[Federal Register: January 3, 2005 (Volume 70, Number 1)]
[Proposed Rules]
[Page 63-68]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr03ja05-22]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Parts 73 and 76
[MM Docket No. 00-167; FCC 04-221]
Broadcast Services; Children's Television; Cable Operators;
Satellite Service Providers
AGENCY: Federal Communications Commission.
[[Page 64]]
ACTION: Notice of proposed rulemaking.
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SUMMARY: The Commission seeks comment on applying to Direct Broadcast
Satellite (DBS) service providers its revised interpretation of the
commercial time limits applicable to children's programming.
Specifically, the Commission proposes to require that the display of
Internet Web site addresses during DBS program material is permitted as
within the time limits only if the Web site meets certain requirements,
including the requirement that it offer a substantial amount of bona
fide program-related or other noncommercial content and is not
primarily intended for commercial purposes. In addition, the Commission
proposes to apply to DBS its revised definition of ``commercial
matter'' as including promotions of television programs or video
programming services other than children's educational and
informational programming. The Commission also seeks comment on how to
tailor its rules to allow innovation in interactivity in children's
television programming, while at the same time ensuring that parents
can control what information their children can access.
DATES: Comments are due by March 1, 2005, and reply comments are due by
April 1, 2005.
ADDRESSES: Federal Communications Commission, Washington, DC 20554.
FOR FURTHER INFORMATION CONTACT: Kim Matthews, Media Bureau, (202) 418-
2120.
SUPPLEMENTARY INFORMATION: This is a summary of the Federal
Communications Commission's Further Notice of Proposed Rule Making in
MM Docket No. 00-167, FCC 04-221, adopted September 9, 2004, and
released November 23, 2004. The complete text of this document is
available for inspection and copying during normal business hours in
the FCC Reference Center, 445 12th Street, SW., Washington, DC 20554.
The complete text may be purchased from the Commission's copy
contractor, Qualex International, 445 12th Street, SW., Room CY-B402,
Washington, DC 20554. The full text may also be downloaded at: http://www.fcc.gov.
To request materials in accessible formats for people with
disabilities (braille, large print, electronic file, audio format),
send an e-mail to fcc504@fcc.gov or call the Consumer & Governmental
Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432 (TTY).
Paperwork Reduction Act: This document contains proposed and
modified information collections subject to the Paperwork Reduction Act
of 1995 (PRA), Public Law 104-13. It will be submitted to the Office of
Management and Budget (OMB) for review under section 3507(d) of the
PRA. OMB, the general public, and other Federal agencies will be
invited to comment on the modified and proposed information collection
requirements contained in this proceeding.
Summary of the Further Notice of Proposed Rule Making
1. In the final rule document in this proceeding, published
elsewhere in the same issue of this Federal Register, we resolved a
number of issues raised in the Notice of Proposed Rulemaking (65 FR
66951-01, November 8, 2000) regarding the obligation of television
broadcasters to protect and serve children in their audience. In the
final rule document, we concluded that, for the time being, we will not
prohibit the appearance of direct, interactive, links to commercial
Internet sites in children's programming, as this technology is
currently not being used in children's programming. Nonetheless, we are
aware that the inclusion of interactive technology in television
programming is on the horizon. We encourage broadcasters to develop
interactive services that enhance the educational value of children's
programming. With the benefits of interactivity, however, come
potential risks that children will be exposed to additional commercial
influences. Accordingly, we seek comment on how to tailor our rules to
allow innovation in interactivity in children's television programming,
while at the same time ensuring that parents can control what
information their children can access.
2. We tentatively conclude that we should prohibit interactivity
during children's programming that connects viewers to commercial
matter unless parents ``opt in'' to such services. We seek comment on
how such a rule could be implemented technologically. We also seek
comment on how we would implement such a rule in terms of the statutory
limits on commercial time. In particular, we note that the time spent
accessing the Internet or other interactive material during a program
is not limited to the time that a link is displayed on the screen. For
the same reason, we seek comment as to how such a rule would apply to
commercials, given that interactive elements can cause a commercial to
last much longer than a 30-second or 15-second spot. Finally, we seek
comment on whether to change how we define commercial matter in this
context.
3. We also concluded in the Report and Order in this proceeding
that we will revise our definition of ``commercial matter'' to include
promotions of television programs or video programming services other
than children's educational and informational programming. We stated
that we will apply this revised definition to television licensees and
cable operators. We tentatively conclude that we should also amend Part
25 of the Commission's rules to apply this revised definition to Direct
Broadcast Satellite (``DBS'') service providers, and seek comment on
this tentative conclusion. In addition, in the Report and Order we
interpreted the CTA commercial time limits to require that, with
respect to programs directed to children ages 12 and under, the display
of Internet Web site addresses during program material is permitted as
within the CTA limitations only if the Web site: (1) Offers a
substantial amount of bona fide program-related or other noncommercial
content; (2) is not primarily intended for commercial purposes,
including either e-commerce or advertising; (3) the Web site's home
page and other menu pages are clearly labeled to distinguish the
noncommercial from the commercial sections; and (4) the page of the Web
site to which viewers are directed by the Web site address is not used
for e-commerce, advertising, or other commercial purposes (e.g.,
contains no links labeled ``store'' and no links to another page with
commercial material). We propose to apply these restrictions on the
displaying of commercial Web site information to DBS and require DBS
providers to maintain records sufficient to verify compliance with the
commercial limits requirements and to make such records available to
the public. We believe that it is appropriate to require that children
in DBS households receive the same protection from excessive
commercialism on television as children in cable or over-the-air
television households. We do not believe that compliance with these
rules will be burdensome as many of the programming services carried by
DBS providers are the same as are carried by cable systems around the
country, which must comply with the revised commercial limits rules
adopted in our decision today.
Administrative Matters
4. This is a permit-but-disclose notice and comment rulemaking
proceeding. Ex parte presentations are permitted, except during the
Sunshine Agenda
[[Page 65]]
period, provided that they are disclosed as provided in the
Commission's Rules. See generally 47 CFR 1.1202, 1.1203, and 1.1206(a).
5. Pursuant to Sections 1.415 and 1.419 of the Commission's rules,
47 CFR 1.415, 1.419, interested parties may file comments on or before
March 1, 2005, and reply comments on or before April 1, 2005. Comments
may be filed using the Commission's Electronic Comment Filing System
(ECFS) or by filing paper copies. See Electronic Filing of Documents in
Rulemaking Proceedings, 63 FR 24121 (1998). Documents filed through the
ECFS can be sent as an electronic file via the Internet to http://www.fcc.gov/e-file/ecfs.html.
Generally, only one copy of an electronic
submission must be filed. If multiple docket or rulemaking numbers are
referenced in the caption of the comments, however, commenters must
transmit one electronic copy of the comments to each docket or
rulemaking number referenced in the caption. In completing the
transmittal screen, commenters should include their full name, U.S.
Postal Service mailing address, and the applicable docket or rulemaking
number. Parties may also submit an electronic comment by Internet e-
mail. To get filing instructions for e-mail comments, commenters should
send an e-mail to ecfs@fcc.gov, and should include the following words
in the body of the message, ``get form .'' A
sample form and directions will be sent in reply. Parties who choose to
file by paper must file an original and four copies of each filing. If
more than one docket or rulemaking number appear in the caption of the
comment, commenters must submit two additional copies for each
additional docket or rulemaking number. Filings can be sent by hand or
messenger delivery, by commercial overnight courier, or by first-class
or overnight U.S. Postal Service mail (although we continue to
experience delays in receiving U.S. Postal Service mail). The
Commission's contractor, Vistronix, Inc., will receive hand-delivered
or messenger-delivered paper filings for the Commission's Secretary at
236 Massachusetts Avenue, NE., Suite 110, Washington, DC 20002. The
filing hours at this location are 8 a.m. to 7 p.m. All hand deliveries
must be held together with rubber bands or fasteners. Any envelopes
must be disposed of before entering the building. Commercial overnight
mail (other than U.S. Postal Service Express Mail and Priority Mail)
must be sent to 9300 East Hampton Drive, Capitol Heights, MD 20743.
U.S. Postal Service first-class mail, Express Mail, and Priority Mail
should be addressed to 445 12th Street, SW., Washington, DC 20554. All
filings must be addressed to the Commission's Secretary, Office of the
Secretary, Federal Communications Commission.
6. This Further Notice of Proposed Rulemaking may contain either
proposed or modified information collections subject to the Paperwork
Reduction Act of 1995. As part of our continuing effort to reduce
paperwork burdens, we invite OMB, the general public, and other Federal
agencies to take this opportunity to comment on the information
collections contained in this Further Notice, as required by the
Paperwork Reduction Act of 1995. Public and agency comments are due at
the same time as other comments on the Further Notice. Comments should
address: (a) Whether the proposed collection of information is
necessary for the proper performance of the functions of the
Commission, including whether the information shall have practical
utility; (b) ways to enhance the quality, utility, and clarity of the
information collected; and (c) ways to minimize the burden of the
collection of information on the respondents, including the use of
automated collection techniques or other forms of information
technology. In addition to filing comments with the Secretary, a copy
of any comments on the information collections contained herein should
be submitted to Cathy Williams, Federal Communications Commission, 445
Twelfth Street, SW., Room 1-C823, Washington, DC 20554, or via the
Internet to Cathy.Williams@fcc.gov and to Kristy L. LaLonde, OMB Desk
Officer, 10234 NEOB, 725 17th Street, NW., Washington, DC 20503 or via
5167.
7. As required by the Regulatory Flexibility Act, the Commission
has prepared an Initial Regulatory Flexibility Analysis (IRFA) of the
possible significant economic impact on a substantial number of small
entities of the proposals addressed in this Further Notice of Proposed
Rulemaking. Written public comments are requested on the IRFA. These
comments must be filed in accordance with the same filing deadlines for
comments on the Further Notice, and they should have a separate and
distinct heading designating them as responses to the IRFA.
8. To request materials in accessible formats for people with
disabilities (braille, large print, electronic file, audio format),
send an e-mail to fcc504@fcc.gov or call the Consumer & Governmental
Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432 (TTY). This
document can also be downloaded in Word and Portable Document Format
(PDF) at: http://www.fcc.gov.
9. For additional information on this proceeding, please contact
Kim Matthews, Policy Division, Media Bureau at (202) 418-2154.
Initial Regulatory Flexibility Analysis
As required by the Regulatory Flexibility Act of 1980, as amended
(``RFA''), the Commission has prepared this Initial Regulatory
Flexibility Analysis (``IRFA'') of the possible significant economic
impact on small entities by the policies and rules proposed in this
Further 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
on the NPRM. The Commission will send a copy of the Notice, including
this IRFA, to the Chief Counsel for Advocacy of the Small Business
Administration. In addition, the Notice and IRFA (or summaries thereof)
will be published in the Federal Register.
I. Need for and Objectives of the Proposed Rules
Our goal in commencing this proceeding is to seek comment on two
issues: (1) Whether and how we should limit the use of interactivity
for commercial purposes in children's television programming; and (2)
whether we should apply to Direct Broadcast Satellite service providers
the same revised definition of ``commercial matter'' adopted in the
Report and Order.
We seek comment in the Notice on the tentative conclusion that we
should prohibit interactivity during children's programming that
connects viewers to commercial matter unless parents ``opt in'' to such
services. We seek comment on how such a rule could be implemented
technologically. We also seek comment on how we would implement such a
rule in terms of the statutory limits on commercial time.
We concluded in the Report and Order that we will revise our
definition of ``commercial matter'' to include promotions of television
programs or video programming services other than children's
educational and informational programming. We stated that we will apply
this revised definition to television licensees and cable operators. We
tentatively conclude in the Notice that we should also amend
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Part 25 of the Commission's rules to apply this revised definition to
Direct Broadcast Satellite service providers, and seek comment on this
tentative conclusion.
In addition, the Report and Order interprets the CTA commercial
time limits to require that, with respect to programs directed to
children ages 12 and under, the display of Internet Web site addresses
during program material is permitted as within the CTA limitations only
if the Web site: (1) Offers a substantial amount of bona fide program-
related or other noncommercial content; (2) is not primarily intended
for commercial purposes, including either e-commerce or advertising;
(3) the Web site's home page and other menu pages are clearly labeled
to distinguish the noncommercial from the commercial sections; and (4)
the page of the Web site to which viewers are directed by the Web site
address is not used for e-commerce, advertising, or other commercial
purposes (e.g., contains no links labeled ``store'' and no links to
another page with commercial material). The Report and Order applies
this restriction to broadcasters and cable operators. We propose in the
NPRM to apply this restriction to DBS. In addition, we propose to
require DBS providers to maintain records sufficient to verify
compliance with the commercial limits in children's programming and to
make such records available to the public.
II. Legal Basis
The authority for the action proposed in this rulemaking is
contained in Sections 4(i) & (j), 303, 303a, 303b, 307, 309 and 336 of
the Communications Act of 1934, as amended, 47 U.S.C. 154(i) & (j),
303, 303a, 303b, 307, 309 and 336.
III. Description and Estimate of the Number of Small Entities to Which
the Proposed Rules Will Apply
The RFA directs the Commission to provide a description of and,
where feasible, an estimate of the number of small entities that will
be affected by the 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
Small Business Administration (``SBA'').
In this context, the application of the statutory definition to
television stations is of concern. An element of the definition of
``small business'' is that the entity not be dominant in its field of
operation. We are unable at this time to define or quantify the
criteria that would establish whether a specific television station is
dominant in its field of operation. Accordingly, the estimates that
follow of small businesses to which rules may apply do not exclude any
television station from the definition of a small business on this
basis and therefore might be over-inclusive.
An additional element of the definition of ``small business'' is
that the entity must be independently owned and operated. It is
difficult at times to assess these criteria in the context of media
entities and our estimates of small businesses might therefore be over
inclusive.
Television Broadcasting. The Small Business Administration defines
a television broadcasting station that has no more than $12 million in
annual receipts as a small business. Business concerns included in this
industry are those ``primarily engaged in broadcasting images together
with sound.'' According to Commission staff review of the BIA
Publications, Inc. Master Access Television Analyzer Database as of May
16, 2003, about 814 of the 1,220 commercial television stations in the
United States have revenues of $12 million or less. We note, however,
that, in assessing whether a business concern qualifies as small under
the above definition, business (control) affiliations must be included.
Our estimate, therefore, likely overstates the number of small entities
that might be affected by our action, because the revenue figure on
which it is based does not include or aggregate revenues from
affiliated companies.
In addition, an element of the definition of ``small business'' is
that the entity not be dominant in its field of operation. We are
unable at this time to define or quantify the criteria that would
establish whether a specific television station is dominant in its
field of operation. Accordingly, the estimate of small businesses to
which rules may apply do not exclude any television station from the
definition of a small business on this basis and are therefore over-
inclusive to that extent. Also as noted, an additional element of the
definition of ``small business'' is that the entity must be
independently owned and operated. We note that it is difficult at times
to assess these criteria in the context of media entities and our
estimates of small businesses to which they apply may be over-inclusive
to this extent.
There are also 380 non-commercial TV stations in the BIA database.
Since these stations do not receive advertising revenue, there are no
revenue estimates for these stations. We believe that virtually all of
these stations would be considered ``small businesses'' given that they
are generally owned by non-commercial entities including local schools
and governments and, for the most part, rely on public donations and
funding.
Cable and Other Program Distribution. The SBA has developed a small
business size standard for cable and other program distribution
services, which includes all such companies generating $12.5 million or
less in revenue annually. This category includes, among others, cable
operators, direct broadcast satellite (``DBS'') services, home
satellite dish (``HSD'') services, multipoint distribution services
(``MDS''), multichannel multipoint distribution service (``MMDS''),
Instructional Television Fixed Service (``ITFS''), local multipoint
distribution service (``LMDS''), satellite master antenna television
(``SMATV'') systems, and open video systems (``OVS''). According to
Census Bureau data, there are 1,311 total cable and other pay
television service firms that operate throughout the year of which
1,180 have less than $10 million in revenue. We address below each
service individually to provide a more precise estimate of small
entities.
Cable Operators. The SBA has developed a small business size
standard for cable and other program distribution services, which
includes all such companies generating $12.5 million or less in revenue
annually. The Commission has developed, with SBA's approval, our own
definition of a small cable system operator for the purposes of rate
regulation. Under the Commission's rules, a ``small cable company'' is
one serving fewer than 400,000 subscribers nationwide. We last
estimated that there were 1,439 cable operators that qualified as small
cable companies. Since then, some of those companies may have grown to
serve over 400,000 subscribers, and others may have been involved in
transactions that caused them to be combined with other cable
operators. Consequently, we estimate that there are fewer than 1,439
small entity cable system operators that may be affected by the
decisions and rules in this Report and Order.
The Communications Act, as amended, also contains a size standard
for a small cable system operator, which is ``a cable operator that,
directly or
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through an affiliate, serves in the aggregate fewer than 1% of all
subscribers in the United States and is not affiliated with any entity
or entities whose gross annual revenues in the aggregate exceed
$250,000,000.'' The Commission has determined that there are 68,500,000
subscribers in the United States. Therefore, an operator serving fewer
than 685,000 subscribers shall be deemed a small operator if its annual
revenues, when combined with the total annual revenues of all of its
affiliates, do not exceed $250 million in the aggregate. Based on
available data, we find that the number of cable operators serving
685,000 subscribers or less totals approximately 1,450. Although it
seems certain that some of these cable system operators are affiliated
with entities whose gross annual revenues exceed $250,000,000, 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.
Direct Broadcast Satellite (``DBS'') Service. Because DBS provides
subscription services, DBS falls within the SBA-recognized definition
of Cable and Other Program Distribution services. This definition
provides that a small entity is one with $12.5 million or less in
annual receipts. There are four licensees of DBS services under Part
100 of the Commission's Rules. Three of those licensees are currently
operational. Two of the licensees that are operational have annual
revenues that may be in excess of the threshold for a small business.
The Commission, however, does not collect annual revenue data for DBS
and, therefore, is unable to ascertain the number of small DBS
licensees that could be impacted by these proposed rules. DBS service
requires a great investment of capital for operation, and we
acknowledge, despite the absence of specific data on this point, that
there are entrants in this field that may not yet have generated $12.5
million in annual receipts, and therefore may be categorized as a small
business, if independently owned and operated. Therefore, we will
assume all four licensees are small, for the purpose of this analysis.
Electronics Equipment Manufacturers. Rules adopted in this
proceeding could apply to manufacturers of DTV receiving equipment and
other types of consumer electronics equipment. The SBA has developed
definitions of small entity for manufacturers of audio and video
equipment as well as radio and television broadcasting and wireless
communications equipment. These categories both include all such
companies employing 750 or fewer employees. The Commission has not
developed a definition of small entities applicable to manufacturers of
electronic equipment used by consumers, as compared to industrial use
by television licensees and related businesses. Therefore, we will
utilize the SBA definitions applicable to manufacturers of audio and
visual equipment and radio and television broadcasting and wireless
communications equipment, since these are the two closest NAICS Codes
applicable to the consumer electronics equipment manufacturing
industry. However, these NAICS categories are broad and specific
figures are not available as to how many of these establishments
manufacture consumer equipment. According to the SBA's regulations, an
audio and visual equipment manufacturer must have 750 or fewer
employees in order to qualify as a small business concern. Census
Bureau data indicates that there are 554 U.S. establishments that
manufacture audio and visual equipment, and that 542 of these
establishments have fewer than 500 employees and would be classified as
small entities. The remaining 12 establishments have 500 or more
employees; however, we are unable to determine how many of those have
fewer than 750 employees and therefore, also qualify as small entities
under the SBA definition. Under the SBA's regulations, a radio and
television broadcasting and wireless communications equipment
manufacturer must also have 750 or fewer employees in order to qualify
as a small business concern. Census Bureau data indicates that there
1,215 U.S. establishments that manufacture radio and television
broadcasting and wireless communications equipment, and that 1,150 of
these establishments have fewer than 500 employees and would be
classified as small entities. The remaining 65 establishments have 500
or more employees; however, we are unable to determine how many of
those have fewer than 750 employees and therefore, also qualify as
small entities under the SBA definition. We therefore conclude that
there are no more than 542 small manufacturers of audio and visual
electronics equipment and no more than 1,150 small manufacturers of
radio and television broadcasting and wireless communications equipment
for consumer/household use.
Computer Manufacturers. The Commission has not developed a
definition of small entities applicable to computer manufacturers.
Therefore, we will utilize the SBA definition of electronic computers
manufacturing. According to SBA regulations, a computer manufacturer
must have 1,000 or fewer employees in order to qualify as a small
entity. Census Bureau data indicates that there are 563 firms that
manufacture electronic computers and of those, 544 have fewer than
1,000 employees and qualify as small entities. The remaining 19 firms
have 1,000 or more employees. We conclude that there are approximately
544 small computer manufacturers.
IV. Description of Projected Reporting, Recordkeeping and Other
Compliance Requirements
At this time, we do not expect that the proposed rules would impose
significant additional reporting or recordkeeping requirements. While
the requirements proposed in the Notice would have an impact on Direct
Broadcast Satellite providers and others, we do not expect the impact
to be significant in terms of time or expense to comply. At this time,
we expect the requirements to be the same for large and small entities.
We seek comment on whether others perceive a need for less extensive
recordkeeping or compliance requirements for small entities.
V. Steps Taken to Minimize Significant Impact on Small Entities, and
Significant Alternatives Considered
The RFA requires an agency to describe any significant alternatives
that it has considered in reaching its proposed approach, which may
include the following four alternatives (among others): (1) The
establishment of differing compliance or reporting requirements or
timetables that take into account the resources available to small
entities; (2) the clarification, consolidation, or simplification of
compliance or reporting requirements under the rule for small entities;
(3) the use of performance, rather than design, standards; and (4) an
exemption from coverage of the rule, or any part thereof, for small
entities.
The proposals in the NPRM would apply equally to large and small
entities. We welcome comment on modifications of the proposals if such
modifications might assist small entities and especially if such are
based on evidence of potential differential impact.
VI. Federal Rules Which Duplicate, Overlap, or Conflict With the
Commission's Proposals
None.
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List of Subjects
47 CFR Part 73
Television.
47 CFR Part 76
Cable television.
Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. 04-28174 Filed 12-30-04; 8:45 am]
BILLING CODE 6712-01-P