[Federal Register Volume 70, Number 129 (Thursday, July 7, 2005)]
[Notices]
[Pages 39343-39345]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-13332]


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LIBRARY OF CONGRESS

Copyright Office

[Docket No. RM 2005-7]


Satellite Home Viewer Extension and Reauthorization Act of 2004

AGENCY: Copyright Office, Library of Congress.

ACTION: Notice of inquiry.

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SUMMARY: The Copyright Office of the Library of Congress is requesting 
information for the preparation of the first report to the Congress 
required by the Satellite Home Viewer Extension and Reauthorization Act 
of 2004.

DATES: Comments are due no later than August 22, 2005. Reply comments 
are due no later than September 12, 2005.

ADDRESSES: If hand delivered by a private party, an original and five 
copies of a comment should be brought to Room LM-401 of the James 
Madison Memorial Building between 8:30 a.m. and 5 p.m. and the envelope 
should be addressed as follows: Office of the General Counsel, U.S. 
Copyright Office, James Madison Memorial Building, Room LM-401, 101 
Independence Avenue, SE, Washington, DC 20559-6000. If delivered by a 
commercial courier, an original and five copies of a comment must be 
delivered to the Congressional Courier Acceptance Site located at 2nd 
and D Streets, NE, between 8:30 a.m. and 4 p.m. The envelope should be 
addressed as follows: Office of the General Counsel, Room LM-403, James 
Madison Memorial Building, 101 Independence Avenue, SE, Washington, DC. 
If sent by mail (including overnight delivery using U.S. Postal Service 
Express Mail), an original and five copies of a comment should be 
addressed to U.S. Copyright Office, Copyright GC/I&R, P.O. Box 70400, 
Southwest Station, Washington, DC 20024. Comments may not be delivered 
by means of overnight delivery services such as Federal Express, United 
Parcel Service, etc., due to delays in processing receipt of such 
deliveries.

FOR FURTHER INFORMATION CONTACT: Tanya Sandros, Associate General 
Counsel, Copyright GC/I&R, P.O. Box 70400, Southwest Station, 
Washington, DC 20024. Telephone: (202) 707-8380. Telefax: (202) 707-
8366.

SUPPLEMENTARY INFORMATION: On December 8, 2004, the President signed 
the Satellite Home Viewer Extension and Reauthorization Act of 2004 
(``SHVERA''), a part of the Consolidated Appropriations Act of 2005. 
Pub. L. No. 108-447. SHVERA extends for an additional five years the 
statutory license for satellite carriers retransmitting over-the-air 
television broadcast stations to their subscribers, as well as making a 
number of amendments to the existing section 119 of the Copyright Act. 
In addition to the extension and the amendments, SHVERA directs the 
Copyright Office to conduct two studies and report its findings to the 
Committee on the Judiciary of the House of Representatives and the 
Committee on the Judiciary of the Senate. One study, due by June 30, 
2008, requires the Copyright Office to examine and compare the 
statutory licensing systems for the cable and satellite industries 
under sections 111, 119 and 122 of the Copyright Act and recommend any 
necessary legislative changes. The other study, due by December 31, 
2005, requires the Office to examine select portions of the section 119 
license and to determine what, if any, impact sections 119 and 122 have 
had on copyright owners whose programming is retransmitted by satellite 
carriers. That study is the subject of this Notice of Inquiry.

The SHVERA Study

    Section 110 of SHVERA provides:

No later than December 31, 2005, the Register of Copyrights shall 
report to the Committee on the Judiciary of the House of 
Representatives and the Committee on the Judiciary of the Senate the 
Register's findings and recommendations on the following:
(1) The extent to which the unserved household limitation for 
network stations contained in section 119 of title 17, United States 
Code, has operated efficiently and effectively and has forwarded the 
goal of title 17, United States Code, to protect copyright owners of 
over-the-air television programming, including what amendments, if 
any, are necessary to effectively identify the application of the 
limitation to individual households to receive secondary 
transmissions of primary digital transmissions of network stations.
(2) The extent to which secondary transmissions of primary 
transmissions of network stations and superstations under section 
119 of title 17, United States Code, harm copyright owners of 
broadcast programming throughout the United States and the effect, 
if any, of the statutory license under section 122 of title 17, 
United States Code, in reducing such harm.

Pub. L. No. 108-447, 118 Stat. 3394, 3408 (2004).

Part One: The Unserved Household Limitation

    The statutory license set forth in section 119 of the Copyright Act 
enables satellite carriers to retransmit distant over-the-air 
television broadcast stations to their subscribers.\1\The license has a 
significant restriction, however, with respect to the retransmission of 
network television stations. Satellite carriers may only retransmit 
distant network stations to subscribers who reside in ``unserved 
households.'' An ``unserved household,'' with respect to a particular 
television network, is defined in the law as:
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    \1\ Section 122 of the Copyright Act permits satellite carriers 
to retransmit local over-the-air television broadcast stations to 
their subscribers. See 17 U.S.C. 122.

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[A] household that-

(A) cannot receive, through the use of a conventional, stationary, 
outdoor rooftop receiving antenna, an over-the-air signal of a 
primary network station affiliated with that network of Grade B 
intensity as defined by the Federal Communications Commission under 
section 73.683(a) of title 47 of the Code of Federal Regulations, as 
in effect on January 1, 1999;
(B) is subject to a waiver that meets the standards of subsection 
(a)(14) whether or not the waiver was granted before the date of the 
enactment of the Satellite Home Viewer Extension and Reauthorization 
Act of 2004;
(C) is a subscriber to whom subsection (e) applies;
(D) is a subscriber to whom subsection (a)(12) applies; or
(E) is a subscriber to whom the exemption under subsection 
(a)(2)(B)(iii) applies.

17 U.S.C. 119(d)(10).


[[Page 39344]]


    As can be seen from the above, the unserved household limitation 
contains a number of involved and complex provisions. It was not always 
so. In the original law that created section 119, the Satellite Home 
Viewer Act of 1988, the unserved household limitation was relatively 
straightforward. Because satellite carriers lacked the technological 
capability at that time to deliver local signals to their subscribers, 
the limitation was created to prevent satellite carriers from bringing 
network stations from distant television markets to subscribers and 
thereby decrease their incentive to watch the signals of the local 
over-the-air network stations. H.R. Rep. No. 100-887, pt. 1, at 18 
(August 18, 1988). If a satellite subscriber could receive the off-air 
signal of the local network station using a conventional rooftop 
antenna, the satellite carrier could not provide the subscriber with a 
distant network station affiliated with the same network. If a 
subscriber resided in a household outside the reach of the signal of 
the local network station-a so-called ``white area''-then the 
subscriber was eligible for satellite service of a distant station of 
the same network. The unserved household limitation therefore operated 
similarly to the network nonduplication rules of the Federal 
Communications Commission (``FCC'') applicable to cable systems.\2\ 
Unfortunately, satellite carriers largely ignored the proscription of 
the unserved household limitation in the years after 1988, resulting in 
revisions to the definition in the 1994 and 1999 extensions of section 
119 and a ``beefing up'' of the enforcement provisions related to the 
limitation. As a result, the limitation was defined with greater 
precision. The FCC was directed in the 1999 legislation to precisely 
define what is meant by receiving a signal of Grade B intensity and to 
develop a test for determining it. See 47 CFR 73.683(a). In addition to 
lack of over-the-air receipt of a network signal, other categories were 
added as demonstrating that a subscriber was unserved for purposes of 
section 119. Subparagraph (B) was added to the unserved household 
limitation to provide that even if a subscriber could receive an over-
the-air signal of Grade B intensity, if the subscriber obtained a 
waiver from the local network affiliate then he/she was considered 
unserved under section 119. Subparagraph (C) applies to subscribers 
whose receipt of network signals was a violation of the limitation but 
were grandfathered in by the 1999 legislation if they received the 
network signals after July 11, 1998, but before October 31, 1999. 17 
U.S.C. 119(e). Subparagraph (D), also added by the 1999 legislation, 
provides that subscribers of satellite service for commercial trucks 
and recreational vehicles, subject to certain requirements, are also 
considered unserved. And subsection (e) defines C-band satellite 
subscribers as unserved regardless of whether they can receive an over-
the-air signal from the local network stations.
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    \2\ The FCC has never regulated the satellite industry in the 
same fashion as the cable industry. Thus, there were no network 
nonduplication rules applicable to satellite for many years.
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    The world of the unserved household limitation in the Copyright Act 
is about to be complicated further. All of the existing provisions and 
definitions were crafted in the era of analog broadcast television. 
Broadcasters are now switching their transmissions from analog to 
digital, and it is anticipated that the ``digital transition'' will 
soon be completed. The Grade B signal intensity standard, which has 
been the centerpiece for defining when an individual household is 
unserved under section 119, does not apply to digital transmissions.\3\ 
However, section 204(b) of SHVERA directs the FCC to complete a study 
within one year from date of enactment to examine a number of factors 
related to developing a digital signal intensity standard. The study is 
expressly being done ``for purposes of identifying if a household is 
unserved by an adequate digital signal under section 119(d)(10) of 
title 17, United States Code.'' 37 U.S.C. 339(c)(1)(A) (2005).\4\ 
Included in that study is a consideration of the development of a 
predictive model for digital broadcast stations to facilitate 
application of the unserved household limitation in the Copyright Act.
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    \3\ The FCC does set forth the signal propagation areas, similar 
to Grade B contours, for digital television stations. See 47 CFR 
73.622(e)(service areas for channels 2 through 69). These rules do 
not, however, permit determination of whether a particular household 
receives an adequate signal with respect to a particular digital 
network station.
    \4\ The FCC has commenced the study with the recent publication 
of a Notice of Inquiry. See Technical Standards for Determining 
Eligibility for Satellite-Delivered Network Signals Pursuant to the 
Satellite Home Viewer Extension and Reauthorization Act, ET Docket 
No. 05-182, Notice of Inquiry (Released May 3, 2005).
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    Part One of the Copyright Office study requires consideration of 
the unserved household limitation on two levels. First, we must 
determine whether the limitation has operated ``efficiently and 
effectively'' and whether it has promoted the goal of protecting 
copyright owners of over-the-air television programming. To make these 
determinations, the Office is soliciting public comment in this Notice 
of Inquiry. With respect to whether the unserved household limitation 
has operated efficiently and effectively, the Office is interested in 
public comments directed to the following. Has the Grade B signal 
intensity standard set forth in 47 CFR 73.683(a) permitted members of 
the public to receive adequate over-the-air television signals and is 
it the correct standard for determining when a subscriber resides in a 
television ``white area''? Has the Grade B predictive model developed 
by the FCC under section 339(c)(3) of the Communications Act, title 37 
of the United States Code, permitted effective identification of white 
areas and promoted the quick and efficient determination of whether 
subscribers are eligible for receipt of distant network stations under 
section 119? To what extent has the unserved household limitation been 
violated by satellite carriers and what are the details of enforcement 
actions taken against such violations? What improvements and/or 
amendments could be implemented to improve the effectiveness and 
efficiency of the unserved household limitation?
    With respect to whether the unserved household limitation has 
protected copyright owners of over-the-air television programming, the 
Copyright Office is interested in data and information that 
demonstrates what impact the limitation has on copyright owners' 
ability to charge a fair market price from broadcasters that transmit 
their programming. If the limitation were removed from the law, what 
impact would that have on the price of programming? Does the limitation 
promote the interests of copyright owners more, less, or the same as it 
does the interests of broadcasters?
    As to the second level of Part One of the study, we seek comment as 
to the following. To what extent will the signal intensity standard for 
households receiving over-the-air digital network stations likely 
resemble the current standard for analog television? What are likely to 
be the technical and practical differences between the two standards 
and how are they likely to affect satellite subscribers' receipt of 
over-the-air television stations? Are the coverage levels of a digital 
standard likely to be sufficient to provide full-time receipt of 
television signals? To prevent receipt of distant signals by 
subscribers who can receive an adequate local signal, what, if any, 
amendments will be necessary to the unserved household definition with 
respect to satellite subscriber receipt of over-the-air digital 
television stations?
    The Copyright Office encourages comments directed to these 
inquiries

[[Page 39345]]

and welcomes additional comments and information related to the 
unserved household limitation.

Part Two: Harm to Copyright Owners

    Part Two of the study is an inquiry as to the extent to which 
satellite retransmissions of superstations and network stations under 
the section 119 license harm copyright owners of broadcast programming 
in the United States and the effect, if any, of the section 122 
license, which permits royalty-free retransmission of local stations, 
in ameliorating such harm. ``Harm'' is generally understood to mean the 
difference in the price that copyright owners would have been able to 
charge satellite carriers for their programming and the price they 
actually receive under the fees established for section 119.\5\ At one 
point in time, the Copyright Royalty Tribunal considered the extent to 
which different categories of copyright owners (e.g. owners of movies 
and syndicated television series, sports programmers, owners of 
noncommercial broadcasting programming, etc.) were harmed by the 
existence of the section 111 cable license in determining the share of 
royalties each programming category should receive. That approach was 
altered by a Copyright Arbitration Royalty Panel (``CARP'') in 1996 in 
a cable royalty distribution proceeding, and it is established 
precedent in the context of cable royalty distribution proceedings that 
copyright owners of all programming categories are harmed equally by 
the existence of the section 111 license. See Distribution of 1990-1992 
Cable Royalties, Distribution Order, 61 FR 55653, 55658-59 (October 28, 
1996). That precedent would presumably apply to a contested 
distribution proceeding conducted under section 119 should one take 
place. Nevertheless, the Copyright Office is interested in data, 
information, and analysis that demonstrates whether and to what extent 
particular program categories are harmed by the section 119 license.
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    \5\It is possible for copyright owners to be harmed in other 
ways by distant signal retransmissions. The Copyright Office is 
interested in receiving comments and information regarding other 
types of ``harm.''
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    Because virtually all over-the-air television stations 
retransmitted by satellite carriers are licensed through the section 
119 license, it is difficult to speculate as to how the licensing of 
broadcast programming would operate in the absence of the license. In 
other words, what would be the fair market value of different types of 
broadcast programming if there was no section 119 license, and how 
would the licensing of that programming be handled (i.e. by the 
broadcasters, by some type of collective rights organization, etc.)? In 
the 1997 proceeding to adjust the section 119 royalty rates, the CARP 
was required to determine the fair market value of superstations and 
network stations retransmitted by satellite carriers. In making this 
determination, the CARP examined data from parallel markets. 
Specifically, the CARP considered the amounts received by programmers 
of cable-originated networks (ESPN, A&E, and other cable channels that 
are similar to broadcast channels) who operate in the free market 
without a statutory license as a proxy for the fair market value of 
broadcast programming. See 62 FR 55742 (October 28, 1997). The 
Copyright Office seeks updated data similar to that submitted in the 
1997 rate adjustment proceeding as a means of approximating what 
copyright owners might have received in the absence of the section 119 
license, along with analyses of that data that explain how copyright 
owners have been harmed by being deprived of the ability to license 
those works to satellite carriers in the open market. Data that 
compares what satellite carriers would have paid under approximate fair 
market value scenarios to what was actually paid under the section 119 
license is helpful. In addition, the Office seeks information as to how 
the licensing of broadcast retransmissions by satellite carriers might 
be handled in the absence of section 119 and approximations as to the 
costs associated with collecting and distributing royalties.
    In assessing the fair market value of broadcast programming, the 
Copyright Office recognizes that there may be factors beyond 
consideration of parallel markets. For example, FCC regulations 
governing satellite retransmissions can ultimately have an effect on 
the price of programming protected by the copyright laws. The FCC's 
syndicated exclusivity rules, sports blackout rules, and the network 
nonduplication rules may play some role in reducing harm to copyright 
owners from section 119 retransmissions. The Copyright Office requests 
information and analysis on this possibility. In addition, the Office 
notes that satellite broadcast retransmissions are exempt from the 
retransmission consent provisions of the communications law. See 37 
U.S.C. 325. What impact, if any, does the retransmission consent 
exemption have on harm to copyright owners from broadcast 
retransmissions under section 119?
    Finally, Part Two of the study requires the Copyright Office to 
consider the effect of the section 122 license on harm caused to 
copyright owners by section 119 retransmissions. Section 122 is a 
royalty-free statutory license created during the 1999 reauthorization 
of section 119 that permits satellite carriers to retransmit 
superstations and network stations to subscribers that reside within 
the local markets of those stations. 17 U.S.C. 122. The Office is 
interested in data, information, and analysis that demonstrates changes 
in royalties paid under section 119 before and after the adoption of 
section 122, and any other information demonstrating any impact section 
122 may have had on the section 119 royalties or any other effect 
section 122 has had on harm caused to copyright owners by section 119 
retransmissions.
    Commenters are encouraged to provide not only the data, 
information, and analyses requested in this Notice of Inquiry but also 
any other data, information, and/or analyses they deem relevant to the 
issues presented in section 110 of SHVERA. The Copyright Office 
welcomes the opportunity to meet with representatives of satellite 
carriers, copyright owners, broadcasters, and other parties affected by 
sections 119 and 122 of the Copyright Act in order to obtain additional 
relevant information and to hear their concerns.

    Dated: June 30, 2005.
Marybeth Peters,
Register of Copyrights.
[FR Doc. 05-13332 Filed 7-6-05; 8:45 am]
BILLING CODE 1410-30-S