[Federal Register: November 26, 2001 (Volume 66, Number 227)]
[Rules and Regulations]
[Page 58973-58982]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr26no01-17]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 73
[MM Docket No. 98-203; FCC 01-306]
The Ancillary or Supplementary Use of Digital Television Capacity
by Noncommercial Licensees
AGENCY: Federal Communications Commission.
ACTION: Final rule.
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SUMMARY: This document amends the Commission's rules to require that
noncommercial educational (``NCE'') television licensees primarily
provide a nonprofit, noncommercial educational service over their
entire digital bitstream, including ancillary or supplementary
services; clarify that they may provide subscription TV service as an
ancillary or supplementary service; and apply to them the same program
to assess and collect fees as that established for commercial DTV
licensees' use of DTV capacity for the provision of ancillary or
supplementary services. This document also determines that the
Communications Act of 1934 prohibition against the provision of
advertising by NCE licensees does not apply to nonbroadcast services,
such as subscription services provided on their digital television
(``DTV'') channels. The intended effect of these actions is to clarify
the manner in which NCE licensees may use their excess DTV capacity for
remunerative purposes.
DATES: Effective on the later of either December 26, 2001, or upon
receipt by Congress of a report in compliance with Contract with
America Advancement Act of 1996, Public Law 104-121, except for
Sec. 73.624(g)(2)(i), which contains information collection
requirements that have not been approved by the Office of Management
and Budget (OMB). The Commission will publish documents in the Federal
Register announcing the effective date of these rule and
Sec. 73.624(g)(2)(i).
FOR FURTHER INFORMATION CONTACT: Jane Gross; Policy and Rules Division,
Mass Media Bureau, at (202) 418-2130, TTY (202) 418-2989.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Report
and Order (R&O;) in MM Docket No. 98-203, FCC 01-306, adopted on October
11, 2001, and released on October 17, 2001. The full text of the
Commission's R&O; is available for inspection and copying during regular
business hours in the FCC Reference Center, 445 Twelfth Street, SW.,
Room CY-A257, Washington DC, and also may be purchased from the
Commission's copy contractor, Qualex International, (202) 863-2893, 445
Twelfth Street, SW., Room CY-B402, Washington, DC. The complete text is
also available under the file name fcc01306.pdf on the Commission's
Internet site at www.fcc.gov.
Paperwork Reduction Act
This document contains new or modified information collection
requirements. The fee program established herein will require NCE TV
licensees annually to file a new reporting form. Licensees will be
required to report whether they provided ancillary or supplementary
services, what ancillary or supplementary services they provided, which
of those services are subject to a fee, and the gross revenues received
from all feeable ancillary or ancillary services. NCE licensees
providing service subject to a fee additionally will be required
annually to file FCC Form 159 in remittance of the fee. So that the
Commission may audit NCE licensees records supporting the calculation
of the fees due, each NCE licensee will be required to retain such
records for three years from the date of remittance of fees. In
addition, each NCE TV licensee will be required to maintain
documentation sufficient to show compliance at renewal time and in
response to any complaint with the requirement to use their entire
bitstream primarily for nonprofit, noncommercial, educational broadcast
services on a weekly basis. Implementation of these new or modified
reporting and recordkeeping requirements will be subject to approval by
the Office of Management and Budget as prescribed by the Paperwork
Reduction Act of 1995.
Synopsis of Report and Order
Introduction
1. With this Report and Order, we clarify the manner in which
noncommercial educational (``NCE'') television licensees may use their
excess digital television (``DTV'') capacity for remunerative purposes.
Among other things, we amend Sec. 73.621 of our rules to apply to the
entire digital bitstream, including ancillary or supplementary
services, thereby requiring NCE licensees to use their digital capacity
primarily for a noncommercial, nonprofit, educational broadcast
service. We also amend Secs. 73.642 and 73.644 of our rules to clarify
that NCE licenses may offer subscription services on their excess
digital capacity. We determine that section 399B of the Communications
Act of 1934, as amended, the provision restricting advertising by NCE
licensees, continues to apply to all broadcasting by NCE licensees, but
does not apply to nonbroadcast services, such as subscription services
provided on their DTV channels. Finally, we amend Sec. 73.624(g) of our
rules to apply to NCE licensees the program for assessing and
collecting fees upon feeable ancillary or supplementary services
provided on their DTV capacity that we have established for commercial
licensees, as required by the Telecommunications Act of 1996 (``1996
Act''), Public Law 104-104, 110 Stat. 56 sec. 201 (1996), codified at
47 U.S.C. 336.
Background
2. The 1996 Act provided that initial eligibility for any advanced
television licenses that we issue should be limited to existing
broadcasters, conditioned upon the requirement that ``either the
additional license or the original license held by the licensee be
surrendered to the Commission for reallocation or reassignment (or
both) pursuant to Commission regulation.'' In our Fifth Report and
Order in the DTV proceeding, we adopted rules to implement the statute,
providing a specific transition process to digital technology for all
existing television broadcasters. 62 FR 26996, May 16, 1997. Among
other things, we established standards for license eligibility, a
transition and construction schedule, and a requirement that
broadcasters continue to provide one free over-the-air video
programming service. We also adopted rules
[[Page 58974]]
permitting DTV licensees, without distinguishing between commercial and
noncommercial licensees, to use their DTV capacity to provide ancillary
or supplementary services, provided that these services do not derogate
the free digital television service.
3. In their Petition for Reconsideration of the Fifth Report and
Order, the Association of America's Public Television Stations and the
Public Broadcasting Service (``AAPTS/PBS'') requested clarification of
public television stations authority to use excess capacity on DTV
channels for commercial purposes. As neither section 336 nor our DTV
rules distinguishes between commercial and noncommercial stations,
AAPTS/PBS argued that both are intended to allow public stations to
offer ancillary or supplementary services for revenue-generating
purposes. In opposing this request in part, Media Access Project and
other public interest parties (``MAP''), jointly argued that, while
public television stations should be able to provide some revenue-
generating ancillary or supplementary services, these services must be
consistent with the noncommercial nature of public television as set
forth in section 399B of the Communications Act, the provision
restricting advertising by these stations.
4. This request for clarification made by AAPTS/PBS raised
significant issues regarding the service and funding opportunities made
available to NCE stations as a result of the transition to digital
transmission. In recognition of the importance of this issue to the
future of public television as it enters the digital age, in the Notice
of Proposed Rulemaking (``NPRM'') in this proceeding, we sought further
comment on the AAPTS/PBS petition in order to establish a more complete
record on the issues it raised. 63 FR 68722, December 14, 1998.
5. In their Petition AAPTS/PBS also requested that we exempt public
television licensees from any fee assessed in connection with use of
digital spectrum for ancillary or supplementary services to the extent
revenues from those service are used to support the licensee's mission-
related activities. Section 336(e) of the 1996 Act, which requires DTV
licensees receiving fees or certain other compensation for ancillary or
supplementary services provided on the DTV spectrum to return a portion
of that revenue to the public, charged us with establishing a means of
assessing and collecting fees for those ancillary or supplementary
services.
6. In a Notice of Proposed Rule Making in MM Docket No. 97-247
(``DTV Fees Proceeding''), we sought comment on AAPTS/PBS's request for
such an exemption and subsequently determined that AAPTS/PBS's request
should be considered in this proceeding. 63 FR 460, January 6, 1998. In
the DTV Fees Report and Order, we established a program for assessing
and collecting fees for certain ancillary or supplementary services
provided by commercial licensees on their DTV capacity. 63 FR 69208,
December 16, 1998. In the NPRM in this proceeding, MM Docket No. 98-
203, we sought additional comment regarding an exemption for
noncommercial licensees in light of the comments received on this issue
in the DTV Fees Proceeding. 63 FR 68722, December 14, 1998. We also
sought comment on tentative proposals set forth in the NPRM.
Issue Analysis
A. Application of Sec. 73.621 of the Commission's Rules to Entire
Digital Bitstream of NCE Licensees
7. Background. The Communications Act defines a ``noncommercial
educational broadcast station'' and ``public broadcast station'' as a
television or radio broadcast station that is eligible under the FCC's
rules to be licensed as ``a noncommercial educational radio or
television broadcast station which is owned and operated by a public
agency or nonprofit private foundation, cooperation, or association''
or ``is owned and operated by a municipality and which transmits only
noncommercial programs for educational purposes,'' 47 U.S.C. 397(6). In
1981, Congress amended the Communications Act to give public
broadcasters more flexibility to generate funds for their operations.
Omnibus Budget Reconciliation Act of 1981, Public Law 97-35, sec. 1231,
95 Stat. 357, 731 (codified at 47 U.S.C. 399B). See also H.R. Rep. No.
97-82, at 13-14. As amended, section 399B of the Act permits public
stations to provide facilities and services in exchange for
remuneration as long as those uses do not interfere with the stations'
provision of public telecommunications services. Section 399B, however,
does not permit public broadcast stations to make their facilities
``available to any person for the broadcasting of any advertisement.''
In addition, under Sec. 73.621 of our rules, public television stations
are required to furnish primarily an educational as well as a nonprofit
and noncommercial broadcast service.
8. In the Fifth Report and Order, we implemented section 336 of the
1996 Act, which sets forth the DTV licensing provisions of the 1996
Act, by adopting Sec. 73.624 of our rules. 62 FR 26996, May 16, 1997.
Section 73.624(g) allows broadcasters the flexibility to respond to the
demands of their audience by providing ancillary or supplementary
services, including subscription television, provided that these
services do not derogate the mandated free, over-the-air program
service. In the NPRM in this proceeding, we invited comment on AAPTS/
PBS's request that we clarify that Sec. 73.621 of our rules, which
requires public stations to provide a primarily nonprofit,
noncommercial, educational broadcast service, is not applicable to
ancillary or supplementary services provided on DTV capacity, and on
whether such a clarification is consistent with the nonderogation of
services provisions of section 399B.
9. In particular, we sought comment on a number of options with
respect to whether and how we should amend Sec. 73.621 of our rules.
For example, we sought comment on whether we should extend the
requirement to provide an educational nonprofit service to ancillary or
supplementary services provided by noncommercial licensees on their DTV
capacity, or whether we should clarify that the requirement applies
only to the single, free-over-the-air broadcast service it is required
to provide.
10. We also sought comment on whether and how we can permit NCE
stations to provide remunerative ancillary or supplementary services in
a manner that does ``not interfere with the provision of public
telecommunications services'' by such stations as required by section
399B of the Act. In particular, we asked whether NCE DTV stations will
have the capacity to provide ancillary or supplementary services
without interfering with their ability to provide a primarily
educational NCE broadcast service, and whether such ancillary or
supplementary services can provide an important funding source that
could facilitate the transition to DTV for NCE stations, and, more
generally, enhance their primary mission of providing a robust
noncommercial, educational broadcasting service.
11. Comments. In its comments, AAPTS modifies its original request,
presented in its Petition for Reconsideration of the Fifth Report and
Order, which would have exempted remunerative ancillary or
supplementary services from Sec. 73.621 of our rules. AAPTS now agrees
that, with respect to provision of remunerative ancillary or
supplementary service, a public television station must be used
primarily to provide a noncommercial educational broadcast service, and
the
[[Page 58975]]
offering of such service must not interfere with the provision of
public telecommunications services. AAPTS also contends that its
proposed standards are consistent with those we have applied in the
analog environment in approving the offer by public television stations
of a variety of ancillary services. AAPTS suggests that we only need
clarify that Sec. 73.621 of our rules applies, without change, to the
digital channel. It states that the requirement that the primary use of
public television stations is to provide an educational and nonprofit,
noncommercial broadcast service would still allow ancillary or
supplementary service to be provided on NCE's excess digital capacity.
AAPTS also requests that, since we concluded in the Fifth Report and
Order that DTV broadcasters may offer subscription television as an
ancillary or supplementary service, that we amend Secs. 73.642 and
73.644 of our rules to clarify that public television stations may
provide subscription television services.
12. AAPTS denies that provision of remunerative ancillary or
supplementary services would change the essential nature of public
television. It contends that digital technology will provide sufficient
capacity for public television stations to offer a range of services
while preserving their primary use for a noncommercial educational
broadcast service. In addition, it argues that section 336 provides,
via its prohibition against derogation of services, separate assurance
that any ancillary or supplementary service will not interfere with a
public television station's basic broadcast service. AAPTS submits that
other limitations on the extent to which public televisions stations
can engage in commercial ventures include their nonprofit educational
mission upon which their tax exempt status is based, the need to
preserve viewer and government support, the requirement to pay taxes on
income unrelated to the exempt purpose of the organization, and the
oversight of stations by responsible bodies. AAPTS also notes that
although section 336 itself does not impose special restrictions on
public television stations, two limitations must be applied to the
provision of ancillary or supplementary service by these stations:
first, a public television station must be used primarily to provide a
noncommercial educational broadcast service under the Commission's
rules; second, the offering of these services must not interfere with
the provision of public telecommunications services under section 399B
of the Communications Act.
13. AAPTS states that, at this point, public television stations do
not have firm plans for the use of their digital spectrum, and it is
impossible to predict what opportunities may be available to them or to
what extent individual stations will take advantage of such
opportunities. It urges us not to impose restrictions now on the
activities of public television stations, but to wait until the
scheduled biennial examination of digital regulations, set forth in the
Fifth Report and Order, to determine whether changes are needed. The
Office of the United Church of Christ and other public interest parties
(``UCC et al.''), however, contend that AAPTS is unclear about its
members'' plans to engage in advertiser supported ancillary or
supplementary services and how much of their digital capacity they plan
to commit to subscription and other remunerative services. UCC et al.
urges us to draw a bright line and find that an NCE broadcaster
``primarily'' serves the educational needs of a community when it
provides free, not-for-profit over-the-air services over 50 percent or
more of its digital capacity at any one time.
14. National Datacast, Inc. (``National Datacast'') is a for-profit
subsidiary of the Public Broadcasting Service that provides data
services using the vertical blanking interval (VBI) on the analog
signal of public television stations. It argues that the Commission
imposed no restrictions on the commercial operation of data services
using the VBI, including advertiser-supported services, by public
television stations or entities affiliated with public television; that
the force of this ruling remains unaltered by section 336; and that no
restrictions should be applied to National Datacast's data transmission
in the digital spectrum of public television stations. The analog
spectrum requires the use of most of an NCE licensee's channel to carry
their video broadcast signal, leaving only a very small portion, the
VBI and the Visual Signal, available to be used for ancillary or
supplementary services. The digital spectrum, however, allows NCE
licensees to offer a number of ancillary or supplementary services on
their excess digital capacity in addition to mandated free, over-the-
air program service. National Datacast points to its service as a
``precursor to the successful use of digital spectrum'' for generating
revenues to help support public television.
15. Decision. We will amend Sec. 73.621 of our rules to clarify
that the section's requirements apply to the entire digital bitstream
of NCE licensees, including the provision of ancillary or supplementary
services. We will require that NCE licensees use their entire digital
capacity primarily for a nonprofit, noncommercial, educational
broadcast service. This amendment will adapt Sec. 73.621 of our rules
to the digital environment. Although we decline to quantify the term
``primarily,'' we will consider it to mean a ``substantial majority''
of their entire digital capacity.
16. We decline to adopt the suggestion of UCC et al. that we draw a
bright line to require that NCE broadcasters provide free, not-for-
profit over-the-air services over 50 percent or more of their digital
capacity at any one time. Such a decision would provide substantially
less flexibility to NCE licensees in developing their digital services.
For example, an NCE licensee might want to use most of its digital
capacity for High Definition Television (``HDTV'') programming during
certain times of the day and, at other times, various amounts of
capacity for Standard Definition Television (``SDTV'') programming and
remunerative ancillary or supplementary services. UCC et al.'s
suggestion, by specifying 50 percent or more at all times, would seem
to restrict their flexibility in this regard. We see no persuasive
reason to impose such a limitation. While we believe that a ``minute by
minute'' approach, such as that suggested by UCC et al., above, would
restrict the flexibility of NCE licensees to too great an extent, we
believe that some time period limitation is appropriate. Because
stations typically schedule their programming on a weekly basis, we
believe that requiring them to use their entire bitstream primarily for
nonprofit, noncommercial, educational broadcast services on a weekly
basis will provide them with sufficient flexibility. We will require
NCE licensees to maintain documentation sufficient to show compliance
with this requirement at renewal time and in response to any
complaints.
17. Our decision to apply Sec. 73.621 of our rules to the entire
digital bitstream also is consistent with the 1996 Act, as well as our
Fifth Report and Order, in which we stated that our overarching goal is
to promote the success of a free, local television service using
digital technology. We believe that this action will help to preserve
the noncommercial educational nature of public broadcasting, while
allowing NCE licensees some flexibility in remunerative use of their
spectrum and indicating the boundaries that we will apply to such use.
We agree with AAPTS that digital technology will
[[Page 58976]]
allow sufficient capacity for public television stations to offer a
range of services while preserving their primary use for a nonprofit,
noncommercial, educational broadcast service. We also note that section
336 provides, via its prohibition against derogation of services,
separate assurance that any ancillary or supplementary service will not
interfere with a public television station's basic broadcast service.
Moreover, NCE licensees are, of course, subject to the general
requirement to provide one free over-the-air video programming service.
In light of the other limitations on the extent to which public
televisions stations can engage in commercial ventures, we will not, at
this time, impose additional restrictions on an NCE licensee's ability
to provide ancillary or supplementary services on its excess digital
capacity. We will address any problems that might arise in the periodic
reviews of our digital regulations set forth in the Fifth Report and
Order, or on a case-by-case basis.
18. We will amend Secs. 73.642 and 73.644 of our rules to clarify
that NCE licenses may offer subscription services on their excess
digital capacity. We included such services in our definition of
ancillary or supplementary services in the Fifth Report and Order.
Given our goal of providing NCE licensees with flexibility in the use
of their digital spectrum, within certain boundaries, we see no reason
to prohibit them from providing subscription services.
B. Advertising
19. Background. In its Petition for Reconsideration of the Fifth
Report and Order, AAPTS/PBS requested that we clarify that public
television stations may use their excess capacity on DTV channels for
commercial purposes. In opposing this request in part, MAP argued that,
while public television stations should be able to provide some
revenue-generating ancillary or supplementary services, these services
must be consistent with the noncommercial nature of public television
as set forth in section 399B, which restricts advertising by these
stations. In reply, AAPTS/PBS argued for an interpretation in which the
advertising ban of section 399B would continue to apply to the primary
noncommercial broadcast service, while any ancillary or supplementary
use of DTV channels would be free from the restrictions of this
section. It also argued that even if the section 399B advertising
restrictions are found to apply to these services, we have discretion
under section 336(a)(2) to allow public TV licensees to offer
advertiser-supported services if we find these services to be in the
public interest.
20. In the NPRM we sought comment on how the advertising ban set
forth in section 399B of the Communications Act implicates the
provision of remunerative services by public DTV stations. Section 399B
prohibits a public station from ``making its facilities available to
any person for the broadcasting of any advertisement.'' By its plain
language, we noted that this section would appear to prohibit
advertisements on any service that would constitute broadcasting, while
permitting a public DTV station to air advertisements on any
nonbroadcast service.
21. We sought comment on our tentative conclusion that while
section 399B continues to apply to all video broadcast programming
streams provided by public DTV stations, it does not apply to any
subscription services they provide on their DTV channels since such
services do not constitute ``broadcasting.'' We also sought comment on
the extent to which section 399B applies to advertising carried on any
other non-subscription ancillary or supplementary services carried by a
public TV station. In addition, we asked parties to address AAPTS/PBS's
argument that even if section 399B's advertising restrictions apply to
some ancillary or supplementary services, we have discretion under
section 336(a)(2) of the Act to allow public TV licensees to include
advertiser-supported services if we find these services to be in the
public interest.
22. Comments. UCC et al. contends that the plain language of 399B,
its legislative history, and subsequent actions by Congress demonstrate
that Congress as recently as the 1996 Act did not intend that NCE
licensees carry commercial advertisements, including on any ancillary
or supplementary services provided on their DTV capacity. An
advertisement is defined in section 399B(b) as ``any message or other
programming material which is broadcast or otherwise transmitted in
exchange for any remuneration.'' UCC et al. contends that this
definition is incorporated by reference in section 399B(b)(2), so that
when the statute prohibits broadcasting of ``advertisements,'' it
prohibits any message that is either broadcast or otherwise
transmitted. Moreover, although section 399B expressly prohibits only
the ``broadcasting'' of advertisements, UCC et al. notes that in 1981
that was the only way NCE stations could carry advertising. UCC et al.
urges us to not extend the Subscription Video decision to allow NCEs to
provide advertiser-supported subscription services over public
broadcast stations. It particularly would object to advertisements on
NCE licensees' free over-the-air services. UCC et al. contends that NCE
licensees did not, and still do not, have the authority to provide
advertiser-supported subscription services.
23. UCC et al. also contends that section 336(a)(2) does not
explicitly permit NCE licensees to carry commercial advertising based
on the Commission's finding that it is in the public interest, nor does
section 336(a)(2) explicitly repeal the ban on advertising in section
399B(b)(2). It argues that to interpret section 336 in that manner
would directly conflict with section 399B. UCC et al. submits that
these sections can be harmonized by permitting NCE licensees only to
provide non-advertiser-supported ancillary or supplementary services.
24. AAPTS and Family Stations of New Jersey, Inc. (``Family NJ'')
contend that the section 399B ban on advertising by NCE stations
applies only to the basic broadcast service, not to any ancillary or
supplementary services. AAPTS acknowledges that the 399B definition of
advertisement is broader, referring to material that is ``broadcast or
otherwise transmitted,'' than the language of the prohibition. But
AAPTS contends that it is the language of the prohibition, which only
forbids ``broadcasting'' of an advertisement, not ``broadcasting or
otherwise transmitting,'' that is relevant. AAPTS reasons that Congress
adopted section 399B in the context of analog broadcasting, where a
station carries only a single broadcast service, and was concerned with
insulating public television program control and content from the
influence of special interests. AAPTS argues that digital technology
would allow a station to offer advertiser-supported broadcast service
on its ancillary or supplementary capacity that is completely unrelated
to and has no influence over the station's primary noncommercial
broadcast service.
25. AAPTS, Family NJ, and National Datacast also contend that our
previous decisions have allowed NCEs to provide subsidiary
communications services on the VBI without regard to whether they
include advertisements. National Datacast argues that we authorized the
use of the VBI for commercial services, including advertising, in
Teletext Transmission. The only pertinent restriction was that any
offering of services for remuneration ``shall not interfere with the
provision of public telecommunications services''.
[[Page 58977]]
26. UCC et al., however, argues that our 1980 decisions allowing
NCE licensees to use their analog VBI for remunerative services do not
support commenters' assertions that we have allowed advertiser-
supported ancillary services on noncommercial stations. UCC et al.
contends that we never squarely addressed in those decisions whether
section 399B prohibits advertiser-supported services on the VBI, but
always specified that the activity must be consistent with section
399B. UCC et al. also contends that it would be arbitrary and
capricious for us to apply decisions that affect a minuscule slice of
analog capacity used only for text to digital services that could use
as much as 80% of the bitstream at any one time for services that would
include text, data, broadband and, most importantly, video services.
UCC et al. cautions that providing advertiser-supported services would
harm NCE licensees more than it would help them, leading to a loss of
public and Congressional support. AAPTS, however, urges us to allow
public television stations the flexibility to develop and implement
remunerative ancillary or supplementary uses of the digital spectrum
and avoid premature promulgation of rules that may be overbroad and
unnecessary, addressing any concerns arising under section 399B in a
``concrete context.''
27. Decision. We conclude that the section 399B ban on advertising
applies to all broadcast programming streams provided by NCE licensees,
but does not apply to ancillary or supplementary services on their DTV
channels, such as subscription services or data transmission services,
to the extent that such services do not constitute ``broadcasting.''
28. While the definition of ``advertisement'' in section 399B
refers to material that is ``broadcast or otherwise transmitted,'' the
plain language of the specific prohibition only forbids the
``broadcasting'' of any advertisement. UCC et al. argues that limiting
the prohibition on advertisements to ``broadcasting'' renders the
``otherwise transmitted'' language in the definition of
``advertisement'' meaningless and, thus, UCC et al. would read the
prohibition as applying to all transmissions. Although UCC et al.'s
argument is one way to read the statute, we believe that UCC et al.'s
reading is problematic because, as noted, the prohibition in section
399B(b)(2) refers to the ``broadcasting of any advertisement,'' whereas
the definition in (a)(1) treats broadcasting as only one means of
transmitting advertising. We believe the better way to reconcile this
disparity is the following: By defining an ``advertisement'' as ``any
message or other programming material which is broadcast or otherwise
transmitted in exchange for any remuneration,'' Congress was arguably
acknowledging that noncommercial stations were technologically capable
of transmitting advertisements on a broadcast or nonbroadcast basis.
AAPTS argues that (t)he phrase `otherwise transmitted' also has clear
meaning, given the technologies available in 1981 when the legislation
was under consideration. At the time the statute was being deliberated,
several forms of `non-broadcast' transmission services were being used
or had been used by television stations. It is therefore reasonable to
suppose that Congress was fully aware of these developments and
intentionally considered them when legislating. Ex parte letter of
AAPTS, October 8, 1999, at 2; see id. at 2-7 (describing such
nonbroadcast services as use of the vertical blanking interval,
teletext, the instructional television fixed service, and the broadcast
auxiliary service). When Congress set out the prohibition in section
399B(b)(2), however, it expressly limited it to those advertisements
provided on a broadcast basis. We thus believe that the better reading
is the literal one: that section 399B only prohibits public broadcast
stations from making their facilities ``available to any person for the
broadcasting of any advertisement.''
29. The term ``broadcasting'' is defined in the Communications Act
as ``the dissemination of radio communications intended to be received
by the public, directly or by the intermediary of relay stations,'' 47
U.S.C. 153(6). In 1986, we addressed this definition in our
Subscription Video proceeding. Subscription Video, 52 FR 6152, March 2,
1987, aff'd sub nom. National Association for Better Broadcasting v.
FCC, 849 F.2d 665 (D.C. Cir. 1988). We recognize that section 399B was
enacted before Subscription Video. Congress gave no indication in
section 399B, however, that it intended to lock in the Commission's
prior interpretation of the statutory definition of the term
``broadcasting.'' See Lukhard v. Reed, 481 U.S. 368, 379 (1987) (``It
is of course not true that whenever Congress enacts legislation using a
word that has a given administrative interpretation it means to freeze
that administrative interpretation in place.''). In Subscription Video
we determined that the term ``broadcasting'' as defined by the
Communications Act ``refers only to those signals which the sender
intends to be received by the indeterminate public.'' We therefore
found that ``a necessary condition for the classification of a service
as broadcasting is that the licensee's programming is available to all
members of the public, without any special arrangements or equipment.''
Based on these criteria, we ruled that subscription television does not
constitute broadcasting. Applying these same criteria to the digital
spectrum, we find that subscription television provided by NCE
licensees on their excess digital spectrum does not constitute
``broadcasting.'' We conclude therefore that NCE licensees may include
advertising in their subscription television offerings, as the section
399B ban on advertising applies only to broadcast streams. We also
conclude that these same criteria continue to apply to any DTV capacity
that NCE licensee might lease to other parties. For example, a public
television station would not be permitted to enter into an agreement
that would allow ``Network A'' to broadcast its advertiser-supported
``Popular Program B'' over the public television station's excess
digital capacity, while an agreement that would allow ``Network A'' to
transmit its ``Popular Program B'' on a subscription basis would be
permitted.
30. With respect to the extent to which section 399B applies to
advertising carried on any other ancillary or supplementary services
carried by a public TV station, we turn to the rules that we adopted in
the Fifth Report and Order. These rules list examples of the kinds of
services that may be offered as ancillary or supplementary services.
They include, but are not limited to, ``computer software distribution,
data transmissions, teletext, interactive materials, aural messages,
paging services, audio signals, subscription video, and any other
services that do not derogate DTV broadcast stations' obligations'' to
``transmit at least one over-the-air video broadcast signal provided at
no direct charge to viewers.'' We stated that such services may be
provided on a broadcast, point-to-point or point-to-multipoint basis,
provided, however, that ``no video broadcast signal provided at no
direct charge to viewers shall be considered ancillary or
supplementary.''
31. This definition and illustrative list of ancillary or
supplementary services makes clear, first, that over-the-air video
programming provided at no charge to viewers is not ancillary or
supplementary service, and, conversely, that services other than a free
video broadcast signal are, by definition,
[[Page 58978]]
ancillary or supplementary services. Although we received very little
comment on the types of non-subscription ancillary or supplementary
services parties contemplate providing, it is possible that NCE
licensees may provide without a fee to viewers data, audio or other
services. For example, an NCE licensee might provide data services that
could be accessed by the general public using a personal computer or
provide, through interactive DTV programming, sports scores that could
be accessed by the public viewing a broadcast sports event. Such
services, although ancillary or supplementary, if constituting ``the
dissemination of radio communications intended to be received by the
public, directly or by the intermediary of relay stations,'' would fall
under the definition of ``broadcasting'' as defined in the
Communications Act, and would be subject to the section 399B
advertising ban. To the extent that ancillary or supplementary services
offered by DTV licensees are not broadcasting services, NCE licensees
may include advertising in their ancillary or supplementary services on
their excess DTV capacity, as the section 399B prohibition of
advertising applies only to broadcast programming. Section 399B also
requires that public stations engaged in revenue generating activities
comply with accounting procedures designed to separately identify these
commercial revenues and costs, and it prohibits Corporation for Public
Broadcasting funds from being used to defray any costs associated with
these activities. Until we gain more experience in determining whether
an ancillary or supplementary service is a broadcasting service, we
will simply be guided by the statutory criteria as questions arise.
32. Finally, in the NPRM, we asked parties to address AAPTS/PBS's
argument that even if section 399B's advertising restrictions apply to
some ancillary or supplementary services, we have discretion under
section 336(a)(2) of the Act to allow public TV licensees to include
advertiser-supported services if we find these services to be in the
public interest. Section 336(a)(2) states that if we issue additional
licenses for DTV, we shall ``adopt such regulations that allow the
holders of such licensees to offer such ancillary or supplementary
services on designated frequencies as may be consistent with the public
interest, convenience or necessity.'' Given our statutory
interpretation of section 399B, which allows NCE licensees considerable
flexibility to offer advertiser-supported subscription services and
other ancillary or supplementary services, there is no need to
interpret section 336(a)(2) as AAPTS/PBS suggests. More importantly, we
conclude that the plain language of section 336(a)(2) does not support
the result AAPTS/PBS suggests.
33. As we stated in the NPRM, we are sympathetic to the relief
requested in the AAPTS/PBS petition, which described a range of
revenue-generating ancillary or supplementary services that could help
NCE stations flourish in a digital age. We noted that the costs of
converting to digital service will be considerable, and that many NCE
stations rely on public funds for the digital build-out. Our decision
regarding the provision of advertising on NCE licensees' ancillary or
supplementary services will permit NCE stations flexibility in
providing such services as well as enhancing their ability to raise
revenue for their support and the transition to digital television. We
are mindful, however, of UCC et al.'s concern that allowing NCE
licensees to provide advertiser-supported services will denigrate the
noncommercial nature of the public television system. We emphasize that
NCE licensees will continue to be prohibited from providing advertising
on their free over-the-air service. Moreover, although we are allowing
NCE licensees considerable flexibility in providing remunerative
ancillary or supplementary services, they are, of course, required by
our amendment of Sec. 73.621 in this Report and Order to use their
entire digital capacity primarily for a nonprofit, noncommercial,
educational broadcast service and to provide at least one free over-
the-air video program signal. Although we decline to quantify the term
``primarily,'' we will consider it to mean a ``substantial majority''
of their entire digital capacity. As noted above, NCE licensees are
further constrained by such limitations as the nonprofit educational
mission upon which their tax exempt status is based, the need to
preserve viewer and government support, the requirement to pay taxes on
income unrelated to the exempt purpose of the organization, and the
oversight of stations by responsible bodies. If we find that these
requirements are not sufficient to ensure the integrity of the
noncommercial educational broadcast service, we will revisit our
decision to allow NCE licensees to provide advertiser-supported
ancillary or supplementary services.
C. Payment of Fees
34. Background. Section 336(e) of the 1996 Act requires DTV
licensees receiving fees or certain other compensation for ancillary or
supplementary services provided on the DTV spectrum to return a portion
of that revenue to the public. In the DTV Fees Report and Order in MM
Docket No. 97-247, we established a program for assessing and
collecting fees for the provision of ancillary or supplementary
services by commercial DTV licensees as required by the 1996 Act. 63 FR
69208, December 16, 1998. We defined as ``feeable ancillary or
supplementary service'' any ancillary or supplementary services for
which the payment of a subscription fee is required to receive such
services or for which the licensee receives any compensation from a
third party other than commercial advertisements used to support non-
subscription broadcasting.
35. In its Petition for Reconsideration of the Fifth Report and
Order, AAPTS/PBS requested that we exempt public television licensees
from any fee assessed in connection with revenue-generating use of the
ancillary or supplementary services on their DTV spectrum ``to the
extent that revenues from those service are used to support the
licensee's mission-related activities.'' We sought comment in the DTV
Fees Proceeding on whether noncommercial television licensees should be
exempt from such fees or subject to a nominal fee when they offer
ancillary or supplementary services as a source of funding for public
television. 63 FR 460, January 6, 1998. In the DTV Fees Report and
Order, we decided to consider the request for exempting NCE licensees
from DTV fees in this proceeding, which focuses specifically on
questions related to the remunerative use by NCE licensees of their
excess digital capacity.
36. In the NPRM in this proceeding, we sought additional comment on
this issue in light of the comments received in the DTV Fees Proceeding
and the tentative proposals outlined in the NPRM. We sought comment on
whether NCE licensees should be exempt from DTV fees when they offer
remunerative ancillary or supplementary services as a source of funding
for their mission-related activities. We sought comment generally on
AAPTS/PBS's arguments in the DTV Fees Proceeding to exempt
noncommercial licensees from fees for remunerative ancillary or
supplementary services offered on their excess digital capacity. We
particularly sought comment on whether such an exemption is consistent
with section 336, which does not distinguish between commercial and
noncommercial licensees. We also sought comment on whether, if such an
exemption is inconsistent with the
[[Page 58979]]
statute, a nominal or reduced fee would be consistent with the statute.
We also asked parties to address MAP's argument that if we allow
noncommercial licensees to include advertising in any ancillary or
supplementary services, these licensees should pay a fee comparable to
that imposed on commercial broadcasters.
37. Comments. All NCE licensees that responded to this issue
support granting NCE licensees an exemption from any assessment of fees
on revenues earned by use of their digital spectrum for ancillary or
supplementary services when those revenues are used to fund mission-
related activities. AAPTS argues that although section 336 requires us
to collect a fee when a licensee uses its digital spectrum for
ancillary or supplementary service, when the revenue is used to support
noncommercial services that are in the public interest, there is no
need to ``recover'' anything for the public, as the revenue is already
devoted to that purpose. AAPTS also argues that because these revenues
help to support noncommercial activities, the provision of ancillary or
supplementary services would not result in any ``unjust enrichment'' of
the stations. AAPTS asserts that the provision in section 336 governing
the amount to be recovered through any fee, i.e., the amount that would
have been received if the excess digital spectrum had been subject to
competitive bidding, makes no sense in the context of public
television, as our competitive bidding authority does not apply to
licenses issued to public television. In addition, the Curators of the
University of Missouri (``Curators''), the licensee of commercial VHF
station KOMU-TV, an NBC affiliate, urge us to make clear that
governmental licensees are exempt from paying fees for ancillary or
supplementary DTV services.
38. Go, Inc., Goodlife Broadcasting, Inc. and Central Florida
Educational Foundation (filing collectively as ``Hardy & Carey
Clients'') and AAPTS contend that such an exemption would be consistent
with Congressional policy to provide support to public television.
AAPTS notes that Congress has exempted public television from fees on
various occasions, and it would be counterproductive to detract from
the federal financial assistance for public broadcasting and place
additional pressure on that support by imposing a DTV fee. Hardy &
Carey Clients and Family Stations of New Jersey, Inc. (``Family NJ'')
also contend that imposing such fees could slow the transition to DTV
and undermine the ability of noncommercial stations to sustain their
operations.
39. UCC et al., however, supports exempting NCE licensees from DTV
fees only if the licensees are not permitted to provide advertiser-
supported ancillary or supplementary services. It contends that the
plain language of section 336(e) requires that fees be paid to recover
a portion of the public spectrum resource made available for commercial
use, and that AAPTS is inconsistent in arguing that section 336 makes
no distinction between noncommercial and commercial broadcasters for
the purpose of offering ancillary or supplementary services, but then
reading into the statute a distinction to exempt NCEs from paying fees
for providing such services.
40. Decision. We conclude that NCE licensees are not exempt from
the requirement to pay fees on revenues generated by the remunerative
use of their excess digital capacity, even when those revenues are used
to support their mission-related activities. Section 336(e)(1) of the
1996 Act does not support exempting NCE licensees from DTV fees or
charging them nominal fees when they offer feeable ancillary or
supplementary services as a source of funding for their mission-related
activities. It draws no distinction between commercial and
noncommercial stations, stating that the Commission ``shall establish a
program to assess and collect. * * * an annual fee'' from DTV licensees
offering subscription-based ancillary or supplementary services. The
statute requires that a fee be assessed upon any ancillary or
supplementary services on DTV spectrum ``for which the payment of a
subscription fee is required in order to receive such services'' or
``for which the licensee directly or indirectly receives compensation
from a third party in return for transmitting materials furnished by
such third party.''
41. As noted above, section 336 requires, among other things, that
the amount of the fee be designed to recover for the public an amount
that would have been received had feeable ancillary or supplementary
services been licensed pursuant to competitive bidding. We are not
persuaded by AAPTS's argument that this provision makes no sense in the
context of public television licensees because they are not subject to
competitive bidding. The Commission was not directed to take into
account the amount of money that would have been recovered had
broadcasters purchased this spectrum through competitive bidding.
Rather, the provision refers to the amount of money that would have
been recovered if spectrum had been made available for these kinds of
ancillary or supplementary services and had been licensed pursuant to
auction. Indeed, existing commercial broadcasters were also statutorily
exempt from competitive bidding for initial digital television
licenses. Thus, under AAPTS's reading, all existing commercial
broadcasters that received initial DTV licenses under section 336(a)
would also be exempt from the fee, making the fee provision almost
meaningless. We therefore reject AAPTS's argument.
42. Consequently, we will amend Sec. 73.624(g) of our rules to
apply to NCE licensees the same program for assessing and collecting
fees upon feeable ancillary or supplementary services provided on their
DTV capacity that we established for commercial licensees in the DTV
Fees Proceeding, as required by the 1996 Act. NCE licensees will be
required to report to us annually on December 1 on their use of their
digital bitstreams, and remit fees of five percent of their gross
revenues received for feeable ancillary or supplementary services
provided on their digital bitstreams. For the first report filed on
December 1, 2002, NCE licensees are to report only on services provided
from the effective date of this Report and Order through September 30,
2002. We will amend form FCC 317, which currently is used to collect
information on DTV ancillary or supplementary use by commercial TV
licensees, to include NCE licenses. We will release a Public Notice
with a copy of the revised form once it is approved by the Office of
Management and Budget.
43. Finally, we also conclude that the Curators of the University
of Missouri, the licensee of commercial VHF station KOMU-TV, an NBC
affiliate, is not exempt from the requirement to pay fees on revenues
generated by the remunerative use of its excess digital capacity, even
when those revenues are used to support noncommercial services that are
in the public interest. Although Curators is a not-for-profit
governmental entity that we have exempted from paying certain
application and regulatory fees, section 336(e)(1) does not distinguish
between governmental and nongovernmental licensees with respect to the
requirement to pay DTV fees. Curators are therefore subject to the
program for assessing and collecting fees upon feeable ancillary or
supplementary services provided on their DTV capacity that we
established for commercial licensees in the DTV Fees Report and Order
in MM Docket No. 97-247, and apply to NCE licenses in this proceeding.
[[Page 58980]]
44.We are sensitive to NCE licensees' need to provide funding to
support their programming and operations and their transition to DTV.
As described above, NCE licensees will be able to use their ancillary
or supplementary services for remunerative purposes, and earn
advertising revenue, as well, on ancillary or supplementary services.
45. We also note that we have previously recognized the financial
difficulties often faced by NCE licensees. For example, the
construction timetable we adopted in the Fifth Report and Order
provides noncommercial stations a six-year period within which to
construct their DTV facilities, the longest construction period
allotted to any category of DTV applicant. In the Fifth Report and
Order, we also stated that special relief measures may eventually be
warranted to assist public television stations to make the transition
to DTV, but we concluded that it was premature to determine what those
specific measures should be. We stated then, and we continue to
believe, that determining the specific nature of whatever special
relief may be needed for noncommercial educational broadcasters is best
considered during our periodic reviews.
D. Administrative Matters
46. Paperwork Reduction Act of 1995 Analysis. The action contained
herein has been analyzed with respect to the Paperwork Reduction Act of
1995 and found to impose new or modified reporting and recordkeeping
requirements or burdens on the public. Implementation of these new or
modified reporting and recordkeeping requirements will be subject to
approval by the Office of Management and Budget as prescribed by the
Act.
47. Accordingly, it is ordered that, pursuant to authority
contained in sections 4(i), 303, 336 and 399B of the Communications Act
of 1934, as amended, 47 U.S.C. 154(i), 303, 307, 336 and 399B, part 73
of the Commission's rules is amended as set forth.
48. A Final Regulatory Flexibility Analysis (``FRFA''), see 5
U.S.C. 604, is included in this Report and Order. It is further ordered
that the Commission's Compliance and Information Bureau, Reference
Information Center, shall send a copy of this Report and Order,
including the FRFA, to the Chief Counsel for Advocacy of the Small
Business Administration.
49. It is further ordered that, pursuant to the Contract with
America Advancement Act of 1996, the rule amendments set forth shall be
effective on the later of either December 26, 2001, or upon receipt by
Congress of a report in compliance with the Contract with America
Advancement Act of 1996, Public Law 104-121.
50. It is further ordered that implementation of the new or
modified reporting and recordkeeping requirements imposed by this
action shall be effective upon approval by the Office of Management and
Budget as prescribed by the Paperwork Reduction Act of 1995.
51. It is further ordered that this proceeding is terminated.
Final Regulatory Flexibility Analysis
As required by the Regulatory Flexibility Act (RFA), an Initial
Regulatory Flexibility Analysis (IRFA), was incorporated in the Notice
of Proposed Rule Making (NPRM) in this proceeding. The Commission
sought written public comment on the proposals in the NPRM, including
comment on the IRFA. This present Final Regulatory Flexibility Analysis
(FRFA) conforms to the RFA.
A. Need for, and Objectives of, the Report and Order: With this
Report and Order, the Commission clarifies the manner in which
noncommercial educational (NCE) television licensees may use their
excess digital television (DTV) capacity for remunerative purposes. The
objectives of this Report and Order are to: (1) Require NCE licensees
to use their entire digital capacity primarily for a nonprofit,
noncommercial, educational broadcast service; (2) clarify that NCE
licensees may provide subscription television services; (3) determine
that although NCE licensees are prohibited form including advertising
on their broadcasting services, they may include advertising on
nonbroadcast services, such as subscription services, provided on their
DTV channels; and (4) require NCE licensees to pay fees on revenues
generated by the remunerative use of their excess digital capacity.
The action taken with respect to the first objective amends
Sec. 73.621 of the Commission's rules to require NCE licensees to use
their entire digital capacity primarily for a nonprofit, noncommercial,
educational broadcast service. Although the Report and Order declined
to quantify the term ``primarily,'' it states that it considers it to
mean a ``substantial majority'' of NCE licensees' entire digital
capacity. Because stations typically schedule their programming on a
weekly basis, it requires NCE TV licensees to use their entire
bitstream primarily for nonprofit, noncommercial, educational broadcast
services on a weekly basis. This action adapts Sec. 73.621 of the
Commission's rules to the digital environment.
The action taken with respect to the second objective amends
Secs. 73.642 and 73.644 of the Commission's rules to allow NCE
licensees to provide subscription television services. It is taken
because the Commission included subscription services in its definition
of ancillary and supplementary services in the Fifth Report and Order
that may be provided by DTV licensees, and because such action advances
the Commission's goal of providing NCE licensees with flexibility in
the use of their digital spectrum, within certain boundaries.
The action taken with respect to the third objective determines
that section 399B, the provision of the Communications Act restricting
advertising by NCE licensees, continues to apply to all broadcasting by
NCE licensees, but does not apply to nonbroadcast services, such as
subscription services, provided on their DTV channels. This action
maintains the integrity of NCE licensees' nonprofit, noncommercial,
educational service on their free over-the-air video programming, while
allowing NCE licensees some flexibility to use their ancillary and
supplementary services for remunerative purposes.
The action taken with respect to the fourth objective amends
Sec. 73.624(g) of the Commission's rules to apply to NCE licensees the
program for assessing and collecting fees upon feeable ancillary or
supplementary services provided on their DTV capacity that the
Commission established for commercial DTV licensees. This action is
taken because section 336(e) of the Telecommunications Act of 1996
requires the Commission, without distinguishing between commercial and
NCE DTV licensees, to return to the public a portion of the fees or
certain other compensation earned by DTV licensees for ancillary and
supplementary services provided on their DTV spectrum.
B. Summary of Significant Issues Raised by Public Comments in
Response to the IRFA: No comments were received specifically in
response to the IRFA attached to the NPRM. No small business issues
were raised specifically in the comments responsive to the NPRM.
C. Description and Estimate of the Number of Small Entities to
Which the Rules Would Apply: The RFA directs agencies to provide a
description of and, where feasible, an estimate of the number of small
entities that may be affected by the proposed rules, if adopted. The
RFA generally defines the term ``small entity'' as having the same
meaning as the terms ``small business,'' ``small organization,'' and
``small
[[Page 58981]]
governmental jurisdiction.'' In addition, the term ``small business''
has the same meaning as the term ``small business concern'' under the
Small Business Act. A ``small business concern'' is one which: (1) Is
independently owned and operated; (2) is not dominant in its field of
operation; and (3) satisfies any additional criteria established by the
Small Business Administration (SBA). The RFA generally defines the term
``small organization'' to mean ``any not-for-profit enterprise which is
independently owned and operated and is not dominant in its field.'' A
small organization is generally ``any not-for-profit enterprise which
is independently owned and operated and is not dominant in its field.''
The rules and policies adopted in this Report and Order will apply
to noncommercial educational (NCE) television licensees, particularly
those television stations licensed to operate on channels reserved as
``noncommercial educational.'' For RFA purposes, television
broadcasting stations consist of establishments primarily engaged in
broadcasting visual programs by television to the public, except cable
and other pay television services. Included in this industry are
commercial, religious, educational, and other television stations. Also
included are establishments primarily engaged in television
broadcasting and that produce taped television program materials. There
were 1,678 operating television broadcasting stations in the nation as
of June 30, 2001, of which 374 were noncommercial educational stations.
FCC News Release ``Broadcast Station Totals as of June 30, 2001,''
issued July 19, 2001. The SBA has determined that television
broadcasters are considered small when they have $10.5 million or less
in annual revenue. 13 CFR 121, NAICS Code 51312.
NCE TV licensees, by virtue of their nonprofit, noncommercial,
educational broadcasting operations, generate less revenue than
commercial TV licensees and are more likely than commercial TV
broadcasters to experience financial difficulties in constructing their
DTV facilities and making the transition to DTV broadcasting. NCE TV
licensees depend partially on fundraising activities and grants from
the Corporation for Public Broadcasting to support their programming
and operations and their transition to DTV. Based on such differences
between typical commercial TV licensees and typical NCE TV licensees,
and based on the concern that NCE TV licensees may be differently
impacted by the rule amendments and other actions taken in this Report
and Order, we choose to separate out NCE TV licensees as smaller
entities in the context established herein by the RFA. Therefore, of
the 1,678 television stations previously noted, we will consider the
374 NCE TV stations to be smaller entities in the context established
herein by the RFA.
At this time, the Commission does not have access to information
about the annual revenues of NCE stations. The Commission is therefore
unable to distinguish between NCE broadcasters based on their annual
revenues. However, based on the differences between typical commercial
TV licensees and typical NCR TV licensees, and based on the concern
that NCE TV licensees may be differently impacted by the rule
amendments and other actions taken in this Report and Order, we choose
to separate out NCE TV licensees as smaller entities in the context
established herein by the RFA.
D. Description of Projected Reporting, Recordkeeping, and Other
Compliance Requirements: The Report and Order adopts modifications to
existing reporting and recordkeeping requirements. The fee program
established herein will require NCE TV licensees annually to file a new
reporting form. Licensees will be required to report whether they
provided ancillary or supplementary services, what ancillary or
supplementary services they provided, which of those services are
subject to a fee, and the gross revenues received from all feeable
ancillary or ancillary services. NCE licensees providing service
subject to a fee additionally will be required annually to file FCC
Form 159 in remittance of the fee. So that we may audit NCE licensees
records supporting the calculation of the fees due, each NCE licensee
will be required to retain such records for three years from the date
of remittance of fees. In addition, each NCE TV licensee will be
required to maintain documentation sufficient to show compliance at
renewal time and in response to any complaint with the requirement to
use their entire bitstream primarily for nonprofit, noncommercial,
educational broadcast services on a weekly basis.
All these new recordkeeping and reporting requirements will apply
to all NCE TV licensees in the same way. Therefore, the action taken
here imposes no separate or greater compliance burdens on smaller
commercial or non-commercial TV stations within the group of all
stations hereby affected.
E. Steps Taken to Minimize Significant Economic Impact on Small
Entities, and Significant Alternatives Considered: With respect to
steps taken to minimize significant economic impact on small entities,
the actions taken herein will enhance NCE TV licensees' ability to
provide funding to support their programming and operations and their
transition to DTV. As described above, NCE licensees will be able to
use a portion of their digital capacity for remunerative purposes,
including the provision of advertising on their non-broadcast ancillary
and supplementary services. We also note that the Commission has
previously recognized the financial difficulties often faced by NCE
licensees. For example, the construction timetable adopted in the Fifth
Report and Order provides noncommercial stations a six-year period
within which to construct their DTV facilities, the longest
construction period allotted to any category of DTV applicant. The
Fifth Report and Order also stated that special relief measures may
eventually be warranted to assist public television stations to make
the transition to DTV, but concluded that it was premature to determine
what those specific measures should be. The Commission stated then, and
continues to believe, that determining the specific nature of whatever
special relief may be needed for noncommercial educational broadcasters
is best considered during the Commission's periodic reviews. Lastly,
the Commission is considering all NCE broadcasters to be small for the
purposes of this RFA analysis.
With respect to significant alternatives considered with respect to
the first objective, the Commission considered applying Sec. 73.621 of
the Commission's rules to only the one free-over-the-air video
broadcast required of all DTV licensees, allowing NCE TV licensees
commercial use on their remaining digital capacity. This alternative
was not adopted because the Commission believed that it would conflict
with Sec. 73.621, which requires that public television stations
furnish primarily an educational as well as a nonprofit and
noncommercial broadcast service.
Another significant alternative to the first objective considered
requiring NCE TV licensees to provide free, not-for-profit over-the-air
services over 50 percent or more of their digital capacity at any one
time. This alternative was not adopted as such a decision would provide
substantially less flexibility to NCE licensees in developing their
digital services. For example, an NCE licensee might want to use most
of its digital capacity for High Definition Television (``HDTV'')
programming during certain times of the day and, at
[[Page 58982]]
other times, various amounts of capacity for Standard Definition
Television (``SDTV'') programming and remunerative ancillary or
supplementary services.
With respect to the second objective, a significant alternative
considered prohibiting NCE TV licensees from providing subscription
services on their excess digital capacity. This alternative was not
adopted because the Commission had included such services in the
definition of ancillary or supplementary services in the Fifth Report
and Order. Moreover, given the Commission's goal of providing NCE
licensees with flexibility in the use of their digital spectrum, within
certain boundaries, there seemed to be no reason to prohibit them from
providing subscription services. Moreover, the ability to provide such
a remunerative service is positive.
With respect to significant alternatives considered to the third
objective, the Commission considered interpreting section 399B of the
Communications Act as prohibiting all advertising on all of NCE TV
licensees' digital capacity. This alternative was not adopted because
the Commission decided that the better interpretation of the statute
was that the broadcasting of advertising is prohibited to NCE TV
licensees, but that they may include advertising on their non-broadcast
ancillary and supplementary services. Moreover, as the action allows
all stations affected to earn money from the provision of advertising,
the effect is positive.
With respect to significant alternatives to the fourth action
taken, the Commission considered collecting a reduced fee or no fee on
the gross revenues earned by NCE TV licenses from all feeable ancillary
and supplementary services. The Commission did not adopt either of
these alternatives because the Telecommunications Act of 1996, without
distinguishing between commercial TV licensees and NCE TV licensees,
requires it to collect fees from such revenues from DTV licensees. The
Commission will apply to NCE TV licensees the program for assessing and
collecting such fees that it established for commercial DTV licensees.
Although all NCE TV licensees, including small entity licensees, will
be required to pay these fees, they will be allowed to retain 95
percent of such revenues, which is a positive, impact.
Report to Congress: The Commission will send a copy of this Report
and Order, including this FRFA, in a report to Congress pursuant to the
Congressional Review Act. In addition, the Commission will send a copy
of this Report and Order, including this FRFA, to the Chief Counsel or
Advocacy of the SBA. A copy of this Report and Order, including this
FRFA, will also be published in the Federal Register.
List of Subjects in 47 CFR Part 73
Radio Broadcast Services.
Federal Communications Commission.
Magalie Roman Salas,
Secretary.
Rule Changes
For the reasons discussed in the preamble, the Federal
Communications Commission amends 47 CFR part 73 as follows:
PART 73--RADIO BROADCAST SERVICES
1. The authority citation for part 73 continues to read as follows:
Authority: 47 U.S.C. 154, 303, 334, and 336.
2. Section 73.621 is amended by adding paragraph (i) to read as
follows:
Sec. 73.621 Noncommercial educational TV stations.
* * * * *
(i) With respect to the provision of advanced television services,
the requirements of this section will apply to the entire digital
bitstream of noncommercial educational television stations, including
the provision of ancillary or supplementary services.
3. Section 73.624 is amended by revising paragraph (g) introductory
text, and the first sentence in paragraphs (g)(2)(i) and (g)(2)(ii) to
read as follows:
Sec. 73.624 Digital television broadcast stations.
* * * * *
(g) Commercial and noncommercial DTV licensees must annually remit
a fee of five percent of the gross revenues derived from all ancillary
or supplementary services, as defined by paragraph (b) of this section,
which are feeable, as defined in paragraphs (g)(2)(i) through (ii) of
this section.
* * * * *
(2) Payment of fees. Each December 1, all commercial and
noncommercial DTV licensees will electronically report whether they
provided ancillary or supplementary services in the twelve-month period
ending on the preceding September 30. * * *
(ii) If a commercial or noncommercial DTV licensee has provided
feeable ancillary or supplementary services at any point during a
twelve-month period ending on September 30, the licensee must
additionally file the FCC's standard remittance form (Form 159) on the
subsequent December 1. * * *
* * * * *
4. Section 73.642 is amended by revising paragraph (a)(1), the
first sentence in paragraph (b) and paragraph (e) introductory text, to
read as follows:
Sec. 73.642 Subscription TV service.
(a) * * *
(1) Licensees and permittees of commercial and noncommercial TV
stations, and
* * * * *
(b) A licensee or permittee of a commercial or noncommercial TV
station or a low power TV station may begin subscription TV service
upon installation of encoding equipment having advance FCC approval. *
* *
* * * * *
(e) A licensee or permittee of a commercial or noncommercial TV
broadcast or low power TV station may not transmit a subscription
service if it has a contract, arrangement, or understanding expressed
or implied, that:
* * * * *
5. Section 73.644 is amended by revising the first sentence in
paragraph (a) to read as follows:
Sec. 73.644 Subscription TV transmission systems.
(a) Licensees and permittees of commercial and noncommercial TV
broadcast and low power TV stations may conduct subscription operations
only by using an encoding system that has been approved in advance by
the FCC. * * *
* * * * *
[FR Doc. 01-29232 Filed 11-23-01; 8:45 am]
BILLING CODE 6712-01-P