[Federal Register Volume 81, Number 206 (Tuesday, October 25, 2016)]
[Proposed Rules]
[Pages 73368-73377]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-25568]


=======================================================================
-----------------------------------------------------------------------

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 76

[MB Docket No. 16-41; FCC 16-129]


Promoting the Availability of Diverse and Independent Sources of 
Video Programming

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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

SUMMARY: In this document, the Federal Communications Commission 
(Commission) proposes to adopt rules that prohibit certain practices 
some multichannel video programming distributors (MVPDs) use in their 
negotiations for carriage of video programming that may impede 
competition, diversity, and innovation in the video marketplace. 
Specifically, the document proposes to prohibit the inclusion of 
``unconditional'' most favored nation (MFN) provisions and unreasonable 
alternative distribution method (ADM) provisions in program carriage 
agreements between MVPDs and independent video programming vendors.

DATES: Comments are due on or before December 27, 2016; reply comments 
are due on or before January 23, 2017.

ADDRESSES: You may submit comments, identified by MB Docket No. 16-41, 
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

[[Page 73369]]

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

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Notice 
of Proposed Rulemaking, FCC 16-129, adopted and released on September 
29, 2016. 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 
https://ecfsapi.fcc.gov/file/0929819517733/FCC-16-129A1.pdf. 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).

Synopsis

    1. We propose to adopt rules that prohibit the inclusion of 
unconditional most favored nation and unreasonable alternative 
distribution method provisions in carriage agreements between MVPDs and 
independent video programming vendors.\1\ We seek comment below on our 
authority to adopt these rules pursuant to Section 616(a) of the Act, 
which directs the Commission to ``establish regulations governing 
program carriage agreements and related practices between [MVPDs] and 
video programming vendors.'' \2\ We believe that our proposed rules 
will serve the objectives of Section 616 and the public interest by 
removing obstacles to enhanced competition, programming diversity, and 
innovation in the marketplace.
---------------------------------------------------------------------------

    \1\ The prohibitions we propose herein are targeted only at 
contract clauses that harm competition, diversity and innovation 
while providing no apparent public interest benefits. If these 
proposals are adopted, independent programmers and MVPDs would have 
latitude to include conditional MFN and reasonable ADM provisions in 
their carriage agreements.
    \2\ 47 U.S.C. 536(a).
---------------------------------------------------------------------------

    2. Application to ``Independent Video Programming Vendors.'' We 
propose to apply the following rules to program carriage agreements 
between MVPDs \3\ and ``independent video programming vendors.'' \4\ In 
the NOI, we defined ``independent programmer'' as a programmer that is 
not vertically integrated with an MVPD.\5\ Several commenters pointed 
out, however, that for purposes of this proceeding, we should define 
that term more narrowly to exclude established programmers that control 
a significant share of the video programming marketplace and therefore 
have bargaining leverage in carriage negotiations. Given this, we seek 
comment on whether, for purposes of the proposed rules, the term 
``independent video programming vendor'' should be defined more 
narrowly to reflect that certain large programmers that are not 
vertically integrated with an MVPD do not confront the same obstacles 
in securing carriage for their content as smaller or niche programmers.
---------------------------------------------------------------------------

    \3\ Id. 522(13) (defining the term ``multichannel video 
programming distributor'' to mean ``a person such as, but not 
limited to, a cable operator, a multichannel multipoint distribution 
service, a direct broadcast satellite service, or a television 
receive-only satellite program distributor, who makes available for 
purchase by subscribers or customers, multiple channels of video 
programming''); 47 CFR 76.1000(e) (defining MVPD as ``an entity 
engaged in the business of making available for purchase, by 
subscribers or customers, multiple channels of video programming. 
Such entities include, but are not limited to, a cable operator, a 
BRS/EBS provider, a direct broadcast satellite service, a television 
receive-only satellite program distributor, and a satellite master 
antenna television system operator, as well as buying groups or 
agents of all such entities.'').
    \4\ Under this proposal, an ``independent video programming 
vendor'' would be a subset of the ``video programming vendors'' 
covered by Section 616 of the Act. 47 U.S.C. 536. See also Liberman 
Broadcasting, Inc. v. Comcast Corporation, MB Docket No. 16-121, 
Memorandum Opinion and Order, 2016 WL 4494601, at *1. As noted in 
the NOI, we do not address in this proceeding issues relating to 
retransmission consent negotiations between MVPDs and broadcast 
stations. NOI, 81 FR at 10243, n.3.
    \5\ Id. at 10243, n.4.
---------------------------------------------------------------------------

    3. For example, as suggested by ITTA, should we define an 
independent video programming vendor as a video programming vendor that 
is not affiliated with a broadcast network, movie studio or MVPD? 
Alternatively, or in combination with this approach, should we define 
an independent video programming vendor based on whether such vendor 
earns less than a threshold amount of annual gross revenue? If we were 
to define an independent programmer based on its annual gross revenue, 
what is the appropriate revenue threshold? Should we consider adopting 
a revenue threshold that is based solely on programming license fees 
and/or advertising revenue? Or are there other sources of revenue that 
we should consider? An alternative to using a threshold based on 
revenue is to define an independent programmer based on a programmer's 
total assets or a combination of revenue and total assets.\6\ Under 
this approach, what is the appropriate threshold for determining that a 
programming vendor is ``independent,'' and how should that threshold be 
calculated? If we were to define independent programmer based on its 
revenue and/or assets, should a programmer that is affiliated with a 
MVPD, a broadcaster, or another video programming vendor be attributed 
with the revenue and/or assets of such affiliated entities? \7\ Or, 
instead, should we exclude from the definition any programmer that is 
affiliated with an MVPD, a broadcaster, or another video programming 
vendor, regardless of its annual revenue or total assets? We also seek 
comment on how a programmer could establish that it satisfies whatever 
definition of independent video programming vendor we adopt. In 
addition, we seek input on whether excluding larger programmers from 
the protections that would be afforded by our proposed rules would have 
any adverse impact on the video marketplace or consumers. To what 
extent are larger programmers subject to the types of contract 
provisions we are proposing to prohibit? Given the costs involved in 
bringing a complaint to the Commission, would larger programmers be 
more likely than smaller programmers to pursue relief through the 
filing of a complaint? We seek comment on any other potential way to 
define ``independent video programing

[[Page 73370]]

vendor'' and on how any such definition would further the objectives of 
this proceeding. Finally, we seek comment on whether certain of the 
possible definitions of independent programmer would raise First 
Amendment concerns.
---------------------------------------------------------------------------

    \6\ See 47 CFR 24.709(a)(1) (1994) (setting the threshold for 
small entities at an annual gross revenue of less than $125 million 
and total assets of less than $500 million).
    \7\ The Commission has stated that, for the purpose of 
determining whether a video programming vendor is affiliated with an 
MVPD under Section 616, it would apply the attribution standards 
applicable to its program access rules. Implementation of Sections 
12 and 19 of the Cable Television Consumer Protection and 
Competition Act of 1992, Development of Competition and Diversity in 
Video Programming and Distribution, Second Report and Order, 9 FCC 
Rcd 2642, 2650, para. 19 (1993) (Program Carriage Second Report and 
Order).
---------------------------------------------------------------------------

    4. Prohibition on ``Unconditional'' MFN Provisions. We propose to 
adopt a rule that prohibits the inclusion of unconditional MFN 
provisions in carriage agreements between MVPDs and independent video 
programming vendors. For the purpose of applying this rule, we propose 
to define an unconditional MFN provision as ``a provision that entitles 
an MVPD to contractual rights or benefits that an independent video 
programming vendor has offered or granted to another video programming 
distributor,\8\ without obligating the MVPD to accept any terms and 
conditions that are integrally related, logically linked, or directly 
tied \9\ to the grant of such rights or benefits in the other video 
programming distributor's agreement, and with which the MVPD can 
reasonably comply technologically and legally.'' \10\
---------------------------------------------------------------------------

    \8\ The term ``video programming distributor'' as used herein 
includes both traditional MVPDs and alternative distributors of 
video programming, such as OVDs. See ACA August 26 Ex Parte Letter 
at 1, 8.
    \9\ The phrase ``integrally related, logically linked, or 
directly tied'' derives from DOJ's Proposed Final Judgment in its 
review of the Charter Communications-Time Warner Cable (Charter-TWC) 
transaction. U.S. v. Charter Communications, Inc. et al., Proposed 
Final Judgment, Civil Action No. 16-cv-00759 at 5, Section IV.B.2.i. 
(2016) (DOJ Charter-TWC Proposed Final Judgment). The relevant 
merger condition, among other things, bars Charter-TWC from entering 
into any agreement with a video programmer that creates incentives 
to limit such programmer's provision of programming to OVDs, 
including agreements that entitle Charter-TWC to receive contractual 
benefits granted to an OVD ``without requiring [Charter-TWC] to also 
accept any obligations, limitations, or conditions . . . that are 
integrally related, logically linked, or directly tied to the . . . 
grant of such . . . benefits.'' Id. (emphasis added). DOJ used this 
phrase in crafting this condition because it found that such 
language is consistent with that contained in conditional MFN 
provisions industrywide. DOJ Charter-TWC Competitive Impact 
Statement at 17, n.8.
    \10\ The phrase ``reasonably comply technologically and 
legally'' also derives from DOJ's Proposed Final Judgment in the 
Charter-TWC transaction. DOJ Charter-TWC Proposed Final Judgment at 
6, Section IV.B.2.ii. The relevant provision, which DOJ also found 
to be consistent with conditional MFN provisions throughout the 
industry, generally relieves Charter-TWC from having to comply with 
related terms and conditions if it is unable to do so for 
technological or regulatory reasons. DOJ Charter-TWC Competitive 
Impact Statement at 17, n.8. See also DOJ Charter-TWC Proposed Final 
Judgment at 6.
---------------------------------------------------------------------------

    5. In proposing this rule, we acknowledge that MFN provisions, 
which have long been common in the industry, may have legitimate public 
interest justifications, such as facilitating efficient negotiations by 
enabling well-informed positions, encouraging investment in programming 
by enabling MVPDs to adjust contract terms after an initial agreement 
is executed, and broadening MVPD subscribers' access to video content 
by allowing MVPDs to secure additional rights to programming. However, 
we are not persuaded based on the record that such justifications exist 
for MFN provisions that are unconditional and thus permit ``cherry 
picking'' of the best contract terms. Because, as noted above, 
unconditional MFN provisions entitle an MVPD to the most favorable 
terms granted to other distributors without obligating the MVPD to 
provide the same or equivalent consideration in exchange for those 
terms, such provisions appear designed to discourage or foreclose the 
wider distribution of video content, including on online platforms.
    6. The record reflects, moreover, that this category of MFN 
provisions can apply upward pressure on both wholesale and retail 
prices for program content by reducing a programmer's incentive to cut 
its carriage rates to any one distributor out of fear that doing so 
would require it to reduce the rates charged to distributors with 
unconditional MFN status without receiving any reciprocal benefits. As 
a consequence, unconditional MFN provisions effectively limit the 
flexibility of content providers to enter into unique deals with new 
and emerging distributors, thereby impeding entry into program 
production and distribution marketplaces and reducing consumer 
choice.\11\ We also note that agreements resulting from the exercise of 
unconditional MFN rights may not reflect marketplace conditions because 
they disregard the balance struck in bilateral negotiations between the 
programmer and rival distributor. While some MVPDs generally defend MFN 
clauses on the basis that they provide certain pro-consumer benefits, 
no party has identified any public interest benefits that accrue from 
making such provisions unconditional. For these reasons, and consistent 
with conditions imposed by the Department of Justice in approving the 
Charter-TWC transaction,\12\ we tentatively conclude that the potential 
harms to competition, diversity and innovation resulting from 
unconditional MFN provisions outweigh any potential public interest 
benefits.\13\
---------------------------------------------------------------------------

    \11\ See, e.g., Milunovich Remarks at 62:03; Newton Remarks at 
130:30. See also Charter-TWC Order, 2016 WL 2858801, at *63, para. 
221. The Commission has rejected the argument that MFN provisions 
included in agreements between cable operators and local franchising 
authorities reduce the incentives of a local franchising authority 
to agree to a more favorable deal with overbuilders new to the 
market. See, e.g., Implementation of Section 621(A)(1) of The Cable 
Communications Policy Act of 1984, as amended by The Cable 
Television Consumer Protection and Competition Act of 1992, Order on 
Reconsideration, 30 FCC Rcd 810, 814 n.39 (2015). We note the 
distinction between the incentives and interests of government 
entities such as local franchising authorities (among them, public 
interest concerns such as consumer costs) and those of commercial 
programmers (for example, profit maximization). In the context of 
wireline competition, the Commission has concluded that allowing 
competitive local exchange carriers (CLECs) to cherry-pick terms and 
conditions of service from incumbent local exchange carriers' 
(ILECs) interconnection agreements with other ILECs impeded give-
and-take negotiations between ILECs and resulted in ``largely 
standardized agreements with little creative bargaining,'' whereas 
requiring CLECs to accept all terms of an agreement between an ILEC 
and another party (``all-or-nothing'' approach) would encourage 
ILECs to make trade-offs in negotiations that they were reluctant to 
make under the ``pick and choose'' approach. Review of the Section 
251 Unbundling Obligations of Incumbent Local Exchange Carriers, 
Second Report and Order, 69 FR 43762, 43764, paras. 10-12 (July 22, 
2004), aff'd, New Edge Network, Inc. v. FCC, 461 F.3d 1105, 1109-10 
(9th Cir. 2006).
    \12\ See, e.g., DOJ Charter-TWC Proposed Final Judgment at 5, 
Section IV.B.2. But see AT&T-DIRECTV Order, 30 FCC Rcd at 9222, 
para. 237. Although the Commission, in the AT&T-DIRECTV merger 
proceeding, declined to adopt a transaction-specific condition due 
to the absence of a supporting record, we have since developed 
through the instant proceeding a record that demonstrates the 
competitive harms resulting from unconditional MFN provisions.
    \13\ As noted above, the record reveals no public interest 
benefits that result from unconditional MFN provisions.
---------------------------------------------------------------------------

    7. We seek comment on this tentative conclusion and on whether the 
purposes of Section 616 and the public interest would be served by 
adopting the proposed rule. In addition, we seek comment on our 
proposed definition of unconditional MFN provision and on any 
alternative definitions. Should we be concerned that the proposed 
definition is too narrow and thus would permit MVPDs to draft contract 
language that avoids application of the prohibition? If so, how should 
we address such concerns? Should any rules we adopt address MFN 
provisions that are partially unconditional or effectively discourage 
or foreclose wider distribution of content? We also seek input on our 
proposal to ban unconditional MFN provisions that entitle an MVPD to 
contractual rights that an independent programmer has negotiated with 
any other video programming distributor. Should we be uniquely 
concerned about the use of unconditional MFN provisions to harm 
competition from nascent OVDs? Accordingly, should we prohibit only 
unconditional MFN provisions that apply to terms an independent

[[Page 73371]]

programmer has negotiated with an OVD? Recent merger conditions adopted 
in DOJ's Proposed Final Judgment in the Charter-TWC merger have 
precluded only unconditional MFN provisions that apply to terms 
negotiated with OVDs.\14\ Should we take a similar approach in this 
proceeding, or is it in the public interest to prohibit unconditional 
MFN provisions that apply to a broader range of video programming 
distributors? We seek comment on the costs and benefits of the rules 
proposed above and any other rules that commenters assert would better 
serve the public interest. To the extent possible, commenters should 
quantify any identified costs and benefits. Are there any circumstances 
in which unconditional MFN provisions may be beneficial to competition 
or programming diversity? If so, are the potential public interest 
benefits of allowing such provisions outweighed by the benefits of our 
proposed prohibition?
---------------------------------------------------------------------------

    \14\ DOJ Charter-TWC Proposed Final Judgment at 5-6, Section 
IV.A-C.
---------------------------------------------------------------------------

    8. We also seek comment on which, if any, of the Commission's 
program carriage rules would need to be amended if we adopted the 
proposed rule.\15\ What remedies and penalties should we impose on an 
MVPD that violates the proposed prohibition on unconditional MFN 
provisions? \16\ For example, would it be appropriate to order that the 
unconditional MFN provision would be unenforceable starting on the 
effective date of any new rule, or that it be replaced with a 
conditional MFN provision? \17\ If we preclude MVPDs from enforcing 
unconditional MFN provisions in existing contracts, should we also 
afford parties some period of time to reform their contracts before the 
Commission will take enforcement action? To what extent, if at all, 
would costs, or other concerns, associated with pursuing a program 
carriage complaint affect the ability of independent programmers to 
obtain relief? Finally, we seek comment on what types of circumstances 
could justify waiver of a rule precluding the use of unconditional MFN 
provisions. Given the potential detrimental impact that such provisions 
have on competition, programming diversity and innovation in the 
marketplace, what, if any, situations would constitute ``good cause'' 
for permitting MFN provisions that otherwise would be precluded under 
our proposed rules? \18\
---------------------------------------------------------------------------

    \15\ 47 CFR 76.1300-1302. In particular, we seek comment on 
whether any rule revisions would be needed in addition to, or 
instead of, those set forth herein.
    \16\ We note that Section 616 of the Act and its implementing 
rules authorize the Commission to prescribe appropriate penalties 
and remedies, including carriage, for a violation of the program 
carriage provisions. See 47 U.S.C. 536(a)(5); 47 CFR 76.1302(j).
    \17\ See DOJ Charter-TWC Proposed Final Judgment at 5, Section 
IV.A.
    \18\ See 47 CFR 1.3.
---------------------------------------------------------------------------

    9. Prohibition on ``Unreasonable'' ADM Provisions. We also propose 
to adopt a rule that prohibits the inclusion of an unreasonable ADM 
provision in a carriage agreement between an MVPD and an independent 
video programming vendor. As with MFN clauses, we recognize that ADM 
provisions, which are a form of exclusivity, can have valid public 
interest justifications. For example, they may incentivize MVPDs to 
invest in new or emerging programming sources, including independent or 
niche content and/or content targeted to underserved audiences. We also 
recognize that, as with MFN provisions, the use of ADM clauses is a 
longstanding industry practice, and that there is a broad variety of 
ADM restrictions in programming contracts today. Based on the record, 
however, it appears that certain restrictive ADM provisions have no 
discernibly pro-competitive justifications and have an adverse impact 
on the provision of diverse programming sources to consumers. As DOJ 
has found, such provisions also ``negatively affect OVDs' business 
models and undermine their ability to provide robust video offerings 
that compete with the offerings of traditional MVPDs,'' \19\ which can 
lead to ``lower-quality services, fewer consumer choices, and higher 
prices.'' \20\
---------------------------------------------------------------------------

    \19\ DOJ Charter-TWC Competitive Impact Statement at 14.
    \20\ Id.
---------------------------------------------------------------------------

    10. We tentatively conclude that in determining whether a 
particular ADM provision is ``unreasonable,'' we will consider, among 
other factors, the extent to which an ADM provision prohibits an 
independent programmer from licensing content to other distributors, 
including OVDs. Although the issue of whether a particular ADM clause 
is ``unreasonable'' would be fact-specific and determined in the 
context of a complaint proceeding brought under Section 616 of the Act 
under our proposal,\21\ certain ADM provisions appear unlikely to yield 
any procompetitive benefits that would outweigh the attendant public 
interest harms. Such ADM provisions include those that: (i) Bar an 
independent programmer from licensing content, for an extended time 
period or indefinitely, to an OVD that distributes content for free to 
consumers; \22\ (ii) bar an independent programmer from licensing 
content, for any period of time, to an OVD that distributes content to 
paying subscribers; \23\ (iii) bar an independent programmer from 
licensing content to an OVD unless or until the OVD meets conditions 
that are difficult to satisfy in a timely manner or are designed to 
undermine the OVD's ability to compete; \24\ or (iv) provide for any 
pecuniary or non-pecuniary penalty or adverse impact on an independent 
programmer for the provision of its video programming to an OVD.\25\ We 
tentatively conclude that ADM provisions that include any of these 
factors should be deemed presumptively unreasonable.
---------------------------------------------------------------------------

    \21\ 47 CFR 76.1302.
    \22\ See DOJ Charter-TWC Competitive Impact Statement at 12.
    \23\ The only type of ADM provisions permissible under DOJ's 
Proposed Final Judgment in Charter-TWC are those that restrict the 
free distribution of programming online. The Proposed Final Judgment 
therefore restricts all ADM provisions that apply to paid 
distribution online. DOJ Charter-TWC Proposed Final Judgment at 5-6, 
Section IV.B-C.
    \24\ DOJ cited this as another example of a problematic ADM 
provision in its review of the Charter-TWC transaction. For example, 
DOJ noted one instance in which an ADM clause in one MVPD's contract 
with a video programmer prohibited the programmer from licensing its 
content to any OVD unless the OVD offered a package that included 35 
channels, including at least two channels each from three out of a 
list of six large programmers. DOJ Charter-TWC Competitive Impact 
Statement at 12, n.5. See also Richard Greenfield Remarks, Media 
Bureau Workshop on the State of the Video Marketplace, at 71:58 
(Mar. 21, 2016), https://www.fcc.gov/news-events/events/2016/03/media-bureau-workshop-state-video-marketplace#acc2.
    \25\ For example, such penalties could include rate reductions, 
re-tiering or repositioning penalties, termination rights for the 
MVPD, or loss or waiver of any rights or benefits otherwise 
available to the video programmer. DOJ Charter-TWC Proposed Final 
Judgment at 5, Section IV.B.1.
---------------------------------------------------------------------------

    11. We believe that our proposed rule, which proscribes only 
``unreasonable'' ADM provisions, would ensure that MVPDs cannot use ADM 
provisions to harm the development of nascent competition, while 
preserving independent programmers' and distributors' respective 
incentives to develop quality program content and invest in independent 
and diverse programming sources. Or would prohibiting such ADM 
provisions make it less likely that MVPDs would agree to carry 
independent programmers or would seek to enter into exclusive 
programming agreements with them that would limit rather than expand 
their carriage opportunities? We seek comment on our tentative 
conclusions and proposed framework for determining whether an ADM 
clause is unreasonable. How should we define an ``extended time 
period'' for the purpose

[[Page 73372]]

of our first proposal in the preceding paragraph? In addition, we seek 
comment on how an MVPD could rebut an independent programmer's showing 
that the ADM provisions noted above are unreasonable.
    12. In addition, we tentatively conclude that an ADM provision that 
prohibits an independent video programming vendor from distributing 
programming, for which the MVPD has agreed to pay, to consumers for 
free over the Internet for a limited period after the programming's 
initial airing on a linear MVPD service should be deemed presumptively 
reasonable. Establishing such a presumption would be consistent with 
conditions imposed in the Comcast-NBCU and Charter-TWC merger 
proceedings that permit the respective combined entities to prevent a 
programmer from making its content available on the Internet for free 
for 30 days after its initial airing, if such entities paid a fee for 
that content.\26\ We seek comment on this proposed presumption and on 
the time frame that should apply if we adopt it. Should it be 
presumptively reasonable for a carriage agreement to include an 
exclusivity window of 30 days vis-[agrave]-vis the free provision of 
programming online, or should the window be shorter or longer? Is 
allowing an MVPD to restrict free online distribution for 30 days 
generally consistent with industry practice? In addition, does a 30-day 
limit adequately balance our interest in ensuring ADM provisions do not 
inhibit the development of OVDs, while at the same time affording MVPDs 
a reasonable opportunity to protect their investment in high quality 
programming? Should the specified window (e.g., 30 days) apply only to 
certain types of programming (e.g., scripted programming)? Would a 
different time period be more reasonable in the case of ``time 
sensitive'' programming (e.g., live sports or news) that may lose its 
value to the public before thirty days after its initial airing?
---------------------------------------------------------------------------

    \26\ Applications of Comcast Corporation, General Electric 
Company and NBC Universal, Inc. for Consent to Assign Licenses and 
Transfer Control of Licensees, Memorandum Opinion and Order, 26 FCC 
Rcd 4238, 4361, App. A, Condition IV.B.3.a. (Comcast-NBCU Order); 
DOJ Charter-TWC Proposed Final Judgment at 6, Section IV.C.1. In its 
review of the Charter-TWC transaction, DOJ explained that such 
limitations on free distribution were ``ubiquitous in the industry'' 
and that there was ``no evidence that such provisions are harmful to 
competition.'' DOJ Charter-TWC Competitive Impact Statement at 17. 
See also Comcast-NBCU Comments at 31.
---------------------------------------------------------------------------

    13. We also seek input on the type of evidence that would be needed 
to rebut a positive presumption. What type of showing should be 
sufficient to overcome the presumption of reasonableness? As an 
alternative to establishing rules based on presumptions, should we 
adopt a bright line rule that defines and expressly prohibits certain 
types of ADM provisions?
    14. We also tentatively conclude that an ADM provision that grants 
an MVPD the universally exclusive right to distribute an independent 
video programming vendor's content should be deemed presumptively 
reasonable. We recognize that this type of blanket exclusivity long has 
been common in the video programming industry and does not appear to 
raise the same competitive concerns as ADMs targeted at OVDs.\27\ This 
type of presumption also would be consistent with the conditions 
imposed by DOJ in the Charter-TWC merger proceeding.\28\ We seek input 
on this proposed presumption. What type of showing would be sufficient 
to overcome this presumption of reasonableness? As an alternative to 
establishing this presumption, should we deem an ADM provision that 
grants an MVPD the universally exclusive right to distribute 
independent programming content to be outside the scope of the proposed 
rule, and thus permissible?
---------------------------------------------------------------------------

    \27\ AT&T-DIRECTV Order, 30 FCC Rcd at 9198, para. 179.
    \28\ DOJ Charter-TWC Proposed Final Judgment at 6, Section 
IV.C.2.
---------------------------------------------------------------------------

    15. We also seek comment on whether adoption of a rule prohibiting 
unreasonable ADM provisions and our proposed framework for the rule 
would warrant any rule revisions besides those set forth herein. In 
particular, which, if any, of the Commission's program carriage rules 
would need to be amended if we adopted the proposed rule? What remedies 
and penalties should we impose on an MVPD that violates the proposed 
prohibition on unreasonable ADM provisions? \29\ For example, would it 
be appropriate for the Media Bureau to order that an unreasonable ADM 
provision not be enforced or be replaced with an ADM provision with 
reasonable terms? If we adopt rules prohibiting the use of certain 
types of ADM clauses, should we preclude MVPDs from enforcing existing 
contracts that include such a clause? If we preclude MVPDs from 
enforcing unreasonable ADM provisions in existing contracts, would it 
be necessary to require them to amend their contracts? If so, how much 
time should be afforded for these amendments?
---------------------------------------------------------------------------

    \29\ In implementing Section 616, the Commission stated that if 
it were to find that a carriage agreement ``includes a coerced . . . 
exclusivity requirement in violation of Section 616, the appropriate 
remedy may simply be to determine that such terms are unenforceable 
by the [MVPD], and to revise the existing agreement, ordering 
carriage on the same terms negotiated in that agreement without the 
. . . coerced promise of exclusivity.'' Program Carriage Second 
Report and Order, 9 FCC Rcd at 2653, n.47.
---------------------------------------------------------------------------

    16. To what extent, if at all, would the costs associated with 
pursuing a program carriage complaint affect the ability of independent 
programmers to obtain relief? We seek comment on the costs and benefits 
of the proposals above and any others that commenters assert would 
better serve the public interest. To the extent possible, commenters 
should quantify any identified costs and benefits. We also seek comment 
on whether there are any circumstances in which the kinds of ADM 
provisions we propose to prohibit are beneficial to competition or 
programming diversity. If so, are the potential public interest 
benefits of allowing such provisions outweighed by the benefits of a 
prohibition?
    17. In addition, we seek comment on whether there are other kinds 
of ADM provisions that we should deem to be presumptively reasonable or 
presumptively unreasonable. We also invite comment on what 
circumstances could justify waiver of a rule prohibiting the use of 
unreasonable ADM provisions in agreements between MVPDs and independent 
video programming vendors. In light of the potential detrimental impact 
that unreasonable ADM provisions have on competition, diversity, and 
innovation in the marketplace, what, if any, situations would 
constitute ``good cause'' for permitting an MVPD to include in a 
carriage contract an ADM provision that otherwise would be precluded 
under our proposed rules?
    18. Additional Rules. We also seek comment on whether, if we were 
to adopt the rules proposed above, we should adopt additional 
provisions that protect against retaliation by MVPDs if independent 
programmers bring complaints with regard to unconditional MFN or 
unreasonable ADM provisions.\30\ Alternatively, should we consider 
adopting a rule that prohibits a broader range of retaliatory conduct 
by MVPDs, including retaliation against

[[Page 73373]]

programmers that refuse to agree to unconditional MFN clauses, 
unreasonable ADM clauses, or other carriage-related demands? We note, 
for example, that conditions imposed in the Comcast-NBCU and Charter-
TWC transaction proceedings include provisions that bar retaliatory 
conduct by the combined entities.\31\ Such rules also would be 
harmonious with Section 616(a)(2) and its implementing rules, which 
prohibit MVPDs from, among other things, retaliating against video 
programming vendors for failing to provide exclusive rights against 
other MVPDs as a condition of carriage.\32\ Parties urging the adoption 
of rules to address retaliatory conduct should specify the kinds of 
actions that should be restricted or prohibited. Should we adopt other 
rules designed to protect independent programmers from retaliation, 
such as rules that provide for a heightened level of confidentiality 
when a programmer brings a complaint to the Commission?
---------------------------------------------------------------------------

    \30\ We note that the Commission in 2011 proposed to amend its 
rules to prohibit an MVPD from, among other things, retaliating 
against a video programming vendor for filing a program carriage 
complaint if the effect of such conduct is to unreasonably restrain 
the ability of the video programming vendor to compete fairly. 
Revision of the Commission's Program Carriage Rules, MB Docket Nos. 
07-42, 11-131, Second Report and Order and Notice of Proposed 
Rulemaking, 76 FR 60675, 60692-94, paras. 60-67 (Sept. 29, 2011) 
(Program Carriage NPRM).
    \31\ See Comcast-NBCU Order, 26 FCC Rcd at 4363-64, App. A, 
Condition IV.G.1.d.; id. at 4287, para. 121; DOJ Charter-TWC 
Competitive Impact Statement at 18-19.
    \32\ 47 U.S.C. 536(a)(2); 47 CFR 76.1301(b). See also H.R. Rep. 
No. 102-628, 102d Cong., 2d Sess. at 110 (1992) (House Report) 
(stating that ``[t]he regulations [to implement Section 616(a)(2)] 
should be designed to prevent a cable operator from taking any kind 
of retaliatory action against a programmer for refusing to grant 
exclusivity to the operator''); H.R. Rep. No. 102-862, 102d Cong., 
2d Sess. at 83 (1992) (Conference Report).
---------------------------------------------------------------------------

    19. We also seek comment on what, if any, additional rules we 
should consider to advance competition, diversity, and innovation in 
the marketplace. In particular, are there other specific actions we can 
take to provide greater opportunities for distribution of programming 
from new video programming vendors, including minorities and women, or 
programming directed at minority, underserved, or female viewers? Are 
there any actions we can take to protect consumers from programming 
disruptions resulting from an MVPD's decision to drop an independent 
video programmer from its lineup? For example, would the public 
interest be served, as RFD-TV suggests, by adopting a rule that permits 
MVPD subscribers to cancel, without penalty, a subscription television 
package within a specified time period, e.g., 90 days, after the MVPD 
has dropped such programmer from its lineup? \33\ In addition, we seek 
comment on whether MVPDs engage in other negotiating practices that 
hamper the ability of independent programmers to secure distribution of 
their content. To the extent MVPDs engage in such practices, we seek 
comment on whether the public interest would be served by requiring 
MVPDs to negotiate carriage agreements with independent video 
programming vendors in good faith.\34\ We also seek further comment on 
bundling practices by video programming vendors.\35\ Specifically, how, 
if at all, do bundling practices affect MVPDs' ability to carry 
independent programmers? Is bundling by large programmers as widespread 
as some in the record suggest? Do small MVPDs face greater demands to 
accept bundles than large MVPDs? Do programmers act differently in 
their negotiations with buying groups, such as the National Cable 
Television Cooperative (NCTC), than they do in negotiations with MVPDs 
that negotiate on their own behalf? Do programmers insist on bundling 
even with respect to capacity constrained MVPDs, or do they provide 
relief for such systems? What is the impact of bundling on small MVPDs 
relative to large MVPDs? How does bundling impact consumer costs, 
choice, and access to diverse programming? Are there other marketplace 
conditions that magnify the effects (harmful or beneficial) of 
bundling?
---------------------------------------------------------------------------

    \33\ We note that the rules currently require customers to be 
notified of any changes in rates, programming services, or channel 
positions as soon as possible in writing, and with an advanced 
notice of 30 days or more if the change is within the operator's 
control. 47 CFR 76.1603(b).
    \34\ We note that in the 2011 Program Carriage NPRM, the 
Commission proposed to adopt a good faith negotiation requirement 
under Section 616 of the Act that would apply to vertically 
integrated MVPDs. Program Carriage NPRM, 76 FR at 60694-95, paras. 
68-71.
    \35\ NOI, 81 FR at 10244-45.
---------------------------------------------------------------------------

    20. Legal Authority. We seek comment on the Commission's legal 
authority under Section 616 of the Act \36\ to adopt rules prohibiting 
the use of unconditional MFN and unreasonable ADM provisions in program 
carriage agreements between MVPDs and independent video programming 
vendors, as proposed above. Section 616(a) provides, in relevant part, 
that ``the Commission shall establish regulations governing program 
carriage agreements and related practices between cable operators or 
other [MVPDs] and video programming vendors.'' \37\ We believe this 
provision reasonably can be read to grant general rulemaking authority 
to the Commission to adopt a prohibition on unfair, unreasonable, and/
or anticompetitive practices employed by MVPDs when negotiating 
carriage agreements, including the use of certain contract provisions 
in agreements with independent programmers.
---------------------------------------------------------------------------

    \36\ 47 U.S.C. 536.
    \37\ Id. 536(a). In addition, Section 616(b) defines the term 
``video programming vendor'' as ``a person engaged in the 
production, creation, or wholesale distribution of video programming 
for sale.'' Id. 536(b).
---------------------------------------------------------------------------

    21. Specifically, we seek comment on whether the Commission's grant 
of authority under Section 616(a) to adopt rules ``governing program 
carriage agreements and related practices between [MVPDs] and video 
programming vendors'' is sufficiently broad to enable us to prohibit 
the use of unconditional MFN or unreasonable ADM provisions. As noted 
above, the rules we propose will apply to agreements between MVPDs and 
``independent video programming vendors,'' which are encompassed within 
the term ``video programming vendor.'' \38\ We believe these rules will 
advance Congress's intent in enacting Section 616 ``to stem and reduce 
the potential for abusive or anticompetitive actions [by MVPDs] against 
programming entities.'' \39\ Congress expressed concern that MVPDs may 
be able ``to extract concessions from programmers'' which ``could 
discourage entry of new programming services, restrict competition, 
impact adversely on diversity, and have other undesirable effects on 
program quality and viewer satisfaction.'' \40\ Consistent with the 
intent of Section 616, our proposals are designed to enhance 
competition in the video programming marketplace and are predicated on 
the belief that ``competition is essential both for ensuring diversity 
in programming and for protecting consumers from potential abuses by 
cable operators possessing market power'' and other MVPDs.\41\
---------------------------------------------------------------------------

    \38\ 47 U.S.C. 536(b).
    \39\ House Report at 27.
    \40\ Id. at 42-43.
    \41\ Id. at 43.
---------------------------------------------------------------------------

    22. Some commenters argue that Section 616 is only a limited grant 
of authority to the Commission. For example, AT&T contends that the 
Commission has authority under Section 616 only to address conduct that 
violates one of three proscriptions set forth in the subsections of 
Section 616(a). Consistent with our previous determination that 
``[Section 616] does not preclude the Commission from adopting 
additional requirements beyond the six listed in the statute,'' we are 
not persuaded that Congress intended to limit the Commission's 
regulatory authority to only those practices specifically listed in 
Section 616(a).\42\ The introductory language in Section 616(a) grants 
the Commission broad authority to ``establish regulations governing 
program carriage agreements

[[Page 73374]]

and related practices between cable operators and multichannel video 
programming distributors and video programming vendors,'' and nothing 
in the statute expressly precludes the Commission from establishing 
rules besides those specifically listed.\43\ Furthermore, the 
subsections relating to substantive requirements, subsections 
616(a)(1)-(a)(3), are introduced by the verbs ``include'' or 
``contain,'' which suggests that such requirements are not exhaustive. 
Where Congress intends to limit the Commission's rulemaking authority 
to specified areas, it has done so expressly.\44\
---------------------------------------------------------------------------

    \42\ Program Carriage NPRM, 76 FR at 60693, para. 65.
    \43\ See generally 47 U.S.C. 536.
    \44\ See, e.g., id. 613(f)(1), (2) (directing the Commission to 
reinstate its video description regulations adopted in Report and 
Order, 65 FR 54805 (Sept. 11, 2000), and to modify those rules 
``only as follows'').
---------------------------------------------------------------------------

    23. Although the first sentence of Section 616(a) directs the 
Commission to adopt implementing rules ``[w]ithin one year after 
October 5, 1992,'' \45\ we do not believe that the timing requirement 
in Section 616(a) means that the Commission's rulemaking authority 
under that Section expired more than 20 years ago. As we have explained 
previously, the Commission's authority under a statutory provision does 
not expire when a statutory deadline for implementation passes.\46\ 
Indeed, the view that the Commission's authority expires with passage 
of a deadline would be at odds with judicial precedent regarding 
statutory deadlines, which are generally considered directory rather 
than mandatory.\47\
---------------------------------------------------------------------------

    \45\ Id. 536(a).
    \46\ Review of the Commission's Program Access Rules, First 
Report and Order, 25 FCC Rcd 746, 752, n.23 (2010), aff'd in part 
and vacated in part on other grounds, Cablevision v. FCC, 649 F.3d 
695 (2011). See also Connect America Fund et al., Report and Order 
and Further Notice of Proposed Rulemaking, 26 FCC Rcd 17663, 17918, 
para. 767, n.1381 (2011); Brock v. Pierce County, 476 U.S. 253, 260, 
262 (1986); Gottlieb v. Pe[ntilde]a, 41 F.3d 730, 733 (D.C. Cir. 
1994).
    \47\ We note that, although the Commission amended its program 
carriage rules several times after October 5, 1993, no party has 
challenged those actions on the grounds that the Commission lacked 
authority to adopt or revise such rules after that date.
---------------------------------------------------------------------------

    24. We also believe that our proposed rules are consistent with the 
overall structure and intent of Section 616(a). Although Sections 
616(a)(1) and 616(a)(2) prohibit an MVPD from ``requiring'' or 
``coercing'' programmers to accept certain terms as a condition of 
carriage on its systems,\48\ we do not believe that our rulemaking 
authority under Section 616(a) is limited to those practices delineated 
in the subsections. In any case, based on the record, we find that 
independent programmers generally do not agree to unconditional MFN or 
unreasonable ADM provisions voluntarily, but rather, are forced to 
accept such provisions because they lack sufficient bargaining leverage 
to resist MVPDs' demands for such provisions. Thus, we find it 
reasonable to conclude that independent programmers agree to 
unconditional MFN and unreasonable ADM provisions only because MVPDs 
require them as a condition of carriage. We seek comment on this 
analysis. Does the use of the terms ``requiring'' and ``coercing'' in 
the subsections of 616(a) affect the scope of our rulemaking authority 
under this provision? We also seek comment on whether or to what extent 
Congress's particular concerns about vertical integration as expressed 
in Section 616's legislative history should factor into our 
determination about the scope of our authority to prohibit the use of 
unconditional MFN and unreasonable ADM provisions under Section 
616.\49\ In addition, we seek comment on any constitutional issues that 
we should consider in determining whether to adopt the proposed rules.
---------------------------------------------------------------------------

    \48\ 47 U.S.C. 536(a)(1) through (a)(2).
    \49\ See, e.g., S. Rep. No. 102-92, 102d Cong., 2d Sess., at 24-
29 (1991) (Senate Report); House Report at 41.
---------------------------------------------------------------------------

    25. We seek comment on whether other provisions of the Act provide 
an alternative or an additional basis for the adoption of rules 
addressing restrictive MFN and ADM provisions. For example, does 
Section 616(a)(3) of the Act provide a basis for proscribing 
restrictive MFN and ADM provisions? Section 616(a)(3) directs the 
Commission to adopt rules ``designed to prevent [an MVPD] from engaging 
in conduct the effect of which is to unreasonably restrain the ability 
of an unaffiliated video programming vendor to compete fairly by 
discriminating in video programming distribution on the basis of 
affiliation or nonaffiliation of vendors in the selection, terms, or 
conditions for carriage of video programming provided by such 
vendors.'' \50\ Is the Commission authorized under that provision, for 
example, to adopt rules that prohibit vertically integrated MVPDs from 
including unconditional MFN and unreasonable ADM clauses in carriage 
agreements with independent video programming vendors, where such MVPDs 
do not include the same clauses in carriage agreements with affiliated 
programming networks? If so, would the application of such rules only 
to vertically integrated MVPDs adequately address the competition and 
diversity concerns raised by restrictive MFN and ADM clauses? Would a 
nondiscrimination requirement be effective given that an MVPD could 
enter into the same restrictive MFN and/or ADM provision with both the 
affiliated and unaffiliated programming network but simply not exercise 
its rights with respect to the affiliated network? To the extent that 
parties assert that Section 616(a)(3) authorizes adoption of the 
proposed rules, we seek comment on whether an independent video 
programming vendor would have ready access to the kind of information 
needed to prove unlawful program carriage discrimination under Section 
616(a)(3), given that such clauses are contained in carriage contracts 
that are not generally subject to public disclosure.
---------------------------------------------------------------------------

    \50\ 47 U.S.C. 536(a)(3).
---------------------------------------------------------------------------

    26. We also seek input on whether any provisions of Section 628 
serve as a valid basis for establishing rules to address restrictive 
MFN and ADM provisions. Consistent with the goal of our proposed rules, 
we note that the purpose of Section 628 is to ``increase[e] competition 
and diversity in the [MVPD] market . . . and to spur the development of 
communications technologies.'' \51\ In addition, Section 628(b) 
prohibits ``a cable operator . . . or a satellite broadcast programming 
vendor [from engaging] in unfair methods of competition or unfair or 
deceptive acts or practices, the purpose or effect of which is to 
hinder significantly or to prevent any [MVPD] from providing . . . 
programming to subscribers or consumers.'' \52\ And Section 628(c)(1) 
directs the Commission to ``prescribe regulations to specify particular 
conduct that is prohibited by [Section 628(b)]'' in order to 
``increase[e] competition and diversity in the [MVPD] market and the 
continuing development of communications technologies.'' \53\ Given 
that Section 628(b) appears to target only methods, acts, and practices 
that adversely affect MVPDs, can the Commission lawfully invoke this 
provision to proscribe, as an ``unfair'' method, act or practice, the 
use of certain MFN and ADM provisions in agreements between MVPDs and 
independent video programming vendors? For example, could Section 
628(b) be invoked based on evidence that such MFN and ADM provisions 
adversely affect small MVPDs? Given

[[Page 73375]]

that direct broadcast satellite (DBS) carriers are not subject to the 
provisions of Section 628, would reliance on that provision to limit 
the use of restrictive MFN and ADM provisions lead to a disparity in 
regulatory treatment among MVPDs? Finally, we seek comment on whether 
there are other provisions of the Act that potentially vest the 
Commission with authority to adopt rules addressing restrictive MFN and 
ADM provisions.\54\
---------------------------------------------------------------------------

    \51\ Id. 548(a).
    \52\ Id. 548(b). The term ``satellite broadcast programming 
vendor'' means ``a fixed service satellite carrier that provides 
service pursuant to Section 119 of title 17, United States Code, 
with respect to satellite broadcast programming.'' Id. 548(i)(4); 47 
CFR 76.1000(g).
    \53\ 47 U.S.C. 548(c)(1).
    \54\ Although we suggested in the NOI that Section 257 of the 
Act could provide a basis for adopting such rules, we note that 
section 257(a) directs the Commission, among other things, to 
``complete a proceeding for the purpose of identifying and 
eliminating, by regulations pursuant to its authority under this Act 
(other than [Section 257]), market entry barriers for entrepreneurs 
and other small businesses in the provision and ownership of 
telecommunications and information services, or in the provision of 
parts or services to providers of telecommunications services and 
information services.'' 47 U.S.C. 257(a) (emphasis added). We read 
this provision, therefore, to authorize the adoption of rules to 
eliminate the specified entry barriers only if such rules are 
expressly authorized by provisions of the Act other than Section 
257. But see TheBlaze Comments at 10. We seek comment on our 
interpretation.
---------------------------------------------------------------------------

Initial Paperwork Reduction Act Analysis

    27. This document does not contain proposed new or revised 
information collection requirements subject to the Paperwork Reduction 
Act of 1995, Public Law 104-13 (44 U.S.C. 3501-3520). In addition, 
therefore, it does not contain any new or modified ``information burden 
for small business concerns with fewer than 25 employees'' pursuant to 
the Small Business Paperwork Relief Act of 2002, Public Law 107-198, 
see 44 U.S.C. 3506(c)(4).

A. Ex Parte Rules

    28. Permit-But-Disclose. This proceeding shall be treated as a 
``permit-but-disclose'' proceeding in accordance with the Commission's 
ex parte rules.\55\ 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 (i) list all persons attending or 
otherwise participating in the meeting at which the ex parte 
presentation was made, and (ii) 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.
---------------------------------------------------------------------------

    \55\ 47 CFR 1.1200 et seq.
---------------------------------------------------------------------------

B. Filing Requirements

    29. 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/.
     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.
    30. 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.
    31. 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).

C. Additional Information

    32. For additional information on this proceeding, contact Raelynn 
Remy or Calisha Myers of the Policy Division, Media Bureau, at 
[email protected], [email protected], or (202) 418-2120.

Initial Regulatory Flexibility Act Analysis

    33. As required by the Regulatory Flexibility Act of 1980, as 
amended (RFA),\56\ the Commission has prepared this present Initial 
Regulatory Flexibility Act 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).\57\ In addition, the NPRM and 
IRFA (or summaries thereof) will be published in the Federal 
Register.\58\
---------------------------------------------------------------------------

    \56\ 5 U.S.C. 603. The RFA, 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).
    \57\ 5 U.S.C. 603(a).
    \58\ Id.
---------------------------------------------------------------------------

A. Need for, and Objectives of, the Proposed Rules

    34. In the NPRM, we propose to adopt rules that prohibit certain 
practices used by some multichannel video programming distributors 
(MVPDs) in their negotiations for carriage of video programming that 
impede competition, diversity and innovation in the video marketplace. 
Specifically, we propose to prohibit the inclusion of:

[[Page 73376]]

(i) ``unconditional'' most favored nation (MFN) provisions; and (ii) 
unreasonable alternative distribution method (ADM) provisions in 
program.

B. Legal Basis

    35. The proposed action is authorized pursuant to sections 4(i), 
4(j), 157, 257, 303(r), 616 and 628 of the Communications Act of 1934, 
as amended, 47 U.S.C. 154(i), 154(j), 157, 257, 303(r), 536, and 548.

C. Description and Estimate of the Number of Small Entities to Which 
the Proposed Rules Will Apply

    36. 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.\59\ The RFA generally 
defines the term ``small entity'' as having the same meaning as the 
terms ``small business,'' ``small organization,'' and ``small 
governmental jurisdiction.'' \60\ In addition, the term ``small 
business'' has the same meaning as the term ``small business concern'' 
under the Small Business Act.\61\ A small business concern is one 
which: (i) Is independently owned and operated; (ii) is not dominant in 
its field of operation; and (iii) satisfies any additional criteria 
established by the SBA.\62\ Below, we provide a list of such small 
entities.
---------------------------------------------------------------------------

    \59\ 5 U.S.C. 603(b)(3).
    \60\ Id. 601(6).
    \61\ 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.'' Id.
    \62\ Id. 632.

 Wired Telecommunications Carriers
 Cable Television Distribution Services
 Cable Companies and Systems
 Cable System Operators
 Direct Broadcast Satellite (DBS)
 ServiceSatellite Master Antenna Television (SMATV) Systems, 
also known as Private Cable Operators (PCOs)
 Home Satellite Dish (HSD) Service
 Broadband Radio Service and Educational Broadband Service
 Fixed Microwave Services
 Open Video Systems
 Cable and Other Subscription Programming
 Small Incumbent Local Exchange Carriers
 Incumbent Local Exchange Carriers (ILECs)
 Competitive Local Exchange Carriers
 Competitive Access Providers (CAPs)
 Shared-Tenant Service Providers
 Other Local Service Providers
 Internet Publishing and Broadcasting and Web Search Portals
 Television Broadcasting

D. Description of Projected Reporting, Recordkeeping, and Other 
Compliance Requirements

    37. Reporting Requirements. The NPRM does not propose to adopt 
reporting requirements.
    38. Recordkeeping Requirements. The NPRM does not propose to adopt 
recordkeeping requirements.
    39. Other Compliance Requirements. The NPRM proposes to prohibit 
use of the following contract provisions in program carriage agreements 
between MVPDs and independent video programming vendors:
     Unconditional MFN provisions; and
     unreasonable ADM provisions.

E. Steps Taken To Minimize Significant Economic Impact on Small 
Entities and Significant Alternatives Considered

    40. 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): ``(i) 
The establishment of differing compliance or reporting requirements or 
timetables that take into account the resources available to small 
entities; (ii) the clarification, consolidation, or simplification of 
compliance and reporting requirements under the rule for such small 
entities; (iii) the use of performance, rather than design standards; 
and (iv) an exemption from coverage of the rule, or any part thereof, 
for small entities.'' \63\
---------------------------------------------------------------------------

    \63\ 5 U.S.C. 603(c)(1) through (c)(4).
---------------------------------------------------------------------------

    41. Although the rules proposed in the NPRM would apply to all 
MVPDs, including those that are small, we do not believe such rules 
would have a significant economic impact on a substantial number of 
small MVPDs. The record indicates that small MVPDs do not appear to 
obtain the kinds of contractual restrictions the proposed rules would 
proscribe. In addition, the NPRM seeks comment on what circumstances 
could justify waiver of the proposed rules. We note further that to the 
extent small MVPDs are aggrieved by contractual restrictions imposed by 
larger MVPDs, small MVPDs would have standing to seek relief by filing 
a program carriage complaint under our existing rules.\64\
---------------------------------------------------------------------------

    \64\ 47 CFR 76.1302(a).
---------------------------------------------------------------------------

    42. With regard to the impact on other small video programming 
distributors (such as online video distributors), and small video 
programming vendors (including independent content creators), based on 
the record, such small entities generally would benefit from Commission 
action addressing unconditional MFN and unreasonable ADM provisions. 
Because such entities likely would support the rules proposed in the 
NPRM, we find that no further analysis of alternatives on their behalf 
is necessary.

F. Federal Rules That May Duplicate, Overlap, or Conflict With the 
Proposed Rule

    43. None.
    44. We adopt this NPRM pursuant to the authority found in sections 
1, 4(i), 4(j), 157, 257, 303(r), 616 and 628 of the Communications Act 
of 1934, as amended, 47 U.S.C. 151, 154(i), 154(j), 157, 257, 303(r), 
536 and 548.

Federal Communications Commission.
Gloria J. Miles,
Federal Register Liaison Officer, Office of the Secretary.

Proposed Rules

    For the reasons discussed in the preamble, the Federal 
Communications Commission proposes to amend 47 CFR part 76 as follows:

PART 76 -- MULTICHANNEL VIDEO AND CABLE TELEVISION SERVICE

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

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

0
2. Section 76.1300 is amended by redesignating paragraphs (b), (c), 
(d), and (e) as paragraphs (c), (d), (e), and (g), and adding new 
paragraph (b) and paragraph (f) to read as follows:


Sec.  76.1300   Definitions.

* * * * *
    (b) Alternative distribution method provision. The term 
``alternative distribution method provision'' means a provision that 
prohibits or restricts a video programming vendor from exhibiting its 
programming on alternative, non-traditional video distribution 
platforms for a specified period of time following the programming's 
original linear airing, or until certain conditions are met.
* * * * *
    (f) Unconditional most favored nation provision. The term 
``unconditional most favored nation provision'' means a provision that 
entitles a multichannel

[[Page 73377]]

video programming distributor to contractual rights or benefits that an 
independent video programming vendor has offered or granted to another 
video programming distributor, without obligating the multichannel 
video programming distributor to accept any terms and conditions that 
are integrally related, logically linked, or directly tied to the grant 
of such rights or benefits in the other video programming distributor's 
agreement, and with which the multichannel video programming 
distributor can reasonably comply technologically and legally.
* * * * *
0
3. Section 76.1301 is amended by adding paragraphs (d) and (e) to read 
as follows:


Sec.  76.1301  Prohibited Practices.

* * * * *
    (d) Unconditional Most Favored Nation Provisions. No multichannel 
video programming distributor shall enter into an agreement with an 
independent video programming vendor that contains an unconditional 
most favored nation provision.
    (e) Unreasonable Alternative Distribution Method Provisions. No 
multichannel video programming distributor shall enter into an 
agreement with an independent video programming vendor that contains an 
unreasonable alternative distribution method provision.
    (1) The following alternative distribution method provisions shall 
be deemed to be presumptively unreasonable:
    (i) A provision that prohibits an independent video programming 
vendor from licensing content, for an extended time period or 
indefinitely, to an online video distributor that distributes content 
for free to consumers;
    (ii) A provision that prohibits an independent video programming 
vendor from licensing content, for any period of time, to an online 
video distributor that distributes content to paying subscribers;
    (iii) A provision that prohibits an independent video programming 
vendor from licensing content to an online video distributor unless or 
until such distributor meets conditions that are difficult to satisfy 
in a timely manner or are designed to undermine such distributor's 
ability to compete; or
    (iv) A provision that imposes any pecuniary or non-pecuniary 
penalty or adverse impact on an independent video programming vendor 
for the provision of its video programming to an online video 
distributor.
    (2) The following alternative distribution method provisions shall 
be deemed to be presumptively reasonable:
    (i) A provision that prohibits an independent video programming 
vendor from distributing programming, for which the multichannel video 
programming distributor has agreed to pay, to consumers for free over 
the Internet for a limited period after the programming's initial 
linear airing; and
    (ii) A provision that grants a multichannel video programming 
distributor the universally exclusive right to distribute an 
independent video programming vendor's content.

[FR Doc. 2016-25568 Filed 10-24-16; 8:45 am]
 BILLING CODE 6712-01-P