Before the
Federal Communications Commission
Washington, D.C. 20554
|
In the Matter of Carriage of Digital Television Broadcast Signals: Amendment to Part 76
of the Commission’s Rules |
) ) ) ) ) ) |
CS Docket No. 98-120 |
THIRD REPORT AND ORDER
AND THIRD FURTHER NOTICE OF PROPOSED RULE MAKING
Adopted: September 11, 2007 Released: November 30, 2007
Comment Date: [30 days after date of publication in the Federal Register]
Reply Comment Date: [45 days after date of publication in the Federal Register]
By the Commission: Chairman Martin and Commissioners
Copps, Tate and McDowell issuing separate statements; Commissioner Adelstein
approving in part, dissenting in part and issuing a statement.
I. Introduction....................................................................................................................... 1
II. THIRD
REPORT AND ORDER................................................................................................. 3
A. Material Degradation – Sections
614(b)(4)(A) and 615(g)(2)..................................................... 4
B. Availability of Signals – Sections
614(b)(7) and 615(h)............................................................ 15
C. Constitutional Issues.............................................................................................................. 41
1. The Viewability Requirements Are
Consistent with the First Amendment........................... 41
2. The Viewability Requirements Are
Consistent with the Fifth Amendment........................... 64
D. Other Issues......................................................................................................................... 72
E. Conclusion............................................................................................................................ 74
III. THIRD
FURTHER NOTICE OF PROPOSED RULE MAKING................................................ 75
A. Issues Related to Downconversion......................................................................................... 76
B. Material Degradation Issues.................................................................................................. 78
C. Availability of Signals............................................................................................................ 79
D. Small Business...................................................................................................................... 80
E. Other Issues......................................................................................................................... 88
IV. procedural
matters...................................................................................................... 89
A. Third Report and Order......................................................................................................... 89
1. Final Regulatory Flexibility Analysis................................................................................. 89
2. Final Paperwork Reduction Act Analysis.......................................................................... 90
3. Congressional Review Act.............................................................................................. 91
B. Third Further Notice of Proposed
Rulemaking........................................................................ 92
1. Initial Regulatory Flexibility
Analysis................................................................................ 92
2. Initial Paperwork Reduction Act
Analysis......................................................................... 93
3. Ex Parte Rules............................................................................................................... 94
4. Filing Requirements......................................................................................................... 95
C. Additional Information........................................................................................................... 98
V. ordering
clauses............................................................................................................. 99
APPENDIX A: Final Regulatory Flexibility Analysis
APPENDIX B: Initial Regulatory Flexibility Analysis
APPENDIX C: Amended Rules
1. Pursuant to Section 614(b)(4)(B) of the Communications Act of 1934, as amended (the “Act”),[1] the Commission initiated this proceeding in 1998 to address the responsibilities of cable television operators with respect to carriage of digital broadcasters in light of the significant changes to the broadcasting and cable television industries resulting from the Nation’s transition to digital television.[2] Now that Congress has established February 17, 2009, as the date certain for the end of analog broadcasts by full-power television licensees, we must address the post-transition carriage responsibilities of cable operators under Sections 614 and 615 – particularly in light of the expectation that there will continue to be a large number of cable subscribers with legacy, analog-only television sets after the end of the DTV transition.[3]
2. In this Third Report and Order and Third Further Notice of Proposed Rulemaking (“Third Report and Order” and “Third Further Notice,” respectively), we adopt rules to ensure that cable subscribers will continue to be able to view broadcast stations after the transition, and that they will be able to view those broadcast signals at the same level of quality in which they are delivered to the cable system.[4] We announce these rules now to ensure that cable operators and broadcasters have sufficient time to prepare to comply with them. We also seek comment on several issues related to implementation of these rules. We are mindful that the mandatory carriage rules serve their purpose only when such stations are viewable by all cable subscribers, including those who will only have analog sets after the transition. Furthermore, we act with the knowledge that Congress intended that the benefits of the digital transition should accrue to all consumers.
3. As discussed below, the Act requires that cable systems carry broadcast signals without material degradation and ensure that all subscribers can receive and view mandatory-carriage signals.[5] This Third Report and Order finalizes the material degradation requirements adopted by the Commission in 2001, and establishes two alternative approaches that cable operators may use to meet their responsibility to ensure that cable subscribers with analog television sets can continue to view all must-carry stations after the end of the DTV transition. Cable operators may either carry such signals in analog, or, for all-digital systems, carry the signal in digital only.[6]
4. In this section, we adopt rules requiring that cable operators not discriminate in their carriage between broadcast and non-broadcast signals, and that they not materially degrade broadcast signals. As explained below, we reaffirm the approach adopted by the Commission in 2001 to determining whether material degradation has occurred, as well as the requirement that HD signals be carried in HD.
5. The Act requires that cable operators carry local broadcast signals “without material degradation,” and instructs the Commission to “adopt carriage standards to ensure that, to the extent technically feasible, the quality of signal processing and carriage provided by a cable system for the carriage of local commercial television stations will be no less than that provided by the system for carriage of any other type of signal.” [7] As noted above, Section 614(b)(4)(B) of the Act directs the Commission “to establish any changes in the signal carriage requirements of cable television systems necessary to ensure cable carriage of such broadcast signals of local commercial television stations which have been changed” as a result of the DTV transition.[8]
6. In the Second Further Notice, we sought comment on proposals for ensuring that broadcast signals would not be materially degraded after the digital transition. We proposed that the measurement by which we determine whether an operator is degrading the broadcast signal change from a subjective to an objective standard or, in the alternative, to maintain the comparative standard established in the First Report and Order. We asked whether we should require cable operators to pass through all primary video and program-related bits (“content bits”).[9] In addition, we proposed a rule that would create a framework for negotiations between cable operators who wanted to carry fewer than all content bits and the broadcasters whose signals were at issue. Such a rule would require any operator that wished to carry fewer than all content bits to demonstrate to the broadcaster that it could meet the picture-quality-nondegradation standard without carriage of all content bits. [10] Finally, in the Second Further Notice, we reminded commenters of the existing requirement to carry high definition signals in HD to those subscribers who have signed up for an HD package, and reiterated that this requirement will continue after the transition.[11]
7. We retain the requirement that HD signals be carried in HD, as well as the comparative approach to determining whether material degradation has occurred. In 2001, the First Report and Order established two requirements to avoid material degradation. First, "a cable operator may not provide a digital broadcast signal in a lesser format or lower resolution than that afforded to any" other signal on the system.[12] Second, a cable operator must carry broadcast stations such that, when compared to the broadcast signal, "the difference is not really perceptible to the viewer."[13] Thus, "a broadcast signal delivered in HDTV must be carried in HDTV."[14] Because we decline to rely on measurement of bits to determine whether degradation has occurred, we do not require carriage of all content bits. Additionally, for the reasons described below, we decline to adopt the proposed negotiation framework.
8. The Act requires that broadcast signals not be “materially degraded.” It also requires the Commission to “adopt carriage standards to ensure that, to the extent technically feasible, the quality of signal processing and carriage provided by a cable system for the carriage of local commercial television stations will be no less than that provided by the system for carriage of any other type of signal.”[15] The Commission stated in 2001 that “[f]rom our perspective, the issue of material degradation is about the picture quality the consumer receives and is capable of perceiving.” [16] Cable commenters argued that this should remain the focus of the Commission’s decision making, and we agree. [17]
9. We considered the “all content bits” proposal, the main benefit of which was a clear means of measurement and consequently ease of enforcement.[18] Ultimately, we conclude, however, that the all content bits approach is likely to stifle innovation and the very efficiency that digital technology offers, and may be more exacting a standard than necessary to ensure that a given signal will be carried without material degradation. We also conclude that it is unnecessary at this time to impose such a requirement in light of the paucity of material degradation complaints over the 15 years since enactment of the Must Carry statute.[19]
10. A number of commenters support the existing standard, and most argue that a comparative approach remains the best method of measuring material degradation.[20] As these commenters point out, there is little evidence to indicate otherwise.[21] We note Comcast’s observations that there appear to have been no more than two material degradation complaints since the 1992 adoption of the prohibition, and that both of those were dismissed.[22] Even if there has been limited opportunity to “test” these rules in a digital context,[23] there is every reason to believe that they will prove just as robust in an environment of greater attention to picture quality.
11. Furthermore, there are technological benefits to the current comparative standard. Time Warner argues that the content bits standard proposed in the Second Further Notice would require devoting additional bandwidth to carriage even when it would not improve the quality of the transmitted image, hurting consumers by limiting other uses of the bandwidth.[24] AT&T further argues that an “all content bits” standard could “dampen[] incentives to invest in video compression and other technologies…that would allow even greater transmission efficiencies and higher quality pictures.”[25] We recognize these concerns, and do not intend to impede improvements in technology. Some cable operators may, currently or in the future, rely on advanced compression technologies such as MPEG 4 to provide service to subscribers with greater efficiency. We particularly recognize the value of compression technologies that take the broadcast signal back to uncompressed baseband and then re-encode it in a more efficient manner without materially degrading the picture. Such advanced compression utilizes a minimum bit rate that does not reduce the quality of the resolution. We agree with commenters that a comparative standard is currently the best way to encourage and reward technological innovations, like MPEG4 compression, that allow for more efficient use of bandwidth without diminishing viewer experience.
12. We decline to adopt the proposal of Agape Church Inc., that we require carriage of secondary channels.[26] Our rules here focus only on the broadcaster’s primary video and program related content. The prohibition on material degradation adds no additional requirement to carry non-program-related content.
13. Commenters requested clarification that downconversion to analog does not constitute material degradation.[27] We accordingly clarify that it is not material degradation to downconvert that signal to comply with the “viewability” requirement discussed below.
14. As noted above, we do not adopt the negotiation framework proposed in the Second Further Notice, and direct parties to continue to follow the rules as established in Section 76.61.[28] Both broadcasters and cable operators, the parties who would be involved in these negotiations, raised serious objections to the proposal. The National Association of Broadcasters (“NAB”) and The Association for Maximum Service Television (“MSTV”) are highly critical of any required negotiations, particularly ones which would begin and end upon the request of operators. They state that the 30 day window for carriage complaints is too short, and that the proposal as a whole places the burden of ensuring compliance on the broadcasters, rather than on the operators who have the duty by statute. Finally, they argue that the requirements and penalties for noncompliance are insufficiently detailed or strict.[29] Cable commenters object to the requirement that operators make a showing of non material-degradation to the satisfaction of the broadcaster. They express concern about what they anticipate would be: (1) a major shift in power to must-carry broadcasters, who do not have an incentive to bargain; and (2) an addition of significant transaction costs for operators, who currently do not negotiate with must carry stations at all. They argue that this would add an unnecessary complication to mandatory carriage.[30] As NAB and MSTV note, the goal of these rules is to provide cable subscribers with the full benefits of the digital transition.[31] Given the broad based objections to the proposal, we decline to establish a formal procedure by which broadcasters would waive the material degradation requirements.[32]
15.
In this section, we adopt rules requiring cable systems
that are not “all-digital” to provide must-carry signals in analog, while
“all-digital” systems may provide them in digital form only.[33] We also require that the cost of any
downconversion be borne by operators, but that downconverted signals may count
toward the cap on commercial broadcast carriage.[34] Pursuant to Sections 614 and 615 of the Act,
cable operators must ensure that all cable subscribers have the ability to view
all local broadcast stations carried pursuant to mandatory carriage. Specifically, Section 614(b)(7) (for
commercial stations) states that broadcast signals that are subject to
mandatory carriage must be “viewable via cable on all television receivers of a subscriber which are connected to a
cable system by a cable operator or for which a cable operator provides a
connection.”[35] Similarly, Section 615(h) for noncommercial
stations states that “[s]ignals carried in fulfillment of the carriage
obligations of a cable operator under this section shall be available to every
subscriber as part of the cable system’s lowest priced tier that includes the
retransmission of local commercial television broadcast signals.”[36] These statutory requirements plainly apply
to cable carriage of digital broadcast signals,[37]
and, as a consequence, cable operators must ensure that all cable subscribers –
including those with analog television sets – continue to be able to view all
commercial and non-commercial must-carry broadcast stations after February 17,
2009.[38]
16.
These rules shall be in force for three years from the
date of the digital transition, subject to review by the Commission during the
last year of this period (i.e., between February 2011 and February 2012). In
light of the numerous issues associated with the transition, it is important to
retain flexibility as we deal with emerging concerns. A three-year sunset
ensures that both analog and digital cable subscribers will continue to be able
to view the signals of must-carry stations, and provides the Commission with
the opportunity after the transition to review these rules in light of the potential cost and service disruption to consumers, and
the state of technology and the marketplace.[39]
17. In the Second Further Notice, we sought comment on proposals that would ensure the viewability, for all subscribers, of signals carried pursuant to mandatory carriage. To that end, we proposed that
cable operators must either: (1) carry the signals of commercial and non-commercial must-carry stations in analog format to all analog cable subscribers, or (2) for all-digital systems, carry those signals only in digital format, provided that all subscribers with analog television sets have the necessary equipment to view the broadcast content.[40]
We also proposed that the cost of any down conversion rendered necessary by these rules be borne by the cable operators.[41]
18. We adopt these proposals, and note that they apply to all operators, regardless of their rate-regulated status.[42] In sum, cable operators must comply with the statutory mandate that must-carry broadcast signals “shall be viewable via cable on all television receivers of a subscriber which are connected to a cable system by a cable operator or for which a cable operator provides a connection,” and they have two options of doing so.[43] First, to the extent that such subscribers do not have the capability of viewing digital signals, cable systems must carry the signals of commercial and non-commercial must-carry stations in analog format to those subscribers, after downconverting the signals from their original digital format at the headend.[44] This proposal is in line with the approach already voluntarily planned by many cable operators, as described in testimony by Time Warner CEO Glenn Britt before the House Subcommittee on Telecommunications and the Internet.[45] In the alternative, operators may choose to operate “all-digital systems.”[46] Under this option, operators will not be required to downconvert the signal to analog, and may provide these stations only in a digital format. In any event, any downconversion costs will be borne by the operator.
19. To fulfill its must-carry obligations in cases where a cable operator uses digital-to-analog converter boxes that do not have analog tuners, the operator can deliver a standard definition digital version of a must-carry broadcaster’s high definition digital signal, in addition to the analog and high definition signal, or use boxes that convert high definition signals for viewing on an analog television set, or use other technical solutions so long as cable subscribers have the ability to view the signals.
20. As NCTA notes, the congressionally mandated end of the Digital Television transition does not apply directly to cable operators.[47] We thus recognize that there may be two different kinds of cable systems for some period of time after the DTV transition is complete.[48] Some operators may choose to deliver programming in both digital and analog format. NAB and MSTV describe these systems as those in which they “keep an analog tier and continue to provide local television signals (and perhaps many cable channels as well) to analog receivers in a format that does not require additional equipment.”[49] Other operators may choose, as many already have, to operate or transition to “all-digital systems,” and as NAB and MSTV further note, “virtually all cable operators ultimately will do so.” [50] Game Show Network, LLC (“GSN”) questions why there should be any rules protecting owners of analog sets, since that is “a format the government itself has determined is no longer worthy of any spectrum.”[51] Congress did decide to end analog broadcasting, but declined to turn its backs on the millions of Americans with analog sets. Thus, they established the NTIA converter box program to protect the continued availability of over-the-air signals to all Americans;[52] they accepted the claims of the cable industry that subscribers with analog sets would continue to be served;[53] and we now establish these rules to ensure that those subscribers do continue to be served.[54]
21. NAB proposes that cable operators carry all broadcasters on their systems in the same manner; i.e., if one must carry station is carried in analog, all broadcasters, whether carried pursuant to retransmission consent or must carry, would be carried in analog. Cable operators object to this proposal, and we decline to adopt it.[55] Although a system that is not “all-digital” will be required to carry analog versions of all must-carry signals to ensure their viewability, retransmission consent stations may be carried in any manner that comports with the private agreements of the parties.
22. The “viewability” requirement that we adopt today is based on a straightforward reading of the relevant statutory text.[56] While some cable commenters dispute our interpretation of Section 614(b)(7), their arguments are at odds with both the plain meaning of the statutory text as well as the structure of the provision. These commenters principally argue that the viewability mandate is satisfied whenever cable operators transmit broadcast signals and “‘offer to sell or lease… a converter box’ to their customers” that will allow those signals to be viewed on their receivers. [57] To the extent that such subscribers do not have the necessary equipment, however, the broadcast signals in question are not “viewable” on their receivers.[58] To be sure, “[i]f a cable operator authorizes subscribers to install additional receiver connections, but does not provide the subscriber with such connections, or with the equipment and materials for such connections, the operator [is only required to] notify such subscribers of all broadcast stations carried on the cable system which cannot be viewed without a converter box and . . . offer to sell or lease such a converter box to such subscribers at rates in accordance with section 623(b)(3).”[59] But these commenters confuse the separate mandates set forth in the second and third sentences of Section 614(b)(7), a distinction we clarified as early as 1993.[60] As NAB and MSTV observe, “there is no evidence that the third sentence of Section 614(b)(7) was intended to narrow the scope of the viewability requirement for sets connected by cable operators.”[61] For every receiver “connected to a cable system by a cable operator or for which a cable operator provides a connection,” that operator must ensure that the broadcast signals in question are actually viewable on their subscribers’ receivers.[62]
23. As we explained in the Second Further Notice, the operators of either all-digital or mixed digital-analog systems will be responsible under the statute for ensuring that mandatory carriage stations are actually viewable by all subscribers, “including those with analog television sets.”[63] Two commenters argued that our proposed rules were overbroad, because analog-only televisions will not “qualify as ‘television receivers’ after the transition for purposes of the viewability requirement.”[64] These arguments fail to recognize, however, that the hard deadline set by Congress does not apply to Low Power television stations, including translators and Class A stations. Thus, Low Power broadcasters, operating hundreds of channels, will still be lawfully transmitting analog signals on February 18, 2009, and for some period of time afterwards.[65] Those consumers who rely on Low Power stations and turn on their over-the-air analog sets that morning to watch a local newscast will be using a device “engaged or able to engage in ‘the process of…radio transmission.’”[66] More broadly, as NAB and MSTV point out, the Commission’s authority over these sets is not predicated merely on their ability to receive over the air signals.[67] Rather, we believe that a device that allows subscribers to view signals sent by their cable operator is a television receiver for purposes of Section 614(b)(7) of the Act.[68]
24. NCTA also argues that the situation in the early 1990s that spurred the creation of these viewability requirements was different from the situation that will be faced by consumers post-transition.[69] Therefore, they posit, it is inappropriate to rely on Sections 614(b)(7) and 615(h) to address viewability on analog receivers. To begin with, it is our primary task to implement the text of the statutory provision. While the enactment of a statute may be principally aimed at a particular set of circumstances present at the time, it is often written in general language so that it applies to similar sets of circumstances in the future. As the United States Supreme Court has instructed, “statutory prohibitions often go beyond the principal evil to cover reasonably comparable evils, and it is ultimately the provisions of our laws rather than the principal concerns of our legislators by which we are governed.”[70] In any event, the cable commenters’ own descriptions of the driving force behind the statutory provision demonstrate that the situation at hand is directly analogous. NCTA explains that “[a]t the time [of the provision’s enactment], certain television sets were not ‘cable-ready’ and could not receive [some] channels at all,” and observes that the Commission therefore required converter boxes provided by cable operators to contain “the necessary channel capacity to permit a subscriber to access a UHF must-carry signal through the converter.”[71] Replace “cable-ready” with “digital cable-ready,” and “UHF” with “digital,” and NCTA has described the problem at hand, and one of the options the Commission has again offered to resolve it.[72] The Commission’s charge is to implement the statutory language enacted by Congress, and this language reflects Congress’s unambiguous determination that broadcast signals must be viewable by all cable subscribers. Indeed, as NAB and MSTV note, “the authority that Congress gave the Commission under Section 614(b)(4)(B) to make rules regarding advanced television reflects Congress’ understanding that broadcast technology certainly would change over time, and that the Commission was expected to modify the carriage rules as needed.”[73] While the circumstances today differ from those present at the time of the provision’s enactment, the basic issue, ensuring the viewability of broadcast signals, is the same.[74]
25. Time Warner argues that we do not have the authority to read Section 614(b)(7) as a “manner of carriage” requirement, even to offer analog carriage as one option for complying with the statute.[75] They see the Commission’s early interpretation of the viewability provision as a statement that operators must provide converter boxes “in a specific and limited context,” and that the section cannot serve as the basis for a carriage requirement.[76] On the contrary, the Commission has frequently allowed cable operators to meet their 614(b)(7) obligations by placing must carry signals on a channel viewable to all subscribers instead of by providing boxes.[77] The rules we adopt today are firmly grounded in longstanding Commission practice, and echo previous solutions to similar problems.
26. Some cable programmer commenters, such as the Weather Channel, argue that the proposal “unquestionably would consume vast amounts of cable system bandwidth” with duplicative programming.[78] In actuality, as Time Warner admits, these rules will not have an impact on the carriage of most stations; the “vast majority of broadcasters opt for retransmission consent.”[79] Thus, as NAB notes in its reply, any incremental increase of bandwidth devoted to must-carry stations will be “negligible.”[80] Gospel Music Channel, LLC (Gospel) articulates a concern that flows from Weather Channel’s: that these rules could reduce their chances of carriage on any given system.[81] While we recognize Gospel’s concerns, Congress already acknowledged them when it mandated that systems with more than 12 usable activated channels need carry local commercial television stations only “up to one-third of the aggregate number of usable activated channels of such system[s].”[82] Furthermore, Gospel fails to recognize that to the extent operators choose the second option and become “all-digital,” these rules could contribute to a very positive impact on independent programmers’ ability to make carriage deals due to the concomitant effective increase in channel capacity. The Africa Channel, et al. (“TAC”) also argue that the potential loss of independent cable programmers serving focused audiences “are digital transition issues as important as a consideration of what constitutes viewability or material degradation for broadcasters who are the least likely television market participants to be left behind with or without burdensome new must-carry rules.”[83] In essence, TAC argues that independent cable programmers deserve protections on par with must-carry broadcasters. Congress, however, disagrees, and the Supreme Court has upheld the must-carry regime to ensure the viewability and prevent the material degradation of the signals of those broadcasters.[84]
27. Some commenters have incorrectly characterized our rule as “dual carriage.”[85] Comcast attempts to frame this requirement as “a requirement to carry broadcast signals in [analog]… in perpetuity.”[86] Not only is this not the Commission’s rule, Comcast’s proposal for avoiding “dual carriage” would read “viewability” itself out of the Act. Dual carriage, as considered and rejected by the Commission, would have required cable operators “to carry both the digital and analog signals of a station during the transition when television stations are still broadcasting analog signals”; that is,