Implementation of the Satellite Television Extension and Localism Act of 2010, 56868-56873 [2010-22814]
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Federal Register / Vol. 75, No. 180 / Friday, September 17, 2010 / Rules and Regulations
PART 100—SAFETY OF LIFE ON
NAVIGABLE WATERS
LIBRARY OF CONGRESS
1. The authority citation for part 100
continues to read as follows:
37 CFR Part 201
Copyright Office
■
Authority: 33 U.S.C. 1233.
[Docket No. RM 2010–2]
2. Add § 100.T08–0534 to read as
follows:
■
Implementation of the Satellite
Television Extension and Localism Act
of 2010
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§ 100.T08–0534 Pittsburgh Dragon Boat
Festival, Monongahela River, Pittsburgh,
PA.
ACTION:
(a) Location. The following area is a
regulated area: All waters of the
Monongahela River, from mile marker
2.2 (Southside Riverfront Park Boat
Ramp) on the Monongahela River to
mile marker 2.7 (27th Street), extending
100 feet out from the left descending
bank.
(b) Effective date. This section is
effective from 11:30 a.m. through 4:30
p.m. on September 18, 2010, and each
year thereafter on a date and time
published in a Federal Register
document.
(c) Periods of enforcement. This
section is effective from 11:30 a.m.
through 4:30 p.m. on September 18,
2010. The Captain of the Port Pittsburgh
or a designated representative will
inform the public through broadcast
notices to mariners of the enforcement
period for the special local regulation as
well as any changes in the planned
schedule.
(d) Regulations.
(1) In accordance with the general
regulations in § 100.35 of this part, entry
into this area is prohibited unless
authorized by the Captain of the Port
Pittsburgh.
(2) Persons or vessels requiring entry
into, departure from, or passage through
a regulated area must request
permission from the Captain of the Port
Pittsburgh or a designated
representative. They may be contacted
on VHF–FM Channel 13 or 16, or
through Coast Guard Sector Ohio Valley
at 1–800–253–7465.
(3) All persons and vessels shall
comply with the instructions of the
Captain of the Port Pittsburgh and
designated on-scene U.S. Coast Guard
patrol personnel. On-scene U.S. Coast
Guard patrol personnel includes
Commissioned, Warrant, and Petty
Officers of the U.S. Coast Guard.
Dated: August 13, 2010.
S.T. Higman,
Lieutenant Commander, U.S. Coast Guard,
Acting Captain of the Port Pittsburgh.
[FR Doc. 2010–23279 Filed 9–16–10; 8:45 am]
BILLING CODE 9110–04–P
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Interim Rule.
The Copyright Office amends
its rules governing statements of
account for cable systems and satellite
carriers to reflect changes resulting from
the recent enactment of the Satellite
Television Extension and Localism Act
of 2010.
FOR FURTHER INFORMATION CONTACT: Ben
E. Golant, Assistant General Counsel or
Tanya M. Sandros, Deputy General
Counsel, Copyright GC/I&R, P.O. Box
70400, Washington, DC 20024.
Telephone: (202) 707–8380. Telefax:
(202)–707–8366.
EFFECTIVE DATES: September 17, 2010.
SUPPLEMENTARY INFORMATION: Congress
recently passed the Satellite Television
Extension and Localism Act of 2010
(‘‘STELA’’) which was signed by the
President on May 27, 2010. See Pub. L.
No. 111–175. This legislation updated
and reauthorized the distant signal
license for satellite carriers under
Section 119 of title 17. It also amended
the local–into–local satellite license and
the cable statutory license in several
respects. The purpose of this Interim
Rule is to account for the new statutory
provisions under Sections 111, 119, and
122, as discussed below.
SUMMARY:
I. SECTION 111 AMENDMENTS
A. Phantom Signals and Subscriber
Groups
For the past 30 years, cable operators
have paid royalties for the
retransmission of non–network
programming carried by distant
broadcast television signals under the
Section 111 statutory license. The
royalties have been based on a
percentage of gross receipts generated
by a cable system. Under the licensing
framework established by Congress in
1976, cable operators had to pay for the
number of distant signals carried, even
though some such signals were not
received or made available to every
subscriber of a particular cable system.
Distant broadcast signals that were not
made available on a system–wide basis,
but on which operators were required to
pay royalties, have been called
‘‘phantom signals.’’ The Copyright Office
has long recognized the phantom signal
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situation, but the matter has only
recently received legislative attention.1
Section 104 of STELA, entitled
‘‘Modifications to Cable System
Secondary Transmission Rights Under
Section 111,’’ directly addresses
phantom signals. Specifically, it
amended Section 111(d)(1) of the
Copyright Act which sets forth the
methodology for cable operators to
calculate royalties. Cable operators now
pay royalties only where the distant
broadcast signal is actually received by
subscribers rather than on a broader
cable system basis as had been the case
since 1978. The amendments finally
resolve this enduring dispute.2
Specifically, the legislation amends
subparagraph (C) of Section 111(d)(1) to
state that if a cable system provides
secondary transmissions of primary
transmitters to some, but not all,
communities served by the cable
system, the gross receipts and distant
signal equivalent values for each
secondary transmission may be derived
on the basis of the subscribers in those
communities where the cable system
actually provides such secondary
transmission. Where a cable system
calculates its royalties on a community–
specific (‘‘subscriber group’’) basis, the
operator applies the methodology in
Section 111(d)(1)(B)(ii)–(iv) to calculate
a separate royalty for each subscriber
group. However, the operator will still
compute the minimum fee calculation
under Section 111(d)(1)(B)(i) on a cable
system basis and is required to pay no
less than the minimum fee. 3
1There is no legislative history accompanying
STELA. However, an earlier iteration of the
legislation in 2009 contained the same statutory
language with respect to phantom signals and did
have accompanying legislative history.See Satellite
Home Viewer Update and Reauthorization Act of
2009, H. Rep. No. 111-319, 111th Cong., 1st Sess.
(Oct. 28, 2009) at 12 (‘‘[T]he cable television and
content industries have taken different views on
whether cable providers should include certain
signals that are not received by every customer in
the calculation of Section 111 royalty obligations.
Members of the cable industry argue that providers
should not have to pay for such signals because
some consumers do not receive them. Members of
the content industry assert that, under the law, all
signals should be taken into account in the royalty
rate calculation. The Committee understands that
there are two different readings of the statute and
that the issue should be resolved to provide
certainty to both industries.’’)
2See id. at 23-24. (‘‘Subsection (c) resolves the
phantom signal ambiguity that required cable
systems to pay royalty fees for carriage to all
subscribers within the system. It allows a cable
system that provides transmissions of distant
signals to some but not all communities to calculate
royalty fees on the basis of the actual carriage of
specific signals and the gross receipts derived from
the subscribers in the community.’’)
3 See id. at 12. (‘‘The legislation revises and
updates subparagraphs (C) and (D) of Section
111(d)(1) to resolve the so–called ‘‘phantom
signal’’issue. Just as the current law allows
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The legislation also amends
subparagraph (D) of Section 111(d)(1) to
state that for any accounting period
prior to the enactment of the
amendments in subparagraph (C), a
cable system’s computation of its
royalty fee consistent with the
methodology described in subparagraph
(C)(iii), or a cable system’s use of such
methodology on an amendment of a
statement originally filed before the date
of enactment, will not be deemed
actionable as an act of infringement
within the meaning of Section
111(c)(2)(B). In other words, operators
who have heretofore based royalty
payments on subscriber group
calculations will not face liability for
having done so. Moreover, the
amendments also make clear that cable
operators who paid for phantom signals
in the past are not entitled to now seek
refunds or offsets for those payments.4
As part of the legislative compromise
on the phantom signal matter, certain
cable operators agreed to the payment of
additional royalty amounts directly to
the Copyright Office for a five year
period. These additional royalty
payments are addressed in new
paragraph (7) of subsection (d), which
directs the Copyright Office to treat
them as part of the Section 111 royalty
pool attributable to the period for which
they are submitted.5
The changes to Section 111(d)
necessitate an amendment to Section
201.17 as well as a revision to the Form
3 Statement of Account. The interim
rule adds a new subsection ‘‘g’’ to the
rules to implement the statutory
language regarding subscriber groups
and reflect the new royalty rates (noted
below). The Office has also revised SOA
Form 3 to better accommodate
subscriber group reporting and to
recognize the additional royalties that
will be submitted by certain cable
operators.
subscriber group calculations for ‘‘partially local/
partially distant’’ situations, so too may cable
systems use the subscriber group methodology
when calculating royalties for phantom signal
situations. . . . This change shall not affect a cable
system’s obligation to pay the minimum fee as
appropriate.’’)
4See id. at 12 (noting the same).
5 See id. at 13. (‘‘Finally, as a result of discussions
among the parties affected by the phantom signal
issue that helped lead to broad industry support for
these amendments, certain cable operators agreed to
the payment of additional royalty amounts directly
to the Copyright Office for a 5-year period. . . . For
example, if the first such additional royalty
payments are submitted on the filing deadline for
the first accounting period of 2010 (i.e., August 29,
2010), the Office shall treat such amounts as part
of the base rate royalty pool for the first accounting
period of 2010 for deposit and distribution to
claimants using the existing procedures.’’)
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B. Rate Adjustments
Section 104 of STELA also revises and
updates Section 111(d)(1) to adjust the
royalty percentages payable by cable
systems that must compute their royalty
payments in accordance with
subparagraph (B) of that provision. The
adjusted royalty percentages were made
effective as of January 1, 2010, in lieu
of any adjustments in royalty
percentages or gross receipts thresholds
that might have been made this year in
a cable royalty rate inflation adjustment
proceeding pursuant to Sections
801(b)(2) and 804(b)(1).6 The new law
adjusts the existing ‘‘base’’ royalty rates
for Form 3 systems upwards by
approximately 5 percent starting with
the first accounting period of 2010.
Under STELA, the fee for the first
distant signal equivalent increases from
1.013 percent to 1.064 percent; the fee
for the second through fourth distant
signal equivalent increases from 0.668
percent to 0.701 percent; and the fee for
the fifth distant signal equivalent, and
each additional distant signal equivalent
increases from 0.314 percent to 0.330
percent. STELA does not change the
rates for smaller cable systems that use
the SOA Form 1–2 nor does it disturb
the gross receipts thresholds for
determining whether an operator should
file SOA Form 3 or SOA Form 1–2.
STELA also clarifies that the base rate
fees, the 3.75 fee, and the syndicated
exclusivity surcharge will not be subject
to an adjustment again before 2015. The
Office has updated Section 201.17 to
reflect the rate adjustment provisions of
STELA, but it does not believe any
further regulatory amendments are
required.
C. DTV Signals
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television programming carried on each
unique digital multicast stream of a
distant digital television signal.
Specifically, the definition of distant
signal equivalent (‘‘DSE’’) in Section 111
was changed to account for the
retransmission of multicast streams. A
DSE, as modified by STELA, is :
(i) the value assigned to the secondary
transmission of any non–network
television programming carried by a
cable system in whole or in part beyond
the local service area of the primary
transmitter of such programming; and
(ii) computed by assigning a value of
one to each primary stream and to each
multicast stream (other than a
simulcast) that is an independent
station, and by assigning a value of one–
quarter to each primary stream and to
each multicast stream (other than a
simulcast) that is a network station or a
noncommercial educational station.
At the same time, however, STELA
carves out special exceptions regarding
the royalty treatment of multicast
streams under Section 111. Specifically,
‘‘the royalty rates specified in Sections
256.2(c) and 256.2(d) of title 37, Code of
Federal Regulations (commonly referred
to as the ‘‘3.75 percent rate’’ and the
‘‘syndicated exclusivity surcharge’’
respectively), as in effect on the date of
enactment of the Satellite Television
Extension and Localism Act, as such
rates may be adjusted, or such sections
redesignated, thereafter by the
Copyright Royalty Judges, shall not
apply to the secondary transmission of
a multicast stream.’’ This provision, in
effect, would permit a cable operator to
carry multiple multicast streams
without concern about exceeding its
market quota of distant signals and
being required to pay the 3.75% fee. In
addition, no royalties are due for
carrying a distant multicast stream that
‘‘simulcasts’’ (i.e., duplicates) a primary
stream or another multicast stream of
the same station that the system is
carrying. The amendments to Section
201.17 incorporate the relevant statutory
language on multicast streams into new
subpart (j) of the Copyright Office’s
rules.7
1. Multicasting
Section 104 of STELA modifies
particular provisions in Section 111 to
accommodate the 2009 digital broadcast
television transition. Digital television
signals are different from analog signals
in that a digital television broadcaster
has the ability to air several sub–
channels, or multicasts, from its single
broadcast transmitter. Cable operators
have retransmitted distant multicasts for
a number of years under the Section 111
license. STELA clarifies that a royalty
payment should be made for the
retransmission of non–network
Section 104 of STELA specifically
delineates the effective dates with
respect to the treatment of multicast
6On January 5, 2010, the Copyright Royalty
Judges issued a Federal Register Notice
commencing the 2010 Cable Rate Proceeding to
adjust the gross receipt limitations and royalty rates
applicable under Section 111. See 75 FR 455 (Jan.
5, 2010). Soon after STELA was enacted, cable
operators and copyright owners filed a Joint Motion
to Terminate the proceeding. The Judges have not
yet issued an Order terminating the proceeding.
7Two years ago, the Office issued a Notice of
Proposed Rulemaking to address the legal concerns
raised by the retransmission of digital television
signals by cable operators under the Section 111
license. See 73 F.R. 31399 (June 2, 2008).
Multicasting was one of the prominent matters
raised for comment. Now that STELA has been
enacted, we will be re–examining the issues that
remain in that rulemaking.
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2. Effective Dates
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streams under the cable statutory
license. First, STELA states that the
Section 111 amendments, with regard to
the distant signal equivalent value of the
secondary transmission of the multicast
stream of a primary transmitter, takes
effect on the date of the enactment of
the Act [i.e., February 27, 2010].8 That
is, any distant multicasts first
retransmitted by a cable operator on or
after February 27, 2010, is subject to
royalties. Second, STELA delays the
implementation of the requirement to
pay for carriage of a multicast stream ‘‘in
any case in which a cable system was
making secondary transmissions of a
multicast stream beyond the local
service area of its primary transmitter
before the date of enactment of this Act
[i.e., February 27, 2010] and states that
‘‘a distant signal equivalent value shall
not be assigned to secondary
transmissions of such multicast stream
that are made on or before June 30,
2010.’’9 [emphasis added]. Clearly, cable
operators will not have to pay royalties
for any multicasts carried prior to
STELA’s effective date. Further,
Congress has built a grace period into
the statute so that those cable operators
that have carried distant multicasts
prior to the effective date through to
June 30, 2010, do not have to pay
royalties for the first accounting period
of this year.10 Finally, STELA states that
‘‘in any case in which the secondary
transmission of a multicast stream of a
primary transmitter is the subject of a
written agreement entered into on or
before June 30, 2009, between a cable
system or an association representing
the cable system and a primary
transmitter or an association
representing the primary transmitter, a
distant signal equivalent value shall not
be assigned to secondary transmissions
of such multicast stream beyond the
local service area of its primary
transmitter that are made on or before
the date on which such written
agreement expires.’’ This could be
characterized as the ‘‘Grandfathered
Agreement Exception.’’ Here, no
royalties are due for the retransmission
of a distant multicast that is subject to
8The date of enactment is usually the date the
President signs the bill whereas the effective date
may be either earlier or later. However, STELA
includes a provision that clarifies that in most
instances references to ‘‘date of enactment’’ shall be
deemed to refer to February 27, 2010, unless
otherwise specified. See Section 307of STELA
9June 30, 2010, is the last day of the first
accounting period for 2010 (i.e., 2010/1).
10A cable operator that did not want to pay
royalties for a multicast for the second accounting
period of 2010 had to drop the signal prior to July
1, 2010 (the first day of the second accounting
period), the date when a royalty obligation would
commence.
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an ongoing agreement. However, once
the agreement expires, then royalties
would have to be paid for such distant
multicasts if they continue to be carried.
It is important to mention that a cable
system that has reported secondary
transmissions of a multicast stream
beyond the local service area of its
primary transmitter on a statement of
account deposited under Section 111
before the date of the enactment of
STELA is not entitled to any refund, or
offset, of royalty fees paid on account of
such secondary transmissions of such
multicast stream.
3. Statement of Account Forms
Section 201.17(e), the rule dictating
the fields and parameters of the cable
statement of account forms, has to be
revised to account for the changes in
Section 111 due to STELA. We have
identified at least two separate
subsections that need to be amended to
conform with the new multicast
provisions of the new law. The first is
the designation of ‘‘channels’’ under
Section 201.17(e)(5). Here, we amend
the regulation to recognize that a
multicast stream would be considered a
‘‘channel’’ for Statement of Account
purposes. Similarly, we amend Section
201.17(e)(9) to account for multicast
streams in the ‘‘Primary Transmitters’’
designation in the rules. Specifically,
we find it necessary to explain how to
label and account for the retransmission
of multicast signals on the SOA. The
revised SOAs the Office has released for
the 2010/1 period reflect this change
and request that each multicast stream
be identified by its over–the–air call
sign followed by the sub–channel
number assigned to it by the television
broadcast licensee. It is important to
note that a simulcast stream11 is a
multicast stream, and even though no
royalties must be paid for its
retransmission, the carriage of such still
must be reported on the Statement of
Account form. A simulcast stream
should be properly labeled on the form
(e.g., WETA–simulcast) so that
Licensing Division examiners are able to
differentiate this type of stream from
other multicast streams that may require
a royalty payment.
4. Definitions
STELA amended Section 111(f) of the
Copyright Act in many respects to
include new definitions that relate to
digital broadcast television and for other
purposes. The new or modified
definitions in Section 111, like the
11A simulcast is defined as ‘‘[A] multicast stream
of a television broadcast station that duplicates the
programming transmitted by the primary stream or
another multicast stream of such station.’’
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revised definition of ‘‘DSE’’ discussed
above, focus on the technical aspects of
digital signals and the ability of
television stations to multicast or split
its one digital signal into many sub–
channels. Under STELA, the terms
‘‘primary stream,’’ ‘‘multicast stream,’’
and ‘‘simulcast’’were added to Section
111 because of the digital television
transition. The terms ‘‘independent
station,’’ ‘‘noncommercial educational
station,’’ and ‘‘network station’’ which
have been part of Section 111 for over
33 years, were modified for the same
reason. The same can be said with
regard to the revised definitions of the
terms ‘‘primary transmission’’ and ‘‘local
service area of a primary transmitter,’’
which is discussed in greater detail,
below.
The definitions of ‘‘secondary
transmission,’’ and ‘‘cable system’’ were
modified slightly and new terms
‘‘Subscribe,’’ ‘‘Subscriber’’ and ‘‘Primary
Transmitter’’ were added to Section
111(f). These new or revised definitions
are simple clarifications with no direct
association with the digital transition.
Consequently, the Office amends
Section 201.17(b)(5) to account for these
new definitions and has revised the
SOA forms to reflect the statutory
language. Network Stations. There is a
newly expanded definition of ‘‘network
station’’in STELA. It reflects the
inclusion of digital television signals in
the Section 111 rubric. For a digital
television station’s primary stream, the
term ‘‘network station’’ means a
‘‘television broadcast station that is
owned or operated by, or affiliated with,
one or more of the television networks
in the United States providing
nationwide transmissions, and that
transmits a substantial part of the
programming supplied by such
networks for a substantial part of the
primary stream’s typical broadcast day.’’
This is the same definition that has been
in Section 111(f) since 1976. However,
the term ‘‘network station’’ is different
for multicast streams, where Congress
has adopted the Section 119 definition
of the term. So, the second half of the
new network station definition now
reads as follows:
The term ‘‘network station’’ shall be
applied to a multicast stream on which
a television broadcast station transmits
all or substantially all of the
programming of an interconnected
program service that is owned or
operated by, or affiliated with, one or
more of the television networks
described in subparagraph (A); and
offers programming on a regular basis
for 15 or more hours per week to at least
25 of the affiliated television licensees
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of the interconnected program service in
10 or more States.
We propose to incorporate this
definition by reference into Section
201.17 of the Office’s rules.
Local Service Area of a Primary
Transmitter. Before STELA, Section
111(f) defined ‘‘local service area of a
primary transmitter,’’ as ‘‘comprising the
area in which such station is entitled to
insist upon its signal being
retransmitted by a cable system
pursuant to the rules, regulations, and
authorizations of the Federal
Communications Commission (FCC) in
effect on April 15, 1976, or such
station’s television market as defined in
Section 76.55(e) of title 47, Code of
Federal Regulations (as in effect on
September 18, 1993), or any
modifications to such television market
made, on or after September 18, 1993,
pursuant to Section 76.55(e) or 76.59 of
title 47 of the Code of Federal
Regulations.’’ For cable statutory
licensing purposes, a television
broadcast station’s local–distant status
may be determined by the television
station’s 35–mile zone (a market
definition concept arising under the
FCC’s old rules), its Area of Dominant
Influence (‘‘ADI’’) (under Arbitron’s
defunct television market system), or
Designated Market Area (‘‘DMA’’) (under
Nielsen’s current television market
system). Grade B contour coverage has
also been used in determining the scope
of a noncommercial television station’s
local service area. However, Grade B
contours apply only to analog signals,
not digital signals whose service area is
now defined by the FCC’s ‘‘noise–
limited service contour.’’ STELA
amended Section 111(f) to include a
television station’s noise limited service
contour as one of the local service area
parameters in Section 111(f). This
amendment directly addresses the local/
distant status of full power
noncommercial educational television
stations under Section 111 of the Act.
II. AMENDMENTS TO THE SECTION
119 AND 122 LICENSES
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A. Definitions
Section 102 of STELA amended
Section 119 in several respects to
account for the digital television
transition and for other purposes.
However, the new law does not require
the Office to implement significant rule
changes. Instead, the task here is to
implement minor modifications to
Section 201.11, the regulatory
provisions centered on the satellite SOA
forms, to account for new and modified
nomenclature. For example, Section
201.11(b)(1) needs to be updated to
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include new definitions.12 Moreover,
the rules need to be amended to account
for the change in nomenclature from
‘‘Superstations’’ to ‘‘Non–network
stations.’’ It is also important to note that
STELA moved certain provisions of
Section 119, such as the provisions
governing low power television stations
and special market exceptions, to
Section 122. Moreover, Section 103 of
STELA added a new provision
governing the retransmission of state
public television networks. While the
majority of the statutory changes to
Sections 119 and 122 are self–executing,
it is worth highlighting these and other
changes that relate to the retransmission
of distant television signals by satellite
carriers.
Unserved Household Definition.
STELA updates the definition of
‘‘unserved household’’ to include a
standard for determining when a
household is served by a digital signal
for Section 119 purposes. Specifically,
the definition now includes a provision
pertaining to the digital noise–limited
service contour in addition to the
existing analog Grade B contour
reference.13 A household falling within
the noise–limited contour of the
primary stream of a digital network
station signal will now be considered
‘‘served’’ under Section 119.
STELA also amends the unserved
household definition to take into
account the ability of a television
broadcast station to transmit multicast
streams. Specifically, a subscriber who
can receive an in–market, over–the–air
signal of a multicast stream affiliated
with a particular television broadcast
network will be considered ‘‘served’’
starting in October 2010 or January
2011, depending on when the multicast
stream first came into existence.14 For
example, a household will be
considered served on October 1, 2010, if
the multicast stream existed on March
31, 2010. For all other in–market
multicast streams, a household will not
be considered served until January 1,
2011. STELA specifically states that
satellite carriers must pay royalties, on
a per–subscriber basis, for both distant
primary streams and distant multicast
streams.15
Unrelated to the digital television
transition, but nonetheless important to
the unserved household definition,
STELA clarifies that a particular
12STELA amended Section 119(f) to add the terms
‘‘Subscribe,’’ ‘‘Multicast Stream,’’ and ‘‘Primary
Stream.’’ It also amended the terms, ‘‘Local Market’’
and ‘‘Subscriber’’ and moved the definition of ‘‘Low
Power Television Station’’ to Section 122.
13See amended Section 119(d)(10)(A)(ii).
14See amended Section 119(d)(14).
15See amended Section 119(b)(1)(B).
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household’s ‘‘unserved’’ status is
determined by the reach of a network
station signal in its local television
market and is unaffected by the
availability of an over–the–air signal
from a network station licensed to a
community located in an adjacent non–
local market.16
B. State Public Television Networks
STELA also added a new provision
for the retransmission of certain distant
noncommercial educational stations to
the Section 122 license. Many state
public television networks, which by
statute or charter have a mandate to
serve their states’ citizens, have been
unable to reach substantial portions of
their intended audience by satellite
television. In response, STELA
explicitly permits the retransmission of
‘‘out–of–market’’ noncommercial
educational television station signals
that are part of a statewide system of
three or more such signals to satellite
subscribers located in a county in the
state where subscribers would otherwise
not be eligible to receive an in–state
noncommercial educational station.17
Even though STELA adds this provision
to Section 122 (the local–into–local
royalty–free license), satellite carriers
must still pay royalties to retransmit
such signals.18 Satellite carriers are
expected to list such signals in Spaces
C and D of the satellite Statement of
Account form.
C. Section 119 Deletions and Section
122 Additions
STELA reorganized Sections 119 and
122 to better reflect the royalty/royalty–
free dichotomy of the licenses. For
example, the provisions regarding the
royalty–free retransmission of
significantly viewed signals and low–
power television stations have been
moved from Section 119 to Section 122
of the Copyright Act.19 With regard to
low–power television stations, STELA
changed the local service area of such
stations so that a signal can be carried
on throughout a designated market
area.20 The special market exceptions,
which were added to Section 119 in
2004, were also moved to Section 122,
although satellite carriers are still
obligated to pay royalties for the stations
subject to such exceptions under the
statute.21 Satellite carriers should
16See
amended Section 119(d)(10)(A).
amended Section 122(a)(4)(E).
18See amended Section 122(a)(5).
19See amended Sections 122(a)(2) and (3),
respectively.
20See amended Section 122(a)(3).
21See amended Sections 122(a)(4) and (5),
respectively.
17See
E:\FR\FM\17SER1.SGM
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Federal Register / Vol. 75, No. 180 / Friday, September 17, 2010 / Rules and Regulations
continue to list the special exception
stations in Spaces C and D of their
Statement of Account forms.
III. CONCLUSION
We hereby issue interim regulations
and will seek comment in the future
from the public on the subjects
discussed above related to the
implementation of Sections 102 through
104 of the Satellite Television Extension
and Localism Act of 2010.
List of Subjects in 37 CFR 201
Cable, Copyright, Satellite
Interim Regulation
For the reasons set forth in the
preamble, Part 201 of Title 37 of the
Code of Federal Regulations is amended
as follows:
PART 201 – GENERAL PROVISIONS
1. The authority citation for part 201
continues to read as follows:
■
Authority: 17 U.S.C. 702
2. Amend § 201.11 as follows:
a. By removing ‘‘superstation’’ each
place it appears and adding in its place
‘‘non–network station’’;
b. In paragraph (a) by adding ‘‘and
Section 122(a)’’ after ‘‘section 119(b)(1)’’;
c. In paragraphs (a) and (b) by
removing ‘‘Pub. L. 103–369’’ each place
it appears and adding in its place ‘‘Pub.
L. No. 111–175’’ and
d. By revising paragraph (b)(1).
The revision reads as follows:
■
§ 201.11 Satellite carrier statements of
account covering statutory licenses for
secondary transmissions.
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*
*
*
*
*
(b) Definitions. (1) The terms
distributor, network station, private
home viewing, satellite carrier,
subscribe, subscriber, non–network
station, unserved household, primary
stream, and multicast stream, have the
meanings set forth in Section 119(d) of
title 17 of the United States Code, as
amended by Pub. L. No. 111–175.
*
*
*
*
*
■ 3. Amend § 201.17 as follows:
a. By revising paragraph (b)(5);
b. In paragraph (e)(5)(i) by adding ‘‘,
including multicast streams’’ after ‘‘The
number of channels’’;
c. By adding paragraph (e)(5)(iii);
d. By redesignating paragraphs
(e)(9)(vii) and (viii) as paragraphs
(e)(9)(ix) and (x)and adding new
paragraphs (e)(9)(vii) and (viii);
e. In newly redesignated paragraph
(e)(9)(ix) by removing ‘‘subclauses (v)
and (vi)’’ and add in its place
‘‘paragraphs (v) through (viii)’’;
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14:39 Sep 16, 2010
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f. By redesignating paragraphs (g)
through (l) as paragraphs (h) through
(m) and adding a new paragraph (g);
g. In newly redesignated paragraph
(i), by adding paragraph (10); and
h. By redesignating newly
redesignated paragraphs (j) through (m)
as paragraphs (k) through (n) and adding
a new paragraph (j).
i. In newly redesignated paragraph
(m), by removing ‘‘(k)’’ each place it
appears and adding ‘‘(m)’’ in its place;
and
j. In newly redesignated paragraph
(m)(3)(v) by removing ‘‘(j)’’ and adding
‘‘(m)’’ in its place.
The revisions and additions read as
follows:
§ 201.17 Statements of Account
covering compulsory licenses for
secondary transmissions by cable
systems.
*
*
*
*
*
(b) * * *
(5) The terms primary transmission,
secondary transmission, local service
area of a primary transmitter, distant
signal equivalent, network station,
independent station, noncommercial
educational station, primary stream,
multicast stream, simulcast, primary
transmitter, subscriber, and subscribe
have the meanings set forth in Section
111(f) of title 17 of the United States
Code, as amended by Pub. L. No. 94–
553, Pub. L. No. 103–369, and Pub. L.
No. 111–175.
*
*
*
*
*
(e) * * *
(5) * * *
(iii) A multicast stream is considered
a channel for purposes of this section
(9) * * *
(vii) A designation as to whether the
channel carried is a multicast stream,
and if so, the sub–channel number
assigned to that stream by the television
broadcast licensee.
(viii)Simulcasts must be reported and
labeled on the Statement of Accounts
form in an easily identifiable manner
(e.g., WETA–simulcast).
*
*
*
*
*
(g) Computation of copyright royalty
fee: subscriber groups. (1) If a cable
system provides a secondary
transmission of a primary transmitter to
some, but not all, communities served
by that cable system—
(i) The gross receipts and the distant
signal equivalent values for such
secondary transmission shall be derived
solely on the basis of the subscribers in
those communities where the cable
system provides such secondary
transmission; and
(ii) The total royalty fee for the period
paid by such system shall not be less
PO 00000
Frm 00016
Fmt 4700
Sfmt 4700
than the minimum fee multiplied by the
gross receipts from all subscribers to the
system.
(2) A cable system that, on a
statement submitted before the date of
the enactment of the Satellite Television
Extension and Localism Act of 2010,
computed its royalty fee consistent with
the methodology under paragraph (i)(1)
of this section or that amends a
statement filed before such date of
enactment to compute the royalty fee
due using such methodology, shall not
be subject to an action for infringement,
or eligible for any royalty refund or
offset, arising out of the use of such
methodology on such statement.
(3) Any royalty fee payments
received by the Copyright Office from
cable systems for the secondary
transmission of primary transmissions
that are in addition to the payments
calculated and deposited in accordance
with this subsection shall be deemed to
have been deposited for the particular
accounting period for which they are
received and shall be distributed as
specified under subsection 111(d) of
title 17, United States Code. Such
payments shall be considered as part of
the base rate royalty fund.
(4) The royalty fee rates established
by the Satellite Television Extension
and Localism Act shall take effect
commencing with the first accounting
period occurring in 2010.
*
*
*
*
*
(i) * * *
(10) The 3.75% rate does not apply to
distant multicast streams retransmitted
by cable systems.
(j) Multicasting. (1) A royalty
payment shall be made for the
retransmission of non–network
television programming carried on each
multicast stream of a distant digital
television signal under the following
circumstances:
(i) If the distant multicast stream was
first retransmitted by a cable system on
or after February 27, 2010, or
(ii) If the distant multicast stream is
retransmitted by a cable operator on or
after July 1, 2010.
(2) In any case in which a distant
multicast stream is the subject of a
written agreement entered into on or
before June 30, 2009, between a cable
system or an association representing
the cable system and a primary
transmitter or an association
representing the primary transmitter, a
distant signal equivalent value shall not
be assigned to a distant multicast stream
that is made on or before the date on
which such written agreement expires.
(3) No royalties are due for carrying
a distant multicast stream that
E:\FR\FM\17SER1.SGM
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Federal Register / Vol. 75, No. 180 / Friday, September 17, 2010 / Rules and Regulations
‘‘simulcasts’’ (i.e., duplicates) a primary
stream or another multicast stream of
the same station that the cable system is
carrying. However, simulcast streams
must be reported on the Statement of
Accounts.
(4) Multicast streams of digital
broadcast programming shall not be
subject to the 3.75% fee or the
syndicated exclusivity surcharge.
*
*
*
*
*
Dated: August 10,2010
Marybeth Peters,
Register of Copyrights.
Dated: August 10, 2010
James H. Billington,
The Librarian of Congress.
[FR Doc. 2010–22814 Filed 9–16–10; 8:45 am]
BILLING CODE 1410–30–S
LIBRARY OF CONGRESS
Copyright Royalty Board
37 CFR Part 380
[Docket No. 2005–1 CRB DTRA]
Digital Performance Right in Sound
Recordings and Ephemeral
Recordings
Copyright Royalty Board,
Library of Congress.
ACTION: Remand order.
AGENCY:
The Copyright Royalty Judges
are announcing their determination
regarding the minimum fee to be paid
by Noncommercial Webcasters under
two statutory licenses, permitting
certain digital performances of sound
recordings and the making of ephemeral
recordings, in response to an order of
remand by the United States Court of
Appeals for the District of Columbia
Circuit.
SUMMARY:
Effective September 17, 2010.
The remand order also is
published on the Copyright Royalty
Board Web site at https://www.loc.gov/
crb/orders/2010/amendment-remandorder-6–30–10.pdf.
FOR FURTHER INFORMATION CONTACT:
Richard Strasser, Senior Attorney, or
Gina Giuffreda, Attorney Advisor, by
telephone at (202) 707–7658 or by
e-mail at crb@loc.gov.
SUPPLEMENTARY INFORMATION: On May 1,
2007, the Copyright Royalty Judges
(‘‘Judges’’) published in the Federal
Register their determination of royalty
rates and terms under the statutory
licenses under Sections 112(e) and 114
of the Copyright Act, title 17 of the
United States Code, for the period 2006
through 2010 for the digital public
DATES:
wwoods2 on DSK1DXX6B1PROD with RULES_PART 1
ADDRESSES:
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Jkt 220001
performance of sound recordings by
means of eligible nonsubscription
transmission or a transmission by a new
subscription service. 72 FR 24084. In
Intercollegiate Broadcast System, Inc. v.
Copyright Royalty Board, 574 F.3d 748
(DC Cir. 2009), the United States Court
of Appeals for the District of Columbia
Circuit (‘‘DC Circuit’’) affirmed the
Judges’ determination in the main but
remanded to the Judges the matter of
setting the minimum fee to be paid by
both Commercial Webcasters and
Noncommercial Webcasters under
Sections 112(e) and 114 of the Copyright
Act. Id. at 762, 767. No rules or
procedures applied to a proceeding that
is remanded, and the Judges adopted an
Interim Final Rule to govern. 37 CFR
351.15. Pursuant to this Rule,
Intercollegiate Broadcasting System, Inc.
(‘‘IBS’’) and SoundExchange, Inc.
(‘‘SoundExchange’’) presented proposals
for the conduct and schedule of the
remand proceeding, including
settlement negotiations, written direct
statements with proposed rates,
discovery and an evidentiary hearing.
By order dated October 23, 2009, the
Judges established a period commencing
November 2, 2009, and concluding on
December 2, 2009, for the parties to
negotiate and submit a settlement of the
minimum fee issue that is the subject of
the remand. Absent settlement, the
parties were directed to file written
direct statements by January 11, 2010.
On December 2, 2009,
SoundExchange, Inc. and the Digital
Media Association (‘‘DiMA’’) submitted
a settlement regarding the statutory
minimum fee to be paid by Commercial
Webcasters. Subsequently, the Judges
published for comment the proposed
change in the rule necessary to
implement that settlement pursuant to
the order of remand from the DC Circuit.
74 FR 68214 (December 23, 2009). The
Judges received one comment from IBS.
The Final Rule for the minimum fee to
be paid by Commercial Webcasters was
published. 75 FR 6097 (February 8,
2010).
Following the filing of Written Direct
Statements by IBS and SoundExchange,
on January 20, 2010, the Judges
established the discovery schedule on
the remaining issue of the minimum fee
for Noncommercial Webcasters.
Following discovery, the hearing was
held May 18, 2010. SoundExchange
presented the testimony of W. Tucker
McCrady, associate counsel, digital legal
affairs, Warner Music Group (‘‘WMG’’),
and Barrie Kessler, chief operating
officer, SoundExchange. It also offered
Webcaster Settlement Acts of 2008 and
2009 agreements between
SoundExchange and College
PO 00000
Frm 00017
Fmt 4700
Sfmt 4700
56873
Broadcasters, Inc. (‘‘CBI’’) for
noncommercial educational webcasters,
National Association of Broadcasters
(‘‘NAB’’) for broadcasters, Sirius XM
Radio, Inc. (‘‘Sirius XM’’) for satellite
services and DiMA for commercial
webcasters. 5/18/10 Tr. at 13 (McCrady).
IBS presented the testimony of
Frederick J. Kass, Jr., John E. Murphy
and Benjamin Shaiken. 5/18/10 Tr. at 62
and 67 (Kass). The testimony of Mr.
Kass was that IBS supported a different
rate proposal than the one filed. When
this different rate proposal was not
timely filed, the Judges ordered that it
be filed by June 1, 2010. 5/18/10 Tr. at
98 (Kass). The IBS’ Restated Rate
Proposal was filed June 1, 2010.
Mr. McCrady testified that WMG
enters voluntary licenses for commercial
webcasters. A negotiated license for the
full catalogue must generate at least
payments of $25,000. 5/18/10 Tr. at 25
(McCrady). The lowest commercial
minimum fee is 20% of revenue. A
smaller revenue stream would not
justify the time and resources WMG
would need to devote to evaluating,
negotiating, implementing and
monitoring an agreement. 5/18/10 Tr. at
20 (McCrady). Noncommercial
Webcasters use the statutory license,
because they do not generate enough
revenue to WMG to support negotiating
a license. SX Remand Trial Ex. 1 at 6
(McCrady).
The CBI agreement has the rates and
terms for noncommercial educational
webcasters, the same group that IBS
represents in this proceeding. 5/18/10
Tr. at 71 (Kass). It has a minimum fee
of $500 per year per station or channel
and a usage rate of $500 per channel for
streaming a noncommercial educational
service up to 159,400 aggregate tuning
hours (‘‘ATH’’). 5/18/10 Tr. at 14
(McCrady). The SoundExchange
proposed minimum fee is $500 per
station or channel. 5/18/10 Tr. at 14
(McCrady). The proposed minimum fee
is fully recoupable against royalty fees
owed and this feature reduces
transaction costs for both parties. 5/18/
10 Tr. at 21, 22 (McCrady). IBS says the
average annual revenue of its member
stations is $9,000. 5/18/10 Tr. at 20
(McCrady) and 5/18/10 Tr. at 71 (Kass).
So, the proposed fee is 6% of revenue,
a large discount for Noncommercial
Webcasters off the negotiated license
agreements for commercial webcasters.
5/18/10 Tr. at 20 (McCrady). All users
of sound recordings should be licensed
and pay something. It is an important
educational message for students to
learn the value of recorded music and
to pay for it. 5/18/10 Tr. at 23
(McCrady). From the first webcasting
proceeding, the standard minimum fee
E:\FR\FM\17SER1.SGM
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Agencies
[Federal Register Volume 75, Number 180 (Friday, September 17, 2010)]
[Rules and Regulations]
[Pages 56868-56873]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-22814]
=======================================================================
-----------------------------------------------------------------------
LIBRARY OF CONGRESS
Copyright Office
37 CFR Part 201
[Docket No. RM 2010-2]
Implementation of the Satellite Television Extension and Localism
Act of 2010
ACTION: Interim Rule.
-----------------------------------------------------------------------
SUMMARY: The Copyright Office amends its rules governing statements of
account for cable systems and satellite carriers to reflect changes
resulting from the recent enactment of the Satellite Television
Extension and Localism Act of 2010.
FOR FURTHER INFORMATION CONTACT: Ben E. Golant, Assistant General
Counsel or Tanya M. Sandros, Deputy General Counsel, Copyright GC/I&R,
P.O. Box 70400, Washington, DC 20024. Telephone: (202) 707-8380.
Telefax: (202)-707-8366.
EFFECTIVE DATES: September 17, 2010.
SUPPLEMENTARY INFORMATION: Congress recently passed the Satellite
Television Extension and Localism Act of 2010 (``STELA'') which was
signed by the President on May 27, 2010. See Pub. L. No. 111-175. This
legislation updated and reauthorized the distant signal license for
satellite carriers under Section 119 of title 17. It also amended the
local-into-local satellite license and the cable statutory license in
several respects. The purpose of this Interim Rule is to account for
the new statutory provisions under Sections 111, 119, and 122, as
discussed below.
I. SECTION 111 AMENDMENTS
A. Phantom Signals and Subscriber Groups
For the past 30 years, cable operators have paid royalties for the
retransmission of non-network programming carried by distant broadcast
television signals under the Section 111 statutory license. The
royalties have been based on a percentage of gross receipts generated
by a cable system. Under the licensing framework established by
Congress in 1976, cable operators had to pay for the number of distant
signals carried, even though some such signals were not received or
made available to every subscriber of a particular cable system.
Distant broadcast signals that were not made available on a system-wide
basis, but on which operators were required to pay royalties, have been
called ``phantom signals.'' The Copyright Office has long recognized
the phantom signal situation, but the matter has only recently received
legislative attention.\1\
---------------------------------------------------------------------------
\1\There is no legislative history accompanying STELA. However,
an earlier iteration of the legislation in 2009 contained the same
statutory language with respect to phantom signals and did have
accompanying legislative history.See Satellite Home Viewer Update
and Reauthorization Act of 2009, H. Rep. No. 111-319, 111th Cong.,
1st Sess. (Oct. 28, 2009) at 12 (``[T]he cable television and
content industries have taken different views on whether cable
providers should include certain signals that are not received by
every customer in the calculation of Section 111 royalty
obligations. Members of the cable industry argue that providers
should not have to pay for such signals because some consumers do
not receive them. Members of the content industry assert that, under
the law, all signals should be taken into account in the royalty
rate calculation. The Committee understands that there are two
different readings of the statute and that the issue should be
resolved to provide certainty to both industries.'')
---------------------------------------------------------------------------
Section 104 of STELA, entitled ``Modifications to Cable System
Secondary Transmission Rights Under Section 111,'' directly addresses
phantom signals. Specifically, it amended Section 111(d)(1) of the
Copyright Act which sets forth the methodology for cable operators to
calculate royalties. Cable operators now pay royalties only where the
distant broadcast signal is actually received by subscribers rather
than on a broader cable system basis as had been the case since 1978.
The amendments finally resolve this enduring dispute.\2\
---------------------------------------------------------------------------
\2\See id. at 23-24. (``Subsection (c) resolves the phantom
signal ambiguity that required cable systems to pay royalty fees for
carriage to all subscribers within the system. It allows a cable
system that provides transmissions of distant signals to some but
not all communities to calculate royalty fees on the basis of the
actual carriage of specific signals and the gross receipts derived
from the subscribers in the community.'')
---------------------------------------------------------------------------
Specifically, the legislation amends subparagraph (C) of Section
111(d)(1) to state that if a cable system provides secondary
transmissions of primary transmitters to some, but not all, communities
served by the cable system, the gross receipts and distant signal
equivalent values for each secondary transmission may be derived on the
basis of the subscribers in those communities where the cable system
actually provides such secondary transmission. Where a cable system
calculates its royalties on a community-specific (``subscriber group'')
basis, the operator applies the methodology in Section
111(d)(1)(B)(ii)-(iv) to calculate a separate royalty for each
subscriber group. However, the operator will still compute the minimum
fee calculation under Section 111(d)(1)(B)(i) on a cable system basis
and is required to pay no less than the minimum fee. \3\
---------------------------------------------------------------------------
\3\ See id. at 12. (``The legislation revises and updates
subparagraphs (C) and (D) of Section 111(d)(1) to resolve the so-
called ``phantom signal''issue. Just as the current law allows
subscriber group calculations for ``partially local/partially
distant'' situations, so too may cable systems use the subscriber
group methodology when calculating royalties for phantom signal
situations. . . . This change shall not affect a cable system's
obligation to pay the minimum fee as appropriate.'')
---------------------------------------------------------------------------
[[Page 56869]]
The legislation also amends subparagraph (D) of Section 111(d)(1)
to state that for any accounting period prior to the enactment of the
amendments in subparagraph (C), a cable system's computation of its
royalty fee consistent with the methodology described in subparagraph
(C)(iii), or a cable system's use of such methodology on an amendment
of a statement originally filed before the date of enactment, will not
be deemed actionable as an act of infringement within the meaning of
Section 111(c)(2)(B). In other words, operators who have heretofore
based royalty payments on subscriber group calculations will not face
liability for having done so. Moreover, the amendments also make clear
that cable operators who paid for phantom signals in the past are not
entitled to now seek refunds or offsets for those payments.\4\
---------------------------------------------------------------------------
\4\See id. at 12 (noting the same).
---------------------------------------------------------------------------
As part of the legislative compromise on the phantom signal matter,
certain cable operators agreed to the payment of additional royalty
amounts directly to the Copyright Office for a five year period. These
additional royalty payments are addressed in new paragraph (7) of
subsection (d), which directs the Copyright Office to treat them as
part of the Section 111 royalty pool attributable to the period for
which they are submitted.\5\
---------------------------------------------------------------------------
\5\ See id. at 13. (``Finally, as a result of discussions among
the parties affected by the phantom signal issue that helped lead to
broad industry support for these amendments, certain cable operators
agreed to the payment of additional royalty amounts directly to the
Copyright Office for a 5-year period. . . . For example, if the
first such additional royalty payments are submitted on the filing
deadline for the first accounting period of 2010 (i.e., August 29,
2010), the Office shall treat such amounts as part of the base rate
royalty pool for the first accounting period of 2010 for deposit and
distribution to claimants using the existing procedures.'')
---------------------------------------------------------------------------
The changes to Section 111(d) necessitate an amendment to Section
201.17 as well as a revision to the Form 3 Statement of Account. The
interim rule adds a new subsection ``g'' to the rules to implement the
statutory language regarding subscriber groups and reflect the new
royalty rates (noted below). The Office has also revised SOA Form 3 to
better accommodate subscriber group reporting and to recognize the
additional royalties that will be submitted by certain cable operators.
B. Rate Adjustments
Section 104 of STELA also revises and updates Section 111(d)(1) to
adjust the royalty percentages payable by cable systems that must
compute their royalty payments in accordance with subparagraph (B) of
that provision. The adjusted royalty percentages were made effective as
of January 1, 2010, in lieu of any adjustments in royalty percentages
or gross receipts thresholds that might have been made this year in a
cable royalty rate inflation adjustment proceeding pursuant to Sections
801(b)(2) and 804(b)(1).\6\ The new law adjusts the existing ``base''
royalty rates for Form 3 systems upwards by approximately 5 percent
starting with the first accounting period of 2010. Under STELA, the fee
for the first distant signal equivalent increases from 1.013 percent to
1.064 percent; the fee for the second through fourth distant signal
equivalent increases from 0.668 percent to 0.701 percent; and the fee
for the fifth distant signal equivalent, and each additional distant
signal equivalent increases from 0.314 percent to 0.330 percent. STELA
does not change the rates for smaller cable systems that use the SOA
Form 1-2 nor does it disturb the gross receipts thresholds for
determining whether an operator should file SOA Form 3 or SOA Form 1-2.
STELA also clarifies that the base rate fees, the 3.75 fee, and the
syndicated exclusivity surcharge will not be subject to an adjustment
again before 2015. The Office has updated Section 201.17 to reflect the
rate adjustment provisions of STELA, but it does not believe any
further regulatory amendments are required.
---------------------------------------------------------------------------
\6\On January 5, 2010, the Copyright Royalty Judges issued a
Federal Register Notice commencing the 2010 Cable Rate Proceeding to
adjust the gross receipt limitations and royalty rates applicable
under Section 111. See 75 FR 455 (Jan. 5, 2010). Soon after STELA
was enacted, cable operators and copyright owners filed a Joint
Motion to Terminate the proceeding. The Judges have not yet issued
an Order terminating the proceeding.
---------------------------------------------------------------------------
C. DTV Signals
1. Multicasting
Section 104 of STELA modifies particular provisions in Section 111
to accommodate the 2009 digital broadcast television transition.
Digital television signals are different from analog signals in that a
digital television broadcaster has the ability to air several sub-
channels, or multicasts, from its single broadcast transmitter. Cable
operators have retransmitted distant multicasts for a number of years
under the Section 111 license. STELA clarifies that a royalty payment
should be made for the retransmission of non-network television
programming carried on each unique digital multicast stream of a
distant digital television signal. Specifically, the definition of
distant signal equivalent (``DSE'') in Section 111 was changed to
account for the retransmission of multicast streams. A DSE, as modified
by STELA, is :
(i) the value assigned to the secondary transmission of any non-
network television programming carried by a cable system in whole or in
part beyond the local service area of the primary transmitter of such
programming; and
(ii) computed by assigning a value of one to each primary stream
and to each multicast stream (other than a simulcast) that is an
independent station, and by assigning a value of one-quarter to each
primary stream and to each multicast stream (other than a simulcast)
that is a network station or a noncommercial educational station.
At the same time, however, STELA carves out special exceptions
regarding the royalty treatment of multicast streams under Section 111.
Specifically, ``the royalty rates specified in Sections 256.2(c) and
256.2(d) of title 37, Code of Federal Regulations (commonly referred to
as the ``3.75 percent rate'' and the ``syndicated exclusivity
surcharge'' respectively), as in effect on the date of enactment of the
Satellite Television Extension and Localism Act, as such rates may be
adjusted, or such sections redesignated, thereafter by the Copyright
Royalty Judges, shall not apply to the secondary transmission of a
multicast stream.'' This provision, in effect, would permit a cable
operator to carry multiple multicast streams without concern about
exceeding its market quota of distant signals and being required to pay
the 3.75% fee. In addition, no royalties are due for carrying a distant
multicast stream that ``simulcasts'' (i.e., duplicates) a primary
stream or another multicast stream of the same station that the system
is carrying. The amendments to Section 201.17 incorporate the relevant
statutory language on multicast streams into new subpart (j) of the
Copyright Office's rules.\7\
---------------------------------------------------------------------------
\7\Two years ago, the Office issued a Notice of Proposed
Rulemaking to address the legal concerns raised by the
retransmission of digital television signals by cable operators
under the Section 111 license. See 73 F.R. 31399 (June 2, 2008).
Multicasting was one of the prominent matters raised for comment.
Now that STELA has been enacted, we will be re-examining the issues
that remain in that rulemaking.
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2. Effective Dates
Section 104 of STELA specifically delineates the effective dates
with respect to the treatment of multicast
[[Page 56870]]
streams under the cable statutory license. First, STELA states that the
Section 111 amendments, with regard to the distant signal equivalent
value of the secondary transmission of the multicast stream of a
primary transmitter, takes effect on the date of the enactment of the
Act [i.e., February 27, 2010].\8\ That is, any distant multicasts first
retransmitted by a cable operator on or after February 27, 2010, is
subject to royalties. Second, STELA delays the implementation of the
requirement to pay for carriage of a multicast stream ``in any case in
which a cable system was making secondary transmissions of a multicast
stream beyond the local service area of its primary transmitter before
the date of enactment of this Act [i.e., February 27, 2010] and states
that ``a distant signal equivalent value shall not be assigned to
secondary transmissions of such multicast stream that are made on or
before June 30, 2010.''\9\ [emphasis added]. Clearly, cable operators
will not have to pay royalties for any multicasts carried prior to
STELA's effective date. Further, Congress has built a grace period into
the statute so that those cable operators that have carried distant
multicasts prior to the effective date through to June 30, 2010, do not
have to pay royalties for the first accounting period of this year.\10\
Finally, STELA states that ``in any case in which the secondary
transmission of a multicast stream of a primary transmitter is the
subject of a written agreement entered into on or before June 30, 2009,
between a cable system or an association representing the cable system
and a primary transmitter or an association representing the primary
transmitter, a distant signal equivalent value shall not be assigned to
secondary transmissions of such multicast stream beyond the local
service area of its primary transmitter that are made on or before the
date on which such written agreement expires.'' This could be
characterized as the ``Grandfathered Agreement Exception.'' Here, no
royalties are due for the retransmission of a distant multicast that is
subject to an ongoing agreement. However, once the agreement expires,
then royalties would have to be paid for such distant multicasts if
they continue to be carried.
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\8\The date of enactment is usually the date the President signs
the bill whereas the effective date may be either earlier or later.
However, STELA includes a provision that clarifies that in most
instances references to ``date of enactment'' shall be deemed to
refer to February 27, 2010, unless otherwise specified. See Section
307of STELA
\9\June 30, 2010, is the last day of the first accounting period
for 2010 (i.e., 2010/1).
\10\A cable operator that did not want to pay royalties for a
multicast for the second accounting period of 2010 had to drop the
signal prior to July 1, 2010 (the first day of the second accounting
period), the date when a royalty obligation would commence.
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It is important to mention that a cable system that has reported
secondary transmissions of a multicast stream beyond the local service
area of its primary transmitter on a statement of account deposited
under Section 111 before the date of the enactment of STELA is not
entitled to any refund, or offset, of royalty fees paid on account of
such secondary transmissions of such multicast stream.
3. Statement of Account Forms
Section 201.17(e), the rule dictating the fields and parameters of
the cable statement of account forms, has to be revised to account for
the changes in Section 111 due to STELA. We have identified at least
two separate subsections that need to be amended to conform with the
new multicast provisions of the new law. The first is the designation
of ``channels'' under Section 201.17(e)(5). Here, we amend the
regulation to recognize that a multicast stream would be considered a
``channel'' for Statement of Account purposes. Similarly, we amend
Section 201.17(e)(9) to account for multicast streams in the ``Primary
Transmitters'' designation in the rules. Specifically, we find it
necessary to explain how to label and account for the retransmission of
multicast signals on the SOA. The revised SOAs the Office has released
for the 2010/1 period reflect this change and request that each
multicast stream be identified by its over-the-air call sign followed
by the sub-channel number assigned to it by the television broadcast
licensee. It is important to note that a simulcast stream\11\ is a
multicast stream, and even though no royalties must be paid for its
retransmission, the carriage of such still must be reported on the
Statement of Account form. A simulcast stream should be properly
labeled on the form (e.g., WETA-simulcast) so that Licensing Division
examiners are able to differentiate this type of stream from other
multicast streams that may require a royalty payment.
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\11\A simulcast is defined as ``[A] multicast stream of a
television broadcast station that duplicates the programming
transmitted by the primary stream or another multicast stream of
such station.''
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4. Definitions
STELA amended Section 111(f) of the Copyright Act in many respects
to include new definitions that relate to digital broadcast television
and for other purposes. The new or modified definitions in Section 111,
like the revised definition of ``DSE'' discussed above, focus on the
technical aspects of digital signals and the ability of television
stations to multicast or split its one digital signal into many sub-
channels. Under STELA, the terms ``primary stream,'' ``multicast
stream,'' and ``simulcast''were added to Section 111 because of the
digital television transition. The terms ``independent station,''
``noncommercial educational station,'' and ``network station'' which
have been part of Section 111 for over 33 years, were modified for the
same reason. The same can be said with regard to the revised
definitions of the terms ``primary transmission'' and ``local service
area of a primary transmitter,'' which is discussed in greater detail,
below.
The definitions of ``secondary transmission,'' and ``cable system''
were modified slightly and new terms ``Subscribe,'' ``Subscriber'' and
``Primary Transmitter'' were added to Section 111(f). These new or
revised definitions are simple clarifications with no direct
association with the digital transition. Consequently, the Office
amends Section 201.17(b)(5) to account for these new definitions and
has revised the SOA forms to reflect the statutory language. Network
Stations. There is a newly expanded definition of ``network station''in
STELA. It reflects the inclusion of digital television signals in the
Section 111 rubric. For a digital television station's primary stream,
the term ``network station'' means a ``television broadcast station
that is owned or operated by, or affiliated with, one or more of the
television networks in the United States providing nationwide
transmissions, and that transmits a substantial part of the programming
supplied by such networks for a substantial part of the primary
stream's typical broadcast day.'' This is the same definition that has
been in Section 111(f) since 1976. However, the term ``network
station'' is different for multicast streams, where Congress has
adopted the Section 119 definition of the term. So, the second half of
the new network station definition now reads as follows:
The term ``network station'' shall be applied to a multicast stream
on which a television broadcast station transmits all or substantially
all of the programming of an interconnected program service that is
owned or operated by, or affiliated with, one or more of the television
networks described in subparagraph (A); and offers programming on a
regular basis for 15 or more hours per week to at least 25 of the
affiliated television licensees
[[Page 56871]]
of the interconnected program service in 10 or more States.
We propose to incorporate this definition by reference into Section
201.17 of the Office's rules.
Local Service Area of a Primary Transmitter. Before STELA, Section
111(f) defined ``local service area of a primary transmitter,'' as
``comprising the area in which such station is entitled to insist upon
its signal being retransmitted by a cable system pursuant to the rules,
regulations, and authorizations of the Federal Communications
Commission (FCC) in effect on April 15, 1976, or such station's
television market as defined in Section 76.55(e) of title 47, Code of
Federal Regulations (as in effect on September 18, 1993), or any
modifications to such television market made, on or after September 18,
1993, pursuant to Section 76.55(e) or 76.59 of title 47 of the Code of
Federal Regulations.'' For cable statutory licensing purposes, a
television broadcast station's local-distant status may be determined
by the television station's 35-mile zone (a market definition concept
arising under the FCC's old rules), its Area of Dominant Influence
(``ADI'') (under Arbitron's defunct television market system), or
Designated Market Area (``DMA'') (under Nielsen's current television
market system). Grade B contour coverage has also been used in
determining the scope of a noncommercial television station's local
service area. However, Grade B contours apply only to analog signals,
not digital signals whose service area is now defined by the FCC's
``noise-limited service contour.'' STELA amended Section 111(f) to
include a television station's noise limited service contour as one of
the local service area parameters in Section 111(f). This amendment
directly addresses the local/distant status of full power noncommercial
educational television stations under Section 111 of the Act.
II. AMENDMENTS TO THE SECTION 119 AND 122 LICENSES
A. Definitions
Section 102 of STELA amended Section 119 in several respects to
account for the digital television transition and for other purposes.
However, the new law does not require the Office to implement
significant rule changes. Instead, the task here is to implement minor
modifications to Section 201.11, the regulatory provisions centered on
the satellite SOA forms, to account for new and modified nomenclature.
For example, Section 201.11(b)(1) needs to be updated to include new
definitions.\12\ Moreover, the rules need to be amended to account for
the change in nomenclature from ``Superstations'' to ``Non-network
stations.'' It is also important to note that STELA moved certain
provisions of Section 119, such as the provisions governing low power
television stations and special market exceptions, to Section 122.
Moreover, Section 103 of STELA added a new provision governing the
retransmission of state public television networks. While the majority
of the statutory changes to Sections 119 and 122 are self-executing, it
is worth highlighting these and other changes that relate to the
retransmission of distant television signals by satellite carriers.
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\12\STELA amended Section 119(f) to add the terms ``Subscribe,''
``Multicast Stream,'' and ``Primary Stream.'' It also amended the
terms, ``Local Market'' and ``Subscriber'' and moved the definition
of ``Low Power Television Station'' to Section 122.
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Unserved Household Definition. STELA updates the definition of
``unserved household'' to include a standard for determining when a
household is served by a digital signal for Section 119 purposes.
Specifically, the definition now includes a provision pertaining to the
digital noise-limited service contour in addition to the existing
analog Grade B contour reference.\13\ A household falling within the
noise-limited contour of the primary stream of a digital network
station signal will now be considered ``served'' under Section 119.
---------------------------------------------------------------------------
\13\See amended Section 119(d)(10)(A)(ii).
---------------------------------------------------------------------------
STELA also amends the unserved household definition to take into
account the ability of a television broadcast station to transmit
multicast streams. Specifically, a subscriber who can receive an in-
market, over-the-air signal of a multicast stream affiliated with a
particular television broadcast network will be considered ``served''
starting in October 2010 or January 2011, depending on when the
multicast stream first came into existence.\14\ For example, a
household will be considered served on October 1, 2010, if the
multicast stream existed on March 31, 2010. For all other in-market
multicast streams, a household will not be considered served until
January 1, 2011. STELA specifically states that satellite carriers must
pay royalties, on a per-subscriber basis, for both distant primary
streams and distant multicast streams.\15\
---------------------------------------------------------------------------
\14\See amended Section 119(d)(14).
\15\See amended Section 119(b)(1)(B).
---------------------------------------------------------------------------
Unrelated to the digital television transition, but nonetheless
important to the unserved household definition, STELA clarifies that a
particular household's ``unserved'' status is determined by the reach
of a network station signal in its local television market and is
unaffected by the availability of an over-the-air signal from a network
station licensed to a community located in an adjacent non-local
market.\16\
---------------------------------------------------------------------------
\16\See amended Section 119(d)(10)(A).
---------------------------------------------------------------------------
B. State Public Television Networks
STELA also added a new provision for the retransmission of certain
distant noncommercial educational stations to the Section 122 license.
Many state public television networks, which by statute or charter have
a mandate to serve their states' citizens, have been unable to reach
substantial portions of their intended audience by satellite
television. In response, STELA explicitly permits the retransmission of
``out-of-market'' noncommercial educational television station signals
that are part of a statewide system of three or more such signals to
satellite subscribers located in a county in the state where
subscribers would otherwise not be eligible to receive an in-state
noncommercial educational station.\17\ Even though STELA adds this
provision to Section 122 (the local-into-local royalty-free license),
satellite carriers must still pay royalties to retransmit such
signals.\18\ Satellite carriers are expected to list such signals in
Spaces C and D of the satellite Statement of Account form.
---------------------------------------------------------------------------
\17\See amended Section 122(a)(4)(E).
\18\See amended Section 122(a)(5).
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C. Section 119 Deletions and Section 122 Additions
STELA reorganized Sections 119 and 122 to better reflect the
royalty/royalty-free dichotomy of the licenses. For example, the
provisions regarding the royalty-free retransmission of significantly
viewed signals and low-power television stations have been moved from
Section 119 to Section 122 of the Copyright Act.\19\ With regard to
low-power television stations, STELA changed the local service area of
such stations so that a signal can be carried on throughout a
designated market area.\20\ The special market exceptions, which were
added to Section 119 in 2004, were also moved to Section 122, although
satellite carriers are still obligated to pay royalties for the
stations subject to such exceptions under the statute.\21\ Satellite
carriers should
[[Page 56872]]
continue to list the special exception stations in Spaces C and D of
their Statement of Account forms.
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\19\See amended Sections 122(a)(2) and (3), respectively.
\20\See amended Section 122(a)(3).
\21\See amended Sections 122(a)(4) and (5), respectively.
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III. CONCLUSION
We hereby issue interim regulations and will seek comment in the
future from the public on the subjects discussed above related to the
implementation of Sections 102 through 104 of the Satellite Television
Extension and Localism Act of 2010.
List of Subjects in 37 CFR 201
Cable, Copyright, Satellite
Interim Regulation
For the reasons set forth in the preamble, Part 201 of Title 37 of
the Code of Federal Regulations is amended as follows:
PART 201 - GENERAL PROVISIONS
0
1. The authority citation for part 201 continues to read as follows:
Authority: 17 U.S.C. 702
0
2. Amend Sec. 201.11 as follows:
a. By removing ``superstation'' each place it appears and adding in
its place ``non-network station'';
b. In paragraph (a) by adding ``and Section 122(a)'' after
``section 119(b)(1)'';
c. In paragraphs (a) and (b) by removing ``Pub. L. 103-369'' each
place it appears and adding in its place ``Pub. L. No. 111-175'' and
d. By revising paragraph (b)(1).
The revision reads as follows:
Sec. 201.11 Satellite carrier statements of account covering statutory
licenses for secondary transmissions.
* * * * *
(b) Definitions. (1) The terms distributor, network station,
private home viewing, satellite carrier, subscribe, subscriber, non-
network station, unserved household, primary stream, and multicast
stream, have the meanings set forth in Section 119(d) of title 17 of
the United States Code, as amended by Pub. L. No. 111-175.
* * * * *
0
3. Amend Sec. 201.17 as follows:
a. By revising paragraph (b)(5);
b. In paragraph (e)(5)(i) by adding ``, including multicast
streams'' after ``The number of channels'';
c. By adding paragraph (e)(5)(iii);
d. By redesignating paragraphs (e)(9)(vii) and (viii) as paragraphs
(e)(9)(ix) and (x)and adding new paragraphs (e)(9)(vii) and (viii);
e. In newly redesignated paragraph (e)(9)(ix) by removing
``subclauses (v) and (vi)'' and add in its place ``paragraphs (v)
through (viii)'';
f. By redesignating paragraphs (g) through (l) as paragraphs (h)
through (m) and adding a new paragraph (g);
g. In newly redesignated paragraph (i), by adding paragraph (10);
and
h. By redesignating newly redesignated paragraphs (j) through (m)
as paragraphs (k) through (n) and adding a new paragraph (j).
i. In newly redesignated paragraph (m), by removing ``(k)'' each
place it appears and adding ``(m)'' in its place; and
j. In newly redesignated paragraph (m)(3)(v) by removing ``(j)''
and adding ``(m)'' in its place.
The revisions and additions read as follows:
Sec. 201.17 Statements of Account covering compulsory licenses for
secondary transmissions by cable systems.
* * * * *
(b) * * *
(5) The terms primary transmission, secondary transmission, local
service area of a primary transmitter, distant signal equivalent,
network station, independent station, noncommercial educational
station, primary stream, multicast stream, simulcast, primary
transmitter, subscriber, and subscribe have the meanings set forth in
Section 111(f) of title 17 of the United States Code, as amended by
Pub. L. No. 94-553, Pub. L. No. 103-369, and Pub. L. No. 111-175.
* * * * *
(e) * * *
(5) * * *
(iii) A multicast stream is considered a channel for purposes of
this section
(9) * * *
(vii) A designation as to whether the channel carried is a
multicast stream, and if so, the sub-channel number assigned to that
stream by the television broadcast licensee.
(viii)Simulcasts must be reported and labeled on the Statement of
Accounts form in an easily identifiable manner (e.g., WETA-simulcast).
* * * * *
(g) Computation of copyright royalty fee: subscriber groups. (1) If
a cable system provides a secondary transmission of a primary
transmitter to some, but not all, communities served by that cable
system--
(i) The gross receipts and the distant signal equivalent values for
such secondary transmission shall be derived solely on the basis of the
subscribers in those communities where the cable system provides such
secondary transmission; and
(ii) The total royalty fee for the period paid by such system shall
not be less than the minimum fee multiplied by the gross receipts from
all subscribers to the system.
(2) A cable system that, on a statement submitted before the date
of the enactment of the Satellite Television Extension and Localism Act
of 2010, computed its royalty fee consistent with the methodology under
paragraph (i)(1) of this section or that amends a statement filed
before such date of enactment to compute the royalty fee due using such
methodology, shall not be subject to an action for infringement, or
eligible for any royalty refund or offset, arising out of the use of
such methodology on such statement.
(3) Any royalty fee payments received by the Copyright Office from
cable systems for the secondary transmission of primary transmissions
that are in addition to the payments calculated and deposited in
accordance with this subsection shall be deemed to have been deposited
for the particular accounting period for which they are received and
shall be distributed as specified under subsection 111(d) of title 17,
United States Code. Such payments shall be considered as part of the
base rate royalty fund.
(4) The royalty fee rates established by the Satellite Television
Extension and Localism Act shall take effect commencing with the first
accounting period occurring in 2010.
* * * * *
(i) * * *
(10) The 3.75% rate does not apply to distant multicast streams
retransmitted by cable systems.
(j) Multicasting. (1) A royalty payment shall be made for the
retransmission of non-network television programming carried on each
multicast stream of a distant digital television signal under the
following circumstances:
(i) If the distant multicast stream was first retransmitted by a
cable system on or after February 27, 2010, or
(ii) If the distant multicast stream is retransmitted by a cable
operator on or after July 1, 2010.
(2) In any case in which a distant multicast stream is the subject
of a written agreement entered into on or before June 30, 2009, between
a cable system or an association representing the cable system and a
primary transmitter or an association representing the primary
transmitter, a distant signal equivalent value shall not be assigned to
a distant multicast stream that is made on or before the date on which
such written agreement expires.
(3) No royalties are due for carrying a distant multicast stream
that
[[Page 56873]]
``simulcasts'' (i.e., duplicates) a primary stream or another multicast
stream of the same station that the cable system is carrying. However,
simulcast streams must be reported on the Statement of Accounts.
(4) Multicast streams of digital broadcast programming shall not be
subject to the 3.75% fee or the syndicated exclusivity surcharge.
* * * * *
Dated: August 10,2010
Marybeth Peters,
Register of Copyrights.
Dated: August 10, 2010
James H. Billington,
The Librarian of Congress.
[FR Doc. 2010-22814 Filed 9-16-10; 8:45 am]
BILLING CODE 1410-30-S