[Federal Register: March 20, 1997 (Volume 62, Number 54)]
[Page 13396-13400]



Copyright Office
[Docket No. 97-1]

Revision of the Cable and Satellite Carrier Compulsory Licenses; 
Public Meetings

AGENCY: Copyright Office, Library of Congress.

ACTION: Notice of public meetings and request for comments.


SUMMARY: The Copyright Office, at the request of the Chairman of the 
Senate Judiciary Committee, is examining the copyright licensing of 
broadcast retransmissions for the purpose of recommending legislative 
changes to the Congress. The Office is announcing public meetings, and 
identifying issues for discussion, for the purpose of taking testimony 
from interested persons. This Notice describes the schedule and 
structure for the public meetings.

DATES: Public meetings will be held from May 6, 1997, through May 9, 
1997, in the CARP Hearing Room, LM 414, James Madison Memorial
Building, 101

   [PLEASE NOTE: This document contains the following corrected 
   information which is not in the original Federal Register Notices.

   DATES: Public meetings will be held from May 6, 1997, through May 9,
   1997, at the Postal Rate Commission, 1333 H Street, N.W., Third Floor,
   Washington, D.C.]

[[Page 13397]]

Independence Avenue, S.E., Washington, D.C. 20540.

TIMES: Each daily session will begin at 10 a.m. Persons wishing to 
testify should notify the Copyright Office in writing no later than 
close of business on April 15, 1997. Notices of intent to testify 
should be addressed to William Roberts, Senior Attorney, and may be 
sent by mail or by telefacsimile. The Office will notify each person 
expressing an intention to testify of the expected date and time of 
his/her testimony.

WRITTEN STATEMENTS AND REPLY COMMENTS: Each person wishing to testify 
must submit a formal written statement of his/her testimony no later 
than the close of business on April 18, 1997. Written statements will 
also be accepted from parties who do not wish to testify. Summaries of 
the formal written testimony, for purposes of oral testimony, may be 
submitted on the date of testimony. In addition, interested parties may 
submit written questions, for possible use by panel members of the 
Copyright Office during the course of meetings, no later than close of 
business on April 18, 1997.
    After the close of the meetings, interested parties may submit 
written reply comments to the testimony offered at the meetings, 
including any proposed legislative amendments, no later than close of 
business on June 3, 1997.

ADDRESSES: If delivered by hand, fifteen copies of written statements, 
questions, and reply comments should be brought to: Office of the 
General Counsel, Copyright Office, James Madison Memorial Building, 
Room LM-403, First and Independence Avenue, S.E., Washington, D.C. 
20540. If sent by mail, fifteen copies of written statements, 
questions, and comments should be sent addressed to Nanette 
Petruzzelli, Acting General Counsel, Copyright GCR, P.O. Box 70400, 
Southwest Station, Washington, D.C. 20024.

FOR FURTHER INFORMATION CONTACT: Nanette Petruzzelli, Acting General 
Counsel, or William Roberts, Senior Attorney for Compulsory Licenses. 
Telephone (202) 707-8380. Telefax: (202) 707-8366.



    On February 6, 1997, Senator Orrin Hatch, Chairman of the Committee 
on the Judiciary, United States Senate, sent a letter to the Register 
of Copyrights requesting the Copyright Office to conduct a global 
review of the copyright licensing regimes governing the retransmission 
of over-the-air broadcast signals. Senator Hatch requested the Office 
to report its findings to the Committee by May 1, 1997, and to develop 
policy options and legislative recommendations. The reporting date has 
now been extended, at the request of the Office, to August 1, 1997.
    In making his request, Senator Hatch identified several issues 
regarding the copyright implications of broadcast retransmissions which 
Warrant consideration. Specifically, these include extension of the 
compulsory copyright license created by the Satellite Home Viewer Acts 
of 1988 and 1994, and the disputes surrounding the implementation of 
that compulsory license and the so-called ``white area'' restriction 
for the retransmission of television network stations. Additionally, 
Senator Hatch asked the Office to consider possible harmonization of 
the cable and satellite carrier compulsory licenses of the Copyright 
Act, and the extension of those licenses to new technologies such as 
local retransmission of broadcast signals by satellite, retransmission 
of broadcast signals over the Internet and by the telephone companies, 
and new markets for public television.
    In discharging its task and making its report, Senator Hatch has 
encouraged the Copyright Office to conduct open public meetings to hear 
from interested parties and promote discussion in the hopes of 
establishing consensus solutions to these issues. Consequently, the 
Office is publishing this Notice to inform interested parties of the 
time and structure of such meetings, and how the Office plans to 
accomplish its task of reporting to the Senate Judiciary Committee.

Public Meetings

    Because both the cable and satellite carrier compulsory licenses 
implicate and affect the existence and profitability of a number of 
industries, the Copyright Office believes that input from these 
affected industries is critical to a complete report to the Congress. 
Consequently, the Office has determined that a process involving both 
written comments and open meetings is essential to gathering the 
necessary information. We are, therefore, announcing the following 
    The Office will conduct public meetings with interested parties in the 
CARP Hearing Room at the Copyright Office beginning on May 6, 1997,  
and running through the end of that week, if necessary.                                                                   
   [PLEASE NOTE: This document contains the following corrected 
   information which is not in the original Federal Register Notices.

   The Office will conduct public meetings with interested parties 
   at the Postal Rate Commission, 1333 H Street, N.W., Third Floor,
   Washington, D.C. beginning on May 6, 1997, and running through the
   end of that week, if necessary.] 

The format for these meetings will resemble the traditional Congressional
hearing model in that there will be panels of witnesses that will present 
testimony to a panel of Copyright Office staff, headed by the Register 
of Copyrights. The Register and Office staff will ask questions of the 
various persons who testify, and interested parties may submit written 
questions to the Office by April 18, 1997, which may be addressed to 
specific witnesses, or the witnesses as a whole. There are no 
guarantees that the Office will ask every written question that is 
    The public meetings are open to anyone. However, in order to 
testify, interested persons must inform the Office of their intention 
to testify no later than the close of business on April 15, 1997. 
Notification of intention to testify must be in written form, either by 
letter or notice, and must be in the possession of the Office by the 
close of business on April 15. Because of time constraints, and the 
need for the Office to schedule the panels of witnesses as soon as 
possible, it is recommended that persons wishing to testify deliver 
their notification by hand or facsimile transmission by the deadline. 
Notifications received after the April 15 deadline will not be 
accepted, and such person or persons will not be allowed to testify.
    The public meetings will begin at 10 a.m. each morning, and will 
continue until 5 p.m., unless otherwise directed by the Register of 
Copyrights. The Office will notify each witness who has filed a timely 
notice of intention to testify several days in advance of the date he/
she is expected to appear and offer testimony. The Office will also 
notify each witness of the other witnesses who will appear on his/her 
panel. Because of space limitations in the CARP Hearing Room, witnesses 
are encouraged to appear only on the date they are scheduled to offer 
    Witnesses may bring with them on the day of their testimony a 
written summary of their oral testimony. Witnesses who bring such 
written summaries are asked to provide fifteen copies of the written 
summaries for use by the Office and others in attendance at the 
    Transcription services of the public meetings will be provided by 
the Copyright Office. Those parties interested in obtaining transcripts 
of the meetings will need to purchase them from the transcription 

Written Statements

    All persons who notify the Copyright Office of their intention to 
testify must submit a written statement of their testimony by the April 
18, 1997, deadline. Because of time limitations, the Office encourages 
parties submitting written statements to deliver them to the

[[Page 13398]]

Office by hand or by overnight express mail on or before the April 18 
deadline. Telefacsimile transmissions of written statements will not be 
    Parties submitting written statements are encouraged to include any 
and all information that they consider relevant to the copyright 
licensing of broadcast retransmissions. Parties may also include any 
exhibits that they deem relevant. Fifteen copies of each written 
statement must be submitted by the deadline.
    There is no prescribed format for the written statements. Parties 
are encouraged to organize their testimony in as clear and readable 
form as possible, and to provide a glossary of technical terms used in 
the written statement.
    Parties who do not wish to appear at the public meetings are 
nonetheless permitted, and encouraged, to submit written statements by 
the April 18 deadline.

Reply Comments

    After the close of the public meetings, interested parties may 
submit comments in reply to the written statements and oral testimony. 
The reply phase is open to all parties, and is not limited to those who 
testified at the meetings and/or submitted written statements. As with 
the written statements, reply comments must be in the possession of the 
Copyright Office by the June 3, 1997, deadline. No facsimile 
transmissions of reply comments will be accepted.
    There is no format for reply comments, beyond the principles of 
clarity and a glossary of technical terms. Parties are also encouraged 
to offer any legislative proposals and/or amendments that they have at 
that time.

Scope of the Proceeding

    As Senator Hatch's letter makes clear, the Copyright Office will be 
conducting a global review of copyright licensing for the 
retransmission of broadcast signals, and in particular the cable and 
satellite carrier compulsory licenses. The Office will be confining its 
report to issues related to the retransmission of over-the-air 
broadcast signals. The Office will not be considering other matters, 
such as music licensing for television, the section 114 compulsory 
license for digital subscription transmission services, operation or 
administration of the Copyright Arbitration Royalty Panels, or matters 
of copyright liability for on-line service providers on the Internet.
    While the Office's report is confined to the retransmission of 
broadcast signals, this does not mean that the Office will focus solely 
on the cable and satellite carrier compulsory licenses as they 
currently exist. Rather, all matters involving copyright licensing of 
broadcast retransmissions will be considered, including basic questions 
such as whether there remains a need for compulsory licenses or whether 
new compulsory licenses should be added to the Copyright Act. More 
specifically, are compulsory licenses still justified? Perpetually? Or, 
can they be phased out? If compulsory licenses all justified, are the 
present configuration and present provisions fair and equitable? Or, 
should adjustments be made? If so, what should the changes be? Should 
the existing licenses be combined into one new license? Should new uses 
or services be combined in it? Or, should new uses and services be 
subject to separate and distinct licenses?
    In filing their written statements and offering oral testimony, the 
parties are encouraged to address any and all matters related to 
copyright licensing of broadcast retransmissions which they believe are 
relevant and important. In order to identify as many issues as possible 
from the outset, so as to permit full discussion, the Copyright Office 
met informally with representatives of the major industries affected by 
copyright licensing of broadcast retransmissions. Representatives 
included copyright owners of broadcast programming, cable and satellite 
carriers, broadcasters, the Public Broadcasting Service, and telephone 
companies. The purpose of these meetings was not to discuss policy or 
what the law should look like, but to identify the relevant issues.
    The Office welcomes discussion of any matters related to copyright 
licensing of broadcast retransmissions that interested parties deem 
important. The Office is, however, raising a number of issues below, 
identified during the course of its informal meetings, which we believe 
deserve attention during the course of the public meetings. We 
encourage interested parties to provide any and all information and 
opinions regarding these issues in both their written statements and 
oral testimony.

A. Basic Principles

    1. Need for compulsory licenses. As noted above, the fundamental 
principles of copyright licensing of broadcast retransmissions are part 
of this review. The cable industry has enjoyed a compulsory license for 
its broadcast retransmission since January 1, 1978, and the satellite 
industry has had a similar license since 1988. Do the conditions that 
warranted creation of those licenses continue, or have circumstances 
changed such that the need and/or configuration of those licenses 
should be altered? Is there a continuing need for the cable and 
satellite licenses, or should cable and/or satellite carriers be 
required to negotiate the licensing of broadcast programming in the 
free marketplace?
    2. Expansion and revision of compulsory licenses. In the 
alternative, should the compulsory licensing scheme of the Copyright 
Act be expanded? Should new types of broadcast retransmission services, 
such as open video systems provided by telephone companies and 
retransmission services via the Internet, have their own separate 
compulsory licenses? Or, is it better to place these services in the 
existing compulsory license structure? How could this be achieved?
    Furthermore, assuming that a compulsory licensing scheme should 
remain for broadcast retransmissions, should the cable and satellite 
licenses be unified into a single compulsory license applicable to all 
on providers? What are the practical barriers to such a 
single license? What are the advantages and disadvantages?
    If the cable and satellite carrier compulsory licenses remain 
separate, should the royalty rates paid under both licenses be 
equalized? Should this be done in the statute, or should the criteria 
for adjusting royalty rates be made the same for both licenses? Should 
the standard be the fair market value of the copyrighted works, or are 
there other or additional criteria that should be used?
    3. Must-carry. An important element of the structure of the cable 
compulsory license in 1976, and today, is the must-carry regulation of 
broadcast signals by the Federal Communications Commission. Must-carry 
regulation was reimposed by Congress in the 1992 Cable Act after it had 
been eliminated by the courts in the mid-1980's, and the 
constitutionality of the new must-carry regime is currently on appeal 
to the United States Supreme Court. The Copyright Office is aware that 
the outcome of that case has a direct impact on how broadcasters, and 
copyright owners, view the copyright licensing of broadcast 
retransmissions. Recognizing that the current appeal may not be the 
final word on must-carry (the Supreme Court could, for instance, find 
the concept of must carry to be constitutional but then find fault with 
the current must-carry rules), what impact might the Court's decision 
have on the current compulsory licensing scheme? If the Court upholds 
must-carry, should must-carry be extended to the satellite carrier 
compulsory license and the provision of local network

[[Page 13399]]

signals, as well as all other broadcast retransmission services seeking 
compulsory licensing? If the Court strikes down must-carry in whole or 
in part, as unconstitutional how should that affect a revised 
compulsory license scheme for broadcast retransmissions?

B. Cable Compulsory License

    1. Cable regulation and rates. The cable compulsory license, 
created in 1976, represents a number of compromises and requirements 
necessitated by the technological and regulatory framework in existence 
at that time. Since 1976, the cable industry has grown considerably, 
and the marketplace has changed. The license is based upon a regulatory 
structure of the Federal Communications Commission that has not been in 
existence for a number of years. Should the cable compulsory license be 
reformed to reflect the current marketplace and regulatory framework? 
Should the royalty payment scheme of the license, based upon each cable 
system's gross receipts for the retransmission of broadcast signals, be 
simplified so as to remove reliance upon outdated FCC rules? Is the per 
subscriber, per signal charge of the satellite carrier license an 
appropriate solution? If not, why not? Are there other solutions? Also, 
should the payout of royalties collected under the cable license be 
broadened to include compensation for network programming as well as 
nonnetwork programming?
    In addition to regulatory changes, the cable industry has 
experienced considerable marketplace change. The FCC's examination of 
the state of the cable industry in the last several years demonstrates 
that the cable industry has become far more concentrated and 
integrated. Should the cable compulsory license be amended to reflect 
the significant amount of mergers and acquisitions in the cable 
industry? If so, in what ways?
    2. Radio retransmissions. Retransmission of broadcast signals under 
the cable license includes both television and radio. The FCC is 
beginning its process of authorizing over-the-air radio services. Does 
the cable license need to be amended to accommodate retransmission of 
these services, and should all broadcast retransmission services be 
allowed to carry radio as well as television broadcast signals?
    3. New retransmission providers. In recent years, a number of new 
retransmission providers outside the ambit of traditional cable systems 
have sought inclusion in the cable compulsory license. These have 
included satellite carriers, wireless cable operators (which 
successfully sought statutory inclusion in 1994) and telephone 
companies providing broadcast retransmissions on video dialtone and 
open video system platforms. Is it appropriate to include these 
services, and other newcomers such a broadcast retransmissions via the 
Internet, within the cable compulsory license? If so, does the license 
require amendment to accommodate these operators, and in what fashion? 
Does the passive carrier exemption of 17 U.S.C. 111(a)(3) require 
amendment to accommodate these services? How can the cable license be 
amended so that all users of the license are in parity with one another 
in terms of the signals that they are permitted to provide and the 
royalty amounts they pay for those signals? Should there be economic 
and/or regulatory caps on the number of distant broadcast signals that 
may be carried, or should all signals be paid for at the same rates?
    Finally, should the existence of the cable compulsory license 
continue in perpetuity, or should the license be phased-out after some 
period of time? Or, in the alternative, should the license be made 
periodic so that it is a subject to renewal every certain number of 
years, such as the satellite carrier compulsory license?

C. Satellite Carrier Compulsory License

    1. White area restriction. One of the major motivating factors for 
requesting the Copyright Office to consider the compulsory licensing 
scheme for broadcast retransmissions consists of certain problems that 
have arisen in the operation of the satellite carrier compulsory 
license. This is especially so since the license is slated to expire at 
the end of 1999, and Congress will need to consider whether it should 
be extended, and if so, under what conditions. Specifically, much of 
the controversy has centered on the network territorial provisions of 
the Satellite Home Viewer Act, commonly known as the ``white area'' 
restriction. The current satellite carrier license does not allow 
satellite carriers to make use of the license for network signals for 
subscribers who do not reside in unserved households. An ``unserved 
household'' is defined as one that cannot receive a signal of grade B 
intensity, using a conventional rooftop antenna, from the local network 
affiliate, and has not received the local network affiliate through a 
subscription to cable services within the previous ninety days.
    Is the white area restriction of the satellite license still 
necessary, or should satellite carriers be permitted to provide network 
signals to all their subscribers? Should the white area restriction 
remain in place for satellite carriers who wish to provide a subscriber 
with a distant network affiliate, but not apply to satellite carriers 
who provide retransmission of local network affiliates to their 
subscribers? If so, how should a local network affiliate be defined? 
Should a satellite carrier be permitted to provide retransmission of a 
network affiliates to subscribers who reside within the Designated 
Market Area of the affiliate, or is there a better way to determine 
local area?
    There are a number of other issues surrounding the white area 
restriction. The purpose of the restriction is to allow network 
broadcasters to preserve the exclusivity of their programming in their 
market. Is it now possible, and appropriate, to impose exclusivity 
protection upon satellite carriers through FCC regulation (syndicated 
exclusivity and network non-duplication) rather than through the 
copyright statute? If the white area restriction remains, is the grade 
B signal intensity still an appropriate measure? Should another 
standard be adopted, such as picture quality? If picture quality is 
appropriate, how can that be enforced as a legal standard for 
determining copyright infringement? How can subscribers who cannot have 
a conventional rooftop antenna receive network signals from their 
satellite carrier? Likewise, can persons who reside and travel in 
mobile homes receive network service? What is the justification for the 
90 day waiting period from any subscription to a cable system that 
provides the signal of a primary network station affiliated with that 
network, and should that provision be eliminated from the statute?
    A possible solution to difficulties surrounding the white area 
provision is an adjustment in royalty rates designed to compensate 
local network affiliate broadcasters for the loss of viewership to 
distant network signals. In essence, subscribers who reside within the 
service area of a network affiliate, and desire to receive the signal 
of a distant network affiliate, can pay a surcharge for the privilege 
of receiving that distant network affiliate. The monies generated by 
the surcharge would be paid to the network affiliates. Is this a viable 
option and, if so, how should the surcharge monies be collected and who 
should administer their payment?

[[Page 13400]]

    Finally, with respect to satellite subscribers who have their 
service of network signals disconnected due to the white area 
restriction, what means of redress can they be afforded to determine 
that termination of their service was accurate and required? Can the 
subscriber require that either the satellite carrier terminating 
service, or the network affiliate challenging service, conduct a test 
at his/her household to determine if he/she is eligible for network 
service? Who should pay for such test and how should it be 
administered? What should be the appropriate standards of the test? If 
a test is created, should subscribers who currently receive network 
signals be grandfathered in their receipt of those signals? Should the 
matter of a subscriber's eligibility to receive network service from a 
satellite carrier be a matter of private determination between 
broadcasters and satellite carriers, or should a government agency make 
the determination?
    Another area of recent interest is the enforcement of the white 
area restriction. If such a restriction continues, how can it be more 
economically and efficiently enforced? Are there better ways to 
identify which subscribers may receive network signals under the 
satellite license, and those who are not eligible? Should the remedies 
for copyright infringement be amended to provide for additional and/or 
different remedies for violations of the white area restriction?
    2. Other issues. Aside from the white area restriction, other areas 
of the satellite carrier compulsory license warrant consideration. 
Network signals are currently paid for at a lower royalty rate than 
superstation signals. Should the disparity be eliminated, so that all 
signals are paid for at the same rate? Should there be special 
provision for retransmission or transmission of a national satellite 
feed of the Public Broadcasting Service, and a separate royalty rate 
for this signal? What should the rate or rates be?
    The satellite carrier license will expire at the end of 1999. 
Should the license be extended on a permanent basis, or is temporary 
extension still an appropriate solution? If an extension is temporary, 
what mechanisms can be put into place to encourage a smooth and 
efficient transition into a free marketplace system? Is collective 
administration of copyrighted broadcast programming an appropriate 
solution, and, if so, who should administer such a system?
    The Copyright Office welcomes and encourages response and 
discussion of these issues, as well as any other related matters 
interested parties deem relevant and important.

    Dated: March 17, 1997.
Marybeth Peters,
Register of Copyrights.
[FR Doc. 97-7091 Filed 3-17-97; 2:51 pm]

Corrected version 5/1/97