Legislation Extending and Amending Compulsory Copyright License for Satellite Delivered Superstations and Network Stations Enacted
After a fair amount of jurisdictional wrangling and two last minute changes, Congress passed the “Intellectual Property and Communications Omnibus Reform Act of 1999” (“IPCORA 99”) at the close of its legislative session on November 19, 1999, and the President signed the bill into law last week. Title I of IPCORA 99 is the “Satellite Home Viewer Improvement Act of 1999” (“SHVA II”) which amends and extends for an additional five years the existing compulsory copyright license set out in the Satellite Home Viewer Act (“SHVA I”). That license governs the delivery of superstations and distant network stations directly to satellite dish owners (“Direct-To-Home” or “DTH”). SHVA I was originally enacted in 1988 and was extended in 1994 until the end of this year. In addition to extending the satellite copyright license to December 31, 2004, SHVA II reduces associated license fees and subjects superstations and distant network stations to new rules covering syndicated exclusivity, network non-duplication and sports blackout. Signal strength measurements and eligibility standards for offering DTH subscribers distant network stations will also be analyzed and likely revised.
The most significant aspect of SHVA II relates to a newly established copyright license for the delivery of local network broadcast signals to DTH subscribers situated within the network affiliates’ local markets, defined as the station’s DMA and county of license (“Local-Into-Local”). SHVA II will permit satellite carriage of network affiliates to DTH subscribers within each network’s affiliate’s local market, subject to the FCC phase in of cable-like “must carry” and retransmission consent rules. The satellite carriers have a six-month grace period until May 29, 2000 to formally obtain retransmission consent for each local signal they wish to distribute. After the must carry rules are promulgated, effective January 1, 2002, local stations will have to choose between must carry and retransmission consent.
Various proposals for extending SHVA and establishing local-into-local service have been introduced and passed at various times. Because the issues involved copyright fees, must carry, program exclusivity, and cable competition, there were many disagreements among the broadcasters, DBS operators, C-Band carriers, legislators and regulators that delayed the legislation and made its final form impossible to predict. Indeed, after the House had passed a compromise bill this fall, the Senate deleted two controversial provisions before passing it as part of an appropriations bill. The two deletions, relating to loan guarantees for establishing rural local-into-local service, and an amendment that would specifically exclude on-line service providers from eligibility for the cable compulsory license, were made in order to insure timely passage.
The DBS carriers have stated that they are only able to or interested in providing local service in the larger television markets. The rural loan guarantee program was seen as necessary to help establish local-into-local service in the smaller and rural markets. There have been promises that the rural loan guarantees will be taken up in the next legislative session. In the next session it is also likely that on-line service providers will advance copyright legislation for Internet delivery of broadcast signals. The U.S. Copyright Office had earlier advised Congress that the online providers would not be eligible for the cable compulsory license. Some legislative amendment would be necessary before broadcast signals could legally be distributed over the Internet.
In addition to extending SHVA and amending provisions governing satellite delivery of superstations and distant network stations to dish owners, the FCC will initiate a host of new rulemakings (see below). While there is a general restriction on the delivery of distant network signals within a local affiliate’s Grade B contour, there is now a moratorium that would allow DTH subscribers (both C-band and DBS) that live within the Grade B contours to continue receiving distant network affiliate signals. Moreover, the entire C-band industry is exempt from the restrictions on qualification for distant networks such that all current (as of October 31, 1999) or former C-band subscribers would be eligible to receive distant network signals without regard to whether such subscribers can receive a network signal off-air.
The DBS carriers are already taking advantage of SHVA II by deploying local signals in the major markets, with rollouts to continue throughout next year. Full deployment may well depend on the outcome of the various rulemakings. The following provides more detail on the various statutory provisions, and a timetable of the required FCC rulemakings is included below.
Distant Network Signals and Superstations (the § 119 License)
SHVA II will:
- Extend the § 119 compulsory license for distant network signals and superstations to an additional five years until December 31, 2004 (§ 119 was scheduled to sunset December 31, 1999);
- Limit the satellite carriers to delivering no more than two distant signals of stations affiliated with a single network to a subscriber in any single day;
- Maintain the “unserved household” definition in the § 119 license limiting eligibility for distant network signals to only those homes that cannot receive a local network affiliate off-air (defined as a signal of Grade B strength, subject to new FCC rulemaking). The “Individual Location Longley-Rice” (“ILLR”) methodology is the legislatively chosen predictive model to be used by the carriers. The 90 day waiting period for subscribers switching from cable is eliminated;
- Provide prospectively a copyright liability moratorium (until December 31, 2004) for distant network service to DTH subscribers that can receive Grade B signals of local affiliates off-air if the particular DTH subscriber had been receiving distant network service on October 31, 1999, or had been terminated after July 11, 1998, the effective date of the Miami court order that began the shut-off process for many DBS and C-Band subscribers (see our advisories dated July 15 1998 and January 7, 1999). The moratorium is structured to allow subscribers to “remain eligible” for distant network signals. The Joint Statement from the conference Committee indicates that grandfathered status “is not transferable to a different carrier or a different type of dish or at a new address;”
- Provide an industry-wide exemption from the “unserved household” limitation for all C-Band satellite service subscribers who received C-Band services before October 31, 1999. (This would permit C-Band reception beyond the “moratorium” period described above);
- Exempt recreational vehicles and commercial trucks (not mobile homes) from the “unserved household” limitation to permit unrestricted reception of distant network signals by those entities upon compliance with documentation requirements;
- Maintain the prior prohibition on serving commercial establishments with distant networks and superstations by retaining language from SHVA I limiting the license to “private home viewing;”
- Reduce § 119 copyright fees from July 1, 1999 until the end of the license (without further adjustment) from the current 27¢ rate for all satellite-delivered distant signals to 18.9¢ for superstations and 14.85¢ for distant network stations;
- Apply a hybrid of the distant network and superstation provisions of the § 119 license to the national PBS satellite feed. Individual PBS affiliates remain protected under the distant network regime such that only “unserved households” are eligible to receive distant PBS stations by satellite throughout the five year term of the § 119 license. However, the new PBS “national feed” is treated like a superstation (available to all households), subject to the 14.85¢ license fee applicable to distant network stations, and unavailable after January 1, 2002, the date must-carry becomes effective for local-into-local service;
- Require the FCC to promulgate program exclusivity regulations to implement cable-like network nonduplication, syndex, and sports blackout protection for satellite-delivered distant network stations and superstations. These exclusivity rules may not be applicable to network stations if the rules would be technically infeasible or economically prohibitive by posing a “very serious economic threat to the health of the satellite carrier.” Availability of the § 119 license is conditioned on compliance with the exclusivity rules;
- Apply the individual location Longley-Rice model set forth by the FCC when it last considered the Grade B rulemaking, as that model may be amended over time, and direct the FCC to commence a rulemaking to establish an improved predictive model for reliably and presumptively determining the ability of individual locations to receive the signals, but insuring that such model takes into account terrain, building structures and other land cover variations;
- Require the FCC to evaluate and recommend to Congress any modifications to the Grade B signal reception standard for analog television signals, and recommend a digital signal standard for updating the license to encompass digital television broadcasting;
- Provide for signal intensity measurements on a “loser pays” basis, subject to new rules designed to eliminate any “undue burden;”
- Allow individual DTH subscribers to receive distant network signals by written request for a waiver that must be acted upon by the station in 30 days. If the station grants the waiver, or fails to act within 30 days, the subscriber is deemed an “unserved household” and eligible to receive a distant network affiliate;
- Allow existing and distant network stations and superstations to be distributed without any need for retransmission consent. The superstation must have been available by satellite before May 1, 1991, and on July 1, 1998. The satellite carrier must also comply with any applicable program exclusivity rules. Satellite delivery of a distant network station is exempt from retransmission consent only if the subscriber is unserved and outside the station’s local market;
- Exempt longstanding superstations that are now affiliated with new networks from the “unserved household” limitation.
- Make the amendments with respect to license fee reductions and the PBS national feed effective as of July 1, 1999. The other amendments affecting distant network and superstations are effective as of the date of enactment;
- Retain all distant signal reporting requirements.
Local Into Local Signals (the § 122 License)
SHVA II will:
- Provide a new § 122 compulsory copyright license, which is permanent and royalty-free, for the delivery of local network stations into local markets (defined as the station’s DMA and county of license). Unlike the § 119 License, the § 122 License is available for service to commercial establishments and applies to Mexican and Canadian broadcast signals. Satellite carriers must provide broadcasters a list of all local-into-local subscribers (alphabetical with street address, county and zip code, with monthly updates) to allow for enforcement of the § 122 restrictions;
- Impose phased-in must-carry requirements for any satellite carrier that provides at least one local signal in the station’s local market. The requirements would be imposed on a market-by-market basis. The FCC’s implementing rules (due within one year) should parallel those rules applicable to cable and will prohibit alterations to the signal carried; require carriage of local stations on contiguous channels (though not on any particular channel number); not require duplication; prohibit compensation for carriage, etc. Satellite carriers would have to be in compliance with the new must-carry requirements by January 1, 2002;
- Deem as copyright infringement violations of § 122 carriage and reporting requirements and delivery of local signals outside local markets. A station may file a complaint in federal court. Violations of regulatory/technical aspects of the must-carry provisions are to be brought by complaint at the FCC.
- Require satellite carriers to obtain retransmission consent for local-into-local transmissions within six months after enactment. After must-carry becomes effective, retransmission consent would not be required for those stations that elect must-carry;
- Provide expedited enforcement procedures at the FCC, with review in federal court in Virginia (or alternatively in Washington, D.C.), for violations of the retransmission consent requirements for local retransmissions. This expedited enforcement section sunsets on December 31, 2001;
- Require the FCC to commence a rulemaking that would require broadcasters to negotiate in good faith for retransmission consent and prohibit exclusive retransmission consent agreements with any multichannel distributor until January 1, 2006. These requirements would not prohibit “discriminatory” terms if such different terms and conditions were the result of competitive market place considerations.
If you would like a copy of the legislation, a redlined version of the affected provisions of the Copyright and Communications Acts, or a copy of the Joint Explanatory Statement of the Conference Committee, please contact us.
TIMETABLE FOR RULEMAKINGS AND REGULATIONS
FCC Retransmission Consent Rulemaking: Initiate within 45 days after enactment, to be completed within one year, to revise the regulations governing television broadcast stations' right to grant retransmission consent, with the directive from Congress that the FCC establish election time periods that correspond to cable’s and, until January 1, 2006, to prohibit television broadcast stations from engaging in exclusive agreements or failing to negotiate in good faith. Different terms and conditions are allowed if they are based on “competitive marketplace considerations.”
FCC Retransmission Consent Enforcement Rules: Establish within 60 days procedural rules for broadcast stations to enforce any violations of the retransmission consent provisions on an expedited basis.
FCC Must Carry Rulemaking: Complete rulemaking and establish within 180 days after enactment new must carry rules for satellite carriers delivering local signals into local markets comparable to cable must carry rules.
FCC Network Nonduplication, Syndicated Exclusivity, and Sports Blackout Rulemaking: Initiate rulemaking within 45 days after enactment, to be completed within one year, to establish network nonduplication, syndicated exclusivity, and sports blackout rules for superstations and network stations.
FCC Establishment of Improved Predictive Model: The Commission shall "take all actions necessary" to develop and prescribe by rule a predictive model within 180 days after enactment that will reliably and presumptively determine “unserved household” status for subscribers to distant network signals. The FCC is to rely on the "Individual Location Longley Rice" as the predictive model (with appropriate refinements as they become available, but now to include land cover, terrain and buildings) for an individual household's receipt of a Grade B signal strength for a particular network station.
FCC Review of Standards and Model: Within 1 year of enactment, the Commission is to complete an inquiry evaluating all possible standards and factors for determining eligibility to receive distant signals, including recommended modifications to the Grade B signal standard, or a recommended alternative standard, and make recommendations for an appropriate standard for digital signals.
FCC Local Signal Licensing and Report to Congress: Within one year “take all actions necessary” to resolve licensing for facilities that will deliver local broadcast signals to satellite dish owners (e.g., Northpoint’s terrestrial microwave local signal proposal using DBS frequencies). Not later than January 1, 2001, report to Congress the extent to which license and authorizations have facilitated delivery of local broadcast signals to dish owners.