Closed Captioning of Video Programming, 1654-1661 [E8-31446]

Agencies

• FEDERAL COMMUNICATIONS COMMISSION

[Federal Register Volume 74, Number 8 (Tuesday, January 13, 2009)]
[Proposed Rules]
[Pages 1654-1661]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-31446]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 79

[CG Docket No. 05-231; FCC 08-255]


Closed Captioning of Video Programming

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: In this document, the Commission seeks comment on the 
application of the closed captioning rules to digital broadcasting, 
specifically to broadcasters that choose to use their digital allotment 
to multicast several streams of programming. The Commission's rules 
exempt video programming channels that produced annual gross revenues 
of less than $3 million during the previous calendar year from the 
Commission's closed captioning obligations. The Commission did not 
determine what constitutes a ``channel'' for purposes of satisfying 
this self-implementing exemption. The Commission therefore seeks 
comment on issues related to, for purposes of this exemption, whether 
each programming stream on a multicast signal constitutes a separate 
channel, or whether the broadcaster's entire operations attributable to 
its digital allotment should be considered one channel.

DATES: Comments are due on or before February 12, 2009. Reply comments 
are due on or before February 27, 2009.

ADDRESSES: Interested parties may submit comments identified by CG 
Docket No. 05-231, by any of the following methods:
     Electronic Filers: Comments may be filed electronically 
using the Internet by accessing the Commission's Electronic Comment 
Filing System (ECFS), through the Commission's Web site: https://
www.fcc.gov/cgb/ecfs/, or the Federal eRulemaking Portal: https://
www.regulations.gov. Filers should follow the instructions provided on 
the Web site for submitting comments. For ECFS filers, in completing 
the transmittal screen, filers should include their full name, U.S. 
Postal Service mailing address, and CG Docket No. 05-231. Parties also 
may submit an electronic comment by Internet e-mail. To get filing 
instructions, filers should send an e-mail to ecfs@fcc.gov, and include 
the following words in the body of the message, ``get form .'' A sample form and directions will be sent in response.
     Paper filers: Parties who choose to file by paper must 
file an original and four copies of each filing. Filings can be sent by 
hand or messenger delivery, by commercial overnight courier, or by 
first-class or overnight U.S. Postal Service mail (although the 
Commission continues to experience delays in receiving U.S. Postal 
Service mail). All filings must be addressed to the Commission's 
Secretary, Office of the Secretary, Federal Communications Commission.
     The Commission's contractor will receive hand-delivered or 
messenger-delivered paper filings for the Commission's Secretary at 236 
Massachusetts Avenue, NE., Suite 110, Washington, DC 20002. The filing 
hours at this location are 8 a.m. to 7 p.m. All hand deliveries must be 
held together with rubber bands or fasteners. Any envelopes must be 
disposed of before entering the building.
     Commercial Mail sent by overnight mail (other than U.S. 
Postal Service Express Mail and Priority Mail) must be sent to 9300 
East Hampton Drive, Capitol Heights, MD 20743.
     U.S. Postal Service first-class, Express, and Priority 
mail should be addressed to 445 12th Street, SW., Washington, DC 20554.
     People with Disabilities: To request materials in 
accessible formats for people with disabilities (Braille, large print, 
electronic files, audio format), send an e-mail to fcc504@fcc.gov or 
call the Consumer and Governmental Affairs Bureau at (202) 418-0530 
(voice), (202) 418-0432 (TTY).
    For detailed instructions for submitting comments and additional

[[Page 1655]]

information on the rulemaking process, see the SUPPLEMENTARY 
INFORMATION section of this document.

FOR FURTHER INFORMATION CONTACT: Amelia Brown, Consumer and 
Governmental Affairs Bureau, Disability Rights Office at (202) 418-2799 
or e-mail at Amelia.Brown@fcc.gov.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Closed 
Captioning of Video Programming; Closed Captioning Requirements for 
Digital Television Receivers, Notice of Proposed Rulemaking (2008 
Digital Closed Captioning NPRM), document FCC 08-255, adopted November 
3, 2008, and released November 7, 2008, in CG Docket No. 05-231, 
seeking comment on matters concerning Sec.  79.1(d)(12) of the 
Commission's rules and digital multicast channels. The full text of FCC 
08-255 and copies of any subsequently filed documents in this matter 
will be available for public inspection and copying during regular 
business hours at the FCC Reference Information Center, Portals II, 445 
12th Street, SW., Room CY-A257, Washington, DC 20554. FCC 08-255 and 
copies of subsequently filed documents in this matter may also be 
purchased from the Commission's duplicating contractor at Portals II, 
445 12th Street, SW., Room CY-B402, Washington, DC 20554. Customers may 
contact the Commission's duplicating contractor at its Web site, http:/
/www.bcpiweb.com, or by calling 1-800-378-3160. FCC 08-255 can also be 
downloaded in Word or Portable Document Format (PDF) at: https://
www.fcc.gov/cgb/dro/caption.html. Parties who choose to file by paper 
should also submit their comments on compact disc. The compact disc 
should be submitted, along with three paper copies, to: Traci Randolph, 
Consumer and Governmental Affairs Bureau, Disability Rights Office, 445 
12th Street, SW., Room 3-C425, Washington, DC 20554. Such submission 
should be on a compact disc formatted in an IBM compatible format using 
Word 2003 or a compatible software. The compact disc should be 
accompanied by a cover letter and should be submitted in ``read only'' 
mode. The compact disc should be clearly labeled with the commenter's 
name, proceeding (CG Docket No. 05-231), type of pleading (comment or 
reply comment), date of submission, and the name of the electronic file 
on the compact disc. The label also should include the following 
phrase: ``CD-Rom Copy--Not an Original.'' Each compact disc should 
contain only one party's pleadings, preferably in a single electronic 
file. In addition, commenters filing by paper must send a compact disc 
copy to the Commission's duplicating contractor at Portals II, 445 12th 
Street, SW., Room CY-B402, Washington, DC 20554.

Initial Paperwork Reduction Act of 1995 Analysis

    This document does not contain proposed information collection 
requirements subject to the Paperwork Reduction Act of 1995, Public Law 
104-13. In addition, therefore, it does not contain any proposed 
information collection 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).

Synopsis

    1. As the nation transitions from analog to digital broadcasting, 
the video programming and broadcasting landscape will change 
substantially. With analog broadcasting, broadcasters use their 
spectrum allocation to provide programming on a single channel. With 
digital broadcasting, broadcasters may use their digital allotment to 
multicast several streams of programming, known as ``multicasting.'' 
Section 79.1(d)(12) of the Commission's rules exempts video programming 
channels that produced annual gross revenues of less than $3 million 
during the previous calendar year from the Commission's closed 
captioning obligations. The Commission seeks comment on the application 
of Sec.  79.1(d)(12) of the Commission's rules to digital broadcasting.
    2. In 1997, when the Commission adopted the exemption for channels 
producing less than $3 million in revenues, it specified that 
``[a]nnual gross revenues shall be calculated for each channel 
individually based on revenues received in the preceding calendar year 
from all sources related to the programming on that channel.'' The 
Commission did not determine, however, what constitutes a ``channel'' 
for purposes of satisfying this self-implementing exemption. The 
Commission seeks comment on whether, for purposes of Sec.  79.1(d)(12) 
of the Commission's rules, each programming stream on a multicast 
signal constitutes a separate channel, or whether the broadcaster's 
entire operations attributable to its digital allotment should be 
considered one channel.
    3. Under the Commission's rules, programming that is already 
captioned and delivered to a broadcaster for airing must be aired with 
the captions intact, regardless of the multicast stream on which the 
programming airs, pursuant to the pass through rule. Given the pass 
through rule, it is likely that much of the programming delivered to 
broadcasters for airing on multicast streams will already be captioned, 
especially if it is programming provided by a network programmer, even 
if Sec.  79.1(d)(12) of the Commission's rules applies to each 
multicast channel. The Commission seeks comment on what percentage of 
programming that airs on multicast streams, other than the main stream, 
is network programming, and how much of that programming is already 
captioned.
    4. The Commission seeks comment on whether individual programming 
streams should not be considered separate channels for purposes of 
calculating revenues for purposes of Sec.  79.1(d)(12) of the 
Commission's rules. In such circumstances, digital broadcasters would 
be exempt from the Commission's requirements under Sec.  79.1(d)(12) of 
the Commission's rules only if their overall operations, taking into 
account all activities on all ``streams,'' received less than $3 
million in revenues. The Commission seeks comment on the relative 
merits of this approach and its practical effects, including how this 
determination might affect program diversity, the airing of locally-
originated programming, or the airing of other kinds of programming 
that may afford little or no economic return. The Commission also seeks 
comment on whether this approach may result in an increase in the 
number of petitions for exemption from the closed captioning 
requirements under the ``undue burden'' standard set forth in Sec.  
79.1(f) of the Commission's rules.
    5. The Commission seeks comment on whether the $3 million revenue 
amount is a reasonable threshold for determining if secondary multicast 
streams should be exempt from the closed captioning requirements, or 
whether a smaller figure is appropriate and, if so, what that amount 
should be.
    6. The Commission seeks comment on whether it is appropriate to 
adopt something other than a fixed revenue threshold for determining 
whether secondary multicast streams must be captioned. For example, 
comment is sought on whether the captioning requirements should be tied 
to a formula that considers the number of programming streams being 
offered (or some other variable), such as that used for determining a 
multicasting broadcaster's children's television programming 
requirements. Finally, the Commission seeks comment on similar 
alternatives for applying captioning

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requirements to multicast program streams.

Initial Regulatory Flexibility Certification

    7. As required by the Regulatory Flexibility Act of 1980, as 
amended (RFA), the Commission has prepared this present Initial 
Regulatory Flexibility Analysis (IRFA) of the possible significant 
economic impact on a substantial number of small entities by the 
policies and rules proposed in this 2008 Digital Closed Captioning 
NPRM. See 5 U.S.C. 603. 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 on the 2008 Digital Closed 
Captioning NPRM provided in paragraph 43 of the Item. The Commission 
will send a copy of the 2008 Digital Closed Captioning NPRM, including 
this IRFA, to the Chief Counsel for Advocacy of the Small Business 
Administration (SBA). See 5 U.S.C. 603(a).

Need for, and Objectives of, the Proposed Rules

    8. The Commission initiates this review relating to closed 
captioning in anticipation of the transition to digital television 
(DTV) by full power broadcasters, which will occur on February 18, 
2009. This rulemaking proceeding proposes several options for the 
appropriate treatment of digital broadcasters that choose to use their 
digital allotment to multicast several streams of programming (known as 
``multicasting''). In light of this new broadcasting environment, the 
2008 Digital Closed Captioning NPRM proposes several options for 
determining the closed captioning obligations for multicasting 
broadcasters. The 2008 Digital Closed Captioning NPRM seeks comment on 
Sec.  79.1(d)(12) of the Commission's rules, which exempts from the 
closed captioning obligations video programming channels that produced 
annual gross revenues of less than $3 million during the previous 
calendar year. 47 CFR 79.1(d)(12). In order to determine whether each 
stream of a digital broadcaster's multicast operation must be 
captioned, the Commission proposes several possible alternatives and 
the possible outcomes to each alternative.
    9. The proposals set forth in the 2008 Digital Closed Captioning 
NPRM, for which comment is sought, contemplate as possible outcomes the 
following: Treat each multicast stream as a separate channel and 
calculate their revenues separately; treat each multicast stream as a 
separate channel and calculate their revenues separately, but decrease 
the revenue threshold for determining whether the non-main programming 
streams must close caption; treat individual programming streams as one 
channel, in which case the revenues would be aggregated for purposes of 
determining if the exemption in Sec.  79.1(d)(12) of the Commission's 
rules applies; or, impose a new non-revenue approach for deciding how 
much programming must be captioned on multicast streams.

Legal Basis

    10. The authority for this proposed rulemaking is contained in 
sections 4(i), 303(r) and 713 of the Communications Act of 1934, as 
amended, 47 U.S.C. 154(i), 303(r) and 613.

Description and Estimate of the Number of Small Entities Impacted

    11. The RFA directs the Commission to provide a description of and, 
where feasible, an estimate of the number of small entities that will 
be affected by the rules. 5 U.S.C. 604(a)(3). The RFA generally defines 
the term ``small entity'' as having the same meaning as the terms 
``small business,'' ``small organization,'' and ``small business 
concern'' under section 3 of the Small Business Act. 5 U.S.C. 601(6). 
Under the Small Business Act, a small business concern is one which: 
(1) Is independently owned and operated; (2) is not dominant in its 
field of operation; and (3) satisfies any additional criteria 
established by the SBA. 5 U.S.C. 632.
    12. Nationwide, there are a total of approximately 22.4 million 
small businesses, according to SBA data. See SBA, Programs and 
Services, SBA Pamphlet No. CO-0028, at page 40 (July 2002). A ``small 
organization'' is generally ``any not-for-profit enterprise which is 
independently owned and operated and is not dominant in its field.'' 5 
U.S.C. 601(4). Nationwide, as of 2002, there were approximately 1.6 
million small organizations. ``Independent Sector, The New Nonprofit 
Almanac & Desk Reference'' (2002). The term ``small governmental 
jurisdiction'' is defined generally as ``governments of cities, towns, 
townships, villages, school districts, or special districts, with a 
population of less than fifty thousand.'' 5 U.S.C. 601(5). Census 
Bureau data for 2002 indicate that there were 87,525 local governmental 
jurisdictions in the United States. U.S. Census Bureau, ``Statistical 
Abstract of the United States: 2006,'' section 8, page 272, Table 415. 
The Commission estimates that, of this total, 84,377 entities were 
``small governmental jurisdictions.'' The Commission assumes that the 
villages, school districts, and special districts are small, and total 
48,558. For 2002, Census Bureau data indicate that the total number of 
county, municipal, and township governments nationwide was 38,967, of 
which 35,819 were small. See U.S. Census Bureau, Statistical Abstract 
of the United States: 2006, section 8, page 273, Table 417. Thus, the 
Commission estimates that most governmental jurisdictions are small.
    13. Wired Telecommunications Carriers. The Census Bureau defines 
this category as follows: ``This industry comprises establishments 
primarily engaged as third-party distribution systems for broadcast 
programming. The establishments of this industry deliver visual, aural, 
or textual programming received from cable networks, local television 
stations, or radio networks to consumers via cable or direct-to-home 
satellite systems on a subscription or fee basis. These establishments 
do not generally originate programming material.'' U.S. Census Bureau, 
2002 NAICS Definitions, ``517110 Wired Telecommunications Carriers.'' 
The SBA has developed a small business size standard for wireline firms 
within the broad economic census category, ``Wired Telecommunications 
Carriers.'' 13 CFR 121.201, NAICS code 517110. Under this category, the 
SBA deems a wireline business to be small if it has 1,500 or fewer 
employees. Census Bureau data for 2002 show that there were 2,432 firms 
in this category that operated for the entire year. U.S. Census Bureau, 
2002 Economic Census, Subject Series: Information, ``Establishment and 
Firm Size: 2002 (Including Legal Form of Organization),'' Table 5, 
NAICS code 517110 (issued Nov. 2005). Of this total, 2,395 firms had 
employment of 999 or fewer employees, and 37 firms had employment of 
1,000 employees or more. U.S. Census Bureau, 2002 Economic Census, 
Subject Series: Information, ``Establishment and Firm Size: 2002 
(Including Legal Form of Organization),'' Table 5, NAICS code 517110 
(issued Nov. 2005). Thus, under this category and associated small 
business size standard, the majority of firms can be considered small.
    14. Cable Television Distribution Services. Since 2007, these 
services have been defined within the broad economic census category of 
Wired Telecommunications Carriers; that category is defined as follows: 
``This industry comprises establishments primarily engaged in operating 
and/or providing access to transmission facilities and infrastructure 
that they own and/or lease for the transmission of

[[Page 1657]]

voice, data, text, sound, and video using wired telecommunications 
networks. Transmission facilities may be based on a single technology 
or a combination of technologies.'' U.S. Census Bureau, 2007 NAICS 
Definitions, ``517110 Wired Telecommunications Carriers'' (partial 
definition. The SBA has developed a small business size standard for 
this category, which is: all such firms having 1,500 or fewer 
employees. The NAICS Code associated with this size standard is 517110. 
To gauge small business prevalence for these cable services we must, 
however, use current census data that are based on the previous 
category of Cable and Other Program Distribution and its associated 
size standard; that size standard was: all such firms having $13.5 
million or less in annual receipts. 13 CFR 121.201, NAICS code 517110. 
According to Census Bureau data for 2002, there were a total of 1,191 
firms in this previous category that operated for the entire year. U.S. 
Census Bureau, 2002 Economic Census, Subject Series: Information, Table 
4, Receipts Size of Firms for the United States: 2002, NAICS code 
517510 (issued November 2005). Of this total, 1,087 firms had annual 
receipts of under $10 million, and 43 firms had receipts of $10 million 
or more but less than $25 million. Thus, the majority of these firms 
can be considered small.
    15. Cable Companies and Systems. The Commission has also developed 
its own small business size standards, for the purpose of cable rate 
regulation. Under the Commission's rules, a ``small cable company'' is 
one serving 400,000 or fewer subscribers, nationwide. 47 CFR 76.901(e) 
of the Commission's rules. The Commission determined that this size 
standard equates approximately to a size standard of $100 million or 
less in annual revenues. Implementation of Sections of the 1992 Cable 
Act: Rate Regulation, Sixth Report and Order and Eleventh Order on 
Reconsideration, 10 FCC Rcd 7393, 7408 (1995), published at 60 FR 
35854, July 12, 1995. Industry data indicate that, of 1,076 cable 
operators nationwide, all but eleven are small under this size 
standard. These data are derived from: R.R. Bowker, Broadcasting & 
Cable Yearbook 2006, ``Top 25 Cable/Satellite Operators,'' pages A-8 & 
C-2 (data current as of June 30, 2005); Warren Communications News, 
Television & Cable Factbook 2006, ``Ownership of Cable Systems in the 
United States,'' pages D-1805 to D-1857. In addition, under the 
Commission's rules, a ``small system'' is a cable system serving 15,000 
or fewer subscribers. 47 CFR 76.901(c) of the Commission's rules. 
Industry data indicate that, of 7,208 systems nationwide, 6,139 systems 
have under 10,000 subscribers, and an additional 379 systems have 
10,000-19,999 subscribers. Warren Communications News, Television & 
Cable Factbook 2006, ``U.S. Cable Systems by Subscriber Size,'' page F-
2 (data current as of Oct. 2005). The data do not include 718 systems 
for which classifying data were not available. Thus, under this second 
size standard, most cable systems are small. Wired Telecommunications 
Carriers with fewer than 1,500 employees are considered to be small. 
See 13 CFR 121.201, NAICS code 517110.
    16. Cable System Operators. The Communications Act of 1934, as 
amended, also contains a size standard for small cable system 
operators, which is ``a cable operator that, directly or through an 
affiliate, serves in the aggregate fewer than 1 percent of all 
subscribers in the United States and is not affiliated with any entity 
or entities whose gross annual revenues in the aggregate exceed 
$250,000,000.'' 47 U.S.C. 543(m)(2); see 47 CFR 6.901(f) of the 
Commission's rules and notes 1-3. The Commission has determined that an 
operator serving fewer than 677,000 subscribers shall be deemed a small 
operator, if its annual revenues, when combined with the total annual 
revenues of all its affiliates, do not exceed $250 million in the 
aggregate. 47 CFR 76.901(f) of the Commission's rules; see Public 
Notice, FCC Announces New Subscriber Count for the Definition of Small 
Cable Operator, DA 01-158 (Cable Services Bureau, January 24, 2001). 
Industry data indicate that, of 1,076 cable operators nationwide, all 
but ten are small under this size standard. These data are derived 
from: R.R. Bowker, Broadcasting & Cable Yearbook 2006, ``Top 25 Cable/
Satellite Operators,'' pages A-8 & C-2 (data current as of June 30, 
2005); Warren Communications News, Television & Cable Factbook 2006, 
``Ownership of Cable Systems in the United States,'' pages D-1805 to D-
1857. The Commission notes that the Commission neither requests nor 
collects information on whether cable system operators are affiliated 
with entities whose gross annual revenues exceed $250 million, and 
therefore the Commission is unable to estimate more accurately the 
number of cable system operators that would qualify as small under this 
size standard. The Commission does receive such information on a case-
by-case basis if a cable operator appeals a local franchise authority's 
finding that the operator does not qualify as a small cable operator 
pursuant to section 76.901(f) of the Commission's rules. See 47 CFR 
76.909(b) of the Commission's rules.
    17. Cable Television Relay Service. This service includes 
transmitters generally used to relay cable programming within cable 
television system distribution systems. As noted, Wired 
Telecommunications Carriers with fewer than 1,500 employees are 
considered to be small, under the currently applicable SBA 
classification. NAICS Code 517110. The data presented were acquired 
when the applicable SBA small business size standard was called Cable 
and Other Program Distribution, and which referred to all such firms 
having $13.5 million or less in annual receipts. 13 CFR 121.201, NAICS 
code 517110. According to Census Bureau data for 2002, there were a 
total of 1,191 firms in this category that operated for the entire 
year. U.S. Census Bureau, 2002 Economic Census, Subject Series: 
Information, Table 4, Receipts Size of Firms for the United States: 
2002, NAICS code 517510 (issued November 2005). Of this total, 1,087 
firms had annual receipts of under $10 million, and 43 firms had 
receipts of $10 million or more but less than $25 million. U.S. Census 
Bureau, 2002 Economic Census, Subject Series: Information, Table 4, 
Receipts Size of Firms for the United States: 2002, NAICS code 517510 
(issued November 2005). Thus, under this size standard, the majority of 
firms can be considered small.
    18. Direct Broadcast Satellite (DBS) Service. DBS service is a 
nationally distributed subscription service that delivers video and 
audio programming via satellite to a small parabolic ``dish'' antenna 
at the subscriber's location. DBS falls under the SBA definition of 
``Wireless Telecommunications Carriers (except satellite)'', which 
establishes as a small DBS company any DBS company which has less than 
1,500 employees. 13 CFR 121.201, NAICS Code 517210. The data presented 
were acquired when the applicable SBA small business size standard was 
called Cable and Other Program Distribution, and which referred to all 
such firms having $13.5 million or less in annual receipts. 13 CFR 
121.201, NAICS code 517110. According to Census Bureau data for 2002, 
there were a total of 1,191 firms in this category that operated for 
the entire year. U.S. Census Bureau, 2002 Economic Census, Subject 
Series: Information, Table 4, Receipts Size of Firms for the United 
States: 2002, NAICS code 517510 (issued November 2005). Of this total, 
1,087 firms had annual receipts of under $10 million,

[[Page 1658]]

and 43 firms had receipts of $10 million or more but less than $25 
million. Currently, only four operators hold licenses to provide DBS 
service, which requires a great investment of capital for operation. 
All four currently offer subscription services. Two of these four DBS 
operators, DirecTV and EchoStar Communications Corporation (EchoStar), 
report annual revenues that are in excess of the threshold for a small 
business. DirecTV is the largest DBS operator and the second largest 
MVPD, serving an estimated 13.04 million subscribers nationwide. See 
Annual Assessment of Status of Competition in the Market for the 
Delivery of Video Programming, Eleventh Annual Report, FCC 05-13, 
paragraph 55 (released February 4, 2005) (2005 Cable Competition 
Report). EchoStar, which provides service under the brand name Dish 
Network, is the second largest DBS operator and the fourth largest 
MVPD, serving an estimated 10.12 million subscribers nationwide. See 
2005 Cable Competition Report, paragraph 55. A third operator, Rainbow 
DBS, is a subsidiary of Cablevision's Rainbow Network, which also 
reports annual revenues in excess of $13.5 million, and thus does not 
qualify as a small business. Rainbow DBS, which provides service under 
the brand name VOOM, reported an estimated 25,000 subscribers. See 2005 
Cable Competition Report, paragraph 55. The fourth DBS operator, 
Dominion Video Satellite, Inc. (Dominion), offers religious (Christian) 
programming and does not report its annual receipts. Dominion, which 
provides service under the brand name Sky Angel, does not publicly 
disclose its subscribership numbers on an annualized basis. See 2005 
Cable Competition Report, paragraph 55. The Commission does not know of 
any source which provides this information and, thus, the Commission 
has no way of confirming whether Dominion qualifies as a small 
business. Because DBS service requires significant capital, the 
Commission believes it is unlikely that a small entity as defined by 
the SBA would have the financial wherewithal to become a DBS licensee. 
Nevertheless, given the absence of specific data on this point, the 
Commission acknowledges the possibility that there are entrants in this 
field that may not yet have generated $13.5 million in annual receipts, 
and therefore may be categorized as a small business, if independently 
owned and operated.
    19. Television Broadcasting. This Economic Census category 
``comprises establishments primarily engaged in broadcasting images 
together with sound. These establishments operate television 
broadcasting studios and facilities for the programming and 
transmission of programs to the public.'' U.S. Census Bureau, 2007 
NAICS Definitions, ``515120 Television Broadcasting'' (partial 
definition). The SBA has created the following small business size 
standard for Television Broadcasting firms: those having $14 million or 
less in annual receipts. 13 CFR 121.201, NAICS code 515120 (updated for 
inflation in 2008). The Commission has estimated the number of licensed 
commercial television stations to be 1,379. See FCC News Release, 
``Broadcast Station Totals as of December 31, 2007,'' dated March 18, 
2008. In addition, according to Commission staff review of the BIA 
Publications, Inc., Master Access Television Analyzer Database (BIA) on 
March 30, 2007, about 986 of an estimated 1,374 commercial television 
stations (or approximately 72 percent) had revenues of $13 million or 
less. The Commission recognizes that BIA's estimate differs slightly 
from the FCC total. The Commission therefore estimates that the 
majority of commercial television broadcasters are small entities.
    20. The Commission notes, however, that in assessing whether a 
business concern qualifies as small under the above definition, 
business (control) affiliations must be included. 13 CFR 21.103(a)(1). 
The Commission's estimate, therefore, likely overstates the number of 
small entities that might be affected by our action, because the 
revenue figure on which it is based does not include or aggregate 
revenues from affiliated companies. In addition, an element of the 
definition of ``small business'' is that the entity not be dominant in 
its field of operation. The Commission is unable at this time to define 
or quantify the criteria that would establish whether a specific 
television station is dominant in its field of operation. Accordingly, 
the estimate of small businesses to which rules may apply does not 
exclude any television station from the definition of a small business 
on this basis and is therefore possibly over-inclusive to that extent.
    21. In addition, the Commission has estimated the number of 
licensed noncommercial educational (NCE) television stations to be 380. 
See FCC News Release, ``Broadcast Station Totals as of December 31, 
2007,'' dated March 18, 2008. These stations are non-profit, and 
therefore considered to be small entities. See generally 5 U.S.C. 
601(4), (6). In addition, there are also 2,295 low power television 
stations (LPTV). See FCC News Release, ``Broadcast Station Totals as of 
December 31, 2007,'' dated March 18, 2008. Given the nature of this 
service, we will presume that all LPTV licensees qualify as small 
entities under the above SBA small business size standard.
    22. Local Multipoint Distribution Service. Local Multipoint 
Distribution Service (LMDS) is a fixed broadband point-to-multipoint 
microwave service that provides for two-way video telecommunications. 
See Rulemaking to Amend Parts 1, 2, 21, 25, of the Commission's Rules 
to Redesignate the 27.5-29.5 GHz Frequency Band, Reallocate the 29.5-
30.5 Frequency Band, to Establish Rules and Policies for Local 
Multipoint Distribution Service and for Fixed Satellite Services, 
Second Report and Order, Order on Reconsideration, and Fifth Notice of 
Proposed Rule Making, 12 FCC Rcd 12545, 12689-90, paragraph 348 (1997), 
published at 62 FR 16514, April 7, 1997. The auction of the 986 Local 
Multipoint Distribution Service (LMDS) licenses began on February 18, 
1998 and closed on March 25, 1998. The Commission established a small 
business size standard for LMDS licenses as an entity that has average 
gross revenues of less than $40 million in the three previous calendar 
years. See Rulemaking to Amend Parts 1, 2, 21, 25, of the Commission's 
Rules to Redesignate the 27.5-29.5 GHz Frequency Band, Reallocate the 
29.5-30.5 Frequency Band, to Establish Rules and Policies for Local 
Multipoint Distribution Service and for Fixed Satellite Services, 12 
FCC Rcd 12545, 12689-90, paragraph 348. An additional small business 
size standard for ``very small business'' was added as an entity that, 
together with its affiliates, has average gross revenues of not more 
than $15 million for the preceding three calendar years. See Rulemaking 
to Amend Parts 1, 2, 21, 25, of the Commission's Rules to Redesignate 
the 27.5-29.5 GHz Frequency Band, Reallocate the 29.5-30.5 Frequency 
Band, to Establish Rules and Policies for Local Multipoint Distribution 
Service and for Fixed Satellite Services, 12 FCC Rcd 12545, 12689-90, 
paragraph 348. The SBA has approved these small business size standards 
in the context of LMDS auctions. See Letter to Dan Phythyon, Chief, 
Wireless Telecommunications Bureau, FCC, from Aida Alvarez, 
Administrator, SBA (January 6, 1998). There were 93 winning bidders 
that qualified as small entities in the LMDS auctions. A total of 93 
small and very small business bidders won approximately 277 A Block 
licenses and

[[Page 1659]]

387 B Block licenses. On March 27, 1999, the Commission re-auctioned 
161 licenses; there were 32 small and very small businesses winning 
that won 119 licenses. Because some LMDS services may not have been 
auctioned, the SBA standard which applies to such services is Wireless 
Telecommunications Carriers (except satellite), pursuant to which a 
service is small if it has fewer than 1500 employees. The NAICS Code 
for this SBA classification is 51711.
    23. Wireless Telecommunications Carriers (except satellite). NAICS 
code 517210. Wireless Telecommunications Carriers, except satellite, is 
a NAICS standard which has a size standard of fewer than 1500 
employees. NAICS Code 517210. Wireless cable systems use 2 GHz band 
frequencies of the Broadband Radio Service (BRS), formerly Multipoint 
Distribution Service (MDS), and the Educational Broadband Service 
(EBS), formerly Instructional Television Fixed Service (ITFS), to 
transmit video programming and provide broadband services to 
residential subscribers. These services were originally designed for 
the delivery of multichannel video programming, similar to that of 
traditional cable systems, but over the past several years licensees 
have focused their operations instead on providing two-way high-speed 
Internet access services. The Commission estimates that the number of 
wireless cable subscribers is approximately 100,000, as of March 2005. 
As noted, within the category of Wireless Telecommunications Carriers, 
except satellite, such firms with fewer than 1500 employees are 
considered to be small. 13 CFR 121.201, NAICS Code 517210. The data 
presented were acquired when the applicable SBA small business size 
standard was called Cable and Other Program Distribution, and which 
referred to all such firms having $13.5 million or less in annual 
receipts. 13 CFR 121.201, NAICS Code 517110. According to Census Bureau 
data for 2002, there were a total of 1,191 firms in this category that 
operated for the entire year. U.S. Census Bureau, 2002 Economic Census, 
Subject Series: Information, Table 4, Receipts Size of Firms for the 
United States: 2002, NAICS code 517510 (issued November 2005). Of this 
total, 1,087 firms had annual receipts of under $10 million, and 43 
firms had receipts of $10 million or more but less than $25 million. 
U.S. Census Bureau, 2002 Economic Census, Subject Series: Information, 
Table 4, Receipts Size of Firms for the United States: 2002, NAICS code 
517510 (issued November 2005). The SBA small business size standard for 
the broad census category of Wireless Telecommunications Carriers, 
which consists of such entities with fewer than 1,500 employees, 
appears applicable to MDS and ITFS. Other standards also apply, as 
described.
    24. The Commission has defined small MDS (now BRS) entities in the 
context of Commission license auctions. In the 1996 MDS auction, the 
Commission defined a small business as an entity that had annual 
average gross revenues of less than $40 million in the previous three 
calendar years. This definition of a small entity in the context of MDS 
auctions has been approved by the SBA. In the MDS auction, 67 bidders 
won 493 licenses. Of the 67 auction winners, 61 claimed status as a 
small business. At this time, the Commission estimates that of the 61 
small business MDS auction winners, 48 remain small business licensees. 
In addition to the 48 small businesses that hold BTA authorizations, 
there are approximately 392 incumbent MDS licensees that have gross 
revenues that are not more than $40 million and are thus considered 
small entities. MDS licensees and wireless cable operators that did not 
receive their licenses as a result of the MDS auction fall under the 
SBA small business size standard for Wireless Telecommunications 
Carriers (except satellite). 13 CFR 121.201, NAICS Code 517210. As 
noted, within the category of Wireless Telecommunications Carriers, 
such firms with fewer than 1500 employees are considered to be small. 
13 CFR 121.201, NAICS Code 517210. The data presented were acquired 
when the applicable SBA small business size standard was called Cable 
and Other Program Distribution, and which referred to all such firms 
having $13.5 million or less in annual receipts. 13 CFR 121.201, NAICS 
Code 517110. According to Census Bureau data for 2002, there were a 
total of 1,191 firms in this category that operated for the entire 
year. U.S. Census Bureau, 2002 Economic Census, Subject Series: 
Information, Table 4, Receipts Size of Firms for the United States: 
2002, NAICS code 517510 (issued November 2005). Of this total, 1,087 
firms had annual receipts of under $10 million, and 43 firms had 
receipts of $10 million or more but less than $25 million. U.S. Census 
Bureau, 2002 Economic Census, Subject Series: Information, Table 4, 
Receipts Size of Firms for the United States: 2002, NAICS code 517510 
(issued November 2005). Information available to the Commission 
indicates that there are approximately 850 of these licensees and 
operators that do not generate revenue in excess of $13.5 million 
annually. Therefore, the Commission estimates that there are 
approximately 850 small entity MDS (or BRS) providers, as defined by 
the SBA and the Commission's auction rules.
    25. Educational institutions are included in this analysis as small 
entities; however, the Commission has not created a specific small 
business size standard for ITFS (now EBS). The Commission estimates 
that there are currently 2,032 ITFS (or EBS) licensees, and all but 100 
of the licenses are held by educational institutions. Thus, the 
Commission estimates that at least 1,932 ITFS licensees are small 
entities.
    26. Open Video Services. Open Video Service (OVS) systems provide 
subscription services. See 47 U.S.C. 573. The data presented were 
acquired when the applicable SBA small business size standard was 
called Cable and Other Program Distribution, and which referred to all 
such firms having $13.5 million or less in annual receipts. 13 CFR 
121.201, NAICS Code 517110. According to Census Bureau data for 2002, 
there were a total of 1,191 firms in this category that operated for 
the entire year. U.S. Census Bureau, 2002 Economic Census, Subject 
Series: Information, Table 4, Receipts Size of Firms for the United 
States: 2002, NAICS code 517510 (issued November 2005). Of this total, 
1,087 firms had annual receipts of under $10 million, and 43 firms had 
receipts of $10 million or more but less than $25 million. U.S. Census 
Bureau, 2002 Economic Census, Subject Series: Information, Table 4, 
Receipts Size of Firms for the United States: 2002, NAICS code 517510 
(issued November 2005). This standard has been replaced by the Wireless 
Telecommunications Carriers (except satellite) standard, which 
considers firms with fewer than 1,500 employees to be small. NAICS Code 
517210. The Commission has certified approximately 100 OVS operators to 
serve 75 areas, and some of these are currently providing service. See 
https://www.fcc.gov/csb/ovs/csovscer.html (current as of June 2004). 
These data were collected when ``Cable and Other Program Distribution'' 
was the operative distribution technology. Affiliates of Residential 
Communications Network, Inc. (RCN) received approval to operate OVS 
systems in New York City, Boston, Washington, DC, and other areas. RCN 
has sufficient revenues to assure that they do not qualify as a small 
business entity. Little financial information is available for the 
other entities that are authorized to provide OVS and are not yet 
operational. Given that some entities authorized to provide OVS service 
have

[[Page 1660]]

not yet begun to generate revenues, the Commission concludes that those 
OVS operators remaining might qualify as small businesses that may be 
affected by the rules and policies adopted herein.
    27. In addition, an element of the definition of ``small business'' 
is that the entity not be dominant in its field of operation. The 
Commission is unable at this time to define or quantify the criteria 
that would establish whether a specific television station is dominant 
in its field of operation. Accordingly, the estimate of small 
businesses to which rules may apply does not exclude any television 
station from the definition of a small business on this basis and is 
therefore over-inclusive to that extent. Also as noted, an additional 
element of the definition of ``small business'' is that the entity must 
be independently owned and operated. The Commission notes that it is 
difficult at times to assess these criteria in the context of media 
entities and our estimates of small businesses to which they apply may 
be over-inclusive to this extent.
    28. Telephone Companies. Neither the Commission nor the SBA has 
developed a small business size standard specifically for incumbent 
local exchange services. The appropriate size standard under SBA rules 
is for the category Wired Telecommunications Carriers. Under that size 
standard, such a business is small if it has 1,500 or fewer employees. 
13 CFR 121.201, NAICS code 517110. According to Commission data, 1,307 
carriers have reported that they are engaged in the provision of 
incumbent local exchange services. FCC, Wireline Competition Bureau, 
Industry Analysis and Technology Division, ``Trends in Telephone 
Service'' at Table 5.3, Page 5-5 (February 2007). This source uses data 
that are current as of October 20, 2005. Of these 1,307 carriers, an 
estimated 1,019 have 1,500 or fewer employees and 288 have more than 
1,500 employees. Consequently, the Commission estimates that most 
providers of incumbent local exchange service are small businesses that 
may be affected by our action. The Commission estimates that ten LECs 
currently provide video programming, and several smaller telephone 
companies provide the service.
    29. Incumbent Local Exchange Carriers (LECs). Neither the 
Commission nor the SBA has developed a small business size standard 
specifically for incumbent local exchange services. The appropriate 
size standard under NCAIS rules is for the category Wired 
Telecommunications Carriers. Under that size standard, such a business 
is small if it has 1,500 or fewer employees. 13 CFR 121.201, NAICS code 
517110. According to Commission data, 1,307 carriers have reported that 
they are engaged in the provision of incumbent local exchange services. 
FCC, Wireline Competition Bureau, Industry Analysis and Technology 
Division, ``Trends in Telephone Service'' at Table 5.3, Page 5-5 
(February 2007). This source uses data that are current as of October 
20, 2005. Of these 1,307 carriers, an estimated 1,019 have 1,500 or 
fewer employees and 288 have more than 1,500 employees. Consequently, 
the Commission estimates that most providers of incumbent local 
exchange service are small businesses that may be affected by our 
action. The Commission estimates that ten LECs currently provide video 
programming, and several smaller telephone companies provide the 
service.
    30. Closed Captioning Services. These entities are indirectly 
affected by the Commission's action. The SBA has developed two small 
business size standards that may be used for closed captioning 
services. The two size standards track the economic census categories, 
``Teleproduction and Other Postproduction Services'' and ``Court 
Reporting and Stenotype Services.''
    31. The first category of Teleproduction and Other Postproduction 
Services ``comprises establishments primarily engaged in providing 
specialized motion picture or video postproduction services, such as 
editing, film/tape transfers, subtitling, credits, closed captioning, 
and animation and special effects.'' The relevant size standard for 
small businesses in these services is an annual revenue of less than 
$29.5 million. U.S. Census Bureau, 2002 NAICS Definitions, ``512191 
Teleproduction and Other Postproduction Services.'' The size standard 
is $29.5 million. For this category, Census Bureau data for 2002 show 
that there were 1,316 firms that operated for the entire year. U.S. 
Census Bureau, 2002 Economic Census, Subject Series: Information, 
``Establishment and Firm Size (Including Legal Form of Organization),'' 
Table 4, NAICS code 512191 (issued November 2005). Of this total, 1,301 
firms had annual receipts of under $25 million, and 10 firms had 
receipts of $25 million to $49,999,999. U.S. Census Bureau, 2002 
Economic Census, Subject Series: Information, ``Establishment and Firm 
Size (Including Legal Form of Organization),'' Table 4, NAICS code 
512191 (issued Nov. 2005). An additional 5 firms had annual receipts of 
$50 million or more. Consequently, the Commission estimates that the 
majority of Teleproduction and Other Postproduction Services firms are 
small entities that might be affected by our action.
    32. The second category of Court Reporting and Stenotype Services 
``comprises establishments primarily engaged in providing verbatim 
reporting and stenotype recording of live legal proceedings and 
transcribing subsequent recorded materials.'' The size standard for 
small businesses in these services is an annual revenue of less than $7 
million. U.S. Census Bureau, 2002 NAICS Definitions, ``561492 Court 
Reporting and Stenotype Services.'' The size standard is $7 million. 
For this category, Census Bureau data for 2002 show that there were 
2,487 firms that operated for the entire year. U.S. Census Bureau, 2002 
Economic Census, Subject Series: Administrative and Support and Waste 
Management and Remediation Services, ``Establishment and Firm Size 
(Including Legal Form of Organization),'' Table 4, NAICS code 561492 
(issued Nov. 2005). Of this total, 2,461 firms had annual receipts of 
under $5 million, and 16 firms had receipts of $5 million to 
$9,999,999. U.S. Census Bureau, 2002 Economic Census, Subject Series: 
Administrative and Support and Waste Management and Remediation 
Services, ``Establishment and Firm Size (Including Legal Form of 
Organization),'' Table 4, NAICS code 561492 (issued Nov. 2005). An 
additional 10 firms had annual receipts of $10 million or more. 
Consequently, the Commission estimates that the majority of Court 
Reporting and Stenotype Services firms are small entities that might be 
affected by our action.

Description of Projected Reporting, Recordkeeping and Other Compliance 
Requirements

    33. The Commission does not anticipate that the proposals contained 
in the 2008 Digital Closed Captioning NPRM will impose additional 
reporting, recordkeeping or compliance requirements.

Steps Taken To Minimize Significant Impact on Small Entities, and 
Significant Alternatives Considered

    34. 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): (1) 
The establishment of differing compliance or reporting requirements or 
timetables that take into account the resources available to small

[[Page 1661]]

entities; (2) the clarification, consolidation, or simplification of 
compliance or reporting requirements under the rule for small entities; 
(3) the use of performance, rather than design, standards; and (4) an 
exemption from coverage of the rule, or any part thereof, for small 
entities. 5 U.S.C. 603(b).
    35. How the Commission resolves the question of how to treat 
digital multicast streams for purposes of the closed captioning rules 
is important, for purposes of Sec.  79.1(d)(12) of the Commission's 
rules, which exempts from the closed captioning obligations video 
programming channels that produced annual gross revenues of less than 
$3 million during the previous calendar year. By its very nature, 
current Sec.  79.1(d)(12) of the Commission's rules decreases the 
closed captioning burden on entities whose annual gross revenues for 
the previous year were less than $3 million. With regard to the 
proposal to treat each of the multicast streams individually, the 2008 
Digital Closed Captioning NPRM suggests that this likely will result in 
less captioned programming being available, and seeks comment on this 
assumption. Although this decision may decrease burdens on small 
businesses, it may mean that individuals who rely on closed captioning 
are burdened. At the same time, however, if the majority of programming 
aired on secondary multicast streams is already captioned, it is 
possible that the percentage of available captioning will not be 
greatly affected, given that programming that is already captioned and 
delivered to a broadcaster for airing must be aired with the captions 
intact, pursuant to the existing pass through rule, which is unaffected 
by the 2008 Digital Closed Captioning NPRM. The Commission notes that, 
under the Commission's rules, programming that is already captioned and 
delivered to a broadcaster for airing must be aired with the captions 
intact, regardless of the multicast stream on which the programming 
airs. See 47 CFR 79.1(c) of the Commission's rules. Another alternative 
being considered by the Commission would retain the concept that each 
stream of multicast programming is separate, but the revenue threshold 
for determining whether one of the non-main programming streams is 
exempt would be less than $3 million. Given the general nature of the 
programming on such channels, the Commission seeks comment on whether a 
smaller figure may be appropriate.
    36. In the alternative, if the Commission adopts the proposal to 
aggregate the revenues of all multicast streams, digital broadcasters 
would be exempt from the Commission's captioning requirements under 
Sec.  79.1(d)(12) of the Commission's rules only if their overall 
operations, taking into account all activities on all ``streams,'' 
received less than $3 million in revenues. However, the 2008 Digital 
Closed Captioning NPRM notes that this conclusion might affect program 
diversity, the airing of locally-originated programming, or the airing 
of other kinds of programming that may afford little or no economic 
return. The Commission further seeks comment on whether it also may 
result in an increase in the number of petitions for exemption from the 
closed captioning requirements based on the undue burden standard in 
the Commission's current rules. See 47 CFR 79.1(f) of the Commission's 
rules.
    37. The last alternative the 2008 Digital Closed Captioning NPRM 
considers is the establishment of a captioning requirement that is not 
dependant on revenues but relies on some other criteria, such as a 
formula that considers the number of programming streams being offered 
(or some other variable) in order to determine captioning obligations.

Federal Rules Which Duplicate, Overlap, or Conflict With, the 
Commission's Proposals

    38. None.

Ordering Clauses

    Pursuant to sections 4(i), 303(r) and 713 of the Communications Act 
of 1934, as amended, 47 U.S.C. 154(i), 303(r) and 613, the Notice of 
Proposed Rulemaking is adopted.
    The Commission's Consumer and Governmental Affairs Bureau, 
Reference Information Center, shall send a copy of the Notice of 
Proposed Rulemaking, including the Initial Regulatory Flexibility 
Certification, to the Chief Counsel for Advocacy of the Small Business 
Administration.

Federal Communications Commission.
William F. Caton,
Deputy Secretary.
[FR Doc. E8-31446 Filed 1-12-09; 8:45 am]
BILLING CODE 6712-01-P