[Federal Register Volume 64, Number 25 (Monday, February 8, 1999)]
[Rules and Regulations]
[Pages 5951-5957]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-1346]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 100

[MM Docket 93-25; FCC 98-307]


Direct Broadcast Satellite Public Interest Obligations

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: In this document, the Commission imposes requirements on 
Direct Broadcast Satellite Service (DBS) providers to comply with the 
political broadcast rules of the Communications Act of 1934, as 
amended, and mandates that DBS providers reserve between 4 percent and 
7 percent of their channel capacity exclusively for ``noncommercial 
programming of an educational or informational nature.'' These rules 
will provide for the carriage on DBS systems of qualified political 
candidates for national office and will make DBS channel capacity 
available to ``national educational programming suppliers,'' upon 
reasonable prices, terms, and conditions.

DATES: Effective June 15, 1999 except for Sec. 100.5(c)(6) which 
contains information collection requirements that are not effective 
until approved by the Office of Management and Budget. The FCC will 
publish a document in the Federal Register announcing the effective 
date for that section. Written Comments regarding the Paperwork 
Reduction Act requirements in Sec. 100.5(c)(6) should be submitted on 
or before April 9, 1999.

ADDRESSES: Comments regarding the paperwork reduction act requirements 
in Sec. 100.5(c)(6) should be submitted to Les Smith at 445 12th Street 
S.W., Rm. 1-A804, Washington D.C. 20554 or via internet at 
[email protected]; phone 202-418-0217.

FOR FURTHER INFORMATION CONTACT: For more information regarding the 
Report and Order contact Rosalee Chiara (202) 418-0754 or James Taylor 
(202) 418-2113 of the International Bureau. For more information 
regarding the information collections and to submit comments, contact 
Les Smith at 202-418-0217; 445 12th Street S.W., Rm. 1-A804, Washington 
D.C. 20554 or via internet at [email protected], and Timothy Fain, OMB 
Desk Officer, Rm. 10236 NEOB, 725 17th Street, N.W., Washington, D.C. 
20503 or [email protected].

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Report 
and Order in MM Docket No. 93-25; FCC 98-307, adopted November 19, 1998 
and released on November 25, 1998. The complete text of this Report and 
Order is available for inspection and copying during normal business 
hours in the FCC Reference Center (Room), 445 12th Street, S.W. 
Washington, D.C. 20554, and also may be purchased from the Commission's 
copy contractor, International Transcription Service, Inc., 1231 20th 
Street, N.W., Washington, DC 20036, telephone: 202-857-3800, facsimile: 
202-857-3805.

Summary of Report and Order

    1. On March 2, 1993 the Commission released a Notice of Proposed 
Rulemaking to implement Section 25 of the 1992 Cable Television 
Consumer Protection and Competition Act of 1992

[[Page 5952]]

(``1992 Cable Act'').1 Specifically, Section 25 of the 1992 
Cable Act, which added new Section 335 to the Communications Act of 
1934, as amended, (the Act) required the Commission to impose on 
providers of Direct Broadcast Satellite Service (DBS), the political 
programming requirements of Sections 312(a)(7) and 315 of the Act and 
adopt rules requiring the set aside of channels for noncommercial 
educational and informational programming. In addition, Section 25 also 
directed the Commission to examine the opportunities for localism.
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    \1\ In the Matter of Implementation of Section 25 of the Cable 
Television Consumer Protection and Competition Act of 1992, Direct 
Broadcast Satellite Public Service Obligations, 8 FCC Rcd. 1589 
(1993).
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    2. On September 16, 1993 the United States District Court for the 
District of Columbia held that Section 25 of the 1992 Cable Act was 
unconstitutional.2 On August 30, 1996, the United States 
Court of Appeals for the District of Columbia Circuit reversed the 
District Court.3 In light of the interval between the 
original Notice of Proposed Rulemaking and the appellate court 
decision, the Commission released a Public Notice on January 31, 1997 
seeking to update and refresh the record.4 Following review 
of the comments provided, the Commission released the Report and Order 
summarized here.
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    \2\ Daniels Cablevision, Inc. v. United States, 835 F. Supp. 1 
(D.D.C. 1993).
    \3\ Time Warner Entertainment Co., L.P. v. FCC, 93 F.3d 957 
(D.C. Cir. 1996).
    \4\ Public Notice (No. 72078, rel. January 31, 1997).
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    3. Entities responsible for complying with DBS public interest 
obligations. The Commission will hold part 100 and part 25 DBS 
licensees ultimately responsible for compliance with these rules. 
Licensees will, however, be able to demonstrate compliance with the 
public service obligations by relying on certifications from 
distributors that expressly state that they have complied with the 
public service obligations. Satellites licensed under Part 25, but 
operating in the C-band, are not covered by these rules because the 
statute specifies only Ku-band licensees. In the case of Part 25 
licensees, the Commission has imposed a threshold for inclusion under 
the rules that requires an entity control at least enough programming 
channels so that 4 percent of the total programming channels available 
for video yields a set-aside of at least one noncommercial, educational 
or informational programming channel.
    4. Application of public service obligations to foreign satellites 
entering the U.S. Market. Section 25.137 of the Commission's rules 
requires that earth stations operating with non-U.S. licensed 
satellites be licensed by the Commission. As a condition of its 
license, the Commission will require the earth station licensee 
communicating with a non-U.S. licensed satellite to comply with Section 
335 public interest rules.
    5. Application of the political broadcasting provisions of Section 
335(a). Section 335(a) of the Act states, among other things, that any 
regulations shall, at a minimum, impose the political broadcast rules 
of Sections 312 and 315 of the Act.
    6. Access for Federal Candidates. Section 312(a)(7) of the Act 
requires broadcasters to allow legally qualified candidates for federal 
office reasonable access to their facilities. Access can be provided on 
a free or paid basis. Since the passage of Section 312(a)(7), the 
Commission's policy has generally been to defer to the reasonable, good 
faith judgment of licensees as to what constitutes ``reasonable 
access'' under the circumstances present in a particular case. Factors 
the Commission would consider in reviewing such a case include the 
number of candidates requesting time, the technical difficulties in 
satisfying the request, and the availability of reasonable 
alternatives.
    7. The Commission will monitor DBS providers' performance in this 
area so that it can modify the Commission's rules if necessary and as 
experience dictates. The Commission will require DBS providers to 
maintain a file available to the public at the providers' headquarters 
containing requests for political advertising time and disposition of 
those requests. Where DBS providers carry the programming of a 
terrestrial broadcast television station, it is the responsibility of 
the terrestrial broadcaster and not the DBS provider to satisfy the 
political broadcasting requirements of Sections 312(a)(7).
    8. Equal Opportunities. In conformance with statutory mandate, the 
Commission will apply the equal opportunities provisions of Section 
315(a) of the Act, Section 73.1940 of the Commission's rules, and the 
policies delineated in prior Commission orders to DBS providers. DBS 
providers will be required to ensure, by contractual means or 
otherwise, that these rules are followed. If one legally qualified 
candidate is afforded access to a DBS system, all other candidates for 
the same office who make timely requests must be afforded that same 
opportunity.5 To ensure that competing candidates will be 
able to ascertain what equal opportunities they are entitled to, we 
will require the DBS provider to maintain a political file similar to 
the one maintained by broadcasters.6 The Report and Order 
retains the definitions of ``use'' and ``legally qualified candidate'' 
in current rules and policies. The Commission will resolve issues 
involving DBS providers' equal opportunities obligations in the context 
of particular cases.
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    \5\ 47 CFR 73.1941(c) (a request must be made within one week of 
the day on which the first prior use giving rise to the right of 
equal opportunities occurred).
    \6\ See 47 CFR 73.1943 (requiring the licensee to keep and 
permit public inspection of a complete record of all requests for 
broadcast time made and a notation showing the disposition, charges, 
etc.).
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    9. Lowest Unit Charge. If advertising is sold on DBS systems, 
legally qualified candidates must be afforded the benefit of the lowest 
unit charge (LUC) during the pre-election periods prescribed by Section 
315 of the Act. Section 315(b) of the Act and Section 73.1942 of the 
Commission's rules provide that broadcasters may not charge any legally 
qualified candidate more than the LUC for advertising on the station 
during certain periods preceding the election. Although DBS providers 
do not currently have commercial rates on which to base a LUC 
determination, they can set a reasonable rate, based on consideration 
of marketplace factors such as what other media charge to reach a 
similar audience if they sell time to candidates pursuant to Sections 
312 or 315 of the Act or otherwise choose to do so. DBS providers, like 
broadcasters and cable operators, must disclose to candidates 
information about rates and discount privileges and give any discount 
privileges to candidates. A DBS provider may make time available 
without charge on a nondiscriminatory basis.
    10. Opportunities for Localism. Section 335(a) also requires the 
Commission ``to examine the opportunities that the establishment of 
direct broadcast satellite service provides for the principle of 
localism under [the] Act, and the methods by which such principle may 
be served through technological and other developments in, or 
regulation of, such service.'' Although there have been significant 
technological developments in the DBS industry since the Commission 
first developed rules for DBS, and some DBS providers are providing 
limited local service, no DBS provider has the technical capability to 
provide local service to all markets in the country. If legal and 
technical issues regarding localized programming are resolved, the 
Commission may consider

[[Page 5953]]

requiring DBS providers to offer some amount of locally-oriented 
programming.
    11. Public Interest or Other Obligations. The Report and Order does 
not impose upon the DBS industry additional programming requirements. 
The Commission found that DBS is a relatively new entrant attempting to 
compete with an established, financially stable cable industry. 
Although the DBS industry has grown significantly since 1992, it still 
claims just under eight million subscribers in contrast to cable's 64 
million customers. Additional obligations on DBS providers might hinder 
the development of DBS as a viable competitor to cable. The Commission 
concluded that, although Section 335(a) provides ample authority to 
impose other public interest programming requirements upon DBS 
providers, it would not exercise its authority at this time. If it 
becomes evident that there is a need, the Commission will reconsider 
this conclusion.
    12. Carriage Obligations for Educational and Informational 
Programming. The 1992 Cable Act requires the Commission to adopt rules 
requiring DBS providers to make available channel capacity for 
programming of an educational or informational nature. The Commission 
concluded that discrete channels should be reserved to fulfill the 
noncommercial reservation requirements of Section 335(b) to assure 
continuity, predictability and easier monitoring and enforcement. 
Requiring the set aside of discrete channels will make it easier for 
consumers to locate such programming on one or more particular 
channels.
    13. Determination of Total Channel Capacity. For the purpose of 
applying Section 335(b), channel capacity should be based on the total 
channel capacity that is being, or could be, used to provide video 
programming. Barker and other informational guide channels will be 
included as available channels for determining the required set aside, 
as they are video channels supplied to the customers. In addition, 
unused channels that could be used to provide DBS service will be 
included in the set aside calculation. Channels used for audio or other 
non-video services will not be included.
    14. Because advances in digital compression technology will 
continue to expand the number of programming channels that can be 
offered to customers in a given amount of spectrum and the number of 
available channels will change depending on the complexity of the type 
of programming transmitted, the total number of programming channels 
offered by a DBS licensee on all its satellites can vary on a weekly or 
even a daily basis. To address these fluctuations, each DBS licensee 
will have to calculate on a quarterly basis the number of channels 
available for video programming on all its satellites. Each DBS 
licensee will then use the average of these quarterly measurements 
during the year to ascertain the total number of channels for purposes 
of determining the number of reserved channels. DBS providers will be 
required to record these quarterly channel measurements and average 
calculations as well as their response to any capacity changes in logs 
kept at their main offices and available to the Commission and to the 
public.
    15. Reservation Percentage. The Commission concluded that DBS 
providers will be required to reserve four percent of their channel 
capacity exclusively for noncommercial educational and informational 
programming. In the event that the four percent calculation creates any 
fraction of a channel, the DBS provider will round the calculation 
upward.7 The public interest programming provided for in 
this order must be made available to all of a DBS provider's 
subscribers without additional charge.
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    \7\ For example, if a DBS provider supplies 120 video channels 
to customers, the provider will have to reserve initially five 
channels for noncommercial programming of an educational or 
informational nature. Four percent of 120 channels amounts to 4.8 
channels. Under the rule this figure would be rounded up to 5 
channels.
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    16. Impact on Existing Programming Contracts. The Commission 
concluded that the reservation requirement applies notwithstanding 
existing programming contracts and DBS providers will have to make 
available sufficient channel capacity to fulfill the reservation 
requirement, regardless of existing programming contracts.
    17. National Educational Programming Supplier. Pursuant to Section 
335(b)(3), DBS providers must make the reserved channels available to 
``national educational programming suppliers'' upon certain terms. 
Section 335(b)(5)(B) provides that the term national educational 
programming supplier ``includes any qualified noncommercial educational 
television station, other public telecommunications entities, and 
public or private educational institutions.'' Neither this section of 
the statute nor the legislative history define ``noncommercial 
educational broadcast station,'' ``public broadcasting entity'' or 
``public telecommunications entity.'' In the absence of any other 
Congressional guidance the Commission looked to other provisions of the 
Act in which those terms are defined such as Section 397 of the Act.
    18. Section 397(6) of the Act defines a ``noncommercial educational 
broadcast station'' as a television or radio broadcast station that (i) 
``is eligible to be licensed by the Commission as a noncommercial 
educational radio or television broadcast station and which is owned 
and operated by a public agency or nonprofit private foundation, 
corporation, or association,'' or (ii) ``is owned and operated by a 
municipality and which transmits only noncommercial programs for 
educational purposes.'' The Commission found it appropriate to use the 
definition of noncommercial educational television station and public 
telecommunication entity used in the noncommercial broadcast context 
and noted that Section 615(1) of the Act further defines such a station 
to include any television broadcast station that has as its licensee an 
entity eligible to receive a community service grant from the 
Corporation for Public Broadcasting.
    19. Section 397(12) of the Act defines ``public telecommunications 
entity'' as any enterprise which (i) ``is a public broadcast station or 
a noncommercial telecommunications entity'' and (ii) ``disseminates 
public telecommunications services to the public.'' A ``noncommercial 
telecommunications entity'' is defined as ``any enterprise which is 
owned and operated by a state, a political or special purpose 
subdivision of a state, a public agency, or a nonprofit private 
foundation, corporation or association, and has been organized 
primarily for the purpose of disseminating audio or video noncommercial 
educational and cultural programs to the public by means other than a 
primary television or radio broadcast station.'' 8 These 
entities are required to disseminate ``public telecommunications 
services,'' which are defined as noncommercial educational and cultural 
radio and television programs, and related noncommercial instructional 
or informational material.9
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    \8\ 47 U.S.C. 397(7). The means of dissemination include, but 
are not limited to, coaxial cable, optical fiber, broadcast 
translators, cassettes, discs, microwave, or laser transmission 
through the atmosphere.
    \9\ 47 U.S.C. 397(14).
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    20. Section 397 of the Act does not define the term ``public or 
private educational institutions.'' The Commission looked elsewhere for 
guidance in defining that term including incorporating the eligibility 
criteria established by the rules for instructional

[[Page 5954]]

television fixed stations (``ITFS'') contained in Section 74.932 of the 
Commission's rules because the types of services provided by 
educational institutions and ITFS are analogous.10 Section 
74.932(a) provides that a license for an ITFS will be issued only to an 
accredited institution or to a governmental organization engaged in the 
formal education of enrolled students or to a nonprofit organization 
whose purposes are educational and include providing educational and 
instructional television material to such accredited institutions and 
governmental organizations. The Commission adopted the ITFS criteria in 
interpreting ``public and private educational institutions.''
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    \10\ 47 CFR 74.932(a). ITFS are intended primarily to provide 
formal educational or cultural development to students enrolled in 
accredited public or private institutions or colleges or 
universities.
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    21. Additional Entities. The Commission determined that the list of 
entities in Section 335(b)(5)(B) was not intended to be an exclusive 
list of entities that can qualify as national educational programming 
suppliers but a nonexclusive list that may be enlarged upon. Although 
the Commission did not interpret Section 335(b)(5)(B) as an exclusive 
list of eligible program suppliers, the Commission found that Congress 
intended to limit eligibility to entities that share the same essential 
characteristics as those listed.
    22. The Report and Order states that the term ``national 
educational programming supplier'' in Section 335(b)(5)(B) includes 
only noncommercial entities with an educational mission. The term 
should not be interpreted as including ``commercial'' entities 
organized for profit-making purposes. The Commission found that the 
eligibility of a programming supplier under the statute should 
depend on its noncommercial character, not merely whether its 
programming contains commercials.
    23. The Commission also found that the tax code definition of non-
profit will apply to qualify an entity as an eligible national 
educational programming supplier.11 Thus, an entity with an 
educational mission that is organized under the tax code as a nonprofit 
corporation will be eligible as a national educational programming 
supplier. An entity that is not organized as a nonprofit corporation 
may also qualify if it shows to the Commission's satisfaction that it 
is organized for a noncommercial purpose and has an educational 
mission. The Report and Order permits joint ventures as long as 
participants demonstrate that the joint venture is noncommercial within 
the meaning of Section 335 and that the venture's mission is 
educational.
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    \11\ 26 U.S.C. 501(c)(3).
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    24. Definition of the Term ``National''. The Commission interpreted 
the term ``national'' broadly so as to include local, regional, or 
national domestic nonprofit entities that qualify under the definitions 
listed above and produce noncommercial programming designed for a 
national audience. The Commission also found that the definition should 
include international nonprofit programmers that satisfy the terms of 
the definitions in Section 397 of the Act and the Commission's ITFS 
rules.
    25. Noncommercial Programming of an Educational or Informational 
Nature. Section 335(b)(1) requires that the reserved channels be used 
``exclusively for noncommercial programming of an educational or 
informational nature.'' The Commission concluded that the rules need 
not elaborate on the term ``educational and informational'' programming 
and that a DBS provider can comply with the reservation requirement by 
affording access to programming supplied by specific categories of 
noncommercial entities. The Commission will reconsider this conclusion, 
however, if it appears that more specific guidance on the definition of 
this term is necessary.
    26. Implementation of Section 335(b)(3); Editorial Control. Section 
335(b)(3) requires DBS providers to make channel capacity available to 
national educational programming suppliers but prohibits the DBS 
provider from exercising any editorial control over any video 
programming provided on the reserved channels. The Commission concluded 
that the best reading of the editorial control language is that it 
prohibits DBS providers from controlling the selection of, or in any 
way editing or censoring, individual programs that will be carried on 
the reserved channels. The Report and Order does not, however, prohibit 
DBS operators from selecting among national educational programming 
suppliers so long as the DBS provider does not refuse to make unused 
reserved capacity available to qualified suppliers. Nor does it 
prohibit DBS providers from refusing to carry non-qualifying 
programming or ineligible programmers.
    27. The Commission rejected arguments that the interpretation of 
Section 335 is constrained by similar language in the cable leased 
access provision. Section 335 only prohibits DBS providers from 
exercising ``editorial control over programming,'' while the cable 
leased access provision, Section 612, also prohibits cable operators 
from ``in any other way consider[ing] the content of such 
programming.'' The Commission found that omission of this last clause 
from the DBS provision suggests that DBS providers are not necessarily 
barred from considering certain factors relating to programming in 
selecting programmers, but are prohibited from exercising control over 
such programming. Thus, DBS providers might consider a variety of 
factors in deciding which programmers to select, including the broad 
genres of programming they plan to provide (e.g., cultural, 
documentary, children's educational), the programmers' experience, 
reliability, and reputation for quality programming, and the quality of 
programming they may have produced in the past. They may not, however, 
require the programmers they select to include particular series or 
programs on their channels as a condition of carriage. If in the 
future, it appears that DBS operators seek to use the selection process 
as a means of improperly influencing programming provided on the 
reserved channels, the Commission will take appropriate action.
    28. The Report and Order does not prohibit the operators from 
electing to use a consortium or clearinghouse of educators and public 
interest specialists to choose among qualifying programs that would be 
aired on the set-aside capacity. With regard to qualifications, the 
Report and Order recognizes that someone must make the determination 
that programmers who wish to use the reserved channels are eligible 
under the statute to do so and that the programming carried on the 
reserved channels qualifies under the statute as noncommercial 
programming of an educational or informational nature. The Commission 
found that DBS providers should be responsible for ensuring that the 
obligations imposed by the statute are fulfilled. In order to avoid 
undue intrusion into the programming decisions of qualified 
programmers, however, the Commission does not believe that it would be 
appropriate for DBS providers to pre-screen all programming carried on 
the reserved channels. Rather, if an abuse of the reserved channels by 
a particular programmer comes to the DBS provider's attention, it can 
then take action to ensure that only qualified programs are carried on 
the reserved channels by that programmer in the future.
    29. DBS providers may not alter or censor the content of the 
programming or otherwise exercise any control over the programming. To 
aid in monitoring and enforcing the obligations of DBS

[[Page 5955]]

providers, we will require them to maintain files available for public 
inspection concerning use of the reserved capacity. These files should 
identify the entities that request access, the entities to whom 
noncommercial capacity is being provided, the amount of capacity being 
provided to each entity, the conditions under which it is being 
provided and the rates, if any, being paid by the entity, and, when 
access is denied, a brief description of the reason or reasons why 
access was denied.
    30. Non-commercial channel limitation. In order to ensure that 
access to non-commercial channels is not dominated by a few national 
educational program suppliers, the Report and Order limits to one the 
number of channels that can be initially allocated to a single 
qualified program provider on each DBS system. The Commission found 
this will make a greater variety of educational and informational 
programs available to the U.S. viewing public and will provide an 
opportunity for carriage of programming that might not otherwise be 
shown.
    31. In order to ensure that a particular programmer will be allowed 
access to only one channel, the Commission will require that individual 
programmers be separate entities. If two national educational 
programming suppliers are directly or indirectly under common control 
or ownership, the will be treated as one entity for purposes of 
obtaining access to the reserved channels. In applying this provision, 
the Commission will define cognizable ownership and other interests 
according to the Commission's broadcast attribution rules.12 
Those rules seek to identify those interests in, or relationships with, 
an entity that confer on their holders a degree of influence or control 
such that the holders have a realistic potential to affect the 
programming decisions of the entity or other core operating functions. 
If, after all qualified entities that have sought access have been 
offered access on at least one channel, a provider may allocate an 
additional channel to a qualified programmer without having to make 
additional efforts to secure other qualified programmers.
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    \12\ 47 CFR 73.3555 note 1 & 2.
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    32. Liability for Violations. Because Section 335 prohibits DBS 
providers from exercising any editorial control over programming 
utilizing the reserved channels, the Commission interpreted the statute 
in accordance with the Supreme Court's holding in Farmers Educational 
and Cooperative Union of America v. WDAY, 13 as immunizing 
the DBS providers from liability under state and local laws as a result 
of the content of the programming. Section 335(b) prohibits DBS 
providers from exercising ``any editorial control'' over noncommercial 
programming using the set-aside capacity, and thus implicitly grants 
them immunity from liability under state and local law for distributing 
such programming. By the same token, the Commission will enforce any 
requirements imposed by the Act or our rules, other than these public 
interest obligations, against the programmers who supply such 
programming, rather than the DBS providers who carry it under Section 
335.
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    \13\ 360 US 525 (1959) (Farmers Union).
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    33. Applicability of Political Broadcasting Rules to the 
Noncommercial Set Aside Capacity. The statutory language makes clear 
that noncommercial programming suppliers are not considered DBS 
providers for purpose of either Section 335(a) or Section 335(b) and 
are not subject to those requirements.
    34. Refusal to Carry Programming Supplier. Section 335 does not 
appear to allow DBS operators to refuse to carry any particular 
program. This does not, however, mean that a DBS provider is prevented 
from making an initial threshold determination as to whether a 
programmer is qualified for carriage or whether the programming 
proposed is noncommercial, educational, or informational. The 
Commission found this approach consistent with judicial interpretation 
of the editorial control prohibition for public, educational, and 
governmental set-aside channels provided by cable operators. In 
addition, a DBS provider can set technical quality standards for 
programming carried on its satellite system and these standards can be 
applied to programming on the set-aside channels.
    35. Unused Channel Capacity. Section 335(b)(2) of the 
Communications Act permits a DBS provider to utilize for any purpose 
any unused channel capacity required to be reserved under this 
subsection pending the actual use of such channel capacity for 
noncommercial programming of an educational or informational nature. A 
DBS provider will however, be required to vacate reserved capacity, 
regardless of contractual obligations, within a reasonable time after a 
qualified programmer's request for access has been received.
    36. Reasonable Prices, Terms, and Conditions. The Commission 
concluded that costs that can be specifically allocated to 
noncommercial programmers are those that are directly related to making 
the capacity available to noncommercial programmers. These include, 
incremental labor required for traffic management at the uplink 
facility, incremental compression equipment, incremental labor required 
to authorize viewers to receive particular programming, and any 
backhaul costs actually incurred by the DBS provider in order to 
transmit the noncommercial educational or informational programming. If 
a DBS provider has an authorization center or procedure used solely for 
the provision of noncommercial channels, such costs may be allocated to 
noncommercial programmers as well.
    37. With regard to rates that are appropriate for the set aside 
channels under Section 335(b), the statute gives certain guidelines for 
the Commission to apply. First, Section 335(b)(4) says the Commission 
should take into account the nonprofit character of the programmer and 
any federal funds used to support programming. Second, the statute 
provides that the Commission shall not allow rates to exceed 50 percent 
of the direct costs, which we have discussed above.
    38. The Commission thinks that it should not be involved in setting 
rates for noncommercial programmers because the Commission does not set 
rates for satellite capacity in any other context. The Commission will 
address any disputes with respect to rates in the context of a 
complaint proceeding. Because the statute does not give the Commission 
any basis upon which to differentiate among noncommercial educational 
and informational programming based on the availability of outside 
financing, the Commission concluded that the 50 percent cap applies to 
all qualified programmers and not just those who receive no outside 
funding for their programs.
    39. Effective Date. The Commission concluded that a long phase-in 
period is unnecessary. The Commission recognized, however, that DBS 
providers and programmers need some amount of time in which to solidify 
plans and execute contracts. The Commission will require each DBS 
provider make available the channel capacity for educational and 
informational programming of a noncommercial nature as soon as the 
rules become effective. DBS providers must open a window at that time 
to allow interested programming suppliers to enter into discussions 
with the DBS providers regarding program carriage. Programming intended 
to fulfill the

[[Page 5956]]

provisions of this section must be made available to the public no 
later than six months after these rules are effective. Until the four 
percent of capacity is filled with qualified programming, DBS providers 
may not assert that capacity is unavailable if there are qualified 
entities seeking carriage who are ready to meet the prices, terms and 
conditions established by the DBS provider.

Ordering Clauses

    40. Accordingly, it is ordered that Part 100 of the Commission's 
rules is hereby amended as set out.
    41. It is further ordered that the Commission's Office of Managing 
Director shall send a copy of this Report and Order, including the 
Final Regulatory Flexibility Analysis, to the Chief Counsel for 
Advocacy of the Small Business Administration.
    42. It is further ordered that the amendments to part 100 of the 
Commission's rules, 47 CFR part 100, and the Commission's policies, 
rules and requirements established in this Report and Order shall take 
effect 60 days after publication of the amendments in the Federal 
Register, or in accordance with the requirements of 5 U.S.C. 801(a)(3) 
and 44 U.S.C. 3507, whichever occurs later. The Commission will publish 
a notice announcing the effective date of this Report and Order.
    43. It is further ordered that the Commission shall send a copy of 
this Report and Order, including the Final Regulatory Flexibility 
Analysis, to the Chief Counsel for Advocacy of the Small Business 
Administration.
    44. This Report and Order is issued under Sec. 0.261 of the 
Commission's rules, 47 CFR 0.261 (1996). Petitions for reconsideration 
under Sec. 1.429 of the Commission's rules, 47 CFR 1.429 (1996), or 
applications for review under Section 1.115 of the Commission's rules, 
47 CFR 1.115 (1996), may be filed within 30 days of the date of this 
Report and Order in the Federal Register (See 47 CFR 1.4(b)(1)).

Paperwork Reduction Act

    The Federal Communications Commission, as part of its continuing 
effort to reduce paperwork burden invites the general public and other 
Federal agencies to take this opportunity to comment on the following 
information collection, as required by the Paperwork Reduction Act of 
1995, Public Law 104-13. An agency may not conduct or sponsor a 
collection of information unless it displays a currently valid control 
number. No person shall be subject to any penalty for failing to comply 
with a collection of information subject to the Paperwork Reduction Act 
(PRA) that does not display a valid control number. Comments are 
requested concerning (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 estimate; (c) ways 
to enhance the quality, utility, and clarify 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: New.
    Title: Implementation of Section 25 of the Cable Television 
Consumer Protection and Competition Act of 1992, Direct Broadcast 
Satellite Public Interest Obligations.
    Form No.: NA.
    Type of Collection: New Collection.
    Respondents: Business or other for-profit.
    Number of Respondents: 8.
    Estimated Time for Response: 12 hours.
    Total Annual Burden: 96 hours.
    Needs and Uses: The information will be used by the Federal 
Communications Commission (FCC) and interested members of the public to 
monitor DBS providers' compliance with public interest obligations. 
Without such information, the FCC could not determine whether DBS 
providers have complied with their obligations.

List of Subjects in 47 CFR Part 100

    Satellite.

Federal Communications Commission.
Magalie Roman Salas,
Secretary.

Rule Changes

    For the reasons discussed in the preamble, the Federal 
Communications Commission amends 47 CFR part 100 as follows:

PART 100--DIRECT BROADCAST SATELLITE SERVICE

    1. The authority citation for part 100 is amended to read as 
follows:

    Authority: 47 U.S.C. 154, 303, 335, 309 and 554.

    2. Add Sec. 100.5 to read as follows:

Subpart A--General Information


Sec. 100.5  Public interest obligations.

    (a) DBS providers are subject to the public interest obligations 
set forth in paragraphs (b) and (c) of this section. For purposes of 
this rule, DBS providers are any of the following:
    (1) Entities licensed pursuant to 47 CFR part 100; or
    (2) Entities licensed pursuant to part 25 of this chapter that 
operate satellites in the Ku-band fixed satellite service and that sell 
or lease capacity to a video programming distributor that offers 
service directly to consumers providing a sufficient number of channels 
so that four percent of the total applicable programming channels 
yields a set-aside of at least one channel of non-commercial 
programming pursuant to paragraph (c) of this section, or
    (3) Non-U.S. licensed satellite operators in the Ku-band that offer 
video programming directly to consumers in the United States pursuant 
to an earth station license issued under part 25 of this title and that 
offer in a sufficient number of channels to consumers so that four 
percent of the total applicable programming channels yields a set-aside 
of one channel of non-commercial programming pursuant to paragraph (c) 
of this section,
    (b) Political broadcasting requirements--(1) Reasonable access. DBS 
providers must comply with Sec. 312(a)(7) of the Communications Act of 
1934, as amended, by allowing reasonable access to, or permitting 
purchase of reasonable amounts of time for, the use of their facilities 
by a legally qualified candidate for federal elective office on behalf 
of his or her candidacy.
    (2) Use of facilities. DBS providers must comply with Sec. 315 of 
the Communications Act of 1934, as amended, by providing equal 
opportunities to legally qualified candidates.
    (c) Carriage obligation for noncommercial programming--(1) 
Reservation requirement. DBS providers shall reserve four percent of 
their channel capacity exclusively for use by qualified programmers for 
noncommercial programming of an educational or informational nature. 
Channel capacity shall be determined annually by calculating, based on 
measurements taken on a quarterly basis, the average number of channels 
available for video programming on all satellites licensed to the 
provider during the previous year. DBS providers may use this reserved 
capacity for any purpose until such time as it is used for 
noncommercial educational or informational programming.
    (2) Qualified programmer. For purposes of these rules, a qualified 
programmer is:
    (i) A noncommercial educational broadcast station as defined in 
Sec. 397(6)

[[Page 5957]]

of the Communications Act of 1934, as amended,
    (ii) A public telecommunications entity as defined in Sec. 397(12) 
of the Communications Act of 1934, as amended,
    (iii) An accredited nonprofit educational institution or a 
governmental organization engaged in the formal education of enrolled 
students (A publicly supported educational institution must be 
accredited by the appropriate state department of education; a 
privately controlled educational institution must be accredited by the 
appropriate state department of education or the recognized regional 
and national accrediting organizations.), or
    (iv) A nonprofit organization whose purposes are educational and 
include providing educational and instructional television material to 
such accredited institutions and governmental organizations.
    (v) Other noncommercial entities with an educational mission.
    (3) Editorial control.
    (i) A DBS operator will be required to make capacity available only 
to qualified programmers and may select among such programmers when 
demand exceeds the capacity of their reserved channels.
    (ii) A DBS operator may not require the programmers it selects to 
include particular programming on its channels.
    (iii) A DBS operator may not alter or censor the content of the 
programming provided by the qualified programmer using the channels 
reserved pursuant to this section.
    (4) Non-commercial channel limitation. A DBS operator cannot 
initially select a qualified programmer to fill more than one of its 
reserved channels except that, after all qualified entities that have 
sought access have been offered access on at least one channel, a 
provider may allocate additional channels to qualified programmers 
without having to make additional efforts to secure other qualified 
programmers.
    (5) Rates, terms and conditions. (i) In making the required 
reserved capacity available, DBS providers cannot charge rates that 
exceed costs that are directly related to making the capacity available 
to qualified programmers. Direct costs include only the cost of 
transmitting the signal to the uplink facility and uplinking the signal 
to the satellite.
    (ii) Rates for capacity reserved under paragraph (c)(1) of this 
section shall not exceed 50 percent of the direct costs as defined in 
this section.
    (iii) Nothing in this section shall be construed to prohibit DBS 
providers from negotiating rates with qualified programmers that are 
less than 50 percent of direct costs or from paying qualified 
programmers for the use of their programming.
    (iv) DBS providers shall reserve discrete channels and offer these 
to qualifying programmers at consistent times to fulfill the 
reservation requirement described in these rules.
    (6) Public file. (i) Each DBS provider shall keep and permit public 
inspection of a complete and orderly record of:
    (A) Quarterly measurements of channel capacity and yearly average 
calculations on which it bases its four percent reservation, as well as 
its response to any capacity changes;
    (B) A record of entities to whom noncommercial capacity is being 
provided, the amount of capacity being provided to each entity, the 
conditions under which it is being provided and the rates, if any, 
being paid by the entity;
    (C) A record of entities that have requested capacity, disposition 
of those requests and reasons for the disposition; and
    (D) A record of all requests for political advertising time and the 
disposition of those requests.
    (ii) All records required by this paragraph shall be placed in a 
file available to the public as soon as possible and shall be retained 
for a period of two years.
    (7) Effective date. DBS providers are required to make channel 
capacity available pursuant to paragraph (c) of this section upon the 
effective date. Programming provided pursuant to this rule must be 
available to the public no later than six months after the effective 
date.
* * * * * *
[FR Doc. 99-1346 Filed 2-5-99; 8:45 am]
BILLING CODE 6712-01-P