Fostering Independent and Diverse Sources of Video Programming, 38007-38017 [2024-09701]

Agencies

• FEDERAL COMMUNICATIONS COMMISSION

[Federal Register Volume 89, Number 89 (Tuesday, May 7, 2024)]
[Proposed Rules]
[Pages 38007-38017]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-09701]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 76

[MB Docket No. 24-115; FCC 24-44; FR ID 216063]


Fostering Independent and Diverse Sources of Video Programming

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: In this document, the Federal Communications Commission 
(Commission) seeks comment on the current state of the marketplace for 
diverse and independent programming and on the obstacles faced by 
independent programmers seeking carriage on multichannel video 
programming distributors (MVPDs) and online platforms. In order to 
alleviate such obstacles, the Commission proposes to prohibit two types 
of contractual provisions in program carriage agreements between 
independent programmers and MVPDs: most favored nation (MFN) 
provisions, and unreasonable alternative distribution method (ADM) 
provisions. The Commission also seeks comment on current program 
bundling practices.

DATES: Comments are due on or before June 6, 2024; reply comments are 
due on or before July 8, 2024.

ADDRESSES: Pursuant to Sec. Sec.  1.415 and 1.419 of the Commission's 
rules, 47 CFR 1.415, 1.419, interested parties may file comments and 
reply comments on or before the dates indicated on the first page of 
this document. Comments may be filed using the Commission's Electronic 
Comment Filing System (ECFS). See Electronic Filing of Documents in 
Rulemaking Proceedings, 63 FR 24121 (1998). You may submit comments, 
identified by MB Docket No. 24-115, by any of the following methods:
     Electronic Filers: Comments may be filed electronically 
using the internet by accessing the ECFS: https://apps.fcc.gov/ecfs/.
     Paper Filers: Parties who choose to file by paper must 
file an original and one copy of each filing.
     Filings can be sent by commercial overnight courier, or by 
first-class or overnight U.S. Postal Service mail. All filings must be 
addressed to the Commission's Secretary, Office of the Secretary, 
Federal Communications Commission.
     Commercial overnight mail (other than U.S. Postal Service 
Express Mail and Priority Mail) must be sent to 9050 Junction Drive, 
Annapolis Junction, MD 20701.
     U.S. Postal Service first-class, Express, and Priority 
mail must be addressed to 45 L Street NE, Washington, DC 20554.
     Effective March 19, 2020, and until further notice, the 
Commission no longer accepts any hand or messenger delivered filings. 
This is a temporary measure taken to help protect the health and safety 
of individuals, and to mitigate the transmission of COVID-19.

[[Page 38008]]

See FCC Announces Closure of FCC Headquarters Open Window and Change in 
Hand-Delivery Policy, Public Notice, DA 20-304 (March 19, 2020). 
https://www.fcc.gov/document/fcc-closes-headquarters-open-window-and-changes-hand-delivery-policy.
     People with Disabilities: To request materials in 
accessible formats for people with disabilities (braille, large print, 
electronic files, audio format), send an email to [email protected] or 
call the Consumer & Governmental Affairs Bureau at 202-418-0530 
(voice), 202-418-0432 (TTY).

FOR FURTHER INFORMATION CONTACT: For additional information, contact 
Kathy Berthot, [email protected], of the Media Bureau, Policy 
Division, (202) 418-7454.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Notice 
of Proposed Rulemaking (NPRM), FCC 24-44, adopted on April 17, 2024 and 
released on April 19, 2024. The full text of this document is available 
on the FCC website at https://docs.fcc.gov/public/attachments/FCC-24-44A1.pdf. This document will also be available via ECFS at https://www.fcc.gov/cgb/ecfs/.
    Paperwork Reduction Act of 1995 Analysis: This document proposes 
new or modified information collection requirements. The Commission, as 
part of its continuing effort to reduce paperwork burdens and pursuant 
to the Paperwork Reduction Act of 1995, Public Law 104-13, invites the 
general public and the Office of Management and Budget (OMB) to comment 
on these information collection requirements. In addition, pursuant to 
the Small Business Paperwork Relief Act of 2002, Public Law 107-198, 
see 44 U.S.C. 3506(c)(4), the Commission seeks specific comment on how 
it might further reduce the information collection burden for small 
business concerns with fewer than 25 employees.
    Providing Accountability Through Transparency Act: Consistent with 
the Providing Accountability Through Transparency Act, Public Law 118-
9, a summary of this document will be available on: https://www.fcc.gov/proposed-rulemakings.

Synopsis

    1. Through this Notice of Proposed Rulemaking (NPRM), the 
Commission initiates a new proceeding to seek comment on the current 
state of the marketplace for diverse and independent programming. The 
Commission also seeks comment on the obstacles faced by independent 
video programmers seeking MVPD carriage and carriage on online 
platforms and how this impacts consumers. In order to alleviate 
marketplace obstacles that may hinder independent programmers from 
reaching consumers, the Commission proposes to prohibit two types of 
contractual provisions in program carriage agreements between 
independent programmers and MVPDs: (i) most favored nation (MFN) 
provisions, and (ii) unreasonable alternative distribution method (ADM) 
provisions. Additionally, the Commission seeks comment on current 
program bundling practices.
    2. In 2016, the Commission launched a proceeding in MB Docket No. 
16-41 to examine how certain contractual provisions in carriage 
agreements between programmers and distributors, such as most favored 
nation (MFN) and alternative distribution method (ADM) clauses, impact 
programming competition, innovation, and diversity. In general, an MFN 
provision entitles an MVPD to more favorable economic or non-economic 
contract terms that a video programming vendor has provided to another 
video programming distributor, whether an MVPD or an OVD. An ADM 
provision generally prohibits or restricts a video programming vendor 
from exhibiting its programming on OVDs, often for a specified period 
of time (sometimes referred to as a ``holdback period'' or ``window'') 
following the programming's original linear airing, or until certain 
conditions are met. In 2020, having not received any new comments in 
the proceeding in over two years, Commission staff terminated this 
proceeding under the dormant proceedings rule.
Current State of the Marketplace for Independent Programming
    3. The Commission seeks comment on developments and changes in the 
marketplace for independent programming and the availability of such 
programming to consumers since the comment cycle in the MB Docket No. 
16-41 proceeding closed in 2017. For example, what is the current state 
of the marketplace? Are independent programmers still experiencing the 
same obstacles to carriage that the record described in response to our 
inquiries in 2016? Has the availability of carriage on a variety of 
platforms, including OVDs and MVPDs, increased or decreased in the 
intervening years? Specifically, we seek information on how many 
independent programmers currently are carried exclusively by MVPDs, how 
many are carried exclusively by OVDs, and how many are carried by both 
MVPDs and OVDs. Has the number of independent programmers carried on 
each of these platforms increased or decreased since 2017? If it has 
decreased, what factor or factors have led to such decrease? Is there 
more or less independent and diverse programming available to consumers 
today than there was in 2017? Have changes in the marketplace 
exacerbated the difficulty of independent programmers in obtaining 
carriage? We note that in the 2022 Communications Marketplace Report, 
NTCA asserts that a number of MVPDs have discontinued offering video 
service to its customers, and Rural Media Group contends that the 
vertical integration of MVPDs has restricted access to independent 
cable networks. Does the continued decrease in MVPD subscribers have 
any effect on the ability of independent programmers to obtain 
carriage?
    4. In addition, the Commission seeks comment on whether it is more 
difficult for independent programmers to obtain carriage on certain 
types of MVPDs (e.g., cable vs. non-cable MVPDs, or smaller vs. larger 
MVPDs). How does the level of competition among MVPDs impact the 
bargaining leverage of independent programmers in negotiations for 
carriage deals? To what extent does the ability of independent 
programmers to grow and thrive today depend on their ability to secure 
carriage on MVPDs? For each of these questions, the Commission requests 
that commenters support their responses with relevant information 
regarding specific independent program networks. The Commission also 
seeks comment on what, if any, difficulties independent programmers 
have experienced in gaining carriage on OVDs.

Marketplace Obstacles Faced by Independent Programmers

    5. Most Favored Nation Provisions. MFN provisions generally 
authorize a contracting video programming distributor to modify a 
programming agreement to incorporate more favorable rates, contract 
terms, or conditions that the contracting programmer later agrees to 
with another distributor. The Commission seeks comment on the current 
usage of MFN provisions, both conditional and unconditional, in 
contracts for carriage of non-broadcast video programming. Has there 
been a notable change in the prevalence of MFNs provisions, 
particularly unconditional MFNs, since 2017? If unconditional MFN 
provisions are used less frequently today, what accounts for this 
change and is the downward trend in the use of such provisions expected 
to continue? Conversely, if unconditional MFN provisions are used more 
frequently today, what accounts

[[Page 38009]]

for this change and is the upward trend in the use of such provisions 
expected to continue? Are conditional and unconditional MFN provisions 
typically only included in carriage agreements between independent 
programmers and MVPDs or are they also included in agreements with 
OVDs? Do both cable and non-cable MVPDs require MFN provisions? Are MFN 
provisions in general, and unconditional MFNs in particular, more 
likely to be included in carriage contracts with independent 
programmers than in carriage contracts with vertically integrated 
programmers? Do certain types of MFN provisions restrain the ability of 
independent programmers to compete fairly and, if so, what types and 
how? To what extent does the size of the MVPD or the number of channels 
offered by an independent programmer impact whether MFN provisions are 
included in carriage contracts? Do MFN provisions in carriage 
agreements between MVPDs and independent programmers cover the terms of 
both other MVPD agreements and OVD agreements? If so, how often do such 
MFN provisions extend to OVD agreements?
    6. Additionally, the Commission seeks comment on the current costs 
and benefits of both conditional and unconditional MFN provisions. What 
impact do conditional and unconditional MFNs have on the development 
and distribution of diverse and niche programming today? To what extent 
do MFN provisions limit the ability of independent programmers to 
experiment with new or unique distribution models or to tailor deals 
with smaller MVPDs or online distributors? Are there particular types 
of conditional MFN provisions that hinder the development and 
distribution of such programming and, if so, how do they have this 
effect? What impact do audits and other mechanisms used to enforce MFN 
provisions have on independent programmers' ability to compete in the 
marketplace? What benefits are associated with conditional and 
unconditional MFN provisions? Are there specific types of MFN 
provisions that are pro-competitive and enhance independent 
programmers' ability to gain MVPD carriage, making more diverse 
programming offerings available for consumers? How do MFN provisions 
ultimately affect consumers? What, if any, consideration, economic or 
non-economic, do independent programmers receive from MVPDs in exchange 
for agreeing to MFN provisions? To what extent do the benefits of MFN 
provisions, either conditional or unconditional, outweigh any harmful 
effects of such provisions?
    7. The Commission proposes to adopt a rule prohibiting the 
inclusion of MFN provisions, either conditional or unconditional, in 
carriage agreements between MVPDs and independent programmers. The 
Commission proposes to define ``independent video programmer'' or 
``independent programmer'' for purposes of this proceeding as ``a non-
broadcast programmer that (1) is not vertically integrated with an MVPD 
and (2) is not affiliated with a broadcast network or entity that holds 
broadcast station licenses.'' The definition of ``affiliated'' set 
forth in 47 CFR 76.1300(a), which provides that ``entities are 
affiliated if either entity has an attributable interest in the other 
or if a third party has an attributable interest in both entities,'' 
would apply to the definition of ``independent programmers.'' For 
purposes of the prohibition on inclusion of MFN provisions in program 
carriage agreements, the Commission proposes to define ``most favored 
nation provision'' as ``a provision that entitles a multichannel video 
programming distributor to contractual rights or benefits that an 
independent video programming vendor has offered or granted to another 
multichannel video programming distributor or online video distributor, 
either conditionally or unconditionally.'' The Commission further 
proposes to define the terms (i) ``conditionally'' as ``subject to the 
multichannel video programming distributor's acceptance of terms and 
conditions that are integrally related, logically linked, or directly 
tied to the grant of such rights or benefits in the other video 
programming distributor's agreement, and with which the multichannel 
video programming distributor can reasonably comply technologically and 
legally,'' and (ii) ``unconditionally'' as ``without obligating the 
multichannel video programming distributor to accept any such terms and 
conditions.'' The Commission seeks comment on this proposal and the 
proposed definitions of ``most favored nation provision,'' 
``conditionally,'' and ``unconditionally.'' In particular, the 
Commission seeks comment on how the proposed prohibition would enhance 
the ability of independent programmers to obtain MVPD carriage and 
compete in the marketplace. The Commission also seeks comment on 
whether the proposed prohibition would benefit consumers by, for 
example, facilitating the development and distribution of more diverse 
and niche programming. Would the proposed prohibition result in other 
benefits to consumers? Are there particular types of MFN provisions 
that should be excluded or exempted from the proposed prohibition 
because they provide procompetitive benefits that outweigh any harmful 
effects? What are the costs and benefits of the proposed prohibition to 
MVPDs, particularly small entities?
    8. The Commission seeks comment on whether it should preclude MVPDs 
on a going forward basis from enforcing all MFN provisions in existing 
contracts. If so, should parties be afforded some period of time to 
reform their existing contracts before the prohibition takes effect? 
How much time would be reasonable? Commenters should explain the 
rationale for any time period proposed. The Commission proposes that 
complaints alleging violations of the prohibition on MFN provisions 
would be addressed under the program carriage complaint procedures. The 
Commission seeks comment on any amendments to the program carriage 
complaint procedures that would be necessitated by adoption of proposed 
prohibition on MFN provisions. What remedies and penalties should be 
imposed on an MVPD that violates the proposed prohibition on MFN 
provisions? To what extent, if any, would costs or other concerns 
associated with pursuing a program carriage complaint affect the 
ability of independent programmers to obtain relief if an MVPD violates 
the proposed prohibition?
    9. Alternative Distribution Method Provisions. ADM provisions 
generally bar or restrict a video programming vendor from exhibiting 
its programming on alternative video distribution platforms (such as 
online platforms), often for a specified window of time following the 
programming's original linear airing, or until certain conditions are 
met. The Commission seeks comment on the prevalence and scope of ADM 
provisions in contracts for carriage of non-broadcast video programming 
today. Has there been any change in the usage or scope of ADMs since 
2017? If ADM provisions are less common today, what accounts for this 
change and is the downward trend in usage of these provisions expected 
to continue? If ADM provisions are used more frequently today, what 
accounts for this change and is the upward trend in such usage expected 
to continue? Are ADM provisions today generally included only in 
carriage agreements between independent programmers and MVPDs or are 
they also included in carriage agreements between independent 
programmers and OVDs?

[[Page 38010]]

Do both cable and non-cable MVPDs require such provisions? Are ADM 
provisions more likely to be included in carriage contracts with 
independent programmers than in carriage contracts with vertically 
integrated programmers? Do certain types of ADM provisions restrain 
independent programmers from competing fairly? If so, what types of ADM 
provisions have this effect and how do such provision restrain 
independent programmers from competing fairly? Is there currently an 
industry standard for the windowing restrictions included in ADM 
provisions (i.e., is there a particular window of time that is 
typically required in agreements today)? Are certain windowing 
restrictions more harmful to independent programmers' ability to 
compete than other windowing restrictions, and if so, why, and how 
common are such restrictions?
    10. The Commission also seeks comment on the current costs and 
benefits of ADM provisions. What effect do ADM provisions have on the 
video marketplace and the availability of independent programming 
today? Do ADM provisions thwart competition, diversity, or innovation? 
If so, how? Parties should describe in detail. To what extent are ADM 
provisions used to limit the ability of independent programmers to 
experiment with new or unique distribution models or to tailor deals 
with smaller MVPDs or OVDs, and how does that impact their ability to 
compete? For example, are certain types of ADM provisions aimed more at 
restricting new means of distribution than at facilitating efficient 
negotiations or protecting an MVPD's investment in programming? What 
benefits are associated with ADM provisions? Do independent programmers 
receive any consideration, economic or non-economic, from MVPDs in 
exchange for agreeing to ADM provisions? Do certain types of ADM 
provisions enhance independent programmers' ability to gain MVPD 
carriage and thereby increase the exposure of their programming by 
incentivizing MVPDs to carry new content? How are ADM provisions 
enforced? Are there particular enforcement mechanisms for ADM 
provisions that are more common to independent programmers than other 
enforcement mechanisms? Do certain types of enforcement mechanisms for 
ADM provisions have a uniquely harmful impact on independent 
programmers' ability to compete?
    11. The Commission proposes to prohibit the inclusion of 
``unreasonable'' ADM provisions in carriage agreements between MVPDs 
and independent programmers. The Commission further proposes to define 
``alternative distribution method provision'' to mean ``a provision 
that prohibits or restricts a video programming vendor from exhibiting 
its programming on alternative, non-traditional video distribution 
platforms (such as OVDs) for a specified period of time following the 
programming's original linear airing, or until certain conditions are 
met.'' Under the proposed prohibition on ``unreasonable'' ADM 
provisions, the issue of whether a particular ADM clause is 
``unreasonable'' would be fact-specific and decided in the context of a 
program carriage complaint proceeding brought under section 616 of the 
Act. In determining whether a particular ADM provision is 
``unreasonable,'' the Commission proposes to consider, among other 
factors, the extent to which an ADM provision prohibits an independent 
programmer from licensing content to other alternative, non-traditional 
distributors, including OVDs. By prohibiting only those ADM provisions 
determined to be ``unreasonable,'' this proposal would recognize that 
some ADM provisions may serve the public interest by incentivizing 
MVPDs to invest in new or emerging programming sources, including 
independent or niche content, while other ADM provisions may have no 
pro-competitive justifications and hinder the provision of diverse 
programming to consumers.
    12. The Commission seeks comment on the proposed prohibition on 
unreasonable ADM provisions. The Commission seeks comment on whether 
the proposed prohibition would enhance the ability of independent 
programmers, particularly small entities, to compete fairly in the 
marketplace for video programming. Alternatively, would prohibiting 
certain ADM provisions make it less likely that MVPDs would agree to 
carry independent programmers or incentivize MVPDs to seek exclusive 
programming arrangements with independent programmers (subject to the 
restrictions in 47 U.S.C. 536(a)(2)) that would limit rather than 
expand their carriage opportunities? Additionally, the Commission seeks 
comment on how the proposed prohibition would affect consumers. Would 
it be expected to result in a greater choice of programming sources or 
lower costs for consumers? How would the proposed prohibition on 
unreasonable ADM provisions likely affect MVPDs, including small MVPDs? 
What costs and benefits are associated with the proposed prohibition 
for each of the affected parties? Should the Commission provide 
additional guidance in this proceeding on what constitutes an 
``unreasonable'' ADM provision or should we make such determinations on 
a case-by-case basis in the context of program carriage complaint 
proceedings as proposed above? In this regard, the Commission seeks 
comment on what factors should be considered in determining whether an 
ADM provision is ``unreasonable.'' Are there specific ADM provisions 
that should be deemed presumptively ``unreasonable''? Conversely, are 
there certain ADM provisions that should be considered to be 
presumptively reasonable?
    13. The Commission seeks comment on whether it should preclude 
MVPDs on a going forward basis from enforcing existing contracts that 
contain unreasonable ADM provisions and, if so, whether it should 
afford the parties a specified period of time to revise their contracts 
to replace any unreasonable ADM provision with an ADM provision with 
reasonable terms before the prohibition takes effect. The Commission 
also seeks input on what, if any, amendments to the program carriage 
complaint procedures would be warranted if the proposed prohibition on 
unreasonable ADM provisions is adopted. In addition, the Commission 
seeks comment on what remedies and penalties should be imposed on an 
MVPD that violates the proposed prohibition on unreasonable ADM 
provisions. In such circumstances, would it be appropriate for the 
Media Bureau to simply order that an unreasonable ADM provision not be 
enforced or be replaced with an ADM provision with reasonable terms? 
Moreover, the Commission seeks comment on the extent to which costs or 
other concerns associated with pursuing a program carriage complaint 
would affect the ability of independent programmers to obtain relief if 
an MVPD violates the proposed ban on unreasonable ADM provisions.
    14. Program Bundling. The Commission seeks comment on what the 
current program bundling practices are today and how such practices 
affect the ability of MVPDs to carry independent and diverse 
programming and competition in the video distribution market. For 
example, is forced bundling prevalent today? What impact, if any, does 
the carriage of bundled channels have on the ability of MVPDs to carry 
independent channels? Are there examples of independent programmers 
being dropped or not carried at all due to the constraints placed on 
MVPD systems by bundling

[[Page 38011]]

since 2017? To what extent does bundling have a greater impact on 
smaller MVPDs than it does on large MVPDs? How much has MVPD channel 
capacity (i.e., the number of MVPD channels available for programming) 
increased or decreased among both large and smaller MVPDs since 2017? 
To the extent there have been increases, will this alleviate the 
constraints placed on MVPD systems by bundling? Are there any plans for 
large and small MVPDs to increase capacity in the future? 
Alternatively, is MVPD capacity increasingly being used for broadband 
today, and does this consequently leave fewer additional channels 
available for independent programming? Are there other factors, such as 
financial resources, that continue to constrain the ability of MVPDs to 
carry independent programming as a result of bundling notwithstanding 
increases in channel capacity? How does bundling affect consumer 
choice? Does bundling raise or lower costs for consumers? What are the 
costs and benefits associated with program bundling? Commenters should 
describe the extent to which bundling may impede the ability of MVPDs 
to carry independent programming and whether this is outweighed by any 
associated benefits of this practice.
    15. Other Marketplace Obstacles. The Commission seeks comment on 
other practices that may impede entry into the market by or growth of 
independent programmers, thereby harming competition and/or consumer 
choice. For example, what impact do tier placement and penetration 
requirements (i.e., requirements in some programming agreements that 
programming be placed on a particular tier or that specify a minimum 
percentage of subscribers who must receive the programming) have on 
independent programmers? Are such requirements more typically found in 
programming agreements with independent programmers than in agreements 
with vertically-integrated programmers? Are there negotiation practices 
that hinder independent programmers' entry into the market? If so, what 
are these practices and how do they impede independent programmers' 
entry into the market? Do independent programmers that reject certain 
provisions or requirements in programming agreements face retaliatory 
conduct that impacts their ability to compete fairly? Are there other 
marketplace practices that limit the ability of independent programmers 
to reach consumers? What are the costs of such practices? In 
particular, do such practices have an adverse effect on diversity, 
competition, or innovation? What, if any, benefits do such practices 
offer and do the benefits outweigh the harms?

Legal Authority To Address Marketplace Obstacles to Independent 
Programming

    16. The Commission seeks comment on its legal authority to take 
action to curb practices that may adversely impact the ability of 
independent programmers to compete fairly. In particular, the 
Commission seeks comment on its authority under section 616 of the Act 
to adopt rules prohibiting the use of MFN provisions and unreasonable 
ADM provisions in program carriage agreements between MVPDs and 
independent programmers, as proposed above. Section 616(a) directs the 
Commission to ``establish regulations governing program carriage 
agreements and related practices between cable operators or other 
[MVPDs] and video programming vendors.'' The Commission seeks comment 
on whether the grant of authority under section 616(a) to adopt rules 
``governing program carriage agreements and related practices between 
[MVPDs] and video programming vendors'' is sufficiently broad to permit 
us to ban the use of MFN or unreasonable ADM provisions. The Commission 
notes that the prohibitions on MFN provisions and unreasonable ADM 
provisions proposed above would apply to agreements between MVPDs and 
independent programmers, which are encompassed within the term ``video 
programming vendors.'' Congress's goal in enacting section 616 was ``to 
stem and reduce the potential for abusive or anticompetitive actions 
[by MVPDs] against programming entities.'' Consistent with this 
objective, the proposed prohibitions on MFN provisions and unreasonable 
ADM provisions discussed above are intended to enhance competition in 
the video marketplace and reflect Congress's belief that ``competition 
is essential both for ensuring diversity in programming and for 
protecting consumers from potential abuses by cable operators 
possessing market power'' and other MVPDs.
    17. Moreover, the Commission tentatively concludes that Congress 
did not intend to limit the Commission's authority under section 616(a) 
to the specific practices listed in that section. The introductory 
language in section 616(a) grants the Commission broad authority to 
``establish regulations governing program carriage agreements and 
related practices between cable operators and multichannel video 
programming distributors and video programming vendors,'' and nothing 
in the statute expressly precludes the Commission from establishing 
rules apart from those specifically listed. Further, sections 
616(a)(1)-(a)(3)--the subsections relating to substantive 
requirements--are introduced by the verbs ``include'' or ``contain,'' 
which suggests that such requirements are not exhaustive. In instances 
where Congress intends to limit the Commission's rulemaking authority 
to specified areas, it has done so expressly. The Commission seeks 
comment on this analysis.
    18. The Commission also seeks comment on whether section 616(a)(3) 
provides a basis for our proposed bans on MFN provisions and 
unreasonable ADM provisions in carriage agreements between MVPDs and 
independent programmers. Section 616(a)(3) directs the Commission to 
adopt rules ``designed to prevent [an MVPD] from engaging in conduct 
the effect of which is to unreasonably restrain the ability of an 
unaffiliated video programming vendor to compete fairly by 
discriminating in video programming distribution on the basis of 
affiliation or nonaffiliation of vendors in the selection, terms, or 
conditions for carriage of video programming provided by such 
vendors.'' The Commission seeks comment on whether this provision 
authorizes it to adopt rules that prohibit vertically integrated MVPDs 
from including MFN and unreasonable ADM clauses in carriage agreements 
with independent programmers, where such MVPDs do not include the same 
clauses in carriage agreements with affiliated programming networks. If 
so, would the application of such rules only to vertically integrated 
MVPDs adequately address the competition and diversity concerns raised 
by restrictive MFN and ADM clauses? Would such rules be effective given 
that an MVPD could enter into the same restrictive MFN and/or ADM 
clauses with both an affiliated programming network and an independent 
programmer but simply not exercise its rights with respect to the 
affiliated network?
    19. The Commission further seeks comment on whether section 628 
provides legal authority for adoption of our proposed rules. Similar to 
our proposed rules, the purpose of section 628 is to ``increase[e] 
competition and diversity in the [[MVPD] market . . . and to spur the 
development of communications technologies.'' Section 628(b) precludes 
a cable operator, a common carrier or its affiliate that provides video 
programming, and an Open Video System (OVS) operator, as

[[Page 38012]]

well as a satellite-delivered programmer affiliated with one of those 
entities, from engaging in ``unfair methods of competition or unfair or 
deceptive acts or practices, the purpose or effect of which is to 
hinder significantly or to prevent any'' MVPD from providing 
programming to subscribers or consumers. Section 628(c)(1) directs the 
Commission to ``prescribe regulations to specify particular conduct 
that is prohibited by [section 628(b)]'' in order to ``increase[e] 
competition and diversity in the [MVPD] market and the continuing 
development of communications technologies.'' Considering that section 
628(b) appears to target only methods, acts, and practices that 
adversely affect MVPDs, the Commission seeks comment on whether it 
could lawfully invoke this provision to proscribe, as an ``unfair'' 
method, act or practice, the use of certain MFN and ADM provisions in 
agreements between MVPDs and independent programmers. Given that direct 
broadcast satellite (DBS) carriers are not subject to the provisions of 
section 628, the Commission seeks comment on whether reliance on that 
provision to limit the use of MFN and ADM provisions would result in a 
disparity in regulatory treatment among MVPDs.
    20. Finally, the Commission seeks comment on whether there are 
other provisions in the Act that afford the Commission the authority to 
alleviate marketplace obstacles to the distribution of independent and 
diverse programming, including obstacles posed by MFN provisions and 
unreasonable ADM provisions. For example, section 335(a) provides the 
Commission with authority to ``impose, on providers of direct broadcast 
satellite service, public interest or other requirements for providing 
video programming.'' Does the Commission have authority under other 
provisions of Title III? The Commission also seeks comment on whether 
it has--and should exercise--ancillary authority under section 4(i) of 
the Act to address MFN and ADM provisions.

Digital Equity and Inclusion

    21. The Commission, as part of its continuing effort to advance 
digital equity for all, including people of color, persons with 
disabilities, persons who live in rural or Tribal areas, and others who 
are or have been historically underserved, marginalized, or adversely 
affected by persistent poverty or inequality, invites comment on any 
equity-related considerations and benefits (if any) that may be 
associated with the issues discussed herein. Specifically, we seek 
comment on how any Commission actions taken to address barriers to the 
distribution of independent and diverse programming may promote or 
inhibit advances in diversity, equity, inclusion, and accessibility.

Initial Regulatory Flexibility Act Analysis

    22. As required by the Regulatory Flexibility Act of 1980, as 
amended (RFA), the Commission has prepared this Initial Regulatory 
Flexibility Act Analysis (IRFA) of the possible significant economic 
impact on a substantial number of small entities by the policies and 
rules proposed in this Notice of Proposed Rulemaking (NPRM). 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 provided on the first page of the NPRM. The Commission will 
send a copy of the NPRM, including this IRFA, to the Chief Counsel for 
Advocacy of the Small Business Administration (SBA). In addition, the 
NPRM and IRFA (or summaries thereof) will be published in the Federal 
Register.

A. Need for, and Objectives of, the Proposed Rules

    23. One of the Commission's primary objectives with respect to 
multichannel video programming is to foster a diverse, robust, and 
competitive marketplace for the delivery of such programming. We 
recognize that competition among distributors of video programming 
continues to evolve and consumers today have a wealth of video 
programming platforms from which to choose. Nevertheless, stakeholders 
continue to raise concerns that certain marketplace practices by 
distributors may hinder independent video programmers from reaching 
consumers and deprive them of access to their choice of diverse 
programming--one of the benefits of enhanced competition in the video 
marketplace. Specifically, independent programmers contend that their 
ability to thrive in the marketplace and reach consumers today depends 
on their ability to negotiate and secure carriage on multichannel video 
programming distributors (MVPDs) or online video distributors (OVDs). 
Despite the changes in the way that consumers access video 
programming--including via the growing number of platforms available to 
video consumers and the protracted decline in MVPD subscribers--
independent video programmers have consistently asserted over the past 
several years that certain practices by incumbent cable operators and 
other MVPDs, particularly most favored nation (MFN) and alternative 
distribution method (ADM) clauses in program carriage agreements, have 
impeded their ability to reach consumers across all video platforms, 
leading to less competition and fewer choices for those who watch.
    24. The NPRM seeks comment on the state of the marketplace for 
independent and diverse programming and the availability of such 
programming to consumers today. The NPRM also seeks comment on the 
obstacles faced by independent programmers in reaching consumers and 
the actions the Commission can take to alleviate such obstacles. 
Specifically, the NPRM seeks comment on the current usage of MFN 
provisions, both conditional and unconditional, in contracts for 
carriage of non-broadcast video programming and on the costs and 
benefits of conditional and unconditional MFN provisions. Additionally, 
the NPRM requests comment on the prevalence and scope of ADM provisions 
in contracts for carriage of non-broadcast video programming today and 
on the current costs and benefits of ADM provisions. The NPRM seeks 
comment on what the current program bundling practices are today and 
how such practices affect the ability of MVPDs to carry independent and 
diverse programming. Further, the NPRM seeks comment on other practices 
that may impede entry into the market by or growth of independent 
programmers. Finally, the NPRM invites comment on the need for 
Commission action to address any obstacles to the distribution of 
independent and diverse programming, as well as the Commission's legal 
authority to take action to curb program carriage practices that may 
adversely impact the ability of independent programmers to compete 
fairly.
    25. In order to alleviate marketplace obstacles that may hinder 
independent programmers from reaching consumers, the NPRM proposes to 
prohibit the use of MFN provisions, either conditional or 
unconditional, in carriage agreements between MVPDs and independent 
programmers. In addition, the NPRM proposes to bar unreasonable ADM 
provisions in carriage agreements between MVPDs and independent 
programmers. The NPRM proposes that the issue of whether a particular 
ADM clause is ``unreasonable'' would be fact-specific and decided in 
the context of a program carriage complaint proceeding brought under 
section 616 of the Act, taking into account, among other factors, the 
extent to which an ADM provision prohibits an independent

[[Page 38013]]

programmer from licensing content to other distributors, including 
OVDs. The NPRM also seeks comment on whether further guidance should be 
provided on the meaning of ``unreasonable'' in this context.

B. Legal Basis

    26. The proposed action is authorized pursuant to sections 1, 4(i), 
4(j),, 303, 307, 316, 335, 616 and 628 of the Communications Act of 
1934, as amended, 47 U.S.C. 151, 154(i), 154(j), 303, 307, 316, 335, 
536, and 548.

C. Description and Estimates of the Number of Small Entities To Which 
the Proposed Rules Will Apply

    27. The RFA directs agencies to provide a description of and, where 
feasible, an estimate of the number of small entities that may be 
affected by the proposed rules, if adopted. The RFA generally defines 
the term ``small entity'' as having the same meaning as the terms 
``small business,'' ``small organization,'' and ``small governmental 
jurisdiction.'' In addition, the term ``small business'' has the same 
meaning as the term ``small business concern'' 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.
    28. Broadband Radio Service and Educational Broadband Service. 
Broadband Radio Service systems, previously referred to as Multipoint 
Distribution Service (MDS) and Multichannel Multipoint Distribution 
Service (MMDS) systems, and ``wireless cable,'' transmit video 
programming to subscribers and provide two-way high speed data 
operations using the microwave frequencies of the Broadband Radio 
Service (BRS) and Educational Broadband Service (EBS) (previously 
referred to as the Instructional Television Fixed Service (ITFS)). 
Wireless cable operators that use spectrum in the BRS often 
supplemented with leased channels from the EBS, provide a competitive 
alternative to wired cable and other multichannel video programming 
distributors. Wireless cable programming to subscribers resembles cable 
television, but instead of coaxial cable, wireless cable uses microwave 
channels.
    29. In light of the use of wireless frequencies by BRS and EBS 
services, the closest industry with a SBA small business size standard 
applicable to these services is Wireless Telecommunications Carriers 
(except Satellite). The SBA small business size standard for this 
industry classifies a business as small if it has 1,500 or fewer 
employees. U.S. Census Bureau data for 2017 show that there were 2,893 
firms that operated in this industry for the entire year. Of this 
number, 2,837 firms employed fewer than 250 employees. Thus under the 
SBA size standard, the Commission estimates that a majority of 
licensees in this industry can be considered small.
    30. According to Commission data as December 2021, there were 
approximately 5,869 active BRS and EBS licenses. The Commission's small 
business size standards with respect to BRS involves eligibility for 
bidding credits and installment payments in the auction of licenses for 
these services. For the auction of BRS licenses, the Commission adopted 
criteria for three groups of small businesses. A very small business is 
an entity that, together with its affiliates and controlling interests, 
has average annual gross revenues exceed $3 million and did not exceed 
$15 million for the preceding three years, a small business is an 
entity that, together with its affiliates and controlling interests, 
has average gross revenues exceed $15 million and did not exceed $40 
million for the preceding three years, and an entrepreneur is an entity 
that, together with its affiliates and controlling interests, has 
average gross revenues not exceeding $3 million for the preceding three 
years. Of the ten winning bidders for BRS licenses, two bidders 
claiming the small business status won 4 licenses, one bidder claiming 
the very small business status won three licenses and two bidders 
claiming entrepreneur status won six licenses. One of the winning 
bidders claiming a small business status classification in the BRS 
license auction has an active licenses as of December 2021.
    31. The Commission's small business size standards for EBS define a 
small business as an entity that, together with its affiliates, its 
controlling interests and the affiliates of its controlling interests, 
has average gross revenues that are not more than $55 million for the 
preceding five (5) years, and a very small business is an entity that, 
together with its affiliates, its controlling interests and the 
affiliates of its controlling interests, has average gross revenues 
that are not more than $20 million for the preceding five (5) years. In 
frequency bands where licenses were subject to auction, the Commission 
notes that as a general matter, the number of winning bidders that 
qualify as small businesses at the close of an auction does not 
necessarily represent the number of small businesses currently in 
service. Further, the Commission does not generally track subsequent 
business size unless, in the context of assignments or transfers, 
unjust enrichment issues are implicated. Additionally, since the 
Commission does not collect data on the number of employees for 
licensees providing these services, at this time we are not able to 
estimate the number of licensees with active licenses that would 
qualify as small under the SBA's small business size standard.
    32. Cable and Other Subscription Programming. The U.S. Census 
Bureau defines this industry as establishments primarily engaged in 
operating studios and facilities for the broadcasting of programs on a 
subscription or fee basis. The broadcast programming is typically 
narrowcast in nature (e.g., limited format, such as news, sports, 
education, or youth-oriented). These establishments produce programming 
in their own facilities or acquire programming from external sources. 
The programming material is usually delivered to a third party, such as 
cable systems or direct-to-home satellite systems, for transmission to 
viewers. The SBA small business size standard for this industry 
classifies firms with annual receipts less than $41.5 million as small. 
Based on U.S. Census Bureau data for 2017, 378 firms operated in this 
industry during that year. Of that number, 149 firms operated with 
revenue of less than $25 million a year and 44 firms operated with 
revenue of $25 million or more. Based on this data, the Commission 
estimates that a majority of firms in this industry are small.
    33. Cable Companies and Systems (Rate Regulation). The Commission 
has developed its own small business size standard 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. Based 
on industry data, there are about 420 cable companies in the U.S. Of 
these, only seven have more than 400,000 subscribers. In addition, 
under the Commission's rules, a ``small system'' is a cable system 
serving 15,000 or fewer subscribers. Based on industry data, there are 
about 4,139 cable systems (headends) in the U.S. Of these, about 639 
have more than 15,000 subscribers. Accordingly, the Commission 
estimates that the majority of cable companies and cable systems are 
small.
    34. Cable System Operators (Telecom Act Standard). The 
Communications Act of 1934, as amended, contains a size standard for a 
``small cable operator,'' which is ``a cable operator that, directly or 
through an affiliate, serves in the aggregate fewer than one percent of 
all

[[Page 38014]]

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.'' For purposes of the Telecom Act Standard, the 
Commission determined that a cable system operator that serves fewer 
than 498,000 subscribers, either directly or through affiliates, will 
meet the definition of a small cable operator. Based on industry data, 
only six cable system operators have more than 498,000 subscribers. 
Accordingly, the Commission estimates that the majority of cable system 
operators are small under this size standard. We note however, that the 
Commission neither requests nor collects information on whether cable 
system operators are affiliated with entities whose gross annual 
revenues exceed $250 million. Therefore, we are unable at this time to 
estimate with greater precision the number of cable system operators 
that would qualify as small cable operators under the definition in the 
Communications Act.
    35. Competitive Local Exchange Carriers (LECs). Neither the 
Commission nor the SBA has developed a size standard for small 
businesses specifically applicable to local exchange services. 
Providers of these services include several types of competitive local 
exchange service providers. Wired Telecommunications Carriers is the 
closest industry with a SBA small business size standard. The SBA small 
business size standard for Wired Telecommunications Carriers classifies 
firms having 1,500 or fewer employees as small. U.S. Census Bureau data 
for 2017 show that there were 3,054 firms that operated in this 
industry for the entire year. Of this number, 2,964 firms operated with 
fewer than 250 employees. Additionally, based on Commission data in the 
2022 Universal Service Monitoring Report, as of December 31, 2021, 
there were 3,378 providers that reported they were competitive local 
exchange service providers. Of these providers, the Commission 
estimates that 3,230 providers have 1,500 or fewer employees. 
Consequently, using the SBA's small business size standard, most of 
these providers can be considered small entities.
    36. 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 is included in the Wired 
Telecommunications Carriers industry which 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 voice, data, text, sound, and video using wired 
telecommunications networks. Transmission facilities may be based on a 
single technology or combination of technologies. Establishments in 
this industry use the wired telecommunications network facilities that 
they operate to provide a variety of services, such as wired telephony 
services, including VoIP services, wired (cable) audio and video 
programming distribution; and wired broadband internet services. By 
exception, establishments providing satellite television distribution 
services using facilities and infrastructure that they operate are 
included in this industry.
    37. The SBA small business size standard for Wired 
Telecommunications Carriers classifies firms having 1,500 or fewer 
employees as small. U.S. Census Bureau data for 2017 show that 3,054 
firms operated in this industry for the entire year. Of this number, 
2,964 firms operated with fewer than 250 employees. Based on this data, 
the majority of firms in this industry can be considered small under 
the SBA small business size standard. According to Commission data 
however, only two entities provide DBS service--DIRECTV (owned by AT&T) 
and DISH Network, which require a great deal of capital for operation. 
DIRECTV and DISH Network both exceed the SBA size standard for 
classification as a small business. Therefore, we must conclude based 
on internally developed Commission data, in general DBS service is 
provided only by large firms.
    38. Fixed Microwave Services. Fixed microwave services include 
common carrier, private-operational fixed, and broadcast auxiliary 
radio services. They also include the Upper Microwave Flexible Use 
Service (UMFUS), Millimeter Wave Service (70/80/90 GHz), Local 
Multipoint Distribution Service (LMDS), the Digital Electronic Message 
Service (DEMS), 24 GHz Service, Multiple Address Systems (MAS), and 
Multichannel Video Distribution and Data Service (MVDDS), where in some 
bands licensees can choose between common carrier and non-common 
carrier status. Wireless Telecommunications Carriers (except Satellite) 
is the closest industry with a SBA small business size standard 
applicable to these services. The SBA small size standard for this 
industry classifies a business as small if it has 1,500 or fewer 
employees. U.S. Census Bureau data for 2017 show that there were 2,893 
firms that operated in this industry for the entire year. Of this 
number, 2,837 firms employed fewer than 250 employees. Thus under the 
SBA size standard, the Commission estimates that a majority of fixed 
microwave service licensees can be considered small.
    39. The Commission's small business size standards with respect to 
fixed microwave services involve eligibility for bidding credits and 
installment payments in the auction of licenses for the various 
frequency bands included in fixed microwave services. When bidding 
credits are adopted for the auction of licenses in fixed microwave 
services frequency bands, such credits may be available to several 
types of small businesses based average gross revenues (small, very 
small and entrepreneur) pursuant to the competitive bidding rules 
adopted in conjunction with the requirements for the auction and/or as 
identified in Part 101 of the Commission's rules for the specific fixed 
microwave services frequency bands.
    40. In frequency bands where licenses were subject to auction, the 
Commission notes that as a general matter, the number of winning 
bidders that qualify as small businesses at the close of an auction 
does not necessarily represent the number of small businesses currently 
in service. Further, the Commission does not generally track subsequent 
business size unless, in the context of assignments or transfers, 
unjust enrichment issues are implicated. Additionally, since the 
Commission does not collect data on the number of employees for 
licensees providing these services, at this time we are not able to 
estimate the number of licensees with active licenses that would 
qualify as small under the SBA's small business size standard.
    41. Home Satellite Dish (HSD) Service. HSD or the large dish 
segment of the satellite industry is the original satellite-to-home 
service offered to consumers and involves the home reception of signals 
transmitted by satellites operating generally in the C-band frequency. 
Unlike DBS, which uses small dishes, HSD antennas are between four and 
eight feet in diameter and can receive a wide range of unscrambled 
(free) programming and scrambled programming purchased from program 
packagers that are licensed to facilitate subscribers' receipt of video 
programming. Because HSD provides subscription services, HSD falls 
within the industry category of Wired Telecommunications Carriers. The 
SBA small business size standard for Wired Telecommunications Carriers 
classifies firms having 1,500 or fewer employees as small. U.S. Census 
Bureau data for

[[Page 38015]]

2017 show that there were 3,054 firms that operated for the entire 
year. Of this total, 2,964 firms operated with fewer than 250 
employees. Thus, under the SBA size standard, the majority of firms in 
this industry can be considered small.
    42. Incumbent Local Exchange Carriers (Incumbent LECs). Neither the 
Commission nor the SBA have developed a small business size standard 
specifically for incumbent local exchange carriers. Wired 
Telecommunications Carriers is the closest industry with an SBA small 
business size standard. The SBA small business size standard for Wired 
Telecommunications Carriers classifies firms having 1,500 or fewer 
employees as small. U.S. Census Bureau data for 2017 show that there 
were 3,054 firms in this industry that operated for the entire year. Of 
this number, 2,964 firms operated with fewer than 250 employees. 
Additionally, based on Commission data in the 2022 Universal Service 
Monitoring Report, as of December 31, 2021, there were 1,212 providers 
that reported they were incumbent local exchange service providers. Of 
these providers, the Commission estimates that 916 providers have 1,500 
or fewer employees. Consequently, using the SBA's small business size 
standard, the Commission estimates that the majority of incumbent local 
exchange carriers can be considered small entities.
    43. Internet Publishing and Broadcasting and Web Search Portals. 
This industry comprises establishments primarily engaged in (1) 
publishing and/or broadcasting content on the internet exclusively or 
(2) operating websites that use a search engine to generate and 
maintain extensive databases of internet addresses and content in an 
easily searchable format (and known as Web search portals). The 
publishing and broadcasting establishments in this industry do not 
provide traditional (non-internet) versions of the content that they 
publish or broadcast. They provide textual, audio, and/or video content 
of general or specific interest on the internet exclusively. 
Establishments known as web search portals often provide additional 
internet services, such as email, connections to other websites, 
auctions, news, and other limited content, and serve as a home base for 
internet users. The SBA small business size standard for this industry 
classifies firms having 1,000 or fewer employees as small. U.S. Census 
Bureau data for 2017 show that there were firms that 5,117 operated for 
the entire year. Of this total, 5,002 firms operated with fewer than 
250 employees. Thus, under this size standard the majority of firms in 
this industry can be considered small.
    44. Open Video Systems. The open video system (OVS) framework was 
established in 1996 and is one of four statutorily recognized options 
for the provision of video programming services by local exchange 
carriers. The OVS framework provides opportunities for the distribution 
of video programming other than through cable systems. OVS operators 
provide subscription services and therefore fall within the SBA small 
business size standard for the cable services industry, which is 
``Wired Telecommunications Carriers.'' The SBA small business size 
standard for this industry classifies firms having 1,500 or fewer 
employees as small. U.S. Census Bureau data for 2017 show that there 
were 3,054 firms in this industry that operated for the entire year. Of 
this total, 2,964 firms operated with fewer than 250 employees. Thus, 
under the SBA size standard the majority of firms in this industry can 
be considered small. Additionally, we note that the Commission has 
certified some OVS operators who are now providing service and 
broadband service providers (BSPs) are currently the only significant 
holders of OVS certifications or local OVS franchises. The Commission 
does not have financial or employment information for the entities 
authorized to provide OVS however, the Commission believes some of the 
OVS operators may qualify as small entities.
    45. Satellite Master Antenna Television (SMATV) Systems, also known 
as Private Cable Operators (PCOs). SMATV systems or PCOs are video 
distribution facilities that use closed transmission paths without 
using any public right-of-way. They acquire video programming and 
distribute it via terrestrial wiring in urban and suburban multiple 
dwelling units such as apartments and condominiums, and commercial 
multiple tenant units such as hotels and office buildings. SMATV 
systems or PCOs are included in the Wired Telecommunications Carriers' 
industry which includes wireline telecommunications businesses. The SBA 
small business size standard for Wired Telecommunications Carriers 
classifies firms having 1,500 or fewer employees as small. U.S. Census 
Bureau data for 2017 show that there were 3,054 firms in this industry 
that operated for the entire year. Of this total, 2,964 firms operated 
with fewer than 250 employees. Thus under the SBA size standard, the 
majority of firms in this industry can be considered small.
    46. Television Broadcasting. This industry is comprised of 
``establishments primarily engaged in broadcasting images together with 
sound.'' These establishments operate television broadcast studios and 
facilities for the programming and transmission of programs to the 
public. These establishments also produce or transmit visual 
programming to affiliated broadcast television stations, which in turn 
broadcast the programs to the public on a predetermined schedule. 
Programming may originate in their own studio, from an affiliated 
network, or from external sources. The SBA small business size standard 
for this industry classifies businesses having $41.5 million or less in 
annual receipts as small. 2017 U.S. Census Bureau data indicate that 
744 firms in this industry operated for the entire year. Of that 
number, 657 firms had revenue of less than $25,000,000. Based on this 
data we estimate that the majority of television broadcasters are small 
entities under the SBA small business size standard.
    47. As of September 30, 2023, there were 1,377 licensed commercial 
television stations. Of this total, 1,258 stations (or 91.4%) had 
revenues of $41.5 million or less in 2022, according to Commission 
staff review of the BIA Kelsey Inc. Media Access Pro Television 
Database (BIA) on October 4, 2023, and therefore these licensees 
qualify as small entities under the SBA definition. In addition, the 
Commission estimates as of September 30, 2023, there were 383 licensed 
noncommercial educational (NCE) television stations, 380 Class A TV 
stations, 1,889 LPTV stations and 3,127 TV translator stations. The 
Commission, however, does not compile and otherwise does not have 
access to financial information for these television broadcast stations 
that would permit it to determine how many of these stations qualify as 
small entities under the SBA small business size standard. 
Nevertheless, given the SBA's large annual receipts threshold for this 
industry and the nature of these television station licensees, we 
presume that all of these entities qualify as small entities under the 
above SBA small business size standard.
    48. Wired Telecommunications Carriers. The U.S. Census Bureau 
defines this industry as establishments primarily engaged in operating 
and/or providing access to transmission facilities and infrastructure 
that they own and/or lease for the transmission of voice, data, text, 
sound, and video using wired communications networks. Transmission 
facilities may be based on a single technology or a combination of 
technologies. Establishments in this

[[Page 38016]]

industry use the wired telecommunications network facilities that they 
operate to provide a variety of services, such as wired telephony 
services, including VoIP services, wired (cable) audio and video 
programming distribution, and wired broadband internet services. By 
exception, establishments providing satellite television distribution 
services using facilities and infrastructure that they operate are 
included in this industry. Wired Telecommunications Carriers are also 
referred to as wireline carriers or fixed local service providers.
    49. The SBA small business size standard for Wired 
Telecommunications Carriers classifies firms having 1,500 or fewer 
employees as small. U.S. Census Bureau data for 2017 show that there 
were 3,054 firms that operated in this industry for the entire year. Of 
this number, 2,964 firms operated with fewer than 250 employees. 
Additionally, based on Commission data in the 2022 Universal Service 
Monitoring Report, as of December 31, 2021, there were 4,590 providers 
that reported they were engaged in the provision of fixed local 
services. Of these providers, the Commission estimates that 4,146 
providers have 1,500 or fewer employees. Consequently, using the SBA's 
small business size standard, most of these providers can be considered 
small entities.

D. Description of Projected Reporting, Recordkeeping, and Other 
Compliance Requirements

    50. The rule changes proposed in the NPRM, if adopted, will impose 
compliance obligations on small, as well as other entities. 
Specifically, the NPRM proposes to prohibit MFN provisions, either 
conditional or unconditional, in carriage agreements between MVPDs and 
independent programmers. The NPRM also proposes to prohibit 
unreasonable ADM provisions in carriage agreements between MVPDs and 
independent programmers. The NPRM proposes that a determination of 
whether a particular ADM provision is ``unreasonable'' would be fact-
specific and decided in the context of a program carriage complaint 
proceeding brought under section 616 of the Act.

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

    51. The RFA requires an agency to describe any significant, 
specifically small business, 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 entities; (2) the 
clarification, consolidation, or simplification of compliance and 
reporting requirements under the rule for such 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.
    52. The proposals to prohibit MFN provisions and unreasonable ADM 
provisions, if adopted, would be expected to benefit small independent 
programmers by enhancing their ability to compete in the video 
marketplace and to create new, innovative program offerings. These 
proposals would also likely benefit small MVPDs and OVDs by removing 
barriers to mutually-beneficial carriage deals between these small 
entities and independent programmers. Nevertheless, the Commission 
seeks comment in the NPRM on how these proposals would affect small 
entities and expects to more fully consider the impact of these 
proposals and any alternatives on small entities, following review of 
the comments received in response to the NPRM.
    53. The NPRM proposes to use the existing program carriage 
complaint procedures to address any complaints regarding violations of 
the proposed bans on MFN provisions and unreasonable ADM provisions. 
The NPRM seeks comment on whether costs or other concerns associated 
with pursuing a program carriage complaint would affect the ability of 
independent programmers, including small entities, to obtain relief if 
an MVPD violates the proposed ban on MFN provisions or unreasonable ADM 
provisions and asks whether any modifications to the program carriage 
complaint procedures are warranted.

F. Federal Rules That May Duplicate, Overlap, or Conflict With the 
Proposed Rule

    54. None.

Ordering Clauses

    55. It is ordered that, pursuant to the authority found in sections 
1, 4(i), 4(j), 303, 307, 316, 335, 616 and 628 of the Communications 
Act of 1934, as amended, 47 U.S.C. 151, 154(i), 154(j), 303, 307, 316, 
335, 536 and 548, this Notice of Proposed Rulemaking is adopted.
    56. It is further ordered that, pursuant to applicable procedures 
set forth in Sec. Sec.  1.415 and 1.419 of the Commission's rules, 47 
CFR 1.415, 1.419, interested parties may file comments on the Notice of 
Proposed Rulemaking in MB Docket No. 24-115 on or before thirty (30) 
days after publication in the Federal Register and reply comments on or 
before sixty (60) days after publication in the Federal Register.

List of Subjects in 47 CFR Part 76

    Television

Federal Communications Commission.
Marlene Dortch,
Secretary.

Proposed Rules

    For the reasons discussed in the preamble, the Federal 
Communications Commission proposes to amend 47 CFR part 76 as follows:

PART 76--MULTICHANNEL VIDEO AND CABLE TELEVISION SERVICE

0
1. The authority citation for part 76 continues to read as follows:

    Authority:  47 U.S.C. 151, 152, 153, 154, 301, 302, 302a, 303, 
303a, 307, 308. 309. 312, 315, 317, 325, 335, 338, 339, 340, 341, 
503, 521, 522, 531, 532, 534, 535, 536, 537, 543, 544, 544a, 545, 
548, 549, 552, 554, 556, 558, 560, 561, 571, 572, 573.

0
2. Amend Sec.  76.1300 by:
0
a. Redesignating paragraphs (b), (c), (d) and (e) as paragraphs (c), 
(d), (g) and (h); and
0
b. Adding new paragraphs (b), (e) and (f).
    The additions read as follows:


Sec.  76.1300  Definitions.

* * * * *
    (b) Alternative distribution method provision. The term 
``alternative distribution method provision'' means a provision that 
prohibits or restricts an independent video programming vendor from 
exhibiting its programming on alternative, non-traditional video 
distribution platforms (such as online video distributors) for a 
specified period of time following the programming's original linear 
airing, or until certain conditions are met. For purposes of this 
section, the term ``original linear airing'' refers to the initial 
prescheduled airing of the programming by the programmer.
* * * * *
    (e) Independent video programming vendor. The term ``independent 
video programming vendor'' means ``a non-broadcast programmer that (1) 
is not vertically integrated with a multichannel video programming 
distributor and (2) is not affiliated with a broadcast network or 
entity that holds broadcast station licenses.''
    (f) Most favored nation provision. The term ``most favored nation 
provision'' means ``a provision that entitles a

[[Page 38017]]

multichannel video programming distributor to contractual rights or 
benefits that an independent video programming vendor has offered or 
granted to another multichannel video programming distributor or online 
video distributor, either conditionally or unconditionally. The term 
``conditionally'' means ``subject to the multichannel video programming 
distributor's acceptance of terms and conditions that are integrally 
related, logically linked, or directly tied to the grant of such rights 
or benefits in the other multichannel video programming distributor's 
or online video distributor's agreement.'' The term ``unconditionally'' 
means ``without obligating the multichannel video programming 
distributor to accept any such terms or conditions.''
* * * * *
0
3. Amend Sec.  76.1301 by adding paragraphs (d) and (e) to read as 
follows:


Sec.  76.1301  Prohibited Practices.

* * * * *
    (d) Most favored nation provisions. No multichannel video 
programming distributor shall enter into an agreement with an 
independent video programming vendor that contains a most favored 
nation provision.
    (e) Unreasonable alternative distribution method provisions. No 
multichannel video programming distributor shall enter into an 
agreement with an independent video programming vendor that contains an 
unreasonable alternative distribution method provision.

[FR Doc. 2024-09701 Filed 5-6-24; 8:45 am]
BILLING CODE 6712-01-P