80 FR 16347 - Carriage of Digital Television Broadcast Signals

FEDERAL COMMUNICATIONS COMMISSION

Federal Register Volume 80, Issue 59 (March 27, 2015)

Page Range16347-16354
FR Document2015-06943

In this document, the Commission seeks comment on a Petition for Rulemaking filed by the American Cable Association (``ACA'') requesting, among other things, that the Commission extend for an additional three years the exemption from the requirement to carry high definition (``HD'') broadcast signals under the ``material degradation'' provisions of the Communications Act of 1934, as amended (``the Act'') that it granted to certain small cable systems in the 2012 Fifth Report and Order. This exemption is slated to expire on June 12, 2015 absent further action by the Commission. We tentatively conclude that the public interest would be served by extending the HD carriage exemption for three years, or until June 12, 2018.

Federal Register, Volume 80 Issue 59 (Friday, March 27, 2015)
[Federal Register Volume 80, Number 59 (Friday, March 27, 2015)]
[Proposed Rules]
[Pages 16347-16354]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-06943]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 76

[CS Docket No. 98-120; FCC 15-29]


Carriage of Digital Television Broadcast Signals

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: In this document, the Commission seeks comment on a Petition 
for Rulemaking filed by the American Cable Association (``ACA'') 
requesting, among other things, that the Commission extend for an 
additional three years the exemption from the requirement to carry high 
definition (``HD'') broadcast signals under the ``material 
degradation'' provisions of the Communications Act of 1934, as amended 
(``the Act'') that it granted to certain small cable systems in the 
2012

[[Page 16348]]

Fifth Report and Order. This exemption is slated to expire on June 12, 
2015 absent further action by the Commission. We tentatively conclude 
that the public interest would be served by extending the HD carriage 
exemption for three years, or until June 12, 2018.

DATES: Comments are due on or before April 16, 2015; reply comments are 
due on or before April 27, 2015. Written comments on the Paperwork 
Reduction Act potential information collection requirements must be 
submitted by the public, Office of Management and Budget (OMB), and 
other interested parties on or before May 26, 2015.

ADDRESSES: You may submit comments, identified by CS Docket No. 98-120, 
by any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Federal Communications Commission's Web site: http://fjallfoss.fcc.gov/ecfs2/. Follow the instructions for submitting 
comments.
     Mail: Filings can be sent by hand or messenger delivery, 
by commercial overnight courier, or by first-class or overnight U.S. 
Postal Service mail. All filings must be addressed to the Commission's 
Secretary, Office of the Secretary, Federal Communications Commission.
     People with Disabilities: Contact the FCC to request 
reasonable accommodations (accessible format documents, sign language 
interpreters, CART, etc.) by email: [email protected] or phone: (202) 418-
0530 or TTY: (202) 418-0432.
    In addition to filing comments with the Secretary, a copy of any 
comments on the Paperwork Reduction Act potential information 
collection requirements contained herein should be submitted to the 
Federal Communications Commission via email to [email protected]. For 
detailed instructions for submitting comments and additional 
information on the rulemaking process, see the SUPPLEMENTARY 
INFORMATION section of this document.

FOR FURTHER INFORMATION CONTACT: Raelynn Remy of the Policy Division, 
Media Bureau at (202) 418-2120 or [email protected]. For additional 
information concerning the Paperwork Reduction Act information 
collection requirements contained in this document, send an email to 
[email protected] or contact Cathy Williams at (202) 418-2918.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Fifth 
Further Notice of Proposed Rulemaking (``Fifth FNPRM''), FCC 15-29, 
adopted on March 11, 2015 and released on March 12, 2015. The full text 
is available for public inspection and copying during regular business 
hours in the FCC Reference Center, Federal Communications Commission, 
445 12th Street SW., Room CY-A257, Washington, DC 20554. This document 
will also be available via ECFS at http://fjallfoss.fcc.gov/ecfs/. 
Documents will be available electronically in ASCII, Microsoft Word, 
and/or Adobe Acrobat. The complete text may be purchased from the 
Commission's copy contractor, 445 12th Street SW., Room CY-B402, 
Washington, DC 20554. Alternative formats are available for people with 
disabilities (Braille, large print, electronic files, audio format), by 
sending an email to [email protected] or calling the Commission's Consumer 
and Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 418-
0432 (TTY).
    The Fifth FNPRM seeks comment on potential information collection 
requirements. If the Commission adopts any information collection 
requirements, the Commission will publish a notice in the Federal 
Register inviting the public to comment on the requirements, as 
required by the Paperwork Reduction Act of 1995, Public Law 104-13 (44 
U.S.C. 3501 through 3520). In addition, pursuant to the Small Business 
Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 
3506(c)(4), the Commission seeks specific comment on how it might 
``further reduce the information collection burden for small business 
concerns with fewer than 25 employees.'' The Commission, as part of its 
continuing effort to reduce paperwork burdens, invites the general 
public and the Office of Management and Budget (OMB) to comment on the 
information collection requirements contained in this document, as 
required by the Paperwork Reduction Act of 1995, Public Law 104-13. 
Public and agency comments are due May 26, 2015.

Synopsis

I. Introduction

    1. In this Fifth FNPRM, we seek comment on a Petition for 
Rulemaking filed by the American Cable Association (``ACA'') \1\ 
requesting, among other things, that the Commission extend for an 
additional three years the exemption from the requirement to carry high 
definition (``HD'') broadcast signals under the ``material 
degradation'' provisions of the Communications Act of 1934, as amended 
(``the Act'') \2\ that it granted to certain small cable systems in the 
Fifth Report and Order (``HD carriage exemption'').\3\ This exemption 
is slated to expire on June 12, 2015 absent further action by the 
Commission. As discussed below, we tentatively conclude that the public 
interest would be served by extending the HD carriage exemption for 
three years, or until June 12, 2018. We set forth below a brief history 
of the HD carriage exemption and a summary of ACA's arguments in 
support of its Petition, and seek comment on our tentative conclusion 
to grant ACA's proposal.
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    \1\ See American Cable Association Petition for Rulemaking, CS 
Docket No. 98-120 (filed Jan. 27, 2015) (``Petition'').
    \2\ See 47 U.S.C. 534(b)(4)(A), 535(g)(2) (material degradation 
requirements relating to signals of local commercial and 
noncommercial television stations, respectively).
    \3\ See Carriage of Digital Television Broadcast Signals: 
Amendment to Part 76 of the Commission's rules, Docket No. CS 98-
120, Fifth Report and Order, 77 FR 36178 (2012) (``Fifth Report and 
Order'').
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II. Background

    2. Sections 614(b)(4)(A) and 615(g)(2) of the Act require that 
cable operators carry signals of commercial and noncommercial broadcast 
television stations, respectively, ``without material degradation.'' 
\4\ In the context of the carriage of digital signals, the Commission 
has interpreted this requirement: (i) To prohibit cable operators from 
discriminating in their carriage between broadcast and non-broadcast 
signals; and (ii) to require cable operators to carry HD broadcast 
signals to their viewers in HD.\5\ In response to concerns from small 
cable operators about cost and technical capacity, the Commission, in 
the 2008 Fourth Report and Order, granted a three-year exemption from 
the HD carriage requirement to certain small cable systems.\6\ 
Specifically, the Commission exempted small cable systems with 2,500 or 
fewer subscribers that are not affiliated with a cable operator serving 
more than 10 percent of all MVPD subscribers, and those with an 
activated channel capacity of 552 MHz or less.
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    \4\ See section 614(b)(4)(A) of the Act (47 U.S.C. 
534(b)(4)(A)). See also Section 615(g)(2) of the Act. See 47 U.S.C. 
535(g)(2). See also 47 CFR 76.62(b) through (d), (h).
    \5\ See Carriage of Digital Television Broadcast Signals: 
Amendment to Part 76 of the Commission's rules, Docket No. CS 98-
120, Third Report and Order and Third Further Notice of Proposed 
Rulemaking, 73 FR 6043 (2007) (``Viewability Order'').
    \6\ See Carriage of Digital Television Broadcast Signals: 
Amendment to Part 76 of the Commission's rules, Docket No. CS 98-
120, Fourth Report and Order, 73 FR 61742 (2008) (``Fourth Report 
and Order'').

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[[Page 16349]]

    3. The exemption from this material degradation requirement permits 
such systems to carry broadcast signals in standard definition (``SD'') 
digital and/or analog format, even if the signals are broadcast in HD, 
so long as all subscribers can receive and view the signal.\7\ The 
Commission provided that the exemption would expire three years after 
the conclusion of the DTV transition, but stated that it would consider 
whether to extend the exemption in its final year.\8\ After conducting 
that review,\9\ the Commission, in the 2012 Fifth Report and Order, 
extended for an additional three years, or until June 12, 2015, the HD 
carriage exemption for certain small cable systems.\10\ The Commission 
stated that the exemption was not intended to be permanent and that its 
purpose was ``to provide small systems additional time to upgrade and, 
where necessary, expand their systems to come into full compliance with 
the material degradation provisions . . . by carrying HD versions of 
all HD broadcast signals without having to make relatively large 
expenditures over a short period of time.'' \11\
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    \7\ Id., para. 5. The Commission concluded that cable operators, 
regardless of system size, need not carry an SD digital version of a 
broadcast station's signal, in addition to the analog version, to 
satisfy the material degradation requirement, because both an SD 
digital version and an analog version of the digital broadcast 
signal received at the headend should have the same 480i resolution; 
thus, there should be no perceivable difference between the two 
versions of the signal. Id.
    \8\ See id., para. 11. See also Carriage of Digital Television 
Broadcast Signals: Amendment to Part 76 of the Commission's rules, 
Docket No. CS 98-120, Fourth Further Notice of Proposed Rulemaking 
and Declaratory Order, 77 FR 9187 (2012) (``Fourth Further 
Notice''). The exemption would have expired on February 17, 2012, if 
Congress had not delayed the DTV transition date from February 17, 
2009 until June 12, 2009. Id. In the 2012 Declaratory Order 
accompanying the Fourth Further Notice, the Commission clarified 
that the HD carriage exemption was effective until June 12, 2012 
because the HD exemption was intended to remain in effect for three 
full years from the DTV transition date. Id.
    \9\ See id., para. 3.
    \10\ See id. The Commission extended the exemption based on its 
finding that the same financial and capacity constraints that 
confronted small cable operators when it initially granted the 
exemption in 2008 continued to exist. Id., para. 21. In particular, 
the Commission found that the exemption ``remains necessary to 
protect the viability of small systems and their service to rural 
and smaller market consumers.'' Id.
    \11\ Id., para. 22. The Commission declined to restrict the 
exemption further by eliminating its application to systems that 
carry any signal in HD, as suggested by the National Association of 
Broadcasters (``NAB''). In so doing, the Commission reasoned that 
the exemption had already been crafted narrowly to excuse only a 
limited number of systems with certain capacity constraints or low 
subscribership, and that a small system's ability to offer some HD 
service did not necessarily render that system capable of offering 
additional HD service. Id., para. 23. The Commission also expressed 
concern that restricting the exemption further would create a 
disincentive for systems to offer more HD programming incrementally. 
Id.
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    4. On January 28, 2015, ACA filed its Petition requesting that the 
Commission: (i) Commence a rulemaking proceeding to extend for an 
additional three years the HD carriage exemption; and (ii) clarify that 
analog-only cable systems are not required, and have never been 
required, to transmit must-carry signals in HD.\12\ In general, ACA 
contends that the HD carriage exemption has worked as intended by 
providing eligible systems with additional time to provide must-carry 
signals in HD, but that the exemption is still needed to protect a 
small number of systems and their subscribers from the potential costs 
and service disruptions that would result from immediate compliance 
with an HD carriage requirement.\13\ In support of its request for an 
extension, ACA points to data from a recent survey \14\ that shows that 
roughly 6%, or 53 of its members, continue to rely on it.\15\
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    \12\ See Petition at 1-2, 18.
    \13\ Id. at 2.
    \14\ ACA conducted an online survey of its members from October 
2 through October 22, 2014 to determine the number of systems still 
relying on the HD carriage exemption. Id. at 4, n.8. ACA represents 
approximately 840 independent MVPDs that serve about 7.4 million 
video subscribers primarily in smaller markets and rural areas. 
ACA's members range from family-run operations that serve a single 
town to multiple system operators with small systems. The median 
number of video subscribers per ACA member is 1,060. Id. at 4, n.9.
    \15\ Id. at 4-5.
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    5. With respect to the category of small systems that have a 
capacity of 552 MHz or less, ACA reports that 42 respondents (that 
account for at least 117 systems serving a total of 35,758 subscribers, 
or an average of 306 subscribers per system) continue to rely on the HD 
carriage exemption.\16\ Similarly, with respect to the category of 
systems that serve 2,500 or fewer subscribers and that are not 
affiliated with an operator serving more than 10 percent of all MVPD 
subscribers, ACA reports that 53 respondents (that account for 143 
systems serving a total of 49,790 subscribers, or an average of 348 
subscribers per system) \17\ still rely on the exemption.\18\ The 
survey reveals further that these systems offer an average of 2.5 must-
carry stations in a ``down-converted'' format only.\19\ Given this 
data, ACA asserts, imposing an HD carriage requirement at this time 
would be as detrimental to small systems today as it was when the 
Commission initially granted the exemption.\20\
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    \16\ Id. at 5. ACA asserts that the survey further indicates 
that: (i) Those systems offer an average of 2.3 must-carry stations 
in a down-converted format only; (ii) only 20.5% of those systems 
offer some HD television services; and (iii) 38.5% of those systems 
offer broadband service. Id. and Table 1.
    \17\ ACA reports that all 117 of the systems with a capacity of 
552 MHz or less also have fewer than 2,500 subscribers, and that 
81.8% of the systems with fewer than 2,500 subscribers also have a 
capacity of 552 MHz or less. See Petition at 5-6 and Tables 1, 2.
    \18\ Id. at 6. ACA asserts that the survey further indicates 
that: (i) Those systems offer an average of 2.5 must-carry stations 
in a down-converted format only; (ii) only 25.9% of those systems 
offer some HD television services; and (iii) 54.4% of those systems 
offer broadband service. Id. and Table 2.
    \19\ Id. Although ACA does not define ``down-converted format,'' 
we assume this term refers to a cable system's conversion of a high 
definition broadcast signal to standard definition when 
retransmitting the signal to subscribers.
    \20\ Id. at 3.
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    6. ACA argues that applying the HD carriage exemption to cable 
systems with 552 MHz or less of channel capacity is still justified 
because such systems continue to face significant bandwidth constraints 
that affect their ability to provide must-carry signals in both analog 
and HD format.\21\ To support its assertion, ACA points to survey data 
demonstrating that for 81% of respondents with a capacity of 552 MHz or 
less, the amount of unused channel capacity that is available for new 
channels or services either has decreased \22\ or remained the same 
\23\ in the past three years. ACA asserts further that a substantial 
majority of survey respondents in this category report that they cannot 
deliver HD signals without changing existing channels or services, and 
that it would be burdensome for them to make available channel capacity 
for HD signals.\24\ ACA contends that imposing an HD carriage 
requirement at this time would harm subscribers of these systems by 
forcing such systems: (i) To drop channels; (ii) to continue providing 
signals only in a down-converted format, thereby risking Commission 
enforcement action; or (iii) to cease operations entirely.\25\
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    \21\ Id. at 7-8.
    \22\ Id. at 8 and Table 4. According to ACA, the decrease in 
unused channel capacity has resulted from the need of operators to 
accommodate non-broadcast programmers that demand carriage of 
additional channels in exchange for access to, or less drastic rate 
increases for, popular non-broadcast channels. Id. at 8-9. ACA also 
attributes this decrease in capacity to the need of operators to 
allocate capacity for broadband services. Id. at 9.
    \23\ ACA asserts that the most common reason reported for no 
change in channel capacity was that the system was channel locked 
three years ago and remains the same today due to a lack of 
financial resources for capacity expansion or the absence of a 
business case to support such expansion. Id.
    \24\ Id. and Table 5.
    \25\ Id. at 10. ACA reports that 45.2% of survey respondents in 
this category would shut down their systems; 14.3% would drop 
existing channels; and 19% would risk Commission enforcement action 
rather than comply with an HD carriage requirement. Id.
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    7. ACA contends that extending the HD carriage exemption to cable 
systems

[[Page 16350]]

with 2,500 or fewer subscribers (and that are not affiliated with an 
operator serving more than 10 percent of all MVPD subscribers) also 
remains justified because such systems still lack the financial 
resources necessary to purchase equipment needed to provide HD 
signals.\26\ To support its assertion, ACA points to survey data 
showing that an overwhelming number of systems in this category 
reported that their net income from video services has declined over 
the last three years.\27\ ACA contends, based on its survey, that many 
such systems would need to purchase additional equipment to offer must-
carry signals in HD, and that doing so would be financially burdensome 
for them.\28\ ACA argues that requiring these systems to transmit HD 
signals would force them to absorb the equipment costs or pass such 
costs on to subscribers, and that these harms far outweigh any benefits 
derived from an HD carriage mandate.\29\ ACA also highlights concerns 
about cost and compliance that may result from the upcoming broadcast 
spectrum incentive auction because the auction could result in fewer 
stations and/or channel sharing.\30\
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    \26\ Id. at 11-12.
    \27\ Id. at 12-13 and Table 6.
    \28\ Id. at 13-14.
    \29\ Id. at 14. ACA reports that 37.3% of cable systems in this 
category would shut down their systems rather than invest in the 
equipment needed to comply with an HD carriage requirement; 22% 
would risk Commission enforcement action; and 35.6% would absorb or 
pass along to their subscribers the cost of the requisite equipment. 
Id.
    \30\ Id. at 3, 15.
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    8. Moreover, ACA asserts that the number of cable systems relying 
on the HD carriage exemption is declining and will continue to decline 
over the next three years.\31\ In particular, ACA claims that more than 
200 fewer systems are using the HD exemption today than in 2012, and 
that by June 2018, only 73 of the 143 systems that are currently 
relying on the exemption are expected to still be in operation and meet 
the criteria for taking advantage of the exemption.\32\ ACA anticipates 
that this decline in the number of systems will result from system 
shutdowns or system upgrades to increase channel capacity.\33\ ACA 
argues that ``[g]iven . . . the trend of decreasing reliance . . . it 
is appropriate to extend the HD exemption for the relatively few 
remaining operators that continue to rely on the exemption.'' \34\
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    \31\ Id. at 15.
    \32\ Id. at 15-16. We note, however, that the number of ACA 
members reporting that they rely on the HD exemption has increased 
from 52 to 53. See Fifth Report and Order, 77 FR 36178 (2012).
    \33\ Petition at 15-16.
    \34\ Id. at 16.
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    9. Finally, ACA seeks a clarification that cable systems that offer 
video programming only in analog are not required, and have never been 
required, to transmit must-carry signals in HD because such carriage is 
not ``technically feasible'' within the meaning of section 614(b)(4)(A) 
of the Act and its implementing rules.\35\ In particular, ACA contends 
that:
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    \35\ As noted above, section 614(b)(4)(A) of the Act requires 
that cable operators transmit local broadcast signals ``without 
material degradation'' and directs the Commission to ``adopt 
carriage standards to ensure that, to the extent technically 
feasible, the quality of signal processing and carriage provided . . 
. will be no less than that provided . . . for the carriage of any 
other type of signal.'' See 47 U.S.C. 534(b)(4)(A) (emphasis added).

analog-only systems are unable to carry any HD signals. If an 
analog-only system had the capability of carrying an HD signal, 
which can only be done in digital format, the system would no longer 
be, by definition, an analog-only system. It would be a hybrid 
analog/digital system.\36\
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    \36\ See Petition at 17.

ACA claims that a small number of cable systems that rely on the HD 
carriage exemption would benefit from the requested clarification, and 
that this number is decreasing.\37\ Even so, ACA asserts, some analog-
only systems will remain in operation, and many of those systems 
provide the only available video service in rural areas where over-the-
air reception of broadcast signals is infeasible.\38\
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    \37\ Id.
    \38\ Id. ACA also asserts that in some cases, all-analog systems 
provide a locally operated, lower cost service that allows customers 
to receive basic cable programming without the need for set-top 
boxes. Id.
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III. Discussion

    10. We tentatively conclude that it would serve the public interest 
to extend the HD carriage exemption for an additional three years as 
requested by ACA. Based on the results of ACA's survey, we tentatively 
conclude that the exemption is still necessary to protect the 
subscribers of small cable systems from the costs and service 
disruptions that may result from requiring those systems to deliver HD 
signals in HD beginning in June 2015. We seek comment on this tentative 
conclusion. We also seek comment on whether we should retain or revise 
the definition of the category of small cable systems eligible for the 
exemption. The fact that small operators that continue to rely on the 
exemption have, on average, only 348 subscribers per system \39\ 
suggests that our current definition of ``small system'' is overly 
broad. To the extent parties assert that we should restrict further the 
category of small systems eligible for the exemption, what is the 
appropriate small system standard? What, if any, harms would accrue to 
small systems if we were to narrow further the category of systems 
eligible for the exemption? What, if any, benefits would result from 
narrowing the exemption?
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    \39\ Id. at 4-5.
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    11. We seek comment on whether any circumstances have changed since 
release of the Fifth Report and Order that weigh in favor of revisiting 
our decision not to eliminate the HD carriage exemption for systems 
carrying any signal in HD.\40\ As noted, ACA's data indicate that at 
least 20 percent of systems relying on the exemption are currently 
offering some HD digital television services.\41\ In particular, we 
request comment on whether there is any evidence that exempt systems 
that provide HD programming have discriminated unfairly against must-
carry HD signals in favor of other HD signals. We also request comment 
on whether systems that carry a significant amount of HD programming, 
such as ten HD channels, should continue to be able to qualify for the 
exemption.
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    \40\ As noted above, the Commission, in the Fifth Report and 
Order, declined to eliminate application of the HD carriage 
exemption to systems that carry any signal in HD on the grounds that 
a system's ability to offer some HD service did not refute an 
argument that offering additional HD service was burdensome, and 
that not allowing such systems to invoke the exemption would 
discourage them from taking incremental steps to offer more HD 
programming to subscribers.
    \41\ Petition at 5-6.
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    12. In addition, we seek comment on the costs and benefits of the 
exemption for broadcasters and cable subscribers. Commenters should 
quantify any asserted costs or benefits. We also request comment on 
whether any claimed benefits to small cable systems of extending the 
exemption for another three years would outweigh the costs to 
broadcasters and cable subscribers. How many, if any, small systems 
relying on the exemption have received complaints from subscribers 
about the absence or amount of HD programming available to them? ACA's 
data also reveal that some systems relying on the exemption currently 
provide broadband service.\42\ How many, if any, such systems would 
reduce or eliminate such service if required to carry HD signals in 
June 2015?
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    \42\ Id. at 5-7 and Tables 2, 3.
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    13. We also invite comment on whether an additional three years 
will provide adequate time for eligible systems to upgrade their 
facilities to

[[Page 16351]]

provide HD signals. Although ACA's data indicate that at least 200 
fewer cable systems are relying on the HD exemption today than did in 
2012, the data also indicate that the number of ACA cable operator 
members relying on the HD exemption has not changed significantly. 
Therefore, do these data points reflect actual progress of ACA members 
coming into compliance with the HD carriage requirement? For example, 
to what extent is the decrease in the number of systems relying on the 
exemption attributable to the fact that some operators have expanded 
system capacity to provide signals in HD (thus rendering them 
ineligible for the exemption), or the fact that systems have ceased 
operations? \43\ In addition, ACA estimates that more than 70 of the 
143 systems that currently invoke the exemption are expected to be 
eligible for the exemption in June 2018.\44\ To the extent some systems 
expect that they still will be unable to provide HD signals in three 
years, when would such systems likely be able to comply with an HD 
carriage requirement? That is, we invite comment on the plans of these 
small systems to upgrade to HD. We seek comment on whether there are 
any systems for which the costs of providing HD signals likely will 
outweigh the benefits for the indefinite future, and, if so, the 
projected number of such systems. We invite comment on any other issues 
that are relevant to our determination whether to extend the HD 
carriage exemption for small cable systems. We also seek comment on any 
other approach to this issue that would appropriately balance the 
interest of broadcast stations in being carried in HD and the technical 
and financial limitations some small cable operators face. In addition, 
we request comment on whether there is any merit to ACA's argument that 
requiring small systems to provide HD signals at this time would be 
inequitable given the uncertainty surrounding the broadcast spectrum 
incentive auction.
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    \43\ Although ACA states that ``some systems that relied on the 
HD exemption in the past no longer rely upon it because a business 
case materialized for an upgrade to occur,'' ACA also asserts that 
``system shutdowns [will be] the primary reason that there will be 
fewer systems relying on the HD exemption'' in the next three years. 
Petition at 16 and n.33. ACA thus contends that ``the benefit of the 
HD exemption is not only in avoiding the hastening of system 
closings, but in giving systems time to make upgrades possible.'' 
Id.
    \44\ Id. at 15-16.
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    14. We note that the HD exemption was not intended to be permanent 
and that, based on ACA's survey, a number of systems must make greater 
progress in complying with the HD carriage requirement. Assuming we 
were to adopt our tentative conclusion to extend the exemption for 
three more years, we seek comment on what steps we can take to 
facilitate such compliance within that time period. For example, should 
we require individual cable systems that rely on the exemption to file 
information with the Commission indicating such, so that we can better 
understand the particular technical and financial challenges faced by 
these systems and track each system's progress for coming into 
compliance with the HD carriage requirement?
    15. Finally, we seek comment on ACA's request for clarification 
that all-analog systems are not subject to the HD carriage requirement 
because such carriage is technically infeasible under Section 
614(b)(4)(A) of the Act and its implementing rules. How many cable 
systems that currently rely on the exemption are all-analog systems? To 
what extent are all-analog systems capable of passing the ATSC \45\ 
digital broadcast signal through to their customers for reception on 
digital televisions? What upgrades, if any, to an all-analog system's 
cable amplifiers and other equipment outside the headend would be 
required to support passing through the ATSC signal on a cable channel? 
What upgrades would be required in the headend?
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    \45\ Section 73.682(d) of the Commission's rules prescribes that 
digital broadcast television signals must comply with certain 
privately developed engineering protocols that the rule incorporates 
by reference. See 47 CFR 73.682(d). The channel identification data 
that a station transmits, for example, must comply with ``ATSC A/
65C: `ATSC Program and System Information Protocol for Terrestrial 
Broadcast and Cable, Revision C With Amendment No. 1 dated May 9, 
2006,' (January 2, 2006).'' Id.
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IV. Procedural Matters

A. Regulatory Flexibility Act

    16. As required by the Regulatory Flexibility Act of 1980, as 
amended (``RFA''),\46\ the Commission has prepared this Initial 
Regulatory Flexibility Act Analysis (``IRFA'') of the possible economic 
impact on a substantial number of small entities by the actions 
proposed in this Fifth FNPRM. Written public comments are requested on 
this IRFA. Comments must be identified as responses to the IRFA and 
must be filed by the deadlines for comments on the Fifth FNPRM as 
indicated on its first page. The Commission will send a copy of the 
Fifth FNPRM, including this IRFA, to the Chief Counsel for Advocacy of 
the Small Business Administration (``SBA'').\47\ In addition, the Fifth 
FNPRM and IRFA (or summaries thereof) will be published in the Federal 
Register.\48\
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    \46\ See 5 U.S.C. 603. The RFA, see 5 U.S.C. 601 through 612, 
has been amended by the Small Business Regulatory Enforcement 
Fairness Act of 1996 (``SBREFA''), Pub. L. 104-121, Title II, 110 
Stat. 857 (1996).
    \47\ See 5 U.S.C. 603(a).
    \48\ See id.
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1. Need for, and Objectives of, the Proposed Rule Changes
    17. In the accompanying Fifth FNPRM, the Commission seeks comment 
on, among other things, whether to extend for an additional three years 
the exemption from the requirement to carry high definition (``HD'') 
broadcast signals under the ``material degradation'' provisions of the 
Communications Act of 1934, as amended, that it granted to certain 
small cable systems in the 2012 Fifth Report and Order (``HD carriage 
exemption'').\49\ The Fifth FNPRM stems from a Petition for Rulemaking 
filed by the American Cable Association principally requesting that the 
Commission extend this exemption, which will expire on June 12, 2015 
without action by the Commission. In the Fifth FNPRM, the Commission 
tentatively concludes that the public interest would be served by 
extending the HD carriage exemption for three years, or until June 12, 
2018. In particular, the Commission tentatively concludes that the HD 
carriage exemption is still necessary to protect the subscribers of 
small cable systems from the costs and service disruptions that may 
result from requiring those systems to deliver HD signals in HD 
beginning in June 2015. The exemption applies to operators of cable 
systems with 2,500 or fewer subscribers that are not affiliated with a 
cable operator serving more than 10% of all MVPD subscribers, and to 
those with an activated channel capacity of 552 MHz or less.
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    \49\ See Fifth FNPRM at paras. 10-15.
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2. Legal Basis
    18. The authority for the action proposed in this rulemaking is 
contained in sections 4, 303, 614, and 615 of the Communications Act of 
1934, as amended, 47 U.S.C. 154, 303, 534, and 535.
3. Description and Estimates of the Number of Small Entities to Which 
the Proposed Rules Will Apply
    19. The RFA directs the Commission to provide a description of and, 
where feasible, an estimate of the number of small entities that will 
be affected by the proposed actions if adopted.\50\ The RFA generally 
defines the term ``small entity'' as having the same meaning as

[[Page 16352]]

the terms ``small business,'' ``small organization,'' and ``small 
governmental jurisdiction.'' \51\ In addition, the term ``small 
business'' has the same meaning as the term ``small business concern'' 
under the Small Business Act.\52\ 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).\53\ The action 
proposed herein will affect small cable system operators and small 
television broadcast stations. A description of these small entities, 
as well as an estimate of the number of such small entities, is 
provided below.
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    \50\ 5 U.S.C. 603(b)(3).
    \51\ 5 U.S.C. 601(b).
    \52\ 5 U.S.C. 601(3) (incorporating by reference the definition 
of ``small-business concern'' in the Small Business Act, 15 U.S.C. 
632). Pursuant to 5 U.S.C. 601(3), the statutory definition of a 
small business applies ``unless an agency, after consultation with 
the Office of Advocacy of the Small Business Administration and 
after opportunity for public comment, establishes one or more 
definitions of such term which are appropriate to the activities of 
the agency and publishes such definition(s) in the Federal 
Register.''
    \53\ 15 U.S.C. 632.
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    20. Cable Companies and Systems. The Commission has developed its 
own small business size standards for the purpose of cable rate 
regulation. Under the Commission's rules, a ``small cable company'' is 
one serving 400,000 or fewer subscribers nationwide.\54\ Industry data 
indicate that there are currently 660 cable operators.\55\ Of this 
total, all but ten cable operators nationwide are small under this size 
standard.\56\ In addition, under the Commission's rate regulation 
rules, a ``small system'' is a cable system serving 15,000 or fewer 
subscribers.\57\ Current Commission records show 4,629 cable systems 
nationwide.\58\ Of this total, 4,057 cable systems have less than 
20,000 subscribers, and 572 systems have 20,000 or more subscribers, 
based on the same records. Thus, under this standard, we estimate that 
most cable systems are small entities.
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    \54\ 47 CFR 76.901(e). The Commission determined that this size 
standard equates approximately to a size standard of $100 million or 
less in annual revenues.
    \55\ NCTA, Industry Data, Number of Cable Operators and Systems, 
http://www.ncta.com/Statistics.aspx (visited October 13, 2014). 
Depending upon the number of homes and the size of the geographic 
area served, cable operators use one or more cable systems to 
provide video service.
    \56\ See SNL Kagan, ``Top Cable MSOs--12/12 Q''; available at 
http://www.snl.com/InteractiveX/TopCableMSOs.aspx?period=2012Q4&sortcol=subscribersbasic&sortorder=desc.
    \57\ 47 CFR 76.901(c).
    \58\ The number of active, registered cable systems comes from 
the Commission's Cable Operations and Licensing System (COALS) 
database on October 10, 2014. A cable system is a physical system 
integrated to a principal headend.
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    21. Cable System Operators (Telecom Act Standard). The 
Communications Act of 1934, as amended, also contains a size standard 
for small cable system operators, which is ``a cable operator that, 
directly or through an affiliate, serves in the aggregate fewer than 1 
percent of all subscribers in the United States and is not affiliated 
with any entity or entities whose gross annual revenues in the 
aggregate exceed $250,000,000.'' \59\ There are approximately 54 
million cable video subscribers in the United States today.\60\ 
Accordingly, an operator serving fewer than 540,000 subscribers shall 
be deemed a small operator if its annual revenues, when combined with 
the total annual revenues of all its affiliates, do not exceed $250 
million in the aggregate.\61\ Based on available data, we find that all 
but ten incumbent cable operators are small entities under this size 
standard.\62\ We note that the Commission neither requests nor collects 
information on whether cable system operators are affiliated with 
entities whose gross annual revenues exceed $250 million.\63\ Although 
it seems certain that some of these cable system operators are 
affiliated with entities whose gross annual revenues exceed 
$250,000,000, we are unable at this time to estimate with greater 
precision the number of cable system operators that would qualify as 
small cable operators under the definition in the Communications Act.
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    \59\ 47 U.S.C. 543(m)(2); see 47 CFR 76.901(f) & nn. 1-3.
    \60\ See NCTA, Industry Data, Cable's Customer Base, http://www.ncta.com/industry-data (visited October 13, 2014).
    \61\ 47 CFR 76.901(f).
    \62\ See NCTA, Industry Data, Top 25 Multichannel Video Service 
Customers (2012), http://www.ncta.com/industry-data (visited Aug. 
30, 2013).
    \63\ The Commission does receive such information on a case-by-
case basis if a cable operator appeals a local franchise authority's 
finding that the operator does not qualify as a small cable operator 
pursuant to Section 76.901(f) of the Commission's rules. See 47 CFR 
76.901(f).
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    22. Open Video Systems. The open video system (OVS) framework was 
established in 1996, and is one of four statutorily recognized options 
for the provision of video programming services by local exchange 
carriers.\64\ The OVS framework provides opportunities for the 
distribution of video programming other than through cable systems. 
Because OVS operators provide subscription services,\65\ OVS falls 
within the SBA small business size standard covering cable services, 
which is ``Wired Telecommunications Carriers.'' \66\ The SBA has 
developed a small business size standard for this category, which is: 
All such businesses having 1,500 or fewer employees.\67\ Census data 
for 2007 shows that there were 3,188 firms that operated for that 
entire year.\68\ Of this total, 2,940 firms had fewer than 100 
employees, and 248 firms had 100 or more employees.\69\ Therefore, 
under this size standard, we estimate that the majority of these 
businesses can be considered small entities.
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    \64\ 47 U.S.C. 571(a)(3) through (4).
    \65\ See 47 U.S.C. 573.
    \66\ See 13 CFR 121.201, 2012 NAICS code 517110. This category 
of Wired Telecommunications Carriers is defined in part as follows: 
``This industry comprises establishments primarily engaged in 
operating and/or providing access to transmission facilities and 
infrastructure that they own and/or lease for the transmission of 
voice, data, text, sound, and video using wired telecommunications 
networks. Transmission facilities may be based on a single 
technology or a combination of technologies. Establishments in this 
industry use the wired telecommunications network facilities that 
they operate to provide a variety of services, such as wired 
telephony services, including VoIP services; wired (cable) audio and 
video programming distribution; and wired broadband Internet 
services.'' U.S. Census Bureau, 2012 NAICS Definitions, ``517110 
Wired Telecommunications Carriers,'' at http://www.census.gov/cgi-bin/sssd/naics/naicsrch.
    \67\ 13 CFR 121.201; 2012 NAICS code 517110.
    \68\ U.S. Census Bureau, 2007 Economic Census. See U.S. Census 
Bureau, American FactFinder, ``Information: Subject Series--Estab 
and Firm Size: Employment Size of Establishments for the United 
States: 2007--2007 Economic Census,'' NAICS code 517110, Table 
EC0751SSSZ5; available at http://factfinder2.census.gov/faces/tableservices/jsf/pages/productview.xhtml?pid=ECN_2007_US_51SSSZ5&prodType=table.
    \69\ Id.
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    23. Television Broadcasting. This economic Census category 
``comprises establishments primarily engaged in broadcasting images 
together with sound.'' \70\ The SBA has created the following small 
business size standard for such businesses: Those having $38.5 million 
or less in annual receipts.\71\ The 2007 U.S. Census indicates that 808 
firms in this category operated in that year. Of that number, 709 had 
annual receipts of $25,000,000 or less, and 99 had annual receipts of 
more than $25,000,000.\72\ Because the Census has no additional 
classifications that could serve as a basis for determining the number 
of stations whose receipts exceeded $38.5 million in that year, we 
conclude that the majority of television

[[Page 16353]]

broadcast stations were small under the applicable SBA size standard.
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    \70\ U.S. Census Bureau, 2012 NAICS Definitions, ``515120 
Television Broadcasting,'' at http://www.census.gov./cgi-bin/sssd/
naics/naicsrch.
    \71\ 13 CFR 121.201; 2012 NAICS code 515120.
    \72\ U.S. Census Bureau, Table No. EC0751SSSZ4, Information: 
Subject Series--Establishment and Firm Size: Receipts Size of Firms 
for the United States: 2007 (515120), http://factfinder2.census.gov/faces/tableservices/jsf/pages/productview.xhtml?pid=ECN_2007_US_51SSSZ4&prodType=table.
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    24. Apart from the U.S. Census, the Commission has estimated the 
number of licensed commercial television stations to be 1,387 
stations.\73\ Of this total, 1,221 stations (or about 88 percent) had 
revenues of $38.5 million or less, according to Commission staff review 
of the BIA Kelsey Inc. Media Access Pro Television Database (BIA) on 
July 2, 2014. In addition, the Commission has estimated the number of 
licensed noncommercial educational (NCE) television stations to be 
395.\74\ NCE stations are non-profit, and therefore considered to be 
small entities.\75\ Based on these data, we estimate that the majority 
of television broadcast stations are small entities.
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    \73\ See Broadcast Station Totals as of June 30, 2014, Press 
Release (MB rel. July 9, 2014) (Broadcast Station Totals) at https://apps.fcc.gov/edocs_public/attachmatch/DOC-328096A1.pdf.
    \74\ See Broadcast Station Totals, supra.
    \75\ See generally 5 U.S.C. 601(4), (6).
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    25. We note, however, that in assessing whether a business concern 
qualifies as ``small'' under the above definition, business (control) 
affiliations \76\ must be included. Because we do not include or 
aggregate revenues from affiliated companies in determining whether an 
entity meets the revenue threshold noted above, our estimate of the 
number of small entities affected is likely overstated. In addition, we 
note that one element of the definition of ``small business'' is that 
an entity not be dominant in its field of operation. We are unable at 
this time to define or quantify the criteria that would establish 
whether a specific television broadcast station is dominant in its 
field of operation. Accordingly, our estimate of small television 
stations potentially affected by the proposed rules includes those that 
could be dominant in their field of operation. For this reason, such 
estimate likely is over-inclusive.
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    \76\ ``[Business concerns] are affiliates of each other when one 
concern controls or has the power to control the other or a third 
party or parties controls or has the power to control both.'' 13 CFR 
21.103(a)(1).
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4. Description of Projected Reporting, Recordkeeping, and Other 
Compliance Requirements
    26. The accompanying Fifth FNPRM seeks comment on, among other 
things, whether to extend for an additional three years the HD carriage 
exemption, which would affect small cable system operators and 
television broadcast stations. The exemption benefits small cable 
system operators by providing them with continued flexibility, and 
imposes no new regulatory compliance burdens on small television 
broadcast stations who need take no action as a result of the proposed 
extension.
5. Steps Taken To Minimize Significant Economic Impact on Small 
Entities, and Significant Alternatives Considered
    27. The RFA requires an agency to describe any significant 
alternatives that it has considered in reaching its proposed approach, 
which may include the following four alternatives (among others): (1) 
The establishment of differing compliance or reporting requirements or 
timetables that take into account the resources available to small 
entities; (2) the clarification, consolidation, or simplification of 
compliance or reporting requirements under the rule for small entities; 
(3) the use of performance, rather than design, standards; and (4) an 
exemption from coverage of the rule, or any part thereof, for small 
entities.\77\ We seek comment on the applicability of any of these 
alternatives to affected small entities.
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    \77\ 5 U.S.C. 603(c)(1) through (c)(4).
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    28. Extending the HD carriage exemption likely would not have an 
adverse economic impact on any small entities, and would have a 
positive economic impact on small cable system operators that choose to 
take advantage of the exemption. In addition, extending the exemption 
would not impose any significant burdens on small television stations. 
We invite small entities to submit comment on the impact of extending 
the HD carriage exemption, and on how the Commission could minimize any 
potential burdens on small entities.
6. Federal Rules That May Duplicate, Overlap, or Conflict With the 
Proposed Rule
    29. None.

B. Paperwork Reduction Act

    30. This document seeks comment on potential information collection 
requirements. The Commission, as part of its continuing effort to 
reduce paperwork burdens, invites the general public and the Office of 
Management and Budget (OMB) to comment on the potential information 
collection requirements contained in this document, as required by the 
Paperwork Reduction Act of 1995, Public Law 104-13.\78\ In addition, 
pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 
107-198, see 44 U.S.C. 3506(c)(4), we seek specific comment on how we 
might further reduce the potential information collection burden for 
small business concerns with fewer than 25 employees.\79\
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    \78\ Paperwork Reduction Act of 1995 (``PRA''), Pub. L. 104-13, 
109 Stat 163 (1995) (codified in Chapter 35 of Title 44 U.S.C.).
    \79\ The Small Business Paperwork Relief Act of 2002 (SBPRA), 
Pub. L. 107-198, 116 Stat 729 (2002) (codified in Chapter 35 of 
title 44 U.S.C.); see 44 U.S.C. 3506(c)(4).
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C. Ex Parte Rules

    31. The proceeding this document initiates shall be treated as a 
``permit-but-disclose'' proceeding in accordance with the Commission's 
ex parte rules.\80\ Persons making ex parte presentations must file a 
copy of any written presentation or a memorandum summarizing any oral 
presentation within two business days after the presentation (unless a 
different deadline applicable to the Sunshine period applies). Persons 
making oral ex parte presentations are reminded that memoranda 
summarizing the presentation must (1) list all persons attending or 
otherwise participating in the meeting at which the ex parte 
presentation was made, and (2) summarize all data presented and 
arguments made during the presentation. If the presentation consisted 
in whole or in part of the presentation of data or arguments already 
reflected in the presenter's written comments, memoranda or other 
filings in the proceeding, the presenter may provide citations to such 
data or arguments in his or her prior comments, memoranda, or other 
filings (specifying the relevant page and/or paragraph numbers where 
such data or arguments can be found) in lieu of summarizing them in the 
memorandum. Documents shown or given to Commission staff during ex 
parte meetings are deemed to be written ex parte presentations and must 
be filed consistent with rule 1.1206(b). In proceedings governed by 
rule 1.49(f) or for which the Commission has made available a method of 
electronic filing, written ex parte presentations and memoranda 
summarizing oral ex parte presentations, and all attachments thereto, 
must be filed through the electronic comment filing system available 
for that proceeding, and must be filed in their native format (e.g., 
.doc, .xml, .ppt, searchable .pdf). Participants in this proceeding 
should familiarize themselves with the Commission's ex parte rules.
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    \80\ 47 CFR 1.1200 et seq.
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D. Filing Requirements

    32. Pursuant to sections 1.415 and 1.419 of the Commission's 
rules,\81\ interested parties may file comments and reply comments on 
or before the dates indicated on the first page of this

[[Page 16354]]

document. Comments may be filed using the Commission's Electronic 
Comment Filing System (ECFS).
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    \81\ See 47 CFR 1.415, 1419.
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     Electronic Filers: Comments may be filed electronically 
using the Internet by accessing the ECFS: http://fjallfoss.fcc.gov/ecfs2/.
     Paper Filers: Parties who choose to file by paper must 
file an original and one copy of each filing. If more than one docket 
or rulemaking number appears in the caption of this proceeding, filers 
must submit two additional copies for each additional docket or 
rulemaking number.
    33. Filings can be sent by hand or messenger delivery, by 
commercial overnight courier, or by first-class or overnight U.S. 
Postal Service mail. All filings must be addressed to the Commission's 
Secretary, Office of the Secretary, Federal Communications Commission.
     All hand-delivered or messenger-delivered paper filings 
for the Commission's Secretary must be delivered to FCC Headquarters at 
445 12th Street SW., Room TW-A325, Washington, DC 20554. The filing 
hours are 8:00 a.m. to 7:00 p.m. All hand deliveries must be held 
together with rubber bands or fasteners. Any envelopes and boxes must 
be disposed of before entering the building.
     Commercial overnight mail (other than U.S. Postal Service 
Express Mail and Priority Mail) must be sent to 9300 East Hampton 
Drive, Capitol Heights, MD 20743.
     U.S. Postal Service first-class, Express, and Priority 
mail must be addressed to 445 12th Street SW., Washington DC 20554.
    34. People with Disabilities: To request materials in accessible 
formats for people with disabilities (braille, large print, electronic 
files, audio format), send an email to [email protected] or call the 
Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), 202-
418-0432 (tty).
    35. Availability of Documents. Comments, reply comments, and ex 
parte submissions will be available for public inspection during 
regular business hours in the FCC Reference Center, Federal 
Communications Commission, 445 12th Street SW., CY-A257, Washington, DC 
20554. These documents will also be available via ECFS. Documents will 
be available electronically in ASCII, Microsoft Word, and/or Adobe 
Acrobat.
    36. For Additional Information: Contact Raelynn Remy of the Policy 
Division, Media Bureau, at [email protected] or (202) 418-2936.

V. Ordering Clauses

    37. It is Ordered that, pursuant to the authority found in sections 
4, 303, 614, and 615 of the Communications Act of 1934, as amended, 47 
U.S.C. 154, 303, 534, and 535, this Fifth FNPRM is adopted.
    38. It is further ordered that the Consumer and Governmental 
Affairs Bureau, Reference Information Center, shall send a copy of this 
Fifth FNPRM, including the Initial Regulatory Flexibility Act Analysis, 
to the Chief Counsel for Advocacy of the Small Business Administration.

Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. 2015-06943 Filed 3-26-15; 8:45 am]
BILLING CODE 6712-01-P


Current View
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionProposed Rules
ActionProposed rule.
DatesComments are due on or before April 16, 2015; reply comments are due on or before April 27, 2015. Written comments on the Paperwork Reduction Act potential information collection requirements must be submitted by the public, Office of Management and Budget (OMB), and other interested parties on or before May 26, 2015.
ContactRaelynn Remy of the Policy Division, Media Bureau at (202) 418-2120 or [email protected] For additional information concerning the Paperwork Reduction Act information collection requirements contained in this document, send an email to [email protected] or contact Cathy Williams at (202) 418-2918.
FR Citation80 FR 16347 

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