[Federal Register Volume 64, Number 249 (Wednesday, December 29, 1999)]
[Proposed Rules]
[Pages 72985-72992]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-33764]


=======================================================================
-----------------------------------------------------------------------

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 76

[CS Docket No. 99-363; FCC 99-406]


Implementation of the Satellite Home Viewer Improvement Act of 
1999: Retransmission Consent Issues.

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: This document proposes to implement certain aspects of the

[[Page 72986]]

Satellite Home Viewer Improvement Act of 1999, which was enacted on 
November 29, 1999. Among other things, the new legislation requires 
broadcasters, until the year 2006, to negotiate in good faith with 
satellite carriers and other multichannel video programming 
distributors (``MVPDs'') with respect to their retransmission of the 
broadcasters'' signals, and prohibits broadcasters from entering into 
exclusive retransmission agreements. We seek comment on these issues. 
This document also seeks comment on the adoption of implementing 
regulations relating to the exercise by television broadcast stations 
of the right to grant retransmission consent to satellite carriers and 
other MVPDs.

DATES: Comments by the public on the Exclusivity and Good Faith 
Negotiation Sections are due January 12, 2000; reply comments are due 
January 19, 2000. Comments on Retransmission Consent Election Process 
and Administrative Matters are due February 1, 2000; reply comments are 
due February 20, 2000. Written comments by the public on the proposed 
information collections relating to the entire Notice are due February 
1, 2000. Written comments must be submitted by the Office of Management 
and Budget (OMB) on the proposed information collection(s) on or before 
February 28, 2000.

ADDRESSES: Federal Communications Commission, 445 12th Street, SW, 
Washington, DC 20554. 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, 445 12th Street, SW, Washington, DC 20554, 
or via the Internet to [email protected], and to Virginia Huth, OMB Desk 
Officer, 10236 NEOB, 725--17th Street, N.W., Washington, DC 20503 or 
via the Internet to [email protected].

FOR FURTHER INFORMATION CONTACT: Steve Broeckaert at (202) 418-7200 or 
via internet at [email protected]. For additional information concerning 
the information collection(s) contained in this document, contact Judy 
Boley at 202-418-0214, or via the Internet at [email protected].

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Notice 
of Proposed Rulemaking (``NPRM''), FCC 99-406, adopted December 21, 
1999; released December 22, 1999. The full text of the Commission's 
NPRM is available for inspection and copying during normal business 
hours in the FCC Reference Center (Room CY-A257) at its headquarters, 
445 12th Street, SW Washington, D.C. 20554, or may be purchased from 
the Commission's copy contractor, International Transcription Service, 
Inc., (202) 857-3800, 1231 20th Street, NW, Washington, D.C. 20036, or 
may be reviewed via internet at http://www.fcc.gov/csb/
 Synopsis of the Notice of Proposed Rulemaking

I. Introduction

    1. In this Notice of Proposed Rulemaking (``Notice''), we seek 
comment on our implementation of certain aspects of the Satellite Home 
Viewer Improvement Act of 1999 (``1999 SHVIA''), which was enacted on 
November 29, 1999. This act authorizes satellite carriers to add more 
local and national broadcast programming to their offerings, and to 
make that programming available to subscribers who previously have been 
prohibited from receiving broadcast fare via satellite under compulsory 
licensing provisions of the copyright law. The legislation generally 
seeks to place satellite carriers on an equal footing with local cable 
operators when it comes to the availability of broadcast programming, 
and thus give consumers more and better choices in selecting a 
multichannel video program distributor (``MVPD''). We intend to 
implement the 1999 SHVIA aggressively to ensure that the pro-
competitive goals underlying this important legislation are realized.
    2. Among other things, the new legislation requires broadcasters, 
until 2006, to negotiate in good faith with satellite carriers and 
other MVPDs with respect to their retransmission of the broadcasters' 
signals, and prohibits broadcasters from entering into exclusive 
retransmission agreements. We are initiating, and plan to conclude, 
this rulemaking well ahead of our statutory deadlines for doing so 
because of the vital importance of these provisions of the 1999 SHVIA. 
Strict adherence by broadcasters to the good faith requirement is 
crucial if the statutory objectives are to be fulfilled. This Notice 
also seeks comment on the adoption of implementing regulations relating 
to the exercise by television broadcast stations of the right to grant 
retransmission consent. Retransmission consent is the process whereby 
television broadcasters negotiate and consent to carriage of their 
signals by MVPDs such as cable television operators and satellite 
carriers.

II. Retransmission Consent

    3. The Commission, in Implementation of the Cable Television 
Consumer Protection and Competition Act of 1992, Broadcast Signal 
Carriage Issues (``Broadcast Signal Carriage Order'') (58 FR 17350), 
implemented the retransmission consent provisions of the Cable 
Television Consumer Protection and Competition Act of 1992 (``1992 
Cable Act''). The 1992 Cable Act amended section 325 of the 
Communications Act of 1934 by adding provisions governing 
retransmission of broadcast signals by cable systems and other MVPDs. 
Section 325 of the 1992 Cable Act provided that television broadcast 
stations were required to make an election every three years whether to 
proceed under the mandatory cable signal carriage rules or to govern 
their relationship with cable operators or other MVPDs by electing 
retransmission consent. Congress indicated that the retransmission 
consent and must-carry rule election provisions adopted pursuant to the 
1992 Cable Act provide a model for implementation of the retransmission 
consent election provisions of the 1999 SHVIA.
Retransmission Consent and the Election Process
    4. Section 1009 of the 1999 SHVIA amends section 325(b)(1) and 
provides that no cable system or other MVPD shall transmit the signal 
of a broadcasting station, or any part thereof, except: (A) with the 
express authority of the originating station; (B) pursuant to section 
614, in the case of a station electing to assert the right to carriage 
by a cable operator; or (C) pursuant to section 338, in the case of a 
station electing to assert the right to carriage by a satellite 
carrier. Thereafter, the 1999 SHVIA provides that every three years 
television stations covered by 325(b) are required to elect 
retransmission consent pursuant to section 325 or must-carry pursuant 
to sections 614 or 338.
    5. Amended section 325(b)(2) provides five exceptions to the 
retransmission consent requirement of section 325(b)(1). The amendment 
provides that the retransmission consent requirement does not apply to: 
(1) noncommercial television broadcast stations; (2) retransmission, in 
certain circumstances, of the signal of a superstation outside the 
station's local market by a satellite carrier; (3) until December 31, 
2004, retransmission of signals of network stations directly to a home 
satellite antenna, if the subscriber receiving the signal is located in 
an area outside the local market of such station and resides in an 
unserved household; (4) retransmission, in certain circumstances, by a 
cable operator or other MVPD other than a satellite carrier of the 
signal of a superstation outside the station's local market; and (5) 
during

[[Page 72987]]

the six month period following the date of enactment of the 1999 SHVIA, 
the retransmission of the signal of a television broadcast station 
within the station's local market by a satellite carrier directly to 
its subscribers. In other words, subject to the limitations set forth 
therein, MVPDs, including satellite carriers, may freely transmit the 
signals of any of the broadcasters satisfying the criteria set forth in 
section 325(b)(2) without obtaining retransmission consent from such 
broadcasters.
    6. Section 325(b)(3)(C) directs the Commission, within 45 days 
after the date of enactment of the 1999 SHVIA, to commence a rulemaking 
to administer the limitations contained in section 325(b)(2). At the 
outset, we note that this Notice relates to retransmission consent 
only. The exercise of must carry rights by broadcasters with regard to 
satellite carriers does not commence until January 1, 2002 and will be 
addressed in a subsequent Notice and Rulemaking proceeding. As part of 
that proceeding, we will seek comment on any necessary or prudent 
revisions to our retransmission consent rules as a result of the 
initiation of satellite must carry.
    7. The Commission was directed by Congress to undertake a 
rulemaking to implement a substantially similar provision of the 1992 
Cable Act. In the Broadcast Signal Carriage Order, the Commission 
adopted such regulations. The rules implementing this provision are 
codified at 47 CFR 76.64. We seek comment on the appropriate manner to 
implement the provisions of amended section 325(b)(2). In particular, 
we seek comment on whether the amended provisions should be 
incorporated into existing 47 CFR 76.64, or whether some other 
regulatory framework or procedures would more appropriately implement 
amended section 325(b)(2). We also seek comment on any other issues 
relevant to the implementation of section 325(b)(2). In addition, we 
note that, although the statute is entitled the Satellite Home Viewer 
Improvement Act, some of the amendments Congress enacted to section 325 
appear to have general impact upon the retransmission consent 
provisions as applied to all MVPDs. We tentatively conclude that such 
was Congress' intent and seek comment on this tentative conclusion.
    8. Congress also amended section 325(b) by adding new paragraph 
(3)(C)(i), which requires the Commission to adopt regulations which 
shall ``establish election time periods that correspond with those 
regulations adopted under subparagraph (B) of this paragraph. * *  *'' 
Commission adopted the required regulations in the Broadcast Signal 
Carriage Order. The regulations are codified in 47 CFR 76.64.
    9. We seek comment on the appropriate manner to implement section 
325(b)(3)(C)(i). In particular we seek comment on whether, following an 
initial election period applicable only to satellite carriers, the 
Commission should merely incorporate the satellite carrier must carry-
retransmission consent election cycle into the Commission's 
regulations, employing the same rules and procedures the Commission 
adopted in response to the 1992 Cable Act. In the alternative, we seek 
comment on whether a different election cycle with different procedures 
is required to appropriately implement section 325(b)(3)(C)(i) and what 
the effect would be of having different procedures in the cable and 
satellite contexts. In this regard, we seek comment on any statutory, 
regulatory or technical differences between satellite carriers and 
other MVPDs that would justify a different election scheme. 47 CFR 
76.64(g) requires that broadcasters make consistent must carry-
retransmission consent elections where the franchise areas of cable 
systems overlap. We seek comment on the consistent election requirement 
and how it would be implemented, if at all, in the context of any 
election cycle in which satellite carriers participate. We also seek 
comment on any other issues relevant to the implementation of section 
325(b)(3)(C)(i).

III. Exclusivity and Good Faith Negotiation

A. Good Faith Negotiation Requirement
    10. Congress further amended section 325(b) of the Communications 
Act, requiring the Commission to adopt regulations that shall:

    * * * until January 1, 2006, prohibit a television broadcast 
station that provides retransmission consent from * * * failing to 
negotiate in good faith, and it shall not be a failure to negotiate 
in good faith if the television broadcast station enters into 
retransmission consent agreements containing different terms and 
conditions, including price terms, with different multichannel video 
programming distributors if such different terms and conditions are 
based on competitive marketplace considerations.

    The Joint Explanatory Statement of the Committee of Conference 
(``Conference Report'') does not explain or clarify the statutory 
language and merely states that:

    The regulations would, until January 1, 2006, prohibit a 
television broadcast station from * * * refusing to negotiate in 
good faith regarding retransmission consent agreements. A television 
station may generally offer different retransmission consent terms 
or conditions, including price terms, to different distributors. The 
[Commission] may determine that such different terms represent a 
failure to negotiate in good faith only if they are not based on 
competitive marketplace considerations.

    Accordingly, we seek comment on the good faith negotiation 
requirement of section 325(b)(3)(C).
    11. Congress did not expressly define the term ``good faith'' in 
the statutory language or the legislative history other than to 
instruct that retransmission consent agreements containing different 
terms and conditions, including price terms, with different video 
programming distributors do not reflect a failure to negotiate in good 
faith on behalf of the television broadcast station if such different 
terms and conditions are based on competitive marketplace conditions. 
While Congress did not expressly define what constitutes good faith 
under section 325(b)(3)(C), Congress has signaled its intention to 
impose some heightened duty of negotiation on broadcasters in the 
retransmission consent process. We seek to fulfill Congress' intent by 
adopting substantive and procedural rules that are clear and subject to 
swift and effective enforcement. We therefore seek comment on the 
criteria that should be employed to define ``good faith.'' We also seek 
comment on whether the duty of good faith negotiation applies equally 
to the MVPD negotiating a retransmission consent agreement. We seek 
comment on whether we need to explicitly define what constitutes good 
faith under section 325(b)(3)(C). The Uniform Commercial Code (``UCC'') 
defines the term ``good faith'' as ``honesty in fact in the conduct of 
the transaction concerned.'' In addition, Black's Law Dictionary 
defines good faith as ``an intangible and abstract quality with no 
technical meaning or statutory definition, and it encompasses, among 
other things, an honest belief, the absence of malice, and the absence 
of design to defraud or to seek an unconscionable advantage * * *'' We 
seek comment on whether to adopt either of these definitions, or some 
other explicit definition of the term good faith.
    12. We note that, in other contexts within both the Communications 
Act and other Federal laws, Congress has imposed a good faith 
negotiation requirement upon parties subject to a federal statutory 
scheme. For example, section 8(d) of the Taft-Hartley Act details the 
collective bargaining duty of

[[Page 72988]]

both employers and employees, providing that:

    To bargain collectively is the performance of the mutual 
obligation of the employer and the representative of the employees 
to meet at reasonable times and confer in good faith with respect to 
wages, hours, and other terms and conditions of employment * * * but 
such obligation does not compel either party to agree to a proposal 
or require the making of a concession.
    In determining good faith under section 8(d), the National Labor 
Relations Board (``NLRB'') and the courts apply two independent 
tests to see whether a party has acted in good faith during 
collective bargaining. In one test, the NLRB applies an objective 
set of criteria to determine whether a party has violated one or 
more enumerated per se violations of the duty to negotiate in good 
faith. In the second test, the NLRB subjectively examines the 
``totality of the circumstances'' evidencing a party's behavior 
during negotiations to determine whether the duty to negotiate in 
good faith has been violated. The objective test allows the NLRB to 
single out specific recurring or particularly damaging behavior. On 
the other hand, the subjective test allows the NLRB to punish 
behavior that would not by itself constitute a per se violation, but 
when examined along with other suspect behavior constitutes a 
violation of the duty to negotiate in good faith.

    13. Congress imposed a good faith negotiation requirement upon 
common carriers as part of the Telecommunications Act of 1996 (``1996 
Act''). Section 251(c)(1) of the Communications Act imposes on 
incumbent local exchange carriers (``ILECs''):

    The duty to negotiate in good faith in accordance with section 
252 the particular terms and conditions of agreements to fulfill the 
duties described in paragraphs (1) through (5) of subsection (b) and 
this subsection. The requesting telecommunications carrier also has 
the duty to negotiate in good faith the terms and conditions of such 
agreements.

    In implementing section 251(c)(1), the Commission adopted a two-
part test to determine good faith similar to that used by the NLRB. 
Reasoning that it would be futile to try to determine in advance every 
possible action that might be inconsistent with the duty to negotiate 
in good faith, the Commission found that it was appropriate to identify 
factors or practices that may be evidence of failure to negotiate in 
good faith, but that need to be considered in light of all relevant 
circumstances. The Commission adopted a list of eight specific actions 
or practices that, among other unenumerated actions or practices to be 
determined on a case-by-case basis, violate the section 251(c)(1) duty 
to negotiate in good faith.
    14. We seek comment on whether to adopt a two-part objective-
subjective test for good faith similar to that embraced by the NLRB and 
by the Commission pursuant to section 251 of the Communications Act. In 
this regard, we seek comment on specific actions or practices which 
would constitute a per se violation of the duty to negotiate in good 
faith in accordance with section 325(b)(3)(C). Establishing a specific 
list of per se requirements or prohibitions would lend clarity to, and 
thus expedite, the negotiation process and would do likewise with 
respect to our enforcement mechanism, where enforcement became 
necessary. In addition to any other actions or practices, we ask 
commenters to address whether it would be appropriate to include in any 
such list provisions similar to the per se violations set forth in 47 
CFR 51.301. Although the 47 CFR 51.301 process provides a basis for 
comment in this proceeding, we emphasize that the good faith standard 
of SHVIA is different in significant respects. We also seek comment on 
any other specific legal precedent upon which we should rely and any 
other regulatory approach that might appropriately implement the good 
faith negotiation requirement of section 325(b)(3)(C) of the 
Communications Act.
    15. Section 325(b)(3)(C) permits television broadcast stations to 
negotiate in good faith retransmission consent agreements with 
different MVPDs with different terms and conditions, including price 
terms, provided that such different terms and conditions are based upon 
``competitive marketplace considerations.'' We seek comment on what 
constitutes a competitive marketplace consideration. We seek to define 
the term as specifically as possible in this rulemaking, rather than to 
adopt a general standard to be fleshed out in subsequent adjudication. 
While we will resolve each case on its own merits, adding specification 
to our rules should add certainty to the negotiation process and reduce 
the number of cases presented to the Commission for adjudication. We 
note that the Commission has adopted non-discrimination standards in 
both the program access and open video system contexts. We seek comment 
on the relevance, if any, of these standards to what constitutes a 
``competitive marketplace consideration.'' We seek comment on the scope 
of the relevant marketplace to which Congress refers. In addition, we 
seek comment on any other factors or approaches to determining what 
constitutes competitive marketplace considerations under section 
325(b)(3)(C). In this regard, we note that the Commission has recently 
relaxed the television broadcast ownership rules, in certain 
circumstances, permitting companies to own two television broadcast 
stations within a given market. We seek comment on this development and 
its impact upon a broadcaster's duty to negotiate in good faith. For 
example, can companies with two broadcast stations within the same 
market negotiate a joint retransmission consent agreement or should 
they be required to negotiate separate arms-length retransmission 
consent agreements on behalf of each station?
    16. The Commission is aware that direct broadcast satellite 
providers have entered into retransmission consent agreements with 
television broadcast stations that predate enactment of section 
325(b)(3)(C). In addition, we note that we are also aware of agreements 
that have been executed since the enactment of the 1999 SHVIA. We seek 
comment on the impact on these agreements of the duty to negotiate in 
good faith.
B. Prohibition of Exclusive Retransmission Consent
    17. Section 325(b) of the Communications Act also directs the 
Commission to commence a rulemaking proceeding that shall:

until January 1, 2006, prohibit a television broadcast station that 
provides retransmission consent from engaging in exclusive contracts 
* * *

    The accompanying Conference Report contains no language to clarify 
or explain the prohibition, stating only:

    The regulations would, until January 1, 2006, prohibit a 
television broadcast station from entering into an exclusive 
retransmission consent agreement with a multichannel video 
programming distributor * * *

    18. The Commission established a similar prohibition in rulemakings 
following passage of the 1992 Cable Act. The 1992 Cable Act called upon 
the Commission to ``establish regulations to govern the exercise by 
television broadcast stations of the right to grant retransmission 
consent * * *'' In the Broadcast Signal Carriage Order, the Commission 
recognized that ``exclusivity can be an efficient form of distribution, 
but, in view of the concerns that led Congress to regulate program 
access and signal carriage arrangements, we believe that it is 
appropriate to extend the same nonexclusivity safeguards to non-cable 
multichannel distributors with respect to television broadcast signals, 
at least initially.'' The Commission established

[[Page 72989]]

the following prohibition on exclusive retransmission contracts:

    Exclusive retransmission consent agreements are prohibited. No 
television broadcast station shall make an agreement with one 
multichannel distributor for carriage, to the exclusion of other 
multichannel distributors.

    19. Section 325(b)(3)(C)(ii) requires us to ``until January 1, 
2006, prohibit a television broadcast station that provides 
retransmission consent from engaging in exclusive contracts.'' We seek 
comment on what activities would constitute ``engaging in'' exclusive 
retransmission agreements. We note that section 325(b)(3)(C)(ii) 
prohibits a broadcaster from ``engaging in'' exclusive retransmission 
consent agreements, while the Conference Report describes the 
prohibition of ``entering into'' exclusive retransmission consent 
agreements. While the phrase ``engaging in'' could be interpreted to 
suggest a currently effective exclusive relationship, it would appear 
to allow television broadcast stations to negotiate future exclusive 
contracts that would take effect on or after January 1, 2006. We seek 
comment on whether the statute allows negotiation and execution of such 
agreements before January 1, 2006. We also note the distinction between 
the phrases ``engaging in'' and ``entering into.'' While the statutory 
phrase ``engaging in'' seems to indicate not only the act of entering 
into a contract, but also the acts necessary to performance of a 
contract, the phrase ``entering into'' seems to indicate only the 
process of negotiating and formalizing a contract. We seek comment on 
the significance, if any, of the Conference Report's use of the phrase 
``entering into.''
    20. The Conference Report states that the prohibition applies to 
``an exclusive retransmission consent agreement with a multichannel 
video programming distributor'' until January 1, 2006. On its face, 
this provision would seem to sunset any prohibition on exclusive 
retransmission consent contracts for all multichannel video program 
distributors. Under this reading of the statute, the Commission's rule 
prohibiting exclusive retransmission consent agreements for cable 
operators would be deemed abrogated as of January 1, 2006. We seek 
comment on whether this was Congress' intent in enacting section 
325(b)(3)(C)(ii). In addition, we seek comment regarding what public 
interest concerns are involved in such a sunset. Section 
325(b)(3)(C)(ii) appears to have immediate effect. We seek comment on 
the existence of exclusive satellite carrier retransmission consent 
agreements that either predate the enactment of the 1999 SHVIA or under 
the Commission's rules implementing section 325(b)(3)(C)(ii). Assuming 
any such agreements exist, we seek comment on what, if anything, the 
Commission should do about them.
    21. We seek comment on what evidence should be required to 
demonstrate the existence of an exclusive contract in violation of 
section 325(b)(3)(C)(ii). Presumably, if companies are engaged in an 
exclusive contractual relationship, they are in violation of the 
statute's prohibitions. However, there is no mechanism for determining 
whether such exclusive contracts exist. As such, it may be difficult 
for a MVPD not party to an exclusive retransmission consent agreement 
to determine whether one exists. We seek comment on approaches to 
establishing the existence of an exclusive retransmission consent 
agreement.
C. Procedural Issues
    22. In directing the Commission to adopt regulations which, until 
January 1, 2006, prohibit exclusive carriage agreements and require 
good faith negotiation of retransmission consent agreements, Congress 
did not indicate what procedures the Commission should employ to 
enforce these provisions. We seek comment on what procedures the 
Commission should employ to enforce the provisions adopted pursuant to 
section 325(b)(3)(C). Our goal is swift and certain enforcement of the 
rules that Congress has directed us to adopt to further the pro-
competitive goals of the 1999 SHVIA. Commenters should state whether 
the same set of enforcement procedures should apply to both the 
exclusivity prohibition and the good faith negotiation requirement, or 
whether the Commission should adopt different procedures tailored to 
each prohibition. We seek comment regarding whether special relief 
procedures of the type found in 47 CFR 76.7 which provides an 
appropriate framework for addressing issues arising under section 
325(b)(3)(C). We seek comment on whether expedited procedures are 
necessary to the appropriate resolution of either exclusivity or good 
faith proceedings. We seek comment on whether there are circumstances 
in which the use of alternative dispute resolution services would 
assist in determining whether a television broadcast station negotiated 
in good faith as defined by section 325(b)(3)(C)(ii) and the 
Commission's rules adopted thereunder.
    23. We also seek comment on how the burden of proof should be 
allocated. In this regard, we seek comment on whether the burden should 
rest with the complaining party until it has made a prima facie showing 
and then shift to the defending party. Under this approach, we seek 
comment on what would constitute a prima facie showing sufficient to 
shift the burden to the defending party.
    24. Section 325(b)(3)(C) directs that the regulations adopted by 
the Commission prohibit exclusive carriage agreements and require good 
faith negotiation of retransmission consent agreements ``until January 
1, 2006.'' We seek comment on whether the Commission's rules regarding 
exclusive carriage agreements and good faith negotiation should 
automatically sunset on this date. We seek comment on whether any 
sunset of regulations should apply to television broadcast stations 
negotiations with all MVPDs or solely to negotiations with satellite 
programming distributors. We also seek comment on what, if anything, is 
the Commission's role with regard to these issues after January 1, 
2006.

IV. Administrative Matters

A. Initial Regulatory Flexibility Act Statement
    25. The initial regulatory flexibility analysis is attached to this 
order as Appendix A.
B. Ex Parte Rules
    26. This proceeding will be treated as a ``permit-but-disclose'' 
proceeding subject to the ``permit-but-disclose'' requirements under 47 
CFR 1.1206(b) of the rules. 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 47 CFR 1.1206(b).
C. Filing of Comments and Reply Comments
    27. Comments may be filed using the Commission's Electronic Comment 
Filing System (``ECFS'') or by filing

[[Page 72990]]

paper copies. Comments filed through the ECFS can be sent as an 
electronic file via the Internet to <http://www.fcc/e-file/ecfs.html>. 
Generally, only one copy of an electronic submission must be filed. If 
multiple docket or rulemaking numbers appear in the caption of this 
proceeding, however, commenters must transmit one electronic copy of 
the comments to each docket or rulemaking number referenced in the 
caption. In completing the transmittal screen, commenters should 
include their full name, Postal service mailing address, and the 
applicable docket or rulemaking number. Parties may also submit an 
electronic comment by Internet e-mail. To get filing instructions for 
e-mail comments, commenters should send an e-mail to [email protected], and 
should include the following words in the body of the message, ``get 
form[email protected] and to 
Virginia Huth, OMB Desk Officer, 10236 NEOB, 725 17th Street, N.W., 
Washington, DC 20503 or via the Internet to [email protected].
    29. Parties who choose to file by paper must file an original and 
four copies of each filing. If participants want each Commissioner to 
receive a personal copy of their comments, an original plus nine copies 
must be filed. If more than one docket or rulemaking number appears in 
the caption of this proceeding commenters must submit two additional 
copies for each additional docket or rulemaking number. All filings 
must be sent to the Commission's Secretary, Magalie Roman Salas, Office 
of the Secretary, Federal Communications Commission, 445 12th Street, 
S.W., Washington, D.C. 20554. The Cable Services Bureau contact for 
this proceeding is Steven Broeckaert at (202) 418-7200, TTY (202) 418-
7172, or at [email protected].
    30. Parties who choose to file by paper should also submit their 
comments on diskette. Parties should submit diskettes to Steven 
Broeckaert, Cable Services Bureau, 445 12th Street N.W., Room 4-A802, 
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 
Microsoft Word, or compatible software. The diskette should be 
accompanied by a cover letter and should be submitted in ``read only'' 
mode. The diskette should be clearly labeled with the party's name, 
proceeding (including the lead docket number in this case [CS Docket 
No. 99-363]), type of pleading (comments or reply comments), date of 
submission, and the name of the electronic file on the diskette. The 
label should also include the following phrase ``Disk Copy--Not an 
Original.'' Each diskette should contain only one party's pleadings, 
referable in a single electronic file. In addition, commenters must 
send diskette copies to the Commission's copy contractor, International 
Transcription Service, 1231 20th Street, N.W., Washington, D.C. 20036.

Paperwork Reduction Act

    This NPRM contains a proposed information collection. The 
Commission, as part of its continuing effort to reduce paperwork 
burdens, invites the general public and the Office of Management and 
Budget (OMB) to comment on the information collection(s) contained in 
this NPRM, as required by the Paperwork Reduction Act of 1995, Public 
Law 104-13. OMB notification of action is due 60 days from date of 
publication of this NPRM in the Federal Register. 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 Control Number: 3060-xxxx.
    Title: Implementation of the Satellite Home Viewer Improvement Act 
of 1999: Retransmission Consent Issues.
    Type of Review: New collection or revision of existing collection.
    Respondents: Business or other for-profit entities.
    Number of Respondents: Television broadcast licensees and MVPDs--
11,588.
    Estimated Time Per Response: 11.196 hours.
    Total Annual Burden: 1,297,492.
    Cost to Respondents: $13,000.
    Needs and Uses: Congress directed the Commission to adopt 
regulations related to retransmission consent pursuant to the changes 
outlined in the Satellite Home Viewer Improvement Act of 1999. 
Retransmission consent is the process whereby television broadcasters 
negotiate and consent to carriage of their signals by MVPDs. Television 
broadcasters will be required to make an election and make status 
information available for public review. The availability of such 
information will serve the purpose of informing the public of the 
method of broadcast signal carriage.

Federal Communications Commission.
William F. Caton,
Deputy Secretary.

Appendix A

Initial Regulatory Flexibility Act Analysis

    1. As required by the Regulatory Flexibility Act (``RFA''), the 
Commission has prepared this Initial Regulatory Flexibility Analysis 
(``IRFA'') of the possible significant economic impact on small 
entities by the possible policies and rules that would result from 
this Notice of Proposed Rulemaking (``Notice''). 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 Notice provided above in paragraph 31. The 
Commission will send a copy of the Notice, including this IRFA, to 
the Chief Counsel for Advocacy of the Small Business Administration. 
In addition, the Notice and IRFA (or summaries thereof) will be 
published in the Federal Register.
    2. Need for, and Objectives of, the Proposed Rules. Section 
325(b)(3)(C), of the Communications Act of 1934, as amended 
(``Act''), 47 U.S.C. Sec. 325, directed the Commission, within 45 
days of enactment of the Satellite Home Viewer Improvement Act of 
1999, ``to commence a rulemaking proceeding to revise the 
regulations governing the exercise by television broadcast stations 
of the right to grant retransmission consent.'' These provisions 
concern retransmission consent in connection with transmission of 
television broadcast station signals by multichannel video 
programming distributors (``MVPDs'').
    3. Legal Basis. The authority for the action proposed in this 
rulemaking is contained in sections 1, 4(i) and (j), 325, 338, and 
614 of the Communications Act of 1934, as amended, 47 U.S.C. 
Secs. 151, 154(i) and (j), 325, 338, and 534.
    4. Description and Estimate of the Number of Small Entities to 
Which the Proposed Rules Will Apply. 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.

[[Page 72991]]

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 may adopt as a result of the Notice will affect television 
station licensees, cable operators, and other MVPDs.
    5. Television Stations. The proposed rules and policies will 
apply to television broadcasting licensees. 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.
    6. 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.
    7. In addition to owners of operating television stations, any 
entity that 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.
    8. 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, 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 services individually 
to provide a more precise estimate of small entities.
    9. 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 emanating out of the 
Notice.
    10. 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. It should be further noted that recent 
industry estimates project that there will be a total 64,000,000 
subscribers and we have based our fee revenue estimates on that 
figure.
    11. Open Video System (``OVS''): The Commission has certified 
eleven OVS operators. Of these eleven, only two are providing 
service. Affiliates of Residential Communications Network, Inc. 
(``RCN'') received approval to operate OVS systems in New York City, 
Boston, Washington, D.C. and other areas. RCN has 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. 
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.
    12. Multichannel Multipoint Distribution Service (``MMDS''): The 
Commission refined the definition of ``small entity'' for the 
auction of MMDS as an entity that together with its affiliates has 
average gross annual revenues that are not more than $40 million for 
the proceeding three calendar years. This definition of a small 
entity in the context of the Commission's Report and Order 
concerning MMDS auctions that has been approved by the SBA.
    13. The Commission completed its MMDS auction in March, 1996 for 
authorizations in 493 basic trading areas (``BTAs''). Of 67 winning 
bidders, 61 qualified as small entities. Five bidders indicated that 
they were minority-owned and four winners indicated that they were 
women-owned businesses. MMDS is an especially competitive service, 
with approximately 1,573 previously authorized and proposed MMDS 
facilities. Information available to us indicates that no MDS 
facility generates revenue in excess of $11 million annually. We 
tentatively conclude that for purposes of this IRFA, there are 
approximately 1,634 small MMDS providers as defined by the SBA and 
the Commission's auction rules.
    14. DBS: There are four licenses of DBS services under Part 100 
of the Commission's Rules. Three of those licensees are currently 
operational. Two of the licensees which are operational have annual 
revenues which may be in excess of the threshold for a small 
business. The Commission, however, does not collect annual revenue 
data for DBS and, therefore, is unable to ascertain the number of 
small DBS licensees that could be impacted by these proposed rules. 
DBS service requires a great investment of capital for operation, 
and we acknowledge that there are entrants in this field that may 
not yet have generated $11 million in annual receipts, and therefore 
may be categorized as a small business, if independently owned and 
operated.
    15. HSD: The market for HSD service is difficult to quantify. 
Indeed, the service itself bears little resemblance to other MVPDs. 
HSD owners have access to more than 265 channels of programming 
placed on C-band satellites by programmers for receipt and 
distribution by MVPDs, of which 115 channels are scrambled and 
approximately 150 are unscrambled. HSD owners can watch unscrambled 
channels without paying a subscription fee. To receive scrambled 
channels, however, an HSD owner must purchase an integrated 
receiver-decoder from an equipment dealer and pay a subscription fee 
to an HSD programming package. Thus, HSD users include: (1) Viewers 
who subscribe to a packaged programming service, which affords them 
access to most of the same programming provided to subscribers of 
other MVPDs; (2) viewers who receive only non-subscription 
programming; and (3) viewers who receive satellite programming 
services illegally without subscribing. Because scrambled packages 
of programming are most specifically intended for retail consumers, 
these are the services most relevant to this discussion.
    16. According to the most recently available information, there 
are approximately 30 program packages nationwide offering packages 
of scrambled programming to retail consumers. These program packages 
provide subscriptions to approximately 2,314,900 subscribers 
nationwide. This is an average of about 77,163 subscribers per 
program package. This is substantially smaller than the 400,000 
subscribers used in the commission's definition of a small MSO. 
Furthermore, because this is an average, it is likely that some 
program packages may be substantially smaller.
    17. SMATVs: Industry sources estimate that approximately 5,200 
SMATV operators were providing service as of December, 1995. Other 
estimates indicate that SMATV operators serve approximately 1.05 
million

[[Page 72992]]

residential subscribers as of September, 1996. The ten largest SMATV 
operators together pass 815,740 units. If we assume that these SMATV 
operators serve 50% of the units passed, the ten largest SMATV 
operators serve approximately 40% of the total number of SMATV 
subscribers. Because these operators are not rate regulated, they 
are not required to file financial data with the Commission. 
Furthermore, we are not aware of any privately published financial 
information regarding these operators. Based on the estimated number 
of operators and the estimated number of units served by the largest 
ten SMATVs, we tentatively conclude that a substantial number of 
SMATV operators qualify as small entities.
    18. Description of Projected Reporting, Recordkeeping and other 
Compliance Requirements. In order to implement the Satellite Home 
Viewer Improvement Act of 1999, the Commission has proposed to add 
new rules and modify others. We have yet to determine whether to 
amend existing provisions of the Commission's rules, or to adopt 
some other regulatory framework or procedures concerning 
retransmission consent. There are certain compliance requirements 
involving the retransmission consent agreement process. Foremost is 
that entities most likely will have to participate in a negotiation 
process. There may be costs relating to the time and effort involved 
in discussions, in crafting, and possibly in achieving an agreement. 
In certain circumstances, there may be costs associated with hiring 
accounting or engineering personnel, as there may be instances where 
entities may have to provide detailed information relating to such 
aspects of their particular operations. Conversely, research may 
have to be conducted and information may have to be obtained on 
other entities' operations. All such data may be key to a 
negotiation and a retransmission consent agreement.
    19. In terms of recordkeeping, entities most likely will have to 
keep a record of their election status and entities may be required 
to maintain such information within their business environment and 
may also have to file such information with the Commission. As 
discussed in the Notice, however, it is unclear what records or 
recordkeeping would be required of entities relating to the good 
faith negotiation and exclusive carriage aspects of a retransmission 
consent agreement. At this time, small businesses might not be 
impacted differently, but we seek comment on these and the above 
matters.
    20. Steps Taken To Minimize Significant Impact on Small 
Entities, and Significant Alternatives Considered. The RFA requires 
an agency to describe any significant alternatives that it has 
considered in reaching its proposed approach, which may include the 
following four alternatives: (1) The establishment of differing 
compliance or reporting requirements or timetables that take into 
account the resources available to small entities; (2) the 
clarification, consolidation, or simplification of compliance or 
reporting requirements under the rule for small entities; (3) the 
use of performance, rather than design, standards; and (4) an 
exemption from coverage of the rule, or any part thereof, for small 
entities.
    21. As indicated above, the Notice proposes to implement certain 
aspects of the Satellite Home Viewer Improvement Act of 1999. Among 
other things, the new legislation requires television broadcasters, 
until 2006, to negotiate in good faith with satellite carriers and 
other multichannel video programming distributors (``MVPDs'') with 
respect to their retransmission of the broadcasters' signals, and 
prohibits broadcasters from entering into exclusive retransmission 
agreements. This document also discusses implementing regulations 
relating to the exercise by television broadcast stations of the 
right to grant retransmission consent to satellite carriers and 
other MVPDs.
    22. This legislation applies to small entities and large 
entities equally. However, in terms of the election process, in the 
Notice we specifically ask whether there are any statutory, 
regulatory, or technical differences between any of the MVPDs that 
would justify different election schemes. The Commission 
acknowledges that consideration should be given to possible 
differences in services. There may be established a different 
election process timetable or compliance requirement, and also 
possibly a different filing requirement, among the different MVPDs. 
In the Notice, however, the possible distinction in treatment was 
not related to the size of the entity. At this time, small entities 
are not treated differently and might not be impacted differently, 
but we seek comment.
    23. Federal Rules Which Duplicate, Overlap, or Conflict with the 
Commission's Proposals. None.

[FR Doc. 99-33764 Filed 12-28-99; 8:45 am]
BILLING CODE 6712-01-P