[Federal Register Volume 66, Number 58 (Monday, March 26, 2001)]
[Proposed Rules]
[Pages 16524-16532]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-7324]



[[Page 16523]]

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Part II





Federal Communications Commission





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47 CFR Part 76



Carriage of Digital Television Broadcast Signals; Proposed Rule and 
Final Rule

  Federal Register / Vol. 66, No. 58 / Monday, March 26, 2001 / 
Proposed Rules  

[[Page 16524]]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 76

[CS Docket No. 98-120, CS Docket No. 00-96; CS Docket No. 00-2, FCC 01-
22]


Carriage of Digital Television Broadcast Signals

AGENCY: Federal Communications Commission.

ACTION: Further notice of proposed rulemaking.

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SUMMARY: This document requests information concerning the issue of 
mandatory dual carriage. Specifically, the document seeks information 
to determine whether a cable operator will have the channel capacity to 
carry the digital television signal of a station, in addition to the 
analog signal of that same station, and without displacing other 
programming or services; whether market forces, through retransmission 
consent, will provide cable subscribers access to digital television 
signals and television stations' access to carriage on cable systems; 
and how the resolution of the carriage issues would impact the digital 
transition process.

DATES: Comments are due May 10, 2001. Replies are due June 25, 2001. 
Written comments by the public on the proposed information collections 
are due May 25, 2001. Written comments must be submitted by the Office 
of Management and Budget (OMB) on the proposed information collections 
on or before May 25, 2001.

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 20544, 
or via the Internet to [email protected], and to Edward Springer, OMB Desk 
Officer, 10236 NEOB, 725--17th Street, NW., Washington, DC 20503 or via 
the Internet to [email protected].

FOR FURTHER INFORMATION CONTACT: Eloise Gore at (202) 418-7200 or via 
the 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 
Further Notice of Proposed Rulemaking (FNPRM), FCC 01-22, adopted 
January 18, 2001; released January 23, 2001. The full text of the 
Commission's FNPRM 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, DC 20554, or may be 
purchased from the Commission's copy contractor, International 
Transcription Service, Inc., (202) 857-3800, 1231 20th Street, NW., 
Washington, DC 20036, or may be reviewed via internet at http://www.fcc.gov/csb/. This FNPRM contains proposed information 
collection(s) subject to the Paperwork Reduction Act of 1995 (PRA), 
Public Law 104-13. It will be submitted to the Office of Management and 
Budget (OMB) for review under section 3507(d) of the PRA. OMB, the 
general public, and other Federal agencies are invited to comment on 
the proposed information collection(s) contained in this proceeding.

Further Notice of Proposed Rulemaking

Synopsis of the Further Notice of Proposed Rulemaking

I. Background

    1. For background on this FNPRM, see final rule published elsewhere 
in this issue of the Federal Register. To ensure that the Commission 
has a sufficient body of evidence on which to evaluate the issue of 
dual carriage, the Commission finds it necessary to issue this FNPRM to 
address several critical questions at the center of the carriage debate 
including, inter alia; whether a cable operator will have the channel 
capacity to carry the digital television signal of a station, in 
addition to the analog signal of that same station, and without 
displacing other programming or services; whether market forces, 
through retransmission consent, will provide cable subscribers access 
to digital television signals and television stations access to 
carriage on cable systems and how the resolution of the carriage issues 
would impact the digital transition process. The Commission has also 
sent out a channel capacity and retransmission consent survey to 16 
cable operators in a separately issued item. The responses from the 
survey will be incorporated into the Second Report and Order in this 
proceeding. The FNPRM also raises questions concerning the 
applicability of the rules and policies adopted in the Order to 
satellite carriers under the Satellite Home Viewer Improvement Act of 
1999 (``SHVIA''). The Commission needs further information on a range 
of issues, including cable system channel capacity and digital 
retransmission consent agreements to build a substantial record upon 
which to develop the best policy for the various entities impacted in 
this area.
    2. In the first Report and Order, the Commission tentatively 
concluded that a dual carriage requirement may burden cable operators' 
First Amendment interests more than is necessary to further the 
important governmental interests they would promote. However, in this 
FNPRM, we request further information on a number of matters, 
including, but not limited to the need for dual carriage for a 
successful transition to digital television and return of the analog 
spectrum; cable system channel capacity; and digital retransmission 
consent. In addition, we ask whether cable operators should be allowed 
to increase subscriber rates for each 6 MHz of capacity devoted to the 
carriage of digital broadcast signals.
    3. To date in this proceeding, we have received comments arguing 
that the statute requires dual carriage or that the statute forbids it. 
It is our view, having deliberated extensively on this question, that 
neither of these views prevail. Based on the record currently before 
us, we believe that the statute neither compels dual carriage; nor 
prohibits it. It is precisely the ambiguity of the statute that has 
driven this policy debate. In order to weigh the constitutional 
questions inherent in a statutory construction that would permit dual 
carriage, we believe it is appropriate and necessary to more fully 
develop the record in this regard. Because any decision requiring dual 
carriage would likely be subject to a constitutional challenge, and 
because an administrative agency can consider potential constitutional 
infirmities in deciding between possible interpretations of a statute, 
we are compelled to further develop the record on the impact dual 
carriage would have on broadcast stations, cable operators and cable 
programmers, as well as consumers. We believe that more evidence is 
necessary because the Supreme Court sustained the Act's analog 
broadcast signal carriage requirements against a First Amendment 
challenge principally because Congress and the broadcasting industry 
built a substantial record of the harm to television stations in the 
absence of mandatory analog carriage rules. We are also mindful that 
the record must substantially reflect how Commission action in this 
proceeding will serve the three identified governmental interests 
supporting mandatory carriage in Turner, which are the preservation of 
the benefits of free over-the-air television; the promotion of

[[Page 16525]]

the widespread dissemination of information from a multiplicity of 
sources; and the promotion of fair competition.
    4. We also recognize that the intermediate scrutiny factors 
established in U.S. v. O'Brien and applied in the Turner cases, for 
determining whether a content-neutral rule or regulation violates the 
Constitution, must also be satisfied here. A content-neutral regulation 
will be upheld if: (1) It furthers an important or substantial 
government interest; (2) the government interest is unrelated to the 
suppression of free expression; and (3) the incidental restriction on 
alleged First Amendment freedoms is no greater than is essential to the 
furtherance of that interest. In sum, under the O'Brien test, a 
regulation must not burden substantially more speech than is necessary 
to further the government's legitimate interests. Thus, a dual carriage 
rule must satisfy the Turner factors and meet the O'Brien test. We 
invite commenters that support a dual carriage requirement to provide 
specific empirical information to demonstrate how mandatory dual 
carriage would satisfy the requirements of both Turner and O'Brien. We 
request that commenters that have previously submitted legal arguments 
on these points in response to the FNPRM, not repeat these arguments.
    5. In the case of dual carriage, we believe that the record is 
insufficient to demonstrate the degree of harm broadcasters will suffer 
without the carriage of both signals. In addition, we must carefully 
consider the burden such a requirement would impose on the cable 
operator. We seek information on digital retransmission consent 
agreements to determine the degree to which cable operators are 
carrying digital signals on a voluntary basis. If broadcasters are 
being carried by agreement, then they may not be harmed in the absence 
of a digital carriage requirement. In addition, First Amendment 
precedent requires that we tailor the carriage requirement to avoid 
burdening more speech than necessary. In this regard, the impact of 
mandatory carriage on cable systems was relevant in Turner. We 
therefore seek substantive information to determine cable system 
channel capacity.
    6. Concurrently with this FNPRM, we are sending out a survey to 
cable operators that asks specific questions concerning retransmission 
consent as well as cable system channel capacity. We believe that this 
form of inquiry is necessary because we need particularized system 
information that can only be obtained through a survey. The answers to 
this survey will be used to supplement the general responses we receive 
as a result of the questions we ask in the FNPRM. The cable operators' 
answers to the survey questions will be included in the record and 
available for public comment. We expect that the information provided 
by the cable operators will provide further insight regarding the 
constitutional questions inherent in the dual carriage discussion.

II. Issues

A. Digital Television Transition and Mandatory Carriage

    7. Both Congress and the Commission have worked to develop a 
digital television transition that accounts for the needs of the 
broadcast industry, while recognizing the government's interest in the 
prompt return of the analog broadcast spectrum. The Commission's stated 
expectation when the DTV rules were adopted was that analog television 
broadcasting would cease no later than the end of 2006. With passage of 
the Balanced Budget Act of 1997, Congress codified the December 31, 
2006 analog television termination date, but also adopted certain 
exceptions to it in section 309(j)(14) of the Communications Act which 
provides:
    (A) Limitations on terms of terrestrial television broadcast 
licenses.--A television broadcast license that authorizes analog 
television service may not be renewed to authorize such service for a 
period that extends beyond December 31, 2006.
    (B) Extension.--The Commission shall extend the date described in 
subparagraph (A) for any station that requests such extension in any 
television market if the Commission finds that--
    (i) one or more of the stations in such market that are licensed to 
or affiliated with one of the four largest national television networks 
are not broadcasting a digital television service signal, and the 
Commission finds that each such station has exercised due diligence and 
satisfies the conditions for an extension of the Commission's 
applicable construction deadlines for digital television service in 
that market;
    (ii) digital-to-analog converter technology is not generally 
available in such market; or
    (iii) in any market in which an extension is not available under 
clause (i) or (ii), 15 percent or more of the television households in 
such market--
    (I) do not subscribe to a multichannel video programming 
distributor (as defined in section 522 of this title) that carries one 
of the digital television service programming channels of each of the 
television stations broadcasting such a channel in such market; and
    (II) do not have either--
    (a) at least one television receiver capable of receiving the 
digital television service signals of the television stations licensed 
in such market; or
    (b) at least one television receiver of analog television service 
signals equipped with digital-to-analog converter technology capable of 
receiving the digital television service signals of the television 
stations licensed in such market.
    8. The Notice of Proposed Rule Making (``NPRM'') 63 FR 42330, Aug 
7,1998 in this proceeding discussed must carry rules for possible 
application during a temporary transitional period prior to the 
cessation of analog broadcasting. Because of the nature of the 
exceptions set forth in the Balanced Budget Act of 1997, questions have 
arisen as to how long the transition period might last either with or 
without a dual carriage requirement. Some have expressed doubt that the 
return of the analog broadcast spectrum will be completed by the end of 
2006, regardless of whether there is a dual carriage requirement. 
Others have argued that dual carriage is necessary to enable 
broadcasters to meet the statutory tests and complete the transition on 
time. None of the participants in this proceeding, however, have 
provided a concise plan for how and when the transition will be 
completed. As such, a number of questions concerning the transition 
have arisen. For example, under what circumstances and statutory 
interpretations will the statutory criteria for the auction of 
recaptured broadcast television spectrum be satisfied? Will the analog 
television license be returned when 85% or more of the television 
households in a market either subscribe to an MVPD that carries all of 
the digital broadcast stations in the market or have a DTV receiver or 
digital downconverter to receive the digital signal over the air? Or is 
there a different interpretation of the statutory exceptions? Will the 
spectrum be returned if some of the MVPD subscribers are unable to 
receive and view the DTV programming notwithstanding that it is carried 
by the MVPD because they do not have a digital receiver or converter? 
How does the growth of competitive non-cable MVPD's change the 
analysis? Alternatively, would the analog licenses be returned in a 
market in which 85% of the television households had a DTV receiver or 
digital-to-analog converter, but only 30% subscribed to a MVPD

[[Page 16526]]

that carried all of the digital television stations in the market?
    9. Understanding how the affected parties expect to complete the 
transition, and exactly how the law applies, substantially affects the 
Commission's policy approach to the digital television transition as 
well as to the overall issue of cable carriage. A mandatory dual 
carriage requirement, for example, would place a more significant and 
lasting burden on a cable operator's constitutional rights if in fact 
there will be a substantially extended transition to a digital-only 
environment. We seek comment on these transition issues and ask for 
more specific comment on when the analog spectrum is likely to be 
returned under both mandatory and non-mandatory dual carriage 
scenarios. We also seek comment on whether and how the dual carriage 
burden on cable operators may be lessened by using a transitional 
approach limiting dual carriage to a specified period of time. For 
example, in this regard, how would a three year limit on dual carriage 
affect the constitutional question?
    10. There are several other issues concerning the rollout of 
digital broadcast television that still remain. For example, a number 
of digital television licensees in markets 11-30, that were required to 
begin digital broadcasting on November 1, 1999 have asked for 
extensions of time to build out their facilities. Such petitions assert 
that these extensions may have been necessary because local zoning 
requirements have hindered the construction of digital broadcast towers 
or because there are construction and equipment delays. Whatever the 
case may be, it is difficult to proceed with the dual carriage question 
if it remains unclear how and when digital signals will become 
available in any particular market. Because an operator is only 
required to carry broadcast signals up to one-third of its channel 
capacity, to rule on the dual carriage issue now may result in on-air 
digital signals being carried, at the expense of those yet-to-air 
digital signals that may not be carried because the operator's one-
third cap has been met and the operator is reluctant to disrupt viewers 
by changing signals carried. In this regard, we ask whether we should 
wait for all or a more significant number of broadcasters to build out 
their facilities before considering a dual carriage rule to avoid this 
potential disruption.
    11. We also note that there appears to be a limited amount of 
original digital programming being broadcast. This calls into question 
the practicality of imposing a dual carriage rule at this time. Cable 
subscribers would not immediately benefit from a dual carriage rule if 
there is little to view but duplicative material. In addition, there is 
a risk that if carriage were mandated, cable subscribers would lose 
existing cable programming services that would be replaced on the 
channel line-up by digital television signals with less programming. It 
is difficult to decide definitional issues, such as what would be 
considered a ``duplicative signal'' without more information. We ask 
broadcasters to describe what part of their planned digital programming 
streams will be devoted to simulcast of their analog programming and 
what parts are, or will be, used for other programming. We ask 
broadcasters to provide us with information on the exact amount of 
digital programming, on a weekly basis, being aired in a high 
definition format and the exact amount of original digital programming. 
We also seek comment on the number of hours, in an average day, that a 
broadcaster currently airs digital television, and specifically high 
definition digital programming.
    12. We also seek further comment on issues relevant to the carriage 
of digital signals by small operators. As described in the First Report 
and Order, the SCBA expressed concern that allowing broadcasters to tie 
analog and digital retransmission consent could have a negative 
financial effect on small cable operators. The current record does not 
contain adequate evidence on this point. We specifically request 
information on small cable operators' equipment costs to deliver 
digital signals to subscribers and experiences thus far with 
retransmission consent negotiations involving both analog and digital 
signals.
    13. Program-related. In addition, as discussed in the final rule 
published elsewhere in this issue of the Federal Register, cable 
operators are required to carry ``program-related'' material as part of 
the broadcaster's primary video. We seek comment on the proper scope of 
program-related in the digital context. As noted in the Report and 
Order, we believe that digital television offers the ability to enhance 
video programming in a number of ways. For example, a digital 
television broadcast of a sporting event could include multiple camera 
angles from which the viewer may select. In addition, a digital 
broadcast could enable viewers to select other embedded information 
such as sports statistics to complement a sports broadcast or detailed 
financial information to complement a financial news broadcast. We seek 
comment on whether such information or interactive enhancements like 
playing along with a game or chatting during a TV program should 
qualify as ``program related.'' What are broadcasters' plans in this 
regard? What are the technical requirements for broadcasting, receiving 
and viewing this programming material? Would they be viewed on a screen 
simultaneously or is it necessary to change channels or select a 
different view on the same screen? What is the proper relationship 
between ``program-related'' and ``ancillary or supplementary'' in terms 
of the statutory objectives? To what extent, if any, is ``program-
related'' limited by ancillary or supplementary? We also note that the 
statutory language that describes ``program-related'' in the context of 
NCE stations differs in some respects from the language regarding 
program-related content for commercial stations. Specifically, section 
615(g)(1), establishing the content of NCE stations to be carried by 
cable operators, tracks the language of section 614(b)(3)(A), the 
provision for commercial broadcasters, except that the NCE provision 
goes on to include in the definition of ``program related'' material: 
``that may be necessary for receipt of programming by handicapped 
persons or for educational or language purposes.'' In light of the 
foregoing, we seek comment on how to define ``program related'' 
material for NCE stations. How, if at all, should it differ from 
``program-related'' in the context of commercial stations? For example, 
some commenters have argued that if an NCE station multicasts 
programming for ``educational'' purposes, the cable operator should 
carry all such program streams. We seek comment on whether these 
``educational'' program streams should qualify as ``program related'' 
in the context of must carry, particularly in light of the language in 
615(g)(1) noted above.

B. Channel Capacity

    14. In the NPRM, we sought quantified estimates and forecasts of 
available usable channel capacity. We asked whether there were 
differences in channel capacity that are based on franchise 
requirements, patterns of ownership, geographic location, or other 
factors. We also inquired about the average number of channels 
dedicated to various categories of programming, such as pay-per-view, 
leased access, local and non-local broadcast channels, and others that 
would assist us in understanding the degree to which capacity is, and 
will be, available over the next several years. We sought system 
upgrade information. For example, we asked for comment on

[[Page 16527]]

whether 750 MHz is the proper cutoff for defining an upgraded system or 
should a lower number, such as 450 MHz, be used instead. We also asked 
commenters to provide information on the expected growth rate for cable 
channel capacity between now and 2003. In addition, we sought comment 
about cable programmer plans to convert to digital and what additional 
carriage needs these programmers would have in the future. These 
questions were posed to generate a record on available channel capacity 
for digital carriage purposes and help the Commission determine the 
speech burden on cable operators under the First Amendment and the 
Turner cases.
    15. We received widely divergent information concerning cable 
channel capacity availability. For example, NAB asserts that current 
channel capacity is substantial and a significant number of channels 
are unutilized, particularly in large markets where the Commission has 
required the construction of the first DTV stations. NCTA disputes this 
claim and asserts that what matters is not whether a cable system has 
adequate capacity to add new digital must carry signals during the 
transition, but whether a significant number of actual systems serving 
a significant number of customers will be forced to remove services to 
accommodate both analog and digital must carry signals. We find the 
comments and analyses provided by the commenters are useful for 
establishing the framework for this inquiry. However, a number of the 
commenters rely on data sources that are either incomplete, or draw 
upon an unrepresentative sample of cable systems. Moreover, some of the 
data are outdated for future channel capacity estimates. For all of 
these reasons, as well as the fact that accurate capacity information 
is essential for a well articulated and constitutionally sustainable 
dual carriage decision under O'Brien and Turner, we seek further 
information on current capacity and forecasts for capacity growth in 
the future.
    16. We first reiterate the questions we posed in the NPRM, as 
summarized elsewhere in this FNPRM. We then note that the NCTA, on its 
website, has stated the following: ``It is estimated that 82% of all 
cable homes now are passed by at least 550 MHz plant--with 65% of cable 
homes passed by systems with 750 MHz or higher, positioning cable to 
compete more effectively with DBS companies, who typically offer more 
than 100 channels.'' While this information is more recent than the 
data submitted by the NAB, it is still tabulated from reports in 1999. 
Thus, we ask for any information on system upgrades current through 
January, 2001. We specifically seek comment on the number of cable 
systems nationwide, on a percentage basis, that are now, or soon will 
be, upgraded to 750 MHz. With regard to these kinds of systems, we ask 
how many channels are now, or soon will be available for video 
programming. We seek comment on whether it is possible for 750 MHz 
systems to be channel-locked and have no capacity to carry additional 
digital broadcast signals. We seek comment on cable industry plans to 
build systems of greater capacity in the future.
    17. We also seek comment on techniques that conserve or recapture 
cable channel capacity. Data on this matter is important because it may 
belie the cable industry's claim that there is, or will be, no channel 
capacity to add more programming. For example, an operator that uses 
256 QAM will have 40% more capacity than an operator that does not. 
With this noted, we ask how many cable systems are now, or soon will 
be, using 256 QAM. In addition, we ask if there are certain set top 
boxes or related software that can further increase capacity for 
systems using 256 QAM. Some operators are also using specialized 
techniques that can comb packages of digital cable programming sent by 
digital compression operations such as Headend in the Sky (``HITS'') or 
other digital compression program delivery services. Using such 
filtering technology, an operator can select the digital cable 
programming it wants to carry and discard that programming it prefers 
not to carry. Through this process, an operator can save as much as 10 
MHz of cable channel capacity. We seek comment on how many operators 
are currently using combining technology to recapture spectrum. A third 
technique used by some cable operators to save channel capacity is to 
shift certain services from an analog tier to a digital tier where such 
programming will be digitally compressed. By doing this, an operator 
could free up additional analog space for other uses. We seek comment 
on this technique and ask how many operators are now exercising this 
option.
    18. In its comments, New World Paradigm (``NWP'') states that the 
Commission should adopt digital carriage rules that allow or motivate 
cable operators to deliver services from video servers through the 
internet's channel addressing methodology. According to NWP, channel 
addressing uses existing capacity very efficiently and asserts that 
adoption of the internet's channel addressing method would serve the 
public interest because it expands cable channel capacity to 
accommodate an infinite amount of services. NWP believes that accessing 
programming residing in a video server, and then sending that specific 
programming to the subscriber, is a far more efficient way of using 
channel capacity than shipping all channels to the subscriber at the 
same time. NWP states that a channel should be defined as ``any 
internet addressable video service engineered for the electromagnetic 
spectrum carried solely in wired networks from the producer of the 
video service and delivered through a video server and made available 
for and to subscribers of a cable system.'' NWP argues that expanding 
the definition of ``cable channel'' would position cable to be a 
communications medium merging voice, internet and video services into a 
characterless digital data stream. We seek comment on NWP's proposal, 
in general, and ask whether it is technically feasible for cable 
operators to cache broadcast programming in this manner. We also ask 
what statutory or rule changes would be necessary to accomplish what 
NWP proposes. Finally, we ask what copyright issues may arise in this 
context, how this approach would affect the advertising rate structure 
for broadcasters, and whether cable operators are contractually or 
otherwise restricted from implementing a video server model of 
distributing local broadcast programming.

C. Voluntary Carriage Agreements

    19. In the NPRM, we recognized that most commercial broadcast 
stations, at least 80% in 1993 for example, were carried by cable 
systems through retransmission consent and asked whether this general 
pattern would be repeated with respect to digital broadcast television 
signals during the transition period. We stated that the broadcasters 
that are most likely to elect must carry are those stations that are 
not affiliated with the four major networks. Many of these stations 
will not commence digital operations until 2002 when they are required 
to do so under the Commission's rules. We sought comment on these 
general suppositions and on the effect these market factors would have 
on the need to implement a digital carriage requirement. We also asked 
what effect not setting rules would have on television stations not 
affiliated with the top four networks that want to commence digital 
broadcasting before 2002. We sought comment on how retransmission 
consent, rather than mandatory carriage,

[[Page 16528]]

could speed the transition to digital television.
    20. According to the cable commenters, several digital 
retransmission consent agreements have been reached. For example, AT&T 
Broadband has arrangements with NBC and FOX to carry their owned and 
operated stations' digital signals for the next several years. Time 
Warner states it has digital carriage arrangements with all four major 
networks, some network affiliate owners, as well as a group of public 
broadcasters. While we are encouraged that some broadcasters, such as 
those noted, have been able to obtain cable carriage through 
retransmission consent agreements, outstanding questions remain 
concerning the scope and pace of the retransmission consent process. 
For example, MSTV reports that cable operators have negotiated digital 
carriage with network owned and operated stations but have refused to 
discuss digital retransmission consent with several network affiliated 
station groups. We seek comment on whether this statement is correct. 
If so, why haven't cable operators entered into negotiations with 
network affiliated broadcast groups?
    21. With regard to the retransmission consent deals already 
concluded, we seek comment on the scope of such agreements. For 
example, while Time Warner has deals with CBS, ABC, NBC, FOX, and 
several PBS affiliates, we seek comment on how many digital television 
signals are now available for purchase by subscribers. Moreover, on 
what tier of service are these signals being carried? We also ask 
whether such signals are being carried in 8 VSB or in QAM. What 
television markets do these deals affect? And in those markets, what 
percentage of cable subscribers are served by a Time Warner system? And 
of those systems, do the deals apply only to upgraded 750 MHz systems 
or all systems regardless of capacity? At first glance, Time Warner's 
efforts seem to satisfy our goal of providing cable subscribers' access 
to digital television signals on a voluntary basis, but if the 
agreements only concern certain areas and certain systems, it would 
call into question the extent to which the marketplace is actually 
working. We pose the same set of questions and concerns to the other 
publicly announced arrangements involving other cable operators, such 
as AT&T and its respective broadcast station partners.
    22. We also note that in August of 1999, the Commission adopted new 
ownership rules that affect the number of television stations in any 
given market that can be owned or controlled by a single broadcaster. 
We seek comment on the effect of these ownership changes on carriage of 
broadcast signals and ask how the potential changes in the broadcast 
industry will affect the retransmission consent process.

D. Tier Placement

    23. As discussed, section 623(b)(7)(A) of the Act requires that the 
basic tier on a rate regulated system include all signals carried to 
fulfill the must carry requirements of sections 614 and 615 and ``any 
signal of any television broadcast station that is provided by the 
cable operator to any subscriber * * *'' We believe that it would 
facilitate the digital transition to permit cable operators that are 
carrying a broadcast station's analog signal on the basic tier to carry 
that broadcast station's digital signal on a digital tier pursuant to 
retransmission consent. We seek comment on permitting such carriage and 
whether it would encourage more cable operators to voluntarily carry a 
broadcaster's digital signal. We believe that such an approach, which 
is necessarily limited to the duration of the transition in a given 
market, is consistent with the flexibility given the Commission by 
section 614(b)(4)(B) to prescribe rules for the transition. We seek 
comment on this interpretation. We also seek comment on limiting this 
approach to those situations in which the digital programming is a 
simulcast of the analog programming available on the basic tier. We 
reiterate that, as discussed, if a cable operator is carrying only the 
broadcaster's digital signal, and not the analog signal, the digital 
signal must be available to subscribers on a basic tier to which 
subscription is required for access to any other tier.

E. Per Channel Rate Adjustments

    24. We recognize that cable operators will be adding digital 
broadcast services to their channel line-ups in the years ahead. While 
the addition of such channels implicates our rate regulation rules, we 
received no comment on what impact this occurrence will have on our per 
channel rate adjustment methodology. Thus, in addition to providing for 
the direct recovery of costs associated with adding digital broadcast 
programming, as explained, we now propose to permit cable operators to 
adjust BST rates to reflect the addition of channels of digital 
broadcast programming, if the operator decides to place such 
programming on that tier. When developing rate regulations pursuant to 
the 1992 Cable Act, the Commission recognized that pricing incentives 
were important to encouraging voluntary increases in the number of 
channels of programming offered to cable subscribers. The Commission 
also recognized that, even in a competitive environment, service 
increases would result in higher prices, just as service decreases 
should result in lower prices. The Commission developed a table of per 
channel rate adjustment factors based on an econometric model of the 
pricing behavior of systems facing competition. The amount of the 
permitted adjustment varied with the number of channels offered on the 
system, the permitted adjustment per channel decreasing as the number 
of channels increases. After gaining experience with rate regulation, 
the Commission concluded that optional additional incentives should be 
available to stimulate the addition of new services to the CPST or to 
the BST when it was the only tier of service offered. The Commission 
established a per channel adjustment factor of up to 20 cents per 
channel exclusive of programming costs for channels added to CPSTs , 
subject to a cap of $1.20 on rate increases through December 31, 1996 
and $1.40 through December 31, 1997. An additional capped amount was 
allowed for license fees associated with the channels. Operators were 
required to offset any revenues received from a channel from the 
programming costs and per-channel adjustment associated with the 
channel. The Commission limited the per channel adjustment incentive to 
the CPST to maximize subscriber choice where cable operators could 
choose between the BST and the CPST when selecting a tier for a new 
nonbroadcast service and also to avoid increasing the complexity of the 
regulatory task faced by local regulatory authorities. The Commission 
also recognized that the base cost for a tier should be adjusted under 
some circumstances to reflect the reallocation of system costs to 
programming tiers when channels are moved between tiers.
    25. We believe that cable operators should have sufficient 
incentives to add digital television broadcast programming, 
particularly where operators carrying a broadcast station's analog 
signal during the transition period must assign spectrum to accommodate 
digital signals. Because the cable industry operates in an increasingly 
competitive environment, we tentatively conclude that subscribers who 
purchase digital programming, including digital broadcast programming, 
should bear a fair share of the overall system costs associated with 
the number of channels delivered on the tier relative to the system's 
overall

[[Page 16529]]

capacity, and that subscriber rates be reasonable. Thus, we propose to 
allow cable operators adding digital broadcast signals to their channel 
line-ups, to increase rates for each 6 MHz of capacity devoted to 
carriage of such signals. We seek comment on this general policy and 
ask for comment on the proper adjustment methodology the Commission 
should adopt. For example, should the Commission revise Sec. 76.922(g), 
and the accompanying per channel adjustment table, for this purpose? 
Alternatively, is the Form 1235 process outlined in the final rule 
published elsewhere in this issue of the Federal Register, adequate to 
account for such costs? We also seek comment on how channels should be 
counted in light of the sunset of CPST rate regulation. What methods 
are there for valuing cable channels? How would they work?

F. Satellite Home Viewer Improvement Act of 1999

    26. Section 338 of the Act, adopted as part of the SHVIA, requires 
satellite carriers, by January 1, 2002, ``to carry upon request all 
local television broadcast stations' signals in local markets in which 
the satellite carriers carry at least one television broadcast station 
signal,'' subject to the other carriage provisions contained in the 
Act. Until January 1, 2002, satellite carriers, such as DirecTV and 
Echostar, are granted a royalty-free copyright license to retransmit 
television broadcast signals on a station-by-station basis, subject to 
obtaining a broadcaster's retransmission consent. This transition 
period is intended to provide the satellite industry with time to begin 
providing local television signals into local markets, otherwise known 
as ``local-into-local'' satellite service. We recently adopted rules to 
implement the satellite carriage provisions contained in section 338. 
(See 66 FR 7410, Jan. 23, 2001.)
    27. The rules we adopted in the satellite carriage proceeding 
specifically concerned the carriage of a television station's analog 
signal by a satellite carrier. While issues related to the carriage of 
a television station's digital signal were discussed, the Commission 
stated that the digital carriage requirements for satellite carriers 
should be addressed in the context of this docket. Herein, we have 
adopted policies governing the cable carriage of digital television 
signals. Given the SHVIA's general thrust that the Commission issue 
satellite carriage rules comparable to the cable carriage rules, we 
seek comment on how we should apply the digital cable carriage rules to 
satellite carriers. We note that satellite carriers provide video 
programming on a national basis through a space-based delivery facility 
while cable operators provide video service on a local franchise-area 
basis through a terrestrial delivery facility. Given these 
distinctions, we ask whether we should take into account the 
differences between the two technologies when implementing digital 
broadcast signal carriage rules for satellite carriers. Interested 
parties need not file additional comments on the constitutional or 
public policy aspects of satellite digital broadcast signal carriage, 
as we shall incorporate the relevant statements made in the satellite 
carriage proceeding into this docket.
    28. Pursuant to the SHVIA, the Commission also adopted rules 
implementing section 339(b) of the Act. (See 65 FR 68082, Nov. 14, 
2000.) This provision directs the Commission to apply the cable 
television network non-duplication, syndicated program exclusivity, and 
sports blackout requirements to satellite carriers. Congress directed 
the Commission to implement the new satellite rules so that they will 
be ``as similar as possible'' to the rules applicable to cable 
operators. In general, the new network non-duplication, syndicated 
program exclusivity, and sports blackout rules require a satellite 
carrier to delete programming when it retransmits a nationally 
distributed superstation to a household within the relevant zone of 
protection, and the nationally distributed superstation carries a 
program to which the local station or the rights holder to a sporting 
event has exclusive rights. In addition, the SHVIA requires that the 
Commission apply the sports blackout rule to satellite carriage of 
network stations. In all cases covered by the statute and the rules, 
the entity holding exclusive rights may require the satellite carrier 
to black out these particular programs for the satellite subscriber 
households within the protected zone. In the Report and Order 
implementing section 339(b), the Commission noted that it would 
consider the application of the satellite exclusivity rules to digital 
broadcast signals in another proceeding. We now seek comment on the 
application of the section 339(b) provisions, and our implementing 
rules, to the carriage of digital television signals by satellite 
carriers. We specifically seek comment on the application of the 
exclusivity requirements in light of the statements made. The comments 
filed on this subject in CS Docket 00-2 will be incorporated by 
reference in this proceeding.

III. Procedural Matters

A. Paperwork Reduction Act of 1995 Analysis

    29. The requirements contained in this Further Notice of Proposed 
Rulemaking have been analyzed with respect to the Paperwork Reduction 
Act of 1995 (the ``1995 Act'') and would impose proposed information 
collection requirements on the public. 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 take this 
opportunity to comment on the proposed information collection 
requirements contained in this Further Notice of Proposed Rulemaking, 
as required by the 1995 Act. 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 would 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. Written comments by the public 
on the proposed information collections are due on or before May 25, 
2001. Any comments on the information collections contained herein 
should be submitted to Judy Boley, Federal Communications Commission, 
445 12th St, SW., Room 1-0804, Washington, DC 20554, or via the 
Internet to [email protected]. For additional information on the proposed 
information collection requirements, contact Judy Boley at 202-418-0214 
or via the Internet at the above address.
    OMB Control Number: 3060-0844.
    Title: Digital Broadcast Carriage.
    From Number: n/a.
    Type of Review: Revision of a currently approved collection.
    Respondents: 99,278.
    Estimated Time Per Response: .5-1 hours.
    Total Annual Burden: 2,355.
    Total Annual Costs: $2,355.12.
    Needs and Uses: The information collection requirements under this 
control number are used to seek comment on possible changes to 
mandatory carriage rules, and explore the impact that cable carriage of 
digital television signals may have on other Commission rules.

[[Page 16530]]

B. Ex Parte Rules

    30. This proceeding will be treated as a ``permit-but-disclose'' 
proceeding subject to the ``permit-but-disclose'' requirements under 
Sec. 1.1206(b) of the Commission's rules. 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. Additional rules pertaining to oral and written presentations 
are set forth in Sec. 1.1206(b).

C. Filing of Comments and Reply Comments

    31. Pursuant to applicable procedures set forth in Secs. 1.415 and 
1.419 of the Commission's rules, 47 CFR 1.415 and 1.419, interested 
parties may file comments on the FNPRM on or before May 10, 2001 and 
reply comments on or before June 25, 2001. Comments may be filed using 
the Commission's Electronic Comment Filing System (``ECFS'') or by 
filing 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 formyour e-mail address.'' A sample 
form and directions will be sent in reply.
    32. 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, 
SW., Washington, DC 20554. The Cable Services Bureau contact for this 
proceeding is Eloise Gore at (202) 418-7200, TTY (202) 418-7172, or at 
[email protected].
    33. Parties who choose to file by paper should also submit their 
comments on diskette. Parties should submit diskettes to Eloise Gore 
Cable Services Bureau, 445 12th Street NW., Room 4-A803, Washington, DC 
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. 98-120]), 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, NW., Washington, DC 20036.

E. Initial Regulatory Flexibility Act Analysis

    34. 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 policies and rules referenced in this FNPRM. The 
Commission will send a copy of the FNPRM, including this IRFA, to the 
Chief Counsel for Advocacy of the Small Business Administration. In 
addition, the IRFA (or summaries thereof) will be published in the 
Federal Register.
    35. Need for, and Objectives of, the Proposed Rule Changes. The 
objective of the FNPRM is to gather more information, and build the 
necessary record, in order to implement a constitutionally sustainable 
digital broadcast signal carriage policy.
    36. Legal Basis. The authority for the action proposed in this 
rulemaking is contained in sections 1, 4(i) and (j), 309(j), 325, 336, 
614, and 615 of the Communications Act of 1934, as amended, 47 U.S.C. 
Secs. 151, 154(i) and (j), 309(j), 325, 336, 534, and 535.
    37. 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. 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 are considering 
in this proceeding generally, will affect cable operators, OVS 
operators, and television station licensees.
    38. Small MVPDs. SBA has developed a definition of small entities 
for cable and other pay television services, which includes all such 
companies generating $11 million or less in annual receipts. This 
definition includes cable system operators, closed circuit television 
services, direct broadcast satellite services, multipoint distribution 
systems, satellite master antenna systems and subscription television 
services. According to the Census Bureau data from 1992, there were 
1,758 total cable and other pay television services and 1,423 had less 
than $11 million in revenue. We address below each service individually 
to provide a more precise estimate of small entities.
    39. 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. The Commission developed this definition based on its 
determinations that a small cable system operator is one with annual 
revenues of $100 million or less. We last estimated that there were 
1439 cable operators that qualified as small cable companies. 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 adopted in 
this Report and Order.

[[Page 16531]]

    40. 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.
    41. Open Video Systems. The Commission has certified 31 OVS 
operators with some now providing service. Affiliates of Residential 
Communications Network, Inc. (``RCN'') received approval to operate OVS 
systems in New York City, Boston, Washington, DC 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.
    42. Program Producers and Distributors. The Commission has not 
developed a definition of small entities applicable to producers or 
distributors of cable television programs. Therefore, we will use the 
SBA classifications of Motion Picture and Video Tape Production (SIC 
7812), Motion Picture and Video Tape Distribution (SIC 7822), and 
Theatrical Producers (Except Motion Pictures) and Miscellaneous 
Theatrical Services (SIC 7922). These SBA definitions provide that a 
small entity in the cable television programming industry is an entity 
with $21.5 million or less in annual receipts for SIC 7812 and SIC 
7822, and $5 million or less in annual receipts for SIC 7922. Census 
Bureau data indicate the following: (a) there were 7,265 firms in the 
United States classified as Motion Picture and Video Production (SIC 
7812), and that 6,987 of these firms had $16.999 million or less in 
annual receipts and 7,002 of these firms had $24.999 million or less in 
annual receipts; (b) there were 1,139 firms classified as Motion 
Picture and Video Tape Distribution (SIC 7822), and 1007 of these firms 
had $16.999 million or less in annual receipts and 1013 of these firms 
had $24.999 million or less in annual receipts; and (c) there were 
5,671 firms in the United States classified as Theatrical Producers and 
Services (SIC 7922), and 5627 of these firms had $4.999 million or less 
in annual receipts.
    43. Each of these SIC categories is very broad and includes firms 
that may be engaged in various industries, including cable programming. 
Specific figures are not available regarding how many of these firms 
exclusively produce and/or distribute programming for cable television 
or how many are independently owned and operated. Thus, we estimate 
that our rules may affect approximately 6,987 small entities primarily 
engaged in the production and distribution of taped cable television 
programs and 5,627 small producers of live programs that may be 
affected by the rules adopted in this proceeding.
    44. DBS: There are four licensees of DBS services under Part 100 of 
the Commission's Rules. Three of those licensees are currently 
operational. Two of the licensees that 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.
    45. 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.
    46. According to the most recently available information, there are 
approximately 30 program packagers nationwide offering packages of 
scrambled programming to retail consumers. These program packagers 
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 packagers 
may be substantially smaller.
    47. Television Stations. The proposed rules and policies will apply 
to television broadcasting licensees, and potential licensees of 
television service. The Small Business Administration defines a 
television broadcasting station that has no more than $10.5 million in 
annual receipts as a small business. Television broadcasting stations 
consist of establishments primarily engaged in broadcasting visual 
programs by television to the public, except cable and other pay 
television services. Included in this industry are commercial, 
religious, educational, and other television stations. Also included 
are establishments primarily engaged in television broadcasting and 
which produce taped television program materials. Separate 
establishments primarily engaged in producing taped television program 
materials are classified under another SIC number.
    48. Pursuant to 5 U.S.C. 601(3), the statutory definition of a 
small business applies ``unless an agency after consultation with the 
Office of Advocacy of the SBA and after opportunity for public comment, 
establishes one or more definitions of such term which are appropriate 
to the activities of the agency and publishes such definition(s) in the 
Federal Register.''
    49. An element of the definition of ``small business'' is that the 
entity not

[[Page 16532]]

be dominant in its field of operation. We are unable at this time to 
define or quantify the criteria that would establish whether a specific 
television station is dominant in its field of operation. Accordingly, 
the estimates that follow of small businesses to which rules may apply 
do not exclude any television station from the definition of a small 
business on this basis and are therefore overinclusive to that extent. 
An additional element of the definition of ``small business'' is that 
the entity must be independently owned and operated. As discussed 
further below, we could not fully apply this criterion, and our 
estimates of small businesses to which rules may apply may be 
overinclusive to this extent. The SBA's general size standards are 
developed taking into account these two statutory criteria. This does 
not preclude us from taking these factors into account in making our 
estimates of the numbers of small entities.
    50. There were 1,509 television stations operating in the nation in 
1992. That number has remained fairly constant as indicated by the 
approximately 1,616 operating television broadcasting stations in the 
nation as of September 30, 1999. For 1992, the number of television 
stations that produced less than $10.0 million in revenue was 1,155 
establishments. Thus, the new rules will affect approximately 1,616 
television stations; approximately 77%, 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.
    51. Small Manufacturers. The SBA has developed definitions of small 
entity for manufacturers of household audio and video equipment (SIC 
3651) and for radio and television broadcasting and communications 
equipment (SIC 3663). In each case, the definition includes all such 
companies employing 750 or fewer employees. Census Bureau data 
indicates that there are 858 U.S. firms that manufacture radio and 
television broadcasting and communications equipment, and that 778 of 
these firms have fewer than 750 employees and would be classified as 
small entities.
    52. Electronic Equipment Manufacturers. The Commission has not 
developed a definition of small entities applicable to manufacturers of 
electronic equipment. Therefore, we will use the SBA definition of 
manufacturers of Radio and Television Broadcasting and Communications 
Equipment. According to the SBA's regulations, a TV equipment 
manufacturer must have 750 or fewer employees in order to qualify as a 
small business concern. The Census Bureau category is very broad, and 
specific figures are not available as to how many of these firms are 
exclusive manufacturers of television equipment or how many are 
independently owned and operated. We conclude that there are 
approximately 778 small manufacturers of radio and television 
equipment.
    53. Electronic Household/Consumer Equipment. The Commission has not 
developed a definition of small entities applicable to manufacturers of 
electronic equipment used by consumers, as compared to industrial use 
by television licensees and related businesses. Therefore, we will use 
the SBA definition applicable to manufacturers of Household Audio and 
Visual Equipment. According to the SBA's regulations, a household audio 
and visual equipment manufacturer must have 750 or fewer employees in 
order to qualify as a small business concern. Census Bureau data 
indicates that there are 410 U.S. firms that manufacture radio and 
television broadcasting and communications equipment, and that 386 of 
these firms have fewer than 500 employees and would be classified as 
small entities. The remaining 24 firms have 500 or more employees; 
however, we are unable to determine how many of those have fewer than 
750 employees and therefore, also qualify as small entities under the 
SBA definition. Furthermore, the Census Bureau category is very broad, 
and specific figures are not available as to how many of these firms 
are exclusive manufacturers of television equipment for consumers or 
how many are independently owned and operated. We conclude that there 
are approximately 386 small manufacturers of television equipment for 
consumer/household use.
    54. Description of Projected Reporting, Recordkeeping and other 
Compliance Requirements. There are compliance requirements for cable 
operators and OVS operators. An attempt has been made to propose 
streamlined compliance requirements, especially for small cable 
operators, in this docket.
    55. 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. We have 
proposed streamlined rules for the carriage of digital broadcast 
signals for small cable operators in this proceeding. We will examine 
this alternative in more detail in the next phase of this rulemaking.
    56. Federal Rules Which Duplicate, Overlap, or Conflict with the 
Commission's Proposals. None.
    57. Report to Congress. The Commission will send a copy of the 
final rule published elsewhere in this issue of the Federal Register, 
including this IRFA, in a report to be sent to Congress pursuant to the 
Small Business Regulatory Enforcement Fairness Act of 1996. In 
addition, the Commission will send a copy of the FNPRM, including IRFA, 
to the Chief Counsel for Advocacy of the Small Business Administration. 
A copy of the FNPRM and IRFA (or summaries thereof) will also be 
published in the Federal Register.

F. Ordering Clauses

    58. Accordingly, it is ordered that the Consumer Information 
Bureau, Reference Information Center, shall send a copy of this Further 
Notice of Proposed Rulemaking, including the Final Regulatory 
Flexibility Analysis, to the Chief Counsel for Advocacy of the Small 
Business Administration.

Federal Communications Commission.
Magalie Roman Salas,
Secretary.
[FR Doc. 01-7324 Filed 3-23-01; 8:45 am]
BILLING CODE 6712-01-P