[Federal Register Volume 70, Number 138 (Wednesday, July 20, 2005)]
[Proposed Rules]
[Pages 41650-41652]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-14270]


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LIBRARY OF CONGRESS

Copyright Office

37 CFR Parts 201 and 256

[Docket No. 2005-2 CARP CRA]


Adjustment of Cable Statutory License Royalty Rates

AGENCY: Copyright Office, Library of Congress.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Copyright Office of the Library of Congress is submitting 
for public comment a settlement proposal for the adjustment of certain 
royalty rates for use of the cable statutory license.

DATES: Comments and Notices of Intent to Participate are due by August 
19, 2005.

ADDRESSES: If hand delivered by a private party, an original and five 
copies of a comment and a Notice of Intent to Participate 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/CARP, U.S. Copyright Office, James 
Madison Memorial Building, Room LM-401, 101 Independence Avenue, S.E., 
Washington, DC 20559-6000. If delivered by a commercial courier, an 
original and five copies of a comment and a Notice of Intent to 
Participate must be delivered to the Congressional Courier Acceptance 
Site located at 2nd and D Streets, N.E., between 8:30 a.m. and 4 p.m. 
The envelope should be addressed as follows: Office of the General 
Counsel/CARP, Room LM-403, James Madison Memorial Building, 101 
Independence Avenue, S.E., Washington, DC. If sent by mail (including 
overnight delivery using U.S. Postal Service Express Mail), an original 
and five copies of a comment and a Notice of Intent to Participate 
should be addressed to: Copyright Arbitration Royalty Panel (CARP), 
P.O. Box 70977, Southwest Station, Washington, DC 20024. Comments and 
Notices of Intent to Participate 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 M. Sandros, Associate General 
Counsel, or Gina Giuffreda, Attorney-Advisor, Copyright Arbitration 
Royalty Panel (CARP), P.O. Box 70977, Southwest Station, Washington, 
D.C. 20024. Telephone: (202) 707-8380. Telefax (202) 252-3423.

SUPPLEMENTARY INFORMATION:

I. Background

    Section 111 of the Copyright Act, 17 U.S.C., creates a statutory 
license for cable systems that retransmit to their subscribers over-
the-air broadcast signals. Royalty fees for this license are calculated 
as percentages of a cable system's gross receipts received from 
subscribers for receipt of broadcast signals. A cable system's 
individual gross receipts determine the applicable percentages. These 
percentages, and the gross receipts limitations, are published in 37 
CFR part 256 and are subject to adjustment at five-year intervals. 17 
U.S.C. 801(b)(2)(A) & (D).\1\ This is a window year for such an 
adjustment.
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    \1\ Unless otherwise noted, all references are to chapter 8 of 
title 17 of the United States Code as in effect prior to May 31, 
2005, the effective date of the Copyright Royalty and Distribution 
Reform Act of 2004.
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    A cable rate adjustment is initiated by the filing of a petition 
from a party with a significant interest in the rates. The Library 
received two such petitions. The

[[Page 41651]]

first was filed on January 10, 2005, on behalf of the Office of the 
Commissioner of Baseball, the National Football League, the National 
Basketball Association, the Women's National Basketball Association, 
the National Hockey League, and the National Collegiate Athletic 
Association (collectively, the ``Joints Sports Claimants'') and the 
Motion Picture Association of America, Inc., its member companies and 
other producers and/or distributors of syndicated television programs 
(collectively, the ``Program Suppliers''). This petition requested that 
the Copyright Office commence a proceeding to adjust the cable 
compulsory license royalty rates set forth in 37 CFR 256.2. On April 
29, 2005, the Office received a second petition from the National Cable 
& Telecommunications Association (hereinafter, ``NCTA''), echoing the 
first petitioners' request for a rate adjustment proceeding to adjust 
the rates in Sec.  256.2. Specifically, NCTA asked that the rate 
adjustment proceeding ``adjust upward the gross receipts limitations 
currently specified in 37 CFR 256.2 to reflect national monetary 
inflation and to adjust downward the rates established in [section] 
111(d)(1)(B),'' and that it reconsider and ``adjust downward the rates 
currently specified in 37 CFR 256.2(c) and (d) (the 3.75% rate and the 
`syndex surcharge').''
    In response to the first petition and before receipt of the second 
one, the Library published a Federal Register notice seeking comment on 
the Joint Sports/Program Suppliers' petition and directing interested 
parties to file a Notice of Intent to Participate in a Copyright 
Arbitration Royalty Panel (``CARP'') proceeding. 70 FR 16306 (March 30, 
2005). The notice also designated a 30-day period to enable the parties 
to negotiate a new rate schedule. 37 CFR 251.63(a).
    In accordance with the March 30 notice, the Office received on June 
30, 2005, one agreement, submitted jointly by the NCTA, the Joint 
Sports Claimants, the Program Suppliers, the Canadian Claimants, the 
Public Television Claimants, the National Association of Broadcasters, 
Broadcast Music, Inc., the American Society of Composers, Authors & 
Publishers, SESAC, Inc., and the Devotional Claimants (``Settling 
Parties''), representing all of the parties who filed notices of intent 
to participate in this proceeding. The agreement proposes amending the 
basic royalty rates and the gross receipts limitations, the regulations 
governing the filing of the statements of account to reflect these 
changes, and proposes that these changes become effective beginning 
with the second semiannual accounting period of 2005. The agreement 
also notes that the syndex rates are not being adjusted for the new 
license period.
    However, the Settling Parties have yet to reach an agreement on 
whether or how to adjust the 3.75 rate set forth in Sec.  256.2(c) of 
title 37 of the CFR. Thus, the Settling Parties continue to consider 
these rates and will notify the Office, on or before August 10, 2005, 
as to whether they will seek adjustments to the 3.75 rate.
    In the meantime, the Settling Parties have asked that the Librarian 
adopt the agreed-upon rates in accordance with the regulations 
governing a rate adjustment proceeding. The relevant rule provides 
that:

     the Librarian may, upon the request of the parties, submit the 
agreed upon rate to the public in a notice-and-comment proceeding. 
The Librarian may adopt the rate embodied in the proposed settlement 
without convening an arbitration panel, provided that no opposing 
comment is received by the Librarian from a party with an intent to 
participate in a CARP proceeding.

37 CFR 251.63(b). This Federal Register notice fulfills the notice and 
comment requirement of Sec.  251.63(b).

II. Proposed Rates and Gross Receipts Limitations

    The June 30 petition proposes specific adjustments to the cable 
license royalty rates, pursuant to 17 U.S.C. 801(b)(2)(A), and the 
gross receipts limitations, pursuant to 17 U.S.C. 801(b)(2)(D). The 
details of the adjustments are as follows.
    With respect to rates, the joint proposal raises the basic (or 
minimum) fee for providing broadcast stations from .956 of 1 per centum 
to 1.013 of 1 per centum of gross receipts for the privilege of further 
transmitting any non-network programming of a primary transmitter in 
whole or in part beyond the local service area of such primary 
transmitter; the fee for the first distant signal equivalent from .956 
of 1 per centum to 1.013 of 1 per centum of gross receipts; the fee for 
the second, third, and fourth distant signal equivalents from .630 of 1 
per centum to .668 of 1 per centum of gross receipts; and the fee for 
the fifth distant signal equivalent and each distant signal equivalent 
thereafter, from .296 of 1 per centum to .314 of 1 per centum of gross 
receipts.
    With respect to the gross receipts limitations which determine the 
size of a cable system (small, medium or large) and the royalty fee 
percentages that apply to those characterizations, the joint proposal 
puts forward increases as well. The gross receipts threshold for 
determining when a cable system is a small system would be raised from 
$98,600 to $137,100. Medium-sized cable systems have two methods of 
calculating their royalties, depending upon which side of the 
limitation threshold their gross receipts result. That threshold would 
be raised from $189,800 to $263,800, with the minimum reportable gross 
receipts over $263,800 being raised from $7,400 to $10,400. Finally, 
the gross receipts limitation for determining a large cable system 
would be raised from $379,600 to $527,600.
    The joint proposal establishes July 1, 2005, as the effective date 
of these rates, meaning that they would apply to royalty calculations 
and payments made by cable systems beginning with the second accounting 
period of 2005.

III. Proposed Rulemaking

    As noted above, the Library is publishing the terms of the joint 
proposal as proposed amendments to parts 201 and 256 of its rules. Any 
party who wishes to challenge these proposed rules must submit its 
written comments to the Librarian of Congress no later than close of 
business on August 19, 2005. The content of the written challenge 
should describe the party's interest in this proceeding, the proposed 
rule or rules that the party finds objectionable, and the reasons for 
the challenge.
    In addition, any party submitting written challenges must also 
submit an accompanying Notice of Intent to Participate in a CARP 
proceeding to adjust the cable rates and gross receipts limitations. It 
should be understood that anyone who challenges the proposed rules must 
be willing to fully participate in a CARP proceeding and have a 
significant interest in the adjustment of the rates. Failure to submit 
a Notice of Intent to Participate will preclude an interested party 
from participating in this proceeding and will preclude consideration 
of his or her written challenge. Any interested party that does file a 
Notice of Intent to Participate will be notified as to when the CARP 
proceeding will commence and when written direct cases will be due.

List of Subjects

37 CFR Part 201

    Copyright, Procedures.

37 CFR Part 256

    Cable television, Royalties.

    For the reasons set forth in the preamble, the Library proposes to 
amend 37 CFR parts 201 and 256 as follows:

[[Page 41652]]

PART 201-GENERAL PROVISIONS

    1. The authority citation for part 201 continues to read as 
follows:

    Authority: 17 U.S.C. 702

Sec.  201.17 Statements of Account covering compulsory licenses for 
secondary transmissions by cable systems.

    2. Section 201.17 is amended as follows:
    a. In paragraph (d)(2), by removing ``$379,600'' each place it 
appears and adding ``$527,600'' in its place;
    b. In paragraph (e)(12), by removing ``$98,600'' and adding 
``$137,100'' in its place; and
    c. In paragraph (g)(2)(ii), by removing ``0.956'' and adding 
``1.013'' in its place.

PART 256-ADJUSTMENT OF ROYALTY FEE FOR CABLE COMPULSORY LICENSE

    3. The authority citation for part 256 continues to read:

    Authority: 17 U.S.C. 702, 802

Sec.  256.2 Royalty fee for compulsory license for secondary 
transmission by cable systems.

    4. Section 256.2 is amended as follows:
    a. In paragraph (a), by removing the phrase ``the second semiannual 
accounting period of 2000'' and adding the phrase ``the second 
semiannual accounting period of 2005'' in its place;
    b. In paragraph (a)(1), by removing ``.956'' and adding ``1.013'' 
in its place;
    c. In paragraph (a)(2), by removing ``.956'' and adding ``1.013'' 
in its place;
    d. In paragraph (a)(3), by removing ``.630'' and adding ``.668'' in 
its place;
    e. In paragraph (a)(4), by removing ``.296'' and adding ``.314'' in 
its place;
    f. In paragraph (b), by removing the phrase ``the second semiannual 
accounting period of 2000'' and adding the phrase ``the second 
semiannual accounting period of 2005'' in its place;
    g. In paragraph (b)(1), by removing ``$189,800'' each place it 
appears and adding ``$263,800'' in its place, and by removing 
``$7,400'' and adding ``$10,400'' in its place; and
    h. In paragraph (b)(2), by removing ``$189,800'' each place it 
appears, and adding ``$263,800'' in its place, and by removing 
``$379,600'' each place it appears and adding ``$527,600'' in its 
place.

    Dated: July 14, 2005
Tanya M. Sandros,
Associate General Counsel.
[FR Doc. 05-14270 Filed 7-19-05; 8:45 am]
BILLING CODE 1410-33-S