Satellite Category

Client Alert: FCC Sets September 20, 2013 Deadline for Payment of 2013 Annual Regulatory Fees

Tony Lin

Posted August 23, 2013

By Tony Lin

Full payment of annual regulatory fees for Fiscal Year 2013 (FY 2013) must be received no later than 11:59 PM Eastern Time on September 20, 2013. As of today, the Commission's automated filing and payment system, the Fee Filer System, is available for filing and payment of FY 2013 regulatory fees. For more information on the FY 2013 annual regulatory fees, please see our Client Alert and our prior posts here and here.


FCC Adopts Proposed FY 2013 Regulatory Fees

Tony Lin

Posted August 15, 2013

By Tony Lin

The FCC has released a Report and Order which includes its final determinations as to how much each FCC licensee will have to pay in Annual Regulatory Fees for fiscal year 2013 (FY 2013), and in some cases how the FCC will calculate Annual Regulatory Fees beginning in FY 2014. The FCC collects Annual Regulatory Fees to offset the cost of its non-application processing functions, such as conducting rulemaking proceedings.

The FCC adopted many of its proposals without material changes. Some of the more notably proposals include:

  • Eliminating the fee disparity between UHF and VHF television stations beginning in FY 2014, which is not a particularly surprising development given the FCC's recently renewed interest in eliminating the UHF discount for purposes of calculating compliance with the FCC's ownership limits;
  • Imposing on Internet Protocol TV (IPTV) providers the same regulatory fees as cable providers beginning in FY 2014. In adopting this proposal, the Commission specifically noted that it was not stating that IPTV providers are cable television providers, which is an issue pending before the Commission in another proceeding;
  • Using more current (FY 2012) Full Time Employees (FTE) data instead of FY 1998 FTE data to assess the costs of providing regulatory services, which resulted in some significant shifts in the allocation of regulatory fees among the FCC's Bureaus. In particular, the portion of regulatory fees allocated to the Wireline Competition Bureau decreased 6.89% and that of all other Bureaus increased, with the Media Bureau's portion of the regulatory fees increasing 3.49%; and
  • Imposing a maximum annual regulatory rate increase of 7.5% for each type of license, which is essentially the rate increase for all commercial UHF and VHF television stations and all radio stations. A chart reflecting the FY 2013 fees for the various types of licenses affecting broadcast stations is provided here.
The Commission deferred decisions on the following proposals in the Notice of Proposed Rulemaking that launched this proceeding: 1) combining the Interstate Telecommunications Service Providers (ITSPs) and wireless telecommunications services into one regulatory fee category; 2) using revenues to calculate regulatory fees; and 3) whether to consider Direct Broadcast Satellite (DBS) providers as a new multi-channel video programming distributor (MVPD) category.

The Annual Regulatory Fees will be due in "middle of September" according to the FCC. The FCC will soon release a Public Notice announcing the precise payment window for submitting the fees. As has been the case for the past few years, the FCC no longer mails a hard copy of regulatory fee assessments to broadcast stations. Instead, stations must make an online filing using the FCC's Fee Filer system, reporting the types and fee amounts they are obligated to pay. After submitting that information, stations may pay their fees electronically or by separately submitting payment to the FCC's Lockbox. However, beginning October 1, 2013, i.e. FY 2014, the FCC will no longer accept paper and check filings for payment of Annual Regulatory Fees.


Comments Due Soon on FCC's Proposed 2013 Regulatory Fees

Paul A. Cicelski Richard R. Zaragoza

Posted June 5, 2013

By Paul A. Cicelski and Richard R. Zaragoza

Last month, the FCC issued its latest annual Notice of Proposed Rulemaking (NPRM) as well as a Further Notice of Proposed Rulemaking (FNPRM) containing regulatory fee proposals for Fiscal Year (FY) 2013. Those who wish to file comments on the FCC's proposed fees must do so by June 19, 2013, with reply comments due by June 26, 2013. The NPRM proposes to collect just under $340 million in regulatory fees for FY 2013.

The FCC indicates that this year's Congressional budget sequester reduced FCC salaries and expenditures by $17 million but that the sequester does not impact the collection of regulatory fees. According to the NPRM, this is because the sequester does not change the amount Congress required the FCC to collect in the FY 2012 appropriation (and continued in effect in FY 2013 by virtue of the Further Continuing Appropriations Act in 2013).

The NPRM seeks comments on adoption and implementation of proposals to reallocate the Agency's regulatory fees based on the matters actually worked on by current FCC full time employees (FTEs) for FY 2013 to more accurately assess the costs of providing regulatory services to various industry sectors and to account for changes in the wireless and wireline industries in recent years. Understanding that a modification of its current fee allocation method based on FTE workload will result in significantly higher fees for some fee categories, the NPRM proposes to potentially cap rate increases at 7.5% for FY 2013.

The FCC's NPRM also asks for comment on the following:

  1. Combining Interstate Telecommunications Service Providers (ITSPs) and wireless telecommunications services into one regulatory fee category and using revenues as the basis for calculating the resulting regulatory fees;
  2. Using revenues to calculate regulatory fees for other industries that now use subscribers as the basis for regulatory fee calculations, such as the cable industry;
  3. Consolidating UHF and VHF television stations into one regulatory fee category;
  4. Proposing a regulatory fee for Internet Protocol TV (IPTV) equivalent to cable regulatory fees;
  5. Alleviating large fluctuations in the fee rate for Multiyear Wireless Services; and
  6. Determining whether the Commission should modify its methodology for collecting regulatory fees from those in declining industries (e.g., CMRS Messaging).

In the FNPRM, the FCC seeks comment on the how to treat, for regulatory fee purposes, services such as non-U.S.-Licensed Space Stations, Direct Broadcast Satellites and broadband.

The FCC also notes that it is seeking to modernize its electronic filing and payment systems. As a result, beginning on October 1, 2013, the FCC will no longer accept paper and check filings for payment of Annual Regulatory Fees. What that means is that this year's regulatory fee filing is likely the last time that regulatory fees can be paid without using electronic funds.

We will be publishing a full Advisory on the FY 2013 Regulatory Fees once they are adopted (likely this summer). You may also immediately access the FCC's FY 2013 proposed fee tables attached to the NPRM, in order to estimate, at least approximately, the size payment the FCC will be expecting from you this fall.


FCC Proposes Wholesale Examination of Satellite and Earth Station Licensing and Operating Rules

Tony Lin

Posted October 4, 2012

By Tony Lin

The FCC has initiated a rulemaking proceeding seeking comments on a comprehensive review of its satellite and earth station licensing and operating rules. The nearly 100-page Notice of Proposed Rulemaking (NPRM) is the FCC's first broad reexamination of its Part 25 rules in over fifteen years. Among other items, the FCC's proposed revisions include:

  • Focusing the rules on addressing interference issues and removing unnecessary Commission oversight and regulation of technical decisions.
  • Increasing the number of earth station applications eligible for routine and streamlined processing.
  • Removing unnecessary reporting rules and consolidating remaining requirements for annual reporting, while improving reporting of emergency contacts.
  • Providing greater flexibility to earth station applicants in verifying antenna performance.
  • Consolidating and clarifying several of the milestone requirements for space stations.
  • Codifying the FCC practice of granting a single earth station license covering multiple antennas located in close proximity to each other.
  • Updating, improving, and consolidating definitions and technical terms used throughout Part 25.

With these proposed changes, the FCC hopes to remove administrative burdens on stakeholders and FCC staff, expedite its licensing process, and to facilitate satellite and earth station operations. The comment filing deadlines have not yet been set, but will occur 45 days after the FCC's rulemaking order is published in the Federal Register. Parties interested in commenting on the FCC's proposals, or wishing to provide alternative proposals for the FCC to consider, will want to begin gearing up for this proceeding by talking these issues through with counsel to determine what to propose, and how best to present it to the FCC.


Client Alert: FCC Sets September 14, 2011 as the Deadline for Payment of FY 2011 Annual Regulatory Fees

Christine A. Reilly Richard R. Zaragoza

Posted August 16, 2011

By Richard R. Zaragoza and Christine A. Reilly

8/15/2011

The FCC has announced that full payment of all applicable Regulatory Fees for Fiscal Year 2011 must be received no later than September 14, 2011.

As of this date, the FCC has not released a Public Notice officially announcing the deadline for payment of FY 2011 annual regulatory fees. However, the FCC's website indicates that the 2011 annual regulatory fees must be paid no later than 11:59 pm (EST) on September 14, 2011.

As reported in July 2010, beginning in 2011, the Commission has discontinued mailing assessment notices to licensees/permittees. It is the responsibility of each licensee/permittee to determine what fees are due and to pay them in full by the deadline. Information pertaining to the annual regulatory fees is available online at http://transition.fcc.gov/fees/regfees.html.

Annual regulatory fees are owed for most FCC authorizations held as of October 1, 2010 by any licensee or permittee which is not otherwise exempt from the payment of such fees. Licensees and permittees may review assessed fees using the FCC's Media Look-Up website - http://www.fccfees.com. Certain entities are exempt from payment of regulatory fees, including, for example, governmental and non-profit entities. Section 1.1162 of the FCC's Rules provides guidance on annual regulatory fee exemptions. Broadcast licensees that believe they qualify for an exemption may refer to the FCC's Media Look-Up website for instructions on submitting a Fee-Exempt Status Claim.

Continue reading "Client Alert: FCC Sets September 14, 2011 as the Deadline for Payment of FY 2011 Annual Regulatory Fees"


November 9, 2011 Announced as First National EAS Test Date

Scott R. Flick

Posted June 9, 2011

By Scott R. Flick

As I wrote back in February, the federal government has decided to conduct the first-ever national test of the Emergency Alert System. Today, FEMA and the FCC announced that the test will occur on November 9, 2011, at 2pm Eastern Standard Time. On that date, the public will hear a message indicating "This is a test," but FEMA and the FCC indicate that the entire test could last up to three and a half minutes.

Because the test is a presidential EAS test, it must be retransmitted by radio and television broadcasters, cable operators, satellite radio service providers, direct broadcast satellite service providers, and wireline video service providers. In the announcement, FEMA took pains to note that the test will not simply be a pass/fail exercise, but an opportunity to find out what is working and what isn't, so that the system can be tweaked and improved.

It is likely that the national EAS test will become an annual event following this initial test. One issue that was not discussed in the announcement, however, is how the current September 30, 2011 deadline for EAS participants to install EAS equipment compatible with the Common Alerting Protocol (CAP) could affect the test. The FCC had originally said that the intent of a national test was to assess the existing EAS operation, as opposed to testing the implementation and functionality of the new CAP-compliant EAS equipment soon to being purchased and installed by broadcast, cable, and satellite operators.

As the FCC just last week announced the commencement of a rulemaking to adopt rules and processes for the implementation of CAP, there is a growing feeling that the September 30, 2011 CAP implementation deadline may need to be extended in order to prevent a situation where EAS participants are required to immediately purchase and install new EAS equipment that may or may not comply with the CAP requirements ultimately adopted by the FCC. Whether intended or not, a national EAS test just six weeks after the CAP deadline will likely end up being more about the teething pains of CAP implementation than about how reliably the current EAS infrastructure functions.

As a result, preventing the national test from being sidelined by the inevitable implementation glitches of CAP may be the strongest reason yet for extending the CAP implementation deadline to a date beyond November 9, 2011. It will be good to know how the never-before-tested national EAS infrastructure functions before adding the additional complexities of CAP-compliant EAS equipment to it.


A Look Ahead at 2011 Reveals an Interesting Year for Retrans, Renewals, and Indecency

Scott R. Flick

Posted December 29, 2010

By Scott R. Flick

Earlier this month we posted our 2011 Broadcasters Calendar on CommLawCenter as well as on our Pillsbury web page. We have been annually publishing the Broadcasters Calendar, which contains much information regarding broadcast station deadlines and legal requirements, for as long as I can recall. It has always been one of our most popular publications, and I usually get calls beginning in early November asking when next year's calendar will be available. The "easy to read" pdf version of the Calendar can be found here, and a text-searchable version is available here.

Even a brief review of the 2011 Broadcasters Calendar reminds us that 2011 will be a busy year for not just broadcasters, but for cable and satellite operators as well. October 1, 2011 is the deadline by which broadcasters qualifying for must-carry need to notify cable and satellite operators of their election between must-carry status and retransmission consent. Recent retransmission disputes once again remind us that retransmission negotiations and their associated revenue are critical to the future of broadcast television. However, the sheer volume of negotiations and carriage disputes likely to occur following the October 1 election deadline will almost certainly make this holiday season look tranquil by comparison.

Adding to the action will be continued efforts by the cable and satellite industries to draw Congress and the FCC into the fray, introducing legislative and regulatory uncertainties into an already complex negotiation process. Their chances for success will depend greatly upon how much disruption in carriage of broadcast programming occurs in 2011, and the public's perception of who is at fault for that disruption. Regardless of the outcome of this particular Washington confrontation, look for 2011 to be the year where economics force cable and satellite providers to more tightly link the number of viewers a program service attracts with the amount they agree to pay for that service. Overpaying for niche cable networks that don't pull in large numbers of viewers is so "last decade".

2011 also marks the beginning of the FCC's next eight-year license renewal cycle, with radio stations in DC, Maryland, Virginia, and West Virginia starting pre-filing announcements in April for their upcoming license renewal applications. The filing cycle will continue state by state until it concludes with television stations in Delaware and Pennsylvania running their last post-filing announcements on June 16, 2015.

However, many stations haven't had their last license renewal application granted because of indecency complaints still pending against them. The FCC has pretty much ceased processing indecency complaints while it awaits guidance from the courts as to whether it can legally enforce the prohibition on broadcast indecency, and if so, how it will be allowed to do that. I have been told that there are literally hundreds of thousands of indecency complaints now pending at the FCC, so unless the courts do the FCC the favor of finding the prohibition on indecency completely unconstitutional, it will take the FCC years to sift through these complaints in an effort to apply any refined indecency standard announced by the Supreme Court.

It is therefore reasonable to predict that indecency complaints will continue to play a large role in the processing of upcoming license renewal applications. 2011 will hopefully be the year when the courts tell us exactly how large (or small) that role will be. If the prohibition on indecency survives this latest round of judicial scrutiny, broadcasters and the FCC can expect a lot of complaint investigations and litigation as both struggle with where the line on content is being drawn.

Of course there are numerous other events that will contribute to 2011 being one of the busiest years in memory for broadcasters. A rebounding economy is slowly lifting most boats in the broadcast industry, with the obvious exception being those that burned their critical assets for fuel during the lean times, and don't have much boat left.

With a growing amount of money to fight over, the fights will begin in earnest (see "Retrans" above). Negotiations between the NAB and the recording industry over performance royalties will continue, and "performance tax" legislation will again rise in Congress with the same certainty that the slasher in a horror film returns for unending sequels.

Broadcasters and the FCC will also be implementing the latest generation of the Emergency Alert System in 2011, and the FCC will continue its efforts to repurpose broadcast spectrum for mobile broadband use, leading to new rules permitting multiple broadcasters to share a single channel, and potentially to legislation allowing participating broadcasters to share in the proceeds of broadband spectrum auctions. As with most of the items discussed above, there is both opportunity and peril for broadcasters here, and those that are inattentive risk missing the former and being battered by the latter.

Yes, 2011 will be a very busy year.


Retrans Watchers Focused on FCC In-State Broadcast Programming Report to Congress

Paul A. Cicelski

Posted December 10, 2010

By Paul A. Cicelski

As we discussed in a previous post and separate Client Advisory, the FCC released a Public Notice to implement a provision of the Satellite Television Extension and Localism Act (STELA) that requires the FCC to submit a report on in-state broadcast programming to Congress by August 11, 2011. The Public Notice was published in the Federal Register yesterday, which means that comments are due by January 24, 2011, with reply comments due by February 22, 2011.

As we discussed previously, the purpose of the FCC's Report to Congress is to address a concern of some members of Congress that subscribers located in markets that straddle a state line may be unable to receive broadcast news and information from their own state because the local stations made available by cable and satellite providers are all located in the "other" state. According to the FCC, the report will: (1) analyze the number of households in a state that receive the signals of local broadcast stations assigned to a community of license located in a different state; (2) evaluate the extent to which consumers in each local market have access to in-state broadcast programming over-the-air or from a multichannel video programming distributor; and (3) consider whether there are alternatives to DMAs for defining "local" markets that would provide consumers with more in-state broadcast programming.

This proceeding is relevant to retrans because there have been some efforts on Capitol Hill to introduce legislation allowing cable and satellite operators to import the signals of television stations from another market. While the official description of this situation describes these subscribers as being deprived of news and information regarding their own state, the more pragmatic concern of such viewers it is argued is that they aren't able to watch sports teams from their state as often as they would like. However, creating a legislative opportunity to import distant stations carrying such in-state sports (and other) programming would often mean importing a station that duplicates the network and syndicated programming of a local station already carried by cable systems and satellite providers in the market. Importing stations in this manner raises complex issues with respect to potentially siphoning off the local station's viewers (and advertisers), undercutting the local station's program exclusivity, and impacting the local station's leverage when it commences retransmission consent negotiations.

For those who plan on filing comments or replies, keep in mind that the FCC has specifically asked for data to help it analyze the issues relating to the availability of in-state broadcast stations for consumers, including the proper "methodologies, metrics, data sources, and level of granularity" that should be used in its report to Congress. The FCC is also asking for specific information to identify counties and populations within given states that have limited access to in-state broadcast programming.

As a result of efforts currently underway on the Hill with respect to potentially allowing the importation of in-state but out-of-market signals, those interested in retransmission consent should continue to monitor this matter closely.


Retransmission Concerns Make FCC's STELA Implementation a Mixed Bag for Broadcasters and Satellite Providers

Posted November 24, 2010

By Scott R. Flick

Yesterday, a day in advance of the November 24th statutory deadline to adopt rules implementing the Satellite Television Extension and Localism Act, the FCC released a flurry of STELA-related orders. STELA governs the satellite carriage of broadcast stations, and in particular, the importation of distant network stations, in local markets. Because STELA and its predecessor statutes lie at the nexus of communications and copyright law, they represent very complex and arcane matters that often leave even communications lawyers scratching their heads if they aren't experienced in the area.

For those interested in the details of yesterday's three Orders and the FCC's request for additional comments, I recommend taking a look at our Client Advisory on the subject from earlier today. For the rest of the population, suffice it to say that the major impact of these orders for broadcasters is how they affect the ability of satellite operators to import a "significantly viewed" ("SV") duplicating network signal into portions of a local market, thereby undercutting the local network affiliate's ratings, ad revenue, and retransmission negotiations.

As detailed in the Client Advisory, of the FCC's three Orders, one favors satellite operators by making it easier to import distant network stations into a market, while the other two favor broadcasters by limiting the proportion of satellite subscribers in a market that are eligible to sign up to receive a distant network station.

Of particular note is the FCC's conclusion in one of the Orders that "because SV status generally applies to only some areas in a DMA and not throughout an entire DMA, we find it unlikely that an SV station could permanently substitute for a local in-market station, even in the provision of network programming to the market." The FCC further stated that "because most viewers want to watch their local stations, we do not think that carriage of only SV stations would satisfy most subscribers for an extended time."

That is a comforting conclusion for broadcasters, and probably an accurate one. However, it may be cold comfort for the local broadcaster in heated retransmission negotiations where the satellite operator threatens to import a duplicative network station into the market. Because of that, and despite the complexity of the law in this area, television station owners and satellite operators need to acquire a keen understanding of each other's rights under STELA and the FCC's related rules, or proceed at their own peril.


Client Alert: FCC Implements Satellite Television Extension and Localism Act

Posted November 24, 2010

By Lauren Lynch Flick and Scott R. Flick

Yesterday, the Federal Communications Commission issued three Orders and a Public Notice designed to implement the new requirements of the Satellite Television Extension and Localism Act (STELA).

The FCC beat by one day the November 24, 2010 statutory deadline for adopting new rules governing several aspects of satellite operators' carriage of television broadcast signals under STELA. The first of three Orders favors satellite providers by making it easier for them to import the signals of significantly viewed ("SV") stations from neighboring markets into a station's local television market. However, the other two Orders favor broadcasters in updating the procedures for subscribers wishing to qualify to receive distant network television stations from their satellite operator. Lastly, the FCC issued a Public Notice seeking comments and data for a required report to Congress regarding the availability of in-state broadcast stations to cable and satellite subscribers located in markets straddling state borders.

Significantly Viewed Stations Order
In this Order, the FCC concluded that, under STELA, a satellite subscriber must generally subscribe to the local-into-local package before it can receive the signal of an out of market station significantly viewed (over-the-air) in that subscriber's area. Illogically, however, the subscriber does not have to receive the signal of the local affiliate of the same network as the imported SV network station. The subscriber's receipt by satellite of any local station is all that is needed. The FCC stated that its interpretation means that, where a local affiliate is not carried during negotiation of a retransmission consent agreement, the satellite carrier can provide certain subscribers with network programming from an SV network station in a neighboring market.

Continue reading "Client Alert: FCC Implements Satellite Television Extension and Localism Act"


Client Advisory: FCC Issues Two Notices of Proposed Rulemaking to Implement STELA

Posted August 6, 2010

By Lauren Lynch Flick

The FCC is moving quickly to implement the Satellite Television Extension and Localism Act of 2010 (STELA). STELA is the latest law to extend and update the original Satellite Home Viewer Act of 1998, allowing direct to home satellite carriers to deliver the signals of local television stations to subscribers. The Commission has commenced two rulemakings which, because Congress gave the FCC a deadline of November 2010 to wrap up its proceedings and adopt implementing rules, have very short comment periods.

The first proceeding deals with satellite carriers' ability to import distant, but significantly viewed, television signals into a local station's television market. The FCC's proposals could result in an increase in importation of significantly viewed signals by satellite providers. Therefore, stations should familiarize themselves with their rights concerning significantly viewed signals. Comments in this proceeding are due on August 17 and Reply Comments are due on August 27. An in-depth analysis of this proceeding can be found in our Client Advisory.

The second proceeding deals with the method by which the FCC determines whether a subscriber is eligible to receive the imported signal of a distant network-affiliated station. The FCC is examining both its computerized predictive model for determining whether a particular household is "served" by the local station, as well as its methodology for making actual on-site signal strength measurements. Where a satellite subscriber seeks to receive the signal of a distant network-affiliated station, the FCC's predictive model is used to assess whether the subscriber can receive the local network affiliate over the air. A household that is found to be "served" by the local affiliate is generally not eligible to receive the imported signal of an out of market affiliate of the same network. However, the subscriber can challenge the results of the FCC's predictive model by seeking an on-site measurement of the local station's signal.

STELA directs the FCC to update its predictive methodology to account for the completion of the nationwide transition to digital television, as well as to make specific modifications to the definition of "unserved" households. Comments in this proceeding are due on August 24 and Reply Comments are due on September 3. A detailed discussion of the FCC's proposals in this proceeding can be found in a second Client Advisory released today.


CARD Act Will Exempt Prepaid Phone Cards (Not Mobile Broadband/Internet Access)

Posted May 18, 2010

By Deborah S. Thoren-Peden, Greg L. Johnson
and Amy L. Pierce

5/18/2010
Prepaid "cards, codes and other devices" redeemable solely for telephone services are exempt from a new federal law that goes into effect August 22, 2010. However, if they can also be redeemed for related technology services, these products will (at least in most instances) be subject to provisions restricting fees, prohibiting expiration in less than five years, and imposing strict disclosure requirements if fees are charged or the products expire.

On March 23, 2010, the Federal Reserve Board ("Board") issued its Final Rule implementing Title IV of the federal Credit Card Accountability, Responsibility and Disclosure Act of 2009, which was signed into law by President Obama on May 22, 2009 (collectively, the "CARD Act"). The CARD Act amends the federal Electronic Funds Transfer Act (EFTA), and the Final Rule amends the EFTA's implementing regulation, Regulation E. It takes effect August 22, 2010. It applies to prepaid card products sold to a consumer on or after August 22, 2010, or provided to a consumer as a replacement for such product. State laws that are consistent with the CARD Act are not preempted, which means the CARD Act provides a minimum floor. State laws that provide greater protection for consumers are not inconsistent with the CARD Act.

The CARD Act restricts most fees and expiration dates on prepaid cards, and requires various disclosures if fees are charged or the products expire. This Advisory, one of several Advisories on the CARD Act, focuses on the exemption for cards, codes and other devices useable solely for telephone services (referred to collectively as "Prepaid Calling Cards").1 Companies that offer or issue Prepaid Calling Cards may be surprised to learn that if these products are also redeemable for related technology services, they will not qualify for this exemption. All persons involved in issuing or distributing Prepaid Calling Cards should review and potentially revise their disclosures, as well as their redemption policies and procedures.

Continue reading "CARD Act Will Exempt Prepaid Phone Cards (Not Mobile Broadband/Internet Access)"


Congress Passes Satellite Television Extension and Localism Act of 2010

Posted May 17, 2010

By Lauren Lynch Flick and Scott R. Flick

5/17/2010
The long strange trip of the Satellite Television Extension and Localism Act ("STELA" for short) seems finally to be ending. After satellite carriers' ability to import distant broadcast signals into stations' local markets expired on December 31, 2009, Congress passed a number of short-term extensions of the predecessor law, SHVERA. The Senate passed three different versions of the bill since late 2009. The House, with a lightning fast voice vote, accepted the Senate's last version unchanged and sent the legislation to the White House for a signature from the President. The President is expected to sign the bill shortly.

Reauthorization of Distant Signal Carriage For Five Years
STELA reauthorizes the provisions of SHVERA which allow satellite carriers to offer the signals of network stations from other markets to subscribers unable to receive their local network-affiliated stations over the air. It also updates the law to reflect the transition to digital television.

Expansion of Distant Signal Carriage Rights of Satellite Providers
A number of subtle revisions to the existing distant signal carriage provisions work together to increase the area into which satellite operators can import distant signals, and conversely, the area in which a local broadcaster can enjoy exclusive rights in the programming for which it has contracted with its program suppliers.

Continue reading "Congress Passes Satellite Television Extension and Localism Act of 2010"


FCC Supports Watching Movies at Home (to the Dismay of Theater Owners)

Posted May 7, 2010

By Scott R. Flick

While the FCC has traditionally steered clear of copyright issues, that has grown more difficult as the preferred method of content protection shifts from court actions to copyright protection built into the hardware. The FCC therefore found itself in the middle when Hollywood insisted that cable and satellite set-top boxes be designed so that programming could be embedded with code preventing the box from outputting the programming through any output unsecured against copying (principally analog outputs). Consumers and consumer electronics manufacturers fought back, noting that early generation DTV sets only had analog inputs, and that allowing programming to be restricted to the digital outputs of set-top boxes would deprive those early adopters of programming unless they bought new DTV sets.

In balancing the desire of Hollywood for an ironclad grip over its programming, and the adverse impact upon consumers just as the FCC was trying to persuade them to transition to digital television, the FCC prohibited the use of Selectable Output Control (SOC), but did not prohibit set-top boxes from being manufactured with SOC capability. The idea was that the FCC might later be presented with a business model requiring the use of SOC, and the FCC did not rule out the possibility of granting a waiver if the applicant could demonstrate that consumers would not be harmed by the use of SOC.

The FCC today released a decision partially granting a waiver request from the MPAA that would allow cable and satellite companies, at the request of the program provider, to use SOC to prevent set-top boxes from outputting recent theatrical HD movies over "unsecured" outputs. The business model proposed in the waiver request is the release of movies through Video on Demand services while those movies are potentially still in theaters, and long before they become available on DVD or Blu-Ray disc. The MPAA persuaded the FCC that studios would never release their content to home viewing this early in a film's marketing life unless assured that it wouldn't result in the content immediately being pirated over the analog outputs of set-top boxes.

In addition to the traditional opposition from consumer electronics manufacturers, who will face the wrath of consumers unable to get their components to work with the restricted outputs, the National Association of Theatre Owners (NATO) also objected. They argued that such an early release model would undercut their business, and that "instant availability of films will reduce choice and limit the ability to develop 'sleeper' hits in movie theaters." Similarly, the Independent Film and Television Association (IFTA) asserted that SOC would reduce access to independently produced films.

The FCC chose, however, to grant a waiver, stating its belief that "home viewing will complement the services that NATO and IFTA members offer and provide access to motion pictures to those consumers who cannot or do not want to visit movie theaters." While the FCC has long claimed not to be in the business of picking winners and losers in its technology decisions, that loud groan you hear is theater owners concerned that they are about to be "complemented" out of business by an ever-improving (and now speedier) home viewing experience.

In an effort to prevent SOC from being abused, however, the FCC did not grant the open-ended waiver sought by the MPAA. For example, the FCC limited the time during which SOC restrictions can be applied to 90 days, or whenever the movie becomes available on prerecorded media, whichever comes first. It also prohibited SOC from being used to promote proprietary connections (by blocking output to acknowledged copyright-secure connections on retail devices in favor of a Hollywood-preferred connection). The FCC also made clear that if "companies taking advantage of this waiver market their offering in a deceptive or unpredictable manner that does not allow consumers to 'truly understand when, how, and why SOC is employed in a particular case'," the FCC "will not hesitate to revoke this waiver."

Finally, to prevent MPAA members from gaining an unfair advantage over other movie producers, the FCC is making the waiver available to any provider of first-run theatrical content that files an "Election to Participate" with the FCC. Such providers will be required to submit a detailed report to the FCC on their use of SOC two years from commencing use of SOC under the waiver so that the FCC can later assess whether the waiver needs to be modified or terminated. Whether the FCC will actually revisit the decision remains to be seen, but keeping its options open is likely a wise idea, as this is a decision that could well have cascading unintended consequences for all involved.


The DISCLOSE Act: Nothing Good for Broadcast, Cable, and Satellite Operators

Posted April 29, 2010

By Scott R. Flick

When the U.S. Supreme Court overturned various restrictions on political spending by corporations in the Citizens United decision, it set off a flurry of activity in Washington. Many, including famously the President in his State of the Union address, derided the decision as opening the political process to the corrupting influence of corporate cash. Many in Congress promised a swift legislative response to minimize the impact of the Court's ruling. Regardless of where you stand on the Court's decision, I have to say I was disturbed by a number of statements coming out of Capitol Hill afterwards which made clear that the speakers had no understanding of the laws already on the books relating to political advertising on electronic media. Some promised to change the law to what it actually already is (although they apparently didn't know it), and others pointed out "problems" that would result from the Citizens United ruling that current law already prohibits from occurring.

Grandstanding without basis is, however, a well-established Washington tradition, and I presumed that when legislative staffers got together to draft the legislation, they would quickly figure out that these criticisms and unneeded solutions had been off-base. I apparently was too optimistic. Today, Senator Schumer of New York unveiled the Senate version of the legislation (Senate link not yet available) at a news conference on the steps of the Supreme Court. The President publicly applauded the legislation, and the House has promised hearings within a week on its version of the bill in hopes of enacting it quickly enough to govern this Fall's elections. The DISCLOSE Act (the acronym for "Democracy Is Strengthened by Casting Light On Spending in Elections"), as its name indicates, requires ample disclosure when corporations or unions spend money on ads relating to a federal political campaign. Unfortunately, it does not stop there, and attempts to then rewrite political advertising laws contained in the Communications Act of 1934 that were not impacted by the Citizens United ruling. These changes appear to be an effort to require broadcasters, as well as cable and satellite operators, to subsidize the ads of not just candidates, but of their national political parties as well, in an effort to make their ad dollars go farther than those of a corporation exercising its rights under Citizens United.

Setting aside the wisdom or constitutionality of that approach, the rub is that the legislation was apparently drafted in such a rush that aspects of it quite literally make no sense. For example, the relevant section of the bill is entitled "TELEVISION MEDIA RATES", but it then amends the political advertising provisions of the Communications Act that affect both television and radio. Even if the impact on radio was unintended, the matter is further confused by a requirement that the FCC perform random political audits during elections of at least 15 DMAs of various sizes, and that each DMA audit include "each of the 3 largest television broadcast networks, 1 independent television network, 1 cable network, 1 provider of satellite services, and 1 radio network."

Similarly, the statutory exceptions to the requirement for providing equal time to a candidate's opponents when the candidate appears on-air would be amended to exclude certain appearances by a candidate's representative as a triggering event. However, since only the appearance of a candidate can trigger equal time in the first place, creating an exception for appearances by a candidate's representative serves no purpose.

Further indicating that the bill is premised on a misunderstanding of the current law, the Reasonable Access provisions of the Communications Act would be amended so that instead of FCC licensees being required to provide federal candidates with "reasonable amounts of time," they would be required to provide "reasonable amounts of time, including reasonable amounts of time purchased at the lowest unit charge ...." The premise of this change appears to be a lack of understanding that all time sold to a candidate in the 45 days before a primary and the 60 days before a general election must be sold at the lowest unit charge for that class of time. The broadcaster has no discretion to charge anything but the lowest unit charge during that time, making this change pointless as well.

A number of other odd provisions in the Senate version of the bill that would significantly impact media companies (and not just broadcasters) is discussed in an Advisory we issued to our clients earlier today. Two of particularly great concern would drastically reduce the lowest unit charge for political advertising while significantly expanding the pool of entities eligible to receive lowest unit charge. It is worth noting that none of these media-oriented provisions appear to be in the House version of the bill, so hopefully they will be excised from the Senate bill before any harm is done. Regardless, broadcasters, as well as cable and satellite providers, need to be vigilant to ensure that these provisions, if not eliminated outright, are at least heavily modified before any final bill emerges.