[Federal Register: March 22, 2005 (Volume 70, Number 54)]
[Rules and Regulations]
[Page 14412-14420]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 76
[CS Docket No. 98-120; FCC 05-27]
Carriage of Digital Television Broadcast Signals
AGENCY: Federal Communications Commission.
ACTION: Final rule; petition for reconsideration.
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SUMMARY: In this document, the Commission considers several petitions
for reconsideration of its First Report and Order (FCC 01-22) and
various comments submitted in response to the Further Notice of
Proposed Rulemaking (FCC 01-22) in this proceeding, but limited to two
issues raised therein: Whether cable operators are required to carry
both the digital and analog signals of a station during the transition
when television stations are still broadcasting analog signals (also
referred to as the ``dual carriage'' issue); and how to construe the
``primary video'' carriage limitation under Sections 614(b)(3)(A) (for
commercial stations) and 615(g)(1) (for noncommercial stations) under
the Communications Act of 1934, as amended, if a broadcaster chooses to
broadcast multiple digital television streams (also referred to as the
``multicast carriage'' issue). In this document, the Commission grants
in part and denies in part the petitions for reconsideration. The
Commission affirms its tentative conclusion in the First Report and
Order not to impose a dual carriage requirement. With regard to the
digital multicast carriage issue, the Commission affirms its earlier
conclusion in the First Report and Order and declines to require cable
operators to carry any more than one programming stream of a digital
television station. Although the Commission found that the operative
statutory language at issue is ambiguous on the subject of multicast
must carry, it also found, based on the current record, that such a
requirement is not necessary to further the purposes of the must carry
statute, as defined by the Supreme Court.
DATES: Effective March 22, 2005.
FOR FURTHER INFORMATION CONTACT: For additional information on this
proceeding, contact Ben Bartolome, Ben.Bartolome@fcc.gov, or Eloise
Gore, Eloise.Gore@fcc.gov, of the Media Bureau, Policy Division, (202)
418-2120. For additional information concerning the Paperwork Reduction
Act of 1995 analysis, please contact Cathy Williams, Federal
Communications Commission, 445 12th St, SW., Room 1-C823, Washington,
DC, 20554, or via the Internet to Cathy.Williams@fcc.gov.
SUPPLEMENTARY INFORMATION: This is a summary of the Federal
Communications Commission's Second Report and Order and First Order on
Reconsideration, FCC 05-27, adopted February 10, 2005, and released on
February 23, 2005. The full text of this document is available for
public inspection and copying during regular business hours in the FCC
Reference Center, Federal Communications Commission, 445 12th Street,
SW., CY-A257, Washington, DC, 20554. These documents will also be
available via ECFS (http://www.fcc.gov/cgb/ecfs/). (Documents will be
available electronically in ASCII, Word 97, and/or Adobe Acrobat.) The
complete text may be purchased from the Commission's copy contractor,
445 12th Street, SW., Room CY-B402, Washington, DC 20554. To request
this document in accessible formats (computer diskettes, large print,
audio recording, and Braille), send an e-mail to fcc504@fcc.gov or call
the Commission's Consumer and Governmental Affairs Bureau at (202) 418-
0530 (voice), (202) 418-0432 (TTY).
Initial Paperwork Reduction Act of 1995 Analysis
This Second Report and Order and First Order on Reconsideration has
been analyzed with respect to the Paperwork Reduction Act of 1995
(``PRA''), Public Law 104-13, 109 Stat 163 (1995), and does not contain
proposed new and/or modified information collection requirements.
Synopsis of the Second Report and Order and First Order on
Reconsideration
I. Introduction
1. In this Second Report and Order and First Order on
Reconsideration, we consider several petitions for reconsideration of
the Commission's First Report and Order, 66 FR 16533, Mar. 26, 2001,
and the various comments submitted in response to the Further Notice of
Proposed Rulemaking (FNPRM), 63 FR 42330, Aug. 7, 1998, in this
proceeding. The actions taken in this order are limited to two
significant issues, the resolution of which are essential to the
Commission's ongoing efforts to complete the transition from analog to
digital television. In the interest of providing certainty on these
significant issues at this time, we are deferring resolution of the
other issues raised on reconsideration and in the FNPRM to a future
order. The two issues resolved in this order are: (1) whether cable
operators are required to carry both the digital and analog signals of
a station during the transition when television stations are still
broadcasting analog signals (also generally referred to as the ``dual
carriage'' issue); and (2) how to construe the ``primary video''
carriage limitation under Sections 614(b)(3)(A) (for commercial
stations) and 615(g)(1) (for noncommercial stations) under the Act if a
broadcaster chooses to broadcast multiple digital television streams
(this issue is generally referred to as the mandatory multicast
carriage issue); see 47 U.S.C. 534(b)(3)(A), 535(g)(1).
2. With respect to the dual carriage issue, we determined in the
First Report and Order that the statute neither mandates nor precludes
the mandatory simultaneous carriage of both a television station's
digital and analog signals. Furthermore, we tentatively concluded that,
based on the available record evidence, a dual carriage requirement
would likely violate the cable operator's First Amendment rights. In
order to evaluate the issue more fully, we adopted the FNPRM to solicit
comment on the constitutionality of imposing a dual carriage
requirement. Several members of the broadcast industry seek
reconsideration of the Commission's statutory interpretation on this
issue, and urge us to conclude that the Act mandates dual carriage. For
the reasons provided in this order, we are denying the petitions on
this issue and affirm our tentative decision not to impose a dual
carriage requirement.
3. With respect to the mandatory multicast carriage issue, the
Commission, in the First Report and Order, interpreted the statutory
term ``primary video'' to mean only a single programming stream. As a
result, if a digital broadcaster elects to divide its digital spectrum
into several separate, independent, and unrelated programming streams,
the Commission found that only one of these streams is considered
primary and entitled to mandatory carriage. Several members of the
broadcast industry seek reconsideration of our statutory
interpretation. For the reasons provided below, we are also denying the
petitions on this issue and thereby affirm our decision in the First
Report and Order.
II. Background
4. Sections 614 and 615 of the Act govern mandatory carriage for
cable operators. Our task in this ongoing proceeding is to determine
how to
[[Page 14413]]
implement and apply the statute to digital signals during the
transition as well as after the transition is completed. Our approach
is guided by Title VI of the Act, which states, in part, that ``cable
communications provide and are encouraged to provide the widest
possible diversity of information sources and services to the public.''
In addition, we are directed to ``promote competition in cable
communications and minimize unnecessary regulation that would impose an
undue economic burden on cable systems.''
5. The law governing retransmission consent generally prohibits
cable operators and other multichannel video programming distributors,
such as satellite carriers, from retransmitting the signal of a
commercial television station, unless the station whose signal is being
transmitted consents or chooses mandatory carriage; see 47 U.S.C.
325(b)(1)(A) and (B). Generally, every three years, commercial
television stations must elect to either grant retransmission consent
or pursue their mandatory carriage rights; see 47 CFR 76.64(f).
6. Under Section 614 of the Act, and the implementing rules adopted
by the Commission, a commercial television broadcast station is
entitled to request mandatory carriage, if it does not elect
retransmission consent, on cable systems located within the station's
market. A station's market for this purpose is its ``designated market
area,'' or DMA, as defined by Nielsen Media Research (A DMA is a
geographic market designation that defines each television market
exclusive of others based on measured viewing patterns). Systems with
more than 12 usable activated channels must carry local commercial
television stations ``up to one-third of the aggregate number of usable
activated channels of such system[s]''; see 47 U.S.C. 534(b)(1)(B).
Beyond this requirement, the carriage of additional television stations
is at the discretion of the cable operator. In addition, Section 615 of
the Act requires cable systems to carry local noncommercial educational
television stations (``NCE'' stations) according to a different
formula, and based upon a cable system's number of usable activated
channels. Carriage of NCE stations are in addition to the one-third cap
that applies to full power commercial stations. Low power television
stations, including Class A stations, may request carriage if they meet
six statutory criteria; see 47 U.S.C. 534(c)(1) and (h)(2); 47 CFR
76.55(d). A cable operator, however, cannot carry a low power
television station in lieu of a full power television station; see 47
U.S.C. 534(b)(1)(A) and (h)(2); 47 CFR 76.56(b)(1) and (b)(4)(i). Among
these criteria are that the low power TV station meets all of the
Commission's requirements that are applicable to full power TV stations
with respect to certain types of programming, such as children's and
political programming, and ``the Commission determines that the
provision of such programming by such station would address local news
and informational needs which are not being adequately served by full
power television broadcast stations because of the geographic distance
of such full power stations from the low power station's community of
license''; see 47 U.S.C. 534(h)(2)(B).
III. Carriage of Digital Broadcast Signals
A. Stations Broadcasting in Analog and Digital
7. A fundamental issue addressed in the First Report and Order and
in the FNPRM is whether cable operators are required to carry both the
analog and digital signals of a station during the transition when
television stations are broadcasting analog and digital signals; see 16
FCC Rcd at 2603-09, 2649-52. We said therein that if the Commission
requires carriage of both analog and digital signals (i.e., ``dual
carriage''), cable operators could be required to carry double the
number of television signals, many of which contain duplicative
content, while having to drop or forego carriage of varied cable
programming services where channel capacity is limited; see 16 FCC Rcd
at 2603-09, 2649-52.
8. In the First Report and Order, we examined our authority to
impose a dual carriage requirement and determined, after extensive
review of Sections 614 and 615 of the Act and the accompanying
legislative history, that ``the statute neither mandates nor precludes
the mandatory simultaneous carriage of both a television station's
digital and analog signals;'' see 16 FCC Rcd at 2600. It is precisely
the ambiguity of the statute that has driven contentious policy debate
on this issue. In order to weigh the constitutional questions inherent
in a statutory construction that would permit dual carriage, we
determined that it was appropriate and necessary to more fully develop
the record in this regard. It was our tentative conclusion, however,
that a dual carriage requirement would burden cable operators' First
Amendment rights substantially more than necessary to further the
government's substantial interests; see 16 FCC Rcd at 2600. We issued a
FNPRM addressing several critical questions concerning the
constitutionality of dual carriage, including: (1) Whether a cable
operator will have the channel capacity to carry the digital television
signal of a station, in addition to the analog signal of that same
station, without displacing other cable programming or services; (2)
whether market forces, through retransmission consent, will provide
cable subscribers access to digital television signals; and (3) how the
resolution of the carriage issues would impact the digital transition
process; see 16 FCC Rcd at 2600, 2647-54. Before considering the
additional record and finally determining the dual carriage question,
we first address the petitions for reconsideration of our preliminary
decision on the statutory issue in the First Report and Order.
1. Statutory Analysis
9. Several members of the broadcast industry seek reconsideration
of the Commission's statutory interpretation on this issue, and urge us
to conclude that the Act mandates dual carriage. Commercial
Broadcasters specifically argue that Section 614(a) of the Act makes no
distinction between qualifying analog and digital signals, so therefore
all local television station signals must be carried. They point out
that Section 614(h)(1)(A) of the A defines the term ``local commercial
television station,'' does not expressly exclude DTV signals from
carriage during the time that the companion analog signal would be
carried. They state that ``Section 614 applies to the signals of any
full power commercial television station licensed and operating on a
channel regularly assigned to its community by the Commission, not
otherwise excluded by the terms of Section 614.'' Furthermore, they
assert that the new DTV signals of full power television broadcast
stations at issue here were, at the time of the 1992 Cable Act,
anticipated to be ``licensed and operating on a channel regularly
assigned to its community by the Commission.'' They surmise that if
Congress intended to exclude these DTV signals from carriage
requirements during the transitional period, it would have so indicated
in Section 614. In their view, ``[b]ecause the statutory mandate to
carry broadcasters' DTV signals is clear, the Commission lacks
discretion to water down or modify the express requirement that cable
operators carry DTV signals.''
10. Cable operators and non-broadcast programmers, on the other
hand, ask the Commission to deny petitioners' request for
reconsideration of this issue. NCTA argues that, in the absence of a
clear statutory directive for dual carriage, the
[[Page 14414]]
Commission must read the statute to err on the side of avoiding
constitutional infirmities. Cable programmer A&E states that if
Congress had intended for the Commission to greatly expand the cable
industry's carriage burden during the DTV transition, it would have
done so much more plainly and explicitly. A&E points out that
subsequent congressional actions and relevant legislative histories in
the Telecommunications Act of 1996, the Balanced Budget Act of 1997,
and the Satellite Home Viewer Improvement Act of 1999, demonstrate that
Congress did not intend to compel dual carriage through Section
614(b)(4)(B) of the Act.
11. The arguments that the parties have presented in support of a
statutory reading to require dual carriage essentially are no different
from those that have previously been submitted, considered, and
rejected in the First Report and Order; see 16 FCC Rcd at 2603-09. We
therefore affirm our earlier conclusion that the Act is ambiguous on
the issue of dual carriage. The statute neither mandates nor precludes
the mandatory simultaneous carriage of both a television station's
digital and analog signals; see 16 FCC Rcd at 2600. Further, we do not
believe that mandating dual carriage is necessary either to advance the
governmental interests identified by Congress in enacting Sections 614
and 615 and upheld in Turner II or to effectuate the DTV transition.
Since no evidence or arguments submitted on reconsideration gives us
any reason to question our original judgment, we deny the petitions for
reconsideration on this point.
2. Constitutional Analysis
12. As indicated above, the First Report and Order held that the
Act was ambiguous as to the question of dual carriage and that further
fact-finding was necessary to determine the appropriate statutory
interpretation; see 16 FCC Rcd at 2648. We rely on several
constitutional principles and cases, in particular the Supreme Court's
decisions in Turner I (Turner Broadcasting Systems, Inc. v. FCC, 512
U.S. 622 (1994)) and Turner II (Turner Broadcasting Systems, Inc. v.
FCC, 520 U.S. 180 (1997)) in addressing the constitutionality of
mandatory dual carriage. The Supreme Court has recognized that
mandatory carriage directly interferes with the free speech rights of
cable operators and cable programmers. Nevertheless, the Turner II
Court upheld the constitutionality of Sections 614 and 615 under an
intermediate scrutiny analysis. A majority of the Court found that the
mandatory carriage provisions of the Act furthered two governmental
interests: (1) preserving the benefits of free, over-the-air local
broadcast television for viewers; and (2) promoting the widespread
dissemination of information from a multiplicity of sources.
Significantly, the Court found that mandatory carriage was narrowly
tailored because the burden imposed at that time was congruent to the
benefits obtained. A plurality of the Court also concluded that
Sections 614 and 615 furthered a third governmental interest--Justice
Breyer, whose vote was necessary to sustain the requirement, however,
did not believe that must carry was necessary to promote ``fair
competition,'' as did the other justices in the majority.
13. In the First Report and Order, we recognized that any type of
dual carriage rule must satisfy the Turner factors and pass the test
provided in United States v. O'Brien, 391 U.S. 367, 377 (1968), for
determining whether a content-neutral rule or regulation violates the
Constitution; see 16 FCC Rcd at 2648. Under the O'Brien test, a
content-neutral regulation would be upheld if: (1) it furthered an
important or substantial governmental interest; (2) the government
interest was unrelated to the suppression of free expression; and (3)
the incidental restriction on First Amendment freedoms was no greater
than is essential to the furtherance of that interest. In sum, under
the O'Brien test, a regulation must not burden substantially more
speech than is necessary to further the government's legitimate
interests. We invited commenters that support a dual carriage
requirement to submit evidence to show how mandatory dual carriage
would satisfy the constitutional requirements of both Turner and
O'Brien. After close examination of the information submitted, we find
nothing in the record that would allow us to conclude that mandatory
dual carriage is necessary to further the governmental interests
identified in Turner, or other potential governmental interests put
forward by commenters. In addition, even if it could be shown that dual
carriage could further any of the governmental interests based on the
current record, the burden that mandatory dual carriage places on cable
operators' speech appears to be greater than is necessary to achieve
the interests that must carry was meant to serve. Mandatory dual
carriage would essentially double the carriage rights and substantially
increase the burdens on free speech beyond those upheld in Turner. As
noted, Turner II found the benefits and burdens of must carry to be
congruent, such that must carry is narrowly tailored to preserve the
multiplicity of broadcast stations for households that do not subscribe
to cable.
14. Preserving the benefits of free over-the-air television for
viewers. The first governmental interest identified in Turner to
support mandatory carriage is the preservation of the benefits of free
over-the-air television for non-subscribers. The broadcast industry
argues that a slow DTV transition places preservation of over-the-air
broadcasting at risk. Commercial Broadcasters assert that the entire
premise of the digital transition is for digital signals to replace
analog signals. They argue that if viewers are unable to receive
digital signals, digital cannot replace analog, and broadcasters will
be forced to sustain the operation of two facilities at considerable
expense, without any additional revenue. Noncommercial Broadcasters
assert that the costs of dual transmissions are overwhelming for
smaller television stations.
15. NCTA contends that the broadcast industry sought a second
channel of spectrum to provide digital programming, prior to which
there was no apparent threat to the preservation of broadcast stations
for over-the-air viewers, given that cable operators were required to
carry virtually all existing analog stations. International Channel
asserts that analog carriage, by itself, serves the government interest
in preserving the benefits of free over-the-air television. A&E states
that the only reason the Court upheld the analog carriage requirements
is that Congress found cable carriage to be necessary to promote the
continued availability of free television programming, ``especially for
viewers who are unable to afford other means of receiving
programming.''
16. Despite the broadcast parties' assertions, the record as a
whole does not demonstrate that television stations would face undue
hardship in the absence of dual carriage that would, in turn, threaten
the ability of broadcasters to provide service to non-cable households.
The critical governmental interest, reflected in the Act, was described
by the Supreme Court as the preservation of over-the-air broadcasting.
More specifically, the congressionally-adopted governmental interest
identified in Turner was the protection of the interests of over-the-
air television viewers--i.e., viewers whose interests were not
reflected in the carriage decisions of cable operators nor in the
viewing options available to cable subscribers. Thus, the focus of the
government interest in Turner is not the economic health of
broadcasting per se,
[[Page 14415]]
but the benefits that broadcasting provides to consumers. In sum, the
critical factor in interpreting the intent of the statute and in the
constitutional analysis of it is that it is designed ``to provide over-
the-air viewers who lack cable with a rich mix of over-the-air
programming by guaranteeing the over-the-air stations that provide such
programming with the extra dollars that an additional cable audience
will generate'' and to assure the over-the-air public ``access to a
multiplicity of information sources.'' With respect to mandatory dual
carriage, all broadcast stations are required to build a digital
facility and broadcast a digital signal. Thus, cable carriage is not
needed to ensure that non-cable, over-the-air viewers have access to
digital broadcast signals. Broadcasters advocating mandatory dual
carriage have not demonstrated that non-cable households would benefit
from more or better broadcast programming if stations have mandatory
dual carriage. (We note that Congress has recently enacted a dual
carriage requirement under very limited circumstances. The Satellite
Home Viewer Extension Reauthorization Act (``SHVERA''), Public Law 108-
447, sec. 210, 118 Stat. 2809, 3393 (2004), requires a phase-in of
mandatory dual carriage only in Alaska and Hawaii by satellite carriers
with more than five million subscribers. Congress may, of course,
decide to impose a dual carriage requirement in situations in which it
finds it necessary to further an important governmental interest. By
imposing a dual carriage requirement in only two states, Congress
implicitly determined that the benefits and burdens of dual carriage in
Alaska and Hawaii with respect to satellite carriers are different from
those in the contiguous United States.). Local analog broadcasters are
already carried today--either pursuant to must carry or retransmission
consent--on virtually every cable system in their market. We have no
evidence that the absence of a dual carriage requirement will
substantially diminish the availability or quality of broadcast signals
available to non-cable subscribers. A small number of broadcasters that
have demonstrated legitimate financial hardship if they were required
to build their digital facilities have been granted extensions, but the
hardship is not due to lack of cable carriage. The absence of a dual
carriage requirement might in fact encourage broadcasters to produce a
``rich mix of over-the-air programming'' in order to convince cable
operators to voluntarily carry their digital signal. Furthermore, the
goal of the DTV transition is not to support the ongoing existence of
two 6 MHz channels for each broadcast licensee, but rather to
transition from one 6 MHz analog allocation to one 6 MHz digital
allocation, with the anticipated return of one 6 MHz allocation.
17. Promoting the widespread dissemination of information from a
multiplicity of sources. The second of the three interrelated
governmental interests identified in Turner is ``promoting the
widespread dissemination of information from a multiplicity of
sources.'' Discovery argues that if the Commission were to mandate dual
carriage, it would allow a single broadcaster to use up to 12 MHz of
cable capacity. Discovery comments that the second 6 MHz channel
requested by broadcasters could instead be used by a cable operator to
provide as many as a dozen diverse non-broadcast programming services
offered on a compressed digital basis. Cable industry commenters also
argue that most broadcast stations are upconverting analog signals to a
standard definition digital format, and that such duplicative broadcast
programming does not contribute to program diversity. On the other
hand, CEA argues that dual carriage assures broadcasters and
programmers of carriage for digital programming, thus motivating them
to produce original digital programming, that will, in turn, provide
consumers with incentive to purchase digital receivers. On balance, we
find that the current record fails to demonstrate that dual carriage is
needed to further this governmental interest because program diversity
is not promoted under a dual carriage requirement, given that it would
not result in additional sources of programming and that digital
programming largely simulcasts analog programming.
18. Promoting fair competition in the market for television
programming. The third important governmental interest identified in
Turner is promoting fair competition in the market for television
programming. While a majority of the Court agreed that this is an
important governmental interest, only four justices found that this
interest was achieved by the must carry statutory requirements. Based
on our previous conclusions--i.e., that dual carriage is not needed to
further the governmental interests found by a majority of the Court, it
is unnecessary to consider this third interest in great detail. The
anti-competitive concerns cited by Congress and the Supreme Court
stemmed from the increasing vertical integration and penetration of the
cable industry in 1992. Commercial Broadcasters claim that cable
operators still act as gatekeepers as they serve nearly 70% of American
households, and compete with local broadcast stations for advertising
dollars. They contend that the enhanced services that DTV makes
possible directly compete with cable services, resulting in greater
disincentives for cable to afford digital broadcasters access to their
audience. Cable operators and programmers counter that such concerns
about competition for local advertising are misplaced.
19. Court TV urges the Commission to recognize the central premise
of broadcasting--i.e., that the medium has the inherent ability to
reach viewers over-the-air independent of cable carriage. HBO adds that
broadcasters use analog retransmission consent/must carry rights to
secure cable channel capacity for their affiliated cable networks. The
Filipino Channel argues that dual carriage, even for a limited period
of time, would foreclose carriage options for many cable networks.
20. In many respects, competition in the MVPD market has increased
since 1992, although the market for the delivery of video programming
to households continues to be characterized by substantial barriers to
entry. The record, however, does not evidence a connection between
mandating dual carriage and remedying any allegations of cable
operators' anti-competitive action against local broadcast stations.
Because operators must carry local broadcaster's analog signal, there
is no obvious need for cable operators to carry two signals for each
local station, and it has not been proven necessary to guarantee such
access for both analog and digital signals to ensure fair competition.
We believe the burden is on the advocates of dual carriage to prove
this competitive necessity and that speculative allegations in this
regard are inadequate in light of the burden on cable operators and
cable programmers competing for cable access.
21. Advancing the Digital Transition. Broadcast commenters state
that a rapid transition from analog to digital broadcast signals is an
important governmental interest that can justify burdening speech
protected by the First Amendment. They contend that dual carriage is
necessary to achieve a swift and successful DTV transition. NCTA
counters that Congress never expressed that hastening the end of the
transition is a governmental interest, and nor has the Supreme Court
``embraced any such interest'' in upholding must carry requirements.
CEA, on the other hand,
[[Page 14416]]
states that some form of dual carriage is necessary for public
acceptance of digital television technology because it will spur
broadcasters to produce digital television programming, which, in turn,
will convince consumers to purchase DTV receivers. Maranatha argues
that consumers will not have the incentive to buy DTV receivers until
they can actually receive digital broadcast programming through their
local cable systems. AT&T and others in the cable industry counter that
dual carriage provides no incentive for consumers to purchase digital
television sets, particularly when broadcasters are creating little or
no original content.
22. A swift digital television transition and the return of the
analog spectrum for other uses are important governmental concerns. We
find that the imposition of a dual carriage requirement, however, is
not necessary to complete the transition. Many factors are necessary
for the transition to be successful, such as consumer acceptance of a
new type of television service and rapid digital receiver penetration.
The top ten cable operators (representing more than 85% of cable
subscribers nationwide) have committed to deploying high-definition
services and are fulfilling that commitment. More recently, NCTA
reports that the HDTV carriage data reflect that more and more cable
households are receiving HDTV programming: (1) the number of local TV
markets in which consumers can now receive a package of HDTV services
from their cable operator has grown to 184 (out of 210), including all
of the top 100 DMAs; (2) the number of local digital broadcast stations
being carried voluntarily by cable systems increased to 504, up from
304 in December 2003; (3) of the 108 million U.S. TV households today,
92 million are now passed by a cable system that offers a package of
HDTV programming; and (4) 18 cable networks now offer HD programming
during some or all of their network schedules, in broad genres
reflecting movies, sports, and general interest.
23. The voluntary carriage of network television stations by these
operators, as well as carriage of high definition digital programming
from non-broadcast sources like HBO, are more likely to spur the sale
of digital television equipment (thereby, facilitating the transition)
than the forced dual carriage of all television stations. We thus
decline to impose dual carriage requirements that burden speech in the
absence of record evidence showing dual carriage is necessary for a
timely completion of the transition.
24. Fifth Amendment Argument. NCTA argues that dual carriage would
constitute an uncompensated taking of private property in violation of
the Fifth Amendment to the Constitution, especially where, as here,
Congress has not clearly authorized such a requirement. NAB responds,
in part, that the mere fact that a dual carriage rule might exact some
financial toll from cable operators would not render mandatory dual
carriage a taking. Given that we have declined to impose dual carriage
on other grounds, we need not address the cable industry's Fifth
Amendment argument.
25. Conclusion. We have analyzed the governmental interests
identified in Turner, additional governmental interests proposed by the
broadcast industry, and policy concerns. We find that there has not
been an adequate showing that dual carriage is necessary to achieve any
valid governmental interest. Therefore, in the absence of a clear
statutory requirement for dual carriage, we decline to impose this
burden on cable operators.
B. Primary Video/Multicast Carriage
26. In the First Report and Order, the Commission examined how to
apply the ``primary video'' carriage limitation if a broadcaster
chooses to broadcast multiple standard definition digital television
streams, or a mixture of high definition and standard definition
digital television streams; see 16 FCC Rcd at 2620-22. Section
614(b)(3)(A) of the Act states:
A cable operator shall carry in its entirety, on the cable
system of that operator, the primary video, accompanying audio, and
line 21 closed caption transmission of each of the local commercial
television stations carried on the cable system and, to the extent
technically feasible, program-related material carried in the
vertical blanking interval or on subcarriers. Retransmission of
other material in the vertical blanking [interval] or other
nonprogram-related material (including teletext and other
subscription and advertiser-supported information services) shall be
at the discretion of the cable operator. Where appropriate and
feasible, operators may delete signal enhancements, such as ghost-
canceling, from the broadcast signal and employ such enhancements at
the system headend or headends; see 47 U.S.C. 534(b)(3).
Largely parallel provisions are contained in Section 615(g)(1) for
noncommercial stations; see 47 U.S.C. 535(g)(1).
27. In the First Report and Order, the Commission recognized that
``the terms `primary video' as used in Sections 614(b)(3) and 615(g)(1)
are susceptible to different interpretations,'' and that ``[t]he
legislative history does not definitively resolve the ambiguity
regarding the intended application of the term `primary video' as used
in [the multicasting] context;'' see 16 FCC Rcd at 2620-21. The
Commission thus analyzed the term within its statutory context,
considered the legislative history, and examined the technological
developments at the time the must carry provisions were enacted; see 16
FCC Rcd at 2620-22. As a result of dictionary definitions and
legislative history indicating that ``must carry provisions were not
intended to cover all uses of a signal,'' the Commission stated that
``[b]ased on the record currently before us, we conclude that `primary
video' means a single programming stream and other program-related
content;'' see 16 FCC Rcd at 2620-22. As a result, the Commission held
that if a digital broadcaster elects to divide its digital spectrum
into several separate, independent, and unrelated programming streams,
only one of these streams is considered primary and entitled to
mandatory carriage; see 16 FCC Rcd at 2620-22. Under this
determination, the broadcaster elects which programming stream is its
primary video, and the cable operator is required to provide mandatory
carriage only of that designated stream; see 16 FCC Rcd at 2620-22.
28. Several commercial and noncommercial broadcasters seek
reconsideration of our interpretation of the term ``primary video.''
They contend that we wrongly concluded that when a digital signal
becomes eligible for mandatory carriage, cable operators are only
required to carry a single video stream. In the view of some broadcast
petitioners, ``primary video'' means all video that is included in a
broadcaster's digital signal. Other broadcast petitioners suggest that
since all video contained in analog broadcast signals has been
available free to over-the-air viewers, the ``primary video'' of a
digital signal should be deemed to include video programming that is
available ``free of charge.'' Disney specifically asks us to adopt a
definition of ``primary video'' that requires ``full carriage of the
entire 19.4 Mbps bit stream of a local broadcaster's digital signal,
except for those ancillary and supplementary services expressly
excluded by statute.'' Disney asserts that such a standard will impose
no greater burden on cable operators than that created by the existing
analog must carry requirements, or by carriage of an HDTV signal.
29. More specifically, the broadcast petitioners argue that the
Commission's definition of ``primary video'' is not supported by the
statutory language and the accompanying legislative history.
[[Page 14417]]
Noncommercial Broadcasters state that because of the unavailability of
a plain meaning interpretation, the Commission must look to the Act as
a whole to determine what Congress meant by a broadcaster's ``primary
video.'' They submit that, because of the ambiguity of the statute, the
most reasonable interpretation of the term ``primary video'' includes
``the package of video and audio digital services transmitted by the
broadcaster free and over the air to viewers.'' Similarly, Commercial
Broadcasters argue that the word ``primary'' is a generic adjective
that may be used with singular or plural noun forms, as in the phrases
``primary elements'' and ``primary colors.'' They state that the
Commission should not have applied a literal definition, but rather
interpreted for the new digital context what was intended by the term
for the analog situation.
30. NCTA, Time Warner, and other parties ask us to deny the
petitions. They contend that a plain reading of the statute clearly
indicates a limited carriage obligation, and that, even if there are
other interpretations of the provision, the Commission's interpretation
is a reasonable one, because it gives meaning to the word ``primary''
and is consistent with the common usage and meaning of the term.
Additionally, NCTA contends that the Commission's interpretation is
consistent with the underlying policy objectives of the Act and
Congress's clear intention to limit carriage obligations in light of
First Amendment concerns. NCTA argues that carriage of multiple video
programming streams would multiply the burden on cable operators as
well as the unfairness to cable program networks without serving any of
the purposes of the must carry provisions of the statute, thereby
raising First Amendment infirmities. NCTA states that the Commission is
compelled to avoid such a construction of the Act even if it were to
find the term ``primary video'' to be at all ambiguous. According to
Professor Tribe's filing on behalf of the NCTA, ``forcing cable
operators to carry multiple video streams of digital broadcasters would
abridge the editorial freedom of cable operators, harm cable
programmers, and invade the right of audiences to choose what they want
to view--all without promoting any of the governmental interests
contemplated by Congress in enacting the must-carry rules, or any of
the interests approved by the Supreme Court in Turner I and Turner
II.'' Professor Tribe also argues that mandatory carriage of multiple
streams of video programming would result in a permanent, physical
occupation of a substantial amount of a cable operator's capacity,
raising ``substantial issues under the Fifth Amendment's Takings Clause
and under the separation of powers.''
31. After consideration of all the arguments and evidence presented
on this issue, we affirm our earlier decision, and decline, based on
the current record before us, to require cable operators to carry any
more than one programming stream of a digital television station that
multicasts. On reconsideration, we acknowledge, however, that the
language of the Act may be less definitive than portions of our earlier
decision suggested. This conclusion is, in fact, more consistent with
our observations in the First Report and Order ``that the terms
`primary video' as used in sections 614(b)(3) and 615(g)(1) are
susceptible to different interpretations,'' and that ``[t]he
legislative history does not definitively resolve the ambiguity
regarding the intended application of the term `primary video' as used
in this context;'' see 16 FCC Rcd at 2620-21. As explained below,
however, we continue to hold that the best construction of the must-
carry provisions, based on the current record before us, is that cable
operators need not carry more than one programming stream.
32. We recognize that Sections 614(b)(3) and 615(g)(1) do not
directly translate to digital technology generally, much less to
associated multicasting capabilities specifically, and thus do not
appear to compel a particular result for multicasting must-carry. In
the First Report and Order, we noted that ``the incorporation of the
primary video construct into the Act in 1992 was reasonably
contemporaneous with the gradual change in common understanding of the
new television service * * * to DTV (digital television) with the
ability to broadcast high definition television, SDTV (standard
definition television) with multicasting possibilities, as well as the
broadcast of non-video services;'' see 16 FCC Rcd at 2621. On
reconsideration, we agree with the broadcasters that Sections 614(b)(3)
and 615(g)(1) appear to have been written with analog technology in
mind, given references to ``line 21,'' ``vertical blanking interval,''
and ``subcarriers,'' which are not applicable in digital technology.
Thus, we conclude that Congress--although aware of digital technology
when it drafted the must-carry requirement--did not expressly compel a
particular result with respect to the application of ``primary video''
to digital television generally, and multicasting specifically; see 16
FCC Rcd at 2621-2622, H.R. Rep. No. 104-204(I), 104th Cong., 1st Sess.
220 (1995) (We reject, however, the argument of Disney and other
broadcast petitioners that the Commission's definition of ``primary
video'' for purposes of Section 614(b)(3)(A) of the Act is somehow
inconsistent with Section 614(b)(3)(B), which provides that ``[t]he
cable operator shall carry the entirety of the program schedule of any
television station carried on the cable system unless carriage of
specific programming is prohibited, and other programming authorized to
be substituted, under section 76.67 or subpart F of part 76 of title
47, Code of Federal Regulations (as in effect on January 1, 1991) or
any successor regulations thereto,'' 47 U.S.C. 534(b)(3)(B). The
legislative history of Section 614(b)(3)(B) does not indicate any
connection to the carriage of multiple video programming streams of a
single broadcaster. According to the House Report accompanying the 1992
Cable Act, ``[s]ubsection (b)(3)(B) prohibits `cherry picking' of
programs from television stations by requiring cable systems to carry
the entirety of the program schedule of television stations they carry.
* * *'' H.R. Rep. No. 102-628, at 93 (1992). In other words, the point
of Section 614(b)(3)(B) is ``to prevent[] cable operators from using
portions of the signals of different broadcasters to create composite
channels in an effort to increase the audience for cable programming.''
Id. at 58. That provision, therefore, requires cable operators to carry
the entire program lineup that is assembled by a broadcaster on a
particular channel that is entitled to carriage pursuant to Section
614(b)(3)(A). We agree with Time Warner Cable that it has nothing to do
with carriage of multiple channels or program lineups. Section
614(b)(3)(B) simply requires that when a cable operator carries an
eligible primary video programming stream, it must carry that stream in
its entirety and may not provide a composite, cherry-picked programming
stream. If Section 614(b)(3)(B) meant what broadcasters say it means,
then Section 614(b)(3)(A) would be a nullity. We also disagree with
some broadcasters' argument that, as a policy matter, the Commission's
interpretation of ``primary video'' creates potential ``administrative
problems.'' Disney, for example, asserts that a digital broadcast
signal may be configured in a variety of ways throughout the day,
requiring the broadcaster, at multiple times throughout the day, to
have to ascertain whether the programming elements being televised are
independent or
[[Page 14418]]
related, program-related, or otherwise. They surmise that there will
thus be constant disputes as to whether particular multicast signals
are program-related (and thus required to be carried) or unrelated
(therefore not required to be carried). Although a mandatory multicast
carriage policy could eliminate the need to determine what is or is not
program related, we do not find that a compelling reason to read the
term ``primary video'' as requiring cable operators to carry more than
one programming stream. We will define in a subsequent Report and Order
in this docket the parameters of what is program-related in the digital
context, which we believe will assist in alleviating the type of
dispute that some broadcasters predict.).
33. Recognizing that the statutory language is ambiguous, however,
of course does not mean that we are now compelled to interpret the
statute differently than the Commission previously did. Rather, given
that ``Congress has not directly addressed the precise question at
issue''--i.e., ``the statute is silent or ambiguous with respect to the
specific issue,'' the question for us is to derive a ``reasonable
interpretation'' of the meaning of ``primary video;'' see Chevron USA
Inc. v. Natural Resources Defense Council, 467 U.S. 837, 843, 844 (1984
).
34. Given the ambiguity of the language of the statute, we consider
its legislative history. As the Commission acknowledged in the First
Report and Order, however, ``[t]he legislative history does not
definitively resolve the ambiguity regarding the intended application
of the term `primary video' as used in [the multicasting] context;''
see 16 FCC Rcd at 2621. The legislative history indicates that ``the
must carry provisions were not intended to cover all uses of a
signal,'' but they do not precisely specify which portion of a signal
is entitled to carriage and which is not; see 16 FCC Rcd at 2621. In
other words, ``[t]he term primary video, as found in Sections 614 and
615 of the Act, suggests that there is some video that is primary and
some that is not,'' but the legislative history of these sections does
not suggest precisely which video signal(s) is (are) primary and which
is (are) not; see 16 FCC Rcd at 2621. The legislative history of
subsequently enacted Section 336, which relates not to cable carriage
obligations but mostly to digital television implementation, likewise
does not reveal any clear intention of Congress with respect to the
multicasting must-carry issue.
35. We next focus on the underlying purposes of the statutory
provisions, and evaluate whether requiring cable operators to carry
more than one programming stream of a multicasting station would
fulfill those purposes. In Turner II, a majority of the Supreme Court
recognized as ``important'' two ``interrelated interests'' that
Congress sought to further through the must-carry provisions: (1)
preserving the benefits of free, over-the-air local broadcast
television for viewers, and (2) promoting ``the widespread
dissemination of information from a multiplicity of sources.'' As
explained below, we cannot find on the current record that a
multicasting carriage requirement is necessary to further either of
these goals. Based on the current record, we find a reasonable
interpretation of the Act is to require cable operators to carry one
programming stream.
36. Significantly, there is nothing in the current record to
convince us that mandatory carriage of all multiple streams of a
broadcaster's transmission is necessary to achieve either of these
goals. In the analog context, broadcasters could invoke explicit
Congressional findings that the benefits of free, over-the-air
television for viewers would be jeopardized without must carry.
Congress, however, has made no such findings regarding multicast must
carry and broadcasters have not made a convincing argument that over-
the-air broadcasting would be jeopardized in the absence of mandatory
multicasting. Unlike in the analog carriage debate, here broadcasters
fail to substantiate their claim that mandatory multicasting is
essential to ensure station carriage or survival. Broadcasters argue
that carriage of multicast streams is essential to help them develop
and support additional programming streams, but they have not made the
case on the current record that these additional programming streams
are essential to preserve the benefits of a free, over-the-air
television system for viewers. Broadcasters will continue to be
afforded must carry for their main video programming stream, which can
be in standard definition or high definition, and any additional
material that is considered program-related. Broadcasters can also rely
on the marketplace working without mandatory carriage in order to
persuade cable systems to carry additional streams of programming.
There is evidence from the record, as well as news accounts, that cable
operators are voluntarily carrying the multiple streams of programming
of some broadcast stations, including public television stations, that
are currently multicasting. Indeed, the Association of Public
Television Stations and the NCTA recently announced an agreement that
involves cable operators carrying up to four programming streams of at
least one public TV station in a DMA during the transition from analog
to digital technology, and every public TV station in a DMA after the
transition, subject to certain nonduplication contingencies. Under
these circumstances, the interests of over-the-air television viewers
appear to remain protected.
37. Likewise, based on the current record, there is little to
suggest that requiring cable operators to carry more than one
programming stream of a digital television station would contribute to
promoting ``the widespread dissemination of information from a
multiplicity of sources.'' Under a single-channel must-carry
requirement, broadcasters will have a presence on cable systems. Adding
additional channels of the same broadcaster would not enhance source
diversity. Furthermore, programming shifted from a broadcaster's main
channel to the same broadcaster's multicast channel would not promote
diversity of information sources. Indeed, mandatory multicast carriage
would arguably diminish the ability of other, independent voices to be
carried on the cable system.
38. Additionally, no persuasive case has been made on the current
record that a multicasting carriage requirement will facilitate the
digital transition. High quality programming in a digital format is a
major factor that will drive this transition. Some broadcasters explain
that they are reluctant to invest in additional programming streams
absent an assurance of carriage. In response, NCTA states that cable
operators ``want to carry HDTV and other compelling digital broadcast
content that is desired by their customers,'' and that they want to
carry local programming to distinguish their offerings from satellite.
NCTA also cautions that giving ``shelf space'' to broadcasters might
lead to carriage of ``infomercials, home shopping, or other low value
content.'' NCTA therefore suggests that a guaranteed carriage
requirement would diminish incentives for broadcast stations to produce
high quality programming, which would ``reduce incentive for consumers
to switch to digital TV.''
39. Given the lack of a meaningful showing on the current record
that mandatory carriage of more than one programming stream is
necessary to
[[Page 14419]]
achieve any of the goals discussed above, we determine not to impose
such a requirement. We thus find it a reasonable construction of the
must-carry provisions of the Act, on the record before us and in light
of the Supreme Court's precedent, not to require cable operators to
designate capacity or ``shelf space'' for multicasting programming
streams at the expense of other competing interests.
40. We also note that cable operators contend that requiring them
to carry more than one programming stream would constitute a taking
under the Fifth Amendment. Given that we decline to impose such a
requirement, we do not reach this issue.
41. Nothing in this Order diminishes the Commission's commitment to
completing action on the multiple open proceedings on localism and on
the public interest obligations of digital broadcasters. We believe the
public interest and localism proceedings are essential components of
the Commission's efforts to complete the transition to digital
television. The Commission intends to move forward on these decisions
within the next few months and complete action in these dockets by the
end of the year.
42. Accordingly, we grant in part and deny in part the petitions
for reconsideration on this issue and affirm our decision in the First
Report and Order. Therefore, if a digital broadcaster elects to divide
its digital spectrum into several separate, independent and unrelated
programming streams, only one of these streams is considered primary
and entitled to mandatory carriage. The broadcaster must elect which
programming stream is its primary video, and the cable operator is
required to provide carriage of that stream. Cable operators can choose
to carry additional video programming streams through retransmission
consent agreements. As reflected in the statute, cable operators are
also required to carry ``program-related material,'' to the extent
technically feasible; see 47 U.S.C. 614(b)(3)(A). What constitutes
program-related material in the new digital context is defined
separately from primary video and will be addressed fully in a
subsequent Report and Order in this docket.
IV. Procedural Matters
43. Paperwork Reduction Act of 1995 Analysis. This document does
not contain new or modified information collection(s) subject to the
Paperwork Reduction Act of 1995 (PRA), Public Law 104-13. In addition,
therefore, it does not contain any new or modified ``information
collection burden for small business concerns with fewer than 25
employees,'' pursuant to the Small Business Paperwork Relief Act of
2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4).
44. Final Regulatory Flexibility Certification. The Regulatory
Flexibility Act of 1980, as amended (RFA), requires that a regulatory
flexibility analysis be prepared for notice-and-comment rule making
proceedings, unless the agency certifies that ``the rule will not, if
promulgated, have a significant economic impact on a substantial number
of small entities;'' see 5 U.S.C. 601-612, 5 U.S.C. 605(b). The RFA
generally defines the term ``small entity'' as having the same meaning
as the terms ``small business,'' ``small organization,'' and ``small
governmental jurisdiction;'' see 5 U.S.C. 601(6). In addition, the term
``small business'' has the same meaning as the term ``small business
concern'' under the Small Business Act; see 5 U.S.C. 601(3), 5 U.S.C.
601(3). 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); see 15 U.S.C. 632.
45. In this Second Report and Order and First Order on
Reconsideration, the Commission takes action on two significant cable
carriage issues, the resolution of which are essential to the
Commission's ongoing efforts to complete the transition from analog to
digital television. The issues resolved in this Order concern (1)
whether cable operators are required under the Communications Act to
carry both the digital and analog signals of a station (also referred
to as ``dual carriage'') during the transition when television stations
are still broadcasting analog signals; and (2) whether the Commission,
in the First Report and Order in this proceeding, properly construed
the term ``primary video,'' which appears in Sections 614(b)(3) (for
commercial broadcasters) and 615(g)(1) (for noncommercial
broadcasters), as requiring cable operators to carry only a single
video programming stream (and not multiple streams of several separate,
independent, and unrelated programming streams). Further, in the First
Report and Order, the Commission also determined that the statute
neither mandates nor precludes the mandatory carriage of both a
television station's digital and analog signals. The Commission
tentatively concluded that, based on the available record evidence, a
dual carriage requirement would likely violate cable operators' First
Amendment rights. In order to evaluate the issue more fully, the
Commission adopted a Further Notice of Proposed Rulemaking. In this
Second Report and Order and First Order on Reconsideration, the
Commission affirms its tentative decision in the First Report and Order
not to impose a dual carriage requirement on cable operators, and
declines, based on the record evidence, to require cable operators to
carry any more than one programming stream of a digital television
station that multicasts.
46. Although the Commission did not receive any comments directed
at the Initial Regulatory Flexibility Analysis, some of the comments
filed in response to the Further Notice of Proposed Rulemaking
addressed issues of concern to small entities. The American Cable
Association, for example, filed reply comments contending that dual
carriage and mandatory multicast carriage would be overly burdensome
for small cable operators because of the more limited channel capacity
of smaller cable systems and that the costs of implementing such
requirements, if imposed, ``present an economic impossibility'' for
smaller systems. The Commission considered these concerns, and decided
not to impose additional requirements. While small broadcast television
stations could benefit from a decision to impose mandatory dual
carriage and mandatory multicast carriage, consideration of the
economic impact of our decision is only relevant to cable operators,
because the obligation to comply with an expanded must carry
requirement would attach (in the context of this proceeding) only to
cable operators (i.e., a decision not to impose expanded must carry
requirements does not, in any way, result in any regulatory obligation
on the part of television broadcast stations or any other non-cable
entities. Our resolution of the specific issues in the Second Report
and Order and First Order on Reconsideration does not result in any
rule changes affecting small entities.
47. The Commission, therefore, certifies that the requirement of
this Second Report and Order and First Order on Reconsideration will
not have a significant economic impact on a substantial number of small
entities. Rather, it appears that our decisions here are likely to
foster competition in the video marketplace and ensure the ability of
small cable systems, in particular, to maximize the use of its
available capacity to deliver diverse digital programming and to offer
other
[[Page 14420]]
services, such as high-speed Internet service, to customers.
48. The Commission will send a copy of the Second Report and Order
and First Order on Reconsideration, including a copy of this Final
Regulatory Flexibility Certification, in a report to Congress pursuant
to the Congressional Review Act; see 5 U.S.C. 801(a)(1)(A). In
addition, the Second Report and Order and First Order on
Reconsideration will be sent to the Chief Counsel for Advocacy of the
SBA, and will be published in the Federal Register; see 5 U.S.C.
605(b).
V. Ordering Clauses
49. Accordingly, it is ordered, pursuant to Section 405(a) of the
Communications Act of 1934, as amended, 47 U.S.C. 405(a), and Sec.
1.429 of the Commission's rules, 47 CFR 1.429, that the petitions for
reconsideration filed by the parties are granted in part and denied in
part as indicated above, and that this Second Report and Order and
First Order on Reconsideration is adopted.
50. It is further ordered that the Commission's Consumer and
Governmental Affairs Bureau, Reference Information Center, shall send a
copy of this Second Report and Order and First Order on
Reconsideration, including the Final Regulatory Flexibility
Certification, to Congress, pursuant to the Congressional Review Act,
and also to the Chief Counsel for Advocacy of the Small Business
Administration, in accordance with the Regulatory Flexibility Act.
Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. 05-5611 Filed 3-21-05; 8:45 am]
BILLING CODE 6712-01-P