
definition of small entities applicable to computer manufacturers. 
Therefore, we will utilize the SBA definition of Electronic Computers. 
According to SBA regulations, a computer manufacturer must have 1,000 
or fewer employees in order to qualify as a small entity. Census Bureau 
data indicates that there are 716 firms that manufacture electronic 
computers and of those, 659 have fewer than 500 employees and qualify 
as small entities. The remaining 57 firms have 500 or more employees; 
however, we are unable to determine how many of those have fewer than 
1,000 employees and therefore also qualify as small entities under the 
SBA definition. We conclude that there are approximately 659 small 
computer manufacturers.
    119. Compliance Requirements. There may be compliance requirements 
for cable operators and OVS operators, in the form of mandatory digital 
broadcast television carriage requirements, if any of the options set 
forth in this NPRM are

[[Page 42348]]

ultimately adopted by the Commission. An attempt has been made to 
streamline compliance requirements. For example, we have sought comment 
on streamlining the must carry complaint process for digital television 
station carriage.
    120. Federal Rules Which Duplicate, Overlap, or Conflict with the 
Commission's Proposals. None.
    121. Report to Congress. The Commission will send a copy of the 
NPRM, including this IRFA, in a report to be sent to Congress pursuant 
to the Small Business Regulatory Enforcement Fairness Act of 1996. In 
addition, the Commission will send a copy of the NPRM, including IRFA, 
to the Chief Counsel for Advocacy of the Small Business Administration.
    122. It is ordered that, pursuant to Sections 1, 4 (i) and (j), 
325, 336, 614, and 615 of the Communications Act of 1934, as amended, 
47 U.S.C. 151, 154 (i) and (j), 325, 336, 534, and 535, notice is 
hereby given of proposed amendments to part 76, in accordance with the 
proposals, discussions and statements of issues in this NPRM, and that 
comment is sought regarding such proposals, discussions and statements 
of issues.
    123. It is further ordered that the Commission's Office of Public 
Affairs, Reference Operations Division, shall send a copy of this NPRM, 
including the Initial Regulatory Flexibility Analysis, to the Chief 
Counsel for Advocacy of the Small Business Administration.

List of Subjects in 47 CFR Part 76

    Cable television.

Federal Communications Commission.
Magalie Roman Salas,
Secretary.
[FR Doc. 98-21085 Filed 8-6-98; 8:45 am]
BILLING CODE 6712-10-U