[Federal Register Volume 80, Number 191 (Friday, October 2, 2015)]
[Proposed Rules]
[Pages 59706-59719]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-24843]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 76

[MB Docket No. 15-216; FCC 15-109]


Implementation of Section 103 of the STELA Reauthorization Act of 
2014, Totality of the Circumstances Test

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: In this document, the Commission seeks comment on potential 
updates to the ``totality of the circumstances test'' for evaluating 
whether broadcast stations and multichannel video programming 
distributors (``MVPDs'') are negotiating for retransmission consent in 
good faith. The document seeks comment generally on the totality of the 
circumstances test, including whether and how the Commission should 
update that test. The document also seeks comment on whether there are 
specific practices that the Commission should identify as evidencing 
bad faith under the totality of the circumstances test.

DATES: Comments are due on or before December 1, 2015; reply comments 
are due on or before December 31, 2015.

ADDRESSES: You may submit comments, identified by MB Docket No. 15-216, 
by any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Federal Communications Commission's Web site: http://fjallfoss.fcc.gov/ecfs2/. Follow the instructions for submitting 
comments.
     Mail: Filings can be sent by hand or messenger delivery, 
by commercial overnight courier, or by first-class or overnight U.S. 
Postal Service mail. All filings must be addressed to the Commission's 
Secretary, Office of the Secretary, Federal Communications Commission.
     People with Disabilities: Contact the FCC to request 
reasonable accommodations (accessible format documents, sign language 
interpreters, CART, etc.) by email: [email protected] or phone: (202) 418-
0530 or TTY: (202) 418-0432.
    For detailed instructions for submitting comments and additional 
information on the rulemaking process, see the SUPPLEMENTARY 
INFORMATION section of this document.

FOR FURTHER INFORMATION CONTACT: For additional information on this 
proceeding, contact Diana Sokolow or Raelynn Remy of the Policy 
Division, Media Bureau at (202) 418-2120 or [email protected]; 
[email protected].

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Notice 
of Proposed Rulemaking, FCC 15-109, adopted and released on September 
2, 2015. The full text is available for public inspection and copying 
during regular business hours in the FCC Reference Center, Federal 
Communications Commission, 445 12th Street SW., Room CY-A257, 
Washington, DC 20554. This document will also be available via ECFS at 
http://fjallfoss.fcc.gov/ecfs/. Documents will be available 
electronically in ASCII, Microsoft Word, and/or Adobe Acrobat. 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). This 
document contains no proposed information collection requirements.

Synopsis

I. Introduction

    1. By this Notice of Proposed Rulemaking (NPRM), as directed by 
Section 103(c) of the STELA Reauthorization Act of 2014 
(``STELAR''),\1\ we review the totality of the circumstances test for 
evaluating whether broadcast stations and multichannel video 
programming distributors (``MVPDs'') are negotiating for retransmission 
consent in good faith. The Communications Act of 1934, as amended (the 
``Act''), prohibits cable systems and other MVPDs from retransmitting a 
broadcast station's signal without the station's express consent.\2\ 
This consent is known as ``retransmission consent.'' The Act and the 
Commission's implementing rules require broadcasters and MVPDs to 
negotiate for retransmission consent in good faith.\3\ The Commission 
has adopted a two-part framework for evaluating good faith in this 
context. First, the Commission has established a list of objective good 
faith negotiation standards, the violation of which is considered a per 
se breach of the good faith negotiation obligation.\4\ Second, even if 
the specific per se standards are met, the Commission may consider 
whether, based on the totality of the circumstances, a party has failed 
to negotiate retransmission consent in good faith.\5\ In accordance 
with Section 103(c) of STELAR, which contemplates that the Commission 
will conduct a ``robust examination'' of practices used by parties in 
retransmission consent negotiations,\6\ we adopt this NPRM and seek 
comment on potential updates to the totality of the circumstances test.


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    \1\ Congress directed the Commission to ``commence a rulemaking 
to review its totality of the circumstances test for good faith 
negotiations'' by September 4, 2015. See Public Law 113-200, 103(c), 
128 Stat. 2059 (2014).
    \2\ 47 U.S.C. 325(b)(1)(A).
    \3\ Id. 325(b)(3)(C)(ii), (iii); 47 CFR 76.65.
    \4\ See 47 CFR 76.65(b)(1).
    \5\ See id. 76.65(b)(2).
    \6\ See Report from the Senate Committee on Commerce, Science, 
and Transportation accompanying S. 2799, 113th Cong., S. Rep. No. 
113-322 at 13 (2014) (``Senate Commerce Committee Report'').
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II. Background

    2. Congress created the retransmission consent regime in 1992 ``to 
establish a marketplace for the disposition of the rights to retransmit 
broadcast signals,'' but not ``to dictate the outcome of the ensuing 
marketplace negotiations.'' \7\ Later, Congress adopted good faith

[[Page 59707]]

negotiation requirements in Section 325 of the Act, prohibiting 
broadcast television stations and MVPDs from ``failing to negotiate 
[retransmission consent] in good faith.'' \8\ Section 325 also provides 
that entering ``into retransmission consent agreements containing 
different terms and conditions, including price terms,'' is not a 
violation of the duty to negotiate in good faith ``if such different 
terms and conditions are based on competitive marketplace 
considerations.'' \9\ The Commission has implemented the good faith 
negotiation statutory provisions through a two-part framework for 
determining whether retransmission consent negotiations are conducted 
in good faith.\10\ First, the Commission initially established a list 
of seven (subsequently nine) good faith negotiation standards, the 
violation of which is considered a per se breach of the good faith 
negotiation obligation.\11\ Second, even if the specific per se 
standards are met, a complainant may attempt to demonstrate that, based 
on the totality of the circumstances, a party has failed to negotiate 
retransmission consent in good faith.\12\ In its Good Faith Order, the 
Commission described the totality of the circumstances test as follows:
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    \7\ S. Rep. No. 92, 102nd Cong., 1st Sess. (1991), reprinted in 
1992 U.S.C.C.A.N. 1133, 1169.
    \8\ 47 U.S.C. 325(b)(3)(C).
    \9\ Id. In 1999, Congress enacted the Satellite Home Viewer 
Improvement Act (``SHVIA''), which required television stations to 
negotiate retransmission consent with MVPDs in good faith and 
included the ``competitive marketplace considerations'' provision. 
Public Law 106-113, 113 Stat. 1501 (1999). Although SHVIA imposed 
the good faith negotiation obligation only on broadcasters, in 2004 
Congress made the good faith negotiation obligation reciprocal 
between broadcasters and MVPDs. Public Law 108-447, 118 Stat. 2809 
(2004) (referred to as the Satellite Home Viewer Extension and 
Reauthorization Act, or ``SHVERA'').
    \10\ See Implementation of the Satellite Home Viewer Improvement 
Act of 1999, Retransmission Consent Issues: Good Faith Negotiation 
and Exclusivity, First Report and Order, 65 FR 15559 (2000) (``Good 
Faith Order'').
    \11\ 47 CFR 76.65(b)(1).
    \12\ See 47 CFR 76.65(b)(2).
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    The second part of the test is a totality of the circumstances 
standard. Under this standard, an MVPD may present facts to the 
Commission which, even though they do not allege a violation of the 
objective standards, given the totality of the circumstances reflect 
an absence of a sincere desire to reach an agreement that is 
acceptable to both parties and thus constitute a failure to 
negotiate in good faith. We do not intend the totality of the 
circumstances test to serve as a `back door' inquiry into the 
substantive terms negotiated between the parties. While the 
Commission will not ordinarily address the substance of proposed 
terms and conditions or the terms of actual retransmission consent 
agreements, we will entertain complaints under the totality of the 
circumstances test alleging that specific retransmission consent 
proposals are sufficiently outrageous, or evidence that differences 
among MVPD agreements are not based on competitive marketplace 
considerations, as to breach a broadcaster's good faith negotiation 
obligation. However, complaints which merely reflect commonplace 
disagreements encountered by negotiating parties in the everyday 
business world will be promptly dismissed by the Commission.\13\
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    \13\ Good Faith Order, 65 FR at 15564, para. 32 (footnote 
omitted).

    3. Since Congress's enactment of Section 325, we have seen 
significant changes in the retransmission consent marketplace that have 
altered the negotiation dynamics between broadcasters and MVPDs. For 
example, whereas broadcasters in the past typically negotiated with 
MVPDs for in-kind compensation, broadcasters have increasingly sought 
and received monetary compensation in exchange for retransmission 
consent.\14\ Moreover, in contrast to the video programming landscape 
that existed in 1992, when consumers typically had a single cable 
operator as their only video service option, consumers seeking to 
purchase video programming service today generally are able to choose 
among multiple MVPDs.\15\ The increase in competition among MVPDs has 
improved broadcasters' leverage in retransmission consent negotiations 
with MVPDs.\16\ MVPDs that face competition have stronger incentives to 
negotiate retransmission consent agreements with broadcast stations 
because much broadcast network television programming continues to be 
``must-have'' programming for MVPDs and an MVPD that is unable to reach 
a retransmission consent agreement with a broadcast station may 
permanently lose subscribers to rival MVPDs--including subscribers to 
its associated voice and broadband services.\17\ In addition, broadcast 
licensees that are affiliated with other programming networks may have 
additional leverage because they can integrate their retransmission 
consent negotiations with carriage of the other networks,\18\ and any 
negotiation impasses could result in the MVPD's loss of those other 
networks as well as the broadcast stations. Further, consumers today 
are increasingly accessing video programming from online video 
distributors that deliver content via the Internet.\19\ As a 
consequence of these marketplace changes, retransmission consent fees 
have steadily grown and are projected to increase further, thereby 
applying upward pressure on consumer prices for MVPD video programming 
services. Moreover, ``negotiations [for] retransmission consent have 
become significantly more complex in recent years, and . . . in some 
cases one or both parties to a negotiation may be engaging in tactics 
that push those negotiations toward a breakdown and result in consumer 
harm from programming blackouts.'' \20\
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    \14\ See Amendment of the Commission's Rules Related to 
Retransmission Consent, Report and Order and Further Notice of 
Proposed Rulemaking, 79 FR 28615, 28616, para. 2 (2014) (``2014 
Joint Negotiation Order''); Time Warner Cable Inc. et al. Petition 
for Rulemaking to Amend the Commission's Rules Governing 
Retransmission Consent, MB Docket No. 10-71, at 15 (filed Mar. 9, 
2010). Prior to the exchange of monetary compensation, cable 
operators typically compensated broadcasters for consent to 
retransmit the broadcasters' signals through in-kind compensation, 
such as carriage of additional channels of the broadcaster's 
programming on the cable system or advertising time. See Amendment 
of the Commission's Rules Related to Retransmission Consent, Notice 
of Proposed Rulemaking, 76 FR 17071, 17072, para. 2 (2011) (``2011 
NPRM'').
    \15\ See Amendment to the Commission's Rules Concerning 
Effective Competition; Implementation of Section 111 of the STELA 
Reauthorization Act, Report and Order, 80 FR 38001, paras. 3, 4 
(2015).
    \16\ See 2011 NPRM, 76 FR at 17072, para. 2 & 17077, para. 14.
    \17\ See, e.g., Joe Flint, Time Warner Cable Loses 306,000 
Subscribers, Cites Fight With CBS, LA Times, Oct. 31, 2013; Duane 
Dudeck, Time Warner Cable Lost Subscribers During WTMJ Blackout, 
Journal Sentinel, Dec. 3, 2013; Yinka Adegoke, Cablevision Blames 
Fox Blackout for Subscriber Losses, Reuters, Feb. 16, 2011.
    \18\ See Annual Assessment of the Status of Competition in the 
Market for Delivery of Video Programming, Sixteenth Report 
(``Sixteenth Competition Report'').
    \19\ See Sixteenth Competition Report.
    \20\ See Senate Commerce Committee Report at 13.
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    4. In March 2014, the Commission, in a separate proceeding 
regarding retransmission consent, adopted an order strengthening its 
retransmission consent rules to provide that joint negotiation by 
stations that are ranked among the top four stations in a market as 
measured by audience share and are not commonly owned constitutes a per 
se violation of the good faith negotiation requirement.\21\ The 
Commission intended its action to facilitate the fair and effective 
completion of retransmission consent negotiations.\22\ Through Section 
103 of STELAR, which was enacted on December 4, 2014, Congress 
subsequently revised Section 325 of the Act to ``prohibit a television 
broadcast station from coordinating negotiations or negotiating on a 
joint basis with another television broadcast station in the same local 
market . . . to grant retransmission consent under this section to a[n 
MVPD], unless such stations are directly or indirectly under common de 
jure control permitted

[[Page 59708]]

under the regulations of the Commission.'' \23\ The Commission adopted 
an order implementing this provision, replacing the previous rule 
regarding joint negotiation with language consistent with the new 
statute.\24\
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    \21\ See 2014 Joint Negotiation Order.
    \22\ Id., 79 FR at 28615, para. 1.
    \23\ Pub. L. 113-200, 103(a); 47 U.S.C. 325(b)(3)(C).
    \24\ The Commission found that the statutory prohibition on 
joint negotiation is broader than, and thus supersedes, the 
Commission's previous prohibition. Implementation of Sections 101, 
103 and 105 of the STELA Reauthorization Act of 2014, Order, 80 FR 
11,328, 11,329, paras. 4, 5 (2015) (``STELAR Sections 101, 103 and 
105 Order'').
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    5. In addition to the joint negotiation provision, Section 103 
requires the Commission to take certain further actions related to 
retransmission consent. First, Section 103 revised Section 325 of the 
Act to ``prohibit a television broadcast station from limiting the 
ability of a[n MVPD] to carry into the local market . . . of such 
station a television signal that has been deemed significantly viewed . 
. . unless such stations are directly or indirectly under common de 
jure control permitted by the Commission.'' \25\ The Commission 
implemented this provision by adding a new per se good faith 
negotiation standard to its rules.\26\ Second, Section 103 directed the 
Commission to ``commence a rulemaking to review its totality of the 
circumstances test for good faith negotiations under clauses (ii) and 
(iii) of section 325(b)(3)(C) of the Communications Act of 1934 (47 
U.S.C. 325(b)(3)(C)).'' \27\ This NPRM commences the rulemaking to 
review and, if necessary, update the totality of the circumstances 
test.\28\ In the single instance in which the Media Bureau has found a 
violation of the good faith negotiation requirement, it determined that 
the cable operator breached its duty to negotiate in good faith based 
on the totality of the circumstances test.\29\ The cable operator 
claimed during negotiations that its retransmission consent agreement 
with one station permitted it to carry the other broadcast stations at 
issue, but the Media Bureau found that its failure to provide evidence 
of a valid retransmission consent agreement permitting such carriage 
was a breach of its duty to negotiate in good faith.\30\
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    \25\ Public Law 113-200, 103(b); 47 U.S.C. 325(b)(3)(C).
    \26\ STELAR Sections 101, 103, and 105 Order, 80 FR at 11,329, 
para. 5.
    \27\ Public Law 113-200, 103(c).
    \28\ We note that we previously initiated a rulemaking 
proceeding on retransmission consent issues in 2011 and certain 
issues in that proceeding remain pending. See 2011 NPRM. To the 
extent certain pleadings filed in the 2011 rulemaking are relevant 
to this proceeding, we refer to them herein.
    \29\ See Letter to Jorge L. Bauermeister, 22 FCC Rcd 4933, 4934 
(MB 2007).
    \30\ Bauermeister, 22 FCC Rcd 4933.
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III. Discussion

    6. In accordance with Congress's directive in Section 103(c) of 
STELAR, we seek comment below on any potential updates we should make 
to the totality of the circumstances test to ensure that the conduct of 
broadcasters and MVPDs during negotiations for retransmission consent 
and after such negotiations have broken down meet the good faith 
standard in Section 325 of the Act.\31\ In Section III.A, we seek 
comment generally on the totality of the circumstances test, including 
whether and how we should update that test. In Section III.B, we seek 
comment on whether there are specific practices that we should identify 
as evidencing bad faith under the totality of the circumstances 
test.\32\ Consistent with Congress's intent in Section 103(c) of 
STELAR, our goal in this proceeding is to provide further guidance to 
negotiating parties about the totality of the circumstances test, if 
necessary, to benefit consumers of video programming service by 
facilitating successful negotiations and avoiding disruptions in 
service to consumers.\33\
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    \31\ See Senate Commerce Committee Report at 13.
    \32\ Pursuant to the totality of the circumstances test, the 
Commission may consider all of the facts that are brought before it 
regarding a retransmission consent negotiation to determine whether 
there is a breach of the duty to negotiate in good faith. See, e.g., 
Good Faith Order, 65 FR 15564, para. 32. Although in this NPRM we 
seek comment on whether there are certain practices and/or conduct 
that should be considered evidence of bad faith under the totality 
of the circumstances test, until this rulemaking is complete we will 
continue to apply the presumptions established in the 2000 Good 
Faith Order. See Good Faith Order, 65 FR at 15567, paras. 56 through 
58. Thus, the fact that we are seeking comment on potential updates 
to the totality of the circumstances test does not preclude us from 
concluding, in a particular case, that certain practices or conduct 
is a breach of the good faith duty today.
    \33\ See Senate Commerce Committee Report at 13.
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A. Totality of the Circumstances Test in General

    7. First, we ask whether there is a need to update the totality of 
the circumstances test. How is the retransmission consent market 
currently functioning? Is there a market failure, and if so, what is 
its source? Are there issues with the current totality of the 
circumstances test that warrant change? We seek comment on this. We 
invite comment on any elaboration of the totality of the circumstances 
test we can provide that will help to guide negotiations to a 
successful conclusion. Section 76.65(b)(2) of our rules permits a party 
to a retransmission consent negotiation to ``demonstrate, based on the 
totality of the circumstances of a particular retransmission consent 
negotiation, that [the other party] breached its duty to negotiate in 
good faith.'' \34\ How can the Commission most effectively address 
complaints that do not allege per se violations but that involve 
behavior that is asserted to be inconsistent with good faith? Does the 
``current process for filing bad faith allegations'' based on the 
totality of the circumstances test, including the legal standards and 
evidentiary burdens, help to promote bona fide negotiations and protect 
consumers? \35\ If not, how can we change our good faith rules in a way 
that will ensure that both parties to a negotiation offer bona fide 
terms and conditions for carriage? If the Commission provides 
additional guidance on conduct that will be considered evidence of bad 
faith under the totality of the circumstances test, would this help 
facilitate productive retransmission consent negotiations? 
Alternatively, should the totality of the circumstances test be 
eliminated or replaced? Commenters that advocate replacement of the 
totality of the circumstances test should specify the test that we 
should consider in its place.
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    \34\ 47 CFR 76.65(b)(2).
    \35\ See Senate Commerce Committee Report at 13.
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    8. How effective has our totality of the circumstances test been? 
Although it was originally designed to give the Commission flexibility 
to take account of any unique facts underlying a particular 
retransmission consent dispute, should we modify the test to make it 
more specific? Is it possible to maintain the flexibility of the 
totality of the circumstances test, while at the same time giving 
additional guidance to the parties to retransmission consent 
negotiations about certain conduct that we consider evidence of bad 
faith negotiation? When we last sought comment on this issue in 
2011,\36\ some commenters stated that providing more specificity for 
the totality of the circumstances test would promote a more competitive 
marketplace,\37\ and others stated that more specificity is 
unnecessary.\38\ Are there certain practices that the Commission should 
consider to be evidence of bad faith in evaluating the totality of the 
circumstances, or is that test best left as

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a general provision to capture those actions and behaviors that we do 
not now foresee but that may in particular future cases impede 
retransmission consent negotiations? To the extent that we are able to 
provide more guidance to MVPDs and broadcasters, what specific 
negotiation practices do parties engage in that should be considered 
evidence of bad faith under the totality of the circumstances test? 
\39\ In adopting the Good Faith Order, the Commission concluded that 
Congress intended it to ``follow established precedent, particularly in 
the field of labor law, in implementing the good faith retransmission 
consent negotiation requirement,'' and the Commission discussed labor 
law precedents in that order.\40\ We invite comment on whether more 
recent labor law precedents, or precedents from other areas of law, may 
be useful in revising the totality of the circumstances test.\41\
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    \36\ 2011 NPRM, 76 FR at 17079, paras. 31 through 33.
    \37\ See, e.g., Comments of CenturyLink on the 2011 NPRM at 7 
(filed May 27, 2011) (``CenturyLink NPRM Comments'').
    \38\ See, e.g., Comments of Barrington Broadcasting Group, LLC, 
et al. on the 2011 NPRM at 20 (filed May 27, 2011) (``Joint 
Broadcasters NPRM Comments'').
    \39\ See infra Section III.B (seeking comment on specific 
practices that potentially evidence a failure to negotiate in good 
faith under the totality of the circumstances test).
    \40\ Good Faith Order, 65 FR at 15560, para. 6.
    \41\ See Ex Parte Letter of CenturyLink, Consolidated 
Communications, Inc., FairPoint Communications, Inc., ITTA, Mediacom 
Communications Corp., NTCA, Public Knowledge and TDS 
Telecommunications Corp. in MB Docket No. 10-71 at 4, 5 (filed Aug. 
18, 2015) (``Joint Parties Ex Parte Letter'').
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    9. Section 325 of the Act provides, among other things, that ``it 
shall not be a failure to negotiate in good faith if the television 
broadcast station enters into retransmission consent agreements 
containing different terms and conditions, including price terms, with 
different [MVPDs] if such different terms and conditions are based on 
competitive marketplace considerations.'' \42\ In implementing this 
provision in 2000, the Commission provided the following examples of 
bargaining proposals that are presumptively consistent with competitive 
marketplace considerations:
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    \42\ 47 U.S.C. 325(b)(3)(C).
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    1. Proposals for compensation above that agreed to with other MVPDs 
in the same market;
    2. Proposals for compensation that are different from the 
compensation offered by other broadcasters in the same market;
    3. Proposals for carriage conditioned on carriage of any other 
programming, such as a broadcaster's digital signals, an affiliated 
cable programming service, or another broadcast station either in the 
same or a different market; \43\
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    \43\ See infra Section III.B (asking whether a broadcaster's 
requirement that broadcast stations and cable networks be bundled as 
part of the same agreement should violate the good faith negotiation 
requirement).
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    4. Proposals for carriage conditioned on a broadcaster obtaining 
channel positioning or tier placement rights;
    5. Proposals for compensation in the form of commitments to 
purchase advertising on the broadcast station or broadcast-affiliated 
media; and
    6. Proposals that allow termination of retransmission consent 
agreement based on the occurrence of a specific event, such as 
implementation of SHVIA's satellite must carry requirements.\44\
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    \44\ Good Faith Order, 65 FR at 15567, para. 56.

We seek comment on whether, in light of changes that have occurred in 
the video programming marketplace since 2000, these bargaining 
proposals should remain presumptively consistent with competitive 
marketplace considerations under the totality of the circumstances 
test.\45\ Should the Commission amend, delete from, or add to this 
list? \46\ At the time the Commission adopted the totality of the 
circumstances test, the good faith negotiation requirement applied only 
to broadcasters, but in 2004 Congress applied it to MVPDs as well. 
Should any practices or bargaining proposals be added to this list to 
account for application of the good faith requirement to the conduct of 
MVPDs?
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    \45\ See ACA Ex Parte Letter in MB Docket No. 10-71 at 2 (filed 
July 31, 2015) (urging the Commission to reexamine its existing 
presumptions that certain types of conduct are consistent with 
competitive marketplace considerations) (``ACA July 31, 2015 Ex 
Parte Letter'').
    \46\ See, e.g., Comments of the American Public Power 
Association on the 2011 NPRM at 26 (filed May 27, 2011) (``APPA 
Group NPRM Comments''); Comments of Sinclair Broadcast Group, Inc. 
on the 2011 NPRM at 19 (filed May 27, 2011); Comments of the 
National Association of Broadcasters on the 2011 NPRM at 51 (filed 
May 27, 2011); Comments of Nexstar Broadcasting, Inc. on the 2011 
NPRM at 18 (filed May 27, 2011).
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    10. The Commission also previously stated that ``[c]onsiderations 
that are designed to frustrate the functioning of a competitive market 
are not `competitive marketplace considerations.' '' \47\ Although the 
Commission found it ``more difficult to develop a . . . list of 
proposals that indicate an automatic absence of competitive marketplace 
considerations,'' \48\ it concluded that the following proposals are 
presumptively inconsistent with competitive marketplace considerations:
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    \47\ Good Faith Order, 65 FR at 15567, para. 58.
    \48\ Id. at para. 57.
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    1. Proposals that specifically foreclose carriage of other 
programming services by the MVPD that do not substantially duplicate 
the proposing broadcaster's programming;
    2. Proposals involving compensation or carriage terms that result 
from an exercise of market power by a broadcast station or that result 
from an exercise of market power by other participants in the market 
(e.g., other MVPDs) the effect of which is to hinder significantly or 
foreclose MVPD competition;
    3. Proposals that result from agreements not to compete or to fix 
prices; and
    4. Proposals for contract terms that would foreclose the filing of 
complaints with the Commission.\49\
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    \49\ Id. at para. 58.
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    11. The Commission explained that these examples are illustrative 
and are not intended to be exclusive of other bargaining proposals that 
may be inconsistent with competitive marketplace considerations.\50\ We 
ask commenters whether we should consider any revisions to the list of 
bargaining proposals that are presumptively inconsistent with 
competitive marketplace considerations under the totality of the 
circumstances test.\51\ Should any practices or bargaining proposals be 
added to this list to account for the 2004 extension of the good faith 
negotiation requirement to the conduct of MVPDs? Should this list be 
revised or expanded to account for any of the practices or proposals 
discussed in Section III.B. infra? Are there practices or proposals 
that standing alone would not violate the good faith negotiation 
requirement but that in combination with other factors could violate 
the totality of the circumstances test? Are there particular 
negotiating practices that tend to result in a breakdown in 
negotiations, and if so, how, if at all, should the totality of the 
circumstances test be changed to account for those practices? How can 
we best ensure that any revisions to the totality of the circumstances 
test will not hinder a party's ability to tailor its proposals to the 
competitive environment? \52\ Should any of the factors considered 
under the totality of the circumstances test be codified in our rules? 
In keeping with Congress's directive, we seek to provide the industry 
with further guidance that would provide more certainty as to what 
constitutes good faith in retransmission consent negotiations, and 
thereby help facilitate productive negotiations.
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    \50\ Id. at 15567, nn.123, 125.
    \51\ See, e.g., Comments of Cox Enterprises, Inc. on the 2011 
NPRM at 9 (filed May 27, 2011); Comments of DISH Network L.L.C. on 
the 2011 NPRM at 25, 26 (filed May 27, 2011) (``DISH Network NPRM 
Comments'').
    \52\ Reply Comments of CBS Corporation on the 2011 NPRM at 21 
(filed June 27, 2011).

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[[Page 59710]]

B. Specific Practices That Potentially Evidence a Failure To Negotiate 
in Good Faith Under the Totality of the Circumstances Test

    12. We seek comment on whether there are specific practices that we 
should identify as evidencing bad faith negotiation under the totality 
of the circumstances test. Do broadcasters or MVPDs engage in 
particular conduct or demand types of contract terms that we should 
consider as evidence of bad faith under the totality of the 
circumstances test? Commenters that advocate the inclusion of 
additional conduct and/or practices under the totality of the 
circumstances test should explain the legal and policy bases for a 
Commission finding that such conduct and/or practices are evidence of 
bad faith or should be deemed presumptively inconsistent with 
competitive marketplace considerations. Interested parties have 
identified a number of practices that broadcasters or MVPDs have 
engaged in during retransmission consent negotiations (or after a 
breakdown in negotiations) that, they assert, evidence bad faith under 
the totality of the circumstances test. We discuss those practices 
below.
    13. First, parties have urged the Commission to address the 
practice by broadcasters of preventing consumers' online access to the 
broadcaster's programming as an apparent tactic to gain leverage in a 
retransmission consent dispute.\53\ In certain recent retransmission 
consent impasses, broadcasters have prevented subscribers from 
accessing their video content over the Internet during retransmission 
consent negotiations.\54\ The legislative history regarding Section 
103(c) of STELAR indicates that Congress was concerned about such 
practices and directed the Commission to examine in this proceeding 
``the role digital rights and online video programming have begun to 
play in retransmission consent negotiations.'' \55\ Such online access 
restrictions prevent all of an MVPD's broadband subscribers, i.e., 
regardless of whether those subscribers are located in markets where 
the MVPD and broadcaster have reached an impasse in negotiations, from 
accessing the online video programming that the broadcaster otherwise 
makes generally available when the broadcaster and the MVPD are engaged 
in a retransmission consent dispute.\56\ In addition, this practice 
affects the MVPD's broadband subscribers even if those subscribers do 
not also subscribe to the MVPD's video service.\57\ We seek comment on 
whether such a practice during retransmission consent disputes should 
be considered evidence of bad faith under the totality of the 
circumstances test.\58\ We acknowledge that, even where a broadcaster 
has prevented access to its programming online, many consumers can 
obtain access to the signal for free over the air. How, if at all, is 
using this online practice as a tactic to gain negotiating leverage 
more egregious or harmful to consumers than other practices used to 
gain leverage in retransmission consent discussions? Should causing 
consumers harm to enhance negotiating leverage generally be a factor 
that we should consider as evidence of bad faith under the totality of 
the circumstances test? \59\ We note that, in an analogous context, 
some news organizations that distribute content via newspapers and the 
Internet limit access to their online content to paid subscribers. To 
the extent online access restrictions are reasonable in that context, 
what distinguishes such restrictions from those that are imposed in 
cases of preventing online access in this context, i.e., where a 
broadcaster distributes its programming content via an MVPD and online? 
Are there issues of statutory authority or constitutional issues that 
should be considered in this context?
---------------------------------------------------------------------------

    \53\ See American Television Alliance (``ATVA'') Ex Parte Letter 
in MB Docket No. 10-71 at 3 (filed July 17, 2015) (``ATVA Ex Parte 
Letter''). In 2014, Mediacom Communications Corporation 
(``Mediacom'') filed a Petition in which it requested, among other 
things, that the Commission prohibit the practice of preventing 
subscribers' online access. See Mediacom Communications Corporation 
Petition for Rulemaking, RM-11728, at iii, iv, 13, 17 (filed July 
21, 2014) (``Mediacom Petition''). Commenters were divided on 
whether the Commission should address this practice. Some commenters 
asserted that we should prohibit this practice because it uses anti-
consumer behavior as leverage in retransmission consent 
negotiations, which they argue is inconsistent with an obligation to 
negotiate in good faith. Others argued that preventing online access 
is an appropriate tool in retransmission consent negotiations and 
that a broadcaster may be unable to ascertain which of an MVPD's 
broadband customers also subscribes to the MVPD's video service.
    \54\ For example, during a retransmission consent dispute 
between CBS and Time Warner Cable (``TWC'') in 2013, CBS prevented 
TWC's broadband customers from accessing CBS programming online, 
even if the broadband customers did not subscribe to TWC for video 
programming.
    \55\ Senate Commerce Committee Report at 13.
    \56\ See Mediacom Reply Comments at 19 (filed Oct. 14, 2014).
    \57\ See NTCA Comments on Mediacom Petition at 6; Reply Comments 
of Cequel Communications, LLC d/b/a Suddenlink Communications in RM-
11728, at 4 (filed Oct. 14, 2014); TDS Comments on Mediacom Petition 
at 6.
    \58\ We understand that when a broadcaster prevents an MVPD's 
broadband subscribers from accessing the broadcaster's programming 
online, it may be unable to identify which broadband subscribers are 
also video subscribers.
    \59\ See ACA July 31, 2015 Ex Parte Letter at 2. See also 
Comments of National Consumers League on the 2011 NPRM at 1 (``NCL 
NPRM Comments'').
---------------------------------------------------------------------------

    14. In addition to broadcasters preventing online access, parties 
have expressed concern about broadcasters' relinquishing to third 
parties their right to grant retransmission consent and similar 
practices. For example, should certain network involvement in 
retransmission consent negotiations be a factor suggesting bad faith 
under the totality of the circumstances test? We understand that some 
network affiliation agreements give the network the right to approve 
its affiliate's retransmission consent agreement with an MVPD, and some 
MVPDs and consumer groups have argued that this practice has hindered 
the progress of retransmission consent negotiations. What are the 
appropriate parameters of network involvement in retransmission consent 
negotiations? Would it be appropriate for a network to negotiate on 
behalf of its affiliates, and if so, to what extent? Should it be 
considered evidence of bad faith for a broadcaster to give any third 
party the right to approve its retransmission consent agreement? As 
noted, the statute now precludes joint negotiation by non-commonly 
owned stations in the same local market; \60\ should it be considered 
evidence of bad faith under the totality of the circumstances test if a 
broadcaster jointly negotiates with, or entrusts retransmission consent 
negotiations to,

[[Page 59711]]

any non-commonly owned entity regardless of the geographic market in 
which that entity operates? \61\
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    \60\ As noted above, Congress in Section 103 of STELAR revised 
Section 325 of the Act to ``prohibit a television broadcast station 
from coordinating negotiations or negotiating on a joint basis with 
another television broadcast station in the same local market . . . 
to grant retransmission consent . . . unless such stations are 
directly or indirectly under common de jure control permitted under 
the regulations of the Commission,'' Pub. L. 113-200, 103(a); 47 
U.S.C. 325(b)(3)(C)(iv), and the Commission codified this language 
in its rules nearly verbatim. See 47 CFR 76.65(b)(1)(viii). We note 
that Congress's inclusion of the term ``de jure control'' in Section 
103 of STELAR was intended to ensure that only those stations that 
come within the scope of this term as defined by the Commission 
(e.g., same market stations owned by an entity that holds over 50 
percent of the stations' voting stock) would be permitted to 
negotiate jointly for retransmission consent. See, e.g., Application 
of Fox Television Stations, Inc., 10 FCC Rcd 8452, 8513 (1995) (de 
jure control typically is determined by whether a shareholder owns 
more than 50 percent of the voting shares of a corporation); 
Metromedia, Inc., 98 FCC 2d 300, 305, 306 (1984) (de jure control is 
ownership of over 50 percent of a corporation's voting stock); 
Corporate Ownership Reporting and Disclosure by Broadcast Licensees, 
Report and Order, 49 FR 19482, 19490, n.47, 19491 (1984) (a voting 
ownership interest exceeding 50% reflects the line of de jure 
control). Thus, stations operating under joint sales agreements 
(``JSAs''), local marketing agreements (``LMAs''), or similar 
``sidecar'' arrangements, even if attributable, cannot jointly 
negotiate retransmission consent with a station in the same market 
owned by the broker because they are not ``under common de jure 
control.''
    \61\ See ATVA Ex Parte Letter at 4, 5.
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    15. We also invite comment on how a broadcaster's insistence on 
bundling broadcast signals with other broadcast stations or cable 
networks into the retransmission consent agreement should be treated 
under the totality of the circumstances test. We note that early 
retransmission consent agreements typically provided for noncash 
payment to broadcasters in the form of carriage of additional 
programming. If a broadcaster requires MVPDs to purchase less popular 
programming in order to purchase more desired programming, the MVPDs 
may be forced to pay for programming that they do not want and may in 
turn pass those costs onto consumers. And while broadcasters and other 
programmers sometimes offer MVPDs both a bundled price and standalone 
prices for particular programming, some MVPDs assert that the prices 
for the standalone options may be so high that the only economically 
sound option is to accept the bundled offer. Although the Commission, 
in the Good Faith Order, concluded that the bundling of broadcast and 
non-broadcast programming in retransmission consent agreements is a 
practice that is presumptively consistent with good faith 
bargaining,\62\ it also stated that ``[c]onduct that is violative of 
national policies favoring competition--that is, for example, intended 
to gain or sustain a monopoly, is an agreement not to compete or fix 
prices, or involves the exercise of market power in one market in order 
to foreclose competitors from participation in another market--is not 
within the competitive marketplace considerations standard . . . .'' 
\63\ The Commission has specifically ``clarif[ied] that tying is not 
consistent with competitive marketplace considerations if it would 
violate the antitrust laws.''\64\ Have circumstances changed such that 
bundling of broadcast and non-broadcast programming should not be 
presumptively consistent with good faith bargaining under any 
circumstances? \65\ What type of showing must an MVPD complainant make 
to demonstrate that bundling in a particular case violates antitrust 
laws? We also seek comment on whether and to what extent a 
broadcaster's insistence on bundling a local broadcast signal with 
specific types of programming such as regional sports networks (or 
other ``must have'' programming), multicast programming, duplicative 
stations, and/or significantly viewed stations should factor into our 
assessment of whether the broadcaster has negotiated in good faith 
under the totality of the circumstances test.\66\ In addition, we seek 
comment on whether a broadcaster's insistence on bundling a local 
broadcast signal with one or more prospective programming channels \67\ 
should be considered evidence of bad faith under the totality of the 
circumstances test. With regard to the bundling of prospective 
channels, how can an MVPD assess the reasonableness of a broadcaster's 
proposed carriage fees for a bundled offering that contains a 
programming channel that has not yet been launched or whose carriage is 
conditioned on future events? Is it consistent with good faith 
bargaining for a broadcaster to insist on MVPD carriage of untested 
programming channels as a condition of carrying a local broadcast 
signal? If we decide that a broadcast station's attempt to tie carriage 
of its affiliated programming to carriage of a broadcast station is a 
factor suggesting a failure to negotiate in good faith, how would we 
analyze the legitimacy of a standalone offer? The American Television 
Alliance, for example, suggests that the stand-alone offer be ``a real 
economic alternative to a bundle of broadcast and non-broadcast 
programming.'' \68\
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    \62\ See Good Faith Order, 65 FR at 15567, para. 56.
    \63\ Id. at para. 58.
    \64\ See also Implementation of Section 207 of the Satellite 
Home Viewer Extension and Reauthorization Act of 2004; Reciprocal 
Bargaining Obligation, Report and Order, 70 FR 40216, 40219, para. 
15 (2005) (``Reciprocal Bargaining Order'') (``[W]e clarify that 
tying is not consistent with competitive marketplace considerations 
if it would violate the antitrust laws.'').
    \65\ See Reply Comments of Public Knowledge and New America 
Foundation on the 2011 NPRM at 6, 7.
    \66\ See ATVA Ex Parte Letter at 3; ACA Ex Parte Letter in MB 
Docket No. 10-71 at 2, 3 (filed July 24, 2015) (``ACA July 24, 2015 
Ex Parte Letter'').
    \67\ By prospective programming channel, we refer to a 
programming channel that has not yet been launched or a station or 
network that may be acquired in the future. See ACA July 24, 2015 Ex 
Parte Letter at 2.
    \68\ See ATVA Ex Parte Letter at 3.
---------------------------------------------------------------------------

    16. Parties have identified a number of other negotiating practices 
that, they assert, are inconsistent with the statutory duty to bargain 
in good faith. We seek comment on whether any of these practices should 
factor into our assessment of whether a negotiating entity has breached 
its duty to negotiate in good faith under the totality of the 
circumstances test. In particular, parties assert that the following 
practices raise concerns about whether a party has met its obligation 
to negotiate retransmission consent in good faith: (i) A broadcaster's 
insistence on contract expiration dates, or threats to black out a 
station signal, in the time period just prior to the airing of a 
``marquee'' sports or entertainment event; \69\ (ii) a broadcaster's 
preventing an MVPD from temporarily importing an out-of-market signal 
in cases where the broadcaster has blacked out its local signal after 
negotiations failed to produce an agreement by the contract expiration 
date; \70\ (iii) a broadcaster's demand that an MVPD place limits on 
its subscribers' use of lawful devices and functionalities; (iv) a 
broadcaster's demand that MVPDs pay per-subscriber fees not only for 
viewers of the broadcaster's retransmitted signal, but also for 
subscribers that receive the broadcaster's signal over-the-air or who 
receive an MVPD's Internet or voice service, but not its video service; 
\71\ (v) an MVPD's or broadcaster's refusal to provide ``information 
substantiating reasons for positions taken when requested to in the 
course of bargaining''; \72\ (vi) an MVPD's or broadcaster's engaging 
in ``surface bargaining,'' i.e., conduct designed to delay 
negotiations, but that does not necessarily constitute an outright 
refusal to bargain; \73\ (vii) an MVPD-affiliated broadcaster's 
``discriminat[ion] in the prices, terms and conditions [for] 
retransmission consent among or between MVPDs based on vertical 
competitive effects''; \74\ (viii) an MVPD's or broadcaster's demanding 
or negotiating retransmission consent based on ``most favored nation'' 
provisions; \75\ (ix) a broadcaster's demand for tier placement 
commitments, which compel MVPDs to place their affiliated networks in 
the

[[Page 59712]]

most popular programming packages; \76\ (x) a broadcaster's imposition 
of minimum penetration requirements, which require MVPDs to guarantee 
that broadcaster-affiliated cable networks will reach a specified 
percentage of customers; \77\ (xi) a broadcaster's failure to make an 
initial contract proposal at least 90 days prior to the existing 
contract's expiration; \78\ (xii) a broadcaster's preventing an MVPD 
from disclosing rates, terms and conditions of a contract proposal or 
agreement to the Commission, a court of competent jurisdiction, and/or 
other state or federal governmental entities in connection with a 
formal retransmission consent complaint or other legal or 
administrative proceeding; \79\ (xiii) a broadcaster's discrimination 
in price among MVPDs in a market absent a showing of direct and 
legitimate economic benefits associated with such price differences; 
\80\ (xiv) an MVPD's or broadcaster's failure to negotiate terms and 
conditions for retransmission consent based on actual local market 
conditions; \81\ and (xv) an MVPD's or broadcaster's attempt to 
manufacture a retransmission consent dispute in the hope of encouraging 
government intervention.\82\ We also seek comment on any other 
practices that should be considered evidence of bad faith under the 
totality of the circumstances test.
---------------------------------------------------------------------------

    \69\ See ATVA Ex Parte Letter at 3, 4; ACA July 24, 2015 Ex 
Parte Letter at 2. See also Comments of Consumer Action on the 2011 
NPRM at 1 (``Consumer Action Comments'').
    \70\ See ATVA Ex Parte Letter at 4. Although Section 103 of 
STELAR amended Section 325 of the Act to ``prohibit a television 
broadcast station from limiting the ability of [an MVPD] to carry 
into the local market . . . of such station a television signal that 
has been deemed significantly viewed . . . or any other television 
broadcast signal such distributor is authorized to carry . . . .,'' 
this provision would not permit an MVPD to import a non-
significantly viewed signal in cases where the MVPD were not 
``authorized to carry'' the signal, with certain exceptions. 47 
U.S.C. 325(b)(3)(C) (as amended by Section 103 of STELAR). ATVA 
proposes that we deem it a failure to negotiate in good faith for a 
broadcaster not to authorize such carriage either through waiver of 
the right to prevent importation of distant signals (in the case of 
satellite carriers) or through exercise of network non-duplication 
or syndicated exclusivity rights (in the case of cable and 
telecommunications MVPDs).
    \71\ ATVA Ex Parte Letter at 5.
    \72\ See ACA July 24, 2015 Ex Parte Letter at 1. See also Joint 
Parties Ex Parte Letter at 4.
    \73\ Id. at 2.
    \74\ Id. at 3.
    \75\ Id.
    \76\ See Cablevision July 31, 2015 Ex Parte Letter at 3, 5; ITTA 
Ex Parte Letter in MB Docket No. 10-71 at 1, 2 (filed Aug. 7, 2015) 
(``ITTA August 7, 2015 Ex Parte Letter''); Mediacom Petition at 10 
through 12 (identifying certain other tactics used by programmers to 
force bundling of multiple channels on widely penetrated tiers).
    \77\ See Cablevision July 31, 2015 Ex Parte Letter at 3 through 
5 (asserting that, in order to broaden the reach of their 
programming, broadcasters have used tying practices in conjunction 
with tier placement and minimum penetration requirements, and that 
these practices collectively harm consumers). Cablevision further 
asserts that the good faith standard mandates that broadcasters omit 
basic tier customers from the denominator used to assess whether 
minimum penetration requirements have been met in contracts for 
bundled programming. Id. at 5.
    \78\ See ITTA Ex Parte Letter in MB Docket No. 10-71 at 2 (filed 
Aug. 13, 2015) (``ITTA August 13, 2015 Ex Parte Letter'').
    \79\ Id.
    \80\ Id.
    \81\ See Comments of Block Communications, Inc. in MB Docket No. 
10-71 at 8, 9 (filed Aug. 14, 2015) (``Block Comments'').
    \82\ See NAB Ex Parte Letter in MB Docket No. 10-71 at 1 (filed 
July 13, 2015); NAB Ex Parte Letter at 2 (filed July 24, 2015); NAB 
Ex Parte Letter at 1 (filed August 25, 2015).
---------------------------------------------------------------------------

    17. How, if at all, should any of the above practices figure into 
our assessment of whether the broadcaster or MVPD has breached its duty 
to negotiate retransmission consent in good faith under the totality of 
the circumstances test? With regard to the second practice noted above 
(concerning importation of distant broadcast signals), we note that 
there could be situations where an MVPD is denied the right to carry a 
significantly viewed signal by a distant broadcast station that is 
precluded from granting out-of-market carriage of its signal due to 
restrictions in a network affiliation agreement.\83\ Does Section 
325(b)(3)(C)(v) of the Act, as added by Section 103(b) of STELAR 
(which, as noted above, generally prohibits a broadcast station from 
limiting the ability of an MVPD ``to carry into the local market . . . 
of such station . . . a television signal that has been deemed 
significantly viewed. . . .'') require the significantly viewed station 
to consent to carriage of its signal by the MVPD in retransmission 
consent negotiations or does it only govern retransmission consent 
negotiations between local stations and the MVPD? \84\ If this section 
does not apply, we note that the Commission, in implementing the 
reciprocal bargaining provisions of Section 325, found that ``it is 
incumbent on broadcasters subject to . . . contractual limitations [in 
a network affiliation agreement] that have been engaged by an out-of-
market MVPD to negotiate retransmission consent of its signal to at 
least inquire with its network whether the network would waive the 
limitation with regard to the MVPD in question.'' \85\ Given this 
statement, in cases where a significantly viewed station refuses out-
of-market carriage of its signal without first asking the network 
whether it would consider waiving its right to enforce contractual 
restrictions on such carriage, should the broadcaster's refusal 
continue to be probative evidence of whether it is negotiating in bad 
faith under the totality of the circumstances test? \86\
---------------------------------------------------------------------------

    \83\ See Comments of ACA on the 2011 NPRM at 55 through 58 
(filed May 27, 2011); ACA Ex Parte Letter in MB Docket No. 10-71 at 
4 (filed Aug. 28, 2015).
    \84\ We note that Congress intended Section 103(b) of STELAR 
``to be interpreted broadly by the FCC to ensure that a television 
broadcast station is not able to limit MVPD carriage of signals that 
it is permitted to carry pursuant to the Communications Act. . . .'' 
See Senate Commerce Committee Report at 13.
    \85\ See Implementation of Section 207 of the Satellite Home 
Viewer Extension and Reauthorization Act of 2004, Reciprocal 
Bargaining Obligation, Report and Order, 70 FR 40216, 40223, para. 
35 (2005) (``Reciprocal Bargaining Order'').
    \86\ Although Section 76.65(b)(vi) of our rules provides that 
the ``[e]xecution by a Negotiating Entity of an agreement with any 
party, a term or condition of which, requires that such Negotiating 
Entity not enter into a retransmission consent agreement with any 
other television broadcast station or [MVPD]'' violates the duty to 
negotiate retransmission consent in good faith, we note that Section 
76.65(b)(vi) was intended to prohibit collusion between a 
broadcaster and an MVPD that contemplates non-carriage of the 
broadcaster's signal by another MVPD, and was not intended ``to 
affect the ability of a network affiliate agreement to limit 
redistribution of network programming.'' See id., 70 FR at 40223, 
para. 34.
---------------------------------------------------------------------------

    18. We note that although most of the alleged bad faith practices 
discussed in this NPRM are attributed by commenting parties to 
broadcasters, Section 325(b)(3)(C) of the Act imposes a duty to 
negotiate retransmission consent in good faith reciprocally on 
broadcasters and MVPDs, and the Commission has interpreted this 
statutory obligation to subject broadcasters and MVPDs equally to the 
totality of the circumstances test and the per se violations of good 
faith in Section 76.65 of our rules.\87\ Thus, we propose that any 
practices that we find to be indicative of bad faith under the totality 
of the circumstances test or to be per se violations of the duty to 
negotiate in good faith apply to both broadcasters and MVPDs (to the 
extent such practices are engaged in by both broadcasters and 
MVPDs),\88\ and we seek comment on that proposal. Parties asserting 
that certain practices should be deemed bad faith only when engaged in 
by MVPDs or by broadcasters should explain how such an interpretation 
is consistent with the text of Section 325(b)(3)(C) of the Act, which 
imposes a reciprocal duty to bargain in good faith.
---------------------------------------------------------------------------

    \87\ See Implementation of Section 207 of the Satellite Home 
Viewer Extension and Reauthorization Act of 2004, Reciprocal 
Bargaining Obligation, Report and Order, 70 FR 40218, para. 13 
(2005).
    \88\ For example, demanding that an MVPD place limits on its 
subscribers' use of lawful devices and functionalities (set forth in 
(iii) above) appears to be a practice that can be attributed only to 
broadcasters.
---------------------------------------------------------------------------

    19. Finally, we invite comment on how an MVPD's demand for online 
distribution rights, or a broadcaster's refusal to grant such rights, 
should be treated under the totality of the circumstances test. Online 
distribution rights are important because consumers today are 
increasingly accessing video programming from online video distributors 
that deliver content via the Internet. We understand that online 
distribution rights have been a critical factor in recent 
retransmission consent negotiations. Are there any circumstances in 
which an MVPD's demands with respect to online rights, or a 
broadcaster's unwillingness to offer such rights, should be considered 
evidence of bad faith under the totality of the circumstances test? 
\89\
---------------------------------------------------------------------------

    \89\ See ACA July 24, 2015 Ex Parte Letter at 3.
---------------------------------------------------------------------------

    20. In the alternative to considering any of the above factors, or 
additional factors that commenters raise, pursuant to the totality of 
the circumstances test,

[[Page 59713]]

we ask commenters to consider whether any of the factors mentioned 
above should instead be considered additional per se violations of the 
duty to negotiate retransmission consent in good faith.\90\ Commenters 
should explain their reasoning for considering particular conduct or 
practices either in the context of the totality of the circumstances 
test or as a candidate for a per se rule, and the statutory authority 
for a Commission finding that any such practices should be regulated 
under the totality of the circumstances test or as a per se rule.\91\
---------------------------------------------------------------------------

    \90\ See, e.g., Cablevision July 31, 2015 Ex Parte Letter at 4, 
5.
    \91\ See id. at 5 through 7.
---------------------------------------------------------------------------

IV. Procedural Matters

A. Regulatory Flexibility Act

    21. As required by the Regulatory Flexibility Act of 1980, as 
amended (``RFA''),\92\ the Commission has prepared this present Initial 
Regulatory Flexibility Analysis (``IRFA'') concerning the possible 
significant economic impact on small entities by the policies and rules 
proposed in the Notice of Proposed Rulemaking (``NPRM''). Written 
public comments are requested on this IRFA. Comments must be identified 
as responses to the IRFA and must be filed by the deadlines for 
comments provided on the first page of the NPRM. The Commission will 
send a copy of the NPRM, including this IRFA, to the Chief Counsel for 
Advocacy of the Small Business Administration (``SBA'').\93\ In 
addition, the NPRM and IRFA (or summaries thereof) will be published in 
the Federal Register.\94\
---------------------------------------------------------------------------

    \92\ See 5 U.S.C. 603. The RFA, see 5 U.S.C. 601 through 612, 
has been amended by the Small Business Regulatory Enforcement 
Fairness Act of 1996 (``SBREFA''), Public Law 104-121, Title II, 110 
Stat. 857 (1996). The SBREFA was enacted as Title II of the Contract 
With America Advancement Act of 1996 (``CWAAA'').
    \93\ See 5 U.S.C. 603(a).
    \94\ See id.
---------------------------------------------------------------------------

1. Need for, and Objectives of, the Proposed Rules
    22. In the Notice of Proposed Rulemaking (``NPRM''), as directed by 
Section 103 of the STELA Reauthorization Act of 2014 (``STELAR''),\95\ 
we review the totality of the circumstances test for evaluating whether 
broadcast stations and multichannel video programming distributors 
(``MVPDs'') are negotiating for retransmission consent in good faith. 
The Communications Act of 1934, as amended (the ``Act''), prohibits 
cable systems and other MVPDs from retransmitting a broadcast station's 
signal without the station's express consent.\96\ This consent is known 
as ``retransmission consent.'' The Act and the Commission's 
implementing rules require broadcasters and MVPDs to negotiate for 
retransmission consent in good faith.\97\ The Commission has adopted a 
two-part framework for evaluating good faith in this context. First, 
the Commission has established a list of objective good faith 
negotiation standards, the violation of which is considered a per se 
breach of the good faith negotiation obligation.\98\ Second, even if 
the specific per se standards are met, the Commission may consider 
whether, based on the totality of the circumstances, a party failed to 
negotiate retransmission consent in good faith.\99\ In accordance with 
STELAR, we adopt this NPRM and seek comment on the scope of the 
totality of the circumstances test.
---------------------------------------------------------------------------

    \95\ Congress directed the Commission to ``commence a rulemaking 
to review its totality of the circumstances test for good faith 
negotiations'' by September 4, 2014. See Public Law 113-200, 103(c), 
128 Stat. 2059 (2014).
    \96\ 47 U.S.C. 325(b)(1)(A).
    \97\ Id. 325(b)(3)(C)(ii), (iii); 47 CFR 76.65.
    \98\ See 47 CFR 76.65(b)(1).
    \99\ See id. 76.65(b)(2).
---------------------------------------------------------------------------

2. Legal Basis
    23. The proposed action is authorized pursuant to Sections 4(i), 
4(j), 303(r), and 325 of the Communications Act of 1934, as amended, 47 
U.S.C. 154(i), 154(j), 303(r), and 325, and Section 103 of the STELA 
Reauthorization Act of 2014, Public Law 113-200, Section 103, 128 Stat. 
2059 (2014).
3. Description and Estimate of the Number of Small Entities To Which 
the Proposed Rules Will Apply
    24. The RFA directs agencies to provide a description of, and where 
feasible, an estimate of the number of small entities that may be 
affected by the proposed rules, if adopted.\100\ The RFA generally 
defines the term ``small entity'' as having the same meaning as the 
terms ``small business,'' ``small organization,'' and ``small 
governmental jurisdiction.'' \101\ In addition, the term ``small 
business'' has the same meaning as the term ``small business concern'' 
under the Small Business Act.\102\ 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 SBA.\103\ Below, we provide a description of such 
small entities, as well as an estimate of the number of such small 
entities, where feasible.
---------------------------------------------------------------------------

    \100\ 5 U.S.C. 603(b)(3).
    \101\ Id. 601(6).
    \102\ Id. 601(3) (incorporating by reference the definition of 
``small-business concern'' in 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.'' 5 U.S.C. 601(3).
    \103\ 15 U.S.C. 632.
---------------------------------------------------------------------------

    25. 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.'' \104\ The SBA has developed a 
small business size standard for wireline firms within the broad 
economic census category, ``Wired Telecommunications Carriers.'' \105\ 
Under this category, the SBA deems a wireline business to be small if 
it has 1,500 or fewer employees. Census data for 2007 shows that there 
were 3,188 firms that operated for the entire year.\106\ Of this total, 
2,940 firms had fewer than 100 employees, and 248 firms had 100 or more 
employees.\107\ Therefore, under this size standard, we estimate that 
the majority of businesses can be considered small entities.
---------------------------------------------------------------------------

    \104\ U.S. Census Bureau, 2007 NAICS Definitions, ``517110 Wired 
Telecommunications Carriers.'' http://www.census.gov/naics/2007/def/ND517110.HTM-N517110.
    \105\ 13 CFR 121.201 (NAICS code 517110).
    \106\ U.S. Census Bureau, 2007 Economic Census. See U.S. Census 
Bureau, American FactFinder, ``Information: Subject Series--Estab 
and Firm Size: Employment Size of Establishments for the United 
States: 2007-2007 Economic Census,'' NAICS code 517110, Table 
EC0751SSSZ5 http://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?pid=ECN_2007_US_51SSSZ5&prodType=table.
    \107\ Id.
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    26. Cable Television Distribution Services. Since 2007, these 
services

[[Page 59714]]

have been defined within the broad economic census category of Wired 
Telecommunications Carriers; that category is defined above. The SBA 
has developed a small business size standard for this category, which 
is: All such firms having 1,500 or fewer employees. Census data for 
2007 shows that there were 31,996 establishments that operated that 
year.\108\ Of this total, 30,178 establishments had fewer than 100 
employees, and 1,818 establishments had 100 or more employees.\109\ 
Therefore, under this size standard, we estimate that the majority of 
businesses can be considered small entities.
---------------------------------------------------------------------------

    \108\ U.S. Census Bureau, 2007 Economic Census. See U.S. Census 
Bureau, American FactFinder, ``Information: Subject Series--Estab 
and Firm Size: Employment Size of Establishments for the United 
States: 2007--2007 Economic Census,'' NAICS code 517110, Table 
EC0751SSSZ2http://factfinder2.census.gov/faces/nav/jsf/pages/index.xhtml.
    \109\ Id.
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    27. Cable Companies and Systems. The Commission has developed its 
own small business size standards, for the purpose of cable rate 
regulation. Under the Commission's rate regulation rules, a ``small 
cable company'' is one serving 400,000 or fewer subscribers, 
nationwide.\110\ According to SNL Kagan, there are 1,258 cable 
operators.\111\ Of this total, all but 10 incumbent cable companies are 
small under this size standard.\112\ In addition, under the 
Commission's rules, a ``small system'' is a cable system serving 15,000 
or fewer subscribers.\113\ Current Commission records show 4,584 cable 
systems nationwide.\114\ Of this total, 4,012 cable systems have fewer 
than 20,000 subscribers, and 572 systems have 20,000 subscribers or 
more, based on the same records. Thus, under this standard, we estimate 
that most cable systems are small.
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    \110\ 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 Cable 
Television Consumer Protection and Competition Act of 1992: Rate 
Regulation, Sixth Report and Order and Eleventh Order on 
Reconsideration, 60 FR 35,854, 35,859 (1995).
    \111\ Data provided by SNL Kagan to Commission Staff upon 
request on March 25, 2014. Depending upon the number of homes and 
the size of the geographic area served, cable operators use one or 
more cable systems to provide video service. See Annual Assessment 
of the Status of Competition in the Market for Delivery of Video 
Programming, MB Docket No. 12-203, Fifteenth Report (2013) (``15th 
Annual Video Competition Report'').
    \112\ SNL Kagan, U.S. Multichannel Top Cable MSOs (2014). We 
note that when this size standard (i.e., 400,000 or fewer 
subscribers) is applied to all MVPD operators, all but 14 MVPD 
operators would be considered small. 15th Annual Video Competition 
Report, paras. 27, 28 (subscriber data for DBS and Telephone MVPDs). 
The Commission applied this size standard to MVPD operators in its 
implementation of the CALM Act. See Implementation of the Commercial 
Advertisement Loudness Mitigation (CALM) Act, Report and Order, 77 
FR 40,276, 40,287, para. 37 (2011) (defining a smaller MVPD operator 
as one serving 400,000 or fewer subscribers nationwide, as of 
December 31, 2011).
    \113\ 47 CFR 76.901(c).
    \114\ The number of active, registered cable systems comes from 
the Commission's Cable Operations and Licensing System (COALS) 
database on July 1, 2014. A cable system is a physical system 
integrated to a principal headend.
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    28. Cable System Operators (Telecom Act Standard). The 
Communications Act of 1934, as amended, 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.'' \115\ There are approximately 56.4 
million incumbent cable video subscribers in the United States 
today.\116\ Accordingly, an operator serving fewer than 564,000 
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.\117\ Based on available data, 
we find that all but 10 incumbent cable operators are small under this 
size standard.\118\ 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.\119\ 
Although it seems certain that some of these cable system operators are 
affiliated with entities whose gross annual revenues exceed 
$250,000,000, we are unable at this time to estimate with greater 
precision the number of cable system operators that would qualify as 
small cable operators under the definition in the Communications Act.
---------------------------------------------------------------------------

    \115\ 47 U.S.C. 543(m)(2); see 47 CFR 76.901(f) & nn.1 through 
3.
    \116\ See NCTA, Industry Data, Cable Video Customers (2012).
    \117\ 47 CFR 76.901(f); see Public Notice, FCC Announces New 
Subscriber Count for the Definition of Small Cable Operator, DA 01-
158 (Cable Services Bureau, Jan. 24, 2001).
    \118\ See NCTA, Industry Data, Top 25 Multichannel Video Service 
Customers (2012).
    \119\ 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 Section 76.901(f) of the Commission's rules. See 47 CFR 
76.901(f).
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    29. 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,'' \120\ 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.\121\ Census data for 2007 shows that there 
were 3,188 firms that operated for the entire year.\122\ Of this total, 
2,940 firms had fewer than 100 employees, and 248 firms had 100 or more 
employees.\123\ Therefore, under this size standard, the majority of 
such businesses can be considered small. However, the data we have 
available as a basis for estimating the number of such small entities 
were gathered under a superseded SBA small business size standard 
formerly titled ``Cable and Other Program Distribution.'' The 2002 
definition of Cable and Other Program Distribution provided that a 
small entity is one with $12.5 million or less in annual receipts.\124\ 
Currently, only two entities provide DBS service, which requires a 
great investment of capital for operation: DIRECTV and DISH 
Network.\125\ Each currently offers subscription services. DIRECTV and 
DISH Network 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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    \120\ See 13 CFR 121.201, NAICS code 517110 (2007). The 2007 
NAICS definition of the category of ``Wired Telecommunications 
Carriers'' is in paragraph 5, above.
    \121\ 13 CFR 121.201, NAICS code 517110 (2007).
    \122\ U.S. Census Bureau, 2007 Economic Census. See U.S. Census 
Bureau, American FactFinder, ``Information: Subject Series--Estab 
and Firm Size: Employment Size of Establishments for the United 
States: 2007--2007 Economic Census,'' NAICS code 517110, Table 
EC0751SSSZ5http://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?pid=ECN_2007_US_51SSSZ5&prodType=table.
    \123\ Id.
    \124\ 13 CFR 121.201; NAICS code 517510 (2002).
    \125\ See 15th Annual Video Competition Report, para. 27. As of 
June 2012, DIRECTV is the largest DBS operator and the second 
largest MVPD in the United States, serving approximately 19.9 
million subscribers. DISH Network is the second largest DBS operator 
and the third largest MVPD, serving approximately 14.1 million 
subscribers. Id. paras. 27, 110, 111.
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    30. Satellite Master Antenna Television (SMATV) Systems, also known 
as Private Cable Operators (PCOs). SMATV systems or PCOs are video 
distribution facilities that use closed transmission paths without 
using any public right-of-way. They acquire video programming and 
distribute it via

[[Page 59715]]

terrestrial wiring in urban and suburban multiple dwelling units such 
as apartments and condominiums, and commercial multiple tenant units 
such as hotels and office buildings. SMATV systems or PCOs are now 
included in the SBA's broad economic census category, ``Wired 
Telecommunications Carriers,'' \126\ 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.\127\ Census data for 
2007 shows that there were 31,996 establishments that operated that 
year.\128\ Of this total, 30,178 establishments had fewer than 100 
employees, and 1,818 establishments had 100 or more employees.\129\ 
Therefore, under this size standard, the majority of such businesses 
can be considered small.
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    \126\ See 13 CFR 121.201, NAICS code 517110 (2007).
    \127\ 13 CFR 121.201, NAICS code 517110 (2007).
    \128\ U.S. Census Bureau, 2007 Economic Census. See U.S. Census 
Bureau, American FactFinder, ``Information: Subject Series--Estab 
and Firm Size: Employment Size of Establishments for the United 
States: 2007-2007 Economic Census,'' NAICS code 517110, Table 
EC0751SSSZ2http://factfinder2.census.gov/faces/nav/jsf/pages/index.xhtml.
    \129\ Id.
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    31. Home Satellite Dish (``HSD'') Service. HSD or the large dish 
segment of the satellite industry is the original satellite-to-home 
service offered to consumers, and involves the home reception of 
signals transmitted by satellites operating generally in the C-band 
frequency. Unlike DBS, which uses small dishes, HSD antennas are 
between four and eight feet in diameter and can receive a wide range of 
unscrambled (free) programming and scrambled programming purchased from 
program packagers that are licensed to facilitate subscribers' receipt 
of video programming. Because HSD provides subscription services, HSD 
falls within the SBA-recognized definition of Wired Telecommunications 
Carriers.\130\ The SBA has developed a small business size standard for 
this category, which is: All such firms having 1,500 or fewer 
employees. Census data for 2007 shows that there were 31,996 
establishments that operated that year.\131\ Of this total, 30,178 
establishments had fewer than 100 employees, and 1,818 establishments 
had 100 or more employees.\132\ Therefore, under this size standard, 
the majority of such businesses can be considered small.
---------------------------------------------------------------------------

    \130\ 13 CFR 121.201, NAICS code 517110 (2007).
    \131\ U.S. Census Bureau, 2007 Economic Census. See U.S. Census 
Bureau, American FactFinder, ``Information: Subject Series--Estab 
and Firm Size: Employment Size of Establishments for the United 
States: 2007-2007 Economic Census,'' NAICS code 517110, Table 
EC0751SSSZ2http://factfinder2.census.gov/faces/nav/jsf/pages/index.xhtml.
    \132\ Id.
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    32. Broadband Radio Service and Educational Broadband Service. 
Broadband Radio Service systems, previously referred to as Multipoint 
Distribution Service (MDS) and Multichannel Multipoint Distribution 
Service (MMDS) systems, and ``wireless cable,'' transmit video 
programming to subscribers and provide two-way high speed data 
operations using the microwave frequencies of the Broadband Radio 
Service (BRS) and Educational Broadband Service (EBS) (previously 
referred to as the Instructional Television Fixed Service (ITFS)).\133\ 
In connection with the 1996 BRS auction, the Commission established a 
small business size standard as an entity that had annual average gross 
revenues of no more than $40 million in the previous three calendar 
years.\134\ The BRS auctions resulted in 67 successful bidders 
obtaining licensing opportunities for 493 Basic Trading Areas (BTAs). 
Of the 67 auction winners, 61 met the definition of a small business. 
BRS also includes licensees of stations authorized prior to the 
auction. At this time, we estimate that of the 61 small business BRS 
auction winners, 48 remain small business licensees. In addition to the 
48 small businesses that hold BTA authorizations, there are 
approximately 392 incumbent BRS licensees that are considered small 
entities.\135\ After adding the number of small business auction 
licensees to the number of incumbent licensees not already counted, we 
find that there are currently approximately 440 BRS licensees that are 
defined as small businesses under either the SBA or the Commission's 
rules. In 2009, the Commission conducted Auction 86, the sale of 78 
licenses in the BRS areas.\136\ The Commission offered three levels of 
bidding credits: (i) A bidder with attributed average annual gross 
revenues that exceed $15 million and do not exceed $40 million for the 
preceding three years (small business) will receive a 15 percent 
discount on its winning bid; (ii) a bidder with attributed average 
annual gross revenues that exceed $3 million and do not exceed $15 
million for the preceding three years (very small business) will 
receive a 25 percent discount on its winning bid; and (iii) a bidder 
with attributed average annual gross revenues that do not exceed $3 
million for the preceding three years (entrepreneur) will receive a 35 
percent discount on its winning bid.\137\ Auction 86 concluded in 2009 
with the sale of 61 licenses.\138\ Of the 10 winning bidders, two 
bidders that claimed small business status won four licenses; one 
bidder that claimed very small business status won three licenses; and 
two bidders that claimed entrepreneur status won six licenses.
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    \133\ Amendment of Parts 21 and 74 of the Commission's Rules 
with Regard to Filing Procedures in the Multipoint Distribution 
Service and in the Instructional Television Fixed Service and 
Implementation of Section 309(j) of the Communications Act--
Competitive Bidding, Report and Order, 60 FR 36,524, 36,525, para. 7 
(1995).
    \134\ 47 CFR 21.961(b)(1).
    \135\ 47 U.S.C. 309(j). Hundreds of stations were licensed to 
incumbent MDS licensees prior to implementation of Section 309(j) of 
the Communications Act of 1934, 47 U.S.C. 309(j). For these pre-
auction licenses, the applicable standard is SBA's small business 
size standard of 1500 or fewer employees.
    \136\ Auction of Broadband Radio Service (BRS) Licenses, 
Scheduled for October 27, 2009, Notice and Filing Requirements, 
Minimum Opening Bids, Upfront Payments, and Other Procedures for 
Auction 86, Public Notice, 74 FR 38,018 (2009).
    \137\ Id. at 8296.
    \138\ Auction of Broadband Radio Service Licenses Closes, 
Winning Bidders Announced for Auction 86, Down Payments Due November 
23, 2009, Final Payments Due December 8, 2009, Ten-Day Petition to 
Deny Period, Public Notice (2009).
---------------------------------------------------------------------------

    33. In addition, the SBA's placement of Cable Television 
Distribution Services in the category of Wired Telecommunications 
Carriers is applicable to cable-based EBS. Since 2007, Cable Television 
Distribution 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. 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.'' \139\ The SBA 
has

[[Page 59716]]

developed a small business size standard for this category, which is: 
All such firms having 1,500 or fewer employees. Census data for 2007 
shows that there were 31,996 establishments that operated that 
year.\140\ Of this total, 30,178 establishments had fewer than 100 
employees, and 1,818 establishments had 100 or more employees.\141\ 
Therefore, under this size standard, the majority of such businesses 
can be considered small entities. In addition to Census data, the 
Commission's internal records indicate that, as of September 2012, 
there were 2,241 active EBS licenses. The Commission estimates that of 
these 2,241 licenses, the majority are held by non-profit educational 
institutions and school districts, which are by statute defined as 
small businesses.\142\
---------------------------------------------------------------------------

    \139\ U.S. Census Bureau, 2007 NAICS Definitions, ``517110 Wired 
Telecommunications Carriers,'' (partial definition) http://www.census.gov/naics/2007/def/ND517110.HTM-N517110. Examples of this 
category are: Broadband Internet service providers (e.g., cable, 
DSL); local telephone carriers (wired); cable television 
distribution services; long-distance telephone carriers (wired); 
closed circuit television (``CCTV'') services; VoIP providers, using 
own operated wired telecommunications infrastructure; direct-to-home 
satellite system (``DTH'') services; telecommunications carriers 
(wired); satellite television distribution systems; and multichannel 
multipoint distribution services (``MMDS'').
    \140\ U.S. Census Bureau, 2007 Economic Census. See U.S. Census 
Bureau, American FactFinder, ``Information: Subject Series--Estab 
and Firm Size: Employment Size of Establishments for the United 
States: 2007--2007 Economic Census,'' NAICS code 517110, Table 
EC0751SSSZ2http://factfinder2.census.gov/faces/nav/jsf/pages/index.xhtml.
    \141\ Id.
    \142\ The term ``small entity'' within SBREFA applies to small 
organizations (non-profits) and to small governmental jurisdictions 
(cities, counties, towns, townships, villages, school districts, and 
special districts with populations of less than 50,000). 5 U.S.C. 
601(4) through 601(6).
---------------------------------------------------------------------------

    34. Fixed Microwave Services. Microwave services include common 
carrier,\143\ private-operational fixed,\144\ and broadcast auxiliary 
radio services.\145\ They also include the Local Multipoint 
Distribution Service (LMDS),\146\ the Digital Electronic Message 
Service (DEMS),\147\ and the 24 GHz Service,\148\ where licensees can 
choose between common carrier and non-common carrier status.\149\ At 
present, there are approximately 31,428 common carrier fixed licensees 
and 79,732 private operational-fixed licensees and broadcast auxiliary 
radio licensees in the microwave services. There are approximately 120 
LMDS licensees, three DEMS licensees, and three 24 GHz licensees. The 
Commission has not yet defined a small business with respect to 
microwave services. For purposes of the IRFA, we will use the SBA's 
definition applicable to Wireless Telecommunications Carriers (except 
satellite)--i.e., an entity with no more than 1,500 persons.\150\ Under 
the present and prior categories, the SBA has deemed a wireless 
business to be small if it has 1,500 or fewer employees.\151\ For the 
category of Wireless Telecommunications Carriers (except Satellite), 
Census data for 2007 show that there were 11,163 firms that operated 
that year.\152\ Of those, 10,791 had fewer than 1,000 employees, and 
372 firms had 1,000 employees or more. Thus under this category and the 
associated small business size standard, the majority of firms can be 
considered small. We note that the number of firms does not necessarily 
track the number of licensees. We estimate 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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    \143\ See 47 CFR part 101, subparts C and I.
    \144\ See 47 CFR part 101, subparts C and H.
    \145\ 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.
    \146\ See 47 CFR part 101, subpart L.
    \147\ See 47 CFR part 101, subpart G.
    \148\ See id.
    \149\ See 47 CFR 101.533, 101.1017.
    \150\ 13 CFR 121.201, NAICS code 517210.
    \151\ 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).
    \152\ 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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    35. Open Video Systems. The open video 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.\153\ The OVS framework provides opportunities for 
the distribution of video programming other than through cable systems. 
Because OVS operators provide subscription services,\154\ OVS falls 
within the SBA small business size standard covering cable services, 
which is ``Wired Telecommunications Carriers.'' \155\ The SBA has 
developed a small business size standard for this category, which is: 
All such firms having 1,500 or fewer employees. Census data for 2007 
shows that there were 3,188 firms that operated for the entire 
year.\156\ Of this total, 2,940 firms had fewer than 100 employees, and 
248 firms had 100 or more employees.\157\ Therefore, under this size 
standard, the majority of such businesses can be considered small. In 
addition, we note that the Commission has certified some OVS operators, 
with some now providing service. Broadband service providers (``BSPs'') 
are currently the only significant holders of OVS certifications or 
local OVS franchises.\158\ 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.
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    \153\ 47 U.S.C. 571(a)(3), (4). See Annual Assessment of the 
Status of Competition in the Market for the Delivery of Video 
Programming, Thirteenth Annual Report, para. 135 (2000) (``13th 
Annual Video Competition Report'').
    \154\ See 47 U.S.C. 573.
    \155\ U.S. Census Bureau, 2007 NAICS Definitions, ``517110 Wired 
Telecommunications Carriers.'' http://www.census.gov/naics/2007/def/ND517110.HTM-N517110.
    \156\ U.S. Census Bureau, 2007 Economic Census. See U.S. Census 
Bureau, American FactFinder, ``Information: Subject Series--Estab 
and Firm Size: Employment Size of Establishments for the United 
States: 2007-2007 Economic Census,'' NAICS code 517110, Table 
EC0751SSSZ5 http://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?pid=ECN_2007_US_51SSSZ5&prodType=table.
    \157\ Id.
    \158\ See 13th Annual Video Competition Report, para. 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.
---------------------------------------------------------------------------

    36. Cable and Other Subscription Programming. The Census Bureau 
defines this category as follows: ``This industry comprises 
establishments primarily engaged in operating studios and facilities 
for the broadcasting of programs on a subscription or fee basis. . . . 
These establishments produce programming in their own facilities or 
acquire programming from external sources. The programming material is 
usually delivered to a third party, such as cable systems or direct-to-
home satellite systems, for transmission to viewers.'' \159\ The SBA 
has developed a small business size standard for this category, which 
is: All such businesses having $38.5 million dollars or less in annual 
revenues.\160\ Census data for 2007 shows that there were 3,188 firms 
that operated for the entire year.\161\ Of this total, 2,940 firms had 
fewer than 100 employees, and 248 firms had 100 or more employees.\162\ 
Thus, under this

[[Page 59717]]

size standard, the majority of such businesses can be considered small 
entities.
---------------------------------------------------------------------------

    \159\ U.S. Census Bureau, 2007 NAICS Definitions, ``515210 Cable 
and Other Subscription Programming.''http://www.census.gov/naics/2007/def/ND515210.HTM-N515210.
    \160\ 13 CFR 121.210; 2012 NAICS code 515210.
    \161\ U.S. Census Bureau, 2007 Economic Census. See U.S. Census 
Bureau, American FactFinder, ``Information: Subject Series--Estab 
and Firm Size: Employment Size of Establishments for the United 
States: 2007--2007 Economic Census,'' NAICS code 517110, Table 
EC0751SSSZ5 http://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?pid=ECN_2007_US_51SSSZ5&prodType=table.
    \162\ Id.
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    37. Small Incumbent Local Exchange Carriers. We have included small 
incumbent local exchange carriers in this present RFA analysis. A 
``small business'' under the RFA is one that, inter alia, meets the 
pertinent small business size standard (e.g., a telephone 
communications business having 1,500 or fewer employees), and ``is not 
dominant in its field of operation.'' \163\ The SBA's Office of 
Advocacy contends that, for RFA purposes, small incumbent local 
exchange carriers are not dominant in their field of operation because 
any such dominance is not ``national'' in scope.\164\ We have therefore 
included small incumbent local exchange carriers in this RFA analysis, 
although we emphasize that this RFA action has no effect on Commission 
analyses and determinations in other, non-RFA contexts.
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    \163\ 15 U.S.C. 632.
    \164\ Letter from Jere W. Glover, Chief Counsel for Advocacy, 
SBA, to William E. Kennard, Chairman, FCC (May 27, 1999). The Small 
Business Act contains a definition of ``small-business concern,'' 
which the RFA incorporates into its own definition of ``small 
business.'' See 15 U.S.C. 632(a) (Small Business Act); 5 U.S.C. 
601(3) (RFA). SBA regulations interpret ``small business concern'' 
to include the concept of dominance on a national basis. See 13 CFR 
121.102(b).
---------------------------------------------------------------------------

    38. Incumbent Local Exchange Carriers (``ILECs''). Neither the 
Commission nor the SBA has developed a small business size standard 
specifically for incumbent local exchange services. The appropriate 
size standard under SBA rules is for the category Wired 
Telecommunications Carriers. Under that size standard, such a business 
is small if it has 1,500 or fewer employees.\165\ Census data for 2007 
shows that there were 3,188 firms that operated for the entire 
year.\166\ Of this total, 2,940 firms had fewer than 100 employees, and 
248 firms had 100 or more employees.\167\ Therefore, under this size 
standard, the majority of such businesses can be considered small 
entities.
---------------------------------------------------------------------------

    \165\ 13 CFR 121.201 (2007 NAICS code 517110).
    \166\ U.S. Census Bureau, 2007 Economic Census. See U.S. Census 
Bureau, American FactFinder, ``Information: Subject Series--Estab 
and Firm Size: Employment Size of Establishments for the United 
States: 2007--2007 Economic Census,'' NAICS code 517110, Table 
EC0751SSSZ5 http://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?pid=ECN_2007_US_51SSSZ5&prodType=table.
    \167\ Id.
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    39. Competitive Local Exchange Carriers, Competitive Access 
Providers (CAPs), ``Shared-Tenant Service Providers,'' and ``Other 
Local Service Providers.'' Neither the Commission nor the SBA has 
developed a small business size standard specifically for these service 
providers. The appropriate size standard under SBA rules is for the 
category Wired Telecommunications Carriers. Under that size standard, 
such a business is small if it has 1,500 or fewer employees.\168\ 
Census data for 2007 shows that there were 31,996 establishments that 
operated that year.\169\ Of this total, 30,178 establishments had fewer 
than 100 employees, and 1,818 establishments had 100 or more 
employees.\170\ Therefore, under this size standard, the majority of 
such businesses can be considered small entities.
---------------------------------------------------------------------------

    \168\ 13 CFR 121.201 (2007 NAICS code 517110).
    \169\ U.S. Census Bureau, 2007 Economic Census. See U.S. Census 
Bureau, American FactFinder, ``Information: Subject Series--Estab 
and Firm Size: Employment Size of Establishments for the United 
States: 2007--2007 Economic Census,'' NAICS code 517110, Table 
EC0751SSSZ2http://factfinder2.census.gov/faces/nav/jsf/pages/index.xhtml.
    \170\ Id.
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    40. Television Broadcasting. ``This industry comprises 
establishments primarily engaged in broadcasting images together with 
sound. 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 studio, from an affiliated 
network, or from external sources. The SBA defines a television 
broadcasting station as a small business if such station has no more 
than $38.5 million in annual receipts. The 2007 U.S. Census reports 
that in 2007, 808 television broadcasting firms operated during that 
year. Of that number, 709 had annual receipts of less than $25 million. 
Twenty-nine firms operated with annual receipts from $25 million to $50 
million, but the Census does not specify the number of stations in that 
category that had annual receipts of $38.5 million or less. Based on 
this data, the Commission concludes that a majority of television 
stations is small under the applicable SBA size standard.
    41. The Commission has estimated the number of licensed commercial 
television stations to be 1,390.\171\ 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 \172\ 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.\173\ We note, however, that in assessing whether a 
business concern qualifies as small under the above definition, 
business (control) affiliations \174\ 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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    \171\ See News Release, ``Broadcast Station Totals as of 
December 31, 2010,'' 2011 WL 484756 (dated Feb. 11, 2011) 
(``Broadcast Station Totals'')http://www.fcc.gov/Daily_Releases/Daily_Business/2011/db0211/DOC-304594A1.pdf.
    \172\ We recognize that this total differs slightly from that 
contained in Broadcast Station Totals, supra; however, we are using 
BIA's estimate for purposes of this revenue comparison.
    \173\ See Broadcast Station Totals, supra.
    \174\ ``[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 to power to control both.'' 
13 CFR 121.103(a)(1).
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    42. 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.
    43. Apart from the U.S. Census, the Commission has estimated the 
number of licensed commercial television stations to be 1,388.\175\ In 
addition, according to Commission staff review of the BIA Advisory 
Services, LLC's Media Access Pro Television Database, as of March 28, 
2012, about 950 of an estimated 1,300 commercial television

[[Page 59718]]

stations (or approximately 73 percent) had revenues of $14 million or 
less.\176\ We therefore estimate that the majority of commercial 
television broadcasters are small entities.
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    \175\ See Broadcast Station Totals as of December 31, 2013, 
Press Release (MB rel. Jan. 8, 2014) (``Jan. 8, 2014 Broadcast 
Station Totals Press Release'')https://www.fcc.gov/document/broadcast-station-totals-december-31-2013.
    \176\ We recognize that this total differs slightly from that 
contained in Jan. 8, 2014 Broadcast Station Totals Press Release; 
however, we are using BIA's estimate for purposes of this revenue 
comparison.
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    44. We note, however, that, in assessing whether a business concern 
qualifies as small under the above definition, business (control) 
affiliations \177\ 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. 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.
---------------------------------------------------------------------------

    \177\ ``[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 to power to control both.'' 
13 CFR 121.103(a)(1).
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    45. In addition, the Commission has estimated the number of 
licensed noncommercial educational (NCE) television stations to be 
396.\178\ These stations are non-profit, and therefore considered to be 
small entities.\179\
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    \178\ See Jan. 8, 2014 Broadcast Station Totals Press Release.
    \179\ See generally 5 U.S.C. 601(4), (6).
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4. Description of Projected Reporting, Recordkeeping, and Other 
Compliance Requirements
    46. The NPRM does not seek comment on specific reporting or 
recordkeeping requirements. Rather, in Section III.A the NPRM broadly 
seeks comment on any elaboration of the totality of the circumstances 
test it can provide that will help guide negotiations to a successful 
conclusion. Then in Section III.B the NPRM seeks comment on whether 
there are specific practices that we should identify as evidencing bad 
faith under the totality of the circumstances test. The resolution of 
these issues could affect all entities that negotiate retransmission 
consent, including small entities.
5. Steps Taken To Minimize Significant Economic Impact on Small 
Entities and Significant Alternatives Considered
    47. The RFA requires an agency to describe any significant 
alternatives that it has considered in reaching its proposed approach, 
which may include the following four alternatives (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 and reporting requirements under the rule for such 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.'' \180\
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    \180\ 5 U.S.C. 603(c)(1) through (c)(4).
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    48. Enhancing the successful completion of retransmission consent 
negotiations would benefit both broadcasters and MVPDs, including those 
that are smaller entities, as well as MVPD subscribers. Given that 
improvements to the totality of the circumstances test would have such 
an effect, making such improvements would benefit both smaller and 
larger entities, and thus an analysis of alternatives is unnecessary. 
We note additionally that the NPRM broadly seeks comment on any 
elaboration of the totality of the circumstances test it can provide 
that will help guide negotiations to a successful conclusion, and it 
asks whether there are specific practices that we should identify as 
evidencing bad faith under the totality of the circumstances test. 
These inquiries are wide-ranging, and we encourage commenters to 
indicate whether we should consider any alternatives that would 
minimize any adverse impact on small businesses while maintaining the 
benefits to the retransmission consent process.
6. Federal Rules That May Duplicate, Overlap, or Conflict With the 
Proposed Rule
    49. None.

B. Paperwork Reduction Act

    50. This NPRM proposes no new or modified information collection 
requirements. In addition, therefore, it does not propose any new or 
modified ``information collection burden for small business concerns 
with fewer than 25 employees,'' pursuant to the Small Business 
Paperwork Relief Act of 2002.

C. Ex Parte Rules

    51. This proceeding shall be treated as a ``permit-but-disclose'' 
proceeding in accordance with the Commission's ex parte rules.\181\ 
Persons making ex parte presentations must file a copy of any written 
presentation or a memorandum summarizing any oral presentation within 
two business days after the presentation (unless a different deadline 
applicable to the Sunshine period applies). Persons making oral ex 
parte presentations are reminded that memoranda summarizing the 
presentation must (1) list all persons attending or otherwise 
participating in the meeting at which the ex parte presentation was 
made, and (2) summarize all data presented and arguments made during 
the presentation. If the presentation consisted in whole or in part of 
the presentation of data or arguments already reflected in the 
presenter's written comments, memoranda or other filings in the 
proceeding, the presenter may provide citations to such data or 
arguments in his or her prior comments, memoranda, or other filings 
(specifying the relevant page and/or paragraph numbers where such data 
or arguments can be found) in lieu of summarizing them in the 
memorandum. Documents shown or given to Commission staff during ex 
parte meetings are deemed to be written ex parte presentations and must 
be filed consistent with rule 1.1206(b). In proceedings governed by 
rule 1.49(f) or for which the Commission has made available a method of 
electronic filing, written ex parte presentations and memoranda 
summarizing oral ex parte presentations, and all attachments thereto, 
must be filed through the electronic comment filing system available 
for that proceeding, and must be filed in their native format (e.g., 
.doc, .xml, .ppt, searchable .pdf). Participants in this proceeding 
should familiarize themselves with the Commission's ex parte rules.
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    \181\ 47 CFR 1.1200 et seq.
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D. Filing Requirements

    52. Comments and Replies. Pursuant to Sections 1.415 and 1.419 of 
the Commission's rules, 47 CFR 1.415, 1.419, interested parties may 
file comments and reply comments on or before the dates indicated on 
the first page of this document. Comments may be filed using the 
Commission's Electronic Comment Filing System (ECFS). See Electronic 
Filing of Documents in Rulemaking Proceedings, 63 FR 24121 (1998).
     Electronic Filers: Comments may be filed electronically 
using the Internet by accessing the ECFS: http://fjallfoss.fcc.gov/ecfs2/.

[[Page 59719]]

     Paper Filers: Parties who choose to file by paper must 
file an original and one copy of each filing. If more than one docket 
or rulemaking number appears in the caption of this proceeding, filers 
must submit two additional copies for each additional docket or 
rulemaking number.
    Filings can be sent by hand or messenger delivery, by commercial 
overnight courier, or by first-class or overnight U.S. Postal Service 
mail. All filings must be addressed to the Commission's Secretary, 
Office of the Secretary, Federal Communications Commission.
     All hand-delivered or messenger-delivered paper filings 
for the Commission's Secretary must be delivered to FCC Headquarters at 
445 12th St. SW., Room TW-A325, Washington, DC 20554. The filing hours 
are 8:00 a.m. to 7:00 p.m. All hand deliveries must be held together 
with rubber bands or fasteners. Any envelopes and boxes must be 
disposed of before entering the building.
     Commercial overnight mail (other than U.S. Postal Service 
Express Mail and Priority Mail) must be sent to 9300 East Hampton 
Drive, Capitol Heights, MD 20743.
     U.S. Postal Service first-class, Express, and Priority 
mail must be addressed to 445 12th Street SW., Washington, DC 20554.
    53. Availability of Documents. Comments, reply comments, and ex 
parte submissions will be available for public inspection during 
regular business hours in the FCC Reference Center, Federal 
Communications Commission, 445 12th Street SW., CY-A257, Washington, DC 
20554. These documents will also be available via ECFS. Documents will 
be available electronically in ASCII, Microsoft Word, and/or Adobe 
Acrobat.
    54. People with Disabilities. To request materials in accessible 
formats for people with disabilities (Braille, large print, electronic 
files, audio format), send an email to [email protected] or call the FCC's 
Consumer and Governmental Affairs Bureau at (202) 418-0530 (voice), 
(202) 418-0432 (TTY).
    55. Additional Information. For additional information on this 
proceeding, contact Diana Sokolow or Raelynn Remy of the Media Bureau, 
Policy Division, Federal Communications Commission, (202) 418-2120, 
[email protected]; [email protected].

V. Ordering Clauses

    56. Accordingly, it is ordered that, pursuant to the authority 
found in Sections 4(i), 4(j), 303(r), and 325 of the Communications Act 
of 1934, as amended, 47 U.S.C. 154(i), 154(j), 303(r), and 325, and 
Section 103 of the STELA Reauthorization Act of 2014,\182\ this Notice 
of Proposed Rulemaking is adopted.
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    \182\ Public Law 113-200, Section 111, 128 Stat. 2059 (2014). 47 
U.S.C. 543(o)(1).
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    57. It is further ordered that, the Commission's Consumer and 
Governmental Affairs Bureau, Reference Information Center, shall send a 
copy of this Notice of Proposed Rulemaking, including the Initial 
Regulatory Flexibility Act Analysis, to the Chief Counsel for Advocacy 
of the Small Business Administration.

Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. 2015-24843 Filed 10-1-15; 8:45 am]
 BILLING CODE 6712-01-P