[Federal Register Volume 77, Number 131 (Monday, July 9, 2012)]
[Rules and Regulations]
[Pages 40276-40302]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-16165]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 73 and 76

[MB Docket No. 11-93; FCC 11-182]


Implementation of the Commercial Advertisement Loudness 
Mitigation (CALM) Act

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: In this document, the Commission adopts rules to implement the 
Commercial Advertisement Loudness Mitigation (``CALM'') Act. Among 
other things, the CALM Act directs the Commission to incorporate into 
its rules by reference and make mandatory a technical standard, 
developed by an industry standards development body, that is designed 
to prevent digital television commercial advertisements from being 
transmitted at louder volumes than the program material they accompany. 
As mandated by the statute, the rules apply to digital TV broadcasters, 
digital cable operators, and other digital multichannel video 
programming distributors (``MVPDs''). Also per the statute, the rules 
will take effect one year after adoption, and will therefore be 
effective as of December 13, 2012. The rules adopted are designed to 
protect viewers from excessively loud commercials and, at the same 
time, permit broadcasters and MVPDs to implement their obligations in a 
minimally burdensome manner. The Commission will require broadcast 
stations and MVPDs to ensure that all commercials are transmitted to 
consumers at the appropriate loudness level in accordance with the 
industry standard.

DATES: Effective December 13, 2012. The incorporation by reference of 
certain publications listed in the rule is approved by the Director of 
the Federal Register as of December 13, 2012.

FOR FURTHER INFORMATION CONTACT: For additional information on this 
proceeding, contact Evan Baranoff, [email protected], or Lyle 
Elder, [email protected], of the Media Bureau, Policy Division, (202) 
418-2120 or Shabnam Javid, [email protected], of the Engineering 
Division, Media Bureau at (202) 418-7000.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Report 
and Order (R&O), FCC 11-182, adopted and released on December 13, 2011. 
The full text of this document is available electronically via ECFS at 
http://fjallfoss.fcc.gov/ecfs/ or may be downloaded at http://transition.fcc.gov/Daily_Releases/Daily_Business/2011/db1214/FCC-11-182A1.doc. (Documents will be available electronically in ASCII, Word 
97, and/or Adobe Acrobat.) This document is also available for public 
inspection and copying during regular business hours in the FCC 
Reference Center, Federal Communications Commission, 445 12th Street 
SW., CY-A257, Washington, DC 20554. The complete text may be purchased 
from the Commission's copy contractor, 445 12th Street SW., Room CY-
B402, Washington, DC 20554. Alternative formats are available for 
people with disabilities (Braille, large print, electronic files, audio 
format), by sending an email to [email protected] or calling the 
Commission's Consumer and Governmental Affairs Bureau at (202) 418-0530 
(voice), (202) 418-0432 (TTY).

Document Summary

I. Introduction

    1. With this Report & Order (R&O), we adopt rules to implement the 
Commercial Advertisement Loudness Mitigation (``CALM'') Act.\1\ Among 
other things, the CALM Act directs the Commission to incorporate into 
its rules by reference and make mandatory a technical standard, 
developed by an industry standards development body, that is designed 
to prevent digital television commercial advertisements from being 
transmitted at louder volumes than the program material they 
accompany.\2\ As mandated by the statute, the rules apply to digital TV 
broadcasters, digital cable operators, and other digital multichannel 
video programming distributors (``MVPDs'').\3\ Also per the statute, 
the rules will take effect one year after adoption, and will therefore 
be effective as of December 13, 2012.\4\ The rules we adopt today are 
designed to protect viewers from excessively loud commercials and, at 
the same time, permit broadcasters and MVPDs to implement their 
obligations in a minimally burdensome manner. As described below, we 
will require broadcast stations and MVPDs to ensure that all 
commercials are transmitted to consumers at the appropriate loudness 
level in accordance with the industry standard. In the event of a 
pattern or trend of complaints, stations and MVPDs will be deemed in 
compliance with regard to their locally inserted commercials if they 
demonstrate that they use certain equipment in the ordinary course of 
business.\5\ For the

[[Page 40277]]

embedded commercials that stations and MVPDs pass through from 
programmers, we also establish a ``safe harbor'' to demonstrate 
compliance through certifications and periodic testing. This regime 
will make compliance less burdensome for the industry while ensuring 
appropriate loudness for all commercials.
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    \1\ Public Law 111-311, 124 Stat. 3294 (2010) (codified at 47 
U.S.C. 621). The CALM Act was enacted on December 15, 2010 (S. 2847, 
111th Cong.). The relevant legislative history includes the Senate 
and House Committee Reports to bills S. 2847 and H.R. 1084, 
respectively, as well as the Senate and House Floor Consideration of 
these bills. See Senate Commerce, Science, and Transportation 
Committee Report dated Sept. 29, 2010, accompanying Senate Bill, S. 
2847, 111th Cong. (2010), S. REP. 111-340 (``Senate Committee Report 
to S. 2847''); House Energy and Commerce Committee Report dated Dec. 
14, 2009, accompanying House Bill, H.R. 1084, 111th Cong. (2009), 
H.R. REP. 111-374 (``House Committee Report to H.R. 1084''); Senate 
Floor Consideration of S. 2847, 156 Cong. Rec. S7763 (daily ed. 
Sept. 29, 2010) (bill passed) (``Senate Floor Debate''); House Floor 
Consideration of S. 2847, 156 Cong. Rec. H7720 (daily ed. Nov. 30, 
2010) (``House Floor Debate of S. 2847'') and H7899 (daily ed. Dec. 
2, 2010) (bill passed); House Floor Consideration of H.R. 1084, 155 
Cong. Rec. H14907 (daily ed. Dec. 15, 2009). The Senate and House 
Committee Reports were prepared before the bill was amended to add 
Section 2(c) of the CALM Act (the compliance provision). See Senate 
Floor Debate at S7763-S7764 (approving ``amendment No. 4687''). See 
also House Floor Debate of S. 2847 at H7720 (Rep. Eshoo stating that 
``[w]ith the passage of this legislation, we will end the practice 
of consumers being subjected to advertisements that are ridiculously 
loud, and we can protect people from needlessly loud noise spikes 
that can actually harm their hearing. This technical fix is long 
overdue, and under the CALM Act, as amended by the Senate, consumers 
will be in the driver's seat.''). We note that our action herein 
satisfies the statutory mandate that the Commission adopt final 
rules in this proceeding on or before December 15, 2011.
    \2\ See Advanced Television Systems Committee (``ATSC'') A/85: 
``ATSC Recommended Practice: Techniques for Establishing and 
Maintaining Audio Loudness for Digital Television,'' (July 25, 2011) 
(``RP'' or ``the RP''). To obtain a copy of the RP, visit the ATSC 
Web site: http://www.atsc.org/cms/standards/a_85-2011a.pdf. See 
also CALM Act sec. 2(a); Senate Committee Report to S. 2847 at 1; 
House Committee Report to H.R. 1084 at 1.
    \3\ See CALM Act sec. 2(a).
    \4\ See CALM Act sec. 2(b)(1).
    \5\ ``Locally inserted'' commercials are commercials added to a 
programming stream by a station or MVPD prior to or at the time of 
transmission to viewers. In contrast, commercials that are placed 
into the programming stream by a third party (i.e., programmer) and 
passed through by the station or MVPD to viewers are referred to 
herein as ``embedded'' commercials. As discussed below, the RP 
recommends different practices for stations and MVPDs to control the 
loudness of commercials depending on whether the commercials are 
locally inserted or embedded.
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II. Background

    2. The CALM Act was enacted into law on December 15, 2010 in 
response to consumer complaints about ``loud commercials.'' \6\ The 
Commission has received complaints about loud commercials virtually 
since the inception of commercial television more than 50 years ago.\7\ 
Indeed, loud commercials have been a leading source of complaints to 
the Commission since the FCC Consumer Call Center began reporting the 
top consumer complaints in 2002.\8\ One common complaint is that a 
commercial is markedly louder than adjacent programming.\9\ The problem 
occurs in over-the-air broadcast television programming, as well as in 
cable, Direct Broadcast Satellite (``DBS'') and other video 
programming. The text of the CALM Act provides in relevant part as 
follows: \10\
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    \6\ See House Floor Debate of S. 2847 at H7721 (Rep. Eshoo 
stating that the law is in response to ``the complaints that the 
American people have registered with the FCC over the last 50 
years'').
    \7\ See 1984 Order, FCC 84-300, 49 FR 28077, July 10, 1984 
(``1984 Order'') (observing in 1984 that ``the Commission has 
received complaints of loud commercials for at least the last 30 
years''). See also 47 CFR 73.4075; Public Notice, ``Statement of 
Policy Concerning Loud Commercials,'' 1 FCC 2d at para. 20(a) (1965) 
(unpublished) (``1965 Policy Statement'') (concluding that 
``complaints of loud commercials are numerous enough to require 
corrective action by the industry and regulatory measures by the 
Commission'').
    \8\ To view the FCC's Quarterly Inquiries and Complaints 
Reports, visit http://www.fcc.gov/cgb/quarter/. According to the FCC 
Consumer Call Center, since January 2008, the Commission has 
received approximately 1,000 complaints and 5,000 inquiries from 
consumers about ``loud commercials.'' The average number of monthly 
complaints has dropped by 50 percent since 2009.
    \9\ See Senate Committee Report to S. 2847 at 1-2. See also 1965 
Policy Statement, 1 FCC 2d at para. 15 (stating that a ``common 
source of complaint is the contrast between loudness of commercials 
as compared to the volume of preceding program material--e.g., soft 
music or dialogue immediately followed by a rapid-fire, strident 
commercial'').
    \10\ See 47 U.S.C. 621 (2010). See also 47 U.S.C. 609 (2010).

    (2)(a) Rulemaking required. Within 1 year after the date of 
enactment of this Act, the Federal Communications Commission shall 
prescribe pursuant to the Communications Act of 1934 (47 U.S.C. 151 
et seq.) a regulation that is limited to incorporating by reference 
and making mandatory (subject to any waivers the Commission may 
grant) the ``Recommended Practice: Techniques for Establishing and 
Maintaining Audio Loudness for Digital Television'' (A/85), and any 
successor thereto, approved by the Advanced Television Systems 
Committee, only insofar as such recommended practice concerns the 
transmission of commercial advertisements by a television broadcast 
station, cable operator, or other multichannel video programming 
distributor.\11\
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    \11\ Id. 621(a).
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    (b) Implementation
    (1) Effective Date. The Federal Communications Commission shall 
prescribe that the regulation adopted pursuant to subsection (a) 
shall become effective 1 year after the date of its adoption.\12\
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    \12\ Id. 621(b)(1).
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    (2) Waiver. For any television broadcast station, cable 
operator, or other multichannel video programming distributor that 
demonstrates that obtaining the equipment to comply with the 
regulation adopted pursuant to subsection (a) would result in 
financial hardship, the Federal Communications Commission may grant 
a waiver of the effective date set forth in paragraph (1) for 1 year 
and may renew such waiver for 1 additional year.\13\
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    \13\ Id. 621(b)(2).
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    (3) Waiver Authority. Nothing in this section affects the 
Commission's authority under section 1.3 of its rules (47 CFR 1.3) 
to waive any rule required by this Act, or the application of any 
such rule, for good cause shown to a television broadcast station, 
cable operator, or other multichannel video programming distributor, 
or to a class of such stations, operators, or distributors.\14\
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    \14\ Id. 621(b)(3).
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    (c) Compliance. Any broadcast television operator, cable 
operator, or other multichannel video programming distributor that 
installs, utilizes, and maintains in a commercially reasonable 
manner the equipment and associated software in compliance with the 
regulations issued by the Federal Communications Commission in 
accordance with subsection (a) shall be deemed to be in compliance 
with such regulations.\15\
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    \15\ Id. 621(c).
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    (d) Definitions. For purposes of this section--
    (1) The term ``television broadcast station'' has the meaning 
given such term in section 325 of the Communications Act of 1934 (47 
U.S.C. 325); \16\ and
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    \16\ Id. 621(d)(1). Section 325 of the Communications Act 
defines the term ``television broadcast station'' as ``an over-the-
air commercial or non-commercial television broadcast station 
licensed by the Commission under subpart E of part 73 of title 47, 
Code of Federal Regulations, except that such term does not include 
a low-power or translator television station.'' 47 U.S.C. 
325(b)(7)(B).
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    (2) The terms ``cable operator'' and ``multi-channel video 
programming distributor'' have the meanings given such terms in 
section 602 of Communications Act of 1934 (47 U.S.C. 522).\17\
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    \17\ Id. 621(d)(2). Section 602 of Communications Act defines 
the term ``cable operator'' as ``any person or group of persons (A) 
who provides cable service over a cable system and directly or 
through one or more affiliates owns a significant interest in such 
cable system, or (B) who otherwise controls or is responsible for, 
through any arrangement, the management and operation of such a 
cable system.'' 47 U.S.C. 522(5). Section 602 of Communications Act 
defines the term ``multichannel video programming distributor'' as 
``a person such as, but not limited to, a cable operator, a 
multichannel multipoint distribution service, a direct broadcast 
satellite service, or a television receive-only satellite program 
distributor, who makes available for purchase, by subscribers or 
customers, multiple channels of video programming.'' 47 U.S.C. 
522(13).

    3. The Commission has not regulated the ``loudness'' of commercials 
in the past, primarily because of the difficulty of crafting effective 
rules due to both ``the subjective nature'' of loudness and the 
technical limitations of the NTSC standard used in analog 
television.\18\ The Commission has incorporated by reference into its 
rules various industry standards on digital television, but these 
standards alone have not described a consistent method for industry to 
measure and control audio loudness.\19\

[[Page 40278]]

The loud commercial problem seems to have been exacerbated by the 
transition to digital television, perhaps because DTV's expanded aural 
dynamic range allows for greater variations in loudness for cinema-like 
sound quality. As a result, when content providers and/or stations/
MVPDs do not properly manage DTV loudness, the resulting wide 
variations in loudness are more noticeable to consumers.\20\ However, 
DTV technology also offers industry the opportunity to more easily 
manage loudness. We note that, because the Recommended Practice we are 
instructed to incorporate by reference and make mandatory is directed 
only at digital programming, the rules we adopt in this R&O deal only 
with commercials transmitted digitally, and do not apply to analog 
broadcasts or analog MVPD service.\21\
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    \18\ 1984 Order at para. 14. In 1965, the Commission issued a 
policy statement, stating that broadcast licensees ``have an 
affirmative obligation to see that objectionably loud commercials 
are not broadcast'' and must make a ``good faith effort'' to 
``prevent the presentation of commercials which are too loud.'' See 
1965 Policy Statement, 1 FCC 2d at paras. 16-17 (1965); republished 
in Public Notice, ``Objectionably Loud Commercials,'' 54 FCC 2d 1214 
(1975). As noted by H&E's comments, the Commission has imposed 
forfeitures for airing objectionably loud commercials. See H&E 
Comments at 1-2. However, in 1984, the Commission terminated a 
proceeding initiated in 1979 that considered whether to adopt rules 
to eliminate loud commercials, finding that new regulations were not 
warranted because of the advent of new technology, such as the mute 
button on remote controls, and noting the difficulty in crafting 
effective rules ``due to the subjective nature of many of the 
factors that contribute to loudness.'' See 1984 Order at para. 14. 
See 1979 NOI, 44 FR 40532, July 11, 1979. The NTSC analog television 
system uses conventional audio dynamic range processing at various 
stages of the signal path to manage audio loudness for broadcasts, a 
practice which compensates for limitations in the dynamic range of 
analog equipment. However, this practice modifies the 
characteristics of the original sound, altering it from what the 
program provider intended. See RP Sec.  1.1.
    \19\ 47 CFR 73.682(d) incorporates by reference and requires 
compliance with most of the ATSC A/53 Digital Television Standard 
(2007 version) relating to digital broadcast television and 47 CFR 
76.640(b)(1)(iii) incorporates by reference the American National 
Standards Institute/Society of Cable Telecommunications Engineers 
(``ANSI/SCTE'') Standard 54 (2003 version) relating to digital cable 
television. The rules do not currently incorporate by reference a 
standard that applies to satellite TV (``DBS'') providers. Part 5 of 
the ATSC Standard A/53, which includes the Dolby AC-3 DTV audio 
standard (a method of formatting and encoding digital multi-channel 
audio, used by TV broadcast stations and many traditional cable 
operators), has recently been updated by ATSC: In our Video 
Description Order, we updated our DTV transmission standard in 
Section 73.682(d) of our rules to incorporate by reference the 2010 
version of Part 5 of the ATSC A/53 Digital Television Standard 
(relating to audio systems). See Video Description: Implementation 
of the Twenty-First Century Communications and Video Accessibility 
Act of 2010, MB Docket No. 11-43, Report and Order, 76 FR 55585, 
para. 52 (2011) (``Video Description Order''). See also ATSC A/53, 
Part 5: 2010 ``ATSC Digital Television Standard, Part 5-AC-3 Audio 
System Characteristics'' (July 6, 2010) (``2010 ATSC A/53 Standard, 
Part 5''). We note that this rule change is consistent with the 
final rules adopted herein because the RP references and requires 
compliance with the same testing methodology adopted in the 2010 
ATSC A/53 Standard, Part 5. See, e.g., RP Sec. Sec.  2.1 
(referencing A/53) and 7.1 (stating that the RP ``identifies methods 
to ensure consistent digital television loudness through the proper 
use of dialnorm metadata for all content, and thus comply with A/
53''). The previous version of the ATSC A/53 Standard, Part 5, which 
is incorporated by reference in Section 73.682(d), includes an 
outdated audio loudness measurement method. See ATSC A/53, Part 5: 
2007 ``ATSC Digital Television Standard, Part 5--AC-3 Audio System 
Characteristics'' Sec.  5.5 at 9 (Dialogue Level) (Jan. 3, 2007) 
(``2007 ATSC A/53 Standard, Part 5''). The 2010 ATSC A/53 Standard, 
Part 5, contains the new methods to measure and control audio 
loudness reflected in the RP. See 2010 ATSC A/53 Standard, Part 5 at 
Sec.  2.1 at 5 (referencing the RP) and Sec.  5.5 at 9 (Dialogue 
Level). Although important, the update to A/53 alone was 
insufficient to fully address the commercial loudness issue, because 
like most of the ATSC standard it deals directly with only broadcast 
signals. The CALM Act and the RP are broader, explicitly covering 
MVPDs, and ensuring that the benefits of commercial loudness 
mitigation will be available to all television viewers.
    \20\ See ATSC Letter by Mark Richer, ATSC President, and 
attached ``Executive Summary of the ATSC DTV Loudness Tutorial 
Presented on February 1, 2011'' (dated Apr. 8, 2011) (``ATSC Letter 
and DTV Loudness Tutorial Summary'') (stating ``[t]he ATSC AC-3 
Digital Television Audio System has 32 times the perceived dynamic 
range (ratio of soft to loud sounds) than the previous NTSC analog 
audio system. Although this increase in dynamic range makes cinema-
like sound a reality for DTV, greater loudness variation is now an 
unintentional consequence when loudness is not managed correctly'').
    \21\ 47 U.S.C. 621(a); RP Sec.  1. See ACA Comments at 9 (``ATSC 
A/85 does not apply to analog transmissions'').
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    4. The television broadcast industry has recognized the importance 
of measuring and controlling volume in television programming, 
particularly in the context of the transition to digital television. In 
November 2009, the Advanced Television Systems Committee (``ATSC'') 
\22\ completed and published the first version of its A/85 Recommended 
Practice (``the RP''),\23\ which was developed to offer guidance to the 
digital TV industry--from content providers to distributors--regarding 
loudness control.\24\ The RP provides detailed guidance on loudness 
measurement methods for different types of content (i.e., short form, 
long form, or file-based) at different stages of distribution (i.e., 
production, post-production and real time production).\25\ It 
specifically provides effective loudness management solutions for 
``operators'' \26\ to avoid large loudness variations during 
transitions between different types of content.\27\ If all stations/
MVPDs ensure that, inter alia, the loudness of all content is measured 
using the algorithm required by the RP and transmitted correctly, then 
consumers will be able to set their volume controls to their preferred 
listening (loudness) level and will not have to adjust the volume 
between programs and commercials.\28\ The RP, like most ATSC documents, 
was initially intended for over-the-air TV broadcasters, in particular 
for AC-3 \29\ digital audio systems. However, the RP also sets forth 
the recommended approach that cable and DBS operators and other MVPDs 
that use AC-3 and non-AC-3 audio systems should employ.\30\
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    \22\ ATSC is an international, non-profit organization 
developing voluntary standards for digital television. The ATSC 
member organizations represent the broadcast, broadcast equipment, 
motion picture, consumer electronics, computer, cable, satellite, 
and semiconductor industries. ATSC creates and fosters 
implementation of voluntary Standards and Recommended Practices to 
advance digital television broadcasting and to facilitate 
interoperability with other media. See http://www.atsc.org/aboutatsc.html.
    \23\ See ATSC A/85: ``ATSC Recommended Practice: Techniques for 
Establishing and Maintaining Audio Loudness for Digital 
Television,'' (Nov. 4, 2009). As noted above, the most current 
version of the RP, released July 25, 2011, is available at the ATSC 
Web site: http://www.atsc.org/cms/standards/a_85-2011a.pdf.
    \24\ See RP Sec.  1. A key goal of the RP was to develop a 
system that would enable industry to control the variations in 
loudness of digital programming, while retaining the improved sound 
quality and dynamic range of such programming. Id.
    \25\ See RP Sec.  5.
    \26\ The RP defines an ``operator'' as ``[a] television network, 
broadcast station, DBS service, local cable system, cable multiple 
system operator (MSO), or other multichannel video program 
distributor (MVPD).'' Thus, the definition includes stations and 
MVPDs, as well as broadcast networks and cable network programmers. 
See RP Sec.  3.4.
    \27\ See RP Sec.  8.
    \28\ See RP Sec.  4. If the operators use the RP properly, the 
loudness will also be consistent across channels. Id. We note that 
the RP does not intend to eliminate all loudness variations, but 
only prevent excessive loudness variations during content 
transitions. The RP also contains advice for systems without 
metadata to achieve the same result. See RP at Annex K.
    \29\ AC-3 is one method of formatting and encoding digital 
multi-channel audio, used by TV broadcast stations and many 
traditional cable operators. The AC-3 audio system is defined in the 
ATSC Digital Audio Compression Standard (A/52B), which is 
incorporated into the ATSC Digital Television Standard (A/53). See 
ATSC A/52B: ``Digital Audio Compression (AC-3, E-AC-3) Standard, 
Revision B'' (June 14, 2005).
    \30\ See RP at Annex H.
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    5. Compliance with the RP requires industry to use the 
International Telecommunication Union \31\ Radiocommunication Sector 
(``ITU-R'') \32\ Recommendation BS.1770 measurement algorithm.\33\ The 
ITU-R BS.1770 measurement algorithm provides a numerical value that 
indicates the perceived loudness \34\ of the content measured in units 
of ``LKFS'' \35\ by averaging the loudness of

[[Page 40279]]

audio signals in all channels over the duration of the content.\36\ In 
the RP, that value is called ``dialnorm'' (short for ``Dialog 
Normalization'') \37\ and is to be encoded as metadata \38\ into the 
audio stream required for digital broadcast television.\39\ Stations/
MVPDs transmit the dialnorm to the consumer's reception equipment.\40\ 
Specifically, the RP provides operators with three metadata management 
modes for ensuring that the consumer's equipment receives the correct 
loudness value.\41\
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    \31\ The International Telecommunication Union (``ITU'') is a 
specialized agency of the United Nations whose goal is to promote 
international cooperation in the efficient use of 
telecommunications, including the use of the radio frequency 
spectrum. The ITU publishes technical recommendations concerning 
various aspects of radiocommunication technology. These 
recommendations are subject to an international peer review and 
approval process in which the Commission participates.
    \32\ The ITU Radiocommunication Sector (``ITU-R'') plays a vital 
role in the global management of the radio-frequency spectrum and 
satellite orbits--limited natural resources which are increasingly 
in demand from a large and growing number of services such as fixed, 
mobile, broadcasting, amateur, space research, emergency 
telecommunications, meteorology, global positioning systems, 
environmental monitoring and communication services--that ensure 
safety of life on land, at sea and in the skies.
    \33\ See RP Sec.  5 (``[t]he specified measurement techniques 
are based on the loudness and true peak measurements defined by ITU-
R Recommendation BS.1770--`Algorithms to measure audio programme 
[sic] loudness and true-peak audio level' '').
    \34\ See RP Sec.  3.4 (defining ITU-R BS.1770). ``Loudness'' is 
a subjective measure based on human perception of sound waves that 
can be difficult to quantify and thus to measure. The ITU utilized 
very extensive human testing to produce an algorithm that provides a 
good approximation of human loudness perception of program audio to 
measure the loudness of programs. ``Volume,'' in contrast to 
loudness, is an objective measure based on the amplitude of sound 
waves. Id (defining loudness as ``[a] perceptual quantity; the 
magnitude of the physiological effect produced when a sound 
stimulates the ear'').
    \35\ The measured value is presented in units of loudness K-
weighted, relative to full scale (``LKFS''). LKFS units are 
equivalent to decibels. See RP Sec.  3.3 and Sec.  5.1.
    \36\ Loudness is measured by integrating the weighted power of 
the audio signals in all stereo audio channels (plus any surround-
sound audio channels) over the duration of the content. See RP Sec.  
5.1.
    \37\ See RP Sec.  1.1.
    \38\ Metadata or ``data about the (audio) data'' is 
instructional information that is transmitted to the home 
(separately, but in the same bit stream) along with the digital 
audio content it describes. See RP Sec.  1.1. The dialnorm and other 
metadata parameters are integral to the AC-3 audio bit stream.
    \39\ Use of AC-3 audio systems is required for TV stations as a 
result of the Commission's incorporation by reference into its rules 
of the ATSC digital TV standard, A/53, but not for cable operators 
or MVPDs. See RP Sec.  7.1. The RP addresses non-AC-3 audio systems 
only in new Annex K, which the ATSC approved after the CALM Act's 
enactment. See id. at Annex K.
    \40\ From the consumer's perspective, the dialnorm metadata 
parameter defines the volume level at which the sound needs to be 
reproduced so that the consumer will end up with a uniform loudness 
level across programs and commercials without a need to adjust it 
again. See RP Sec.  1.1. See also ATSC DTV Loudness Tutorial Summary 
at 1 (``When content is measured with the ITU-R BS.1770 measurement 
algorithm and dialnorm metadata is transmitted that correctly 
identifies the loudness of the content it accompanies, the ATSC AC-
audio system presents DTV sound capable of cinema's range but 
without loudness variations that a viewer may find annoying.''). We 
note, however, that compliance with the RP does not guarantee that a 
commercial will not seem loud to a viewer. A commercial could, for 
example, include loud sounds in part and softer sounds in part and 
overall comply with the RP. In addition, the loudness measurement 
algorithm does not account for all of the perceptual qualities of 
sound which could make a commercial seem louder to a listener.
    \41\ See RP Sec.  7.2.
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    6. The ``golden rule'' of the RP is that the dialnorm value must 
correctly identify the loudness of the content it accompanies in order 
to prevent excessive loudness variation during content transitions on a 
channel (e.g., TV program to commercial) or when changing channels.\42\ 
If the dialnorm value is correctly encoded--if it matches the loudness 
of the content, which depends in turn on accurate loudness 
measurements--the consumer's receiver will adjust the volume 
automatically to avoid spikes in loudness.\43\
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    \42\ See ATSC DTV Loudness Tutorial Summary at 1 (``An essential 
requirement (the golden rule) for management of loudness in an ATSC 
audio system is to ensure that the average content loudness in units 
of LKFS matches the metadata's dialnorm value in the AC-3 bit 
stream. If these two values do not match, the metadata cannot 
correctly ensure that the consumer's DTV sound level is consistently 
reproduced''). See also RP Sec.  5. Following the golden rule can be 
accomplished in multiple ways under the RP, including using a real-
time processor to ensure consistent loudness that matches the 
dialnorm value. We recognize, however, that this solution can be 
less desirable for industry and consumers in some cases, precisely 
because it reduces the dynamic range of the audio content. See RP 
Sec.  8.1.1 (c), Sec.  8.1.2 (c), and Sec.  9.1.
    \43\ See RP Sec.  1.1 and Sec.  4.
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    7. In addition to requiring the Commission to incorporate the RP by 
reference, the CALM Act requires the Commission to incorporate by 
reference ``any successor thereto.'' \44\ After the CALM Act's 
enactment, the ATSC approved several relevant changes to the RP. The 
ATSC approved a first successor document to the RP on May 25, 2011 and 
approved a second on July 25, 2011.\45\ The first successor added Annex 
J which provides guidance with respect to local insertions for 
operators using AC-3 audio systems.\46\ The second successor added 
Annex K \47\ which in turn provides instructions for operators using 
non-AC-3 audio systems.\48\ The RP states that Annexes J and K 
``contain all the courses of action necessary to perform effective 
loudness control of digital television commercial advertising.'' \49\ 
Both Annexes state that ``[i]t is vital that, when loudness of short 
form content (e.g., commercial advertising) is measured, it be measured 
in units of LKFS including all audio channels and all elements of the 
soundtrack over the duration of the content.'' \50\ Since there is no 
dialnorm metadata in non-AC-3 audio systems, the operator must ensure 
that the loudness of content measured in LKFS matches the Target 
Loudness \51\ of the delivery channel.\52\ In the context of the 
Annexes, the term ``vital'' indicates a course of action to be followed 
strictly (no deviation is permitted).\53\ Throughout the RP, the term 
``should'' indicates that a certain course of action is preferred but 
not necessarily required,\54\ and the term ``should not'' means a 
certain possibility or course of action is undesirable but not 
prohibited.\55\
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    \44\ See CALM Act sec. 2(a).
    \45\ This document is available at http://www.atsc.org/cms/standards/a_85-2011a.pdf.
    \46\ See RP at Annex J.
    \47\ See RP at Annex K.
    \48\ The second successor document added Annex K for use by non-
AC-3 digital audio systems, which includes many MVPDs. Non-AC-3 
audio systems use different compression and coding techniques from 
AC-3, such as MPEG-1 Layer 2 (MP2) or Advanced Audio Coding (AAC). 
See RP at Annex K.
    \49\ See RP Sec.  J.1 and Sec.  K.1. Stating that it ``contains 
the courses of action necessary to perform effective loudness 
control * * *'' In the NPRM we asked how to apply the RP, through 
our rules, to non-AC-3 MVPD systems, since the RP was written with 
that technology as its focus. NPRM at para. 12. Because Annex K 
expressly extends the RP to non-AC-3 systems, this issue is moot, 
although as some commenters correctly note, these rules apply only 
to digital transmissions.
    \50\ Id. at J.4. The only difference between Annex J.4, quoted 
above, and Annex K.4 is the phrase ``short form'' before ``content'' 
at the end of the sentence. Id. at K.4.
    \51\ Target Loudness is a specified value, established to 
facilitate content exchange from a content provider to a station/
MVPD. See RP Sec.  3.4.
    \52\ See RP Sec.  K.5.
    \53\ See RP Sec.  3.1.
    \54\ Id.
    \55\ Id. As discussed below, because the CALM Act makes the RP 
mandatory with respect to commercials transmitted by stations/MVPD, 
we interpret the statute to require courses of action by stations/
MVPDs that are recommended but not strictly required by the RP.
---------------------------------------------------------------------------

III. Discussion

    8. We initiated this proceeding on May 27, 2011 by issuing a Notice 
of Proposed Rulemaking (``NPRM'').\56\ We sought comment on proposals 
regarding compliance, waivers, and other implementation issues. As 
discussed below, after reviewing the concerns expressed in the record, 
we seek to adopt rules that recognize the distinct role played by 
stations and MVPDs in the transmission of commercials under the RP. 
Accordingly, our rules incorporate the RP and make commercial volume 
management mandatory, as required by the CALM Act,\57\ reduce the 
burden associated with demonstrating compliance in the event of 
complaints,\58\ and reflect the practical concerns described in the 
rulemaking record.\59\
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    \56\ Implementation of the Commercial Advertisement Loudness 
Mitigation (CALM) Act; MB Docket No. 11-93, Notice of Proposed 
Rulemaking, 76 FR 32116, June 3, 2011 (``NPRM'').
    \57\ CALM Act at sec. 2(a).
    \58\ CALM Act at sec. 2(c).
    \59\ Issues raised by commenters include the difficulties of 
performing real-time corrections on embedded commercials, and the 
use of spot checks by large stations and MVPDs to assure compliant 
programming on all stations and MVPDs
---------------------------------------------------------------------------

A. Section 2(a) and Scope

    9. We hereby adopt our proposal to incorporate the RP by reference 
into our rules,\60\ as well as our tentative conclusion that the 
Commission may not modify the RP or adopt other actions inconsistent 
with the statute's express limitations.\61\ In addition, we adopt our 
tentative conclusion that ``all stations/MVPDs and not only those using 
AC-3 audio systems'' are subject to our rules.\62\ We also tentatively 
concluded

[[Page 40280]]

in the NPRM that ``stations/MVPDs are responsible for all commercials 
`transmitted' by them.'' \63\ We conclude that the statute makes each 
station/MVPD responsible for compliance with the RP as incorporated by 
reference in our rules with regard to all commercials it transmits to 
consumers, including both those it inserts and those that are 
``embedded'' in programming it receives from program suppliers. As set 
forth below, this conclusion is consistent with the statutory language, 
the legislative history, and the RP.\64\
---------------------------------------------------------------------------

    \60\ Final Rules (47 CFR 73.8000(b)(3), Sec.  76.602(b)(10)).
    \61\ See NPRM at para. 8.
    \62\ See id. at para. 12 (reasoning that ``[t]he statute * * * 
expressly applies to all stations/MVPDs regardless of the audio 
system they currently use. Nothing in the statutory language or 
legislative history suggests an intent to make an exception for 
MVPDs that do not use AC-3 audio systems.''). See also RP at Annex K 
(providing ``recommendations * * * based on other sections of this'' 
RP as to ``courses of action necessary to perform effective loudness 
control * * * when using non-AC-3 audio codecs'').
    \63\ Id. at para. 10.
    \64\ Our interpretation is also bolstered by a series of letters 
from Members of Congress who have written in support of the approach 
described in the NPRM. See, e.g., Reply of Rep. Anna G. Eshoo (July 
29, 2011) (``Eshoo Reply''); Ex Parte Comments of Sens. Sheldon 
Whitehouse, Sherrod Brown, Tim Johnson, Claire McCaskill, and 
Charles E. Schumer (September 14, 2011) (``Whitehouse Letter''); and 
Ex Parte Comments of Sen. John D. Rockefeller, IV, Chairman, 
Committee on Commerce, Science, and Transportation (October 3, 2011) 
(``Rockefeller Letter'').
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    10. Our conclusion rests on our reading of the CALM Act and the RP. 
As set forth above, the CALM Act directs the Commission to 
``incorporat[e] by reference and mak[e] mandatory'' the RP ``only 
insofar as'' it ``concerns the transmission of commercial 
advertisements by a television broadcast station, cable operator, or 
other multichannel video programming distributor.'' \65\ As one 
commenter accurately observes, the RP ``relies not on a single entity 
to control the audio loudness, but rather on an entire `ecosystem' of 
all participants to ensure that correct audio levels are maintained--
ranging from when an advertisement is created through display in a 
consumer's home.'' \66\ Consistent with the statute, however, the rules 
we adopt today are limited to station/MVPD responsibilities under the 
RP.\67\ Our rules are also limited to the RP's methods for controlling 
the loudness of commercial advertisements--as opposed to regular 
programming--transmitted by stations/MVPDs to consumers.\68\
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    \65\ 47 U.S.C. 621(a). The RP defines an ``operator'' more 
broadly, as ``[a] television network, broadcast station, DBS 
service, local cable system, cable multiple system operator (MSO), 
or other multichannel video program distributor (MVPD).
    \66\ NCTA Comments at 4. See, e.g., RP Sec.  7.3.2 
(``Cooperation between the content supplier and recipient is 
necessary to achieve successful loudness management.'').
    \67\ Final Rules (47 CFR 73.682(e)(1), Sec.  76.607(a)(1)). This 
statutory focus is consistent with other contexts, such as 
commercial limits in children's programming, where Congress imposed 
responsibility on stations/MVPDs which, in turn, required their 
providers to comply through contracts. See 1991 Children's TV Order, 
FCC 91-113, 56 FR 19611, April 29, 1991 (``1991 Children's TV 
Order'') (stating an MVPD remains liable for violations of the 
commercial limits on cable network children's programs they carry).
    \68\ CALM at sec. 2(a) (requiring that the Commission make the 
RP mandatory ``only insofar as such recommended practice concerns 
the transmission of commercial advertisements''). See also RP Sec.  
7 and Sec.  8.
---------------------------------------------------------------------------

    11. The RP recommends different courses of action for stations/
MVPDs to control the audio loudness of commercials depending on whether 
they are ``inserted'' or ``embedded.'' Appendices J and K of the RP 
summarize station/MVPD responsibilities with regard to the former.\69\ 
With regard to ``embedded'' content, the RP recommends ``[c]ooperation 
between the content supplier and recipient'' in ``fixed'' dialnorm 
systems in order to ``achieve successful loudness management'' and also 
requires that stations and MVPDs ``ensur[e] dialnorm [value] properly 
reflects the Dialog Level of all content.'' \70\ The CALM Act requires 
that our rules ``mak[e] mandatory'' the RP with regard to commercials 
transmitted by stations/MVPDs.\71\ We conclude, therefore, that the 
cooperative course of action the RP recommends as to embedded content 
``concerns the transmission of commercial advertisements'' by stations/
MVPDs and, therefore, that the CALM Act requires stations/MVPDs to take 
such actions.\72\ As examination of the record reveals, the RP relies 
on such cooperation for effective loudness control; without it, 
transmission of ``embedded'' commercials that comport with the RP would 
be impractical at best.\73\
---------------------------------------------------------------------------

    \69\ See RP at Annex J and Annex K. See id. Sec.  8.4 (``In the 
case of TV station or MVPD insertion of local commercials or 
segments, the operator should ensure that the Dialog Level of the 
local insertion matches the dialnorm setting of the inserted audio 
stream.'').
    \70\ See RP Sec.  7.3.2 (``Cooperation between content supplier 
and recipient is necessary to achieve successful loudness management 
when implementing [fixed dialnorm]''); Sec.  7.3.4 (``To ensure the 
proper match between dialnorm value and loudness, the operator 
should make use of loudness metering during quality control, and 
when necessary make compensating adjustments to ensure the loudness 
meets the target value.''); Sec.  8.1.1 (``Ensure that all content 
meets the Target Loudness''); Sec.  8.1.2 (``Ensure that * * * 
content is measured (see Section 5.2) and labeled with the correct 
dialnorm''); Sec.  8.3 (``1) Ensure proper targeted average loudness 
of content in a fixed metadata system, or 2) Ensure proper dialnorm 
authoring matching the measured content loudness in an agile 
metadata system''); Sec.  H.8 (``Key Idea: Ensure that all program 
and commercial audio content matches the dialnorm value''); and 
Sec.  K.2 (``The Operator's goal is to present to the audience 
consistent audio loudness'').
    \71\ 47 U.S.C. 621(a).
    \72\ Id.
    \73\ See, e.g., Verizon Comments at 8; NAB Comments at 8; NCTA 
Comments at note 5.
---------------------------------------------------------------------------

    12. Our conclusion that stations/MVPDs are responsible for 
compliance with regard to ``embedded'' as well as ``inserted'' 
commercials is consistent with Congressional intent as well as the 
language of the statute and the RP. Examination of the legislative 
history reflects that Congress's purpose in regulating the volume of 
audio on commercials was to ``make the volume of commercials and 
regular programming uniform so consumers can control sound levels.'' 
\74\ Our reading of the statute and the RP carries out this purpose by 
requiring that all commercials transmitted by stations/MVPDs comport 
with the RP, regardless of whether they are ``inserted'' or 
``embedded.'' The record reflects that most commercials are not 
inserted in programming by stations/MVPDs, but rather upstream by 
broadcast or cable networks; in some cases, more than 95% of the 
commercials transmitted are embedded within programming when it is sent 
to stations/MVPDs.\75\ Our interpretation carries out Congress's 
purpose by requiring compliance with the RP's provisions uniformly for 
all commercials transmitted by stations/MVPDs, not just the minority 
they happen to insert.
---------------------------------------------------------------------------

    \74\ See, e.g., House Floor Debate of S. 2847 at H7720 (Rep. 
Eshoo stating that the bill would ``make the volume of commercials 
and regular programming uniform so consumers can control sound 
levels.''); Senate Committee Report to S. 2847 at 1 (stating 
Congress' expectation that the RP will ``moderat[e] the loudness of 
commercials in comparison to accompanying video programming''); 
House Committee Report to H.R. 1084 at 1 (stating goal of statute is 
``to preclude commercials from being broadcast at louder volumes 
than the program material they accompany''); House Floor Debate of 
S. 2847 at H7720 (Rep. Eshoo stating that ``[w]ith the passage of 
this legislation, we will end the practice of consumers being 
subjected to advertisements that are ridiculously loud, and we can 
protect people from needlessly loud noise spikes that can actually 
harm their hearing. This technical fix is long overdue, and under 
the CALM Act, as amended by the Senate, consumers will be in the 
driver's seat.''). See also Eshoo Reply at 1 (``The law's intent is 
simple--to make the volume of commercials and programming uniform so 
that spikes in volume do not affect the consumer's ability to 
control sound.'').
    \75\ See, e.g., ACA Comments at 32 (member cable systems insert 
fewer than 4 percent of transmitted commercials; cf. DIRECTV 
Comments at 19 (generally inserts \1/7\ of transmitted commercials 
in non-broadcast programming, but no commercials in broadcast 
programming).
---------------------------------------------------------------------------

    13. We find unpersuasive the arguments of some industry commenters 
that the responsibility of stations/MVPDS under the CALM Act and the RP 
is limited to ensuring that those

[[Page 40281]]

commercials they insert are set to the correct dialnorm value or meet 
the Target Loudness.\76\ Several commenters argue that imposing 
responsibility on stations/MVPDs for a task the RP ``assigns'' to 
others would exceed our statutory authority.\77\ We do not disagree. As 
described above, however, the ``practices'' described in the RP include 
actions that stations and MVPDs must take to cooperate with their 
content providers \78\ to ensure that all of the programming they 
transmit conforms with the RP, including commercials that they pass 
through in real time.\79\ Thus, our interpretation is consistent with 
the responsibilities set forth in the RP, as well as with the statutory 
focus on stations and MVPDs, and does not shift responsibilities under 
the RP from third parties to stations/MVPDs.
---------------------------------------------------------------------------

    \76\ See, e.g., Verizon Comments at 13, NCTA Comments at 9-10, 
AT&T Comments at 4, ACA Comments at 6, TWC Reply at 2-3, DIRECTV 
Comments at 12, Comcast Ex Parte at 1 (October 6, 2011) (Comcast Ex 
Parte). We note that none of the comments filed in response to the 
NPRM disputed the responsibility of stations/MVPDs under the RP to 
pass through the metadata inserted into programming by third 
parties.
    \77\ See, e.g., NCTA Comments at 6 (stating that ``the 
Commission would exceed its very specific mandate to incorporate the 
ATSC A/85 Recommended Practice if it were to impose responsibilities 
on cable operators not included in that Recommended Practice.''); Ex 
Parte Presentation of the American Cable Association (October 20, 
2011) (``ACA 10/20 Ex Parte'') (arguing that the Commission ``lacks 
discretion to * * * alter the balance of responsibilities concerning 
loudness moderation assigned in the RP''.)
    \78\ See RP Sec.  7.3.2.
    \79\ See RP Sec.  8.1 and Sec.  8.3.
---------------------------------------------------------------------------

    14. Some commenters also argue that stations/MVPDs can only be held 
responsible under the Commission's regulations for actions that the RP 
identifies as ``vital.'' \80\ We disagree. The Annexes to the RP set 
forth a variety of ``practices,'' referred to variously as ``vital,'' 
``preferred,'' (``should'' be followed), and ``critical,'' which apply 
to various industry participants.\81\ Some of those industry 
participants are subject to the CALM Act and some are not. The statute, 
in turn, directs us to make the RP mandatory insofar as it ``concerns 
the transmission of commercial advertisements'' by stations/MVPDs.\82\ 
The statute makes no distinction among these types of actions or 
between commercials ``inserted'' by stations/MVPDs and others.\83\ In 
light of the fact that the RP covers parties and practices that are 
outside the scope of the statute, we must exercise considerable care in 
implementing the statutory directive to incorporate the RP by reference 
to the extent that it concerns transmission of commercials by stations/
MVPDs. Based on our examination of the record, we believe that the most 
reasonable reading of the statutory language, together with the RP 
itself, is to make stations/MVPDs responsible for all of the 
commercials that they transmit, but to recognize that their 
responsibilities under the RP vary for inserted and embedded content.
---------------------------------------------------------------------------

    \80\ See, e.g., NAB Comments at 3; ACA Comments at 11; Reply of 
CenturyLink at 5 (``CenturyLink Reply'').
    \81\ The term ``vital'' (used only in the Annexes) indicates a 
course of action to be followed strictly (no deviation is 
permitted). The term ``should'' indicates that a certain course of 
action is preferred but not necessarily required. ``Critical'' 
elements of compliance are identified throughout the item, but the 
term is not defined. See RP Sec.  3.1.
    \82\ 47 U.S.C. 621(a). See NPRM, 26 FCC Rcd at para. 10.
    \83\ 47 U.S.C. 621(a) (directing the FCC to ``incorporat[e] by 
reference and mak[e] mandatory'' the RP ``insofar as [it] concerns 
the transmission of commercial advertisements'' by stations/MVPDs). 
See NPRM at para. 10. We note that, as the time of the CALM Act's 
adoption, the RP made no distinction between ``vital'' and 
``preferred'' actions. We also note that the RP does not address 
``transmission'' separately from other aspects of the program 
distribution process.
---------------------------------------------------------------------------

    15. We also reject the argument that station/MVPD responsibilities 
under the RP as incorporated into the Commission's rules should be 
limited to those set forth in Annexes J and K to the RP, adopted after 
passage of the CALM Act.\84\ These Annexes do not purport to describe 
all practices that concern the transmission of commercials by a 
station/MVPD, nor do they do so. Rather, we read them as addressing 
only the actions required when entities insert commercials into 
programming. They do not override the RP as a whole.\85\ Sections 8.1 
and 8.3 of the RP, directing stations and MVPDs to themselves take 
various actions to ``ensure'' the proper loudness level of all the 
content they transmit, not just the commercials they insert, provide 
that such actions are ``critical'' for compliance with the RP.\86\ 
Moreover, as set forth above, the RP as a whole depends on stations' 
and MVPDs' cooperation with their programming providers to ensure 
proper loudness control for the commercials that they transmit. Neither 
Annex, nor any other amendment to the RP, changes the critical nature 
of such cooperation.
---------------------------------------------------------------------------

    \84\ See, e.g., NAB Comments at 3; ACA Comments at 11; Reply of 
CenturyLink at 5 (``CenturyLink Reply'').
    \85\ See RP Sec.  J.1 (``The recommendations in this Annex are 
based on other sections of this Recommended Practice.'').
    \86\ Id. at Sec. Sec.  8.1 and 8.3.
---------------------------------------------------------------------------

    16. We believe that our reading fulfills the statutory purpose 
better than the narrow one advocated by some industry commenters. 
Interpreting the statute such that stations'/MVPDs' responsibility to 
ensure that they do not transmit loud commercials applies only to those 
commercials that they insert would render the statute largely 
meaningless because consistent loudness cannot be achieved without 
applying the RP to all commercials. That is, commercials cannot be 
``present[ed] to viewers at a consistent loudness'' if only some--and 
not all--of the commercials conform to the engineering solutions 
developed in the RP. Simply put, inserting properly modulated 
commercials next to improperly modulated ones will not solve the 
loudness problem, and as a practical matter, consumers neither know nor 
care which entity inserts commercials into the programming stream. 
Congress did not intend to adopt only part of the industry's technical 
solution or to exclude from the solution essential elements for its 
success. To the contrary, Congress intended the Commission to implement 
the engineering solution with respect to all commercials and to make 
stations/MVPDs responsible for achieving that solution.\87\
---------------------------------------------------------------------------

    \87\ See, e.g., CU Reply at 3 (``It now appears that some in the 
industry are trying to renegotiate the intent and language of the 
Act.''); see also Eshoo Reply; Whitehouse Letter; Rockefeller 
Letter.
---------------------------------------------------------------------------

    17. Some commenters contend that the legislative history of the 
CALM Act demonstrates that Congress' intent was narrow, aiming at some 
but not all commercials. These commenters point to earlier, 
unsuccessful versions of the legislation that would have granted the 
Commission broad authority to establish loudness standards.\88\ We 
disagree. The ``more circumscribed language'' of the CALM Act as it was 
ultimately adopted does not absolve stations/MVPDs of responsibility 
for the vast majority of commercials they transmit.\89\ The legislative 
history reflects a Congressional decision to require regulation in 
accordance with the RP in lieu of a broad grant of authority for the 
Commission to establish technical standards. As indicated above, 
however, nothing in the statutory language or legislative history 
reflects that Congress did not intend that the RP be applied to all 
commercials.\90\
---------------------------------------------------------------------------

    \88\ See, e.g., Verizon Comments at 5-6, TWC Comments at 6-7.
    \89\ Verizon Comments at 6, 8.
    \90\ See, e.g., House Floor Debate of S. 2847 at H7720 (Rep. 
Eshoo stating that the bill would ``eliminate the earsplitting 
levels of television advertisements and return control of television 
sound modulation to the American consumer''); Senate Committee 
Report to S. 2847 at 1 (stating purpose of law); NAB Comments at 3-
4; RP Sec.  H.4 (``Key Idea: Goal is to present to the viewer 
consistent audio loudness across commercials, programs, and channel 
changes.'') (emph. in original).

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

[[Page 40282]]

1. ``Commercial Advertisements''
    18. We affirm the NPRM's tentative conclusion that non-commercial 
broadcast stations would be largely unaffected by this proceeding 
because Section 399B of the Communications Act, as amended, prohibits 
them from broadcasting ``advertisements.'' \91\ The Commission has 
previously concluded that the prohibition in Section 399B does not 
apply to ancillary and supplementary services provided by non-
commercial stations, such as subscription services provided on their 
DTV channels.\92\ Accordingly, we find that non-commercial broadcast 
stations are excluded from the statute except to the extent they 
transmit commercial advertisements as part of an ``ancillary or 
supplementary service.'' \93\
---------------------------------------------------------------------------

    \91\ NPRM at para. 11.
    \92\ Id.
    \93\ Id.
---------------------------------------------------------------------------

    19. In the NPRM, we also asked whether political advertisements 
were ``commercial advertisements,'' \94\ and some commenters argued for 
their exclusion.\95\ We find no basis in the statute to exclude 
political advertisements from the coverage of the CALM Act. The station 
or MVPD transmitting the political advertisement receives consideration 
for airing these advertisements,\96\ and we are merely requiring a 
candidate's advertisement to comply with a technical standard 
applicable to all advertisements.\97\ Complying with such a technical 
standard with respect to a political advertisement does not constitute 
an editorial change that would conflict with a licensee's obligations 
to accept political advertisements under Section 315 of the 
Communications Act. Based on the current record, we also find no policy 
or legal reason to exempt program-length commercials or commercial 
advertisements promoting television programming (``promos'') from the 
scope of the rules.\98\ First, we find no basis in the statute, the 
legislative history, or the RP for exempting promos from the definition 
of commercial advertisements for the purpose of the CALM Act. 
Specifically, the statute does not distinguish between commercials 
promoting the products or services of third parties and those promoting 
the station's or MVPD's own commercial television programming, whether 
shown on the same or a different channel. The RP, which the statute 
directs us to incorporate by reference into our rules, likewise makes 
no such distinction. Instead, it distinguishes between ``short form'' 
or ``interstitial'' content and ``long form'' content, treating 
``promotional'' material as ``short form'' content equivalent to 
advertisements.\99\ Moreover, we do not believe that exempting promos 
would serve the statutory purpose of preventing commercials from being 
transmitted at louder volumes than the programming they accompany. From 
a consumer perspective, we believe that there is no difference between 
promos and other commercials. Were we to exclude promos, television 
programmers could advertise their own programming at a higher volume 
than surrounding programming or other commercial advertisements. 
Accordingly, we find that it is most consistent with the statutory 
language and purpose to require that the loudness of promos comply with 
the RP.\100\ We emphasize that our determination that promos are 
covered by the definition of commercial advertisements is limited to 
the use of that term in the CALM Act and that this determination does 
not change how promos are categorized for any other purpose or 
Commission rule. We will address any other definitional issues 
surrounding ``commercial advertisements'' on a case-by-case basis as 
they arise.
---------------------------------------------------------------------------

    \94\ Id.
    \95\ See, e.g., HBI Comments at 4-5; AT&T Comments at 6; ACA 
Reply at 5, n.19; NCTA Comments at 13.
    \96\ This is consistent with the definition of an 
``advertisement'' in Section 399B of the Act. Section 399B of the 
Communications Act defines the term ``advertisement'' as ``any 
message or other programming material which is broadcast or 
otherwise transmitted in exchange for any remuneration, and which is 
intended--(1) to promote any service, facility, or product offered 
by any person who is engaged in such offering for profit; (2) to 
express the views of any person with respect to any matter of public 
importance or interest; or (3) to support or oppose any candidate 
for political office.'' See 47 U.S.C. 399b(a). It is also consistent 
with the definition of ``commercial matter'' in the children's 
television commercial limits rules. In the context of commercial 
limits during children's programming, the Commission defines 
``commercial matter'' as ``airtime sold for purposes of selling a 
product or service and promotions of television programs or video 
programming services other than children's or other age-appropriate 
programming appearing on the same channel or promotions for 
children's educational and informational programming on any 
channel.'' See 47 CFR 73.670 Note 1; 47 CFR 76.225 Note. 1.
    \97\ C.f. Codification of the Commission's Political Programming 
Policies, MM Docket No. 91-168, Memorandum Opinion and Order, 57 FR 
8278, March 9, 1992.
    \98\ We note that, although the Commission specifically asked 
about this issue in the NPRM at para. 11, it was not addressed at 
all in the comments or replies. Some Ex Parte filers did object to 
treating promotional announcements, particularly those made on 
premium networks, as ``commercials'' for purposes of the CALM Act. 
See, e.g., Time Warner, Inc. Ex Parte (October 26, 2011), Verizon Ex 
Parte (December 6, 2011), NCTA Ex Parte (December 6, 2011). These Ex 
Partes, however, provide no justification or rational basis for such 
a distinction, simply stating without support that ``promotion'' has 
alternative meanings in other contexts. We reiterate that non-
commercial broadcast stations are excluded from the statute except 
to the extent they transmit commercial advertisements as part of an 
``ancillary or supplementary service.''
    \99\ RP Sec.  3.4.
    \100\ In this regard, we note that there is no evidence in the 
record that bringing ``promos'' into compliance will require any 
effort beyond that necessary to bring all other commercial 
advertisements into compliance.
---------------------------------------------------------------------------

2. Successor Documents
    20. We observed in the NPRM that Section 2(a) mandates that the 
required regulation incorporate by reference and make mandatory ``any 
successor'' to the RP, affording the Commission no discretion in this 
regard.\101\ Accordingly, we tentatively concluded that notice and 
comment would be unnecessary to incorporate successor documents into 
our rules.\102\ On further reflection, we now conclude that, although 
the ``good cause'' exception excuses compliance with notice and comment 
requirements under these circumstances, the public interest will be 
better served by an opportunity for comment in most cases. Examination 
of the record reflects that interpretation may be required to determine 
how the RP successors apply to the transmission of commercial 
advertisements by stations/MVPDs pursuant to the CALM Act, and that 
interpretive work can only benefit from public input.\103\ If, however, 
a successor is not sufficiently substantive to require interpretation 
or public comment, we will simply adopt the successor by Public Notice. 
As proposed in the NPRM, for the present we will incorporate by 
reference into our rules the current successor to the RP, adopted by 
ATSC prior to the adoption of this Report and Order.\104\
---------------------------------------------------------------------------

    \101\ NPRM at para. 13, quoting 47 U.S.C. 621(a).
    \102\ Id., citing 5 U.S.C. 552(b)(B) (providing that 
Administrative Procedure Act's notice and comment requirements do 
not apply when the agency for good cause finds, and incorporates the 
finding and a brief statement of reasons therefor in the rules 
issued, that notice and public procedure thereon are unnecessary).
    \103\ See ACA Comments at 17 (``By eschewing a notice and 
comment process, the Commission will fail to fully and properly 
analyze and interpret the obligations placed by any `successor' [RP] 
on MVPDs and programmers.'').
    \104\ See NPRM at para. 13. As the NPRM indicated, we ask that 
the ATSC notify us whenever it approves a successor to the RP, 
submit a copy of it into the record of this proceeding, and send a 
courtesy copy to the Chief Engineer of the Media Bureau. Id.
---------------------------------------------------------------------------

    21. The ACA argues that the foregoing statutory mandate constitutes 
an improper delegation of legislative authority because it ties the 
Commission's hands and provides no guidance for the ATSC as to the 
content

[[Page 40283]]

of successor standards.\105\ The Commission, however, ``may not ignore 
the dictates of the legislative branch.'' \106\ Our obligation to 
incorporate by reference into our rules successor RPs is clear and, 
therefore, we do not address ACA's argument that we cannot incorporate 
the current version of the RP.\107\ We note, however, that we disagree 
with ACA's unsupported contention that if the successor clause were 
held to be an improper delegation, it would render the entire CALM Act 
null and void ``since Congress clearly considered this clause an 
essential part of the statute.'' \108\ The salient question for a court 
would be: `` `[w]ould Congress still have passed the valid sections had 
it known about the constitutional invalidity of the other portions of 
the statute?' '' \109\ The CALM Act as a whole does not appear to us to 
be so dependent, conditional, or connected to the statutory clause 
``and any successor thereto'' as to warrant a conclusion that Congress 
would not have passed the CALM Act without that clause. In any event, 
the severability issue makes no difference here, because the current RP 
is consistent with the preexisting one,\110\ and our rules implement 
the RP both as it existed at the time of the CALM Act's enactment and 
in its current form. In other words, our action herein would be the 
same in material respects in the absence of the ATSC's post-CALM Act 
amendments. Thus, if a court were to conclude that the successor 
provision in the CALM Act was an invalid but severable delegation, it 
would affect only incorporation of future successor RP documents.
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    \105\ See ACA Comments at 17-20, citing, inter alia, Mistretta 
v. United States, 488 U.S. 361, 422 (1989) (``If rulemaking can be 
entirely unrelated to the exercise of judicial or executive powers, 
I foresee all manner of ``expert'' bodies, insulated from the 
political process, to which Congress will delegate various portions 
of its lawmaking responsibility * * * This is an undemocratic 
precedent that we set-not because of the scope of the delegated 
power, but because its recipient is not one of the three Branches of 
Government.''); (Scalia, J., dissenting); Carter v. Carter Coal, 298 
U.S. 238, 311 (1936) (in concluding that delegation of authority to 
a subset of the mining industry to set minimum wages and maximum 
hours of labor violated due process).
    \106\ Action for Children's Television v. FCC, 932 F.2d 1504, 
1509 (D.C. Cir. 1991) (recognizing ``the Commission's constraints in 
responding to [an] appropriations rider'' that required it to ban 
all radio and television broadcasts of indecent material, despite 
the Commission's prior view that such a ban would be 
unconstitutional, but explaining that the court has an ``independent 
duty to check the constitutional excesses of Congress.''). See 
Branch v. FCC, 824 F.2d 37, 47 (D.C. Cir. 1987) (``although an 
administrative agency may be influenced by constitutional 
considerations in the way it interprets or applies statutes, it does 
not have jurisdiction to declare statutes unconstitutional.''). See 
also Hettinga v. United States, 560 F.3d 498, 506 (D.C. Cir. 2009) 
(``As the Supreme Court has observed, it would make little sense to 
require exhaustion where an agency `lacks institutional competence 
to resolve the particular type of issue presented, such as the 
constitutionality of a statute' ''), quoting McCarthy v.  Madigan, 
503 U.S. 140, 147-48 (1992).
    \107\ See ACA Comments at 19-20.
    \108\ Id. at 19.
    \109\ Basardh v. Gates, 545 F.3d 1068, 1070 (D.C. Cir. 2008), 
quoting U.S. v. Booker, 543 U.S. 220 (2005) (internal quotation 
marks omitted).
    \110\ For example, Appendices J and K state that they ``are 
based on other sections of this Recommended Practice.'' See RP Sec.  
J.1 and Sec.  K.1.
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B. Compliance and Enforcement

    22. Below, we discuss procedures stations and MVPDs may follow with 
regard to locally inserted commercials in order to be ``deemed in 
compliance'' with the rules in the event of an FCC investigation or 
inquiry. We then establish a ``safe harbor,'' based on a proposal by 
NCTA, for stations and MVPDs to demonstrate compliance with regard to 
embedded commercials through certifications and periodic testing. We 
intend to initiate an investigation when we receive a pattern or trend 
of consumer complaints indicating possible noncompliance.\111\ Stations 
or MVPDs that seek to be ``deemed in compliance'' or in the ``safe 
harbor'' need not demonstrate, in response to an FCC enforcement 
inquiry, that they complied with the RP with regard to the complained-
of commercial or commercials, and they will not be held liable for 
noncompliant commercials that they previously transmitted.\112\ The 
procedures we adopt, however, are optional, and any station or MVPD may 
instead choose to demonstrate actual compliance, in response to an FCC 
enforcement inquiry prompted by a pattern or trend of complaints, with 
the requirements of the RP with regard to the commercial(s) in 
question, as well as certifying to the Commission that its own 
transmission equipment is not at fault.\113\ If unable to do so, the 
station or MVPD may be liable for penalties or forfeitures.\114\ If we 
find that our approach (``deemed in compliance,'' ``safe harbor,'' 
complaint-driven enforcement, etc.) does not appear to be effective in 
ensuring widespread compliance with the RP, we will revisit it to the 
extent necessary.
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    \111\ As proposed by, e.g., NCTA and ACA. NCTA Comments at 15, 
ACA Reply at 12. Consumers Union (CU) proposed that the Commission 
conduct audits of programming to verify compliance. Consumers Union 
Reply at 5. CU argued that this would be a ``low-cost, efficient 
mechanism to ensure compliance,'' but since the goal of the statute 
is to improve the viewer experience, we find that responding 
directly to viewer concerns will be a more efficient and effective 
use of Commission resources.
    \112\ The record suggests that it is very difficult for stations 
or MVPDs to prove that an embedded commercial transmitted in the 
past actually complied with the RP. See, e.g., NAB Comments at 6 
(``Broadcast television stations currently do not measure every 
commercial that is transmitted, and such an approach would not be 
practical from a technical, administrative, or financial 
standpoint''). It becomes more difficult with the passage of time, 
although it is possible that some stations or MVPDs are capable of 
demonstrating past compliance based on their own records (see, e.g., 
DIRECTV Ex Parte (September 16, 2011)) or by working with 
programmers (potentially by seeking records to compare to 
complaints) (see, e.g., Comcast Ex Parte (October 6, 2011)).
    \113\ Final Rules (47 CFR 73.682(e)(6), Sec.  76.607(a)(6)). As 
NCTA notes, analog transmissions are exempt from the coverage of 
these rules in all cases, and do not need the protection of a safe 
harbor. NCTA Comments at 18. If an entity can demonstrate that a 
pattern or trend of complaints relates to an analog transmission, it 
need take no further action under these rules.
    \114\ 47 U.S.C. 503. See also 47 U.S.C. 503(b)(1)(B) and 47 CFR 
1.80(a)(2) (stating that any person who willfully or repeatedly 
fails to comply with the provisions of the Communications Act or the 
Commission's rules shall be liable for a forfeiture penalty).
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1. Deemed in Compliance/Safe Harbor
    23. The CALM Act states that ``[a]ny broadcast television operator, 
cable operator, or other multichannel video programming distributor 
that installs, utilizes, and maintains in a commercially reasonable 
manner the equipment and associated software in compliance with the 
regulations issued by the Federal Communications Commission in 
accordance with subsection (a) shall be deemed to be in compliance with 
such regulations.'' \115\ As described in the NPRM and discussed in 
detail below, we conclude that the scope of this provision is limited 
to situations in which the station or MVPD itself installs, utilizes, 
and maintains the equipment required to comply with the RP.\116\ 
Stations and MVPDs use such equipment for locally inserted commercials, 
and could similarly be deemed in compliance under the statute for 
embedded commercials by performing real-time processing.\117\ However, 
we believe that stations, MVPDs, content providers, and consumers 
disfavor real-time processing due to its harm to overall audio

[[Page 40284]]

quality.\118\ Based on the information in the record submitted in 
response to the NPRM, we will establish a safe harbor for stations and 
MVPDs with respect to embedded commercials that does not require real-
time processing.\119\ The safe harbor is derived from the RP's reliance 
on cooperation by stations and MVPDs with upstream program providers to 
ensure proper loudness control of the content that is passed through to 
viewers in real time without additional processing by the station or 
MVPD.\120\ Under these circumstances, the station or MVPD itself does 
not use the equipment necessary to encode dialnorm value into a 
commercial and thus does not ensure compliance through those means. 
This safe harbor provides a simple way for stations and MVPDs to 
respond to an enforcement inquiry regarding embedded commercials so as 
to reduce their burden of demonstrating compliance without forcing them 
to use equipment that distorts the audio they transmit.
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    \115\ CALM Act at Sec.  2(c).
    \116\ See NPRM at para. 16. Final Rules (47 CFR 73.682(e)(2), 
Sec.  76.607(a)(2)).
    \117\ A station or MVPD can install, utilize, and maintain, in a 
commercially reasonable manner, a real-time or ``conventional'' 
processor to ensure consistent loudness by limiting dynamic range, 
rather than by setting the dialnorm or meeting the Target Loudness. 
Conventional processing ``modifies the dynamic range of the decoded 
content by reducing the level of very loud portions of the content 
to avoid annoying the viewer and by raising the level of very quiet 
portions of the content so that they are better adapted to the 
listening environment.''
    \118\ Such processing can be undesirable for industry and 
consumers precisely because it reduces the dynamic range of the 
audio content.
    \119\ Final Rules (47 CFR 73.682(e)(3), Sec.  76.607(a)(3)).
    \120\ See RP Sec.  7.3.2. But see para. 30 (stations and MVPDs 
can comply with the RP by ensuring the loudness of embedded 
commercials is controlled by real-time processing, rather than 
through cooperation with program providers, but rarely do so).
---------------------------------------------------------------------------

    24. First, it is essential that stations and MVPDs have the proper 
equipment to pass-through RP-compliant programming. Therefore, we 
conclude that all stations and MVPDs must have the equipment necessary 
to pass through programming compliant with the RP, and be able to 
demonstrate that the equipment has been properly installed, maintained, 
and utilized. We note that the necessary equipment will vary depending 
on whether a station or MVPD uses an AC-3 audio system or not, whether 
it needs to encode incoming program streams, and other factors.\121\ 
MVPDs will be considered compliant with this requirement so long as the 
processes used for transmitting to subscribers the information 
contained in the transmissions of digital program networks correctly 
maintains the relative loudness of network commercials and long-form 
content consistent with the RP. This equipment is required in many 
cases for the provision of any audio at all, and is therefore necessary 
but not sufficient for parties to be ``deemed in compliance'' under 
Section 2(c) of the CALM Act, to enter the ``safe harbor'' we establish 
for embedded content, or to demonstrate actual compliance with the RP. 
In the context of an enforcement inquiry, any station or MVPD must be 
prepared to certify to the Commission that its own transmission 
equipment is not at fault for any pattern or trend of complaints.\122\
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    \121\ See DIRECTV and DISH Network Ex Parte (October 27, 2011).
    \122\ See 47 CFR 1.17. Final Rules (47 CFR 73.682(e)(2)(iv), 
Sec.  76.607(a)(2)(iv); Sec.  73.682(e)(3), Sec.  76.607(a)(3); 47 
CFR 73.682(e)(5)(ii), Sec.  76.607(a)(5)(ii); 47 CFR 73.682(e)(6), 
Sec.  76.607(a)(6)). As discussed above, stations and MVPDs not 
deemed in compliance must also demonstrate actual compliance with 
the RP.
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    25. Second, we have considered proposals in the record describing 
how stations and MVPDs may be ``deemed in compliance'' under the 
statute and the Commission's rules, and, as discussed below, we have 
adopted or adapted many of these suggestions in crafting our rules. We 
note that our approach regarding embedded commercials is based in large 
part on an MVPD-focused proposal offered by NCTA, which NCTA described 
as having the support of other industry participants.\123\
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    \123\ NCTA Ex Parte Comment (October 18, 2011).
---------------------------------------------------------------------------

    26. Consistent with our conclusion above with respect to the scope 
of Section 2(c) of the CALM Act, the measures set forth below for safe 
harbor protection with regard to embedded content fall outside of the 
statutory ``deemed in compliance'' section because they need not 
involve installation, use, or maintenance of ``equipment and associated 
software'' by a station/MVPD.\124\ Our interpretation harmonizes 
Section 621(c) with the statutory command to ``mak[e] mandatory'' all 
of the RP's recommendations concerning the transmission of commercials 
by stations/MVPDs, not just those that they insert locally. In 
contrast, interpreting Section 2(c) more broadly, as some industry 
commenters urge,\125\ such that stations and MVPDs would not have to 
take any actions beyond those prescribed in Section 2(c) even with 
respect to embedded commercials, would place the majority of 
commercials that they transmit beyond the Commission's enforcement 
authority, thereby undermining the statutory purpose.
---------------------------------------------------------------------------

    \124\ 47 U.S.C. 621(c).
    \125\ See AT&T Comments at 10, NAB Comments at 4, NCTA Comments 
at 9-10, Verizon Comments at 15-16.
---------------------------------------------------------------------------

    27. In the discussion below, we describe our conclusion to 
establish two approaches for stations and MVPDs: (1) ``Deemed in 
compliance'' (with regard to locally inserted commercials or with 
regard to all commercials where real-time processing is employed) and 
(2) ``safe harbor'' (with regard to embedded commercials). We 
emphasize, however, that following these approaches does not relieve 
these entities of their obligations under the CALM Act. We reiterate 
that all stations and MVPDs are required to comply with the RP. In 
response to questions raised in the NPRM,\126\ the record reflects that 
compliance can be difficult to demonstrate retroactively. Therefore, 
the ``deemed in compliance'' and ``safe harbor'' approaches offer 
alternative methods by which stations and MVPDs may demonstrate ongoing 
compliance with the RP in the event of a pattern or trend of complaints 
that leads to a Commission inquiry. If they prefer, parties may choose 
to demonstrate actual compliance with the RP in response to an FCC 
enforcement inquiry.
---------------------------------------------------------------------------

    \126\ See, e.g., NPRM at para. 28.
---------------------------------------------------------------------------

a. Local Insertions
    28. As noted above, the CALM Act states that ``[a]ny broadcast 
television operator, cable operator, or other multichannel video 
programming distributor that installs, utilizes, and maintains in a 
commercially reasonable manner the equipment and associated software in 
compliance with the regulations issued by the Federal Communications 
Commission in accordance with subsection (a) shall be deemed to be in 
compliance with such regulations.'' \127\ Application of this standard 
is fairly straightforward with respect to commercial advertisements 
inserted into the program stream by stations or MVPDs, and we agree 
with NAB's argument that a station or MVPD should be deemed in 
compliance for these inserted commercials when it
---------------------------------------------------------------------------

    \127\ CALM Act at Sec.  2(c). Final Rules (47 CFR 
73.682(e)(2)(i), Sec.  76.607(a)(2)(i)).

uses the equipment in the ordinary course of business to properly 
measure the loudness of the content and to ensure that the dialnorm 
metadata value correctly matches the loudness of the content when 
encoding the audio into AC-3 for transmitting the content to the 
consumer.\128\
---------------------------------------------------------------------------

    \128\ NAB Comments at 7. This general approach will remain valid 
even in non-AC-3 systems that will be encoding to meet the Target 
Loudness of the delivery channel. See RP Sec.  K.5. See also, e.g., 
AT&T Comments at 9 (`` `installs, utilizes, and maintains in a 
commercially reasonable manner' audio management systems and 
equipment that perform the essential functions of measuring content 
loudness consistent with ITU[-R] BS.1770 and transmitting normalized 
audio content (i.e., normalized based on the dialnorm parameter) 
downstream to consumers, regardless of which specific equipment and 
systems that station/MVPD has deployed or where in the distribution 
stream those functions are performed.''). Final Rules (47 CFR 
73.682(e)(2)(i), Sec.  76.607(a)(2)(i)).

    As a practical matter, and as indicated by NAB, the equipment would 
be used by the station or MVPD prior to the

[[Page 40285]]

insertion of each commercial to ensure that it complies with the 
RP.\129\
---------------------------------------------------------------------------

    \129\ See RP at Sec.  8.4 (explaining that locally inserted 
commercials must have their loudness level matched to the dialnorm 
of the stream into which they are to be inserted prior to 
insertion). For non-AC-3 systems, see RP Sec.  K.5. In practice, 
program providers may inform stations and MVPDs ahead of time of the 
dialnorm/Target Loudness at which their programming will be 
provided, and local inserters, when they encode, set the loudness of 
the commercials they plan to insert according to this information. 
Cooperation between the program provider and the stations and MVPDs 
is necessary to achieve successful loudness management when 
implementing this practice. See RP Sec.  7.3.2.
---------------------------------------------------------------------------

    29. In response to an enforcement inquiry concerning local 
insertions, a station or MVPD must provide records showing the 
consistent and ongoing use of this equipment in the regular course of 
business and demonstrating that the equipment has undergone 
commercially reasonable periodic maintenance and testing to ensure its 
continued proper operation.\130\ In addition, in response to such an 
inquiry, the station or MVPD must certify that it either has no actual 
knowledge of a violation of the RP, or that any such violation of which 
it has become aware has been corrected promptly upon becoming aware of 
such a violation.\131\ Upon receipt of this information and 
certification, the station or MVPD will be deemed in compliance with 
the RP with respect to commercials it inserted. We note here, as 
guidance for stations and MVPDs, that we do not believe that a station 
or MVPD that has actual knowledge of a violation but fails to correct 
the problem has utilized the equipment used to encode the commercials 
in a ``commercially reasonable manner.'' Therefore, it is not entitled 
to ``deemed in compliance'' treatment under the statute.
---------------------------------------------------------------------------

    \130\ Final Rules (47 CFR 73.682(e)(2)(ii), Sec.  
76.607(a)(2)(ii)).
    \131\ Final Rules (47 CFR 73.682(e)(2)(iii), Sec.  
76.607(a)(2)(iii)).
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b. Embedded Commercials
    30. For embedded commercials, which a station or MVPD receives from 
an upstream programmer, we conclude that there are two options: (1) Use 
a real-time processor to be deemed in compliance, or (2) follow the 
components of the ``safe harbor'' we describe herein.\132\ Stations and 
MVPDs are not able to modify the embedded commercials they transmit to 
viewers except by use of real-time processing equipment that distorts 
the audio.\133\ Commenters report, and our engineering analysis 
confirms, that no equipment is currently available that stations or 
MVPDs can use to set the dialnorm value or meet the Target Loudness 
\134\ in real time for embedded commercials they transmit to 
viewers.\135\ Nor are they in direct control of the production or 
encoding of these commercials such that they could use their equipment 
to bring them into compliance with the RP prior to transmission (even 
if they have access to the commercials prior to transmission). 
Nonetheless, as explained above, the CALM Act requires stations and 
MVPDs to ensure the compliance of these commercials with the statute 
and our rules.\136\
---------------------------------------------------------------------------

    \132\ We remind stations and MVPDs that they must always utilize 
their audio pass-through equipment so that it does not harm the RP-
compliant programming they receive and transmit to their viewers. We 
note that this safe harbor is an important but severable element of 
our compliance and enforcement scheme. We are establishing it to 
simplify our enforcement process for the benefit of stations and 
MVPDs, but it is not so fundamental to the scheme as a whole that 
the CALM Act regulations adopted in the item would be unenforceable 
in its absence. If the safe harbor is declared invalid or 
unenforceable for any reason, it is our intent that the remaining 
CALM Act regulations shall remain in full force and effect. As 
mentioned above, the safe harbor does not replace the basic 
obligation of all stations and MVPDs to comply with the requirements 
of the RP. As is typical in many other areas of Commission 
regulation, regulated entities still could seek to demonstrate on a 
case-by-case basis that they have done all that is required in 
response to an investigation.
    \133\ A station or MVPD can be deemed in compliance if it 
``installs, utilizes, and maintains in a commercially reasonable 
manner'' a real-time or ``conventional'' processor to ensure 
consistent loudness by limiting dynamic range, rather than by 
setting the dialnorm or meeting the Target Loudness. A station or 
MVPD relying on real-time processing must provide records showing 
the consistent and ongoing use of this equipment in the regular 
course of business and demonstrating that the equipment has 
undergone commercially reasonable periodic maintenance and testing 
to ensure its continued proper operation; certify that it either has 
no actual knowledge of a violation of the ATSC A/85 RP, or that any 
violation of which it has become aware has been corrected promptly 
upon becoming aware of such a violation; and certify that its own 
transmission equipment is not at fault for any pattern or trend of 
complaints. Final Rules (47 CFR 73.682(e)(4), Sec.  76.607(a)(4)). 
As discussed above, conventional processing ``modifies the dynamic 
range of the decoded content by reducing the level of very loud 
portions of the content to avoid annoying the viewer and by raising 
the level of very quiet portions of the content so that they are 
better adapted to the listening environment.'' We recognize, 
however, that such processing can be less desirable for industry and 
consumers in some cases, precisely because it reduces the dynamic 
range of the audio content. See RP Sec.  9.1.
    \134\ Target Loudness is a specified value established to 
facilitate content exchange from a content supplier to station/
MVPDs. See RP Sec.  3.3.
    \135\ NCTA Comments at 8; DIRECTV Comments at 10; ACA Comments 
at i; Reply of Time Warner Cable, Inc. at 6 (``TWC Reply''); see 
also, NAB Comments at 6.
    \136\ Id.
---------------------------------------------------------------------------

    31. Given the limitations in their options for controlling embedded 
commercials onsite, stations and MVPDs are likewise limited in their 
ability to rely exclusively on equipment to be deemed in compliance. 
Therefore, relying on the record and the RP, we establish a regulatory 
safe harbor, in which stations and MVPDs can take the steps discussed 
below to, first, significantly reduce the likelihood of any 
noncompliance with the RP, and, second, quickly resolve any problems 
that do arise. The safe harbor is based on a proposal filed by 
NCTA.\137\ We largely adopt the framework of NCTA's proposal and, at 
the same time, modify several components in order to ensure that the 
goals of the statute are fully achieved.
---------------------------------------------------------------------------

    \137\ NCTA Ex Parte (October 18, 2011).
---------------------------------------------------------------------------

    32. To use the safe harbor, stations and MVPDs must undertake 
certain activities: obtain widely available certifications of 
compliance from programmers; conduct annual spot checks of non-
certified programming to ensure compliance with the RP (for larger 
stations and MVPDs); \138\ and conduct spot checks of specific channels 
in the event the Commission notifies the station or MVPD of a pattern 
or trend of complaints. Not all MVPDs or stations must perform an 
annual spot check in order to use the safe harbor. Following NCTA's 
proposal, we rely on the largest MVPDs and stations to perform spot 
checks in the specific situations discussed below. Because we 
anticipate that the need for annual spot checks will diminish after the 
first two years, due in part to the likely increase in the number of 
programmers that certify compliance, we terminate the requirement for 
annual spot checks after two years on an individual channel or program 
stream basis, provided no problems are found and certifications remain 
in force.
---------------------------------------------------------------------------

    \138\ If necessary, MVPDs and stations can contract to have 
third parties perform the spot checks.
---------------------------------------------------------------------------

    33. In formulating the safe harbor, we began with the proposal in 
the NPRM to consider contractual arrangements and quality control 
monitoring as a practical means to address embedded commercials.\139\ 
For example, we asked in the NPRM whether parties should rely on 
contracts with programmers to ensure compliance, and if that approach 
had downsides for small stations and MVPDs.\140\ Commenters responded 
with concerns about a purely contractual approach, particularly for 
smaller entities.\141\ As a result, we have moved away from a 
contractual approach and adopt instead the requirement that 
certifications be widely available. We also asked in the NPRM ``what, 
if any, quality control measures [stations and MVPDs] should take to 
monitor the content delivered to them for

[[Page 40286]]

transmission to consumers.'' \142\ Commenters objected to a requirement 
for constant monitoring, and the safe harbor instead requires spot 
checks in some cases.\143\ The following paragraphs describe these and 
other requirements for using the safe harbor.
---------------------------------------------------------------------------

    \139\ NPRM at paras. 23-24.
    \140\ NPRM at paras. 24-25.
    \141\ See, e.g., ACA Comments at 26-27.
    \142\ NPRM at para. 24.
    \143\ See, e.g., NCTA Comments at 8, NAB Reply at 5.
---------------------------------------------------------------------------

(i) Certified Programming
    34. A station or MVPD will be eligible for the safe harbor with 
regard to the embedded commercials in particular programming if the 
supplier of the programming has provided a certification that its 
programming is compliant with the RP, and the station or MVPD has no 
reason to believe the certification is false.\144\ A programmer's 
certification must be available to all stations and MVPDs in order to 
count as a ``certification'' for purposes of being in the safe 
harbor.\145\ Virtually all MVPDs receive the same programming feed of a 
given channel.\146\ Consequently, if the programmer provides RP-
compliant programming and commercials to one station or MVPD, then it 
should be similarly compliant for all stations and MVPDs receiving that 
same programming. NCTA proposed use of a widely available certification 
(available through a Web site, for instance) as an alternative to the 
NPRM proposal for contractual terms that would promise compliant 
commercials.\147\ NCTA expressed concern about possible delays and 
expense to open and re-negotiate numerous individual contracts, and 
proposed that widely available certifications avoid these 
problems.\148\ ACA raised similar concerns regarding the difficulty 
smaller operators face in getting modifications to their programming 
contracts, even when, as here, the changes would be costless to the 
programmer.\149\ In addition, many programmers have corporate or 
financial relationships with particular MVPDs, raising the possibility 
that certifications might be offered only to an affiliated MVPD or 
provided on more favorable terms to certain MVPDs. Widely available 
certifications, as proposed by NCTA, solve all of these problems by 
obviating the need for individual contractual certifications. Because, 
as discussed above, the same program feed goes to all distributors, as 
a practical matter an individual certification would provide the same 
assurance as a widely available certification. Not all parties, 
however, would know of the existence of the certification, placing some 
at an unfair disadvantage because they would be unaware of something 
that would allow them to avoid the need for spot checks. Therefore, we 
require that a certification be widely available in order to qualify as 
a certification for purposes of being in the safe harbor.\150\ We 
express no opinion on the appropriate duration of certifications, but 
in order for a station or MVPD to rely on a certification, that 
certification must be in effect. If a programmer terminates a 
certification, stations and MVPDs that are required to perform annual 
spot checks must begin to perform annual spot checks of the 
programmer's channel (as discussed immediately below) in order to 
continue to be in the safe harbor regarding commercials on that 
channel. This will be the case even if they are performing no other 
annual spot checks because those spot checks have ``phased-out,'' as 
discussed in paragraph 40, below. We encourage programmers to provide 
initial widely available certifications before December 13, 2012, when 
the rules take effect, to reduce the number of annual spot checks that 
stations and MVPDs would need to do to be in the safe harbor.
---------------------------------------------------------------------------

    \144\ Final Rules (47 CFR 73.682(e)(3)(i)(B), Sec.  
76.607(a)(3)(i)(B)).
    \145\ Final Rules (47 CFR 73.682(e)(3)(i)(A), Sec.  
76.607(a)(3)(i)(A)). NCTA has suggested that these certifications 
could be available on Web sites, perhaps accessible only to 
distributors of the programming in questions. NCTA Ex Parte (October 
18, 2011). We express no opinion on the appropriate way to make 
certifications widely available, so long as they are available to 
all stations and MVPDs that distribute the programming.
    \146\ NCTA Ex Parte at 1 (October 18, 2011).
    \147\ NCTA Ex Parte (October 18, 2011).
    \148\ NCTA Ex Parte at 4 (October 18, 2011).
    \149\ ACA Ex Parte at 3 (September 19, 2011).
    \150\ We note that stations and MVPDs will have a year to work 
with their programmers before the CALM Act rules take effect. CALM 
Act at Sec.  2(B)(1).
---------------------------------------------------------------------------

(ii) Non-Certified Programming: Annual Spot Checks
    35. In order to be in the safe harbor regarding commercial channels 
and programming for which there is no programmer certification, larger 
MVPDs and stations must perform annual spot-checks of the non-certified 
commercial programming they carry.\151\ Specifically, large television 
stations \152\ and very large MVPDs \153\ must annually spot check 100 
percent of noncertified programming carried by the station, or by any 
system operated by the MVPD.\154\ Large (but not ``very large'') MVPDs 
\155\ must annually spot check 50 percent (chosen at random) of the 
noncertified channels carried by any system operated by the MVPD.\156\ 
Stations and MVPDs should not count (and do not need to spot check) 
duplicating channels or streams unless there is some reason to believe 
that the audio on, for instance, an SD stream might be different (for 
the purposes of the RP) from the HD stream of the same 
programming.\157\ Small stations and small MVPDs need not perform any 
annual spot checks to be in the safe harbor.\158\ The first set of 
annual spot checks must be completed by December 13, 2013--that is, one 
year after the effective date of these rules.
---------------------------------------------------------------------------

    \151\ Stations and MVPDs have told us that they cannot 
distinguish between programming and embedded commercials. See, e.g., 
Verizon Comments at 6. As a result, the entirety of a programming 
stream must be monitored in order to find any noncompliant embedded 
commercials. We may revisit this matter in the future if 
technological developments warrant, given the statute's limitation 
to commercials.
    \152\ ``Large'' television stations, for these purposes, are 
those not considered ``small television stations'' under the Small 
Business Act definition--that is, those that have more than $14.0 
million in annual receipts. 13 CFR 121.201, NAICS Code 515120 
(2007). To provide certainty and clarity to stations, we will 
consider ``large'' those stations with more than $14.0 million in 
annual receipts in calendar year 2011. See, e.g., BIA Kelsey Inc. 
Media Access Pro Television Database, showing the annual receipts 
for 2010. We will rely on the version of this list that is based on 
data available as of December, 31 2011 for purposes of the rules 
implementing the CALM Act.
    \153\ ``Very large MVPDs'' are defined, for these purposes, as 
those with more than 10 million subscribers nationwide. To provide 
certainty and clarity to MVPDs, we will consider ``very large'' 
those MVPDs with more than 10 million subscribers as of December 31, 
2011. Per NCTA, this would include the four largest MVPDs. See 
http://www.ncta.com/Stats/TopMSOs.aspx (visited November 16, 2011) 
showing the numbers of subscribers for the top 25 MVPDs based on 
2010 data. We will rely on the version of this list that is based on 
data available as of December, 31 2011 for purposes of the rules 
implementing the CALM Act.
    \154\ Final Rules (47 CFR 73.682(e)(3)(ii), Sec.  
76.607(a)(3)(ii)(A)).
    \155\ ``Large MVPDs,'' for these purposes, are those serving 
more than 400,000 subscribers nationwide. This definition is derived 
from the Commission's definition of ``small'' cable in 47 CFR 
76.901(e). To provide certainty and clarity to MVPDs, we will 
consider ``large'' those MVPDs with more than 400,000 but fewer than 
10 million subscribers as of December 31, 2011. Per NCTA, this would 
include 11 MVPDs. See http://www.ncta.com/Stats/TopMSOs.aspx 
(visited November 16, 2011) showing the numbers of subscribers for 
the top 25 MVPDs based on 2010 data. We will rely on the the version 
of this list that is based on data available as of December, 31 2011 
for purposes of the rules implementing the CALM Act.
    \156\ Final Rules (47 CFR 76.607(a)(3)(ii)(B)).
    \157\ This avoidance of duplication largely addresses the 
concerns raised by DIRECTV and DISH Network in their November 16, 
2011 Ex Parte filing, about the number of channels they could 
potentially be required to spot check in the absence of 
certifications.
    \158\ Final Rules (47 CFR 73.682(e)(3)(iii), Sec.  
76.607(a)(3)(iii)).
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    36. Because small stations and MVPDs are not required to perform 
annual spot checks, there is no requirement that they purchase (or seek 
access to) loudness measurement equipment prior to a Commission 
inquiry. In the event of an inquiry,

[[Page 40287]]

stations and MVPDs will have 30 days to complete a spot check.\159\ 
This will allow small entities to preserve their financial flexibility 
while still being in a position to address a pattern or trend of 
complaints brought to their attention by the Commission. We note, 
however, that small stations and MVPDs, just like larger ones, are 
required by the CALM Act and our rules to comply with the requirements 
of the RP. And, in the event of an enforcement inquiry, these small 
entities must be able to demonstrate that they have the equipment 
necessary to pass through programming compliant with the RP, 
demonstrate that the equipment has been properly installed, maintained, 
and utilized, and show that the equipment was not the source of any 
problem.\160\
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    \159\ An inquiry is unlikely to be directed to a small station 
or MVPD even in the event of a pattern or trend of complaints, 
unless the complaints have come largely or solely from viewers of 
the small entity in question.
    \160\ This equipment, fundamental to the provision of audio, is 
distinct from the loudness measurement equipment discussed below.
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    37. Under our approach, we place differing obligations depending on 
the size of the entity. These distinctions are based on both the valid 
NCTA argument that, if the larger companies take care of performing 
spot checks and obtaining certifications, the same programming carried 
by smaller companies is likely to comply with the CALM Act, and on our 
interest in reducing burdens on small entities.\161\ Each very large 
MVPD is required to spot check each non-certified channel on only one 
of its systems that carry that programming.\162\ Given that all 
programmers, including each regional sports network, may not be carried 
by the top four MVPDs, we also require the middle group of MVPDs (those 
with more than 400,000 but fewer than 10 million subscribers) to 
conduct a more limited number of spot checks. We do this to increase 
the likelihood that all programmers will be checked and that 
programming provided to all geographic areas, including regional 
programming, will be tested. As the parties explain, requiring annual 
spot checks by smaller stations and MVPDs is both unnecessary and more 
burdensome than asking the same of larger parties.\163\ Unlike larger 
stations and MVPDs, many smaller entities lack the necessary loudness 
measurement equipment, and, while it is appropriate to require smaller 
entities to obtain the use of such equipment in the case of complaints, 
there is little benefit to requiring small entities to do so simply in 
order to check a programming stream that is already being checked by 
others. Under our approach, small entities would be freed from the need 
to purchase loudness monitoring equipment, an additional expense that 
would provide insufficient countervailing benefit if mandated. As noted 
above, even the burden on larger entities of conducting annual spot 
checks is limited because the timeframe for conducting the annual spot 
checks is limited to the two years after the rules take effect for the 
MVPD or station, assuming no noncompliance is found.
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    \161\ NCTA Ex Parte (October 18, 2011).
    \162\ We recognize that very large MVPDs carry different 
programmers on different systems. They need not spot check the same 
programmer on more than one system, but they must utilize as many 
systems as necessary to be sure they spot check 100 percent of the 
non-certified commercial programmers. This may require running tests 
on more than one system, if not all non-certified channels offered 
by an MVPD are carried on any one system.
    \163\ NAB Ex Parte (November 9, 2011); ACA Ex Parte at 3-4 
(November 9, 2011); NCTA Ex Parte (October 18, 2011).
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    38. Definition of Spot Checks. A ``spot check'' requires monitoring 
24 uninterrupted hours of programming with an audio loudness meter 
employing the measurement technique specified in the RP, and reviewing 
the records from that monitoring to detect any commercials transmitted 
in violation of the RP.\164\ To promote the reliability of the spot 
check, the station or MVPD must not provide prior notice to the 
programmer of the timing of the spot check. This requirement applies 
with respect to all spot checks (annual or in response to a Commission 
inquiry) on all programming, and for all stations and MVPDs--large and 
small. Stations (and occasionally MVPDs) may have multiple program 
suppliers for a single channel/stream of programming. In these cases, 
there may be no single 24-hour period in which all program suppliers 
are represented. In such cases, an annual spot check could consist of a 
series of loudness measurements over the course of a 7-day period, 
totaling no fewer than 24 hours, that measure at least one program, in 
its entirety, provided by each non-certified programmer that supplies 
programming for that channel or stream of programming.\165\ To verify 
that the operator's system is properly passing through loudness 
metadata, spot checking must be conducted after the signal has passed 
through the operator's processing equipment (e.g., at the output of a 
set-top box or television receiver).\166\ If a problem is found, a 
station or MVPD may check multiple points in its reception and 
transmission process to determine the source of the noncompliance. For 
a spot check to be considered valid, a station or MVPD must be able to 
demonstrate appropriate maintenance records for the audio loudness 
meter,\167\ and to demonstrate, at the time of any enforcement inquiry, 
that appropriate spot checks had been ongoing.\168\
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    \164\ Final Rules (47 CFR 73.682(e)(3)(iv), Sec.  
76.607(a)(3)(iv)). We do not anticipate that a spot-check would 
require a person to monitor a channel in real-time. A possible 
procedure could be: (1) Connect a loudness meter conforming to the 
RP to the output of a set-top box, measure the long-term loudness of 
all the elements of the soundtrack and log the loudness of content 
in 1 second intervals over a 24-hour period; (2) review the logs 
(which could be done with an automated process) to identify any 
potential violations of the RP (i.e., the average measured loudness 
exceeds the target loudness by more than 2 dB for the duration of a 
commercial); and (3) ascertain whether those potential violations 
occurred during a commercial (e.g., by reviewing a recording of the 
monitored content or obtaining from the programmer a log of the 
commercials for the day that was monitored).
    \165\ Final Rules (47 CFR 73.682(e)(3)(iv)(C)(II), Sec.  
76.607(a)(3)(iv)(C)(II)).
    \166\ Final Rules (47 CFR 73.682(e)(3)(iv)(A), Sec.  
76.607(a)(3)(iv)(A)).
    \167\ Final Rules (47 CFR 73.682(e)(3)(iv)(B), Sec.  
76.607(a)(3)(iv)(B)).
    \168\ Final Rules (47 CFR 73.682(e)(3)(iv)(C)(I), Sec.  
76.607(a)(3)(iv)(C)(I)).
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    39. Exclusion of Broadcast Programming from Spot Checks. We will 
not require MVPDs to include broadcast television programming in their 
annual spot checks. Unlike the non-broadcast programming carried by 
MVPDs, which is provided by third parties totally outside the scope of 
these rules, a significant amount of broadcast programming will already 
be annually spot checked by large broadcast stations pursuant to these 
rules. More to the point, we have explicit jurisdiction over broadcast 
stations themselves under the Act, and any problems arising as a result 
of the loudness of their commercials can be more effectively dealt with 
by addressing them directly with broadcast stations. This is 
particularly important with must-carry broadcast signals, which MVPDs 
are prohibited from either modifying or dropping.\169\ All MVPDs are 
responsible for not harming the broadcast signal, however, and must 
properly use the necessary equipment to pass through programming 
compliant with the RP, such that the broadcast programming is 
transmitted without altering its compliance with the RP. We note that, 
if the Commission becomes aware of a pattern or trend of complaints 
about broadcast programming carried on an MVPD, while over-the-air 
viewers of the same programming have not filed similar complaints, that 
may indicate that there is a problem with the MVPD's

[[Page 40288]]

transmission equipment, for which the MVPD will be liable.
---------------------------------------------------------------------------

    \169\ NCTA Comments at 13.
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    40. Phase-Out of Annual Spot Check Obligation. Once a given station 
or MVPD has performed two consecutive annual spot checks on a given 
channel or program stream and encountered no evidence of noncompliance, 
it may cease to perform annual spot checks of that programming but 
continue to be in the safe harbor with respect to that 
programming.\170\ Because this phase-out applies to individual channels 
or program streams, any new, non-certified channel or programming must 
undergo the full two years of spot checks before the requirement phases 
out with respect to that programming.\171\ Although ``large'' MVPDs 
(between 400,000 and 10,000,000 subscribers) will be spot checking only 
50 percent of their non-certified programming, they are also excused 
from continued checks after two years, except that if any annual spot 
check shows noncompliance, the two-year requirement for that channel or 
programming will be reset (that is, the two-year period will begin anew 
for that channel or programming until there is no noncompliance for a 
full two years).\172\ Similarly, if a spot check undertaken in response 
to an enforcement inquiry in the context of a pattern or trend of 
complaints (discussed below) reveals noncompliance, the two-year 
requirement will be reset for that channel or programming even if it 
has been previously phased out.\173\
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    \170\ Final Rules (47 CFR 73.682(e)(3)(iv)(C)(III), Sec.  
76.607(a)(3)(iv)(C)(III)). The two years runs from the effective 
date of the rules as to the given station or MVPD. This phase-out of 
annual spot checks does not affect the obligation to perform spot 
checks in response to an enforcement inquiry in the context of a 
pattern or trend of complaints, as discussed below.
    \171\ Final Rules (47 CFR 73.682(e)(3)(iv)(C)(IV), Sec.  
76.607(a)(3)(iv)(C)(IV)). We expect and encourage MVPDs to seek 
certification from new programmers as part of their carriage 
negotiations.
    \172\ Final Rules (47 CFR 73.682(e)(3)(iv)(C)(V), Sec.  
76.607(a)(3)(iv)(C)(V)).
    \173\ Final Rules (47 CFR 73.682(e)(3)(iv)(C)(V), Sec.  
76.607(a)(3)(iv)(C)(V)).
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(iii) Pattern or Trend of Complaints: Spot Checks
    41. If the Commission becomes aware of a pattern or trend of 
sufficiently specific complaints, it may open an enforcement inquiry 
with the station or MVPD in question.\174\ Whether relying on a 
certification or not, and irrespective of size, if a station or MVPD is 
notified by the Commission of a pattern or trend of sufficiently 
specific complaints about a given channel or programming, and seeks to 
be or remain in the safe harbor, it must utilize its equipment to 
verify actual compliance with the RP by performing a spot check on that 
channel or programming on a going forward basis \175\ within 30 days of 
receiving notification from the Commission.\176\ Although we do not 
require stations and MVPDs to perform spot checks in response to 
complaints they receive directly, we encourage them to do so if they 
become aware of a pattern or trend even absent Commission action. If a 
Commission inquiry is opened and a station or MVPD can demonstrate that 
it has already performed a spot check in response to the same pattern 
or trend that led to the inquiry, no additional spot check will be 
required. We note that, as ACA explained, a pattern or trend of 
complaints from viewers of a single station or MVPD about programming 
that is being transmitted on other stations or MVPDs without triggering 
complaints on those other stations or MVPDs may be an indication that 
the problem lies with the station's or MVPD's equipment, rather than 
with the programming itself.\177\
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    \174\ By a ``pattern or trend'' we mean complaints sufficiently 
numerous and specific to justify focused review by the station/MVPD 
and the Commission. We decline to define what number of complaints 
is sufficient to constitute a pattern or trend, as this judgment 
will be fact-specific, based on such matters as the ratio of 
complaints to subscribers.
    \175\ Final Rules (47 CFR 73.682(e)(3)(i)(C), Sec.  
76.607(a)(3)(i)(C); 47 CFR 73.682(e)(3)(ii), Sec.  
76.607(a)(3)(ii)(A) and (B); 47 CFR 73.682(e)(3)(iii), Sec.  
76.607(a)(3)(ii)).
    \176\ The rule allows the Enforcement Bureau to specify a time 
other than 30 days, when appropriate. Final Rules, (47 CFR 
73.682(e)(3)(iv)(D)(I), 76.607(a)(3)(iv)(D)(I)). A station or MVPD 
that is in the safe harbor need not verify whether the complained of 
programming was in compliance, although it may do so if it wishes 
(and obviate the need for a prospective spot check) by providing the 
necessary information to demonstrate past compliance. As noted 
above, a station or MVPD can contract with a third party to perform 
the spot check if necessary. A spot check performed in response to 
an FCC inquiry may not be counted toward any annual spot check 
obligations of a station or MVPD. A station or MVPD that opts not to 
conduct the prospective spot checks is no longer in the safe harbor 
and must respond to a Commission enforcement inquiry by 
demonstrating actual compliance with respect to the complaints 
referenced in the Letter of Inquiry and provide other information 
requested therein.
    \177\ ACA Oral Ex Parte (Oct. 24, 2011).
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    42. Financial Inability to Perform Spot Checks. Small MVPDs and 
stations, as discussed above, are not required to conduct annual spot 
checks, and will be in the safe harbor for embedded commercials 
transmitted in all programming they carry, even if that programming is 
not certified.\178\ As with larger stations and MVPDs, however, 
stations and MVPDs that are treated as ``small'' for purposes of the 
CALM Act must have the equipment necessary to pass through programming 
compliant with the RP, and be able to demonstrate that the equipment 
has been properly installed, maintained, and utilized. In the context 
of an enforcement inquiry, small stations and MVPDs must be prepared to 
certify to the Commission that their own transmission equipment is not 
at fault for any such pattern or trend. They must also be prepared to 
conduct spot checks, or contract to have spot checks done, in response 
to a Commission inquiry triggered by a pattern or trend of complaints. 
We do not require a station or MVPD to purchase the necessary equipment 
to conduct spot checks in response to a Commission inquiry; it may 
borrow or contract for use of the equipment.\179\ Stations and MVPDs 
may seek to delay the effective date of the rules for up to two years 
through a financial hardship waiver and may seek general waivers (also 
discussed below) for non-financial reasons, as discussed below.
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    \178\ If they insert commercials, they must comply with the 
requirements for ``Local Insertions'' or ``Third Party Local 
Insertions,'' as appropriate, in order to be deemed in compliance 
for those commercials.
    \179\ For example, based on a staff review of the Commission's 
online filing system (COALS), we know that smaller operators will 
often contract for technical analysis of their systems, for instance 
the performance of signal leakage tests.
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(iv) Outcome of Spot Checks
    43. Whether performed as part of an annual audit of non-certified 
programming, or in response to an FCC Letter of Inquiry, spot checks 
will require further action only if they indicate noncompliance on the 
part of a programmer with respect to embedded commercials. If the spot 
check reveals actual compliance with the RP, then the station or MVPD 
continues to be in the safe harbor and need take no further action 
(except, where appropriate, to notify the Commission in response to the 
letter of inquiry).\180\ If the spot check indicates noncompliance, 
however, then the station or MVPD has actual knowledge that the channel 
or programming does not comply with the RP. Within seven business days, 
the station or MVPD must inform the Commission and the programmer in 
question of the noncompliance indicated by the spot check, and direct 
the programmer's attention to any relevant complaints.\181\ We note 
that noncompliance can be the result of deficiencies in the equipment 
the station or MVPD uses to pass through programming, rather than any 
problem with the commercials as provided by a

[[Page 40289]]

programmer. Stations and MVPDs should be mindful of this possibility in 
their review of the spot check data and check their own equipment as 
appropriate. The station or MVPD must then re-check the noncompliant 
commercial programming with a follow-up spot check within 30 days of 
notifying the Commission and the programmer, and inform both of the 
result of the re-check.\182\ If the station or MVPD finds no further 
noncompliance with the RP, then the station or MVPD will continue to be 
in the safe harbor.\183\
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    \180\ Final Rules (47 CFR 73.682(e)(3)(iv)(D)(II), Sec.  
76.607(a)(3)(iv)(D)(II)).
    \181\ Final Rules (47 CFR 73.682(e)(3)(iv)(E), Sec.  
76.607(a)(3)(iv)(E)).
    \182\ Final Rules (47 CFR 73.682(e)(3)(iv)(E), Sec.  
76.607(a)(3)(iv)(E)).
    \183\ Final Rules (47 CFR 73.682(e)(3)(iv)(E)(I), Sec.  
76.607(a)(3)(iv)(E)(I)).
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    44. If, however, the re-check reveals noncompliance with the RP, 
then the station or MVPD, going forward, is no longer in the safe 
harbor for that channel or programming.\184\ The station's or MVPD's 
actual knowledge that the commercials in the programming are not 
compliant with the RP means that station or MVPD is liable for future 
commercial loudness violations in that programming, notwithstanding any 
certification or previous spot check of that programming.\185\
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    \184\ Final Rules (47 CFR 73.682(e)(3)(iv)(E)(II), Sec.  
76.607(a)(3)(iv)(E)(II)).
    \185\ In the context of an enforcement action the Commission can 
consider the specific facts and circumstances of the alleged 
violation, including any mitigating factors.
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c. Third Party Local Insertions
    45. The rulemaking record evidences that some stations and MVPDs 
contract with a third party to handle sales of its available commercial 
time and encode/insert local commercials into program streams, rather 
than the station or MVPD handling this process itself.\186\ For the 
reasons discussed above, if a station or MVPD does not itself install, 
utilize and maintain the equipment used to encode the loudness of a 
commercial either before or at the time of its transmission, it cannot 
be ``deemed in compliance'' pursuant to the CALM Act.\187\ Furthermore, 
these third-party local insertions are unlike commercials embedded in 
nationally distributed programming. Third-party inserters of local 
commercials provide a service to stations and MVPDs and place their 
equipment at the station or MVPD's facilities. The third-party inserter 
sells commercial time to advertisers and shares the payment with the 
station or MVPD, thus functioning as the agent of the station or MVPD 
in that process.\188\ The NPRM sought comment on circumstances that 
might pose practical problems for compliance and means of demonstrating 
compliance.\189\ Given that the record presents this situation, which 
does not fall neatly into one of the situations we have described above 
(that is, local insertion or embedded commercial), we adopt a hybrid 
approach for such stations and MVPDs utilizing the same components 
presented in the NPRM and addressed in the comments. Specifically, we 
find that, in order to be in the safe harbor for the commercials 
inserted by these third parties, the station or MVPD, regardless of 
size, must acquire a certification from the third party that all 
commercials it is inserting comply with the RP, and that it is 
inserting those commercials into the programming transmitted by the 
station or MVPD such that they comply with the RP.\190\ Just as with 
embedded commercials, in response to a FCC Letter of Inquiry, a station 
or MVPD must have no reason to believe that the certification is false, 
and perform a spot check of the inserted commercials without providing 
notice to the third-party inserter to determine, going forward, whether 
the inserted commercials in fact comply, and take steps to ensure that 
any discovered noncompliance is remedied.\191\ This spot check will 
follow the same format as discussed above for other embedded 
programming. The record supports the conclusion that stations or MVPDs 
that use third party inserters have the ability to insist on such 
certifications as part of their business relationships.\192\
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    \186\ See, e.g., ACA Comments at iv; ACA Ex Parte at 3 (October 
26, 2011).
    \187\ CALM Act at sec. 2(c).
    \188\ ACA Ex Parte (October 26, 2011).
    \189\ NPRM at paras. 26-32.
    \190\ Final Rules (47 CFR 73.682(e)(5), Sec.  76.607(a)(5)).
    \191\ Final Rules (47 CFR 73.682(e)(5)(i), (iii), Sec.  
76.607(a)(5)(i), (iii)).
    \192\ ACA Ex Parte at 3 (October 26, 2011).
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d. Complaints
    46. As discussed above, we will rely on consumers to bring any 
potential noncompliance to our attention. We believe that a consumer-
complaint-driven procedure, rather than an audit-driven one, is the 
most practical means to monitor industry compliance with our rules. In 
order for us to detect whether a pattern or trend of noncompliance 
exists and for stations and MVPDs to investigate them, it is essential 
that consumer complaints be specific in describing the commercials 
complained of, as well as identifying the station or MVPD and 
programming network on which the commercials appeared.\193\ As a 
general matter, non-specific complaints will not be actionable. In 
addition, we note that while it may seem to some consumers that a 
commercial is loud, the commercial may, nevertheless, comply with the 
RP. As noted above, commercials, like the programming they accompany, 
include content covering a range of audio levels, some of which may 
seem loud without violating the RP.
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    \193\ We note that a television broadcast station must retain in 
its local public inspection file a copy of a complaint filed with 
the Commission about a loud commercial under the Commission's 
existing rules. See 47 CFR 73.3526(e)(10) (requiring commercial TV 
stations to retain in its local public inspection file material 
relating to a Commission investigation or complaint to the 
Commission). The rule requires a station to retain the complaint in 
its public file until it is notified in writing that the complaint 
may be discarded.
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    47. Filing a Complaint. Consumers may file a complaint alleging a 
loud commercial electronically using the Commission's online complaint 
form (specifically Form 2000e) found at http://esupport.fcc.gov/complaints.htm. We have added ``loud commercials'' as a complaint 
category. Consumers may also file complaints by fax to 1-866-418-0232 
or by letter mailed to Federal Communications Commission, Consumer & 
Governmental Affairs Bureau, Consumer Inquiries & Complaints Division, 
445 12th Street SW., Washington, DC 20554, although we reiterate the 
need for detailed information. Consumers who want assistance filing 
their complaint may contact the Commission's Consumer Call Center by 
calling 1-888-CALL-FCC (1-888-225-5322) (voice) or 1-888-TELL-FCC (1-
888-835-5322) (tty).\194\ There is no fee for filing a consumer 
complaint.
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    \194\ We also encourage consumers to visit the Consumer & 
Governmental Affairs Bureau Web site at http://www.fcc.gov/cgb/ or 
to visit our online Consumer Help Center at http://reboot.fcc.gov/consumers/.
---------------------------------------------------------------------------

    48. Complaint Details. The only way the Commission will be in a 
position to detect a pattern or trend of commercial loudness complaints 
is if consumers include detailed information allowing us to identify 
the specific distributor, program at issue, and commercial. Therefore, 
as proposed in the NPRM, we will require complaints to contain detailed 
information, which will enable us to take appropriate action.\195\ Form 
2000e is designed to elicit the information that is needed for this 
purpose.\196\ To ensure that the Commission is able to take appropriate 
action on a complaint, the complaint

[[Page 40290]]

should clearly indicate that it is a ``loud commercial'' complaint and 
include the following information: (1) The complainant's contact 
information, including name, mailing address, daytime phone number, and 
email address if available; (2) the name and call sign of the broadcast 
station or the name and type of the MVPD against whom the complaint is 
directed; (3) the date and time the loud commercial problem occurred; 
(4) the channel and/or network involved; (5) the name of the television 
program during which the commercial was viewed; (6) the name of the 
commercial's advertiser/sponsor or product involved; and (7) a 
description of the loudness problem. We will evaluate the individual 
complaints we receive and track them to determine if there are patterns 
or trends that suggest a need for enforcement action. If we receive 
complaints that indicate a pattern or trend affecting multiple MVPDs or 
stations, we will be conscious of the greater resources available to 
large entities when determining where to address our initial inquiries.
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    \195\ NPRM at para. 35.
    \196\ Available at https://esupport.fcc.gov/ccmsforms/form2000.action.
---------------------------------------------------------------------------

C. Waivers

    49. The CALM Act includes two waiver provisions: A waiver of the 
effective date for up to two years based on financial hardship \197\ 
and a reservation of the Commission's general authority to grant a 
waiver for good cause.\198\ While our goal is to provide for waivers 
where appropriate, this objective must be balanced against the 
interests of consumers in realizing the benefit of the CALM Act without 
undue delay. Thus, as described below, we establish standards for 
stations/MVPDs that face true financial hardship to seek waivers, using 
a streamlined process for small entities and requiring a four-part 
showing for larger entities. We acknowledge that a waiver for good 
cause may be warranted in other circumstances, and, per the CVAA, 
stations and MVPDs may seek waivers of these statutory requirements for 
good cause under Section 1.3 of our rules.\199\ We conclude that the 
waiver process we adopt is responsive to ACA's concerns that the 
equipment to monitor programming is expensive and the costs are 
disproportionately large for MVPDs with small systems.\200\ We also 
note that we have adopted a safe harbor approach, as discussed above, 
that does not require smaller MVPDs to audit programming or negotiate 
with contractors for certifications, thereby reducing the burden for 
these entities to demonstrate their compliance.
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    \197\ Section 2(b)(2) of the CALM Act provides as follows: 
``WAIVER.--For any television broadcast station, cable operator, or 
other multichannel video programming distributor that demonstrates 
that obtaining the equipment to comply with the regulation adopted 
pursuant to subsection (a) would result in financial hardship, the 
Federal Communications Commission may grant a waiver of the 
effective date set forth in paragraph (1) for 1 year and may renew 
such waiver for 1 additional year.'' CALM Act sec. 2(b)(2).
    \198\ Section 2(b)(3) of the CALM Act provides as follows: 
``WAIVER AUTHORITY.--Nothing in this section affects the 
Commission's authority under section 1.3 of its rules (47 CFR 1.3) 
to waive any rule required by this Act, or the application of any 
such rule, for good cause shown to a television broadcast station, 
cable operator, or other multichannel video programming distributor, 
or to a class of such stations, operators, or distributors.'' CALM 
Act sec. 2(b)(3).
    \199\ See 47 CFR 1.3. The Media Bureau has delegated authority 
to act on both such waiver requests. See 47 CFR 0.61(h).
    \200\ See ACA Reply at 6, note 25. ACA also argued that smaller 
MVPDs are unable to effectively negotiate with programmers to ensure 
they comply with the RP. Id. See also, ACA Comments at note 4.
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    50. Financial Hardship Waiver. Section 2(b)(2) of the CALM Act 
provides that the Commission may grant a one-year waiver of the 
effective date of the rules implementing the statute to any station or 
MVPD that shows it would be a ``financial hardship'' to obtain the 
necessary equipment to comply with the rules, and may renew such waiver 
for one additional year.\201\ As we stated in the NPRM, the legislative 
history indicates that Congress intended us to interpret ``financial 
hardship'' broadly and, in particular, recognizes ``that television 
broadcast stations in smaller markets and smaller cable systems may 
face greater challenges budgeting for the purchase of equipment to 
comply with the bill than television broadcast stations in larger 
markets or larger cable systems.'' \202\
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    \201\ See 47 U.S.C. 621(b)(2) (codifying CALM Act Sec.  
2(b)(2)).
    \202\ See NPRM at para. 38. (citing Senate Committee Report to 
S. 2847 at 4). The legislative history, in particular, states that 
the Commission ``should not require stations or MVPDs to demonstrate 
that they have negative cash flow or are in receivership for 
bankruptcy to be eligible for a waiver based on financial 
hardship.'' This appears to be a reference to the strict financial 
hardship standard established in 2008 for DTV station build-out 
extensions given the short time remaining before the DTV transition 
deadline. See Third DTV Periodic Report and Order, FCC 07-228, 73 FR 
5634, January 30, 2008 (``Third DTV Periodic Report and Order'') 
(requiring a station to either (1) submit proof that they have filed 
for bankruptcy or that a receiver has been appointed, or (2) submit 
an audited financial statement for the previous three years showing 
negative cash flow).
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    51. We adopt the four-part test we proposed in the NPRM for larger 
stations/MVPDs \203\ seeking a waiver on the grounds of financial 
hardship based on their need to obtain equipment to comply with the 
loudness requirements in the RP.\204\ Specifically, to request a 
financial hardship waiver pursuant to Section 2(b)(2), the station/MVPD 
must provide: (1) Evidence of its financial condition, such as 
financial statements; \205\ (2) a cost estimate for obtaining the 
necessary equipment to comply with the required regulation; (3) a 
detailed statement explaining why its financial condition justifies 
postponing compliance; and (4) an estimate of how long it will take to 
comply, along with supporting information. Consistent with the 
legislative history, we do not require waiver applicants to show 
negative cash flow but, instead, require only that the station or 
MVPD's assertion of financial hardship be reasonable under the 
circumstances.\206\ We believe this test for a financial hardship 
waiver appropriately balances Congress' intent in adopting the Section 
2(b)(2) waiver provision and our goal to ensure that the benefits of 
the CALM Act not be delayed unless financial circumstances truly 
warrant a waiver.\207\
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    \203\ Smaller entities are eligible to seek a waiver under the 
streamlined waiver process we adopt herein.
    \204\ See NPRM at para. 39.
    \205\ Financial statements should be compiled according to 
generally accepted accounting practices (``GAAP''). Stations/MVPDs 
may request confidential treatment for this financial information 
pursuant to 47 CFR 0.459.
    \206\ See NPRM at para. 38.
    \207\ As directed by Section 2(b)(2), stations/MVPDs may request 
a waiver for one year under our waiver standard. Entities granted a 
waiver may request a renewal of the waiver for one additional year 
if they can demonstrate that circumstances continue to prevent them 
from obtaining the necessary equipment to comply with the CALM Act 
requirements.
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    52. For small stations and MVPDs, we adopt a more streamlined 
financial hardship waiver approach.\208\ We agree with the commenters 
who argued that smaller stations and MVPDs may find it particularly 
burdensome to comply with our rules by the effective date.\209\ We also 
agree that, because smaller entities are more likely to face financial 
hardship in complying with our rules, the process for smaller entities 
to obtain a waiver should not itself be burdensome. Accordingly, we 
adopt a streamlined waiver process for smaller entities that face a 
financial challenge in obtaining the equipment needed to comply with 
our rules. Specifically, a

[[Page 40291]]

small station or MVPD (as we define below) that seeks a waiver must 
file with the Commission a certification that it: (1) Meets our 
definition of small for this purpose, and (2) needs a delay of one year 
to obtain specified equipment in order to avoid the financial hardship 
that would be imposed if it were required to obtain the equipment 
sooner.\210\ The station or MVPD is not required to submit any proof of 
financial condition. Small broadcast stations and small MVPDs may 
consider the waiver granted when they file this information online and 
receive an automatic ``acknowledgement of request,'' unless the Media 
Bureau notifies them of a problem or question concerning the adequacy 
of the certification.
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    \208\ As noted above, the legislative history recognizes that 
obtaining the necessary equipment to comply with the rules may be a 
financial hardship for small broadcast stations and small cable/MVPD 
systems See Senate Committee Report to S. 2847 at 4.
    \209\ See Comments of NAB at 9-10, ACA at 31-32, NCTA at 19-20, 
and OPATSCO-NCTA-WTA at 2. See also Reply Comments of ACA at 13-15 
and Letter from Jonathan Friedman, Counsel for Comcast Corporation, 
to Marlene Dortch, Secretary, FCC, dated October 6, 2011, at 2.
    \210\ The certifying entity must identify or provide a 
description of the kind of equipment it intends to obtain; however, 
it need not specify the model number.
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    53. The streamlined financial hardship waiver is available to 
``small broadcast stations'' and ``small MVPD systems'' that request a 
one-year delay in the effective date based on their need to obtain 
equipment to comply with the rules adopted to implement the CALM Act, 
including the RP incorporated by reference.\211\ We define a ``small 
broadcast station'' for purposes of the streamlined waiver as either a 
station with no more than $14.0 million in annual receipts \212\ or 
that is located in television markets 150 to 210.\213\ Although we 
proposed in the NPRM to limit small market stations that would be 
eligible for the streamlined waiver process to those not affiliated 
with a top-four network (i.e., ABC, CBS, Fox and NBC),\214\ we are 
persuaded by NAB that the waiver should be available to all stations in 
markets 150 through 210. We agree with NAB that a station's network 
affiliation is not necessarily determinative of its financial ability 
to purchase new equipment, and even stations affiliated with a top-four 
network in smaller markets may be struggling as advertising revenue in 
those markets is more limited than in larger markets.\215\ For 
simplicity, we combine the definition of a small station, regardless of 
the market size, with the definition of a small market station, and 
treat them both as a ``small broadcast station'' for purposes of the 
CALM Act financial waiver.
---------------------------------------------------------------------------

    \211\ Entities granted a waiver may request a renewal of the 
waiver for one additional year if they certify that (1) they meet 
our definition of small, and (2) financial circumstances continue to 
prevent them from obtaining the necessary and specified equipment to 
comply with the CALM Act requirements. The filing requirements to 
request a waiver for a second year are the same as those for the 
initial waiver request.
    \212\ This definition is consistent with the SBA's small 
business definition for a television broadcast station. See also 13 
CFR 121.201, NAICS Code 515120 (2007). NAB proposed that we use this 
definition as one criterion to identify stations that qualify as 
``small'' for purposes of the waiver. See NAB Comments at 9.
    \213\ See NAB Comments at 9.
    \214\ See NPRM at para. 40.
    \215\ See NAB Comments at 9-10.
---------------------------------------------------------------------------

    54. Consistent with our proposal in the NPRM,\216\ we will define a 
``small MVPD system'' eligible for the streamlined waiver process as 
one with fewer than 15,000 subscribers (as of December 31, 2011) that 
is not affiliated with a larger operator serving more than 10 percent 
of all MVPD subscribers.\217\ We note that our definition of ``small 
MVPD system'' for purposes of the streamlined waiver is different from 
our definition of smaller MVPDs for purposes of being in the safe 
harbor. We are using a small MVPD system definition for purposes of the 
streamlined waiver because we believe that this waiver should be 
available only to those systems that are most likely to face financial 
hardships in complying with the RP. We note that stations and MVPDs 
that want a waiver and do not qualify under the streamlined waiver 
provision can apply for a waiver under the four-part waiver test 
described above. We disagree with ACA's proposal to use an MSO-based 
definition as we did in the ``bargaining agent'' condition in the 
Comcast-NBC Universal proceeding, which set the threshold at 1,500,000 
subscribers.\218\ As discussed above, we have adopted a regulatory 
scheme that does not require small MVPDs to audit programming and 
relieves them of the need to negotiate with programmers for contractual 
certifications. We conclude that, combined, the approach we have taken 
with respect to MVPD compliance with the Act, the streamlined waiver 
provisions we are adopting for small MVPD systems, and the four-part 
waiver test for larger MVPD systems, appropriately address the concerns 
raised by ACA.
---------------------------------------------------------------------------

    \216\ See NPRM at para. 40.
    \217\ See NCTA Comments at 19. This definition is consistent 
with Section 76.901(c) of our rules (defining a ``small system'' as 
a cable system serving 15,000 or fewer subscribers). See 47 CFR 
76.901(c). The affiliation exclusion is consistent with our 
definition of a small MVPD operator in the cable carriage context, 
which excludes an MVPD system that was affiliated with an MVPD 
operator serving more than 10 percent of all MVPD subscribers. See 
DTV Broadcast Carriage Signals Order, FCC 08-193, 73 FR 61742, 
October 17, 2008 (holding that ``cable systems that either have 
2,500 or fewer subscribers and are not affiliated with a large cable 
operator serving more than 10 percent of all MVPD customers * * * 
are exempt from the requirement to carry high definition versions of 
broadcast signals for three years following the [DTV] Transition'').
    \218\ See ACA Reply Comments at 6, note 25 (citing In the Matter 
of Applications of Comcast Corporation, General Electric Company, 
and NBC Universal, Inc. For Consent to Assign Licenses and Transfer 
Control of Licenses, Memorandum Opinion and Order, 26 FCC Rcd 4238 
(2011)), Appendix A.
---------------------------------------------------------------------------

    55. We decline to adopt a ``blanket'' waiver for financial 
hardship, as proposed by some commenters.\219\ We believe a blanket 
approach, which would automatically grant a waiver to all small 
entities without requiring an individual showing of financial hardship, 
would be over-inclusive of stations and MVPDs that do not actually need 
the additional time to obtain equipment and would unnecessarily delay 
the benefits of the CALM Act for their viewers. We also are not 
persuaded that a blanket approach would be consistent with the statute, 
which contemplates grant of waivers based on individual showings of 
financial hardship.\220\ The streamlined waiver approach we are 
implementing is simple and straightforward and is, in fact, less 
burdensome than the approach suggested by some commenters.\221\ 
Moreover, we note that stations and MVPDs seeking to be in the safe 
harbor are not expected to enter into contracts with program suppliers 
as we anticipated in the NPRM,\222\ but instead can rely on a less 
burdensome certification and spot check approach, thus mooting the 
argument that stations/MVPDs need additional time to amend their 
contracts.\223\ This certification and

[[Page 40292]]

spot check procedure should prove less burdensome for all stations and 
MVPDs and should reduce the number of entities that need to request a 
waiver. We note that small stations and MVPDs are not required to 
perform annual spot checks, and therefore would only need equipment to 
perform a spot check if the FCC initiates an inquiry.\224\
---------------------------------------------------------------------------

    \219\ See Comments of ACA at 32 (supporting a blanket financial 
hardship waiver for small MVPDs) and NAB at 9-10 (supporting a 
blanket waiver for stations that are ``small businesses''). See also 
Comments of NCTA at 19-20 (supporting waiver of the rules for small 
MVPD systems ``as a class'') and OPATSCO-NCTA-WTA at 4-5 (supporting 
a streamlined waiver provision for small MVPDs, MVPDs using older 
equipment or alternative technologies, and rural LEC-affiliated 
MVPDs).
    \220\ See 47 U.S.C. 621(b)(2) (``For any television broadcast 
station, cable operator, or other multichannel video programming 
distributor that demonstrates that obtaining the equipment to comply 
with the regulation adopted pursuant to subsection (a) would result 
in financial hardship, the [FCC] may grant a waiver of the effective 
date set forth in paragraph (1) for 1 year and may renew such waiver 
for 1 additional year.'').
    \221\ For example, OPATSCO-NCTA-WTA would have required small 
MVPDs to describe the equipment purchases needed to comply with the 
RP and an estimate of the costs associated with the purchase, 
installation, and maintenance of that equipment. See OPATSCO-NCTA-
WTA Comments at 4. We also note that, while we do not adopt the 
blanket financial hardship waiver proposed by ACA, our streamlined 
waiver approach is less burdensome than the approach ACA recommended 
as an alternative to a blanket waiver. See ACA Comments at 32 and 
ACA Reply Comments at 14.
    \222\ See NPRM, 26 FCC Rcd at 8294-5, para. 23.
    \223\ See also Comments of NAB at 9 (noting that it can take up 
to a year and a half or more for a station to take the steps 
necessary to comply, including negotiating contracts with third-
party programming providers and noting that this process will be 
particularly burdensome for small businesses and small stations in 
small markets); Comments of AT&T at 11-13 (noting that it will take 
up to eight years to add indemnification provisions to all existing 
contracts assuming they are added to agreements as they come up for 
renewal).
    \224\ For small MVPD systems, most of the steps they must take 
to comply with the RP may be taken on their behalf by a third-party 
programmer providing embedded commercials or third-party contractors 
providing local insertions. Consequently, we expect that small MVPDs 
will be less likely to need to obtain equipment, and, therefore, 
less likely to need a waiver to delay the effective date of the 
rule. In the event they are going to obtain monitoring equipment to 
conduct spot checks, or equipment to insert local commercials 
themselves, they may need the additional time afforded by the 
waiver, and we intend to grant waivers to small MVPDs in these 
circumstances.
---------------------------------------------------------------------------

    56. General Waiver. Section 2(b)(3) of the CALM Act provides that 
the statute does not affect the Commission's authority to waive any 
rule required by the CALM Act, or the application of any such rule, for 
good cause shown with regard to any station/MVPD or class of stations/
MVPDs under Section 1.3 of the Commission's rules.\225\ We will use our 
general waiver authority, consistent with Section 2(b)(3), for waivers 
necessitated by unforeseen circumstances as well as for MVPDs that 
demonstrate they cannot implement the RP because of the technology they 
use.\226\ Several commenters noted that some entities might face 
particular difficulty complying with the RP because of the outdated or 
alternative technology they employ.\227\ Grant of a waiver under such 
circumstances would be more likely to be in the public interest if the 
waiver recipient can demonstrate that it, by some other means, will be 
able to prevent the transmission of loud commercials, as intended by 
the CALM Act.
---------------------------------------------------------------------------

    \225\ See 47 U.S.C. 621(b)(3) (codifying CALM Act Sec.  
2(b)(3)). See 47 CFR 1.3 (the Commission's rules ``may be suspended, 
revoked, amended, or waived for good cause shown, in whole or in 
part, at any time by the Commission'' and ``[a]ny provision of the 
rules may be waived by the Commission on its own motion or on 
petition if good cause therefore is shown.'').
    \226\ See NPRM at para. 41.
    \227\ See, e.g., Comments of OPASTCO-NCTA-WTA at 2-5 (stating 
that it is expensive for MVPDs that provide service via coaxial 
cable systems or Internet protocol television (``IPTV''), and that 
often utilize older equipment, to upgrade to comply with the RP).
---------------------------------------------------------------------------

    57. Filing Deadline. Absent extraordinary circumstances, the 
deadline for filing a waiver request pursuant to either Section 2(b)(2) 
of the CALM Act or Section 1.3 of the Commission's rules will be 60 
days before the effective date of the rules. While we proposed a 
deadline of 180 days before the effective date in the NPRM,\228\ we 
agree with NAB that a 60-day deadline is more practical and will still 
afford the Media Bureau enough time to consider these requests before 
our rules take effect.\229\ Requests for waiver renewals must be filed 
at least 60 days before the waiver expires.
---------------------------------------------------------------------------

    \228\ See NPRM at para. 43.
    \229\ See NAB Comments at 10-11. The 60 day requirement provides 
the Media Bureau with adequate time to contact the waiver applicant 
in the event of a question regarding its certification.
---------------------------------------------------------------------------

    58. Filing Requirements. A station or MVPD must file a financial 
hardship or general waiver request electronically into this docket 
through the Commission's Electronic Comment Filing System (``ECFS'') 
using the Internet by accessing the ECFS: http://www.fcc.gov/cgb/ecfs/. 
The filing must be clearly designated as a ``financial hardship'' or 
``general'' waiver request and must clearly reference this proceeding 
and docket number. Requests for ``general'' waiver must comply with 
Section 1.3 of our rules.\230\ All filers will receive a confirmation 
online after their waiver has been successfully submitted through ECFS. 
It is recommended that applicants for a streamlined waiver retain this 
confirmation for their records. We will not impose a filing fee for 
waiver requests pursuant to the waiver provisions of the CALM Act.\231\
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    \230\ See 47 CFR 1.3.
    \231\ ``Financial hardship'' or ``general'' waiver requests 
filed by cable operators pursuant to CALM Act secs. 2(b)(2) and 
2(b)(3) and 47 CFR 1.3 are not ``Cable Special Relief Petitions'' 
under Sec.  76.7 of the Commission's rules, and are therefore not 
subject to a statutory filing fee. See 47 U.S.C. 158(g). Section 
76.7(a)(1) of the rules provides, inter alia, that the Commission 
may waive ``any provision of this part 76'' in response to a 
petition by a cable operator. Requests by cable operators for CALM 
Act relief pursuant to CALM Act secs. 2(b)(2) and (2)(b)(3) and 
Sec.  1.3 of the Commission's rules would not involve waiver of any 
part 76 provisions, so the general procedures in Sec.  76.7 would be 
inapplicable.
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IV. Conclusion

    59. The CALM Act directs us to incorporate by reference into our 
rules and make mandatory the RP to ``make the volume of commercials and 
regular programming uniform so consumers can control sound levels.'' To 
achieve this directive, we incorporate the RP into our rules, establish 
a consumer-complaint-driven process to identify genuine instances of 
noncompliance, and specify the means by which all regulated parties may 
be ``deemed in compliance'' with our regulations or enter the safe 
harbor depending on the content involved. These rules implement the 
statute as Congress intended for the benefit of consumers while 
limiting the compliance burden on stations and MVPDs.

V. Procedural Matters

A. Final Regulatory Flexibility Act Analysis

    60. As required by the Regulatory Flexibility Act of 1980, as 
amended (``RFA'') \232\ an Initial Regulatory Flexibility Analysis 
(``IRFA'') was incorporated in the Notice of Proposed Rule Making in 
this proceeding.\233\ The Commission sought written public comment on 
the proposals in the NPRM, including comment on the IRFA. The 
Commission received no comments on the IRFA. This present Final 
Regulatory Flexibility Analysis (``FRFA'') conforms to the RFA.\234\
---------------------------------------------------------------------------

    \232\ See 5 U.S.C. 603. The RFA, see 5 U.S.C. 601-612, has been 
amended by the Small Business Regulatory Enforcement Fairness Act of 
1996 (``SBREFA''), Public Law 104-121, Title II, 110 Stat. 847 
(1996). The SBREFA was enacted as Title II of the Contract With 
America Advancement Act of 1996 (``CWAAA'').
    \233\ See NPRM.
    \234\ See 5 U.S.C. 604.
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1. Need for, and Objectives of, the Report and Order
    61. This Report and Order (``R&O'') adopts rules to implement the 
Commercial Advertisement Loudness Mitigation (CALM) Act.\235\ Among 
other things, the CALM Act directs the Commission to incorporate into 
its rules by reference and make mandatory a technical standard 
developed by an industry standard-setting body that is designed to 
prevent television commercial advertisements from being transmitted at 
louder volumes than the program material they accompany.\236\ 
Specifically, the CALM Act requires the Commission to incorporate by 
reference the ATSC A/85 Recommended Practice (``the RP'' or ``RP'') 
\237\ and make it mandatory ``insofar as such recommended practice 
concerns the transmission of commercial advertisements by a television 
broadcast station, cable operator, or other multichannel video 
programming

[[Page 40293]]

distributor.'' \238\ This R&O incorporates the RP by reference, and, 
pursuant to the statute, makes stations and MVPDs fully responsible for 
all commercial advertisements they transmit.
---------------------------------------------------------------------------

    \235\ The Commercial Advertisement Loudness Mitigation 
(``CALM'') Act, Public Law 111-311, 124 Stat. 3294 (2010) (codified 
at 47 U.S.C. 621).
    \236\ See CALM Act sec. 2(a); Senate Committee Report to S. 2847 
at 1; House Committee Report to H.R. 1084 at 1.
    \237\ See ATSC A/85: ``ATSC Recommended Practice: Techniques for 
Establishing and Maintaining Audio Loudness for Digital 
Television,'' (May 25, 2011) (``RP'' or ``the RP''). To obtain a 
copy of the RP, visit the ATSC Web site: http://www.atsc.org/cms/standards/a_85-2011a.pdf.
    \238\ See CALM Act sec. 2(a).
---------------------------------------------------------------------------

    62. Commission enforcement actions will be based on a pattern or 
trend of complaints. Stations and MVPDs may demonstrate actual 
compliance in response to such an inquiry by providing records of the 
audio levels of the complained-of programming. However, the statute 
recognizes, and the rulemaking record confirms, that such 
demonstrations can be impractical and difficult. Therefore, the R&O 
provides two methods by which entities may more easily demonstrate 
ongoing compliance. First, with respect to locally inserted 
commercials, stations and MVPDs may demonstrate that they install, 
utilize, and maintain, in a commercially reasonable manner, equipment 
and software to comply with the RP. Second, for embedded commercials, 
the R&O provides an alternative ``safe harbor'' approach. Under this 
approach, stations and MVPDs can rely on widely-available 
certifications, or annual spot checks of non-certified programming by 
large entities, to enter the safe harbor,\239\ and can remain there by 
conducting a spot check of programming containing commercials that are 
the subject of a pattern or trend of complaints, and thereby 
demonstrate ongoing compliance. If any spot check demonstrates 
noncompliance, the station or MVPD must re-check the noncompliant 
commercial programming with a follow-up spot check. If the re-check 
reveals noncompliance with the RP, then the station or MVPD, going 
forward, is no longer in the safe harbor for that channel or 
programming.
---------------------------------------------------------------------------

    \239\ This process is simplified further for smaller entities.
---------------------------------------------------------------------------

    63. Based on statutory provisions, the R&O also provides for 
financial hardship waivers which will allow all stations or MVPDs, 
large or small, to delay the effective date of the rules. This waiver 
is easier for smaller stations and MVPD systems to obtain. The R&O also 
provides for general waivers for unforeseen circumstances, as well as 
for stations or MVPDs that demonstrate they cannot strictly implement 
the RP because of the technology they use and propose to use an 
alternative approach to achieving the same goals. The CALM Act requires 
the Commission to adopt these rules on or before December 15, 
2011,\240\ and they will take effect one year after adoption.\241\
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    \240\ See CALM Act sec. 2(a).
    \241\ See CALM Act Sec.  2(b)(1).
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2. Legal Basis
    64. The authority for the action taken in this rulemaking is 
contained in the Commercial Advertisement Loudness Mitigation Act of 
2010, Pub. L. 111-311, 124 Stat. 3294, and Sections 1, 2(a), 4(i) and 
(j), and 303 of the Communications Act of 1934, as amended, 47 U.S.C. 
151, 152, 154(i) and (j), 303 and 621.
3. Summary of Significant Issues Raised by Public Comments in Response 
to the IRFA
    65. No comments were filed in response to the IRFA.
4. Description and Estimate of the Number of Small Entities to Which 
the Rules Will Apply
    66. The RFA directs the Commission to provide a description of and, 
where feasible, an estimate of the number of small entities that will 
be affected by the rules adopted.\242\ The RFA generally defines the 
term ``small entity'' as having the same meaning as the terms ``small 
business,'' ``small organization,'' and ``small governmental 
jurisdiction'' \243\ In addition, the term ``small business'' has the 
same meaning as the term ``small business concern'' under the Small 
Business Act.\244\ A ``small business concern'' is one which: (1) Is 
independently owned and operated; (2) is not dominant in its field of 
operation; and (3) satisfies any additional criteria established by the 
Small Business Administration (SBA).\245\ The final rules adopted 
herein will directly affect small television broadcast stations and 
small MVPD systems, which include cable operators and satellite video 
providers. A description of these small entities, as well as an 
estimate of the number of such small entities, is provided below.
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    \242\ 5 U.S.C. 603(b)(3).
    \243\ 5 U.S.C. 601(b).
    \244\ 5 U.S.C. 601(3) (incorporating by reference the definition 
of ``small-business concern'' in the Small Business Act, 15 U.S.C. 
632). Pursuant to 5 U.S.C. 601(3), the statutory definition of a 
small business applies ``unless an agency, after consultation with 
the Office of Advocacy of the Small Business Administration and 
after opportunity for public comment, establishes one or more 
definitions of such term which are appropriate to the activities of 
the agency and publishes such definition(s) in the Federal 
Register.''
    \245\ 15 U.S.C. 632.
---------------------------------------------------------------------------

    67. Wired Telecommunications Carriers. The 2007 North American 
Industry Classification System (``NAICS'') defines ``Wired 
Telecommunications Carriers'' as follows: ``This industry comprises 
establishments primarily engaged in operating and/or providing access 
to transmission facilities and infrastructure that they own and/or 
lease for the transmission of voice, data, text, sound, and video using 
wired telecommunications networks. Transmission facilities may be based 
on a single technology or a combination of technologies. Establishments 
in this industry use the wired telecommunications network facilities 
that they operate to provide a variety of services, such as wired 
telephony services, including VoIP services; wired (cable) audio and 
video programming distribution; and wired broadband Internet services. 
By exception, establishments providing satellite television 
distribution services using facilities and infrastructure that they 
operate are included in this industry.'' \246\ The SBA has developed a 
small business size standard for wireline firms within the broad 
economic census category, ``Wired Telecommunications Carriers.'' \247\ 
Under this category, the SBA deems a wireline business to be small if 
it has 1,500 or fewer employees. Census data for 2007, which supersede 
data from the 2002 Census, show that 3,188 firms operated in 2007 as 
Wired Telecommunications Carriers. 3,144 had 1,000 or fewer employees, 
while 44 operated with more than 1,000 employees.\248\
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    \246\ U.S. Census Bureau, 2007 NAICS Definitions, ``517110 Wired 
Telecommunications Carriers''; http://www.census.gov/naics/2007/def/ND517110.HTM#N517110.
    \247\ 13 CFR 121.201 (NAICS code 517110).
    \248\ http://factfinder.census.gov/servlet/IBQTable?_bm=y&-geo_id=&-_skip=600&-ds_name=EC0751SSSZ5&-_lang=en.
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    68. Wireless Telecommunications Carriers (except Satellite). Since 
2007, the Census Bureau has placed wireless firms within this new, 
broad, economic census category.\249\ Prior to that time, such firms 
were within the now-superseded categories of ``Paging'' and ``Cellular 
and Other Wireless Telecommunications.'' \250\ Under the present and 
prior categories, the SBA has deemed a wireless business to be small if 
it has 1,500 or fewer employees.\251\ For the category of

[[Page 40294]]

Wireless Telecommunications Carriers (except Satellite), Census data 
for 2007 shows that there were 1,383 firms that operated that 
year.\252\ Of those 1,383, 1,368 had fewer than 100 employees, and 15 
firms had more than 100 employees. Thus under this category and the 
associated small business size standard, the majority of firms can be 
considered small. Similarly, according to Commission data, 413 carriers 
reported that they were engaged in the provision of wireless telephony, 
including cellular service, Personal Communications Service (``PCS''), 
and Specialized Mobile Radio (``SMR'') Telephony services.\253\ Of 
these, an estimated 261 have 1,500 or fewer employees and 152 have more 
than 1,500 employees.\254\ Consequently, the Commission estimates that 
approximately half or more of these firms can be considered small. 
Thus, using available data, we estimate that the majority of wireless 
firms can be considered small.
---------------------------------------------------------------------------

    \249\ U.S. Census Bureau, 2007 NAICS Definitions, 517210 
Wireless Telecommunications Categories (Except Satellite), http://www.census.gov/naics/2007/def/ND517210.HTM#N517210.
    \250\ U.S. Census Bureau, 2002 NAICS Definitions, 517211 Paging, 
http://www.census.gov/epcd/naics02/def/NDEF517.HTM; U.S. Census 
Bureau, 2002 NAICS Definitions, ``517212 Cellular and Other Wireless 
Telecommunications''; http://www.census.gov/epcd/naics02/def/NDEF517.HTM.
    \251\ 13 CFR 121.201, NAICS code 517210 (2007 NAICS). The now-
superseded, pre-2007 CFR citations were 13 CFR 121.201, NAICS codes 
517211 and 517212 (referring to the 2002 NAICS).
    \252\ U.S. Census Bureau, 2007 Economic Census, Sector 51, 2007 
NAICS code 517210 (rel. Oct. 20, 2009), http://factfinder.census.gov/servlet/IBQTable?_bm=y&-geo_id=&-fds_name=EC0700A1&-_skip=700&-ds_name=EC0751SSSZ5&-_lang=en.
    \253\ See Trends in Telephone Service, at table 5.3.
    \254\ Id.
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    69. Television Broadcasting. The SBA defines a television 
broadcasting station as a small business if such station has no more 
than $14.0 million in annual receipts.\255\ Business concerns included 
in this industry are those ``primarily engaged in broadcasting images 
together with sound.'' \256\ The Commission has estimated the number of 
licensed commercial television stations to be 1,390.\257\ According to 
Commission staff review of the BIA Kelsey Inc. Media Access Pro 
Television Database (BIA) as of January 31, 2011, 1,006 (or about 78 
percent) of an estimated 1,298 commercial television stations \258\ in 
the United States have revenues of $14 million or less and, thus, 
qualify as small entities under the SBA definition. The Commission has 
estimated the number of licensed noncommercial educational (``NCE'') 
television stations to be 391.\259\ We note, however, that, in 
assessing whether a business concern qualifies as small under the above 
definition, business (control) affiliations \260\ must be included. Our 
estimate, therefore, likely overstates the number of small entities 
that might be affected by our action, because the revenue figure on 
which it is based does not include or aggregate revenues from 
affiliated companies. The Commission does not compile and otherwise 
does not have access to information on the revenue of NCE stations that 
would permit it to determine how many such stations would qualify as 
small entities.
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    \255\  See 13 CFR 121.201, NAICS Code 515120 (2007).
    \256\ Id. This category description continues, ``These 
establishments operate television broadcasting studios and 
facilities for the programming and transmission of programs to the 
public. These establishments also produce or transmit visual 
programming to affiliated broadcast television stations, which in 
turn broadcast the programs to the public on a predetermined 
schedule. Programming may originate in their own studios, from an 
affiliated network, or from external sources.'' Separate census 
categories pertain to businesses primarily engaged in producing 
programming. See Motion Picture and Video Production, NAICS code 
512110; Motion Picture and Video Distribution, NAICS Code 512120; 
Teleproduction and Other Post-Production Services, NAICS Code 
512191; and Other Motion Picture and Video Industries, NAICS Code 
512199.
    \257\ See News Release, ``Broadcast Station Totals as of 
December 31, 2010,'' 2011 WL 484756 (F.C.C.) (dated Feb. 11, 2011) 
(``Broadcast Station Totals''); also available at http://www.fcc.gov/Daily_Releases/Daily_Business/2011/db0211/DOC-304594A1.pdf.
    \258\ We recognize that this total differs slightly from that 
contained in Broadcast Station Totals, however, we are using BIA's 
estimate for purposes of this revenue comparison.
    \259\ See Broadcast Station Totals.
    \260\ ``[Business concerns] are affiliates of each other when 
one concern controls or has the power to control the other or a 
third party or parties controls or has the power to control both.'' 
13 CFR 121.103(a)(1).
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    70. In addition, an element of the definition of ``small business'' 
is that the entity not be dominant in its field of operation. We are 
unable at this time to define or quantify the criteria that would 
establish whether a specific television station is dominant in its 
field of operation. Accordingly, the estimate of small businesses to 
which rules may apply do not exclude any television station from the 
definition of a small business on this basis and are therefore over-
inclusive to that extent. Also, as noted, an additional element of the 
definition of ``small business'' is that the entity must be 
independently owned and operated. We note that it is difficult at times 
to assess these criteria in the context of media entities and our 
estimates of small businesses to which they apply may be over-inclusive 
to this extent.
    71. Direct Broadcast Satellite (``DBS'') Service. DBS service is a 
nationally distributed subscription service that delivers video and 
audio programming via satellite to a small parabolic ``dish'' antenna 
at the subscriber's location. DBS, by exception, is now included in the 
SBA's broad economic census category, ``Wired Telecommunications 
Carriers,'' \261\ which was developed for small wireline firms. Under 
this category, the SBA deems a wireline business to be small if it has 
1,500 or fewer employees.\262\ To gauge small business prevalence for 
the DBS service, the Commission relies on data currently available from 
the U.S. Census for the year 2007. According to that source, there were 
3,188 firms that in 2007 were Wired Telecommunications Carriers. Of 
these, 3,144 operated with less than 1,000 employees, and 44 operated 
with more than 1,000 employees. However, as to the latter 44 there is 
no data available that shows how many operated with more than 1,500 
employees. Based on this data, the majority of these firms can be 
considered small.\263\ Currently, only two entities provide DBS 
service, which requires a great investment of capital for operation: 
DIRECTV and EchoStar Communications Corporation (``EchoStar'') 
(marketed as the DISH Network).\264\ Each currently offers subscription 
services. DIRECTV \265\ and EchoStar \266\ each report annual revenues 
that are in excess of the threshold for a small business. Because DBS 
service requires significant capital, we believe it is unlikely that a 
small entity as defined by the SBA would have the financial wherewithal 
to become a DBS service provider.
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    \261\ See 13 CFR 121.201, NAICS code 517110 (2007). The 2007 
NAICS definition of the category of ``Wired Telecommunications 
Carriers'' is in paragraph 7, above.
    \262\ 13 CFR 121.201, NAICS code 517110 (2007).
    \263\ See http://www.factfinder.census.gov/servlet/IBQTable?_bm=y&-geo_id=&-fds_name=EC0700A1&-_skip=600&-ds_name=EC0751SSSZ5&-_lang=en.
    \264\ See Annual Assessment of the Status of Competition in the 
Market for the Delivery of Video Programming, Thirteenth Annual 
Report, 24 FCC Rcd 542, 580, para. 74 (2009) (``13th Annual 
Report''). We note that, in 2007, EchoStar purchased the licenses of 
Dominion Video Satellite, Inc. (``Dominion'') (marketed as Sky 
Angel). See Public Notice, ``Policy Branch Information; Actions 
Taken,'' Report No. SAT-00474, 22 FCC Rcd 17776 (IB 2007).
    \265\ As of June 2006, DIRECTV is the largest DBS operator and 
the second largest MVPD, serving an estimated 16.20 percent of MVPD 
subscribers nationwide. See 13th Annual Report, 24 FCC Rcd at 687, 
Table B-3.
    \266\ As of June 2006, DISH Network is the second largest DBS 
operator and the third largest MVPD, serving an estimated 13.01 
percent of MVPD subscribers nationwide. Id. As of June 2006, 
Dominion served fewer than 500,000 subscribers, which may now be 
receiving ``Sky Angel'' service from DISH Network. See id. at 581, ] 
76.
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    72. Fixed Microwave Services. Microwave services include common 
carrier,\267\ private-operational fixed,\268\

[[Page 40295]]

and broadcast auxiliary radio services.\269\ At present, there are 
approximately 31,549 common carrier fixed licensees and 89,633 private 
and public safety operational-fixed licensees and broadcast auxiliary 
radio licensees in the microwave services. Microwave services include 
common carrier,\270\ private-operational fixed,\271\ and broadcast 
auxiliary radio services.\272\ They also include the Local Multipoint 
Distribution Service (LMDS),\273\ the Digital Electronic Message 
Service (DEMS),\274\ and the 24 GHz Service,\275\ where licensees can 
choose between common carrier and non-common carrier status.\276\ The 
Commission has not yet defined a small business with respect to 
microwave services. For purposes of the FRFA, the Commission will use 
the SBA's definition applicable to Wireless Telecommunications Carriers 
(except satellite)--i.e., an entity with no more than 1,500 persons is 
considered small.\277\ For the category of Wireless Telecommunications 
Carriers (except Satellite), Census data for 2007, which supersede data 
contained in the 2002 Census, show that there were 1,383 firms that 
operated that year.\278\ Of those 1,383, 1,368 had fewer than 100 
employees, and 15 firms had more than 100 employees. Thus under this 
category and the associated small business size standard, the majority 
of firms can be considered small. The Commission notes that the number 
of firms does not necessarily track the number of licensees. The 
Commission estimates that virtually all of the Fixed Microwave 
licensees (excluding broadcast auxiliary licensees) would qualify as 
small entities under the SBA definition.
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    \267\ 47 CFR part 101 et seq. (formerly, part 21 of the 
Commission's rules) for common carrier fixed microwave services 
(except MDS).
    \268\ Persons eligible under parts 80 and 90 of the Commission's 
rules can use Private-Operational Fixed Microwave services. See 47 
CFR parts 80 and 90. Stations in this service are called 
operational-fixed to distinguish them from common carrier and public 
fixed stations. Only the licensee may use the operational-fixed 
station, and only for communications related to the licensee's 
commercial, industrial, or safety operations.
    \269\ Auxiliary Microwave Service is governed by Part 74 and 
Part 78 of Title 47 of the Commission's Rules. Available to 
licensees of broadcast stations, cable operators, and to broadcast 
and cable network entities. Auxiliary microwave stations are used 
for relaying broadcast television signals from the studio to the 
transmitter, or between two points such as a main studio and an 
auxiliary studio. The service also includes TV pickup and CARS 
pickup, which relay signals from a remote location back to the 
studio.
    \270\ See 47 CFR part 101, subparts C and I.
    \271\ See 47 CFR part 101, subparts C and H.
    \272\ Auxiliary Microwave Service is governed by Part 74 of 
Title 47 of the Commission's Rules. See 47 CFR part 74. Available to 
licensees of broadcast stations and to broadcast and cable network 
entities, broadcast auxiliary microwave stations are used for 
relaying broadcast television signals from the studio to the 
transmitter or between two points such as a main studio and an 
auxiliary studio. The service also includes mobile TV pickups, which 
relay signals from a remote location back to the studio.
    \273\ See 47 CFR part 101, subpart L.
    \274\ See 47 CFR part 101, subpart G.
    \275\ See id.
    \276\ See 47 CFR 101.533, 101.1017.
    \277\ 13 CFR 121.201, NAICS code 517210.
    \278\ U.S. Census Bureau, 2007 Economic Census, Sector 51, 2007 
NAICS code 517210 (rel. Oct. 20, 2009), http://factfinder.census.gov/servlet/IBQTable?_bm=y&-geo_id=&-fds_name=EC0700A1&-_skip=700&-ds_name=EC0751SSSZ5&-_lang=en.
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    73. Cable and Other Program Distribution. Since 2007, these 
services have been defined within the broad economic census category of 
Wired Telecommunications Carriers; that category is defined as follows: 
``This industry comprises establishments primarily engaged in operating 
and/or providing access to transmission facilities and infrastructure 
that they own and/or lease for the transmission of voice, data, text, 
sound, and video using wired telecommunications networks. Transmission 
facilities may be based on a single technology or a combination of 
technologies.'' \279\ The SBA has developed a small business size 
standard for this category, which is: All such firms having 1,500 or 
fewer employees.\280\ According to Census Bureau data for 2007, there 
were a total of 955 firms in the subcategory of Cable and Other Program 
Distribution that operated for the entire year.\281\ Of this total, 939 
firms had employment of 999 or fewer employees, and 16 firms had 
employment of 1,000 employees or more.\282\ Accordingly, The Commission 
believes that a majority of firms operating in this industry were 
small.
---------------------------------------------------------------------------

    \279\ U.S. Census Bureau, 2007 NAICS Definitions, ``517110 Wired 
Telecommunications Carriers'' (partial definition), http://www.census.gov/naics/2007/def/ND517110.HTM#N517110.
    \280\ 13 CFR 121.201, NAICS code 517110 (2007).
    \281\ U.S. Census Bureau, 2007 Economic Census, Subject Series: 
Information, Table 5, Employment Size of Firms for the United 
States: 2007, NAICS code 5171102 (located at http://factfinder.census.gov/servlet/IBQTable?_bm=y&-geo_id=&-_skip=600&-ds_name=EC0751SSSZ5&-_lang=en).
    \282\ See id.
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    74. Cable Companies and Systems. The Commission has also developed 
its own small business size standards, for the purpose of cable rate 
regulation. Under the Commission's rules, a ``small cable company'' is 
one serving 400,000 or fewer subscribers, nationwide.\283\ Industry 
data indicate that, of 1,076 cable operators nationwide, all but eleven 
are small under this size standard.\284\ In addition, under the 
Commission's rules, a ``small system'' is a cable system serving 15,000 
or fewer subscribers.\285\ Industry data indicate that, of 6,635 
systems nationwide, 5,802 systems have under 10,000 subscribers, and an 
additional 302 systems have 10,000-19,999 subscribers.\286\ Thus, under 
this second size standard, most cable systems are small.
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    \283\ 47 CFR 76.901(e). The Commission determined that this size 
standard equates approximately to a size standard of $100 million or 
less in annual revenues. Implementation of Sections of the 1992 
Cable Act: Rate Regulation, Sixth Report and Order and Eleventh 
Order on Reconsideration, 10 FCC Rcd 7393, 7408 (1995).
    \284\ These data are derived from: R.R. Bowker, Broadcasting & 
Cable Yearbook 2006, ``Top 25 Cable/Satellite Operators,'' pages A-8 
& C-2 (data current as of June 30, 2005); Warren Communications 
News, Television & Cable Factbook 2006, ``Ownership of Cable Systems 
in the United States,'' pages D-1805 to D-1857.
    \285\ 47 CFR 76.901(c).
    \286\ Warren Communications News, Television & Cable Factbook 
2008, ``U.S. Cable Systems by Subscriber Size,'' page F-2 (data 
current as of Oct. 2007). The data do not include 851 systems for 
which classifying data were not available.
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    75. Cable System Operators. The Act also contains a size standard 
for small cable system operators, which is ``a cable operator that, 
directly or through an affiliate, serves in the aggregate fewer than 1 
percent of all subscribers in the United States and is not affiliated 
with any entity or entities whose gross annual revenues in the 
aggregate exceed $250,000,000.'' \287\ The Commission has determined 
that an operator serving fewer than 677,000 subscribers shall be deemed 
a small operator, if its annual revenues, when combined with the total 
annual revenues of all its affiliates, do not exceed $250 million in 
the aggregate.\288\ Industry data indicate that, of 1,076 cable 
operators nationwide, all but ten are small under this size 
standard.\289\ We note that the Commission neither requests nor 
collects information on whether cable system operators are affiliated 
with entities whose gross annual revenues exceed $250 million,\290\ and 
therefore we are unable to estimate more accurately the number of cable 
system operators that would qualify as small under this size standard.
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    \287\ 47 U.S.C. 543(m)(2); see also 47 CFR 76.901(f) & nn.1-3.
    \288\ 47 CFR 76.901(f); see FCC Announces New Subscriber Count 
for the Definition of Small Cable Operator, Public Notice, 16 FCC 
Rcd 2225 (Cable Services Bureau 2001).
    \289\ These data are derived from R.R. Bowker, Broadcasting & 
Cable Yearbook 2006, ``Top 25 Cable/Satellite Operators,'' pages A-8 
& C-2 (data current as of June 30, 2005); Warren Communications 
News, Television & Cable Factbook 2006, ``Ownership of Cable Systems 
in the United States,'' pages D-1805 to D-1857.
    \290\ The Commission does receive such information on a case-by-
case basis if a cable operator appeals a local franchise authority's 
finding that the operator does not qualify as a small cable operator 
pursuant to Sec.  76.901(f) of the Commission's rules.
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    76. Open Video Services. Open Video Service (OVS) systems provide 
subscription services.\291\ The open video

[[Page 40296]]

system (``OVS'') framework was established in 1996, and is one of four 
statutorily recognized options for the provision of video programming 
services by local exchange carriers.\292\ The OVS framework provides 
opportunities for the distribution of video programming other than 
through cable systems. Because OVS operators provide subscription 
services,\293\ OVS falls within the SBA small business size standard 
covering cable services, which is ``Wired Telecommunications 
Carriers.'' \294\ The SBA has developed a small business size standard 
for this category, which is: All such firms having 1,500 or fewer 
employees. To gauge small business prevalence for the OVS service, the 
Commission relies on data currently available from the U.S. Census for 
the year 2007. According to that source, there were 3,188 firms that in 
2007 were Wired Telecommunications Carriers. Of these, 3,144 operated 
with less than 1,000 employees, and 44 operated with more than 1,000 
employees. However, as to the latter 44 there is no data available that 
shows how many operated with more than 1,500 employees. Based on this 
data, the majority of these firms can be considered small.\295\ In 
addition, we note that the Commission has certified some OVS operators, 
with some now providing service.\296\ Broadband service providers 
(``BSPs'') are currently the only significant holders of OVS 
certifications or local OVS franchises.\297\ The Commission does not 
have financial or employment information regarding the entities 
authorized to provide OVS, some of which may not yet be operational. 
Thus, at least some of the OVS operators may qualify as small entities. 
The Commission further notes that it has certified approximately 45 OVS 
operators to serve 75 areas, and some of these are currently providing 
service.\298\ Affiliates of Residential Communications Network, Inc. 
(``RCN'') received approval to operate OVS systems in New York City, 
Boston, Washington, DC, and other areas. RCN has sufficient revenues to 
assure that they do not qualify as a small business entity. Little 
financial information is available for the other entities that are 
authorized to provide OVS and are not yet operational. Given that some 
entities authorized to provide OVS service have not yet begun to 
generate revenues, the Commission concludes that up to 44 OVS operators 
(those remaining) might qualify as small businesses.
---------------------------------------------------------------------------

    \291\ See 47 U.S.C. 573.
    \292\ 47 U.S.C. 571(a)(3)-(4). See 13th Annual Report, 24 FCC 
Rcd at 606, para. 135.
    \293\ See 47 U.S.C. 573.
    \294\ U.S. Census Bureau, 2007 NAICS Definitions, ``517110 Wired 
Telecommunications Carriers''; http://www.census.gov/naics/2007/def/ND517110.HTM#N517110.
    \295\ See http://factfinder.census.gov/servlet/IBQTable?_bm=y&-fds_name=EC0700A1&-geo_id=&-_skip=600&-ds_name=EC0751SSSZ5&-_lang=en.
    \296\ A list of OVS certifications may be found at http://www.fcc.gov/mb/ovs/csovscer.html.
    \297\ See 13th Annual Report, 24 FCC Rcd at 606-07, ] 135. BSPs 
are newer firms that are building state-of-the-art, facilities-based 
networks to provide video, voice, and data services over a single 
network.
    \298\ See http://www.fcc.gov/mb/ovs/csovscer.html (current as of 
February 2007).
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5. Description of Projected Reporting, Recordkeeping, and Other 
Compliance Requirements
    77. These rules impose new reporting, recordkeeping and/or other 
compliance requirements on small television broadcast stations and 
small MVPDs. Small stations and MVPDs must be prepared to demonstrate 
compliance with the RP in the event of an enforcement inquiry, 
including demonstrating in every circumstance that the equipment 
necessary to pass through programming compliant with the RP has been 
properly installed, maintained, and utilized.\299\ The R&O does not, 
however, mandate the method by which compliance is demonstrated. It 
does provide optional methods to demonstrate compliance by being 
``deemed in compliance'' or in a ``safe harbor.'' For locally inserted 
commercials, a small station or MVPD must provide records showing the 
consistent and ongoing use of equipment to properly measure the 
loudness of the content and to ensure that the dialnorm metadata value 
correctly matches the loudness of the content when encoding the audio 
into AC-3 for transmitting the content to the consumer in the regular 
course of business and demonstrating that the equipment has undergone 
commercially reasonable periodic maintenance and testing to ensure its 
continued proper operation. It must also certify that it either has no 
actual knowledge of a violation of the ATSC A/85 RP, or that any 
violation of which it has become aware has been corrected promptly upon 
becoming aware of such a violation.\300\ For embedded commercials, a 
small station or MVPD must perform a 24-hour spot check on programming 
containing complained-of commercials, and report the results to the 
Commission, and, if they show noncompliance, to the programmer.\301\ In 
the event of a failed spot check, the station or MVPD must re-check the 
noncompliant commercial programming, and if the re-check reveals 
noncompliance with the RP, then the station or MVPD has actual 
knowledge of noncompliance and, going forward, is no longer in the safe 
harbor for that channel or programming.\302\
---------------------------------------------------------------------------

    \299\ R&O at para. 24.
    \300\ R&O at para 29.
    \301\ R&O at paras. 41-42.
    \302\ R&O at paras. 43-44.
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6. Steps Taken To Minimize Significant Economic Impact on Small 
Entities, and Significant Alternatives Considered
    78. The RFA requires an agency to describe any significant 
alternatives that it has considered in reaching its approach, which may 
include the following four alternatives (among others): (1) The 
establishment of differing compliance or reporting requirements or 
timetables that take into account the resources available to small 
entities; (2) the clarification, consolidation, or simplification of 
compliance or reporting requirements under the rule for small entities; 
(3) the use of performance, rather than design, standards; and (4) an 
exemption from coverage of the rule, or any part thereof, for small 
entities.\303\
---------------------------------------------------------------------------

    \303\ 5 U.S.C. 603(c)(1)-(c)(4).
---------------------------------------------------------------------------

    79. The express language of the statute requires that the RP be 
incorporated into the rules and made mandatory for all stations and 
MVPDs, regardless of size.\304\ As a result, these rules may have a 
significant economic impact in some cases, and that impact may affect a 
substantial number of small entities, although, as discussed below, the 
streamlined waiver process for small entities will relieve much of this 
impact. Nonetheless, the R&O makes significant strides to minimize the 
economic impact of the rules on small entities. The ``safe harbor'' we 
adopt simplifies the process by which small stations and MVPDs may 
demonstrate compliance with the RP, by eliminating the need for 
retroactive demonstrations of compliance. Larger stations and MVPDs 
must either seek certifications that programming is compliant with the 
RP, or perform annual spot checks of programming that has not been 
certified.\305\ Smaller entities, however, are required only to 
install, maintain, and utilize the equipment necessary to comply, and 
in the case of an enforcement inquiry triggered by a pattern or trend 
of complaints regarding embedded commercials, to demonstrate ongoing 
compliance via means of a spot check.\306\ This gives smaller entities 
the choice to demonstrate compliance via

[[Page 40297]]

an approach which creates minimal economic impact on those entities.
---------------------------------------------------------------------------

    \304\ See 47 U.S.C. 621(a).
    \305\ R&O at para. 32.
    \306\ R&O at paras. 36-37, 41-42.
---------------------------------------------------------------------------

    80. The smaller entities eligible for this simplified process are 
broadcast stations with less than $14 Million in annual receipts, and 
MVPDs with 400,000 or fewer subscribers, as of December 2011. The R&O 
adopts the SBA size standard for stations, under which, as discussed 
above, approximately 78 percent of television broadcast stations are 
small. The MVPD size standard adopted by the R&O is based on the 
Commission's definition of a ``small cable company,'' allowing us to 
apply a relevant and easily-measurable size standard to all MVPDs. SBA 
considers MVPDs to be either Wired or Wireless Telecommunications 
Carriers, both of which use a 1,500 employee size standard. That 
standard, however, is less relevant than a subscriber-based measure to 
the goal of ensuring that the channels most subscribers watch are 
either certified or annually spot-checked, because the number of people 
employed by an MVPD does not necessarily directly correlate to the 
number of subscribers it reaches. Although the rules adopted in this 
R&O will look to MVPD size as of December 2011, we note that as of June 
2011 all but 15 MVPDs are small.\307\ Because the same program streams 
are provided to smaller and larger entities, spot checks by even a 
small number of large entities should ensure compliance for all while 
reducing the burden on smaller stations and MVPDs.
---------------------------------------------------------------------------

    \307\ These fifteen MVPDs include DIRECTV, DISH Network, AT&T, 
and Verizon, along with more traditional cable companies like Time 
Warner and Suddenlink. See http://www.ncta.com/Stats/TopMSOs.aspx 
(visited November 16, 2011).
---------------------------------------------------------------------------

    81. Furthermore, the statute provides that the Commission may grant 
a one-year waiver of the effective date of the rules implementing the 
statute to any station/MVPD that shows it would be a ``financial 
hardship'' to obtain the necessary equipment to comply with the rules, 
and may renew such waiver for one additional year.\308\ To request a 
financial hardship waiver, a larger station or MVPD must provide: (1) 
Evidence of its financial condition, such as financial statements; (2) 
a cost estimate for obtaining the necessary equipment to comply with 
the required regulation; (3) a detailed statement explaining why its 
financial condition justifies postponing compliance; and (4) an 
estimate of how long it will take to comply, along with supporting 
information. We do not require waiver applicants to show negative cash 
flow but, instead, require only that the station/MVPD's assertion of 
financial hardship be reasonable under the circumstances.\309\ For 
small stations/MVPDs that face a financial challenge in obtaining the 
equipment needed to comply with our rules, we adopt a particularly 
streamlined financial hardship waiver approach.\310\ Specifically, a 
small station or MVPD that seeks a waiver must file with the Commission 
a certification that it: (1) meets our definition of small for this 
purpose, and (2) needs a delay of one year to obtain specified 
equipment in order to avoid the financial hardship that would be 
imposed if it were required to obtain the equipment sooner. The station 
or MVPD is not required to submit any proof of financial condition. 
Small broadcast stations and small MVPDs may consider the waiver 
granted when they file this information online and receive an automatic 
``acknowledgement of request,'' unless the Media Bureau notifies them 
of a problem or question concerning the adequacy of the 
certification.\311\
---------------------------------------------------------------------------

    \308\ R&O at para. 50.
    \309\ R&O at para. 51.
    \310\ R&O at para. 52.
    \311\ Id.
---------------------------------------------------------------------------

    82. This streamlined process is available to stations with no more 
than $14.0 million in annual receipts or that are located in television 
markets 150 to 210. With respect to the latter, the legislative history 
of the CALM Act specifically expressed concern about the difficulties 
faced by broadcasters in smaller markets, where the advertising revenue 
base is much more limited than in larger markets. Unlike small MVPD 
systems, most of the steps small broadcasters must take to comply with 
the RP must be undertaken internally, rather than by a third party 
programmer providing embedded commercials or third party contractors 
providing local insertions. Consequently, we expect that small 
broadcast stations will be more likely to need to obtain equipment, 
and, therefore, more likely to need a waiver to delay the effective 
date of the rule. We will therefore allow all of these stations to use 
the streamlined process. The streamlined process is also available to 
MVPD systems with fewer than 15,000 subscribers (as of December 31, 
2011) that are not affiliated with a larger operator serving more than 
10 percent of all MVPD subscribers. Our definition of ``small MVPD 
system'' for purposes of the streamlined waiver is different from our 
definition of smaller MVPD operators for purposes of being in the safe 
harbor.\312\ While the waiver is available to all systems likely to 
face financial hardships in complying with the RP, we believe that only 
the smallest need an expedited process, and as discussed above, many of 
the steps small MVPD systems must take to comply with the RP may be 
undertaken by a third party.
---------------------------------------------------------------------------

    \312\ R&O at paras. 35-36.
---------------------------------------------------------------------------

    83. Finally, Section 2(b)(3) of the CALM Act provides that the 
statute does not affect the Commission's authority to waive any rule 
required by the CALM Act, or the application of any such rule, for good 
cause shown with regard to any station/MVPD or class of stations/MVPDs 
under Section 1.3 of the Commission's rules. We will use our general 
waiver authority, consistent with Section 2(b)(3), for waivers 
necessitated by unforeseen circumstances as well as for MVPDs that 
demonstrate they cannot implement the RP because of the technology they 
use.\313\
---------------------------------------------------------------------------

    \313\ R&O at para. 56.
---------------------------------------------------------------------------

7. Report to Congress
    84. The Commission will send a copy of the Report and Order, 
including this FRFA, in a report to be sent to Congress pursuant to the 
Congressional Review Act.\314\ In addition, the Commission will send a 
copy of the Report and Order, including this FRFA, to the Chief Counsel 
for Advocacy of the SBA. The Report and Order and FRFA (or summaries 
thereof) will also be published in the Federal Register.\315\
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    \314\ See 5 U.S.C. 801(a)(1)(A).
    \315\ See 5 U.S.C. 604(b).
---------------------------------------------------------------------------

B. Final Paperwork Reduction Act of 1995 Analysis

    85. We analyzed this Report and Order with respect to the Paperwork 
Reduction Act of 1995 (``PRA'') \316\ and it contains new and modified 
information collection requirements.\317\ It will be submitted to the 
Office of Management and Budget (OMB) for review under Section 3507(d) 
of the PRA.\318\ The Commission, as part of its continuing effort to 
reduce paperwork burdens, invites OMB, the general public, and other 
interested parties to comment on the information collection 
requirements contained in this proceeding. In addition, we note that 
pursuant to the Small Business

[[Page 40298]]

Paperwork Relief Act of 2002,\319\ we previously sought specific 
comment on how the Commission might further reduce the information 
collection burden for small business concerns with fewer than 25 
employees.\320\ We did not receive any comments on this issue. We have 
assessed the effects of our rules that might impose information 
collection burdens on small business concerns, and find no results 
specific to businesses with fewer than 25 employees.
---------------------------------------------------------------------------

    \316\ The Paperwork Reduction Act of 1995 (``PRA''), Public Law 
104-13, 109 Stat 163 (1995) (codified in Chapter 35 of title 44 
U.S.C.).
    \317\ We modify existing information collection requirements 
relating to the Commission's online complaint form (the Form 2000 
series). See OMB Control No. 3060-0874 (preapproved July 19, 2011). 
We also create a new information collection requirement to cover the 
filing of financial hardship and general waiver requests pursuant to 
Sections 2(b)(2) and 2(b)(3) of the CALM Act. See OMB Control No. 
3060-1154 (preapproved July 15, 2011).
    \318\ 44 U.S.C. 3507(d).
    \319\ The Small Business Paperwork Relief Act of 2002 
(``SBPRA''), Public Law 107-198, 116 Stat 729 (2002) (codified in 
Chapter 35 of title 44 U.S.C.); see 44 U.S.C. 3506(c)(4).
    \320\ NPRM at para. 48.
---------------------------------------------------------------------------

VI. Ordering Clauses

    86. Accordingly, it is ordered that pursuant to the Commercial 
Advertisement Loudness Mitigation Act of 2010, Pub. L. 111-311, 124 
Stat. 3294, and Sections 1, 2(a), 4(i), and 303(r) of the 
Communications Act of 1934, as amended, 47 U.S.C. 151, 152, 154(i) and 
(j), 303(r), and 621, this Report and order is adopted.
    87. It is further ordered that the rules adopted herein will become 
effective December 13, 2012. We note that these rules contain new 
information collection requirements subject to the Paperwork Reduction 
Act and will be submitted to the Office of Management and Budget for 
review. These requirements will not become effective until after OMB 
approval. The Commission will publish a notice in the Federal Register 
announcing such approval.
    88. It is further ordered that we delegate authority to the Media 
Bureau to consider waiver requests filed under these rules and pursuant 
to Sections 2(b)(2) and 2(b)(3) of the CALM Act.
    89. It is further ordered that, pursuant to the Congressional 
Review Act, 5 U.S.C. 801(a)(1)(A), the Commission will send a copy of 
this Report and Order in a report to Congress and the General 
Accounting Office.
    90. It is further ordered that the Commission's Consumer and 
Governmental Affairs Bureau, Reference Information Center, WILL SEND a 
copy of this Report and Order, including the Final Regulatory 
Flexibility Analysis, to the Chief Counsel for Advocacy of the Small 
Business Administration.

List of Subjects in 47 CFR Parts 73 and 76

    Cable television, Digital television, Incorporation by reference, 
and Satellite television.

Federal Communications Commission.
Marlene H. Dortch,
Secretary.

Final Rules

    For the reasons discussed in the preamble, the Federal 
Communications Commission amends 47 CFR parts 73 and 76 as follows:

PART 73--RADIO BROADCAST SERVICES

0
1. The authority citation for part 73 continues to read as follows:

    Authority: 47 U.S.C. 154, 303, 334 and 336.

0
2. Amend Sec.  73.682 by adding paragraph (e) and Note to Sec.  73.682 
to read as follows:


Sec.  73.682  TV transmission standards.

* * * * *
    (e) Transmission of commercial advertisements by television 
broadcast station. (1) Mandatory compliance with ATSC A/85 RP. 
Effective December 13, 2012, television broadcast stations must comply 
with the ATSC A/85 RP incorporated by reference, see Sec.  73.8000), 
insofar as it concerns the transmission of commercial advertisements.
    (2) Commercials inserted by station. A television broadcast station 
that installs, utilizes, and maintains in a commercially reasonable 
manner the equipment and associated software to comply with ATSC A/85 
RP shall be deemed in compliance with respect to locally inserted 
commercials, which for the purposes of this provision are commercial 
advertisements added to a programming stream by a station prior to or 
at the time of transmission to viewers. In order to be considered to 
have installed, utilized and maintained the equipment and associated 
software in a commercially reasonable manner, a television broadcast 
station must:
    (i) Install, maintain and utilize equipment to properly measure the 
loudness of the content and to ensure that the dialnorm metadata value 
correctly matches the loudness of the content when encoding the audio 
into AC-3 for transmitting the content to the consumer;
    (ii) Provide records showing the consistent and ongoing use of this 
equipment in the regular course of business and demonstrating that the 
equipment has undergone commercially reasonable periodic maintenance 
and testing to ensure its continued proper operation;
    (iii) Certify that it either has no actual knowledge of a violation 
of the ATSC A/85 RP, or that any violation of which it has become aware 
has been corrected promptly upon becoming aware of such a violation; 
and
    (iv) Certify that its own transmission equipment is not at fault 
for any pattern or trend of complaints.
    (3) Embedded commercials--safe harbor. With respect to embedded 
commercials, which, for the purposes of this provision, are those 
commercial advertisements placed into the programming stream by a third 
party (i.e., programmer) and passed through by the station to viewers, 
a television broadcast station must certify that its own transmission 
equipment is not at fault for any pattern or trend of complaints, and 
may demonstrate compliance with the ATSC A/85 RP through one of the 
following methods:
    (i) Relying on a network's or other programmer's certification of 
compliance with the ATSC A/85 RP with respect to commercial 
programming, provided that:
    (A) The certification is widely available by Web site or other 
means to any television broadcast station, cable operator, or 
multichannel video programming distributor that transmits that 
programming; and
    (B) The television broadcast station has no reason to believe that 
the certification is false; and
    (C) The television broadcast station performs a spot check, as 
defined in Sec.  73.682(e)(3)(iv)(A), (B), (D), and (E), on programming 
in response to an enforcement inquiry concerning a pattern or trend of 
complaints regarding commercials contained in that programming.
    (ii) If transmitting any programming that is not certified as 
described in Sec.  73.682(e)(3)(i), a television broadcast station that 
had more than $14,000,000 in annual receipts for the calendar year 2011 
must perform annual spot checks, as defined in Sec.  
73.682(e)(3)(iv)(A), (B), (C), and (E), of all the non-certified 
commercial programming it receives from a network or other programmer 
and perform a spot check, as defined in Sec.  73.682(e)(3)(iv)(A), (B), 
(D), and (E), on programming in response to an enforcement inquiry 
concerning a pattern or trend of complaints regarding commercials 
contained in that programming;
    (iii) A television broadcast station that had $14,000,000 or less 
in annual receipts for the year 2011 need not perform annual spot 
checks but must perform a spot check, as defined in Sec.  
73.682(e)(3)(iv)(A), (B), (D), and (E), on programming in response to 
an enforcement inquiry concerning a pattern or trend of complaints 
regarding commercials contained in that programming.

[[Page 40299]]

    (iv) For purposes of this section, a ``spot check'' of embedded 
commercials requires monitoring 24 uninterrupted hours of programming 
with an audio loudness meter employing the measurement technique 
specified in the ATSC A/85 RP, and reviewing the records from that 
monitoring to detect any commercials transmitted in violation of the 
ATSC A/85 RP. The television broadcast station must not inform the 
network or programmer of the spot check prior to performing it.
    (A) Spot-checking must be conducted after the signal has passed 
through the television broadcast station's processing equipment (e.g., 
at the output of a television receiver). If a problem is found, the 
television broadcast station must determine the source of the 
noncompliance.
    (B) To be considered valid, the television broadcast station must 
demonstrate appropriate maintenance records for the audio loudness 
meter.
    (C) With reference to the annual ``safe harbor'' spot check in 
Sec.  73.682(e)(3)(ii):
    (1) To be considered valid, the television broadcast station must 
demonstrate, at the time of any enforcement inquiry, that appropriate 
spot checks had been ongoing.
    (2) If there is no single 24 hour period in which all programmers 
of a given program stream are represented, an annual spot check may 
consist of a series of loudness measurements over the course of a 7 day 
period, totaling no fewer than 24 hours, that measure at least one 
program, in its entirety, provided by each non-certified programmer 
that supplies programming for that program stream.
    (3) If annual spot checks are performed for two consecutive years 
without finding evidence of noncompliance with the ATSC A/85 RP, no 
further annual spot checks are required to remain in the safe harbor 
for existing programming.
    (4) Non-certified program streams must be spot-checked annually 
using the approach described in this section. If annual spot checks of 
the program stream are performed for two consecutive years without 
finding evidence of noncompliance with the ATSC A/85 RP, no further 
annual spot checks are required to remain in the safe harbor for that 
program stream.
    (5) Even after the two year period for annual spot checks, if a 
spot check shows noncompliance on a non-certified program stream, the 
station must once again perform annual spot checks of that program 
stream to be in the safe harbor for that programming. If these renewed 
annual spot checks are performed for two consecutive years without 
finding additional evidence of noncompliance with the ATSC A/85 RP, no 
further annual spot checks are required to remain in the safe harbor 
for that program stream.
    (D) With reference to the spot checks in response to an enforcement 
inquiry pursuant to Sec.  73.682(e)(3)(i)(C), (2), or (3):
    (1) If notified of a pattern or trend of complaints, the television 
broadcast station must perform the 24-hour spot check of the program 
stream at issue within 30 days or as otherwise specified by the 
Enforcement Bureau; and
    (2) If the spot check reveals actual compliance, the television 
broadcast station must notify the Commission in its response to the 
enforcement inquiry.
    (E) If any spot check shows noncompliance with the ATSC A/85 RP, 
the television station must notify the Commission and the network or 
programmer within 7 days, direct the programmer's attention to any 
relevant complaints, and must perform a follow-up spot check within 30 
days of providing such notice. The station must notify the Commission 
and the network or programmer of the results of the follow-up spot 
check. Notice to the Federal Communications Commission must be provided 
to the Chief, Investigations and Hearings Division, Enforcement Bureau, 
or as otherwise directed in a Letter of Inquiry to which the station is 
responding.
    (1) If the follow-up spot check shows compliance with the ATSC A/85 
RP, the station remains in the safe harbor for that program stream.
    (2) If the follow-up spot check shows noncompliance with the ATSC 
A/85 RP, the station will not be in the safe harbor with respect to 
commercials contained in the program stream for which the spot check 
showed noncompliance until a subsequent spot check shows that the 
program stream is in compliance.
    (4) Use of a real-time processor. A television broadcast station 
that installs, maintains and utilizes a real-time processor in a 
commercially reasonable manner will be deemed in compliance with the 
ATSC A/85 RP with regard to any commercial advertisements on which it 
uses such a processor, so long as it also:
    (i) Provides records showing the consistent and ongoing use of this 
equipment in the regular course of business and demonstrating that the 
equipment has undergone commercially reasonable periodic maintenance 
and testing to ensure its continued proper operation;
    (ii) Certifies that it either has no actual knowledge of a 
violation of the ATSC A/85 RP, or that any violation of which it has 
become aware has been corrected promptly upon becoming aware of such a 
violation; and
    (iii) Certifies that its own transmission equipment is not at fault 
for any pattern or trend of complaints.
    (5) Commercials locally inserted by a station's agent--safe harbor. 
With respect to commercials locally inserted, which for the purposes of 
this provision are commercial advertisements added to a programming 
stream for the television broadcast station by a third party after it 
has been received from the programmer but prior to or at the time of 
transmission to viewers, a station may demonstrate compliance with the 
ATSC A/85 RP by relying on the third party local inserter's 
certification of compliance with the ATSC A/85 RP, provided that:
    (i) The television broadcast station has no reason to believe that 
the certification is false;
    (ii) The television broadcast station certifies that its own 
transmission equipment is not at fault for any pattern or trend of 
complaints; and
    (iii) The television broadcast station performs a spot check, as 
defined in Sec.  73.682(e)(3)(iv)(A), (B), (D), and (E), on the 
programming at issue in response to an enforcement inquiry concerning a 
pattern or trend of complaints regarding commercials inserted by that 
third party.
    (6) Instead of demonstrating compliance pursuant to paragraphs 
(e)(2) through (5) of this section, a station may demonstrate 
compliance with paragraph (e)(1) of this section in response to an 
enforcement inquiry prompted by a pattern or trend of complaints by 
demonstrating actual compliance with ATSC A/85 RP with regard to the 
commercial advertisements that are the subject of the inquiry, and 
certifying that its own transmission equipment is not at fault for any 
such pattern or trend of complaints.

    Note to Sec.  73.682:  For additional information regarding this 
requirement, see Implementation of the Commercial Advertisement 
Loudness Mitigation (CALM) Act, FCC 11-182.


0
3. Amend Sec.  73.8000 by revising paragraph (b) introductory text and 
adding paragraph (b)(5) to read as follows:


Sec.  73.8000  Incorporation by reference.

* * * * *
    (b) The following materials are available from Advanced Television 
Systems Committee (ATSC), 1776 K Street NW., 8th Floor, Washington, DC 
20006; or at the ATSC Web site: http://www.atsc.org/standards.html.
* * * * *

[[Page 40300]]

    (5) ATSC A/85:2011 ``ATSC Recommended Practice: Techniques for 
Establishing and Maintaining Audio Loudness for Digital Television,'' 
(July 25, 2011) (``ATSC A/85 RP''), IBR approved for Sec.  73.682.
* * * * *

PART 76--MULTICHANNEL VIDEO AND CABLE TELEVISION SERVICE

0
4. The authority citation for part 76 continues to read as follows:

    Authority:  47 U.S.C. 151, 152, 153, 154, 301, 302, 302a, 303, 
303a, 307, 308, 309, 312, 315, 317, 325, 339, 340, 341, 503, 521, 
522, 531, 532, 534, 535, 536, 537, 543, 544, 544a, 545, 548, 549, 
552, 554, 556, 558, 560, 561, 571, 572, 573.


0
5. Revise Sec.  76.602 to read as follows:


Sec.  76.602  Incorporation by reference.

    (a) The materials listed in this section are incorporated by 
reference in this part. These incorporations by reference were approved 
by the Director of the Federal Register in accordance with 5 U.S.C. 
552(a) and 1 CFR part 51. These materials are incorporated as they 
exist on the date of the approval, and notice of any change in these 
materials will be published in the Federal Register. The materials are 
available for inspection at the Federal Communications Commission, 445 
12th. St. SW., Reference Information Center, Room CY-A257, Washington, 
DC 20554 and at the National Archives and Records Administration 
(NARA). For information on the availability of this material at NARA, 
call 202-741-6030, or go to: http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html.
    (b) The following materials are available from Advanced Television 
Systems Committee (ATSC), 1776 K Street NW., 8th Floor, Washington, DC 
20006; phone: 202-872-9160; or online at http://www.atsc.org/standards.html.
    (1) ATSC A/65B: ``ATSC Standard: Program and System Information 
Protocol for Terrestrial Broadcast and Cable (Revision B),'' March 18, 
2003, IBR approved for Sec.  76.640.
    (2) ATSC A/85:2011 ``ATSC Recommended Practice: Techniques for 
Establishing and Maintaining Audio Loudness for Digital Television,'' 
(July 25, 2011) (``ATSC A/85 RP''), IBR approved for Sec.  76.607.
    (c) The following materials are available from Consumer Electronics 
Association (CEA), 1919 S. Eads St., Arlington, VA 22202; phone: 866-
858-1555; or online at http://www.ce.org/standards.
    (1) CEA-542-B, ``CEA Standard: Cable Television Channel 
Identification Plan,'' July 2003, IBR approved for Sec.  76.605.
    (2) CEA-931-A, ``Remote Control Command Pass-through Standard for 
Home Networking,'' 2003, IBR approved for Sec.  76.640.
    (d) The following materials are available from Society of Cable 
Telecommunications Engineers (SCTE), 140 Philips Road Exton, PA 19341-
1318; phone: 800-542-5040; or online at http://www.scte.org/standards/Standards_Available.aspx.
    (1) ANSI/SCTE 26 2001 (formerly DVS 194): ``Home Digital Network 
Interface Specification with Copy Protection,'' 2001, IBR approved for 
Sec.  76.640.
    (2) SCTE 28 2003 (formerly DVS 295): ``Host-POD Interface 
Standard,'' 2003, IBR approved for Sec.  76.640.
    (3) SCTE 40 2003 (formerly DVS 313), ``Digital Cable Network 
Interface Standard,'' 2003, IBR approved for Sec.  76.640.
    (4) SCTE 41 2003 (formerly DVS 301): ``POD Copy Protection 
System,'' 2003, IBR approved for Sec.  76.640.
    (5) ANSI/SCTE 54 2003 (formerly DVS 241), ``Digital Video Service 
Multiplex and Transport System Standard for Cable Television,'' 2003, 
IBR approved for Sec.  76.640.
    (6) ANSI/SCTE 65 2002 (formerly DVS 234), ``Service Information 
Delivered Out-of-Band for Digital Cable Television,'' 2002, IBR 
approved for Sec.  76.640.
    (e) Some standards listed above are also available for purchase 
from the following sources:
    (1) American National Standards Institute (ANSI), 25 West 43rd 
Street, 4th Floor, New York, NY 10036; phone: 212-642-4980; or online 
at http://webstore.ansi.org/.
    (2) Global Engineering Documents (standards reseller), 15 Inverness 
Way East, Englewood, CO 80112; phone: 800-854-7179; or online at http://global.ihs.com.
0
6. Add Sec.  76.607 to subpart K to read as follows:


Sec.  76.607  Transmission of commercial advertisements.

    (a) Transmission of commercial advertisements by cable operator or 
other multichannel video programming distributor. (1) Mandatory 
compliance with ATSC A/85 RP. Effective December 13, 2012, cable 
operators and other multichannel video programming distributors 
(MVPDs), as defined in 47 U.S.C. 522, must comply with ATSC A/85 RP 
(incorporated by reference, see Sec.  76.602), insofar as it concerns 
the transmission of commercial advertisements.
    (2) Commercials inserted by cable operator or other MVPD. A cable 
operator or other multichannel video programming distributor that 
installs, utilizes, and maintains in a commercially reasonable manner 
the equipment and associated software to comply with ATSC A/85 RP shall 
be deemed in compliance with respect to locally inserted commercials, 
which for the purposes of this provision are commercial advertisements 
added to a programming stream by a cable operator or other MVPD prior 
to or at the time of transmission to viewers. In order to be considered 
to have installed, utilized and maintained the equipment and associated 
software in a commercially reasonable manner, a cable operator or other 
MVPD must:
    (i) Install, maintain and utilize equipment to properly measure the 
loudness of the content and to ensure that the dialnorm metadata value 
correctly matches the loudness of the content when encoding the audio 
into AC-3 for transmitting the content to the consumer;
    (ii) Provide records showing the consistent and ongoing use of this 
equipment in the regular course of business and demonstrating that the 
equipment has undergone commercially reasonable periodic maintenance 
and testing to ensure its continued proper operation;
    (iii) Certify that it either has no actual knowledge of a violation 
of the ATSC A/85 RP, or that any violation of which it has become aware 
has been corrected promptly upon becoming aware of such a violation; 
and
    (iv) Certify that its own transmission equipment is not at fault 
for any pattern or trend of complaints.
    (3) Embedded commercials--safe harbor. With respect to embedded 
commercials, which, for the purposes of this provision, are those 
commercial advertisements placed into the programming stream by a third 
party (i.e., programmer) and passed through by the cable operator or 
other MVPD to viewers, a cable operator or other MVPD must certify that 
its own transmission equipment is not at fault for any pattern or trend 
of complaints, and may demonstrate compliance with the ATSC A/85 RP 
through one of the following methods:
    (i) Relying on a network's or other programmer's certification of 
compliance with the ATSC A/85 RP with respect to commercial 
programming, provided that:
    (A) The certification is widely available by Web site or other 
means to

[[Page 40301]]

any television broadcast station, cable operator, or multichannel video 
programming distributor that transmits that programming; and
    (B) The cable operator or other MVPD has no reason to believe that 
the certification is false; and
    (C) The cable operator or other MVPD performs a spot check, as 
defined in Sec.  76.607(a)(3)(iv)(A), (B), (D), and (E), on the 
programming in response to an enforcement inquiry concerning a pattern 
or trend of complaints regarding commercials contained in that 
programming;
    (ii) If transmitting any programming that is not certified as 
described in Sec.  76.607(a)(3)(i):
    (A) A cable operator or other MVPD that had 10,000,000 subscribers 
or more as of December 31, 2011 must perform annual spot checks, as 
defined in Sec.  76.607(a)(3)(iv)(A), (B), (C), and (E), of all the 
non-certified commercial programming it receives from a network or 
other programmer that is carried by any system operated by the cable 
operator or other MVPD, and perform a spot check, as defined in Sec.  
76.607(a)(3)(iv)(A), (B), (D), and (E), on programming in response to 
an enforcement inquiry concerning a pattern or trend of complaints 
regarding commercials contained in that programming; and
    (B) A cable operator or other MVPD that had fewer than 10,000,000 
but more than 400,000 subscribers as of December 31, 2011, must perform 
annual spot checks, as defined in Sec.  76.607(a)(3)(iv)(A), (B), (C), 
and (E), of a randomly chosen 50 percent of the non-certified 
commercial programming it receives from a network or other programmer 
that is carried by any system operated by the cable operator or other 
MVPD, and perform a spot check, as defined in Sec.  
76.607(a)(3)(iv)(A), (B), (D), and (E), on programming in response to 
an enforcement inquiry concerning a pattern or trend of complaints 
regarding commercials contained in that programming; or
    (iii) A cable operator or other MVPD that had fewer than 400,000 
subscribers as of December 31, 2011, need not perform annual spot 
checks but must perform a spot check, as defined in Sec.  
76.607(a)(3)(iv)(A), (B), (D), and (E), on programming in response to 
an enforcement inquiry concerning a pattern or trend of complaints 
regarding commercials contained in that programming.
    (iv) For the purposes of this section, a ``spot check'' of embedded 
commercials requires monitoring 24 uninterrupted hours of programming 
with an audio loudness meter compliant with the ATSC A/85 RP's 
measurement technique, and reviewing the records from that monitoring 
to detect any commercials transmitted in violation of the ATSC A/85 RP. 
The cable operator or other MVPD must not inform the network or 
programmer of the spot check prior to performing it.
    (A) Spot-checking must be conducted after the signal has passed 
through the cable operator or other MVPD's processing equipment (e.g., 
at the output of a set-top box). If a problem is found, the cable 
operator or other MVPD must determine the source of the noncompliance.
    (B) To be considered valid, the cable operator or other MVPD must 
demonstrate appropriate maintenance records for the audio loudness 
meter.
    (C) With reference to the annual ``safe harbor'' spot check in 
Sec.  76.607(a)(3)(ii):
    (1) To be considered valid, the cable operator or other--MVPD must 
demonstrate, at the time of any enforcement inquiry, that appropriate 
spot checks had been ongoing.
    (2) If there is no single 24 hour period in which all programmers 
of a given channel are represented, an annual spot check could consist 
of a series of loudness measurements over the course of a 7 day period, 
totaling no fewer than 24 hours, that measure at least one program, in 
its entirety, provided by each non-certified programmer that supplies 
programming for that channel.
    (3) If annual spot checks are performed for two consecutive years 
without finding evidence of noncompliance with the ATSC A/85 RP, no 
further annual spot checks are required to remain in the safe harbor 
for existing programming.
    (4) Newly-added (or newly de-certified) non-certified channels must 
be spot-checked annually using the approach described in this section. 
If annual spot checks of the channel are performed for two consecutive 
years without finding evidence of noncompliance with the ATSC A/85 RP, 
no further annual spot checks are required to remain in the safe harbor 
for that channel.
    (5) Even after the two year period, if a spot check shows 
noncompliance on a non-certified channel, the cable operator or other 
MVPD must once again perform annual spot checks of that channel to be 
in the safe harbor for that programming. If these renewed annual spot 
checks are performed for two consecutive years without finding 
additional evidence of noncompliance with the ATSC A/85 RP, no further 
annual spot checks are required to remain in the safe harbor for that 
channel.
    (D) With reference to the spot checks in response to an enforcement 
inquiry pursuant to Sec.  76.607(a)(3)(i)(C), (ii), or (iii):
    (1) If notified of a pattern or trend of complaints, the cable 
operator or other MVPD must perform the 24-hour spot check of the 
channel or programming at issue within 30 days or as otherwise 
specified by the Enforcement Bureau; and
    (2) If the spot check reveals actual compliance, the cable operator 
or other MVPD must notify the Commission in its response to the 
enforcement inquiry.
    (E) If any spot check shows noncompliance with the ATSC A/85 RP, 
the cable operator or other MVPD must notify the Commission and the 
network or programmer within 7 days, direct the programmer's attention 
to any relevant complaints, and must perform a follow-up spot check 
within 30 days of providing such notice. The cable operator or other 
MVPD must notify the Commission and the network or programmer of the 
results of the follow-up spot check. Notice to the Federal 
Communications Commission must be provided to the Chief, Investigations 
and Hearings Division, Enforcement Bureau, or as otherwise directed in 
a Letter of Inquiry to which the cable operator or other MVPD is 
responding.
    (1) If the follow-up spot check shows compliance with the ATSC A/85 
RP, the cable operator or other MVPD remains in the safe harbor for 
that channel or programming.
    (2) If the follow-up spot check shows noncompliance with the ATSC 
A/85 RP, the cable operator or other MVPD will not be in the safe 
harbor with respect to commercials contained in programming for which 
the spot check showed noncompliance until a subsequent spot check shows 
that the programming is in compliance.
    (4) Use of a real-time processor. A cable operator or other MVPD 
that installs, maintains and utilizes a real-time processor in a 
commercially reasonable manner will be deemed in compliance with the 
ATSC A/85 RP with regard to any commercial advertisements on which it 
uses such a processor, so long as it also:
    (i) Provides records showing the consistent and ongoing use of this 
equipment in the regular course of business and demonstrating that the 
equipment has undergone commercially reasonable periodic maintenance 
and testing to ensure its continued proper operation;
    (ii) Certifies that it either has no actual knowledge of a 
violation of the ATSC A/85 RP, or that any violation of which it has 
become aware has been

[[Page 40302]]

corrected promptly upon becoming aware of such a violation; and
    (iii) Certifies that its own transmission equipment is not at fault 
for any pattern or trend of complaints.
    (5) Commercials locally inserted by a cable operator or other 
MVPD's agent--safe harbor. With respect to commercials locally 
inserted, which for the purposes of this provision are commercial 
advertisements added to a programming stream for the cable operator or 
other MVPD by a third party after it has been received from the 
programmer but prior to or at the time of transmission to viewers, a 
cable operator or other MVPD may demonstrate compliance with the ATSC 
A/85 RP by relying on the third party local inserter's certification of 
compliance with the ATSC A/85 RP, provided that:
    (i) The cable operator or other MVPD has no reason to believe that 
the certification is false;
    (ii) The cable operator or other MVPD certifies that its own 
transmission equipment is not at fault for any pattern or trend of 
complaints; and
    (iii) The cable operator or other MVPD performs a spot check, as 
defined in Sec.  76.607(a)(3)(iv)(A), (B), (D), and (E), on the 
programming at issue in response to an enforcement inquiry concerning a 
pattern or trend of complaints regarding commercials inserted by that 
third party.
    (6) Instead of demonstrating compliance pursuant to paragraphs 
(a)(2) through (5) of this section, a cable operator or other MVPD may 
demonstrate compliance with paragraph (a)(1) of this section in 
response to an enforcement inquiry prompted by a pattern or trend of 
complaints by demonstrating actual compliance with ATSC A/85 RP with 
regard to the commercial advertisements that are the subject of the 
inquiry, and certifying that its own transmission equipment is not at 
fault for any such pattern or trend of complaints.

    Note to Sec.  76.607(a): For additional information regarding 
this requirement, see Implementation of the Commercial Advertisement 
Loudness Mitigation (CALM) Act, FCC 11-182.

    (b) [Reserved]

[FR Doc. 2012-16165 Filed 7-6-12; 8:45 am]
BILLING CODE 6712-01-P