[Federal Register: July 20, 2005 (Volume 70, Number 138)]

[Proposed Rules]               

[Page 41650-41652]

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LIBRARY OF CONGRESS



Copyright Office



37 CFR Parts 201 and 256



[Docket No. 2005-2 CARP CRA]



 

Adjustment of Cable Statutory License Royalty Rates



AGENCY: Copyright Office, Library of Congress.



ACTION: Notice of proposed rulemaking.



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SUMMARY: The Copyright Office of the Library of Congress is submitting 

for public comment a settlement proposal for the adjustment of certain 

royalty rates for use of the cable statutory license.



DATES: Comments and Notices of Intent to Participate are due by August 

19, 2005.



ADDRESSES: If hand delivered by a private party, an original and five 

copies of a comment and a Notice of Intent to Participate should be 

brought to Room LM-401 of the James Madison Memorial Building between 

8:30 a.m. and 5 p.m. and the envelope should be addressed as follows: 

Office of the General Counsel/CARP, U.S. Copyright Office, James 

Madison Memorial Building, Room LM-401, 101 Independence Avenue, S.E., 

Washington, DC 20559-6000. If delivered by a commercial courier, an 

original and five copies of a comment and a Notice of Intent to 

Participate must be delivered to the Congressional Courier Acceptance 

Site located at 2nd and D Streets, N.E., between 8:30 a.m. and 4 p.m. 

The envelope should be addressed as follows: Office of the General 

Counsel/CARP, Room LM-403, James Madison Memorial Building, 101 

Independence Avenue, S.E., Washington, DC. If sent by mail (including 

overnight delivery using U.S. Postal Service Express Mail), an original 

and five copies of a comment and a Notice of Intent to Participate 

should be addressed to: Copyright Arbitration Royalty Panel (CARP), 

P.O. Box 70977, Southwest Station, Washington, DC 20024. Comments and 

Notices of Intent to Participate may not be delivered by means of 

overnight delivery services such as Federal Express, United Parcel 

Service, etc., due to delays in processing receipt of such deliveries.



FOR FURTHER INFORMATION CONTACT: Tanya M. Sandros, Associate General 

Counsel, or Gina Giuffreda, Attorney-Advisor, Copyright Arbitration 

Royalty Panel (CARP), P.O. Box 70977, Southwest Station, Washington, 

D.C. 20024. Telephone: (202) 707-8380. Telefax (202) 252-3423.



SUPPLEMENTARY INFORMATION:



I. Background



    Section 111 of the Copyright Act, 17 U.S.C., creates a statutory 

license for cable systems that retransmit to their subscribers over-

the-air broadcast signals. Royalty fees for this license are calculated 

as percentages of a cable system's gross receipts received from 

subscribers for receipt of broadcast signals. A cable system's 

individual gross receipts determine the applicable percentages. These 

percentages, and the gross receipts limitations, are published in 37 

CFR part 256 and are subject to adjustment at five-year intervals. 17 

U.S.C. 801(b)(2)(A) & (D).\1\ This is a window year for such an 

adjustment.

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    \1\ Unless otherwise noted, all references are to chapter 8 of 

title 17 of the United States Code as in effect prior to May 31, 

2005, the effective date of the Copyright Royalty and Distribution 

Reform Act of 2004.

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    A cable rate adjustment is initiated by the filing of a petition 

from a party with a significant interest in the rates. The Library 

received two such petitions. The



[[Page 41651]]



first was filed on January 10, 2005, on behalf of the Office of the 

Commissioner of Baseball, the National Football League, the National 

Basketball Association, the Women's National Basketball Association, 

the National Hockey League, and the National Collegiate Athletic 

Association (collectively, the ``Joints Sports Claimants'') and the 

Motion Picture Association of America, Inc., its member companies and 

other producers and/or distributors of syndicated television programs 

(collectively, the ``Program Suppliers''). This petition requested that 

the Copyright Office commence a proceeding to adjust the cable 

compulsory license royalty rates set forth in 37 CFR 256.2. On April 

29, 2005, the Office received a second petition from the National Cable 

& Telecommunications Association (hereinafter, ``NCTA''), echoing the 

first petitioners' request for a rate adjustment proceeding to adjust 

the rates in Sec.  256.2. Specifically, NCTA asked that the rate 

adjustment proceeding ``adjust upward the gross receipts limitations 

currently specified in 37 CFR 256.2 to reflect national monetary 

inflation and to adjust downward the rates established in [section] 

111(d)(1)(B),'' and that it reconsider and ``adjust downward the rates 

currently specified in 37 CFR 256.2(c) and (d) (the 3.75% rate and the 

`syndex surcharge').''

    In response to the first petition and before receipt of the second 

one, the Library published a Federal Register notice seeking comment on 

the Joint Sports/Program Suppliers' petition and directing interested 

parties to file a Notice of Intent to Participate in a Copyright 

Arbitration Royalty Panel (``CARP'') proceeding. 70 FR 16306 (March 30, 

2005). The notice also designated a 30-day period to enable the parties 

to negotiate a new rate schedule. 37 CFR 251.63(a).

    In accordance with the March 30 notice, the Office received on June 

30, 2005, one agreement, submitted jointly by the NCTA, the Joint 

Sports Claimants, the Program Suppliers, the Canadian Claimants, the 

Public Television Claimants, the National Association of Broadcasters, 

Broadcast Music, Inc., the American Society of Composers, Authors & 

Publishers, SESAC, Inc., and the Devotional Claimants (``Settling 

Parties''), representing all of the parties who filed notices of intent 

to participate in this proceeding. The agreement proposes amending the 

basic royalty rates and the gross receipts limitations, the regulations 

governing the filing of the statements of account to reflect these 

changes, and proposes that these changes become effective beginning 

with the second semiannual accounting period of 2005. The agreement 

also notes that the syndex rates are not being adjusted for the new 

license period.

    However, the Settling Parties have yet to reach an agreement on 

whether or how to adjust the 3.75 rate set forth in Sec.  256.2(c) of 

title 37 of the CFR. Thus, the Settling Parties continue to consider 

these rates and will notify the Office, on or before August 10, 2005, 

as to whether they will seek adjustments to the 3.75 rate.

    In the meantime, the Settling Parties have asked that the Librarian 

adopt the agreed-upon rates in accordance with the regulations 

governing a rate adjustment proceeding. The relevant rule provides 

that:



     the Librarian may, upon the request of the parties, submit the 

agreed upon rate to the public in a notice-and-comment proceeding. 

The Librarian may adopt the rate embodied in the proposed settlement 

without convening an arbitration panel, provided that no opposing 

comment is received by the Librarian from a party with an intent to 

participate in a CARP proceeding.



37 CFR 251.63(b). This Federal Register notice fulfills the notice and 

comment requirement of Sec.  251.63(b).



II. Proposed Rates and Gross Receipts Limitations



    The June 30 petition proposes specific adjustments to the cable 

license royalty rates, pursuant to 17 U.S.C. 801(b)(2)(A), and the 

gross receipts limitations, pursuant to 17 U.S.C. 801(b)(2)(D). The 

details of the adjustments are as follows.

    With respect to rates, the joint proposal raises the basic (or 

minimum) fee for providing broadcast stations from .956 of 1 per centum 

to 1.013 of 1 per centum of gross receipts for the privilege of further 

transmitting any non-network programming of a primary transmitter in 

whole or in part beyond the local service area of such primary 

transmitter; the fee for the first distant signal equivalent from .956 

of 1 per centum to 1.013 of 1 per centum of gross receipts; the fee for 

the second, third, and fourth distant signal equivalents from .630 of 1 

per centum to .668 of 1 per centum of gross receipts; and the fee for 

the fifth distant signal equivalent and each distant signal equivalent 

thereafter, from .296 of 1 per centum to .314 of 1 per centum of gross 

receipts.

    With respect to the gross receipts limitations which determine the 

size of a cable system (small, medium or large) and the royalty fee 

percentages that apply to those characterizations, the joint proposal 

puts forward increases as well. The gross receipts threshold for 

determining when a cable system is a small system would be raised from 

$98,600 to $137,100. Medium-sized cable systems have two methods of 

calculating their royalties, depending upon which side of the 

limitation threshold their gross receipts result. That threshold would 

be raised from $189,800 to $263,800, with the minimum reportable gross 

receipts over $263,800 being raised from $7,400 to $10,400. Finally, 

the gross receipts limitation for determining a large cable system 

would be raised from $379,600 to $527,600.

    The joint proposal establishes July 1, 2005, as the effective date 

of these rates, meaning that they would apply to royalty calculations 

and payments made by cable systems beginning with the second accounting 

period of 2005.



III. Proposed Rulemaking



    As noted above, the Library is publishing the terms of the joint 

proposal as proposed amendments to parts 201 and 256 of its rules. Any 

party who wishes to challenge these proposed rules must submit its 

written comments to the Librarian of Congress no later than close of 

business on August 19, 2005. The content of the written challenge 

should describe the party's interest in this proceeding, the proposed 

rule or rules that the party finds objectionable, and the reasons for 

the challenge.

    In addition, any party submitting written challenges must also 

submit an accompanying Notice of Intent to Participate in a CARP 

proceeding to adjust the cable rates and gross receipts limitations. It 

should be understood that anyone who challenges the proposed rules must 

be willing to fully participate in a CARP proceeding and have a 

significant interest in the adjustment of the rates. Failure to submit 

a Notice of Intent to Participate will preclude an interested party 

from participating in this proceeding and will preclude consideration 

of his or her written challenge. Any interested party that does file a 

Notice of Intent to Participate will be notified as to when the CARP 

proceeding will commence and when written direct cases will be due.



List of Subjects



37 CFR Part 201



    Copyright, Procedures.



37 CFR Part 256



    Cable television, Royalties.



    For the reasons set forth in the preamble, the Library proposes to 

amend 37 CFR parts 201 and 256 as follows:



[[Page 41652]]



PART 201-GENERAL PROVISIONS



    1. The authority citation for part 201 continues to read as 

follows:



    Authority: 17 U.S.C. 702



Sec.  201.17 Statements of Account covering compulsory licenses for 

secondary transmissions by cable systems.



    2. Section 201.17 is amended as follows:

    a. In paragraph (d)(2), by removing ``$379,600'' each place it 

appears and adding ``$527,600'' in its place;

    b. In paragraph (e)(12), by removing ``$98,600'' and adding 

``$137,100'' in its place; and

    c. In paragraph (g)(2)(ii), by removing ``0.956'' and adding 

``1.013'' in its place.



PART 256-ADJUSTMENT OF ROYALTY FEE FOR CABLE COMPULSORY LICENSE



    3. The authority citation for part 256 continues to read:



    Authority: 17 U.S.C. 702, 802



Sec.  256.2 Royalty fee for compulsory license for secondary 

transmission by cable systems.



    4. Section 256.2 is amended as follows:

    a. In paragraph (a), by removing the phrase ``the second semiannual 

accounting period of 2000'' and adding the phrase ``the second 

semiannual accounting period of 2005'' in its place;

    b. In paragraph (a)(1), by removing ``.956'' and adding ``1.013'' 

in its place;

    c. In paragraph (a)(2), by removing ``.956'' and adding ``1.013'' 

in its place;

    d. In paragraph (a)(3), by removing ``.630'' and adding ``.668'' in 

its place;

    e. In paragraph (a)(4), by removing ``.296'' and adding ``.314'' in 

its place;

    f. In paragraph (b), by removing the phrase ``the second semiannual 

accounting period of 2000'' and adding the phrase ``the second 

semiannual accounting period of 2005'' in its place;

    g. In paragraph (b)(1), by removing ``$189,800'' each place it 

appears and adding ``$263,800'' in its place, and by removing 

``$7,400'' and adding ``$10,400'' in its place; and

    h. In paragraph (b)(2), by removing ``$189,800'' each place it 

appears, and adding ``$263,800'' in its place, and by removing 

``$379,600'' each place it appears and adding ``$527,600'' in its 

place.



    Dated: July 14, 2005

Tanya M. Sandros,

Associate General Counsel.

[FR Doc. 05-14270 Filed 7-19-05; 8:45 am]