[Federal Register Volume 81, Number 177 (Tuesday, September 13, 2016)]
[Rules and Regulations]
[Pages 62812-62813]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-20529]


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LIBRARY OF CONGRESS

Copyright Royalty Board

37 CFR Part 387

[Docket No. 15-CRB-0010-CA]


Adjustment of Cable Statutory License Royalty Rates

AGENCY: Copyright Royalty Board, Library of Congress.

ACTION: Final rule.

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SUMMARY: On April 26, 2016, the Copyright Royalty Judges (Judges) 
published for comment proposed regulations governing royalty rates and 
terms for the distant retransmission of over-the-air television and 
radio broadcast stations by cable television systems to their 
subscribers. The participants in the proceeding concluded their 
negotiations and asked for readoption of the cable rate regulations 
without change. The Judges accepted the negotiated settlement and did 
not propose any substantive changes to the participants' proposed rates 
and terms. However, the Judges' proposed regulations updated terms, 
moved the rules to the chapter of the CFR that includes other 
applicable rules of the Copyright Royalty Board, and proposed certain 
other non-substantive changes to make the rules easier to read. The 
Judges received comments from the Phase I parties on the proposed 
changes and finding the suggested revisions therein clarified the rule, 
accepted all of the proposed changes.

DATES: Effective: September 13, 2016.
    Applicability date: January 1, 2015, through December 31, 2019.

ADDRESSES: The final rule is also posted on the agency's Web site 
(www.loc.gov/crb).

FOR FURTHER INFORMATION CONTACT: Kimberly Whittle, Attorney Advisor, by 
telephone at (202) 707-7658, or by email at [email protected].

SUPPLEMENTARY INFORMATION: 

Background

    On April 26, 2016, the Copyright Royalty Judges (Judges) published 
for comment in the Federal Register proposed regulations governing 
royalty rates and terms for the distant retransmission of over-the-air 
television and radio broadcast stations by cable television systems to 
their subscribers for the period 2015-2019. See 81 FR 24523. The 
proposal was the result of a settlement between the National Cable & 
Telecommunications Association, the American Cable Association, and a 
group referring to itself as the ``Phase I Parties.'' \1\ The 
settlement proposed that the extant rates, terms, and gross receipts 
limitations remain unchanged through 2019. See 17 U.S.C. 111(d)(1)(B) 
and 37 CFR 256.2(c)-(d). The notice included a request for comments 
from interested parties as required by 17 U.S.C. 801(b)(7)(A).
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    \1\ The ``Phase I Parties'' are the Program Suppliers, Joint 
Sports Claimants, Public Television Claimants, Commercial Television 
Claimants, Music Claimants, Canadian Claimants Group, National 
Public Radio, and Devotional Claimants.
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    The Judges received the following comments on the substance of the 
proposal from the Phase I Parties:

    Proposed Sec.  387.1, second sentence. The proposed language ``. 
. . a cable system entity may engage in the activities set forth in 
17 U.S.C. 111'' appears to be vague and overly broad as compared to 
the scope of the Section 111 statutory license that is limited to 
``secondary transmissions to the public by a cable system of a 
performance or display of a work embodied in a primary transmission 
made by a broadcast station'' under certain conditions that are set 
forth in 17 U.S.C. 111(c). Accordingly, the Phase I Parties suggest 
the above-quoted language of proposed Sec.  387.1 be changed to ``. 
. . a cable system shall be subject to a statutory license 
authorizing secondary transmissions of broadcast signals to the 
extent provided in 17 U.S.C. 111.''
    Proposed Sec.  387.2(a). The proposed language, ``the royalty 
fee rates for secondary transmission by cable systems are those 
established by 17 U.S.C. 111(d)(1)(B)(i)-(iv), as amended,'' is 
potentially ambiguous in light of the express limitation at the 
beginning of Section 111(d)(1)(B) that: ``Except in the case of a 
cable system whose royalty fee is specified by subparagraph (E) or 
(F).'' This limitation means that the royalty rates in subsections 
(i)-(iv) of Section 111(d)(1)(B) apply to only one class of cable 
systems--those with semi-annual gross receipts of $527,600 or more 
(commonly known as ``Form 3 systems'')--not to all ``cable systems'' 
as the general reference in proposed Sec.  387.2(a) now suggests. 
Accordingly, the Phase I Parties suggest that the above-quoted 
language of proposed Sec.  387.2(a) be modified to incorporate the 
statutory limitation, perhaps by revising the language to state ``. 
. . by cable systems not subject to Sec.  387.2(b) of these 
regulations . . . ''
    Proposed Sec.  387.2(b). The use of ``alternate tiered rates'' 
in the title and body of this section is potentially confusing 
because these rates are not ``alternate'' rates that might apply to 
any cable system, but a separate set of rates, established by 17 
U.S.C. 111(d)(1)(E) and (F), that apply to cable systems with less 
than $527,600 in semi-annual gross receipts (commonly known as 
``Form \1/2\ systems''). In addition, use of the phrase, ``tiered 
rates,'' could cause some confusion because monthly subscriber fees 
for cable service are almost universally based on ``tiered'' bundles 
of programming services and rates. Accordingly, the Phase I Parties 
suggest that the title of proposed Sec.  387.2(b) be changed to 
``Rates for Certain Classes of Cable Systems,'' and the words 
``alternate tiered'' be deleted from the text of the regulation.
    Proposed Sec.  387.2(e). The language, ``Computation of royalty 
fess shall be governed by 17 U.S.C. 111(d)(1)(C),'' is potentially 
confusing because it might be read to suggest that any and all 
aspects of the royalty fee computation can be determined by 
reference to Section 111(d)(1)(C). While that paragraph identifies 
the computation to be used in some specific situations that might 
apply to some Form 3 systems, it does not address how some other key 
components (e.g., gross receipts and distant signal equivalent 
values) of the royalty fee calculation are determined, or how the 
3.75 percent rate and syndicated exclusivity surcharge are computer. 
Accordingly the Phase I Parties suggest that either Sec.  387.2(e) 
be deleted in its entirety or it be rewritten to state: 
``Computation of royalty fees shall be governed by 17 U.S.C. 111(d) 
and 111(f), and 37 CFR 201.17.''

Comments of the Phase I Parties on Proposed Rule at 1-3 (May 17, 2016).
    In addition to seeking comments on the proposed settlement, the 
Judges also solicited comments on the Judges' proposed relocation of 
the regulations to 37 CFR part 387, which includes other applicable 
rules of the Copyright Royalty Board. The Judges likewise solicited 
comments on certain non-substantive changes to the regulations to make 
them easier to read. The Judges received no comments on the editorial 
proposals.
    The Judges' authority to adopt proposed settlements as statutory 
rates and terms is codified in Section 801(b)(7)(A) of the Copyright 
Act. That provision of the Act authorizes the Judges to adopt as a 
basis for statutory terms and rates an agreement concerning such 
matters reached among ``some or all of the participants'' in a 
proceeding ``at any time during the proceeding'' except that the Judges 
must provide an opportunity to comment on the agreement to those that 
would be bound by the agreement. 17 U.S.C. 801(b)(7)(A)(i). In light of 
the statutory requirements regarding adoption of settlements and the 
absence of any opposition to the proposed settlement, the Judges find 
that the proposed settlement (along with the revisions proposed by the 
settling parties in their comments), which leaves the current rates and 
terms unchanged and adjusts the regulatory language to improve

[[Page 62813]]

clarity and precision, provides a reasonable basis for setting 
statutory terms and rates and, therefore, the Judges adopt the 
settlement as proposed as well as the improved language.
    Moreover, the Judges believe that the proposed change to the 
placement of the extant regulations (i.e., relocating them to 37 CFR 
part 387) and the non-substantive changes to the regulations are 
reasonable and appropriate measures to consolidate related CRB 
regulations and to make those regulations more comprehensible. 
Therefore, the Judges adopt the regulations as proposed.

List of Subjects in 37 CFR Part 387

    Cable television, Copyright, Royalties.

Final Regulations

0
In consideration of the foregoing, the Copyright Royalty Judges amend 
37 CFR chapter III by adding part 387 to read as follows:

PART 387--ADJUSTMENT OF ROYALTY FEE FOR CABLE COMPULSORY LICENSE

Sec.
387.1 General.
387.2 Royalty fee for compulsory license for secondary transmission 
by cable systems.

    Authority:  17 U.S.C. 801(b)(2), 803(b)(6).


Sec.  387.1  General.

    This part establishes adjusted terms and rates for royalty payments 
in accordance with the provisions of 17 U.S.C. 111 and 801(b)(2)(A), 
(B), (C), and (D). Upon compliance with 17 U.S.C. 111 and the terms and 
rates of this part, a cable system shall be subject to a statutory 
license authorizing secondary transmissions of broadcast signals to the 
extent provided in 17 U.S.C. 111.


Sec.  387.2  Royalty fee for compulsory license for secondary 
transmission by cable systems.

    (a) Royalty fee rates. Commencing with the first semiannual 
accounting period of 2015 and for each semiannual accounting period 
thereafter, the royalty fee rates for secondary transmission by cable 
systems not subject to paragraph (b) of this section are those 
established by 17 U.S.C. 111(d)(1)(B)(i)-(iv), as amended.
    (b) Rates for certain classes of cable systems. Commencing with the 
first semiannual accounting period of 2015 and for each semiannual 
accounting period thereafter, the alternate tiered royalty fee rates 
for cable systems with certain levels of gross receipts as described in 
17 U.S.C. 111(d)(1)(E) and (F), are those described therein.
    (c) 3.75 percent rate. Commencing with the first semiannual 
accounting period of 2015, and for each semiannual accounting period 
thereafter, and notwithstanding paragraphs (a) and (d) of this section, 
for each distant signal equivalent or fraction thereof not represented 
by the carriage of:
    (1) Any signal that was permitted (or, in the case of cable systems 
commencing operations after June 24, 1981, that would have been 
permitted) under the rules and regulations of the Federal 
Communications Commission in effect on June 24, 1981 (former 47 CFR 
76.1 through 76.617 (1980)); or
    (2) A signal of the same type (that is, independent, network, or 
non-commercial educational) substituted for such permitted signal; or
    (3) A signal that was carried pursuant to an individual waiver of 
(former 47 CFR 76.1 through 76.617 (1980)); in lieu of the royalty 
rates specified in paragraphs (a) and (d) of this section, the royalty 
rate shall be 3.75 percent of the gross receipts of the cable system 
for each distant signal equivalent. Any fraction of a distant signal 
equivalent shall be computed at its fractional value.
    (d) Syndicated exclusivity surcharge. Commencing with the first 
semiannual accounting period of 2015 and for each semiannual accounting 
period thereafter, in the case of a cable system located outside the 
35-mile specified zone of a commercial VHF station that places a 
predicted Grade B contour, in whole or in part, over the cable system, 
and that is not significantly viewed or otherwise exempt from the FCC's 
syndicated exclusivity rules in effect on June 24, 1981 (former 47 CFR 
76.151 through 76.617 (1980)), for each distant signal equivalent or 
fraction thereof represented by the carriage of such commercial VHF 
station, the royalty rate shall be, in addition to the amount specified 
in paragraph (a) of this section:
    (1) For cable systems located wholly or in part within a top 50 
television market:
    (i) 0.599 percent of such gross receipts for the first distant 
signal equivalent;
    (ii) 0.377 percent of such gross receipts for each of the second, 
third, and fourth distant signal equivalents; and
    (iii) 0.178 percent of such gross receipts for the fifth distant 
signal equivalent and each additional distant signal equivalent 
thereafter;
    (2) For cable systems located wholly or in part within a second 50 
television market:
    (i) 0.300 percent of such gross receipts for the first distant 
signal equivalent;
    (ii) 0.189 percent of such gross receipts for each of the second, 
third, and fourth distant signal equivalents; and
    (iii) 0.089 percent of such gross receipts for the fifth distant 
signal equivalent and each additional distant signal equivalent 
thereafter;
    (3) For purposes of this section ``first 50 major television 
markets'' and ``second 50 major television markets'' shall be defined 
as those terms are defined or interpreted in accordance with the 
Federal Communications Commission rule ``Major television markets'' in 
effect on June 24, 1981 (47 CFR 76.51 (1980)).
    (e) Computation of rates. Computation of royalty fees shall be 
governed by 17 U.S.C. 111(d) and 111(f) and 37 CFR 201.17.

    Dated: June 28, 2016.
Suzanne M. Barnett,
Chief Copyright Royalty Judge.
    Approved:
David S. Mao,
Acting Librarian of Congress.
[FR Doc. 2016-20529 Filed 9-12-16; 8:45 am]
BILLING CODE 1410-72-P