[Federal Register Volume 66, Number 187 (Wednesday, September 26, 2001)]
[Rules and Regulations]
[Pages 49124-49135]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-23970]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 76

[CS Docket No. 00-96; FCC 01-249]


Implementation of the Satellite Home Viewer Improvement Act of 
1999: Broadcast Signal Carriage Issues

AGENCY: Federal Communications Commission.

ACTION: Final rule; petitions for reconsideration.

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SUMMARY: This document responds to petitions for reconsideration of 
certain aspects of the Report and Order (FCC 00-417) previously issued 
in this proceeding. The Report and Order, a summary of which is 
published in the Federal Register at 66 FR 7410 (January 23, 2001), 
implemented section 338 of the Communications Act of 1934, as amended 
by the Satellite Home Viewer Improvement Act of 1999 (``SHVIA''). 
Specifically, the Report and Order implemented regulations regarding 
the carriage of local television stations in markets where satellite 
carriers offer local television service to their subscribers. As 
described, the Commission, in the Order on Reconsideration, denies the 
petitions and, on its own motion, clarifies and, where necessary, 
amends some of the requirements set forth in the Report and Order and 
the satellite broadcast signal carriage rule, 47 CFR 76.66.

DATES: Effective October 26, 2001.

FOR FURTHER INFORMATION CONTACT: Eloise Gore or Ben Bartolome, Cable 
Services Bureau, (202) 418-7200, TTY (202) 418-7172, or via Internet at 
[email protected] or [email protected].

SUPPLEMENTARY INFORMATION: This is a summary of the Federal 
Communications Commission's Order on Reconsideration, FCC 01-249, in CS 
Docket No. 00-96, adopted on September 4, 2001, and released on 
September 5, 2001. The full text of this Order on Reconsideration is 
available for public inspection and copying during normal business 
hours at the FCC Reference Information Center, Portals II, Room CY-
A257, 445 12th Street, SW., Washington, DC, 20554. This document may 
also be purchased from the Commission's duplicating contractor, Qualex 
International, Portals II, 445 12th Street, SW., Room CY-B402, 
Washington, DC, 20554, telephone (202) 863-2893, facsimile (202) 863-
2898, or via e-mail at [email protected]. The full text may also be 
reviewed and downloaded from the FCC Cable Services Bureau's website at 
http://www.fcc.gov/csb/. Alternative formats are available to persons 
with disabilities by contacting Martha Contee at (202) 418-0260 or TTY 
(202) 418-2555.

Synopsis of the Order on Reconsideration

I. Introduction

    1. The Order on Reconsideration addresses eight distinct issues 
raised in two petitions for reconsideration of the Commission's Report 
and Order in Implementation of the Satellite Home Viewer Improvement 
Act of 1999: Broadcast Signal Carriage Issues; Retransmission Consent 
Issues, which implements section 338 of the Communications Act of 1934 
(the ``Act''), as amended by the Satellite Home Viewer Improvement Act 
of 1999 (``SHVIA''). The Report and Order adopted broadcast signal 
carriage requirements for satellite carriers in order to implement 
section 338 of the Act. Section 338 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 pursuant to the 
statutory copyright license, subject to the other carriage provisions 
contained in the Act. As noted in the Report and Order, 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. The Commission's carriage 
rules in many respects mirror the broadcast signal carriage rules 
applicable to cable operators, but with key distinctions made in 
recognition of the statutory and practical constraints that result from 
differences in satellite and cable technologies.
    2. DIRECTV, Inc. (``DIRECTV'') and the Association of Local 
Television Stations, Inc. (``ALTV'') separately filed petitions for 
reconsideration of the Report and Order, raising different issues. 
Several parties separately filed oppositions or comments in response to 
DIRECTV's petition: ALTV; National Association of Broadcasters 
(``NAB''); Network Affiliated Stations Alliance (``NASA''); Paxson 
Communications

[[Page 49125]]

Corporation (``Paxson''); and a joint opposition by the Association of 
America's Public Television Stations, the Public Broadcasting Service, 
and the Corporation for Public Broadcasting (collectively ``Public 
Television Stations''). DIRECTV, in turn, filed a reply. In response to 
ALTV's petition, DIRECTV filed an opposition and NAB submitted comments 
in support. Both ALTV and NAB filed separate replies to DIRECTV's 
opposition.
    3. Our response to the petitions are governed by the Communications 
Act and our own rules. Reconsideration of a Commission decision is 
warranted only if the petitioner cites a material error of fact or law, 
or presents additional facts and circumstances which raise substantial 
or material questions of fact that were not considered and that 
otherwise warrant Commission review of its prior action. The Commission 
will not reconsider arguments that have already been considered. For 
the reasons stated herein, we affirm our decisions in the Report and 
Order and deny both DIRECTV's and ALTV's petition. We also take this 
opportunity to clarify and, where necessary, amend some of the 
requirements set forth in the Report and Order and the rule.

II. Order on Reconsideration

    4. As explained below, after careful consideration of all the 
arguments and facts presented, we decline to revise the satellite 
broadcast signal carriage requirements adopted in the Report and Order, 
except to provide additional clarification to some of those rules. 
Consistent with the requirements of the SHVIA, the Commission's 
satellite broadcast signal carriage rules generally attempt to place 
satellite carriers on an equal footing with cable operators regarding 
the provision of local broadcast programming, in order to give 
consumers more competitive options in selecting a multichannel video 
program distributor (``MVPD''). In the legislative history to section 
338, Congress made clear that ``[t]he procedural provisions applicable 
to section 338 (concerning costs, avoidance of duplication, channel 
positioning, compensation for carriage, and complaints by broadcast 
stations) are generally parallel to those applicable to cable 
systems.'' As the legislative history of the SHVIA indicates, Congress 
was concerned that, ``without must carry obligations, satellite 
carriers would simply choose to carry only certain stations which would 
effectively prevent many other local broadcasters from reaching 
potential viewers in their service areas.'' Our satellite carriage 
rules also reflect Congress's desire to provide satellite subscribers 
with local television service in as many markets as possible, but also 
take into account, to the extent possible, the inherent nature of 
satellite technology and constraints on the use of satellite spectrum 
in the delivery of must carry signals. Against this backdrop, we 
address the six issues raised by DIRECTV in its petition, then the two 
issues raised by ALTV in its petition, and, on our own motion, provide 
clarification and amendment to several of the rules governing 
procedures consistent with the legislative intent of section 338(g).

A. DIRECTV's Petition

1. Carriage of Local NCE Stations
    5. The Commission denies DIRECTV's request that the Commission 
modify its noncommercial educational (``NCE'') carriage rule by 
limiting a satellite carrier's carriage obligation to only one 
qualified NCE station per designated market area (``DMA''), with 
additional NCE stations carried on a voluntary basis. We affirm the 
current rule requiring satellite carriers to carry all non-duplicative 
NCE stations in markets where they provide local-into-local service. 
Contrary to DIRECTV's contention, the Commission's rule is consistent 
with the plain language of section 338(c)(2) as it requires, ``[t]o the 
extent possible, * * * the same degree of carriage by satellite 
carriers * * * as is provided by cable systems.'' It also promotes 
parity between DBS and cable by assuring that consumers receive via 
satellite essentially the same local channels they would receive if 
they subscribed to cable.
    6. Contrary to DIRECTV's assertion, the standard we developed for 
the NCE carriage obligation also took into consideration the technical 
limitations, as well as the national character, of satellite systems, 
in addition to other factors that differentiate the satellite industry 
from the cable industry. Under our rules, a cable system with more than 
36 channels must carry all of the first three local NCEs in its market, 
even when the stations transmit substantially the same programming at 
the same time. The limitation on mandatory carriage of NCEs that 
duplicate only applies to additional NCEs when there are more than 
three local NCEs in the cable system's market. Satellite carriers, on 
the other hand, need not carry any simultaneously duplicative signals. 
Satellite carriers are required to carry up to three local NCEs that do 
not duplicate programming--with duplication defined as more than 50 
percent of prime time programming and more than 50 percent of 
programming outside of prime time broadcast on a simultaneous basis. 
Once the carrier provides three local noncommercial stations, the 
duplication test becomes the same as for cable--whether more than 50 
percent of prime time programming and more than 50 percent of 
programming outside of prime time is duplicative on a simultaneous or 
non-simultaneous basis. Given this standard, our rule does address the 
capacity concerns that DIRECTV raises because the foregoing standard 
prevents satellite capacity from being wasted on repetitive programming 
while ensuring carriage of nonduplicating, diverse public stations that 
respond to the different audiences and distinct needs of each 
community. In this regard, we agree with Public Television Stations and 
Paxson that the NCE carriage formulation proposed by DIRECTV (i.e., 
that we require satellite carriers to carry only one qualified NCE 
station per DMA, with additional NCE stations carried on a voluntary 
basis) would deprive satellite subscribers of access to local 
noncommercial television stations in those markets where local-into-
local is offered.
2. Public Interest Set-Aside
    7. In 1998, the Commission, in Implementation of Section 25 of the 
Cable Television Consumer Protection and Competition Act of 1992, 
Direct Broadcast Satellite Public Interest Obligations (``DBS Public 
Interest Report and Order''), adopted rules implementing section 335 of 
the Act, as amended by the Cable Television Consumer Protection Act of 
1992 (``1992 Cable Act''). The rules require DBS providers to reserve 
four percent (4%) of their channel capacity exclusively for use by 
qualified programmers for noncommercial programming of an educational 
or informational nature. DIRECTV, in its petition, asks the Commission 
to permit satellite carriers to include NCE stations in the calculation 
of public interest programming required to be set aside by satellite 
carriers under section 335 of the Act. DIRECTV argues that Congress 
knew of the existence of section 335 in crafting the satellite must 
carry regime of section 338, and that ``nothing in the text of this 
latter provision suggests that NCE stations should not be counted 
towards the 4% set-aside.''
    8. The Commission denies DIRECTV's request for reconsideration of 
this issue. We find that DIRECTV's request that we permit satellite 
carriers to include local NCE stations, carried pursuant to section 
338, in the calculation of public interest programming required to be 
set aside under section 335 would not result in compliance with section 
335 because carriage of certain stations in a

[[Page 49126]]

limited number of markets does not provide the national scope intended 
by section 335. Section 338 is not a national but rather a market-by-
market requirement. Significantly, the public interest set-aside 
requirement under the 1992 Cable Act focuses on educational or 
informational public interest programming available to all subscribers 
nationally. SHVIA, in contrast, is intended to provide satellite 
subscribers with their local noncommercial educational stations. 
Allowing satellite carriers to count towards the national set aside 
individual local NCE stations provided only in their respective local 
markets would violate section 335's requirement that a direct broadcast 
satellite service meet the set aside requirement ``by making channel 
capacity available to national educational programming suppliers.'' 
(emphasis added). In applying this requirement, we have made it clear 
that eligible public interest programming must therefore be available 
to all subscribers. We also note that DIRECTV is seeking 
reconsideration of an issue that has already been addressed in the 
Report and Order, and that DIRECTV has not presented any new arguments 
that would warrant reconsideration of this issue.
    9. Alternatively, DIRECTV, in its petition, states that, ``[a]t a 
minimum, the Commission should clarify that NCE stations that are 
distributed on a national basis should be included in the 4% DBS public 
interest set-aside calculation.'' We note that the Commission has 
generally addressed DIRECTV's alternative request for clarification (on 
the issue of whether, in the abstract, a local NCE station can be 
counted as a programmer for section 335 purposes) in the DBS Public 
Interest Report and Order (concluding ``that we should interpret the 
term `national' broadly so as to include local, regional, or national 
domestic nonprofit entities that qualify under the definitions listed 
above and produce noncommercial programming designed for a national 
audience'')), but we decline at this point to go beyond what we said in 
the DBS Public Interest Report and Order about this matter without 
having a concrete set of facts before us.
3. Programming in the Vertical Blanking Interval
    10. In its petition, DIRECTV contends that carriage of 
``additional'' VBI material is not ``technically feasible'' for 
existing, deployed satellite systems. It states that, ``[a]part from 
primary video and audio signals and Line 21 closed caption 
transmissions, it is not technically feasible for DIRECTV's DBS system 
to reliably pass through additional material in a usable form from 
other portions of the VBI.'' It asserts that the Commission's 
requirement on this issue ``could require the replacement of DIRECTV 
equipment for as many as ten million households, resulting in a cost of 
more than 2.8 billion dollars.'' DIRECTV asks the Commission to 
reconsider its findings with respect to the ability of existing 
satellite carriers to carry additional VBI material, ``at least insofar 
as it applies to satellite systems that are already in operation.'' The 
broadcast interests generally agree that DIRECTV should not have to 
replace all the set-top boxes currently being used by subscribers if it 
is technically infeasible or prohibitively expensive for DIRECTV to do 
so, but they maintain that DIRECTV should be required to comply with 
the VBI carriage requirement on a going-forward basis.
    11. Section 338(g) of the Act states that, ``[t]he regulations 
prescribed [under section 338] shall include requirements on satellite 
carriers that are comparable to the requirements on cable operators 
under [s]ections 614(b)(3) * * * and 615(g)(1).'' Section 614(b)(3) 
states that, ``[a] cable operator shall carry in its entirety * * * the 
primary video, accompanying audio, and line 21 closed caption 
transmission of each of the local commercial television stations 
carried on the cable system and, to the extent technically feasible, 
program-related material carried in the vertical blanking interval or 
on subcarriers.'' Section 615(g)(1) applies a similar requirement to 
the contents of noncommercial educational stations. In the cable 
context, with regard to the ``technical feasibility'' of the carriage 
of program-related material in the VBI or on subcarriers, the 
Commission stated in Implementation of the Cable Television Consumer 
Protection and Competition Act of 1992: Broadcast Signal Carriage 
Issues (``Cable Must Carry Report and Order'') that such carriage 
should be considered ``technically feasible'' if only nominal costs, 
additions or changes of equipment are necessary in order to carry such 
material. In the Report and Order the Commission expressed its view 
that, based on the record presented, it was technically feasible for 
satellite carriers to carry the program-related material currently 
carried in a television station's VBI. The Report and Order declined to 
rule on new kinds of program-related data in the VBI or on subcarriers 
indicating that these issues would be addressed in the future on a 
case-by-case basis. DIRECTV's petition addresses the carriage of such 
additional VBI material and does not dispute the feasibility of 
carrying the data in line 21. We conclude, for the reasons set forth, 
that it is unnecessary to revise the rule requiring satellite carriers 
to carry in its entirety the primary video, accompanying audio, and 
closed-caption data contained in line 21 of the VBI and, to the extent 
technically feasible, program-related material carried in the VBI or on 
subcarriers.
    12. We find no reason to reconsider these decisions since it was 
not the Commission's intention to require satellite carriers to carry 
program-related material in the VBI if it is not ``technically 
feasible'' for satellite carriers to do so. DIRECTV indicates that its 
system is able to carry line 21 closed captioning, closed text, XDS, V-
chip information, ``TSID'' data and extended service packets on line 
21. Neither DIRECTV nor the broadcast parties commenting on this issue 
have been specific as to what additional information that, if made the 
subject of a carriage request, would be jeopardized by the current 
system limitations described by DIRECTV. In these circumstances, we 
believe it is generally appropriate to apply the ``technically 
feasible'' standard as previously articulated in the cable context, but 
that it is not appropriate to attempt to rule on any additional or 
future VBI service without more specific information. We note, however, 
that most of the costs that DIRECTV claims it would have to bear as the 
consequence of any additional carriage obligation, totaling some $2.8 
billion, relate to replacing the integrated receiver/decoders that are 
currently used to receive DIRECTV service. In the future, any claim of 
technical infeasibility should address separately the technical issues 
involved with the transmission of the material in question as opposed 
to its reception and management in the receiver/decoder and the extent 
to which each set of issues is under the control of the satellite 
provider.
    13. On a different, but related point, DIRECTV argues that 
satellite carriers should not be required to carry programming material 
of a ``must carry'' station if inclusion of such type of material is 
not covered by the retransmission consent agreements reached by that 
carrier with other stations in the local market in question. We find no 
authority in section 338, and DIRECTV has not presented any, to support 
DIRECTV's request. The terms negotiated by retransmission consent 
stations for the carriage of program-related material cannot be used to 
undermine Congress's directive that the

[[Page 49127]]

Commission adopt satellite carriage requirements that are comparable to 
the cable carriage requirements, which explicitly mandate the carriage 
of program-related material. We therefore reject DIRECTV's request that 
we establish separate VBI requirements for must carry and 
retransmission consent stations.
4. Good Quality Signal Standard
    14. Section 338(b)(1) of the Act requires a television broadcast 
station asserting its right to carriage to bear the costs associated 
with delivering a ``good quality signal'' to the satellite carrier's 
receive facility. In the cable context, Congress defined a signal 
strength standard that would equate to a good quality signal. In the 
satellite context, however, Congress did not define specific signal 
levels that local stations must deliver to satellite carriers, and 
apparently left that determination to the Commission. In determining 
what constitutes a ``good quality signal,'' as that term is used in 
section 338, the Commission, in the Report and Order, found that the 
signal quality parameters under section 614 of the Act and section 
76.55 of the Commission's cable regulations were appropriate in the 
satellite carriage context. The Commission noted that, under the 
current cable carriage regime, television broadcast stations must 
deliver either a signal level of -45dBm for UHF signals or -49dBm for 
VHF signals at the input terminals of the signal processing equipment, 
to be considered eligible for carriage. The Commission determined that 
application of the same standard to the satellite carriage context was 
appropriate, given that the standards that have been applied to cable 
operators ``have functioned well since the inception of the statutory 
carriage requirements seven years ago.'' Additionally, the Commission 
did not find evidence in the record to suggest that the cable signal 
quality standard will not prove equally satisfactory in the satellite 
context. In providing a good quality signal, the Commission concluded 
that television stations may use any delivery method (e.g., microwave 
transmission, fiber optic cable, or telephone lines) to improve the 
quality of their signals to the satellite carrier as long as they pay 
for the costs of such delivery mechanisms.
    15. In its petition for reconsideration, DIRECTV asks the 
Commission to change its signal quality standard and ``compel any 
station seeking carriage to provide a signal that meets the 
requirements of GR-388 CORE, TV1 for 20 route miles.'' DIRECTV asserts 
that the cable standard the Commission adopted will not allow satellite 
carriers to make efficient use of their allocated bandwidth and that it 
will increase the likelihood of signal degradation. It argues that the 
adoption of the cable signal quality standard in the satellite context 
is based on ``unsupported speculation that a higher standard may prove 
``prohibitively expensive'' for small television stations to meet.'' 
DIRECTV also argues that there are no statutory limits on broadcasters' 
costs for providing a good quality signal. Furthermore, DIRECTV insists 
that the record contained ``ample evidence'' that satellite carriers 
must receive a TV-1 quality signal. According to DIRECTV, requiring a 
TV-1 quality signal is ``critical'' to differentiating DBS from cable 
television. DIRECTV maintains that it markets its services on the basis 
of providing a higher quality signal than cable, and that, without 
having a higher standard for what constitutes a good quality signal in 
the satellite context, its marketing advantage will be severely 
undercut. DIRECTV asserts that the use of compression systems based on 
the Moving Pictures Experts Group (``MPEG-2'') standard requires 
signals that meet the requirements of GR-338 CORE, TV1 for 20 route 
miles. It further asserts that all of the local stations that are 
currently carried by DIRECTV meet the TV-1 quality standard and are 
delivered to DIRECTV's local receive facilities using a dedicated fiber 
circuit. DIRECTV insists that any station seeking carriage should be 
required to meet the same standard, thus ensuring a ``good quality'' 
satellite signal.
    16. The Commission declines to revise the ``good quality signal'' 
standard adopted in the Report in the Order, as urged by DIRECTV. As 
noted by ALTV and Paxson, DIRECTV made the same request in its initial 
comments in the proceeding which the Commission reviewed and rejected. 
As reflected in the Report and Order, the Commission has already 
considered DIRECTV's request that the Commission define ``good quality 
signal'' as one that will facilitate efficient MPEG compression of all 
channels, and that the signal must meet the requirements of GR-388 
CORE, TV1 for 20 route miles. The Commission, however, declined to 
adopt DIRECTV's good quality signal proposals for the following 
reasons:

    First, we believe that the TV1 standard is too rigid a 
construct. Specifically, a signal-to-noise ratio of +67 dB cannot be 
easily implemented by most television broadcast stations. 
Broadcasters do not have to meet such exacting ratios and levels 
when delivering signals to a cable operator's headend to qualify for 
carriage. Moreover, as NAB points out, satellite carriers, such as 
EchoStar, have been retransmitting local television signals that 
they have received over-the-air * * *. We also note that it would be 
prohibitively expensive for a small television station to lease a 
dedicated TV1 circuit from a telecommunications carrier. It is not 
our intention to impose inordinate costs on small television 
stations that would prevent them from being carried by a satellite 
carrier.

    17. In reviewing DIRECTV's petition, we find that DIRECTV has not 
presented new evidence that warrants changing the good quality signal 
standard already adopted to a TV-1 quality signal, which NAB and ALTV 
refer to as an ``essentially perfect signal.'' DIRECTV, in an ex parte 
letter, suggests that ``a number of'' TV stations ``can come close'' to 
achieving a 67 dB S/N ratio. By ``coming close,'' DIRECTV means a S/N 
ratio of ``approximately 60 dB,'' and says that even achieving that S/N 
ratio with an over-the-air signal will, in many cases, require the 
purchase of additional noise reduction equipment. While lower than the 
67 dB S/N ratio that DIRECTV initially requested, we agree with NAB and 
ALTV that ``a 60 dB signal-to-noise [ratio] would still force stations 
to deliver to DBS firms a virtually perfect signal, rather than the 
good quality signal that the SHVIA requires stations to provide to 
satellite carriers and that the Cable Act requires stations to provide 
to cable systems (including cable systems that provide digital 
service).'' Moreover, we note that DIRECTV proposes requiring a S/N 
ratio of 60 dB but does not clarify what signal strength level would 
satisfy the ``strong, high quality broadcast signal'' or whether the 
intention is to combine the -49dBm for VHF signals and -45dBm for UHF 
signals with a 60 dB S/N ratio. Additionally, DIRECTV does not define 
the ``as-received'' S/N ratio that a broadcast station must deliver, 
but rather proposes that stations must achieve the desired 60 dB S/N 
through use of noise reduction equipment. Furthermore, DIRECTV 
acknowledges that stations with ``weaker off-air signals at the local 
receive facility may not be able to meet the TV-1 (or 60 dB ) standard 
via off-air transmission'' and recommends that broadcasters can pay 
$14,000 per year to lease a TV-1 line to accommodate the standard 
proposed. As the Commission previously stated, however, ``[i]t is not 
our intention to impose inordinate costs on small television stations 
that would prevent them from being carried by a satellite carrier.''
    18. With respect to DIRECTV's claims about the potential for 
diminished

[[Page 49128]]

capacity under the current good quality signal standard, we are unable 
to make a meaningful evaluation of this claim based on the record. 
DIRECTV, in its June 25, 2001 Ex Parte Letter, explains that if each 
video frame is similar to the next, then only ``a small amount of 
``difference'' information is required for the second frame'' and 
states that ``noise is the enemy of compression.'' DIRECTV further 
explains that, in a compression system, it is difficult to 
differentiate between intended activity and undesirable background 
noise. It states that such excessive background noise will ``consume 
valuable transmission capacity thus causing the desired picture to be 
degraded.'' On this point, we note that DIRECTV, however, did not 
establish the amount of picture degradation that could result. DIRECTV 
asserts that tests conducted in its lab ``show that one channel with a 
50 dB weighted signal-to-noise ratio will consume 25% more bandwidth 
than the same program with a 67 dB signal-to-noise ratio.'' DIRECTV, 
however, did not submit information as to how these tests were 
conducted and how capacity would be affected if we retain the signal 
strength standard established in the Report and Order versus adopting 
its proposed 60 dB S/N standard. Further, we see merit in NAB's and 
ALTV's response on this issue that a ``DBS firm can set a cap on the 
number of bits that will be allocated to any one channel, thus ensuring 
that there will be no effect on any other channel through the 
statistical multiplexing process.''
    19. Although DIRECTV clarifies, in its reply, that microwave 
transmissions may be used in lieu of fiber optic cable to achieve a TV-
1 quality signal, it appears to expect that microwave spectrum is 
available everywhere. Moreover, DIRECTV provided no standard or cost 
analysis for such an alternative.
    20. DIRECTV has not provided sufficient evidence to demonstrate 
that the good quality signal standard used in the cable context is 
inadequate or inappropriate in the satellite context. As NAB and ALTV 
point out, ``many cable systems (like DBS firms) now provide digital 
service, but that has not resulted in any change in the quality of the 
signal that stations are required to provide to cable headends. As 
before, stations are still required to provide cable systems with a 
``good quality,'' but not a flawless, signal to cable systems.'' The 
good quality signal standard--in either the cable or satellite 
context--ensures that a signal available to over-the-air viewers will 
receive carriage. We continue to believe that the standard used for 
cable is appropriate in the satellite context as well. The signal 
standard must be one that can be measured and can be satisfied by over-
the-air delivery. We believe that the goal of preserving over-the-air 
local television, which underlies the carriage requirements in the 
Communications Act, would be disserved by a signal quality standard 
that cannot be satisfied by over-the-air delivery. Furthermore, as 
indicated in the Report and Order, the Commission was compelled to 
reject the TV-1 standard because, among other reasons, many television 
broadcast stations would have difficulty implementing the standard. We 
believe that imposing an exacting standard that exceeds the level 
necessary would inhibit many local stations' ability to qualify for 
carriage with a satellite carrier, when the same stations can qualify 
for carriage with a cable operator. If we adopted DIRECTV's proposal to 
require broadcasters to meet a 60 dB signal-to-noise ratio, we would be 
creating disparate schemes for satellite and cable. Moreover, to the 
extent that cable operators have upgraded their systems and equipment 
since the 1992 Cable Act, they have been bearing the costs of improving 
some broadcasters' signal quality to meet the cable system's higher 
standards and subscribers' higher expectations. Because the good 
quality signal standard is statutory for cable systems, we cannot 
revise it. Creating such a disparity for cable versus satellite 
subscribers, as well as for broadcast stations, is not what Congress 
contemplated in section 338.
5. Relocation of Local Receive Facilities Mid-Cycle
    21. In the Report and Order, the Commission concluded that, as a 
general matter, a satellite carrier may relocate the designated local 
receive facility at the beginning of an election cycle (i.e., at the 
time broadcast stations must elect either must carry or retransmission 
consent). The Commission stated that satellite carriers should have the 
flexibility to change their designated local receive facility or 
alternative facility, and required satellite carriers to provide 60 
days advance notice to all local stations of such a change. In 
affording satellite carriers this flexibility, however, the Commission 
was concerned that the relocation of a local receive facility, if done 
mid-cycle, may make it more difficult for some television stations to 
pay the unanticipated costs of delivering a good quality signal. 
Accordingly, the Commission determined that if a satellite carrier 
decides to relocate its local receive facility in the middle of an 
election cycle (i.e., after the time for electing must carry or 
retransmission consent during an election cycle has expired), it should 
pay the television stations' costs to deliver a good quality signal to 
the new location. In its petition, DIRECTV seeks reconsideration of 
this issue, contending that the costs of delivering a good quality 
signal in the context of the relocation of local receive facilities 
mid-cycle by satellite carriers should be borne by broadcasters, not 
satellite carriers.
    22. The Commission denies DIRECTV's request for reconsideration of 
this issue. The Commission's prior interpretation of the statute is 
reasonable and consistent with the purpose of the SHVIA. It is within 
the Commission's discretion to interpret ``designated'' facility, as 
that term appears in section 338(b), as the facility for which the 
carrier gives a station notice before the station makes its carriage 
election. The carrier thus cannot change the ``designated'' facility to 
which the broadcaster can be held responsible for delivering its good 
quality signal until it comes time to make a carriage election for the 
next election cycle. If the satellite carrier, however, does make such 
a change mid-cycle, even as a result of unforeseen events, it is only 
reasonable to require it to bear any new capital costs and incremental 
ongoing expenses required for the delivery of a good quality broadcast 
signal, because the new receive facility was not the one initially 
``designated'' and anticipated by local stations. We agree with Public 
Television Stations that this limited burden on carriers protects a 
broadcast station's reasonable expectations of the signal delivery 
costs it will incur if it elects satellite carriage.
6. Extra Equipment for Some Local Signals
    23. In the Report and Order, the Commission interpreted the 
nondiscrimination provision of section 338(d) of the Act to prohibit 
satellite carriers from requiring subscribers to purchase additional 
equipment (e.g., a satellite dish) to gain access only to some, but not 
all of the local signals in a market. This determination was made in 
response to concerns over the possible discriminatory treatment that 
television stations electing mandatory carriage might receive; that is, 
a concern that a satellite carrier may place mandatory carriage 
stations on a satellite that would require a subscriber to purchase 
another dish and/or other equipment to receive such signals, which 
would effectively inhibit the

[[Page 49129]]

ability of local stations to reach potential viewers. In addressing 
this issue, the Commission found that ``the language of [s]ection 
338(d) covers the additional equipment concerns raised by the parties 
and bars satellite carriers from requiring subscribers to purchase 
additional equipment when television stations from one market are 
segregated and carried on separate satellites.'' As the Commission 
explained, this interpretation does not prohibit a satellite carrier 
from requiring a subscriber to pay for additional equipment in order to 
receive all television stations from a single market. To illustrate the 
application of the rule, the Commission noted: ``For example, DIRECTV 
may require an additional dish to receive all television stations from 
the Baltimore market, but it may not require subscribers to purchase 
the same to receive some Baltimore stations where the others are 
available using existing equipment.''
    24. In its petition, DIRECTV asks the Commission to reconsider its 
interpretation of the nondiscrimination provision of section 338(d) of 
the Act, contending that section 338(d) does not unduly restrict 
satellite carriers from offering local-into-local service through the 
use of different orbital positions, with multiple dishes if necessary. 
DIRECTV further asserts that Congress considered this precise question 
and decided to delete draft statutory language that would have imposed 
the very restriction that the Commission found in the statute.
    25. The Commission declines to reconsider this issue. DIRECTV's 
arguments were squarely before us when we made our determination that 
section 338(d)'s nondiscrimination provision bars satellite carriers 
from discriminating against some broadcast stations by requiring 
subscribers to purchase additional receiving equipment in order to 
access some, but not all, local signals. DIRECTV has not presented any 
new facts or arguments to convince us to change our interpretation of 
section 338(d) as it concerns this issue. Indeed, as reflected in the 
Report and Order, the Commission considered the very same line of 
legislative argument that DIRECTV now makes, which EchoStar previously 
made:

    EchoStar comments that one of the obligations advocated by the 
NAB--that local stations be available from the same orbital 
location--is tantamount to a provision that had been included in 
draft legislation prior to the passage of SHVIA. EchoStar states 
that such provision, which was dropped from the final version of 
[s]ection 338, would have barred satellite carriers from 
transmitting local stations in a manner that would require 
additional reception equipment. EchoStar argues that the Commission 
cannot implement a rule similar to this provision when Congress 
decided not to include such a requirement in the SHVIA.

In response, the Commission held ``that the language of [s]ection 
338(d) covers the additional equipment concerns raised by the parties 
and bars satellite carriers from requiring subscribers to purchase 
additional equipment when television stations from one market are 
segregated and carried on separate satellites.'' The Commission's rule 
on this issue is intended to prohibit satellite carriers from placing 
mandatory carriage television stations on a satellite if that would 
require a subscriber to purchase equipment additional to what is needed 
to receive other local stations in the same market, and, at the same 
time, placing retransmission consent stations on another satellite that 
does not require subscribers to purchase any additional equipment.
    26. We agree with Public Television Stations that DIRECTV, in any 
event, misinterprets the legislative history of SHVIA in arguing that 
it should be permitted to require subscribers to use two separate 
dishes to receive the full package of local channels. When Congress 
adopted the SHVIA, it rejected language that said subscribers could not 
be required to install an additional dish to receive any local signals. 
The legislative drafting change cited by DIRECTV involved a deletion of 
a much broader limitation on satellite carriers than what the 
Commission adopted under the general anti-discrimination language that 
survived. The legislative drafting change, at most, indicated that 
Congress did not want to prohibit satellite carriers from requiring 
additional dishes generally, but the change does not imply that 
Congress wanted to allow satellite carriers to require additional 
dishes if such a requirement created discriminatory effects. We believe 
that a limited prohibition on requiring subscribers to obtain a 
separate dish to receive some local signals when other local signals 
are available without the separate dish is necessary to give full 
effect to local station carriage requirements. Otherwise, as Public 
Television Stations argue, satellite carriers could structure local 
station packages and separate dish requirements to discourage consumers 
from subscribing to certain local stations, including local 
noncommercial stations. For the foregoing reasons, we affirm our rule 
prohibiting satellite carriers from requiring subscribers to purchase 
additional equipment to gain access only to some, but not all of the 
local signals in a market.

B. ALTV's Petition

1. A La Carte Sales of Local Signals
    27. In the Report and Order, the Commission held that section 338 
does not require satellite carriers to sell all local television 
stations as one package to subscribers, as broadcast interests had 
urged in their comments. The Commission found that Congress did not 
intend to establish a basic service tier-type requirement for satellite 
carriers when it implemented section 338, and that Congress did not 
explicitly prohibit the sale of local television station signals on an 
a la carte basis. The Commission determined that, instead, section 
338's anti-discrimination language prohibits satellite carriers from 
implementing pricing schemes that effectively deter subscribers from 
purchasing some, but not all, local television station signals. Thus, 
the Commission stated, ``a satellite carrier must offer local 
television signals, as a package or a la carte, at comparable rates.''
    28. ALTV seeks reconsideration of this issue. NAB, NASA, Paxson, 
and Public Television Stations submitted arguments, similar to those 
that ALTV makes, in support of reconsideration. ALTV and other parties 
contend that the Commission's decision to allow a la carte pricing of 
local stations could result in discrimination against local stations 
and run counter to the SHVIA's anti-discrimination requirements. They 
ask the Commission to require all local signals to be included in a 
single package in order to ensure that consumers have access to all 
local stations. ALTV insists that this change to the Commission's rule 
is needed because of its concern that a satellite carrier, through its 
packaging and pricing decision, could influence the availability of, 
and access to, local channels. NAB states that ``allowing satellite 
carriers to adopt differential pricing policies for `favored' and 
`disfavored' local channels directly contravenes the statutory 
prohibition on discriminatory pricing.'' Further, NAB asserts that 
authorizing a la carte pricing for local stations ``would allow 
satellite carriers to demote some local stations to second-class status 
in a manner that cable systems could never dream of--namely, selling a 
handful of stations in a market as a package, while offering the 
smaller stations in the market only on an a la carte basis, which 
predictably will be purchased by far fewer subscribers.''
    29. The Commission denies ALTV's request for reconsideration of 
this issue. As reflected in the Report and Order, the Commission 
considered and rejected

[[Page 49130]]

the precise argument that ALTV is asking us to reconsider. Neither ALTV 
nor the parties that support ALTV on this issue has submitted new 
arguments or facts to warrant reconsideration of our decision that 
satellite carriers should not be required to offer local stations only 
as a single package. We find nothing in the statute that prohibits 
satellite carriers from offering local stations on an individual a la 
carte basis to the extent the carrier is not using this method of 
packaging to discriminate against local stations. As DIRECTV points 
out, and we agree, Congress could have created a requirement that 
satellite carriers must sell local stations to its subscribers as a 
single package, but it did not do so. The relevant part of section 338 
requires only that a satellite carrier provide access to a local 
television station's signal ``at a nondiscriminatory price'' and access 
``in a nondiscriminatory manner on any navigational device, on-screen 
program guide, or menu.'' Neither of these requirements prohibits 
satellite carriers from offering local television signals to consumers 
on an a la carte basis, and we believe that allowing a satellite 
carrier the flexibility to offer local television station signals to 
its subscribers on an a la carte basis promotes consumer choice.
    30. ALTV faults our decision to implement the statutory prohibition 
on discriminatory pricing by requiring that satellite carriers offer 
broadcast stations at ``comparable rates.'' ALTV argues that the 
discriminatory pricing prohibition must translate to a prohibition of a 
la carte offerings and a requirement for a single package of local 
signals. We used the term ``comparable'' in the Report and Order to 
explain that ``non-discriminatory'' need not mean identical. That is, 
although the charges need not be the same, they should be within a 
nondiscriminatory range. The pricing should be based on relevant 
economic factors applied in a nondiscriminatory fashion that does not 
result in discriminatory treatment of any station or stations, such as 
pricing so as to effectively deter subscribers from purchasing some, 
but not all, local television station signals. We recognize that 
comparable pricing may require further clarification on a case-by-case 
basis, and that in most cases local stations should be offered to 
subscribers at the same or nearly identical prices. We are, however, 
unwilling at this time to require identical pricing for each local 
station carried and will evaluate on a case-by-case basis any 
complaints alleging discrimination prohibited by section 338.
    31. We clarify here that although the statute does not prohibit 
satellite carriers from offering stations on an a la carte basis at 
comparable rates, we believe that a prohibited discriminatory effect 
would result if carriers created a mix of one or more packages for some 
stations while offering other stations only individually (e.g., 
creating a package of six local stations and offering other local 
stations only on an individual a la carte basis, or creating two 
separate packages of different local stations). Allowing satellite 
carriers to offer some stations as a package and others on an a la 
carte basis could operate as a deterrent to the purchase of certain 
local stations without furthering consumer choice. We believe that this 
is one of the very discriminatory results that section 338 sought to 
prohibit. In contrast, we do not believe it would be discriminatory for 
a satellite carrier to offer either each local station individually or 
a package containing all local stations for a price less than or equal 
to the sum of subscribing to each station individually (e.g., each of 
twelve local stations for $1 or all twelve stations for $10). Thus, if 
subscribers choose to forego a package of local stations that a 
satellite carrier is offering and instead subscribe, for example, to 
only three of the twelve stations that may be offered on an a la carte 
basis, that is an exercise of consumer choice. At the same time, other 
subscribers may choose to select a package that may be cheaper than the 
sum of individual stations.
2. Station Eligibility To Vote on Alternative Receive Facility
    32. Section 338(b)(1) of the Act requires a television station 
asserting its ``right to carriage'' under section 338(a) to bear the 
costs associated with the delivery of a good quality signal to the 
satellite carrier's designated local receive facility or to ``another 
facility that is acceptable to at least one-half the stations asserting 
the right to carriage in the local market.'' In the Report and Order, 
the Commission interpreted the phrase ``that is acceptable to at least 
one-half the stations asserting the right to carriage in the local 
market'' to mean that a satellite carrier may establish an alternative 
receive facility if ``50% or more'' of those stations in a particular 
market consent to such a site. The Commission determined that 
calculation of the ``50% or more'' stations should be based on the 
majority of stations entitled to carriage in each affected market. The 
Commission reasoned: ``Since the `right to carriage' under [s]ection 
338 extends, at least initially, to all local television broadcasters, 
the calculation includes all stations, whether they elect mandatory 
carriage or retransmission consent.''
    33. ALTV asks the Commission to revise its rule concerning this 
issue. ALTV contends that the calculation of the 50% threshold should 
be based on the number of local stations actually electing mandatory 
carriage, and that it should not include those stations that elect to 
proceed via retransmission consent. ALTV asserts that, if stations that 
elect retransmission consent are allowed to approve an alternative 
receive facility, ``stations `asserting their right' to be carried 
under the signal carriage rules will be harmed,'' because of the costs 
associated with having to transport their signals to a distant 
location.
    34. We decline to revise our rule on this issue. As an initial 
observation, we note that the Commission already has considered and 
rejected similar arguments voiced in the initial rulemaking. In the 
Report and Order, the Commission stated:

    We disagree * * * with ALTV, which asserts that a non-local 
receive facility may be established if half the local stations 
electing mandatory carriage, rather than retransmission consent, 
agree to the alternate site. Just as we decide that a satellite 
carrier should include both retransmission consent and mandatory 
carriage local stations on the same designated local receive 
facility, we do not distinguish between retransmission consent and 
mandatory carriage in the determination of an acceptable alternative 
receive facility * * *. All stations ``asserting a right to 
carriage,'' either through retransmission consent or mandatory 
carriage, may participate in the consideration of whether an 
alternative receive facility is acceptable.

    35. We recognize that ALTV wishes to ensure that stations electing 
retransmission consent are not permitted to vote in an election process 
that ALTV views as a protection only for must carry stations. We 
disagree, however, that this is the only or the best reading of the 
statute. The relevant language in section 338(b)(1) (``asserting the 
right to carriage'') is not the same as the language in section 
338(a)(1), which requires carriage of those local stations that 
``request'' carriage. Nothing in this language suggests that a station 
seeking to participate in the selection of an alternative reception 
site in order to determine its rights under the law could not assert 
that it has a right to carriage in a market but thereafter opt to be 
carried pursuant to retransmission consent. In this, as in many other 
areas, asserting the existence of a right need not be the same as 
proceeding to exercise that right. As the process

[[Page 49131]]

contemplated by the statue commences (and as it plays out in subsequent 
years) there is a set of stations that can assert a right to carriage 
consisting basically of all stations in the market. As the process 
proceeds, this group of stations is divided through the carriage 
election process into stations that request carriage and those that 
proceed under the retransmission consent provisions of the law. The 
assertion of the right and the request for carriage pursuant to that 
right are separate acts. Moreover, since the location of the receive 
facility may inform the station's decision to elect must carry or 
retransmission consent (e.g., if the receive site is in a location to 
which the station is confident of delivering a good quality signal, it 
may encourage a mandatory carriage election), a logical reading of the 
phrase in section 338(b)(1) of ``asserting the right to carriage'' 
would permit a vote by all must carry eligibles (including those 
ultimately choosing retransmission consent at the election for the 
upcoming cycle) prior to the election. In addition, since a station's 
status as a ``must carry'' or ``retransmission consent'' station may 
change from election cycle to election cycle, and since there may be 
only one opportunity to vote on the alternative receive facility, the 
best reading of the phrase ``asserting the right to carriage'' would 
cover those stations asserting that they have such a right at the vote, 
which they may then exercise at the upcoming election cycle, or in 
future election cycles.
    36. We note also that there are practical problems associated with 
the ALTV suggested rule. It is not known at the inception of the 
satellite broadcast carriage requirements, when or even if satellite 
carriers will attempt to use alternative receive facilities. If a 
satellite carrier proposes an alternative receive facility after the 
local stations in the affected market have submitted their carriage 
elections but before the carriage cycle commences (e.g., between July 1 
and December 31, 2001), it could be possible to identify stations that 
have elected mandatory carriage and that satellite carriers have agreed 
to carry. However, if the alternative receive facility is proposed at 
any other time, it is not possible to identify which stations have 
requested mandatory carriage for the relevant cycle. We believe the 
statute neither contemplates nor dictates station eligibility 
requirements that vary according to the timing of the satellite 
carrier's proposal of an alternative receive facility. We believe the 
statute provides us with the flexibility to adopt rules that will best 
address the factual circumstances we anticipate and, if warranted, to 
amend these rules if actions and events in practice prove otherwise.

C. Issues for Clarification

    37. Below, we clarify and modify several requirements adopted in 
the Report and Order. We take these actions partly sua sponte and 
partly in response to informal telephonic requests for clarification of 
our rules from the public.
1. Refusals To Carry
    38. The Report and Order implemented the terms of section 338 with 
respect to bases for refusing a local broadcast station's request for 
mandatory carriage. To the extent the statutory language in section 338 
is similar to the language of section 614, we patterned the rules for 
satellite carriers on the cable must carry rules. Where possible, we 
endeavored to leave the details of compliance to the affected parties 
and the marketplace. We expected that the parties would act reasonably 
and not refuse carriage without a good-faith basis for doing so. As the 
parties have commenced acting on the carriage procedures set forth in 
the rules, however, we have seen indications that more specific 
instruction and parameters may be necessary. We take the opportunity 
afforded by this Order on Reconsideration to clarify our intent and 
expectations more fully. We continue to hope that specific rule 
amendments will not be necessary.
    39. The rules we adopted to implement section 338 govern carriage 
elections and describe the information a station must include in its 
carriage request ``to ensure that a satellite carrier has the base 
information it needs to commence the carriage of local television 
stations.'' The rules also require satellite carriers to respond to 
must carry elections by accepting or denying carriage and providing 
reasons for denial. We noted, by way of example, that a valid reason 
for not commencing carriage is ``poor quality television signal.'' In 
addition, with respect to substantial duplication, we noted that a 
satellite carrier is not required to carry stations that broadcast 
programming that duplicates another station carried in the market. 
However, a broadcast station requesting mandatory carriage is not 
required to provide evidence with its request to prove that it does not 
duplicate. Indeed, it would be difficult or impossible for a station to 
do so because it does not know which other stations in the market have 
requested carriage. Rather, if the satellite carrier has a reasonable 
basis for asserting that the station substantially duplicates another 
station carried in the market, the carrier should describe its basis in 
sufficient detail to afford the station an opportunity to respond.
    40. In the context of carriage elections, we did not require 
broadcast stations to provide information about signal quality nor did 
we require each station electing must carry to first prove to the 
satellite carrier that its signal is of good quality. Rather, we left 
it to the satellite carrier, in its response to a request for mandatory 
carriage, to notify the station if the request is rejected and the 
reason for refusal is a poor quality signal. If a satellite carrier has 
a reasonable, good-faith basis for believing that a station is not 
delivering a good quality signal to the designated receive facility, 
then it may describe its basis for this belief in its response to the 
station's request for mandatory carriage. We do not require in the 
satellite context, as we did in the cable context, that satellite 
carriers must conduct tests or present specific measurements to 
broadcasters in response to requests for mandatory carriage. However, 
the absence of this express requirement should not be taken to imply 
that the satellite carrier is not required to have a reasonable basis 
for a denial of carriage and to convey that information to the 
broadcast station affected. With respect to the issue of signal 
quality, a station should not be rejected for carriage unless, based on 
a knowledge of the facts and circumstances involved, there are 
engineering reasons for doubting that a good quality signal is likely 
to be available. Our expectation was that carriers would generally be 
able to readily determine whether the signal of a station requesting 
carriage is being received by the facility's reception equipment. It is 
implicit in the notification requirement, and indeed it is explicit in 
the statute itself, that stations are entitled to carriage if they 
qualify based on the applicable statutory and regulatory provisions. 
Carriage is not to be avoided by denials where there is no legitimate 
controversy as to the station's qualifications.
    41. In discussing ``disputed'' signal quality, the Report and Order 
concluded that a satellite carrier is not required to carry a station 
``until'' the station provides or pays the costs for a good quality 
signal. We required that ``the signal testing practices in the cable 
carriage context should be generally applied in the satellite carriage 
context.'' In the event of a dispute over signal quality, we advised 
parties to look to cable precedent for guidance,

[[Page 49132]]

and we concluded that the broadcast station should pay the cost of 
signal tests if necessary to prove that the signal is of good quality. 
If, however, the satellite carrier has no reasonable basis for 
contending that the broadcast station does not provide a good quality 
signal, then no test is required. When a carrier has a reasonable basis 
for asserting that the station is not providing a good quality signal, 
the station has the opportunity to improve its over-the-air signal or 
arrange alternative means of delivery. In that case, or if the station 
responds with a promise to provide or pay to provide a good quality 
signal in the future, we encourage the parties to arrange a reasonable 
time frame within which the good quality signal will be provided to 
avoid long-term uncertainty that ties up the carrier's capacity.
    42. We further clarify that rejection of a request for carriage 
based on a broadcast station's ``failure'' to prove in its initial 
request for carriage that it delivers a good quality signal to the 
receive facility is not a valid ground for refusing carriage. 
Specifically, it has been reported to us that at least one satellite 
carrier has utilized a form letter that rejected carriage requests 
solely on the basis of ``failure to prove signal meets legal standard 
of quality necessary for mandatory carriage.'' This is not a valid 
reason for rejecting a request for mandatory carriage. Additionally, we 
are informed that the same carrier's form letter also attempts to shift 
the burden to the station requesting carriage to prove that it does not 
substantially duplicate another station that has requested carriage. 
Such attempts to shift the burden to the station requesting carriage do 
not comply with the rule or the Report and Order. We believe that 
stations that have received such form letters may appropriately respond 
by notifying the satellite carrier pursuant to section 76.66(m)(1) that 
it has failed to meet its obligations under the rules. Such 
notification by the broadcast station should specify how the satellite 
carrier's response failed to comply. For example, in response to a 
carrier's assertion that the station has failed to prove its signal 
quality, a station could provide information that the receive facility 
is within the station's Grade A service contours or that the Individual 
Location Longley-Rice computer model predicts that the station delivers 
a good quality signal to the receive facility. The satellite carrier 
would have 30 days to respond, pursuant to section 76.66(m)(2). The 
carrier could use the response to rescind its initial rejection and 
agree to carry the station or to provide specific information as to its 
basis for asserting that the station is not entitled to carriage. This 
response must state either that the station will be carried (e.g., as 
of January 1, 2002 for the first election cycle), or provide reasons, 
including the reasonable basis therefor, for not carrying the station 
as requested.
    43. We also clarify that the 60 days within which a complaint must 
be filed with the Commission pursuant to section 76.66(m)(6) will 
commence after the satellite carrier submits a final rejection of a 
broadcast station's carriage request, as clarified in this Order on 
Reconsideration. If a satellite carrier provides no response to a must 
carry election, the 60 days commences after the time for responding as 
required by the rule has elapsed. Or, in the case of a carrier's 
failure to provide the second response, as described above, the 60 days 
commences after the 30 days for response pursuant to section 
76.66(m)(2) has elapsed. As in the cable context, if the parties are 
negotiating to resolve carriage disputes (e.g., a station and carrier 
are planning to conduct a signal quality test or to determine 
alternative means for signal delivery), the 60 days does not begin to 
run until resolution efforts have failed, and the satellite carrier has 
notified the station in writing that it will not be carried. We 
continue to hope that parties will work together to resolve disputes or 
to determine that disputes cannot be resolved by negotiation and that 
Commission action is required. We note, however, that a station that 
has received an initial rejection letter may file a complaint with the 
Commission within 60 days of receipt if it believes that the carrier's 
apparent resolution efforts are not in good faith and are intended 
primarily to delay or derail legitimate carriage.
    44. To summarize, as a general and guiding principle, we take this 
opportunity to note that the Act requires satellite carriers to carry 
stations upon request in those markets in which the carrier uses the 
statutory copyright license to retransmit one or more local stations. 
If the satellite carrier has a good faith, reasonable basis for 
refusing carriage, the carrier has the initial responsibility to 
specify that basis and to provide the station with adequate information 
and justification for its refusal. This principle applies to any 
refusal to carry, not only to refusals based upon signal quality. It is 
not consistent with the SHVIA or our rules to attempt to place the 
burden on the broadcast station to prove why it is entitled to carriage 
in the absence of a legitimate reason for questioning its eligibility. 
It is also inconsistent with the Act and rules to refuse to provide 
broadcast stations with reasonable and readily available access to the 
local receive facility to conduct signal strength tests as necessary. 
As in the cable context, a satellite carrier that fails to comply with 
the Act and rules, for example by using the notification procedures to 
frustrate the process or delay carriage without justification is not 
acting in the public interest and may be subject to further actions. In 
addition, in the satellite context, a local broadcast station may file 
a civil action under section 501(f) of the copyright provisions in 
title 17 to the extent the satellite carrier's actions result in a 
failure to carry a station entitled to carriage.
2. Consistent Carriage Elections
    45. As indicated in the Report and Order, television broadcast 
stations are not required to have the same election requirement--i.e., 
of either retransmission consent or must carry--between a satellite 
carrier and a cable operator. This decision was based in part on the 
lack of statutory language requiring television stations to make 
consistent retransmission consent/must carry elections for the two 
types of MVPDs, but also on the service area differences between 
satellite carriers and cable operators. In this Order on 
Reconsideration, we further clarify that where there is more than one 
satellite carrier in a local market area, a television station can 
elect retransmission consent for one satellite carrier and elect must 
carry for another satellite carrier. We believe that allowing broadcast 
stations to elect independently is consistent with our goal of 
promoting competition in the MVPD market.
3. Retransmission Consent Agreements
    46. Under our rules, a television station must, during the first 
election cycle, notify a satellite carrier by July 1, 2001 of its 
carriage intention if it is located in a market where local-into-local 
service is provided. Beyond the first election cycle, our rules require 
television stations to make their retransmission consent-mandatory 
carriage election by October 1st of the year preceding the new cycle 
for all election cycles after the first election cycle. Commercial 
television stations are required to choose between retransmission 
consent and mandatory carriage by the prescribed date; NCE stations, on 
the other hand, must simply request carriage. A satellite carrier, in 
turn, must respond to a television station's carriage request within 30 
days

[[Page 49133]]

of receiving notice (e.g., for the first election cycle, by August 1, 
2001), and state whether it accepts or denies the carriage request. If 
the satellite carrier denies the request, it must state the reasons 
why. We clarify that, absent an agreement by the parties to the 
contrary, if a broadcast station has a retransmission agreement that 
extends into and terminates during an election cycle, the station--at 
the end of its contract term with the carrier--will not be entitled to 
demand must carry if it has not elected must carry by the required date 
(i.e., by July 1, 2001 for the first election cycle, by October 1, 2005 
for the next election cycle, etc.). We believe that this clarification 
is consistent with the requirements of the statute that, in the absence 
of a specific request for carriage by the relevant election deadline, a 
broadcaster is deemed to have elected retransmission consent and cannot 
assert a demand for carriage until the next election cycle.
4. Amendment of Carriage Request Provisions
    47. On our own motion, we take this opportunity to clarify and 
amend the rule provisions concerning carriage election provisions that 
apply to satellite carriers. As described in the Report and Order, 
under section 338, satellite carriers are required to carry broadcast 
stations only ``upon request.'' The Report and Order further explains 
that if an existing station fails to request carriage by the election 
deadline, it is not entitled to demand carriage for the duration of 
that cycle. The request for carriage is manifested by the station's 
election of must carry by the specified deadline. Section 
76.66(d)(1)(i) provides that ``a retransmission consent-mandatory 
carriage election made by a television broadcast station shall be 
treated as a request for carriage for purposes of this section.'' We 
are concerned that, as written, this provision could be misconstrued to 
mean that an election for retransmission consent constitutes a request 
for carriage that necessitates mandatory carriage under the statute. To 
avoid confusion or misinterpretation of this language, we revise 
section 76.66(d)(1)(i), as follows: ``An election for mandatory 
carriage made by a television broadcast station shall be treated as a 
request for carriage. For purposes of this subsection concerning 
carriage procedures, the term ``election request'' includes an election 
of retransmission consent or mandatory carriage.'' We will also change 
the reference from ``carriage request'' to ``election request'' in 
section 76.66(d)(1)(ii) to conform to the revision in section 
76.66(d)(1)(i).
    48. In addition, on our own motion, we clarify and amend section 
76.66(d)(2)(ii), which provides for carriage elections by television 
broadcast stations in new local-into-local markets. This provision 
requires local stations to make elections and requests for carriage 
``in writing, no more than 30 days after receipt of the satellite 
carrier's notice.'' We note that this provision does not contain the 
same requirements that apply to carriage elections for existing local-
into-local markets. We believe that certified mail, return receipt 
requested is the preferred method to ensure that broadcast stations are 
able to demonstrate that they submitted their elections by the required 
deadline, and that they were received by the satellite carrier. 
Therefore, we will amend section 76.66(d)(2)(ii) as follows: ``A local 
television station shall make its election request, in writing, sent to 
the satellite carrier's principal place of business by certified mail, 
return receipt requested, no more than 30 days after the station's 
receipt of the satellite carrier's notice of intent to provide local-
into-local service in a new television market. This written 
notification shall include the information required by Section 
76.66(d)(1)(iii).''
    49. We will also amend section 76.66(d)(3)(ii), which provides for 
elections and carriage requests for new television stations to be 
consistent with sections 76.66(d)(1) and (2), as amended. The amended 
language is as follows: ``A new television station shall make its 
election request, in writing, sent to the satellite carrier's principal 
place of business by certified mail, return receipt requested, between 
60 days prior to commencing broadcasting and 30 days after commencing 
broadcasting. This written notification shall include the information 
required by Section 76.66(d)(1)(iii).''
    50. For similar reasons of consistency, we amend sections 
76.66(d)(2)(iv) and (3)(iv), that set forth the procedures for new 
local-into-local service and new television stations, respectively. 
These amendments clarify the requirement that satellite carriers 
respond to elections for mandatory carriage within 30 days with 
notification of either agreement to carry or not to carry, along with 
reasons for the latter decision. These amendments track the requirement 
in section 76.66(d)(1)(iv). Accordingly, section 76.66(d)(2)(iv) is 
amended as follows: ``Within 30 days of receiving a local television 
station's election of mandatory carriage in a new television market, a 
satellite carrier shall notify in writing: (1) those local television 
stations it will not carry, along with the reasons for such decision; 
and (2) those local television stations it intends to carry.'' Also, 
section 76.66(d)(3)(iv) is amended as follows: ``Within 30 days of 
receiving a new television station's election of mandatory carriage, a 
satellite carrier shall notify the station in writing that it will not 
carry the station, along with the reasons for such decision, or that it 
intends to carry the station.''
    51. In this respect we also note that if a satellite carrier 
provides notification of intent to provide local-into-local service in 
a new market, pursuant to section 76.66(d)(2)(i), the satellite carrier 
must respond to an election of mandatory carriage, requested pursuant 
to section 76.66(d)(2)(ii), as required by section 76.66(d)(2)(iv), 
notwithstanding that it has not yet commenced local-into-local service 
in that market. We clarify that the satellite carrier is not required 
to carry a local television station that elects mandatory carriage in 
the new local-into-local market until the satellite carrier has 
commenced such service. We amend section 76.66(d)(2)(iii) accordingly, 
as follows: ``A satellite carrier shall commence carriage of a local 
station by the later of 90 days from receipt of an election of 
mandatory carriage or upon commencing local-into-local service in the 
new television market.''
    52. We further clarify that, with respect to determining the 
satellite carrier's principal place of business for purposes of 
submitting an election or carriage request, we believe it would be 
appropriate for a local television station to use a satellite carrier's 
letterhead address or other readily available principal address. If the 
satellite carrier wishes to designate a particular name or address for 
purposes of receipt of election notices, the carrier bears the 
obligation of providing that information to the local television 
stations no later than 30 days prior to the deadline for election and 
carriage requests. In addition, as in the cable context, the local 
television station's election or request for carriage may be signed by 
any person authorized to make and submit such election on behalf of the 
station.
    53. In response to numerous telephone inquiries, we clarify that 
election requests must be sent by the relevant election deadline. In 
the cable context, section 76.64(h) provides that ``on or before each 
must carry/retransmission consent deadline, each television broadcast 
station shall * * * send via certified mail to each cable system in the 
station's defined market a copy of the station's election statement 
with respect to that operator.'' The rules

[[Page 49134]]

implementing satellite carriage requirements do not contain the same 
language, and we received no comments on this specific question during 
the rulemaking proceeding. In light of our general goal of making the 
satellite carriage rules comparable and parallel to the cable carriage 
rules, and in the absence of arguments demonstrating why the procedures 
for election notifications should differ, we clarify our intent that 
the election request should be sent by certified mail, return receipt 
by the election date to be effective. We hereby amend section 76.66(d) 
of our rules to clarify this intent, as follows: ``(4) Television 
broadcast stations must send election requests as provided in Sections 
76.66(d)(1), (2), and (3) on or before the relevant deadline.''
5. Allocation of Costs for Reception Equipment at Receive Facility
    54. DIRECTV in an ex parte meeting and submission requested a 
clarification that it would be permissible for a satellite carrier to 
``pass through to broadcasters the costs incurred on the broadcaster 
side of the demarcation point at the local receive facility.'' DIRECTV 
asserts that section 76.66(g)(2) requires the broadcaster to provide a 
good quality signal ``at the input terminals of the signal processing 
equipment.'' DIRECTV contends that, in the satellite context, ``this 
would mean the input to any signal preamplifiers in the antenna 
downlead. Thus, the demarcation point for a station to hand off a `good 
quality signal' must be at the preamplifier input, which in [DIRECTV's] 
case is a junction box at the point where the downleads enter the 
building.'' DIRECTV wants to pass through to broadcasters on a pro rata 
basis the costs of providing the rooftop equipment and other costs 
related to signal reception up to the junction box, which DIRECTV 
refers to as the ``demarcation point.'' DIRECTV further explains that 
the ``non-recurring costs'' for negotiating roof rights, obtaining 
local permits, mounting antenna masts and installing conduit range from 
$1,000 to $45,000 and average $15,000. DIRECTV estimates average 
monthly costs for maintaining roof rights would be $2,500. DIRECTV 
proposes to pass these costs on to the broadcasters in the market, both 
those carried pursuant to retransmission consent and mandatory 
carriage. In the average case, and assuming ten stations in the market, 
DIRECTV estimates charging each station ``a one-time, non-recurring 
charge of $1,500, and a recurring charge of $250 per month.''
    55. In response to DIRECTV's views on this issue, NAB and ALTV, in 
a joint ex parte letter, contend that a station's obligation under the 
Act is only to deliver a good quality signal, ``and not to build (or 
rent) a local receive facility for a DBS operator.'' NAB and ALTV 
assert that ``the roof space on which DIRECTV has erected (or plans to 
erect) antennas is the relevant part of its local receive facility; and 
all that a station is required to do is deliver a good quality signal 
to that location.'' Thus, they argue, DIRECTV's demand that stations 
pay for DIRECTV's own real estate costs for creation of a local receive 
facility is ``inconsistent with the division of responsibility 
established by Congress in the SHVIA.''
    56. DIRECTV's proposal and request for clarification raise an issue 
not mentioned in the original proceeding nor in the Petitions for 
Reconsideration. We do not have in the record information that would 
warrant a decision that could potentially impose unexpected expense on 
broadcast stations. We note that, in the cable context, upon which the 
satellite carriage rules generally are based, the cable system headends 
typically include antennas and other receiving and processing equipment 
necessary to receive a broadcaster's good quality signal. We have 
required cable operators to employ good engineering practices with 
respect to receiving and processing the broadcast station's signal. In 
the Cable Must Carry Report and Order, we noted that the television 
station has the obligation to bear the costs associated with delivering 
a good quality signal to the system's principal headend. In this 
context we offered by way of example, ``improved antennas, increased 
tower height, microwave relay equipment, amplification equipment and 
tests that may be needed to determine whether the station's signal 
complies with the signal strength requirements, especially if the cable 
system's over-the-air reception equipment is already in place and 
operating properly.'' Cable operators are not, however, required to 
bear the burden of improving a broadcast station's signal.
    57. In the Order clarifying the Cable Must Carry Report and Order, 
the Commission was asked to address whether the broadcaster or the 
cable system should pay for the purchase, installation, and maintenance 
of a special antenna if necessary to receive adequate signal strength. 
The Commission concluded that the statute specifies that a broadcast 
station must deliver a good quality signal to the principal headend of 
the cable system in order to be entitled to mandatory carriage, and, 
for broadcast stations received at the principal headend and carried on 
the system, the signal quality measurements should be made using the 
existing equipment at the headend. For stations that were not carried 
by the cable system prior to the implementation of the carriage rules, 
the Commission concluded that cable operators should measure the signal 
quality using ``generally accepted equipment that is currently used to 
receive signals of similar frequency range, type or distance from the 
principal headend'' but need not ``employ extraordinary measures or 
specialized equipment'' for stations not currently carried. The 
Commission also reiterated what was said in the Cable Must Carry Report 
and Order that broadcasters may provide ``improved antennas'' to 
deliver a good quality signal, that the cable operator may not refuse 
to allow the broadcaster to provide such types of equipment, either for 
measurements or delivery of signals, and that broadcasters ``shall be 
responsible for the cost of such specialized antennas or equipment. 
However, cable operators may not shift the costs of routine reception 
of broadcast signals to those stations seeking must-carry status.'' 
(emphasis added). The Commission concluded: ``Accordingly, we believe 
that it is appropriate to require a broadcast station to pay only for 
antennas, equipment and other needed improvements that are directly 
related to the delivery of its signal and not to contribute to the 
general maintenance of the cable system's facilities.''
    58. We believe that for satellite carriers, like cable operators, 
it is reasonable to require that the local receive facility include, 
for example, the roof rights, antennas, towers, and processing 
equipment necessary to receive and process over-the-air good quality 
signals from local broadcasters. We do not believe, therefore, that it 
is consistent with our rules or with the statute to require 
broadcasters to pay for the basic equipment and property negotiations 
necessary to operate a receive facility. However, as in the cable 
context, if a broadcaster would require special or additional equipment 
so that its signal can be received at the established level of good 
quality at the receive facility, then the broadcaster is responsible 
for these additional costs.

III. Paperwork Reduction Act of 1995 Analysis

    59. This Order on Reconsideration has been analyzed with respect to 
the Paperwork Reduction Act of 1995 and has been found to contain no 
new or

[[Page 49135]]

modified information collection requirements on the public. The rule 
revisions we adopt on our own motion are included in the approval we 
obtained from the Office of Management and Budget (``OMB''). See OMB 
Notice of Action (OMB No. 3060-0980) (June 7, 2001). No further OMB 
approval is required.

IV. Ordering Clauses

    60. It is ordered, pursuant to section 405(a) of the Communications 
Act of 1934, 47 U.S.C. 405(a), and section 1.429 of the Commission's 
rules, 47 CFR 1.429, that DIRECTV's Petition for Reconsideration and 
the Association of Local Television Stations' Petition for 
Reconsideration are denied.
    61. It is further ordered, pursuant to sections 4(i), 4(j), and 303 
of the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 
154(j), and 303, that the amendments to rule 47 CFR 76.66 discussed in 
this Order on Reconsideration and set forth in Appendix A, and the 
clarifications of that rule discussed in this Order on Reconsideration, 
are adopted, and shall become effective October 26, 2001.

List of Subjects in 47 CFR Part 76

    Cable television, Multichannel video and cable television service.

Federal Communications Commission.
Magalie Roman Salas,
Secretary.

Rule Changes

    For the reasons discussed in the preamble, the Federal 
Communications Commission amends 47 CFR part 76 as follows:

PART 76--MULTICHANNEL VIDEO AND CABLE TELEVISION SERVICE

    1. The authority citation for part 76 continues to read as follows:

    Authority: 47 U.S.C. 151, 152, 153, 154, 301, 302, 303, 303a, 
307, 308, 309, 312, 315, 317, 325, 338, 339, 503, 521, 522, 531, 
532, 533, 534, 535, 536, 537, 543, 544, 544a, 545, 548, 549, 552, 
554, 556, 558, 560, 561, 571, 572, 573.

    2. Section 76.66 is amended by revising paragraph 3(d)(1)(i), 
(d)(2)(ii), (iii), (iv), (d)(3)(ii), (iv), and (d)(4) to read as 
follows:


Sec. 76.66  Satellite broadcast signal carriage.

* * * * *
    (d) Carriage procedures. (1) Carriage requests. (i) An election for 
mandatory carriage made by a television broadcast station shall be 
treated as a request for carriage. For purposes of this paragraph 
concerning carriage procedures, the term election request includes an 
election of retransmission consent or mandatory carriage.
    (ii) An election request made by a television station must be in 
writing and sent to the satellite carrier's principal place of 
business, by certified mail, return receipt requested.
* * * * *
    (2) * * *
    (i) * * *
    (ii) A local television station shall make its election request, in 
writing, sent to the satellite carrier's principal place of business by 
certified mail, return receipt requested, no more than 30 days after 
the station's receipt of the satellite carrier's notice of intent to 
provide local-into-local service in a new television market. This 
written notification shall include the information required by 
paragraph (d)(1)(iii) of this section.
    (iii) A satellite carrier shall commence carriage of a local 
station by the later of 90 days from receipt of an election of 
mandatory carriage or upon commencing local-into-local service in the 
new television market.
    (iv) Within 30 days of receiving a local television station's 
election of mandatory carriage in a new television market, a satellite 
carrier shall notify in writing: Those local television stations it 
will not carry, along with the reasons for such decision, and those 
local television stations it intends to carry.
    (3) * * *
    (i) * * *
    (ii) A new television station shall make its election request, in 
writing, sent to the satellite carrier's principal place of business by 
certified mail, return receipt requested, between 60 days prior to 
commencing broadcasting and 30 days after commencing broadcasting. This 
written notification shall include the information required by 
paragraph (d)(1)(iii) of this section.
* * * * *
    (iv) Within 30 days of receiving a new television station's 
election of mandatory carriage, a satellite carrier shall notify the 
station in writing that it will not carry the station, along with the 
reasons for such decision, or that it intends to carry the station.
    (4) Television broadcast stations must send election requests as 
provided in paragraphs (d)(1), (2), and (3) of this section on or 
before the relevant deadline.
* * * * *
[FR Doc. 01-23970 Filed 9-25-01; 8:45 am]
BILLING CODE 6712-01-P