82 FR 56926 - Statutory Cable, Satellite, and DART License Reporting Practices
LIBRARY OF CONGRESS
U.S. Copyright Office Federal Register Volume 82, Issue 230 (December 1, 2017)
U.S. Copyright Office
Federal Register Volume 82, Issue 230 (December 1, 2017)
| Page Range | 56926-56939 | |
| FR Document | 2017-25487 |
[Federal Register Volume 82, Number 230 (Friday, December 1, 2017)] [Proposed Rules] [Pages 56926-56939] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-25487] ======================================================================= ----------------------------------------------------------------------- LIBRARY OF CONGRESS U.S. Copyright Office 37 CFR Part 201 [Docket No. 2005-6] Statutory Cable, Satellite, and DART License Reporting Practices AGENCY: U.S. Copyright Office, Library of Congress. ACTION: Notice of proposed rulemaking. ----------------------------------------------------------------------- SUMMARY: The U.S. Copyright Office (``Office'') is seeking comment on proposed rules governing the royalty reporting practices of cable operators under section 111 and proposed revisions to the Statement of Account forms, and on proposed amendments to the Statement of Account filing requirements. With this Notice of Proposed Rulemaking, the Office intends to resolve issues raised in an earlier Notice of Inquiry directed towards cable reporting practices,\1\ as well as address additional issues that have subsequently arisen. Further, to the extent this rulemaking proposes changes to the Office's section 111 regulations governing the processing of refunds, supplemental or amended payments, or calculation of interest, as well as case management procedures, the Office proposes similar changes with regard to the regulations governing the statutory licenses for satellite carriers and digital audio recording devices or media. --------------------------------------------------------------------------- \1\ 71 FR 45749 (Aug. 10, 2006). DATES: Written comments must be received no later than 11:59 p.m. --------------------------------------------------------------------------- Eastern Time on January 16, 2018. ADDRESSES: For reasons of government efficiency, the Copyright Office is using the regulations.gov system for the submission and posting of public comments in this proceeding. All comments are therefore to be submitted electronically through regulations.gov. Specific instructions for submitting comments are available on the Copyright Office Web site at https://copyright.gov/rulemaking/section111. If electronic submission of comments is not feasible due to lack of access to a computer and/or the internet, please contact the Office using the contact information below for special instructions. FOR FURTHER INFORMATION CONTACT: Sarang V. Damle, General Counsel and Associate Register of Copyrights, by email at [email protected], Regan A. Smith, Deputy General Counsel, by email at [email protected], or Anna Chauvet, Assistant General Counsel, by email at [email protected], or any of them by telephone at 202-707-8350. SUPPLEMENTARY INFORMATION: I. Background Section 111 of the Copyright Act (``Act''), title 17 of the United States Code, provides cable operators with a statutory license to retransmit a performance or display of a work embodied in a ``primary transmission'' made by a television station licensed by the Federal Communications Commission (``FCC''). Cable operators that retransmit broadcast signals in accordance with this provision are required to pay royalty fees to the Copyright Office (``Office''), among other requirements. Payments made under section 111 are remitted semi- annually to the Office, which invests the royalties in United States Treasury securities pending distribution of these funds to copyright owners eligible to receive a share of the royalties.\2\ In conjunction with royalty payments, cable operators must also complete and file statements of account (``SOAs''), which provide a record regarding the cable operators' retransmissions and royalty payments to ``promote uniform and accurate reporting, assist cable operators in meeting their obligations under the Act and regulations, and aid copyright owners, the Copyright Office, and the Copyright [Royalty Judges] in reviewing and using the information provided.'' \3\ Information provided on SOAs includes, among other things, the number of channels on which the cable system made secondary transmissions, the number of subscribers to the cable system, and the gross amount paid to the cable system by subscribers for the basic service of providing secondary transmissions.\4\ Cable operators file the SOAs with the Office using an appropriate form provided by the Office.\5\ --------------------------------------------------------------------------- \2\ The Office distributes those royalties in accordance with periodic distribution orders entered by the Copyright Royalty Board. \3\ 42 FR 61051, 61054 (Dec. 1, 1977) (explaining benefits of using a standard SOA form, referencing the Copyright Royalty Tribunal, a precursor to the current Copyright Royalty Judges system). \4\ 37 CFR 201.17(e)(5)-(7). \5\ Id. 201.17(d). The SOA forms are available in PDF and Excel format on the Office's Web site at https://www.copyright.gov/licensing/sec_111.html. --------------------------------------------------------------------------- [[Page 56927]] In 2005, the Motion Picture Association of America, Inc. (``MPAA''), on behalf of its member companies and other producers and/ or distributors of movies and television series (hereinafter, ``Program Suppliers''), filed a petition for rulemaking with the Copyright Office requesting the commencement of a proceeding to address several issues related to the SOA reporting practices of cable operators under section 111 (the ``Petition''). The Petition asked the Office to adopt a number of changes to its section 111 regulations and SOAs to ``improve the nature of the information reported on the SOAs by cable operators,'' believing them to be ``critical to efficient and effective compliance review'' of SOAs by copyright owners.\6\ The Office published a notice of inquiry (``NOI'') seeking comment on Program Suppliers' proposals and recommendations,\7\ and multiple parties filed comments in response to the NOI, as well as reply comments.\8\ --------------------------------------------------------------------------- \6\ Program Suppliers, Petition for Rulemaking 2 (June 7, 2005) (``Petition''). \7\ 71 FR 45749. \8\ The initial and reply comments have been posted on the Office's Web site at https://copyright.gov/rulemaking/section111. --------------------------------------------------------------------------- Since the Office issued that NOI, the Satellite Television Extension and Localism Act of 2010 (``STELA'') and STELA Reauthorization Act of 2014 (``STELARA'') updated section 111 in several respects.\9\ Among other things, STELA modified the calculation of royalty rates paid by cable operators, and updated certain provisions to accommodate the transition to digital television broadcasts.\10\ In addition, pursuant to STELA, the Copyright Office issued a regulation implementing a confidential procedure under which a qualified independent auditor working on behalf of all copyright owners can ``confirm the correctness of the calculations and royalty payments reported'' on a cable SOA filed for accounting periods commencing on or after January 1, 2010.\11\ STELARA, in turn, amended section 111 to expand the local service area of low power television stations.\12\ --------------------------------------------------------------------------- \9\ See Satellite Television Extension and Localism Act of 2010, Public Law 111-175, 124 Stat. 1218 (2010) (``STELA''); STELA Reauthorization Act of 2014, Public Law 113-200, 128 Stat. 2059 (2014) (``STELARA''). \10\ 17 U.S.C. 111(d)(1)(B)-(F), (f)(4); see generally 75 FR 56868 (Sept. 17, 2010) (interim rule implementing STELA). \11\ 17 U.S.C. 111(d)(6); 37 CFR 201.16(h), (l), (o). \12\ 17 U.S.C. 111(f)(5). --------------------------------------------------------------------------- This notice of proposed rulemaking (``NPRM'') addresses issues raised in response to the NOI that are still relevant, and notes where intervening statutory and/or regulatory changes may have mooted some issues. This NPRM also proposes revisions to SOA forms and/or the Office's regulations that are intended to streamline administration of SOAs by the Office's Licensing Division, some of which would also apply to remitters making use of the section 119 (satellite) or chapter 10 (``DART'') licenses. The Office welcomes public input on the following proposed changes, as well as other suggestions on streamlining or otherwise improving reporting practices for the section 111 license. II. Proposed Section 111--Specific Changes A. Relationship Between Gross Receipts (Space K) and Subscriber and Rate Information (Space E) Section 111 requires cable operators to report, in public filings to the Copyright Office, a variety of information regarding the secondary transmissions licensed under the statute, including the number of channels by which the system made secondary transmissions, the names and locations of all primary transmitters used, and, as particularly relevant here, the ``total number of [cable system] subscribers'' and the ``gross amounts'' paid to the cable system by these subscribers ``for the basic service of providing secondary transmissions of primary broadcast transmitters.'' \13\ Cable operators pay a percentage from these reported gross receipts ``for the privilege'' of providing such secondary transmissions (that is, a base rate), and additional amounts for any distant signal equivalent (``DSEs'') carried by the cable system. These amounts in turn are distributed as royalty fees to copyright owners whose works have been broadcast pursuant to the statutory license.\14\ The statute further provides that copyright owners may conduct confidential audits to verify the information provided on the SOAs, including the number of subscribers and relevant subscription rates, as well as the total amount of gross receipts collected from these subscribers at the reported rates, to ensure that they have received accurate compensation under the statutory license.\15\ --------------------------------------------------------------------------- \13\ 17 U.S.C. 111(d)(1)(A). \14\ Id. 111(d)(1)(B)(i)-(iv). \15\ Id. 111(d)(6). --------------------------------------------------------------------------- In accordance with this statutory design, the Copyright Office has implemented these requirements through its regulations \16\ and SOA forms. The Office addressed the statutory requirements to report the ``number of subscribers'' and ``gross amounts'' paid to cable operators as part of its initial regulations implementing section 111. In a notice of proposed rulemaking, the Office noted that reporting ``[t]he `number of subscribers' alone will serve no real purpose.'' \17\ Instead, the Office concluded that the statutory requirement was ``intended to provide copyright owners with a basis for a comparison with the reported gross receipts.'' \18\ Accordingly, the Office ``proposed . . . that the number of subscribers be accompanied by certain related information concerning subscriber categories and charges in order reasonably to accomplish this purpose.'' \19\ In a subsequent final rule adopting regulatory language almost identical to the present section 201.17(e)(6), the Office noted that ``although this information `will not provide a definitive or detailed comparison with the reported gross receipts,' it will be useful for at least a rough comparison with the reported gross receipts, and gives meaning to the statutory requirement that the `number of subscribers' be given.'' \20\ --------------------------------------------------------------------------- \16\ 37 CFR 201.17(e)(6)-(7). \17\ 42 FR at 61054. \18\ Id. \19\ Id. \20\ 43 FR 958, 959 (Jan. 5, 1978). --------------------------------------------------------------------------- To facilitate this ``rough comparison with the reported gross receipts,'' under section 201.17(e)(6) cable operators must provide ``[a] brief description of each subscriber category for which a charge is made by the cable system for the basic service of providing secondary transmissions of primary broadcast transmitters''; ``[t]he number of subscribers to the cable system in each such subscriber category''; and ``[t]he charge or charges made per subscriber to each such subscriber category for the basic service of providing such secondary transmissions.'' \21\ These regulatory requirements are reflected in Space E of the SOA forms (titled ``Secondary Transmission Service: Subscribers and Rates''), which requests information that ``should cover all categories of secondary transmission service of the cable system,'' including ``the number of subscribers to the cable system, broken down by categories of secondary transmission service,'' and the ``rate charged for each category of service.'' \22\ Section 201.17(e)(7) of the Office's regulation addresses the statutory reference to ``gross amounts'' and is reflected in Space K (titled ``Gross Receipts''), which requires cable [[Page 56928]] operators to ``[e]nter the total of all amounts (gross receipts) paid to [the] cable system by subscribers for the system's secondary transmission service (as identified in Space E) during the accounting period.'' \23\ --------------------------------------------------------------------------- \21\ 37 CFR 201.17(e)(6)(i)-(iii). \22\ Paper Form SA1-2 at 2, Space E (``Short Form SOA''); Paper Form SA3 at 2, Space E (``Long Form SOA''). \23\ Short Form SOA at 6, Space K; Long Form SOA at 7, Space K; see also 37 CFR 201.17(e)(6)-(7) (describing corresponding SOA requirements). --------------------------------------------------------------------------- Many of the issues raised by Program Suppliers' Petition address whether the subscriber and rate information provided by cable operators under the Office's current regulations is sufficient to provide the copyright owner with the intended ``rough comparison'' with the required gross receipts information, a concern the Office understands remains germane as the cable marketplace continues to evolve since the regulation was first promulgated. Program Suppliers stated that SOAs do not ``require adequate information for a meaningful comparison between Space E and Space K,'' \24\ and requested the Office to ``require greater congruity between the `gross receipts' information and the subscriber and rate information provided on the SOAs,'' and ``greater detail concerning the nature of revenues that a cable operator includes and excludes in its `gross receipts.' '' \25\ As explained below, while the Office tentatively concludes that it is not advisable to adopt all of the Program Suppliers' recommendations, the Office proposes some changes to the information sought in Space E to better facilitate the ability of copyright owners to verify gross receipts and other information provided on SOAs through the auditing mechanism set forth in 37 CFR 201.16. --------------------------------------------------------------------------- \24\ Program Suppliers Comments at 6. Broadcast Music, Inc., The American Society of Composers, Authors and Publishers, Broadcast Music Inc., and SESAC, Inc. (collectively, ``Music Claimants'') submitted their own comments in response to the NOI, stating that ``as a general matter, [they] support MPAA's comments and proposed revisions to the SOAs.'' Music Claimants Comments at 2. \25\ Petition at 3; see also Program Suppliers Comments at 5-7. --------------------------------------------------------------------------- 1. Proposed Requirement to Explain Variation in Data Between Spaces E and K In proposing that the Office require ``greater congruity'' between these spaces, Program Suppliers specifically requested that the Office instruct remitters that the gross receipts reported in Space K should approximate calculated gross receipts (i.e., the number of subscribers in each category identified in Space E, multiplied by the applicable rate) and require cable operators to explain briefly in Space K any variation of more than 10% between calculated and reported gross receipts.\26\ National Association of Broadcasters (``NAB'') supported this proposal, stating that ``requiring greater congruity between the `gross receipts' information in Space K . . . and the subscriber and rate information in Space E would allow the Office to conduct its compliance reviews with the benefit of more readily comparable base data.'' \27\ --------------------------------------------------------------------------- \26\ Program Suppliers Comments at 5-6, 8. \27\ NAB Comments at 1. --------------------------------------------------------------------------- Cable associations National Cable & Telecommunications Association (``NCTA'') and American Cable Association (``ACA'') opposed this suggestion. Specifically, ACA maintained that title 17 does not require such detailed reporting and suggested that instead, copyright owners should request additional information about individual SOAs if the filing appeared questionable.\28\ NCTA stated that even if the Office adopted all of the Program Suppliers' proposed changes to the SOA (discussed further below), the ``calculated gross receipts'' derived from Space E and actual gross receipts would still not be identical. For example, NCTA asserted that simply multiplying tier charges by the number of subscribers per tier would not equal gross receipts since both tier charges and subscribership fluctuate over six months due to, among other things, periodic rate adjustments to ``reflect inflation, changes in the channels offered, [and] increased programming costs for the basic tier.'' \29\ NCTA also stated that variations between gross receipts derived from using the data in Space E and the actual gross receipts reported under Space K result because the number of subscribers in Space E are reported as of the last day of the accounting period, whereas gross receipts are accumulated over the entire six-month period.\30\ --------------------------------------------------------------------------- \28\ ACA Comments at 5-6. \29\ NCTA Comments at 5. \30\ Id. --------------------------------------------------------------------------- The Office understands Program Suppliers' position that a variance explanation requirement would aid copyright owners in making a rough comparison between the amount of ``gross receipts'' given in Space K and the result of multiplying the number of subscribers by the rates given in Space E. This requirement, however, would go beyond what has traditionally been required of remitters and may be inappropriate in light of differences in how data is reported in the two spaces. For example, the amount in Space K may vary depending on whether the cable system's accounting is done on an accrual or cash basis and, as noted by NCTA, a comparison between Spaces E and K is difficult since the information in the two spaces reflects different time periods (i.e., Space E calls for figures as of the last day of the accounting period whereas Space K calls for gross receipts for the entire accounting period). The Office is also concerned that a variance explanation requirement could increase burdens on the Office, by requiring its Licensing Division examiners to assume a far greater role in examination of SOAs than has traditionally been the case. Under the current examination scheme, the Office simply checks whether SOAs contain ``obvious errors or omissions''--not to identify all possible deficiencies.\31\ It has never been the Office's practice to compute totals in Space E and compare the result with Space K, or otherwise attempt to validate the information provided in those spaces. The variance explanation requirement, however, apparently envisions a role of the Office in calculating the proposed 10% variance that would go beyond checking for obvious errors and omissions. --------------------------------------------------------------------------- \31\ See 37 CFR 201.17(c)(2). --------------------------------------------------------------------------- For the same reasons, while the Office is considering adding an instruction to its SOAs generally explaining that Space E is intended to allow for a rough comparison with reported gross receipts, the Office tentatively concludes that it is not appropriate to adopt Program Suppliers' related proposal to explicitly instruct remitters that the gross receipts reported in Space K should approximate the number of subscribers in each category identified in Space E, multiplied by the applicable rate. 2. Proposed Requirement To Provide More Detailed Reporting of Subscriber and Rate Information (Space E) As noted above, Program Suppliers' Petition proposed ``greater congruity'' between gross receipts and subscriber and rate information on SOAs. In response, the Office agrees that it may be advisable to update the subscriber and rate information required by Space E to provide private parties with more granular information to make a rough comparison with the gross receipts information provided in Space K, including by making use of the audit mechanism provided by the regulations.\32\ With the exception of one amendment to the regulatory usage of the word ``converter,'' which, as discussed below, is intended to be technical, these proposed changes are to [[Page 56929]] the Office's forms and not its regulations. --------------------------------------------------------------------------- \32\ Id. Sec. 201.16. --------------------------------------------------------------------------- While the audit right established by STELA provides a mechanism for copyright owners to verify information provided by cable operators and ensure they are being accurately compensated for use of their intellectual property under the compulsory license, these audits are limited in various ways, including by accounting period, frequency, and scope of initial and expanded audits as proscribed in the Offices regulations.\33\ These audits are not intended to substitute for accurate and complete information provided by cable operators on the SOAs; nor is there an expectation that every single SOA would be audited. Indeed, it is important for SOAs to provide meaningful information to facilitate copyright owners' determination of whether or not to initiate an audit. Accordingly, this section outlines proposed changes or clarifications to reporting requirements in Space E concerning categories of service and other rate information. --------------------------------------------------------------------------- \33\ 17 U.S.C. 111(d)(6); 37 CFR 201.16. --------------------------------------------------------------------------- Space E implements 37 CFR 201.17(e)(6), which requires remitters to provide ``[a] brief description of each subscriber category for which a charge is made by the cable system for the basic service of providing secondary transmissions of primary broadcast transmitters.'' \34\ The regulation further states that ``[e]ach entity (for example, the owner of a private home, the resident of an apartment, the owner of a motel, or the owner of an apartment house) . . . shall be considered one subscriber'' \35\ subject to charges by the cable system for the basic service of providing secondary transmissions. These requirements are intended to complement the regulatory definition of ``gross receipts,'' which includes ``the full amount of monthly (or other periodic) service fees for any and all services or tiers of services which include one or more secondary transmissions of television or radio broadcast signals, for additional set fees, and for converter fees.'' \36\ --------------------------------------------------------------------------- \34\ 37 CFR 201.17(e)(6)(i). \35\ Id. 201.17(e)(6)(iii)(B). \36\ Id. 201.17(e)(b)(i). --------------------------------------------------------------------------- As depicted below, Space E currently requires cable operators to report their number of subscribers and corresponding rate, ``broken down by categories of secondary transmission service'' offered to subscribers.\37\ As the form instructs, ``[t]he information in Space E should cover all categories of secondary transmission service of the cable system, that is, the retransmission of television and radio broadcasts by your system to subscribers.'' This information is reported through ``Block 1,'' which ``lists the categories of secondary transmission service that cable systems most commonly provide to their subscribers,'' and ``Block 2,'' which allows cable systems to add brief descriptions of additional categories for secondary transmission service that they offer to customers: --------------------------------------------------------------------------- \37\ Short Form SOA at 2, Space E; Long Form SOA at 2, Space E. -------------------------------------------------------------------------------------------------------------------------------------------------------- Block 1 Block 2 -------------------------------------------------------------------------------------------------------------------------------------------------------- Category of service Number of subscribers Rate Category of service Number of subscribers Rate -------------------------------------------------------------------------------------------------------------------------------------------------------- Residential:[thinsp]Service to ...................... ...................... ...................... ..................... ..................... first set [thinsp]Service to ...................... ...................... ...................... ..................... ..................... additional set(s) [thinsp]FM radio (if ...................... ...................... ...................... ..................... ..................... separate rate) Motel, hotel ...................... ...................... ...................... ..................... ..................... Commercial ...................... ...................... ...................... ..................... ..................... Converter: ...................... ...................... ...................... ..................... ..................... [thinsp]Residential ...................... ...................... ...................... ..................... ..................... [thinsp]Non- ...................... ...................... ...................... ..................... ..................... residential -------------------------------------------------------------------------------------------------------------------------------------------------------- As the Petition suggested, and as the Licensing Division's examination of recently filed SOAs illustrates, there appear to be opportunities to improve the consistency and quality of information reported in Space E. Specifically, Program Suppliers noted that there currently is ``scant information'' about the tiers of service (e.g., basic, expanded, digital) offered by cable operators that contain broadcast signals.\38\ Program Suppliers requested that the Office revise its SOAs to require a variety of information, including: --------------------------------------------------------------------------- \38\ Petition at 8 (citing 37 CFR 201.17(e)(7)). (1) Each tier of service they provide for a separate fee, noting which tiers contain broadcast signals, (2) the rates associated with each service tier, and whether the fees collected for each package are included or excluded from their gross receipts calculation, (3) the number of subscribers receiving each service tier, (4) the lowest tier of service including secondary broadcast transmissions that is available for independent subscription, and (5) any tier of service or equipment for which purchase is required as a prerequisite to obtaining another tier of service.\39\ --------------------------------------------------------------------------- \39\ Id. at 9-10. In addition, the Office of the Commissioner of Baseball, National Basketball Association, National Football League, National Hockey League, Women's National Basketball Association, and the National Collegiate Athletic Association (a group collectively referred to as ``Joint Sports Claimants'' or ``JSC'') expressed concerns that cable operators could limit the reporting of gross receipts to revenues derived solely from the lowest priced tier of service carrying broadcast signals and exclude revenues derived from higher priced tiers that also carry such signals.\40\ --------------------------------------------------------------------------- \40\ JSC Comments at 2-3. --------------------------------------------------------------------------- While the Office does not endorse every proposal of the Petition, in light of the increased variation in rates offered by cable operators, the Office agrees with revising Space E to require a somewhat more granular breakdown of the number of subscribers and rates charged for the various pertinent categories of service provided to subscribers. Remitters would be instructed to list the total number of subscribers for each category of service as well as the corresponding rate (or range of rates), and to mark ``N/A'' if they did not offer service in a given category. The Office hopes that these changes will make it easier for cable operators to more accurately report the number of subscribers for the various services they offer. Specifically, the Office proposes to update the various bolded categories of service--currently listed in Block 1 of Space E as ``Residential,'' ``Motel, hotel,'' ``Commercial,'' and ``Converter.'' The Office proposes to replace these categories with the following: ``Single-unit residential,'' ``Multi-unit [[Page 56930]] residential,'' ``Motel, hotel,'' ``Commercial,'' ``Other MDU,'' and ``Equipment.'' In addition, the Office proposes to add additional space below each category for providers to provide a further breakdown that captures each relevant category of retransmission of television and radio broadcasts offered to subscribers. In doing so, the proposed rule would replace the existing categories of service listed under what is currently labeled ``Residential''-- ``Service to first set,'' ``Service to additional set(s),'' and ``FM radio (if separate rate)''--with the more generic categories ``basic service 1,'' ``service 2,'' and ``service 3.'' In addition, the proposed rule would list these same categories underneath most of the additional types of subscribers (e.g., ``motel, hotel,'' or ``commercial''). The category ``equipment'' would retain the current subcategories ``residential'' and ``non- residential.'' Remitters could add additional categories of service as relevant to their business in empty lines, currently labeled ``Block 2'' of Space E. The Office is also considering whether space should be provided for cable operators to briefly describe these additional services to reflect the specific offering (e.g., ``expanded'' or ``sports and news bundle''). Finally, the Office proposes clarifying in its instructions that cable operators should separately list the number of subscribers and rate information for each cable service offered that contains any broadcast signals. The proposal to break up the existing ``Residential'' category into single- and multi-unit sub-categories is intended to alleviate some discrepancy in reporting practices for residential multiple-dwelling units (``MDUs''), as noted in earlier stakeholder comments, as well as better organize the type of rate information provided. For example, in their Petition, Program Suppliers stated that while some cable operators report the ``total subscriber counts'' for each of the MDUs they serve (albeit in a manner that leaves it unclear how these numbers are derived), others report each MDU simply as one subscriber, while still others leave the lines relating to ``motel, hotel'' or ``commercial'' categories of service blank.\41\ Under the proposal here, the Office intends for remitters to report single-family homes and individual unit apartment or condominium subscribers on the ``single-unit residential'' space, and subscribers on behalf of an overall apartment or condominium building on the ``multi-unit residential'' space. If an operator has a single contract for cable service on behalf of the residents or occupants of a multi-unit residential building, the operator should report that building served as one multi-unit residential subscriber, and the rate (or range of rates) the operator receives for cable service from those subscribers.\42\ In addition, the replacement of the term ``converter'' with ``equipment'' on the SOA forms and in the regulation is simply intended to modernize regulatory terminology. The Office seeks comment on these proposed changes, including whether it would be advisable to specifically add the category of ``other MDU,'' which could encompass subscriptions for non-commercial multi-dwelling units such as penitentiaries, churches, or schools, or whether it is sufficient to allow cable operators to add categories of service as needed in the blank section of Space E. --------------------------------------------------------------------------- \41\ Petition at 6-7 (citing Short Form SOA at 2, Space E; Long Form SOA at 2, Space E); see also 71 FR at 45750 (noting Program Suppliers' concerns over Space E). \42\ See 37 CFR 201.17(e)(6)(iii)(B) (listing a private home owner, apartment owner, apartment resident, motel owner as subscriber examples). --------------------------------------------------------------------------- These proposed changes are also intended to recognize the increased variety in cable subscription rates by providing a flexible table to allow cable operators to report each category of service ``for which a charge is made by the cable system for the basic service of providing secondary transmissions of primary broadcast transmitters.'' \43\ For example, since the Petition was received, the cable marketplace has experimented with a variety of service offerings, ranging from tiers of packages offering over 400 channels to skinny bundles emphasizing family friendly or sports-related programming. Meanwhile, the Office recognizes that it is no longer commonplace for cable operators to charge additional fees for ``service to additional sets'' or ``FM radio,'' but any remitter who does offer these services for a separate fee could list them as a separate service. --------------------------------------------------------------------------- \43\ Id. 201.17(e)(6)(i). --------------------------------------------------------------------------- In addition, for each service offered to a category of subscribers, the Office proposes to allow cable operators to report a range of rates that the cable operator actually charged on the last day of the accounting period.\44\ This instruction is intended to address pricing variations, as well as concerns from NCTA that reporting each rate charged to MDU subscribers based on individual negotiations would be ``enormously difficult, and would unfairly require operators to divulge competitively sensitive information.'' \45\ As noted above, cable operators could also add additional categories of services to report rates that correspond to different types of service. The Office invites comment on whether there should be a limit on the variance that may be reported for a single service, such as a requirement that the highest amount may be no more than 100% of the lowest amount in a range (e.g., a range of $14.99-$26.99 would be permissible, but not a range of $24.00-$78.00), and whether any variance limit should be higher for MDUs to reflect the more individualized nature of services offered. --------------------------------------------------------------------------- \44\ See Petition at 7; Program Suppliers Reply Comments at 12- 14. \45\ NCTA Comments at 6. --------------------------------------------------------------------------- Finally, the Office proposes that information regarding categories of service shall not be left blank.\46\ If a cable operator does not serve a specific category, a ``zero'' or a ``N/A'' (not applicable) should be reported in the appropriate space. These revisions are intended to facilitate the review of cable SOAs. --------------------------------------------------------------------------- \46\ See Program Suppliers Reply Comments at 12-14. --------------------------------------------------------------------------- Further, the Office intends to revise Space E's instructions and its regulatory definition of ``gross receipts'' to specifically note that cable operators' gross receipts must include revenue from subscription to non-broadcast tier(s) and/or from equipment sales or leases if they are required to obtain tiers with broadcast signals. If a tier or other service has no broadcast signals, and is not required to be purchased to obtain access to broadcast signals, it need not be reported in Space E. This addition does not represent a substantive change in policy, but is intended to provide more detailed guidance in furtherance of the Office's current regulatory definition of ``gross receipts.'' \47\ This change is also in accordance with Cablevision v. MPAA, which found this definition and the Office's longstanding requirement that ``revenues from all tiers other than pay cable and from all channels within each included tier must be included in gross receipts'' to be reasonable.\48\ --------------------------------------------------------------------------- \47\ See 37 CFR 201.17(b)(1). \48\ Cablevision Sys. Dev. Co. v. Motion Picture Ass'n of Am., Inc., 836 F.2d 599, 602, 611 (D.C. Cir. 1988). --------------------------------------------------------------------------- In sum, by updating the pre-populated categories listed in Space E and requiring more detail regarding the categories of service offered (i.e., by breaking out currently-reported subscriptions into separate tiers of service and listing the per-tier rate or range of rates), the Office hopes to address concerns about the adequacy of reported information. At the same time, the Office does not propose to adopt every information category proposed by [[Page 56931]] Program Suppliers, tentatively agreeing with NCTA and ACA that requiring filers to provide information on offerings that do not contain broadcast signals (or are not prerequisites to obtaining service containing any broadcast signals) would be inappropriate, as those tiers do not contribute to gross receipts.\49\ --------------------------------------------------------------------------- \49\ See NCTA Comments at 7; ACA Comments at 7-8. --------------------------------------------------------------------------- 3. Reporting of Bundled Services in Gross Receipts and Subscriber Rates (Spaces E and K) For years, cable operators and other multichannel video programming distributors have marketed video, internet data, and voice services as a single bundle of communication products to subscribers for a set price. Bundling offers certain subscriber benefits, such as price discounts and a single monthly bill. While pricing models vary, subscribers generally pay less for a bundled package than if purchasing each service individually. From time to time, the Office receives questions on how to report the price of cable television service in gross receipts on their SOAs when it is sold as part of a bundle of services. The Office is considering whether to amend its regulations to provide specific guidance on how remitters should report cable television services sold as a bundled service. The Office welcomes comments on how cable operators currently report the price of cable television service in gross receipts on their SOAs when it is sold as part of a bundle of services, and whether the Office's regulations should be amended to provide more guidance. B. Definition of Cable System The Office proposes to amend the regulatory definition of ``cable system'' to reflect both the Copyright Office's longstanding position that such systems are limited to systems providing only localized retransmissions of limited availability, and the uniform case law holding that internet-based retransmission services are excluded from the section 111 compulsory license.\50\ --------------------------------------------------------------------------- \50\ See, e.g., Fox Television Stations, Inc. v. Aereokiller, LLC, 851 F.3d 1002, 1007 n.1 (9th Cir. 2017) (noting that seven other federal courts held that ``Internet-based transmission services'' did not qualify as a ``cable systems'' under the Copyright Act). --------------------------------------------------------------------------- As the Ninth Circuit recently explained, Congress did not intend for section 111 ``to service the entire secondary transmission community . . . without regard to the technological makeup of its members,'' and instead limited the cable license to a narrower subset of providers that the statute defines in a ``detailed, if arguably ambiguous, way.'' \51\ --------------------------------------------------------------------------- \51\ Id. at 1009. --------------------------------------------------------------------------- The Act requires a ``cable system'' to make secondary transmissions by ``wires, cables, microwave, or other communications channels.'' \52\ As the Ninth Circuit recognized, when read in conjunction with the whole of section 111 and the rest of the Copyright Act, it is clear that Congress did not intend section 111 ``to sweep in secondary transmission services with indifference to their technological profile.'' \53\ As the Office has previously noted, ``at the time Congress created the cable compulsory license, the FCC regulated the cable industry as a highly localized medium of limited availability, suggesting that Congress, cognizant of the FCC's regulations and the market realities, fashioned a compulsory license with a local rather than a national scope.'' \54\ Indeed, the localized nature of the cable statutory license is reflected throughout section 111. For example, in defining ``cable system,'' section 111 states that two or more systems operating from ``one headend'' \55\ are considered a single system; the same section also makes references to ``contiguous communities.'' \56\ Thus, as the Ninth Circuit properly concluded, the Office's established understanding of the section 111 license ``aligns with [section] 111's many instances of location-sensitive language.'' \57\ --------------------------------------------------------------------------- \52\ 17 U.S.C. 111(f)(3). \53\ Aereokiller, 851 F.3d at 1009. \54\ 62 FR 18705, 18707 (Apr. 17, 1997); see also Aereokiller, 851 F.3d at 1014 (quoting same). \55\ Under FCC regulations, a ``principal headend'' is defined as ``(1) the headend, in the case of a cable system with a single headend or, (2) in the case of a cable system with more than one headend, the principal headend designated by the cable operator, except that such designation shall not undermine or evade [the broadcast signal carriage requirements.]'' 47 CFR 76.5(pp). \56\ 17 U.S.C. 111(f)(3). \57\ Aereokiller, 851 F.3d at 1013. --------------------------------------------------------------------------- Indeed, the overall operation of the section 111 license assumes cable systems operate as localized retransmission services. The royalty structure for the license is predicated upon determining whether the retransmission of television programming is ``local'' to or ``distant'' from the local service area of the primary transmitter of such programming.\58\ Specifically, royalty rates for larger (i.e., Long Form SOA) cable systems are calculated based on a value known as the ``distant signal equivalent,'' \59\ which is calculated based on the type and number of stations with ``non-network television programming carried by a cable system in whole or in part beyond the local service area of the primary transmitter of such programming.'' \60\ The statute, in turn, defines ``local service area'' in precise geographic terms. For example, for low power stations, the statute itself defines the local service area in terms of a specific radius in miles around a transmitter site.\61\ Accordingly, for a cable station to accurately calculate royalties under the statutory license, it must know with some precision the locations to which the cable system has retransmitted a broadcast station's signal--and whether that retransmission was within or outside the local service area of that station. This is something that is possible with traditional, hard-wired cable systems and their equivalent, because of the localized nature of their retransmission services. --------------------------------------------------------------------------- \58\ See 17 U.S.C. 111(d)(1), (f)(4), (5). \59\ See, e.g., id. 111(d)(1)(B). \60\ Id. 111(f)(5)(i) (emphasis added). \61\ See 17 111(f)(4). Specifically, the statute defines the local service area for ``low power stations'' as comprising ``the designated market area . . . that encompasses the community of license of such station,'' plus communities outside the designated market area that are either ``wholly or partially within 35 miles of the transmitter site'' or, in the case of stations located in larger metropolitan areas, ``wholly or partially within 20 miles of such transmitter site.'' Id.; see also id. 122(j)(2)(C) (defining ``designated market area''). --------------------------------------------------------------------------- Other aspects of the statutory scheme similarly underscore the localized nature of the statutory license. As discussed in greater detail below, for purposes of categorizing cable systems for royalty purposes, the statute specifies that two or more cable systems constitute a single cable system for purposes of section 111 if they are under common ownership or control and ``are located in the same or contiguous communities.'' \62\ Similarly, the Office's section 111 regulations require cable operators to report the communities served by each cable system (i.e., the cities or towns).\63\ Thus, determining what ``community'' a cable system serves requires knowing with some precision where retransmitted signals are being sent, which necessarily implies that a ``cable system'' is one that operates via a localized transmission system.\64\ --------------------------------------------------------------------------- \62\ Id. 111(f)(3). \63\ 37 CFR 201.17(e)(4). \64\ Cf. Aereokiller, 851 F.3d at 1013-14 (deferring to Copyright Office interpretation based on section 111's use of ``location-sensitive language''). --------------------------------------------------------------------------- Consistent with this understanding of the overall legislative scheme, the Office in prior rulemakings has held a consistent view that a ``cable system'' under the meaning of section 111 must operate in an inherently localized retransmission medium. For instance, in 1992 and 1997, in the context of [[Page 56932]] rulemakings to determine whether satellite and wireless cable retransmission systems could qualify for the section 111 license, the Office concluded that the section 111 license ``applies only to localized retransmission services,'' \65\ and that ``a provider of broadcast signals [must] be an inherently localized transmission media of limited availability to qualify as a cable system.'' \66\ Applying this standard, the Office found that satellite carriers could not qualify as cable systems.\67\ The Eleventh Circuit upheld the reasonableness of that determination.\68\ Congress established the section 119 and 122 licenses to provide for a separate statutory licensing scheme for satellite carriers.\69\ Thus, as the Ninth Circuit recently noted, ``if Congress meant Sec. 111 to sweep in secondary transmission services with indifference to their technological profile, then it was strange for Congress to have provided separate compulsory license provisions--Sec. Sec. 119 and 122--for broadcast retransmissions by satellite carriers.'' \70\ --------------------------------------------------------------------------- \65\ 57 FR 3284-01, 3292 (Jan. 29, 1992) (codified at 37 CFR pt. 201). \66\ 62 FR 18705, 18707 (Apr. 17, 1997) (codified at 37 CFR pt. 201). \67\ 57 FR at 3292, 3296. In this 1992 rulemaking, the Copyright Office also concluded that ``wireless'' cable systems could not qualify as ``cable systems'' under section 111. Id. at 3293-95. Congress amended section 111 in 1992 to reverse that decision. Satellite Home Viewer Act of 1994, Public Law 103-369, 108 Stat. 3477 (1994); 59 FR 67635 (Dec. 30, 2004). In doing so, however, Congress did not question the Copyright Office's conclusion that the statute was limited to localized retransmission services. To the contrary, Congress recognized that such wireless cable systems would have to be treated the same as wired systems for purposes of calculating distant signal royalties under the statutory license. See S. Rep. No 103-407 at 14 (1994); H.R. Rep. No. 103-703 at 19 (1994); see generally 62 FR at 18709 (discussing legislative history). \68\ Satellite Broad. & Commc'ns Ass'n of Am. v. Oman, 17 F.3d 344, 346-48 (11th Cir. 1994); see also 37 CFR 201.17(k) (1992) (``Satellite carriers, [and] satellite resale carriers . . . are not eligible for the cable compulsory license based upon an interpretation of the whole of section 111 of title 17 of the United States Code.''). \69\ Satellite Home Viewer Act of 1994, Public Law 103-369, 108 Stat. 3477 (1994); 59 FR 67635 (Dec. 30, 2004). \70\ Aereokiller, 851 F.3d at 1009. --------------------------------------------------------------------------- Similarly, in policy reports and testimony before Congress, the Office consistently communicated its position that internet-based retransmission services are not ``cable systems'' under section 111.\71\ As explained in more detail in those reports, the Office's view was based on an understanding that, unlike other systems qualifying for the cable license, online streaming services are not closed, localized systems, and so are outside the statutory license. By contrast, in a 2008 policy report, the Office opined that video programming distribution systems using Internet Protocol technology, by virtue of the fact that they were inherently closed systems delivering content to a limited set of subscribers at their homes, could meet the definition of ``cable system'' \72\ --------------------------------------------------------------------------- \71\ See, e.g., Register of Copyrights, A Review of the Copyright Licensing Regimes Covering Retransmission of Broadcast Signals 97-99 (1997), https://www.copyright.gov/reports/study.pdf; Copyrighted Webcast Programming on the Internet: Hearing Before the H. Subcomm. on Courts and Intell. Prop., 106th Cong. 5-6 (2000) (statement of Marybeth Peters, Register of Copyrights and Dir., U.S. Copyright Office); Register of Copyrights, Satellite Home Viewer Extension and Reauthorization Act Section 109 Report 193-94 (2008), http://www.copyright.gov/reports/section109-final-report.pdf (``Section 109 Report''); Register of Copyrights, Satellite Home Viewer Extension and Localism Act Section 302 Report 47-49 (2011), https://www.copyright.gov/reports/section302-report.pdf. \72\ Section 109 Report at 197-99; see also id. at 200 (concluding that retransmission of broadcast signals to mobile devices should be outside statutory license). --------------------------------------------------------------------------- In sum, in light of the Office's understanding of section 111, its longstanding policy views, and the uniform direction of case law, the Office proposes adding the following sentence to its regulatory definition of ``cable system'': ``A provider of broadcast signals must be an inherently localized and closed transmission system of limited availability to qualify as a cable system.'' C. Interpretation of Community and Reporting of Area Served (Space D) 1. Cable Headend Location Section 111(f) of the Copyright Act states in relevant part that: ``For purposes of determining the royalty fee under subsection (d)(1), two or more cable systems in contiguous communities under common ownership or control or operating from one headend shall be considered as one system.'' \73\ Moreover, two cable systems operating from the same headend are considered to be one system for purposes of calculating the section 111 royalties ``even if they are owned by different entities.'' \74\ Currently, a cable operator is required to identify on its SOA only the community or communities in which it operates and not the location of the headend(s) serving those communities.\75\ --------------------------------------------------------------------------- \73\ 17 U.S.C. 111(f)(3); see also 37 CFR 201.17(b)(2). \74\ Short Form SOA at ii; Long Form SOA at ii; see also 43 FR at 958. \75\ See 37 CFR 201.17(e)(4); Short Form SOA at 1b, Space D; Long Form SOA at 1b, Space D. --------------------------------------------------------------------------- In their Petition, Program Suppliers requested that the Office revise Space D of the SOA form to require cable operators to identify the location of each headend and the specific communities served from that headend.\76\ Program Suppliers stated that this information will help them determine whether cable operators are, in fact, complying with the section 111(f) requirement to treat all cable systems operating from a common headend as a single cable system and suggested that a headend identification requirement would not burden cable operators, as the FCC already requires them to maintain records of the location of principal headends.\77\ As to which headend a cable operator should report where there are multiple headends, Program Suppliers stated that an operator should be required to identify the location of each headend that serves communities listed by its systems.\78\ NAB concurred that including the specific location of headends would enhance the Office's review of SOAs.\79\ --------------------------------------------------------------------------- \76\ Petition at 10-11. \77\ See Program Suppliers Comments at 12-13 (citing 47 CFR 76.1708, 76.1716). The Office notes that the FCC recently eliminated the requirement that cable operators maintain for public inspection the designation and location of the cable system's principal headend. In re Revisions to Public Inspection File Requirements-- Broadcaster Correspondence File & Cable Principal Headend Location, 32 FCC Rcd. 1565 (2017), https://apps.fcc.gov/edocs_public/attachmatch/FCC-17-3A1.pdf. \78\ Id. at 13. \79\ NAB Comments at 1-2. --------------------------------------------------------------------------- By contrast, NCTA remarked that if a single system uses more than one headend, it should make no difference to copyright owners which one is identified; in that instance, an operator has already determined that it operates a single system for copyright purposes.\80\ ACA commented that if a Program Supplier has a legitimate question regarding the location of a headend, it can request clarification from that particular operator, and that Program Suppliers have employees and outside counsel devoted to precisely that type of activity.\81\ --------------------------------------------------------------------------- \80\ NCTA Comments at 8. \81\ ACA Comments at 11. --------------------------------------------------------------------------- The Office tentatively concludes that it is not clear that artificial fragmentation by cable systems seeking to avoid paying a higher royalty rate (i.e., a Long Form SOA cable system reporting as several Short Form cable systems) is currently a pressing concern, or that requiring the reporting of headend information would significantly help lessen this issue, compared to the additional burden imposed upon cable operators. Given the lack of a strong record demonstrating the need for this information, the Office declines to adopt [[Page 56933]] a headend-reporting requirement at this time. 2. County Information The Office's regulations currently require a cable operator to report the name of the community or communities served by its cable system.\82\ Space D of the SOAs require a cable operator to identify the communities it serves, including by listing the ``city or town'' and ``state'' served.\83\ The SOAs do not currently require identification of the county in which the given community is located, although some operators report counties on a voluntary basis. --------------------------------------------------------------------------- \82\ 37 CFR 201.17(e)(4). \83\ Short Form SOA at 1b, Space D; Long Form SOA at 1b, Space D. --------------------------------------------------------------------------- In their Petition, Program Suppliers requested that the Office require cable operators to identify the county where each cable community is located, in addition to the city and state.\84\ They commented that this information would help clarify whether a signal is local, distant, or partially distant (i.e., distant to some subscribers but local to others) for section 111 purposes.\85\ NCTA agreed that the absence of county designations has hampered legitimate efforts to review certain SOAs and did not object to modification of the SOA forms to require inclusion of county information in Space D.\86\ Similarly, ACA stated that this requirement will impose minimal additional burdens and will facilitate review of SOAs by the Licensing Division.\87\ --------------------------------------------------------------------------- \84\ Petition at 11-13. \85\ Id. at 12. \86\ NCTA Comments at 9. \87\ ACA Comments at 4. --------------------------------------------------------------------------- Because the parties agreed that inclusion of the county on the SOA would be beneficial, the Office proposes that Space D should be revised to require ``county'' information, but seeks comment on whether this proposed change remains desirable to stakeholders. The Office concludes that regulatory change is not necessary to implement this update to the form. 3. Definition of ``Community'' Under the Copyright Act and the Office's regulations, two or more cable systems constitute a single cable system for purposes of section 111 if, as relevant here, they are under common ownership or control and are located in the same or ``contiguous communities.'' \88\ Where common ownership of cable systems is established, defining the ``community'' served is important to determine whether two or more cable facilities operate in ``contiguous communities,'' and whether those facilities should file as a single cable system, preventing artificial fragmentation of large cable systems into multiple smaller systems to avoid the higher royalty payments Form 3 cable systems pay under section 111.\89\ --------------------------------------------------------------------------- \88\ 17 U.S.C. 111(f)(3); 37 CFR 201.17(b)(2). \89\ See 43 FR 958 (Jan. 5, 1978) (``[T]he legislative history of the Act indicates that the purpose of this sentence [in section 111(f)] is to avoid the artificial fragmentation of cable systems.''). --------------------------------------------------------------------------- The Office's regulations currently state that a cable system's ``community,'' for purposes of section 111, is the same geographic area as that specified under the definition of ``community unit'' as defined in the FCC's rules and regulations.\90\ FCC regulations define ``community unit'' as ``[a] cable television system, or portion of a cable television system, that operates or will operate within a separate and distinct community or municipal entity (including unincorporated communities within unincorporated areas and including single, discrete unincorporated areas).'' \91\ --------------------------------------------------------------------------- \90\ 37 CFR 201.17(e)(4); see also Short Form SOA at 1b, Space D; Long Form SOA at 1b, Space D. \91\ 47 CFR 76.5(dd). --------------------------------------------------------------------------- Program Suppliers requested that the Office amend the regulatory definition of the term ``community'' so that a cable operator's ``franchise area'' should be the de facto regulatory boundary for defining cable communities instead of the FCC's community unit definition. In support, Program Suppliers noted that the FCC itself, in written opinions, has interpreted ``community unit'' to mean cable franchise areas.\92\ But while it may be true that the FCC has itself at times equated its regulatory definition of ``community unit'' with a given cable system's franchise area, that is, the political jurisdiction for which a local government body has granted it the right to provide cable television to its residents, the regulatory definition refers more broadly to a ``distinct community'' and the Petition itself suggests the FCC has not been uniform in that interpretation. In its NOI, the Office asked if there is a general pattern of disaggregation by cable operators to support a rule change, and if so, whether it would be reasonable to equate the term ``community'' with a cable operator's ``franchise area.'' \93\ --------------------------------------------------------------------------- \92\ Petition at 16 (citation omitted). \93\ 71 FR at 45752. --------------------------------------------------------------------------- In comments, NCTA suggested that the FCC community unit concept was part of a long-established cable copyright paradigm.\94\ It explained that the cable industry's signal carriage obligations under current FCC rules, notably the syndicated exclusivity rules, continue to depend on the community unit definition, and were necessary under the FCC's former distant signal rules for establishing whether a distant signal is permitted for copyright purposes. NCTA further stated that Program Suppliers offered no evidence that Congress intended franchise areas to play a decisive role in defining a single cable system for copyright purposes. NCTA noted that with the advent of statewide franchising in some states, the proposed rule change could result in the artificial joinder of systems that could be hundreds of miles apart and not interconnected in any way.\95\ In reply comments, NAB agreed that the Copyright Office should continue to rely upon the FCC's regulatory definition of community unit, and suggested that a literal application of those rules would prevent artificial fragmentation by requiring cable operators to list all contiguous units that shared a franchise authority.\96\ --------------------------------------------------------------------------- \94\ NCTA Comments at 11. \95\ Id. at 11-13. \96\ NAB Reply Comments at 12-13. --------------------------------------------------------------------------- The Copyright Office tentatively concludes that the facts and the law do not support replacing the community unit definition with a franchise area definition. Moreover, since the receipt of the Petition, the Office has not noted a practice of fragmentation, and has learned that this issue may be of less interest to stakeholders. The Office invites public comments on whether this issue is still significant to stakeholders. D. Grade B Contour (Parts 6 and 7) Under the Copyright Act, the definition of ``local service area of a primary transmitter'' establishes the difference between ``local'' and ``distant'' signals and ``therefore the line between signals which are subject to payment under the compulsory license [under section 111] and those that are not.'' \97\ The shifting technologies used for television transmission, as reflected in STELA, have led the Copyright Office to question whether certain parts of its regulations and SOA forms should be modified or eliminated. --------------------------------------------------------------------------- \97\ H.R. Rep. No. 94-1476, at 99 (1976), as reprinted in 1976 U.S.C.C.A.N. 5659, 5714. --------------------------------------------------------------------------- Specifically, the parts of the Long Form SOA which reference the ``Grade B contour,'' an FCC construct used for many years in the context of analog television stations, appear to be obsolete. Section 111 imported this construct, as detailed in FCC rules and regulations, with respect to determining the local service area of certain signals.\98\ Subsequently, with the advent [[Page 56934]] of digital television signals, the FCC has recognized a new standard known as the ``noise-limited service contour.'' STELA amended section 111 by adding to the definition of ``local service area'' any area ``within the noise-limited contour as defined in 73.622(e)(1) of title 47, Code of Federal Regulations.'' \99\ --------------------------------------------------------------------------- \98\ 17 U.S.C. 111(f)(4). \99\ STELA at sec.104, 124 Stat. at 1235; 17 U.S.C. 111(f)(4). --------------------------------------------------------------------------- Two parts of the form appear to have been overtaken by these technological developments. First, the Long Form SOA asks for certain information related to certain UHF signals within a Grade B contour, for purposes of calculating royalties paid under a 3.75% fee in Part 6, Block B of the form. Under the FCC's old ``market quota'' rules, which were incorporated by reference into section 111, a cable operator could carry a certain number of distant signals based upon a complex scheme involving the type of the television market and the type of signal available. A cable operator, however, could carry more signals than its market quota of distant signals if the station was considered ``permitted'' by the FCC's 1976-era rules. The concept of ``permitted'' stations has been imported into the section 111 license. Under section 111, an operator that carries a non-permitted signal above its market quota is generally subject to a 3.75% fee for carriage of that signal, in lieu of the minimum royalty rate.\100\ There are several bases of ``permitted'' carriage, however, for which retransmission will not trigger the 3.75% fee. One of these bases--basis ``G''--includes carriage of commercial UHF stations within a Grade B contour.\101\ On cable SOAs, permitted signals, including those under basis ``G,'' must be reported in Part 6, Block B, or be subject to the 3.75% fee calculation in Part 6/Block C.\102\ --------------------------------------------------------------------------- \100\ See 37 CFR 387.2. All cable systems filing Long Form SOAs must pay at least the minimum fee which is 1.064% of gross receipts. The cable system pays either the minimum fee or the sum of the base rate fee and the 3.75% fee, whichever is larger, and a Syndicated Exclusivity Surcharge, as applicable. Long Form SOA at 10. \101\ See Long Form SOA at 13. \102\ See Long Form SOA at 13. --------------------------------------------------------------------------- The Office, in a 2008 Notice of Proposed Rulemaking concerning digital broadcast signals (``Digital Signals NPRM'') that pre-dated STELA,\103\ made initial conclusions concerning the continued relevance of the ``basis G'' for the cable retransmission of digital television signals. With regard to commercial UHF stations placing a Grade B contour over a cable system, the Office noted that the Grade B contour could not be replaced by the noise limited service contour as the appropriate measurement to determine whether a commercial UHF station is ``permitted'' for copyright purposes because the new contour parameters were not in use at the time Section 111 was enacted.\104\ --------------------------------------------------------------------------- \103\ See 73 FR 31399 (June 2, 2008). Because STELA confirmed the application of section 111 to digital broadcast signals, the Office considers the Digital Signals NPRM to be closed. \104\ Id. at 31408-409. --------------------------------------------------------------------------- As noted, after the Digital Signals NPRM, STELA amended the definition of ``local service area of a primary transmitter'' in section 111 so that such area would include the area within the noise limited service contour.\105\ This amendment confirms to the Office that the noise limited service contour is the proper standard by which to measure the reach of digital television signals with respect to the section 111 license, including digital UHF signals. And, as most relevant here, the amendment appears to render ``basis G'' obsolete as it currently exists. That is because, as stated above, royalty rates under the section 111 license are calculated based on the ``secondary transmission of any non-network television programming carried by a cable system in whole or in part beyond the local service area of the primary transmitter of such programming.'' \106\ Any digital signals within the noise-limited service contour are ``local'' and thus are not subject to the section 111 royalty rate. Thus, it appears that there is no need to treat any station within the noise limited contour as ``permitted,'' because locally retransmitted stations do not count against the market quota in the first place. --------------------------------------------------------------------------- \105\ See STELA at sec.104, 124 Stat. at 1235; 17 U.S.C. 111(f)(4). \106\ 17 U.S.C. 111(f)(5) (emphasis added). --------------------------------------------------------------------------- To the extent that the ``Grade B contour'' construct theoretically may continue to apply to analog signals, the Office questions whether it has become obsolete as a practical matter. From running database queries on submitted SOAs, the Office has learned that permitted basis ``G'' in Part 6/Block B is rarely, if ever, used. Moreover, in the few cases where cable operators have reported the permitted basis of carriage category ``G,'' the Office believes the cable operators may have used the noise-limited contour (for digital signals) interchangeably with the Grade B contour (for analog signals) because they historically reported ``G'' in the all-analog world (prior to the mandated FCC digital conversion in 2009), and continue to report the ``G'' permitted basis out of habit. Accordingly, the Office proposes eliminating permitted basis ``G'' in Part 6/Block B on the cable SOAs (i.e., commercial UHF stations within a Grade B contour). The Office invites public comment on this proposal. The Office is particularly interested in learning whether cable operators still retransmit broadcast signals using analog signals, and if so, to what extent the permitted basis ``G'' is relevant to this carriage. Second, the Grade B contour has, in the past, had relevance to other aspects of the statutory license under section 111, including the calculation of a ``syndicated exclusivity surcharge.'' Cable systems located in whole or in part within a major television market, as defined by FCC rules and regulations, must calculate a syndicated exclusivity surcharge for the carriage of any commercial VHF station that places a Grade B contour, in whole or in part, over the cable system that would have been subject to the FCC's syndicated exclusivity rules in effect on June 24, 1981.\107\ Cable operators report any syndicated exclusivity surcharge in Part 7, Block B of cable Long Form SOAs. --------------------------------------------------------------------------- \107\ See 37 CFR 201.17(i)(1)(ii), (i)(2)(ii). --------------------------------------------------------------------------- From running database queries on submitted SOAs, however, the Office has learned that the last time Part 7 of the cable SOA was used (i.e., Computation of the Syndicated Exclusivity Charge) was in 2013, on a single SOA. Accordingly, the Office invites public comment on whether Part 7 of the cable SOA should be amended, and whether, more generally, the Office's related regulations should be amended to remove references to a Grade B contour. E. Changes to SOA Due to Copyright Royalty Board's Proposed Rule Relating to the Retransmission of Sports Programming In May 2017, the Copyright Royalty Board (``CRB'') issued a notice of proposed settlement and proposed rule to require covered cable systems to pay a separate per-telecast royalty (a ``Sports Surcharge'') in addition to the other royalties that cable systems must pay under section 111.\108\ In September, the CRB issued an additional notice concerning whether non-participants to the settlement could be eligible to receive royalties stemming from the Sports Charge, but did not otherwise alter its proposed rule.\109\ Under the CRB's proposed rule, the ``Sports Surcharge would amount to 0.025 percent of the cable system's `gross receipts' during the relevant semi-annual accounting period for the secondary transmission of each affected [[Page 56935]] broadcast of a sports event, provided that all of the conditions of the proposed rule are satisfied.'' \110\ ``Thus, if a covered cable system made a secondary transmission of one affected broadcast, it would pay 0.025 percent of `gross receipts' during the relevant semi-annual accounting period for that transmission; if it made secondary transmissions of two affected broadcasts, it would pay 0.025 percent of `gross receipts' during the relevant semi-annual accounting period for each of those transmissions (or a total of 0.050 percent of its `gross receipts').'' \111\ --------------------------------------------------------------------------- \108\ 82 FR 24611 (May 30, 2017). \109\ 82 FR 44368 (Sept. 22, 2017). \110\ 82 FR at 24612. \111\ Id. --------------------------------------------------------------------------- Assuming the CRB's rule is adopted, the Office intends to amend its cable SOA forms to account for the new Sports Surcharge for semi-annual accounting periods by adding a new Space R that would allow for calculations of this surcharge. No amendments to the Office's regulations are needed to accommodate this change. F. Interest Payments and Copyright Infringement Liability The Office's current regulations require cable operators to pay interest on late or underpaid royalty payments.\112\ In their Petition, Program Suppliers asserted that such payments do not preclude copyright owners from bringing an action against cable operators for copyright infringement during the time period in which the cable operators' royalty payments were not properly remitted, and requested that the Office amend its regulations and revise its SOA forms to include language clarifying that the assessment of interest does not absolve cable operators from copyright infringement liability for failure to make timely royalty payments.\113\ Cable associations disagreed, with ACA stating that ``[s]ound policy supports maintaining the ability of a cable operator to correct an[y] SOA and pay additional royalties with interest, without the imminent threat of copyright infringement,'' and that the ability to file amended or late SOAs with interest ``provides an efficient means to correct good faith errors in filings[,] while at the same time providing copyright claimants with their full compensation plus interest.'' \114\ --------------------------------------------------------------------------- \112\ See 37 CFR 201.17(k)(4); see also Short Form SOA at 8, Space Q; Long Form SOA at 9, Space Q. \113\ Petition at 13. \114\ ACA Comments at 12; see also NCTA Comments at 9. --------------------------------------------------------------------------- The Office declines Program Suppliers' suggestion to modify the SOA to state that a payment made after the due date does not bar an infringement action against the cable operator. While section 111(d)(1)(A) directs the Register to issue regulations governing the filing of SOAs, including identification of all secondary retransmissions of broadcast stations, number of subscribers, and gross revenues paid to the cable system, it does not require the Office to determine the scope of liability for copyright infringement; in the Office's view, this question is more properly reserved for the courts in appropriate cases.\115\ --------------------------------------------------------------------------- \115\ There are two other provisions, aside from 17 U.S.C. 111(d)(1)(A), which require action by the Register in the cable statutory licensing context. These are the authority to set filing fees for SOAs under 17 U.S.C. 111(d)(1)(G) and the authority to issue audit regulations under 17 U.S.C. 111(d)(6). --------------------------------------------------------------------------- G. Removing Outdated References to the Satellite Television Extension and Localism Act After Congress enacted STELA in 2010, the Office issued implementing regulations that, among other things, established the accounting period for which the new cable operator royalty fee rates would take effect.\116\ In the seven years since STELA was enacted, however, some references to STELA in the Office's regulations appear to have become outdated and unnecessary. The Office understands that cable operators rarely file SOAs for periods dating back further than the last five years (i.e., for periods prior to the enactment of STELA). Accordingly, the Office proposes amending section 201.17 by deleting outdated references to STELA, and adding language for remitters to contact the Licensing Division for instructions should they need to file SOAs for accounting periods further back than the last five years. The Office invites public comment on this proposal. --------------------------------------------------------------------------- \116\ 37 CFR 201.17(g)(4). --------------------------------------------------------------------------- H. Technical Amendments The Office's current regulations provide a number of instructions to cable operators on how to complete SOAs, many of which duplicate the instructions on the SOA forms themselves.\117\ The Office proposes removing regulatory provisions that are duplicative of information provided on cable operator SOA forms and/or on the Office's Web site. --------------------------------------------------------------------------- \117\ See id. 201.17(e)(1)-(4), (8), (10)-(13). --------------------------------------------------------------------------- In addition, the Office's current regulations instruct which information must be provided as part of the electronic funds transfer (``EFT'') to pay royalty fees.\118\ The Office proposes removing this language from the regulations and incorporating it into the instructions for the SOA forms themselves. --------------------------------------------------------------------------- \118\ Id. 201.17(k)(1). --------------------------------------------------------------------------- These changes are intended to improve the readability of existing regulations and do not represent substantive changes in policy. III. Reporting Practices--Cable, Satellite and DART The Office has identified a number of additional issues relating to cable SOA reporting practices, and finds it is administratively efficient to address these new cable reporting practice matters here rather than initiate a new proceeding. Because some of these issues are also pertinent to the filing of SOAs for other statutory licenses, the Office proposes to amend certain reporting rules for cable operators (under section 201.17), satellite carriers (under section 201.11) and digital audio recording equipment manufacturers and importers (under sections 201.27 and 201.28), where applicable, so that there are parallel requirements for all three licenses in the Office's regulations. Each of the following proposed changes are reflected in the updated proposed regulatory language below. A. Closing Out Statements of Account During an initial examination of SOAs, the Office's Licensing Division often makes inquiries of cable system operators regarding the information provided in the SOA.\119\ Generally, the Office does not make an entire SOA available to the public until the cable operator has responded to the Office's inquiry and the initial examination process has been completed. But oftentimes, the Office may not receive a response to its inquiry until long after the Office's letter or email. In some cases, replies are not received in the Office until years later. Currently, if this happens, the Office re-examines the original SOA in light of the request. --------------------------------------------------------------------------- \119\ These inquiries generally seek missing or clarifying information pertaining to an element(s) of the SOA and might raise the possibility that there has been an underpayment or overpayment of the royalty fee. --------------------------------------------------------------------------- To streamline the administrative process and encourage timely responses to Office inquiries, the Office proposes to close out SOA examination if a filer fails to reply to an Office correspondence request after 90 days from the date of the last correspondence from the Office. After an SOA is closed, it would be placed with other publicly available SOA records. At that point, a cable operator wishing to submit a reply or pay additional royalties or make necessary corrections would need to file an amended SOA along with a filing fee as prescribed in 37 CFR 201.3(e). But, to [[Page 56936]] be clear, operators failing to respond within the prescribed 90-day window would forfeit any potential refund of an overpayment associated with any issue with the SOA identified by the Office in its correspondence. The Office tentatively concludes that 90 days is a reasonable timeframe for operators to reply to any issues arising from examination of an SOA and that the proposed amendments will facilitate the timely disposition of SOAs. The Office proposes harmonizing this practice across regulations affecting SOAs for cable operators, satellite carriers, and digital audio recording equipment manufacturers and importers. B. Royalty Refunds Because the administrative cost of issuing royalty refunds of less than $50.00 can exceed the amount actually refunded, under the Office's proposed rule, refunds for amounts of $50.00 or less will issue only where the refund is specifically requested before the SOA is closed and made available for public inspection. If a refund is not requested before the SOA is closed, the amount will be added to the relevant royalty pool. The proposed rule will harmonize this practice across regulations affecting royalty refunds for cable operators, satellite carriers, and digital audio recording equipment manufacturers and importers. C. Payment of Supplemental Royalty Fees and Filing Fees by EFT The Office proposes to amend its regulations to require payment of supplemental royalty fees and filing fees by EFT for cable operators, satellite carriers, and digital audio recording equipment manufacturers and importers, and eliminate the ability to pay by paper check or money order. Use of EFT has enhanced the efficiency of the Office's royalty collection process by avoiding problems associated with a paper check or money order (e.g., lost checks or delays in processing mail) and by lessening the Office's administrative workload. D. Interest Assessment Current regulations regarding the treatment of interest assessment for late payments or underpayments of royalties are similar, but not uniform, for cable operators, satellite carriers, and digital audio recording equipment manufacturers and importers. The Office proposes to harmonize these regulations so that interest begins accruing on the first day after the close of the period for filing SOAs for all underpayments or late payments of royalties; the accrual period shall end on the date the payment submitted by the remitter is received by the Office; and the applicable interest rate shall be the Current Value of Funds Rate, established by section 8025.4 of the Treasury Finance Manual. In addition, interest payments shall not be required if the interest charge is less than $5.00. IV. Conclusion The Copyright Office hereby seeks comment from the public on the amendments proposed in this Notice of Proposed Rulemaking. List of Subjects in 37 CFR Part 201 Cable television, Copyright, Recordings, Satellites. Proposed Regulations For the reasons stated in the preamble, the Copyright Office proposes to amend 37 CFR part 201 as follows: PART 201--GENERAL PROVISIONS 0 1. The authority citation for part 201 continues to read as follows: Authority: 17 U.S.C. 702. 0 2. Amend Sec. 201.11 by: 0 a. Revising paragraph (f)(1). 0 b. Revising paragraph (h)(3)(iv). 0 c. Adding paragraph (h)(3)(vii). 0 d. Adding paragraphs (h)(5) and (h)(6). The revisions and additions read as follows: Sec. 201.11 Satellite carrier statements of account covering statutory licenses for secondary transmissions. * * * * * (f) * * * (1) All royalty fees, including supplemental royalty payments, must be paid by a single electronic funds transfer (EFT), and must be received in the designated bank by the filing deadline for the relevant accounting period. Satellite carriers must provide specific information as part of the EFT and as part of the remittance advice, as listed in the instructions for the Statement of Account form. * * * * * (h) * * * (3) * * * (iv) All requests for correction or refunds must be accompanied by a filing fee in the amount prescribed in Sec. 201.3(e) for each Statement of Account involved, paid by EFT. No request will be processed until the appropriate filing fees are received, and no supplemental royalty fee will be deposited until an acceptable remittance in the full amount of the supplemental royalty fee has been received. * * * * * (vii) A refund payment in the amount of fifty dollars ($50.00) or less will not be refunded unless specifically requested before the statement of account is closed, at which point any excess payment will be treated as part of the royalty fee. A request for a refund payment in an amount of over fifty dollars ($50.00) is not necessary where the Licensing Division, during its examination of a Statement of Account or related document, discovers an error that has resulted in a royalty overpayment. In this case, the Licensing Division will affirmatively send the royalty refund to the satellite carrier owner named in the Statement of Account without regard to the time limitations provided for in paragraph (h)(3)(i) of this section. * * * * * (5) Interest on late payments or underpayments. Royalty fee payments submitted as a result of late or amended filings shall include interest. Interest shall begin to accrue beginning on the first day after the close of the period for filing statements of account for all underpayments or late payments of royalties for the satellite carrier statutory license for secondary transmissions for private home viewing and viewing in commercial establishments occurring within that accounting period. The accrual period shall end on the date the full payment submitted by a remitter is received by the Copyright Office. The interest rate applicable to a specific accounting period beginning with the 1992/2 period shall be the Current Value of Funds Rate, as established by section 8025.40 of the Treasury Financial Manual and published in the Federal Register, in effect on the first business day after the close of the filing deadline for that accounting period. Satellite carriers wishing to obtain the interest rate for a specific accounting period may do so by consulting the Federal Register for the applicable Current Value of Funds Rate, or by consulting the Copyright Office Web site. Interest is not required to be paid on any royalty underpayment or late payment from a particular accounting period if the interest charge is less than or equal to five dollars ($5.00). (6) A statement of account shall be considered closed in cases where a licensee fails to reply within ninety days to the request for further information from the Copyright Office or, in the case of subsequent correspondence that may be necessary, [[Page 56937]] ninety days from the date of the last correspondence from the Office. 0 3. Amend Sec. 201.17 by: 0 a. Revising paragraphs (b)(1) and (2). 0 b. Revising paragraph (c) introductory text and paragraph (c)(3). 0 c. Adding paragraph (c)(5). 0 d. Revising paragraph (d). 0 e. Revising paragraph (e) introductory text. 0 f. Removing paragraphs (e)(1) through (4), (e)(8), and (e)(10) through (13). 0 g. Redesignating paragraph (e)(5) as (e)(1), paragraph (e)(6) as (e)(2), paragraph (e)(7) as (e)(3), paragraph (e)(9) as (e)(4), and paragraph (e)(14) as (e)(5). 0 h. Removing ````Secondary Transmission Service: Subscribers and Rates'','' and adding in its place ````Secondary Transmission Service: Subscribers and Rates,'''' in the newly redesignated paragraph (e)(2). 0 i. Adding ``or, in the case of a cable system ceasing operations during the accounting period, the facts existing on the last day of operations'' after ``Statement'' in the newly redesignated paragraph (e)(2)(iii)(A). 0 j. Revising newly redesignated paragraph (e)(2)(iii)(B). 0 k. Adding paragraph (e)(2)(iii)(C). 0 l. Removing ````Gross Receipts'','' and adding in its place ````Gross Receipts,'''' in the newly redesignated paragraph (e)(3). 0 m. Removing ``Television'','' and adding in its place ``Television,'''' and removing ``and required to be specially identified by paragraph (e)(11) of this section,'' in the newly redesignated paragraph (e)(4) in the introductory text. 0 n. Revising newly redesignated paragraph (e)(4)(iv). 0 o. Removing paragraphs (g)(2) and (g)(4). 0 p. Redesignating paragraph (g)(3) as paragraph (g)(2). 0 q. Revising paragraph (k) introductory text and paragraph (k)(1). 0 r. Removing ``satellite carrier'' and adding in its place ``cable operator'' in paragraph (k)(4). 0 s. Revising paragraph (l)(1). 0 t. Removing ``(m)(4)'' and adding in its place ``(l)(4)'' in paragraph (l)(2). 0 u. Removing ``, for any reason except that mentioned in paragraph (m)(2)(iii) of this section,'' in paragraph (l)(2)(ii). 0 v. Removing ``(m)(2)'' and adding in its place ``(l)(2)'' in paragraph (l)(4). 0 w. Removing ``(m)(2)(i)'' and adding in its place ``(l)(2)(i)'' in paragraph (l)(4)(iii)(A). 0 x. Removing ``(m)(2)(ii)'' and adding in its place ``(l)(2)(ii)'' in paragraph (l)(4)(iii)(B). 0 y. Revising paragraph (l)(4)(iv). 0 z. Removing ``(m)'' and adding in its place ``(l)'', and removing ``(e)(14)'' and adding in its place ``(e)(5)'' in paragraph (l)(4)(v). 0 aa. Removing ``(m)(4)(i)'' and adding in its place ``(l)(4)(i)'' in paragraph (l)(4)(vi). 0 bb. Adding paragraph (l)(4)(vii). 0 cc. Redesignating paragraph (l)(5) as (l)(7). 0 dd. Revising newly redesignated paragraph (l)(5). 0 ee. Adding paragraph (l)(6). 0 ff. Removing ``(m)'' and adding in its place ``(l)'' in newly redesignated paragraph (l)(7). The revisions and additions read as follows: Sec. 201.17 Statements of Account covering compulsory licenses for secondary transmissions by cable systems. * * * * * (b) * * * (1) Gross receipts for the ``basic service of providing secondary transmissions of primary broadcast transmitters'' include the full amount of monthly (or other periodic) service fees for any and all services or tiers of services which include one or more secondary transmissions of television or radio broadcast signals. Gross receipts also include fees for non-broadcast tier(s) of services if such purchase is required to obtain tiers of services with broadcast signals, and fees for any other type of equipment or device necessary to receive broadcast signals that is supplied by the cable operator. In no case shall gross receipts be less than the cost of obtaining the signals of primary broadcast transmitters for subsequent retransmission. All such gross receipts shall be aggregated and the distant signal equivalent (DSE) calculations shall be made against the aggregated amount. Gross receipts for secondary transmission services do not include installation (including connection, relocation, disconnection, or reconnection) fees, separate charges for security, alarm or facsimile services, charges for late payments, or charges for pay cable or other program origination services: Provided that, the origination services are not offered in combination with secondary transmission service for a single fee. In addition, gross receipts shall not include any fees collected from subscribers for the sale of Internet services or telephony services when such services are bundled together with cable service; instead, when cable services are sold as part of a bundle of other services, gross receipts shall include fees in the amount that would have been collected if such subscribers received cable service as an unbundled stand-alone product. (2) A cable system is a facility, located in any State, Territory, Trust Territory, or Possession, that in whole or in part receives signals transmitted or programs broadcast by one or more television broadcast stations licensed by the Federal Communications Commission, and makes secondary transmissions of such signals or programs by wires, cables, microwave, or other communications channels to subscribing members of the public who pay for such service. A provider of broadcast signals must be an inherently localized and closed transmission system of limited availability to qualify as a cable system. A system that meets this definition is considered a ``cable system'' for copyright purposes, even if the FCC excludes it from being considered a ``cable system'' because of the number or nature of its subscribers or the nature of its secondary transmissions. The Statements of Account and royalty fees to be deposited under this section shall be recorded and deposited by each individual cable system desiring its secondary transmissions to be subject to compulsory licensing. The owner of each individual cable system on the last day of the accounting period covered by a Statement of Account is responsible for depositing the Statement of Account and remitting the copyright royalty fees. For these purposes, and the purpose of this section, an ``individual'' cable system is each cable system recognized as a distinct entity under the rules, regulations, and practices of the Federal Communications Commission in effect on the last day of the accounting period covered by a Statement of Account, in the case of the preparation and deposit of a Statement of Account and copyright royalty fee. For these purposes, two or more cable facilities are considered as one individual cable system if the facilities are either: (i) In contiguous communities under common ownership or control or (ii) Operating from one headend. * * * * * (c) Submission of Statement of Account, accounting periods, and deposit. * * * * * (3) Statements of Account and royalty fees received before the end of the particular accounting period they purport to cover will not be processed by the Copyright Office except for cases where the cable system has ceased operation before the account period closes. Statements of Account and royalty fees received after the filing deadlines of July 30 or January 30, respectively, will be accepted for [[Page 56938]] whatever legal effect they may have, if any. * * * * * (5) A cable system that changes ownership during an accounting period is obligated to file only a single Statement of Account at the end of the accounting period. Statements of Account and royalty fees received after the filing deadlines of August 29 or March 1, respectively, will be accepted for whatever legal effect they may have, if any. (d) Statement of Account forms and submission. Cable systems should submit each Statement of Account using an appropriate form provided by the Copyright Office on its Web site and following the instructions for completion and submission provided on the Office's Web site or the form itself. To file a Statement of Account for an accounting period that includes dates prior to five years from submission of the form, please contact the Licensing Division for instructions. (e) Contents. In addition to the instructions for completion and submission provided on the Office's Web site or the form itself, each Statement of Account shall contain the following information: * * * * * (2) * * * (iii) * * * (A) The description, the number of subscribers, and the charge or charges made shall reflect the facts existing on the last day of the period covered by the Statement or, in the case of a cable system ceasing operations during the accounting period, the facts existing on the last day of operations; and (B) Each entity (for example, the owner of a private home, the resident of an apartment, the owner of a motel, or the owner of an apartment house) which is charged by the cable system for the basic service of providing secondary transmissions shall be considered one subscriber. For short-stay multiple dwelling units (e.g., motel, hotels), the operator shall report each building served as one subscriber if the operator has a single agreement for cable service with the units' proprietor, landlord, or owner on behalf of the residents or occupants of the structure. If the operator does not serve any type of multiple dwelling unit, residential or commercial, or any hotel or motel, a ``zero'' or a ``N/A'' (for ``not applicable'') must be reported in the appropriate space on the statement of account form. (C) A cable operator shall on its Statement of Account separately report, line by line, for both single and multiple dwelling unit buildings, the number of subscribers served, gross receipts for the sale of each tier containing broadcast programming, any revenue derived from non-broadcast tier(s) of services if such purchase is required to obtain tiers of services with broadcast signals, and fees for any other type of equipment or device necessary to receive broadcast signals that is supplied by the cable operator. Information regarding multiple dwelling units shall not be left blank. * * * * * (4) * * * (iv) A designation as to whether that primary transmitter is a ``network station,'' an ``independent station,'' or a ``noncommercial educational station.'' * * * * * (k) Royalty fee payment. (1) All royalty fees, including supplemental royalty fees, must be paid by a single electronic funds transfer (EFT), and must be received in the designated bank by the filing deadline for the relevant accounting period. Cable systems must provide specific information as part of the EFT and as part of the remittance advice, as listed in the instructions for the Statement of Account form. * * * * * (l) * * * (1) To amend or request a refund relating to a Statement of Account for an accounting period that includes dates prior to five years from submission of the form, please contact the Licensing Division for instructions. * * * * * (4) * * * (iv) All requests for correction or refunds must be accompanied by a filing fee in the amount prescribed in Sec. 201.3(e) for each Statement of Account involved, paid by EFT. No request will be processed until the appropriate filing fees are received, and no supplemental royalty fee will be deposited until an acceptable remittance in the full amount of the supplemental royalty fee has been received. * * * * * (vii) A refund payment in the amount of fifty dollars ($50.00) or less will not be refunded unless specifically requested before the statement of account is closed, at which point any excess payment will be treated as part of the royalty fee. A request for a refund payment in an amount of over fifty dollars ($50.00) is not necessary where the Licensing Division, during its examination of a Statement of Account or related document, discovers an error that has resulted in a royalty overpayment. In this case, the Licensing Division will affirmatively send the royalty refund to the cable system owner named in the Statement of Account. * * * * * (5) Interest on late payments or underpayments. Royalty fee payments submitted as a result of late or amended filings shall include interest. Interest shall begin to accrue beginning on the first day after the close of the period for filing statements of account for all underpayments or late payments of royalties for the cable statutory license occurring within that accounting period. The accrual period shall end on the date the payment submitted by a remitter is received by the Copyright Office. The interest rate applicable to a specific accounting period beginning with the 1992/2 period shall be the Current Value of Funds Rate, as established by section 8025.40 of the Treasury Financial Manual and published in the Federal Register, in effect on the first business day after the close of the filing deadline for that accounting period. Cable operators wishing to obtain the interest rate for a specific accounting period may do so by consulting the Federal Register for the applicable Current Value of Funds Rate, or by consulting the Copyright Office Web site. Interest is not required to be paid on any royalty underpayment or late payment from a particular accounting period if the interest charge is less than or equal to five dollars ($5.00). (6) A statement of account shall be considered closed in cases where a licensee fails to reply within ninety days to the request for further information from the Copyright Office or, in the case of subsequent correspondence that may be necessary, ninety days from the date of the last correspondence from the Office. * * * * * 0 4. Amend 201.28 by: 0 a. Revising paragraph (h)(1). 0 b. Revising paragraph (j)(3)(v). 0 c. Adding paragraph (j)(3)(viii) 0 d. Adding paragraphs (j)(4) and (j)(5). The revisions and additions read as follows: Sec. 201.28 Statement of Account for digital audio recording devices or media. * * * * * (h) * * * (1) All royalty fees, including supplemental royalty fee payments, must be paid by a single electronic funds transfer (EFT), and must be received in the designated bank by the filing deadline for the relevant accounting period. Remitters must provide specific information as part of the EFT and as part of the remittance [[Page 56939]] advice, as listed in the instructions for the Statement of Account form. * * * * * (j) * * * (3) * * * (v) All requests for correction or refunds must be accompanied by a filing fee in the amount prescribed in Sec. 201.3(e) for each Statement of Account involved, paid by EFT. No request will be processed until the appropriate filing fees are received, and no supplemental royalty fee will be deposited until an acceptable remittance in the full amount of the supplemental royalty fee has been received. * * * * * (viii) A refund payment in the amount of fifty dollars ($50.00) or less will not be refunded unless specifically requested before the statement of account is closed, at which point any excess payment will be treated as part of the royalty fee. A request for a refund payment in an amount of over fifty dollars ($50.00) is not necessary where the Licensing Division, during its examination of a Statement of Account or related document, discovers an error that has resulted in a royalty overpayment. In this case, the Licensing Division will affirmatively send the royalty refund to the manufacturing or importing party named in the Statement of Account. (4) Interest on late payments or underpayments. Royalty fee payments submitted as a result of late or amended filings shall include interest. Interest shall begin to accrue beginning on the first day after the close of the period for filing statements of account for all underpayments or late payments of royalties for the digital audio recording obligation occurring within that accounting period. The accrual period shall end on the date the payment submitted by a remitter is received by the Copyright Office. The interest rate applicable to a specific accounting period beginning with the 1992/2 period shall be the Current Value of Funds Rate, as established by section 8025.40 of the Treasury Financial Manual and published in the Federal Register, in effect on the first business day after the close of the filing deadline for that accounting period. Manufacturers or importing parties wishing to obtain the interest rate for a specific accounting period may do so by consulting the Federal Register for the applicable Current Value of Funds Rate, or by consulting the Copyright Office Web site. Interest is not required to be paid on any royalty underpayment or late payment from a particular accounting period if the interest charge is less than or equal to five dollars ($5.00). (5) A statement of account shall be considered closed in cases where a licensee fails to reply within ninety days to the request for further information from the Copyright Office or, in the case of subsequent correspondence that may be necessary, ninety days from the date of the last correspondence from the Office. Sarang V. Damle, General Counsel and Associate Register of Copyrights. [FR Doc. 2017-25487 Filed 11-30-17; 8:45 am] BILLING CODE 1410-30-P
![56926 Federal Register / Vol. 82, No. 230 / Friday, December 1, 2017 / Proposed Rules
information collection impacts of this Dated: November 28, 2017. information below for special
action on small businesses. Bruce Summers, instructions.
A small business guide on complying Acting Administrator, Agricultural Marketing FOR FURTHER INFORMATION CONTACT:
with fruit, vegetable, and specialty crop Service. Sarang V. Damle, General Counsel and
marketing agreements and orders may [FR Doc. 2017–25965 Filed 11–30–17; 8:45 am] Associate Register of Copyrights, by
be viewed at: http://www.ams.usda.gov/ BILLING CODE 3410–02–P email at sdam@loc.gov, Regan A. Smith,
rules-regulations/moa/small-businesses. Deputy General Counsel, by email at
Any questions about the compliance resm@loc.gov, or Anna Chauvet,
guide should be sent to Richard Lower LIBRARY OF CONGRESS Assistant General Counsel, by email at
at the previously mentioned address in achau@loc.gov, or any of them by
the FOR FURTHER INFORMATION CONTACT U.S. Copyright Office telephone at 202–707–8350.
section. SUPPLEMENTARY INFORMATION:
37 CFR Part 201
A 15-day comment period is provided I. Background
to allow interested persons to respond [Docket No. 2005–6]
Section 111 of the Copyright Act
to this proposal. Fifteen days is deemed
Statutory Cable, Satellite, and DART (‘‘Act’’), title 17 of the United States
appropriate because handlers are aware
License Reporting Practices Code, provides cable operators with a
of this action, which was recommended
statutory license to retransmit a
by the Committee at a public meeting, AGENCY: U.S. Copyright Office, Library performance or display of a work
and the subject matter of this proposal of Congress. embodied in a ‘‘primary transmission’’
is not complex. All written comments
ACTION: Notice of proposed rulemaking. made by a television station licensed by
timely received will be considered the Federal Communications
before a final determination is made on SUMMARY: The U.S. Copyright Office Commission (‘‘FCC’’). Cable operators
this matter. (‘‘Office’’) is seeking comment on that retransmit broadcast signals in
List of Subjects in 7 CFR Part 985 proposed rules governing the royalty accordance with this provision are
reporting practices of cable operators required to pay royalty fees to the
Marketing agreements, Oils and fats, under section 111 and proposed Copyright Office (‘‘Office’’), among
Reporting and recordkeeping revisions to the Statement of Account other requirements. Payments made
requirements, Spearmint oil. forms, and on proposed amendments to under section 111 are remitted semi-
the Statement of Account filing annually to the Office, which invests the
For the reasons set forth in the requirements. With this Notice of
preamble, 7 CFR part 985 is proposed to royalties in United States Treasury
Proposed Rulemaking, the Office securities pending distribution of these
be amended as follows: intends to resolve issues raised in an funds to copyright owners eligible to
PART 985—MARKETING ORDER earlier Notice of Inquiry directed receive a share of the royalties.2 In
REGULATING THE HANDLING OF towards cable reporting practices,1 as conjunction with royalty payments,
SPEARMINT OIL PRODUCED IN THE well as address additional issues that cable operators must also complete and
FAR WEST have subsequently arisen. Further, to file statements of account (‘‘SOAs’’),
the extent this rulemaking proposes which provide a record regarding the
changes to the Office’s section 111 cable operators’ retransmissions and
■ 1. The authority citation for 7 CFR regulations governing the processing of royalty payments to ‘‘promote uniform
part 985 continues to read as follows: refunds, supplemental or amended and accurate reporting, assist cable
Authority: 7 U.S.C. 601–674. payments, or calculation of interest, as operators in meeting their obligations
well as case management procedures, under the Act and regulations, and aid
[Subpart Redesignated as Subpart A] the Office proposes similar changes copyright owners, the Copyright Office,
with regard to the regulations governing and the Copyright [Royalty Judges] in
■ 2. Redesignate ‘‘Subpart—Order the statutory licenses for satellite reviewing and using the information
Regulating Handling’’ as ‘‘Subpart A— carriers and digital audio recording provided.’’ 3 Information provided on
Order Regulating Handling’’. devices or media. SOAs includes, among other things, the
[Subpart Redesignated as Subpart B DATES: Written comments must be number of channels on which the cable
and Amended] received no later than 11:59 p.m. system made secondary transmissions,
Eastern Time on January 16, 2018. the number of subscribers to the cable
■ 3. Redesignate ‘‘Subpart— ADDRESSES: For reasons of government system, and the gross amount paid to
Administrative Rules and Regulations’’ efficiency, the Copyright Office is using the cable system by subscribers for the
as subpart B and revise the heading to the regulations.gov system for the basic service of providing secondary
read as follows: submission and posting of public transmissions.4 Cable operators file the
comments in this proceeding. All SOAs with the Office using an
Subpart B—Administrative comments are therefore to be submitted appropriate form provided by the
Requirements electronically through regulations.gov. Office.5
Specific instructions for submitting
2 The Office distributes those royalties in
■ 4. In § 985.236, revise paragraph (b) to comments are available on the
jstallworth on DSKBBY8HB2PROD with PROPOSALS
accordance with periodic distribution orders
read as follows: Copyright Office Web site at https:// entered by the Copyright Royalty Board.
copyright.gov/rulemaking/section111. If 3 42 FR 61051, 61054 (Dec. 1, 1977) (explaining
§ 985.236 Salable quantities and allotment
percentages—2017–2018 marketing year. electronic submission of comments is benefits of using a standard SOA form, referencing
not feasible due to lack of access to a the Copyright Royalty Tribunal, a precursor to the
* * * * * computer and/or the internet, please
current Copyright Royalty Judges system).
4 37 CFR 201.17(e)(5)–(7).
(b) Class 3 (Native) oil—a salable contact the Office using the contact 5 Id. 201.17(d). The SOA forms are available in
quantity of 1,514,902 pounds and an PDF and Excel format on the Office’s Web site at
allotment percentage of 62 percent. 1 71 FR 45749 (Aug. 10, 2006). https://www.copyright.gov/licensing/sec_111.html.
VerDate Sep<11>2014 15:01 Nov 30, 2017 Jkt 244001 PO 00000 Frm 00005 Fmt 4702 Sfmt 4702 E:\FR\FM\01DEP1.SGM 01DEP1](https://thefederalregister.org/doc/82_FR_57156/page/1.svg)
![Federal Register / Vol. 82, No. 230 / Friday, December 1, 2017 / Proposed Rules 56927
In 2005, the Motion Picture relevant, and notes where intervening statutory requirements to report the
Association of America, Inc. (‘‘MPAA’’), statutory and/or regulatory changes may ‘‘number of subscribers’’ and ‘‘gross
on behalf of its member companies and have mooted some issues. This NPRM amounts’’ paid to cable operators as part
other producers and/or distributors of also proposes revisions to SOA forms of its initial regulations implementing
movies and television series and/or the Office’s regulations that are section 111. In a notice of proposed
(hereinafter, ‘‘Program Suppliers’’), filed intended to streamline administration of rulemaking, the Office noted that
a petition for rulemaking with the SOAs by the Office’s Licensing Division, reporting ‘‘[t]he ‘number of subscribers’
Copyright Office requesting the some of which would also apply to alone will serve no real purpose.’’ 17
commencement of a proceeding to remitters making use of the section 119 Instead, the Office concluded that the
address several issues related to the (satellite) or chapter 10 (‘‘DART’’) statutory requirement was ‘‘intended to
SOA reporting practices of cable licenses. provide copyright owners with a basis
operators under section 111 (the The Office welcomes public input on for a comparison with the reported gross
‘‘Petition’’). The Petition asked the the following proposed changes, as well receipts.’’ 18 Accordingly, the Office
Office to adopt a number of changes to as other suggestions on streamlining or ‘‘proposed . . . that the number of
its section 111 regulations and SOAs to otherwise improving reporting practices subscribers be accompanied by certain
‘‘improve the nature of the information for the section 111 license. related information concerning
reported on the SOAs by cable II. Proposed Section 111—Specific subscriber categories and charges in
operators,’’ believing them to be Changes order reasonably to accomplish this
‘‘critical to efficient and effective purpose.’’ 19 In a subsequent final rule
compliance review’’ of SOAs by A. Relationship Between Gross Receipts adopting regulatory language almost
copyright owners.6 The Office (Space K) and Subscriber and Rate identical to the present section
published a notice of inquiry (‘‘NOI’’) Information (Space E) 201.17(e)(6), the Office noted that
seeking comment on Program Suppliers’ Section 111 requires cable operators ‘‘although this information ‘will not
proposals and recommendations,7 and to report, in public filings to the provide a definitive or detailed
multiple parties filed comments in Copyright Office, a variety of comparison with the reported gross
response to the NOI, as well as reply information regarding the secondary receipts,’ it will be useful for at least a
comments.8 transmissions licensed under the rough comparison with the reported
Since the Office issued that NOI, the statute, including the number of gross receipts, and gives meaning to the
Satellite Television Extension and channels by which the system made statutory requirement that the ‘number
Localism Act of 2010 (‘‘STELA’’) and secondary transmissions, the names and of subscribers’ be given.’’ 20
STELA Reauthorization Act of 2014 locations of all primary transmitters To facilitate this ‘‘rough comparison
(‘‘STELARA’’) updated section 111 in used, and, as particularly relevant here, with the reported gross receipts,’’ under
several respects.9 Among other things, the ‘‘total number of [cable system] section 201.17(e)(6) cable operators
STELA modified the calculation of subscribers’’ and the ‘‘gross amounts’’ must provide ‘‘[a] brief description of
royalty rates paid by cable operators, paid to the cable system by these each subscriber category for which a
and updated certain provisions to subscribers ‘‘for the basic service of charge is made by the cable system for
accommodate the transition to digital providing secondary transmissions of the basic service of providing secondary
television broadcasts.10 In addition, primary broadcast transmitters.’’ 13 transmissions of primary broadcast
pursuant to STELA, the Copyright Cable operators pay a percentage from transmitters’’; ‘‘[t]he number of
Office issued a regulation implementing these reported gross receipts ‘‘for the subscribers to the cable system in each
a confidential procedure under which a privilege’’ of providing such secondary such subscriber category’’; and ‘‘[t]he
qualified independent auditor working transmissions (that is, a base rate), and charge or charges made per subscriber to
on behalf of all copyright owners can additional amounts for any distant each such subscriber category for the
‘‘confirm the correctness of the signal equivalent (‘‘DSEs’’) carried by basic service of providing such
calculations and royalty payments the cable system. These amounts in turn secondary transmissions.’’ 21 These
reported’’ on a cable SOA filed for are distributed as royalty fees to regulatory requirements are reflected in
accounting periods commencing on or copyright owners whose works have Space E of the SOA forms (titled
after January 1, 2010.11 STELARA, in been broadcast pursuant to the statutory ‘‘Secondary Transmission Service:
turn, amended section 111 to expand license.14 The statute further provides Subscribers and Rates’’), which requests
the local service area of low power that copyright owners may conduct information that ‘‘should cover all
television stations.12 confidential audits to verify the categories of secondary transmission
This notice of proposed rulemaking information provided on the SOAs, service of the cable system,’’ including
(‘‘NPRM’’) addresses issues raised in including the number of subscribers and ‘‘the number of subscribers to the cable
response to the NOI that are still relevant subscription rates, as well as system, broken down by categories of
the total amount of gross receipts secondary transmission service,’’ and
6 Program Suppliers, Petition for Rulemaking 2
collected from these subscribers at the the ‘‘rate charged for each category of
(June 7, 2005) (‘‘Petition’’). reported rates, to ensure that they have service.’’ 22 Section 201.17(e)(7) of the
7 71 FR 45749.
received accurate compensation under Office’s regulation addresses the
8 The initial and reply comments have been
the statutory license.15 statutory reference to ‘‘gross amounts’’
posted on the Office’s Web site at https:// and is reflected in Space K (titled
copyright.gov/rulemaking/section111. In accordance with this statutory
‘‘Gross Receipts’’), which requires cable
jstallworth on DSKBBY8HB2PROD with PROPOSALS
9 See Satellite Television Extension and Localism design, the Copyright Office has
Act of 2010, Public Law 111–175, 124 Stat. 1218 implemented these requirements
17 42 FR at 61054.
(2010) (‘‘STELA’’); STELA Reauthorization Act of through its regulations 16 and SOA
2014, Public Law 113–200, 128 Stat. 2059 (2014) 18 Id.
(‘‘STELARA’’). forms. The Office addressed the 19 Id.
10 17 U.S.C. 111(d)(1)(B)–(F), (f)(4); see generally 20 43 FR 958, 959 (Jan. 5, 1978).
13 17 U.S.C. 111(d)(1)(A).
75 FR 56868 (Sept. 17, 2010) (interim rule 21 37 CFR 201.17(e)(6)(i)–(iii).
implementing STELA). 14 Id. 111(d)(1)(B)(i)–(iv).
22 Paper Form SA1–2 at 2, Space E (‘‘Short Form
11 17 U.S.C. 111(d)(6); 37 CFR 201.16(h), (l), (o). 15 Id. 111(d)(6).
SOA’’); Paper Form SA3 at 2, Space E (‘‘Long Form
12 17 U.S.C. 111(f)(5). 16 37 CFR 201.17(e)(6)–(7). SOA’’).
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![56928 Federal Register / Vol. 82, No. 230 / Friday, December 1, 2017 / Proposed Rules
operators to ‘‘[e]nter the total of all calculated and reported gross receipts.26 NCTA, a comparison between Spaces E
amounts (gross receipts) paid to [the] National Association of Broadcasters and K is difficult since the information
cable system by subscribers for the (‘‘NAB’’) supported this proposal, in the two spaces reflects different time
system’s secondary transmission service stating that ‘‘requiring greater congruity periods (i.e., Space E calls for figures as
(as identified in Space E) during the between the ‘gross receipts’ information of the last day of the accounting period
accounting period.’’ 23 in Space K . . . and the subscriber and whereas Space K calls for gross receipts
Many of the issues raised by Program rate information in Space E would allow for the entire accounting period).
Suppliers’ Petition address whether the the Office to conduct its compliance The Office is also concerned that a
subscriber and rate information reviews with the benefit of more readily
variance explanation requirement could
provided by cable operators under the comparable base data.’’ 27
Cable associations National Cable & increase burdens on the Office, by
Office’s current regulations is sufficient requiring its Licensing Division
to provide the copyright owner with the Telecommunications Association
(‘‘NCTA’’) and American Cable examiners to assume a far greater role in
intended ‘‘rough comparison’’ with the examination of SOAs than has
required gross receipts information, a Association (‘‘ACA’’) opposed this
suggestion. Specifically, ACA traditionally been the case. Under the
concern the Office understands remains current examination scheme, the Office
germane as the cable marketplace maintained that title 17 does not require
such detailed reporting and suggested simply checks whether SOAs contain
continues to evolve since the regulation ‘‘obvious errors or omissions’’—not to
was first promulgated. Program that instead, copyright owners should
request additional information about identify all possible deficiencies.31 It
Suppliers stated that SOAs do not has never been the Office’s practice to
individual SOAs if the filing appeared
‘‘require adequate information for a compute totals in Space E and compare
questionable.28 NCTA stated that even if
meaningful comparison between Space the result with Space K, or otherwise
the Office adopted all of the Program
E and Space K,’’ 24 and requested the attempt to validate the information
Suppliers’ proposed changes to the SOA
Office to ‘‘require greater congruity provided in those spaces. The variance
(discussed further below), the
between the ‘gross receipts’ information explanation requirement, however,
‘‘calculated gross receipts’’ derived from
and the subscriber and rate information apparently envisions a role of the Office
Space E and actual gross receipts would
provided on the SOAs,’’ and ‘‘greater in calculating the proposed 10%
still not be identical. For example,
detail concerning the nature of revenues variance that would go beyond checking
NCTA asserted that simply multiplying
that a cable operator includes and for obvious errors and omissions.
tier charges by the number of
excludes in its ‘gross receipts.’ ’’ 25 As
subscribers per tier would not equal For the same reasons, while the Office
explained below, while the Office
gross receipts since both tier charges is considering adding an instruction to
tentatively concludes that it is not
and subscribership fluctuate over six its SOAs generally explaining that
advisable to adopt all of the Program
months due to, among other things, Space E is intended to allow for a rough
Suppliers’ recommendations, the Office
periodic rate adjustments to ‘‘reflect comparison with reported gross
proposes some changes to the
inflation, changes in the channels receipts, the Office tentatively
information sought in Space E to better
offered, [and] increased programming concludes that it is not appropriate to
facilitate the ability of copyright owners
costs for the basic tier.’’ 29 NCTA also adopt Program Suppliers’ related
to verify gross receipts and other
stated that variations between gross proposal to explicitly instruct remitters
information provided on SOAs through
receipts derived from using the data in that the gross receipts reported in Space
the auditing mechanism set forth in 37
Space E and the actual gross receipts K should approximate the number of
CFR 201.16.
reported under Space K result because subscribers in each category identified
1. Proposed Requirement to Explain the number of subscribers in Space E are in Space E, multiplied by the applicable
Variation in Data Between Spaces reported as of the last day of the rate.
E and K accounting period, whereas gross
receipts are accumulated over the entire 2. Proposed Requirement To Provide
In proposing that the Office require six-month period.30 More Detailed Reporting of Subscriber
‘‘greater congruity’’ between these The Office understands Program and Rate Information (Space E)
spaces, Program Suppliers specifically Suppliers’ position that a variance
requested that the Office instruct As noted above, Program Suppliers’
explanation requirement would aid
remitters that the gross receipts reported Petition proposed ‘‘greater congruity’’
copyright owners in making a rough
in Space K should approximate between gross receipts and subscriber
comparison between the amount of
calculated gross receipts (i.e., the and rate information on SOAs. In
‘‘gross receipts’’ given in Space K and
number of subscribers in each category response, the Office agrees that it may
the result of multiplying the number of
identified in Space E, multiplied by the be advisable to update the subscriber
subscribers by the rates given in Space
applicable rate) and require cable and rate information required by Space
E. This requirement, however, would go
operators to explain briefly in Space K E to provide private parties with more
beyond what has traditionally been
any variation of more than 10% between granular information to make a rough
required of remitters and may be
comparison with the gross receipts
inappropriate in light of differences in
23 Short Form SOA at 6, Space K; Long Form SOA information provided in Space K,
how data is reported in the two spaces.
at 7, Space K; see also 37 CFR 201.17(e)(6)–(7) including by making use of the audit
(describing corresponding SOA requirements). For example, the amount in Space K
mechanism provided by the
jstallworth on DSKBBY8HB2PROD with PROPOSALS
24 Program Suppliers Comments at 6. Broadcast may vary depending on whether the
regulations.32 With the exception of one
Music, Inc., The American Society of Composers, cable system’s accounting is done on an
Authors and Publishers, Broadcast Music Inc., and accrual or cash basis and, as noted by amendment to the regulatory usage of
SESAC, Inc. (collectively, ‘‘Music Claimants’’) the word ‘‘converter,’’ which, as
submitted their own comments in response to the 26 Program
Suppliers Comments at 5–6, 8.
discussed below, is intended to be
NOI, stating that ‘‘as a general matter, [they] support technical, these proposed changes are to
27 NAB Comments at 1.
MPAA’s comments and proposed revisions to the
28 ACA Comments at 5–6.
SOAs.’’ Music Claimants Comments at 2.
25 Petition at 3; see also Program Suppliers 29 NCTA Comments at 5. 31 See 37 CFR 201.17(c)(2).
Comments at 5–7. 30 Id. 32 Id. § 201.16.
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![Federal Register / Vol. 82, No. 230 / Friday, December 1, 2017 / Proposed Rules 56929
the Office’s forms and not its reporting requirements in Space E include one or more secondary
regulations. concerning categories of service and transmissions of television or radio
While the audit right established by other rate information. broadcast signals, for additional set fees,
STELA provides a mechanism for Space E implements 37 CFR and for converter fees.’’ 36
copyright owners to verify information 201.17(e)(6), which requires remitters to As depicted below, Space E currently
provided by cable operators and ensure provide ‘‘[a] brief description of each requires cable operators to report their
they are being accurately compensated subscriber category for which a charge number of subscribers and
for use of their intellectual property is made by the cable system for the basic corresponding rate, ‘‘broken down by
under the compulsory license, these service of providing secondary categories of secondary transmission
audits are limited in various ways, transmissions of primary broadcast service’’ offered to subscribers.37 As the
including by accounting period, transmitters.’’ 34 The regulation further form instructs, ‘‘[t]he information in
frequency, and scope of initial and states that ‘‘[e]ach entity (for example, Space E should cover all categories of
expanded audits as proscribed in the the owner of a private home, the secondary transmission service of the
Offices regulations.33 These audits are resident of an apartment, the owner of cable system, that is, the retransmission
not intended to substitute for accurate a motel, or the owner of an apartment of television and radio broadcasts by
and complete information provided by house) . . . shall be considered one your system to subscribers.’’ This
cable operators on the SOAs; nor is subscriber’’ 35 subject to charges by the information is reported through ‘‘Block
there an expectation that every single cable system for the basic service of 1,’’ which ‘‘lists the categories of
SOA would be audited. Indeed, it is providing secondary transmissions. secondary transmission service that
important for SOAs to provide These requirements are intended to cable systems most commonly provide
meaningful information to facilitate complement the regulatory definition of to their subscribers,’’ and ‘‘Block 2,’’
copyright owners’ determination of ‘‘gross receipts,’’ which includes ‘‘the which allows cable systems to add brief
whether or not to initiate an audit. full amount of monthly (or other descriptions of additional categories for
Accordingly, this section outlines periodic) service fees for any and all secondary transmission service that they
proposed changes or clarifications to services or tiers of services which offer to customers:
Block 1 Block 2
Number of Category of Number of
Category of service Rate Rate
subscribers service subscribers
Residential:
• Service to first set
• Service to additional set(s)
• FM radio (if separate rate)
Motel, hotel
Commercial
Converter:
• Residential
• Non-residential
As the Petition suggested, and as the independent subscription, and (5) any tier of agrees with revising Space E to require
Licensing Division’s examination of service or equipment for which purchase is a somewhat more granular breakdown
recently filed SOAs illustrates, there required as a prerequisite to obtaining of the number of subscribers and rates
another tier of service.39 charged for the various pertinent
appear to be opportunities to improve
the consistency and quality of In addition, the Office of the categories of service provided to
information reported in Space E. Commissioner of Baseball, National subscribers. Remitters would be
Specifically, Program Suppliers noted Basketball Association, National instructed to list the total number of
that there currently is ‘‘scant Football League, National Hockey subscribers for each category of service
information’’ about the tiers of service League, Women’s National Basketball as well as the corresponding rate (or
(e.g., basic, expanded, digital) offered by Association, and the National Collegiate range of rates), and to mark ‘‘N/A’’ if
cable operators that contain broadcast Athletic Association (a group they did not offer service in a given
signals.38 Program Suppliers requested collectively referred to as ‘‘Joint Sports category. The Office hopes that these
that the Office revise its SOAs to require Claimants’’ or ‘‘JSC’’) expressed changes will make it easier for cable
a variety of information, including: concerns that cable operators could operators to more accurately report the
limit the reporting of gross receipts to number of subscribers for the various
(1) Each tier of service they provide for a
separate fee, noting which tiers contain
revenues derived solely from the lowest services they offer.
broadcast signals, (2) the rates associated priced tier of service carrying broadcast Specifically, the Office proposes to
with each service tier, and whether the fees signals and exclude revenues derived update the various bolded categories of
collected for each package are included or from higher priced tiers that also carry service—currently listed in Block 1 of
jstallworth on DSKBBY8HB2PROD with PROPOSALS
excluded from their gross receipts such signals.40 Space E as ‘‘Residential,’’ ‘‘Motel,
calculation, (3) the number of subscribers While the Office does not endorse hotel,’’ ‘‘Commercial,’’ and ‘‘Converter.’’
receiving each service tier, (4) the lowest tier every proposal of the Petition, in light The Office proposes to replace these
of service including secondary broadcast of the increased variation in rates categories with the following: ‘‘Single-
transmissions that is available for offered by cable operators, the Office unit residential,’’ ‘‘Multi-unit
33 17 U.S.C. 111(d)(6); 37 CFR 201.16. 36 Id.201.17(e)(b)(i). 38 Petitionat 8 (citing 37 CFR 201.17(e)(7)).
34 37 CFR 201.17(e)(6)(i). 37 Short Form SOA at 2, Space E; Long Form SOA 39 Id.at 9–10.
35 Id. 201.17(e)(6)(iii)(B). at 2, Space E. 40 JSC Comments at 2–3.
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Program Suppliers, tentatively agreeing subset of providers that the statute stations with ‘‘non-network television
with NCTA and ACA that requiring defines in a ‘‘detailed, if arguably programming carried by a cable system
filers to provide information on ambiguous, way.’’ 51 in whole or in part beyond the local
offerings that do not contain broadcast The Act requires a ‘‘cable system’’ to service area of the primary transmitter
signals (or are not prerequisites to make secondary transmissions by of such programming.’’ 60 The statute, in
obtaining service containing any ‘‘wires, cables, microwave, or other turn, defines ‘‘local service area’’ in
broadcast signals) would be communications channels.’’ 52 As the precise geographic terms. For example,
inappropriate, as those tiers do not Ninth Circuit recognized, when read in for low power stations, the statute itself
contribute to gross receipts.49 conjunction with the whole of section defines the local service area in terms of
111 and the rest of the Copyright Act, a specific radius in miles around a
3. Reporting of Bundled Services in it is clear that Congress did not intend transmitter site.61 Accordingly, for a
Gross Receipts and Subscriber Rates section 111 ‘‘to sweep in secondary cable station to accurately calculate
(Spaces E and K) transmission services with indifference royalties under the statutory license, it
For years, cable operators and other to their technological profile.’’ 53 As the must know with some precision the
multichannel video programming Office has previously noted, ‘‘at the time locations to which the cable system has
distributors have marketed video, Congress created the cable compulsory retransmitted a broadcast station’s
internet data, and voice services as a license, the FCC regulated the cable signal—and whether that retransmission
single bundle of communication industry as a highly localized medium was within or outside the local service
products to subscribers for a set price. of limited availability, suggesting that area of that station. This is something
Bundling offers certain subscriber Congress, cognizant of the FCC’s that is possible with traditional, hard-
benefits, such as price discounts and a regulations and the market realities, wired cable systems and their
single monthly bill. While pricing fashioned a compulsory license with a equivalent, because of the localized
models vary, subscribers generally pay local rather than a national scope.’’ 54 nature of their retransmission services.
less for a bundled package than if Indeed, the localized nature of the cable Other aspects of the statutory scheme
purchasing each service individually. statutory license is reflected throughout similarly underscore the localized
From time to time, the Office receives section 111. For example, in defining nature of the statutory license. As
questions on how to report the price of ‘‘cable system,’’ section 111 states that discussed in greater detail below, for
cable television service in gross receipts two or more systems operating from purposes of categorizing cable systems
on their SOAs when it is sold as part of ‘‘one headend’’ 55 are considered a for royalty purposes, the statute
a bundle of services. The Office is single system; the same section also specifies that two or more cable systems
considering whether to amend its makes references to ‘‘contiguous constitute a single cable system for
regulations to provide specific guidance communities.’’ 56 Thus, as the Ninth purposes of section 111 if they are
on how remitters should report cable Circuit properly concluded, the Office’s under common ownership or control
television services sold as a bundled established understanding of the section and ‘‘are located in the same or
service. The Office welcomes comments 111 license ‘‘aligns with [section] 111’s contiguous communities.’’ 62 Similarly,
on how cable operators currently report many instances of location-sensitive the Office’s section 111 regulations
the price of cable television service in language.’’ 57 require cable operators to report the
gross receipts on their SOAs when it is Indeed, the overall operation of the communities served by each cable
sold as part of a bundle of services, and section 111 license assumes cable system (i.e., the cities or towns).63 Thus,
whether the Office’s regulations should systems operate as localized determining what ‘‘community’’ a cable
be amended to provide more guidance. retransmission services. The royalty system serves requires knowing with
structure for the license is predicated some precision where retransmitted
B. Definition of Cable System upon determining whether the signals are being sent, which necessarily
The Office proposes to amend the retransmission of television implies that a ‘‘cable system’’ is one that
regulatory definition of ‘‘cable system’’ programming is ‘‘local’’ to or ‘‘distant’’ operates via a localized transmission
to reflect both the Copyright Office’s from the local service area of the system.64
longstanding position that such systems primary transmitter of such Consistent with this understanding of
are limited to systems providing only programming.58 Specifically, royalty the overall legislative scheme, the Office
localized retransmissions of limited rates for larger (i.e., Long Form SOA) in prior rulemakings has held a
availability, and the uniform case law cable systems are calculated based on a consistent view that a ‘‘cable system’’
holding that internet-based value known as the ‘‘distant signal under the meaning of section 111 must
retransmission services are excluded equivalent,’’ 59 which is calculated operate in an inherently localized
from the section 111 compulsory based on the type and number of retransmission medium. For instance, in
license.50 1992 and 1997, in the context of
As the Ninth Circuit recently 51 Id. at 1009.
60 Id. 111(f)(5)(i) (emphasis added).
explained, Congress did not intend for 52 17 U.S.C. 111(f)(3).
61 See
53 Aereokiller, 851 F.3d at 1009. 17 111(f)(4). Specifically, the statute
section 111 ‘‘to service the entire defines the local service area for ‘‘low power
54 62 FR 18705, 18707 (Apr. 17, 1997); see also
secondary transmission community . . . stations’’ as comprising ‘‘the designated market area
Aereokiller, 851 F.3d at 1014 (quoting same).
without regard to the technological 55 Under FCC regulations, a ‘‘principal headend’’
. . . that encompasses the community of license of
makeup of its members,’’ and instead such station,’’ plus communities outside the
is defined as ‘‘(1) the headend, in the case of a cable designated market area that are either ‘‘wholly or
jstallworth on DSKBBY8HB2PROD with PROPOSALS
limited the cable license to a narrower system with a single headend or, (2) in the case of partially within 35 miles of the transmitter site’’ or,
a cable system with more than one headend, the in the case of stations located in larger metropolitan
49 See NCTA Comments at 7; ACA Comments at principal headend designated by the cable operator, areas, ‘‘wholly or partially within 20 miles of such
7–8. except that such designation shall not undermine transmitter site.’’ Id.; see also id. 122(j)(2)(C)
50 See, e.g., Fox Television Stations, Inc. v. or evade [the broadcast signal carriage (defining ‘‘designated market area’’).
requirements.]’’ 47 CFR 76.5(pp). 62 Id. 111(f)(3).
Aereokiller, LLC, 851 F.3d 1002, 1007 n.1 (9th Cir. 56 17 U.S.C. 111(f)(3).
63 37 CFR 201.17(e)(4).
2017) (noting that seven other federal courts held
57 Aereokiller, 851 F.3d at 1013.
that ‘‘Internet-based transmission services’’ did not 64 Cf. Aereokiller, 851 F.3d at 1013–14 (deferring
58 See 17 U.S.C. 111(d)(1), (f)(4), (5).
qualify as a ‘‘cable systems’’ under the Copyright to Copyright Office interpretation based on section
Act). 59 See, e.g., id. 111(d)(1)(B). 111’s use of ‘‘location-sensitive language’’).
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rulemakings to determine whether detail in those reports, the Office’s view headend and the specific communities
satellite and wireless cable was based on an understanding that, served from that headend.76 Program
retransmission systems could qualify for unlike other systems qualifying for the Suppliers stated that this information
the section 111 license, the Office cable license, online streaming services will help them determine whether cable
concluded that the section 111 license are not closed, localized systems, and so operators are, in fact, complying with
‘‘applies only to localized are outside the statutory license. By the section 111(f) requirement to treat
retransmission services,’’ 65 and that ‘‘a contrast, in a 2008 policy report, the all cable systems operating from a
provider of broadcast signals [must] be Office opined that video programming common headend as a single cable
an inherently localized transmission distribution systems using Internet system and suggested that a headend
media of limited availability to qualify Protocol technology, by virtue of the fact identification requirement would not
as a cable system.’’ 66 Applying this that they were inherently closed burden cable operators, as the FCC
standard, the Office found that satellite systems delivering content to a limited already requires them to maintain
carriers could not qualify as cable set of subscribers at their homes, could records of the location of principal
systems.67 The Eleventh Circuit upheld meet the definition of ‘‘cable system’’ 72 headends.77 As to which headend a
the reasonableness of that In sum, in light of the Office’s cable operator should report where
determination.68 Congress established understanding of section 111, its there are multiple headends, Program
the section 119 and 122 licenses to longstanding policy views, and the Suppliers stated that an operator should
provide for a separate statutory uniform direction of case law, the Office be required to identify the location of
licensing scheme for satellite carriers.69 proposes adding the following sentence each headend that serves communities
Thus, as the Ninth Circuit recently to its regulatory definition of ‘‘cable listed by its systems.78 NAB concurred
noted, ‘‘if Congress meant § 111 to system’’: ‘‘A provider of broadcast that including the specific location of
sweep in secondary transmission signals must be an inherently localized headends would enhance the Office’s
services with indifference to their and closed transmission system of review of SOAs.79
technological profile, then it was strange limited availability to qualify as a cable
system.’’ By contrast, NCTA remarked that if a
for Congress to have provided separate
single system uses more than one
compulsory license provisions—§§ 119 C. Interpretation of Community and headend, it should make no difference
and 122—for broadcast retransmissions Reporting of Area Served (Space D) to copyright owners which one is
by satellite carriers.’’ 70
Similarly, in policy reports and 1. Cable Headend Location identified; in that instance, an operator
testimony before Congress, the Office has already determined that it operates
Section 111(f) of the Copyright Act a single system for copyright
consistently communicated its position states in relevant part that: ‘‘For
that internet-based retransmission purposes.80 ACA commented that if a
purposes of determining the royalty fee Program Supplier has a legitimate
services are not ‘‘cable systems’’ under under subsection (d)(1), two or more
section 111.71 As explained in more question regarding the location of a
cable systems in contiguous headend, it can request clarification
communities under common ownership from that particular operator, and that
65 57 FR 3284–01, 3292 (Jan. 29, 1992) (codified
or control or operating from one Program Suppliers have employees and
at 37 CFR pt. 201).
66 62 FR 18705, 18707 (Apr. 17, 1997) (codified headend shall be considered as one outside counsel devoted to precisely
at 37 CFR pt. 201). system.’’ 73 Moreover, two cable systems that type of activity.81
67 57 FR at 3292, 3296. In this 1992 rulemaking, operating from the same headend are
the Copyright Office also concluded that ‘‘wireless’’ considered to be one system for The Office tentatively concludes that
cable systems could not qualify as ‘‘cable systems’’ purposes of calculating the section 111 it is not clear that artificial
under section 111. Id. at 3293–95. Congress fragmentation by cable systems seeking
amended section 111 in 1992 to reverse that
royalties ‘‘even if they are owned by
decision. Satellite Home Viewer Act of 1994, Public different entities.’’ 74 Currently, a cable to avoid paying a higher royalty rate
Law 103–369, 108 Stat. 3477 (1994); 59 FR 67635 operator is required to identify on its (i.e., a Long Form SOA cable system
(Dec. 30, 2004). In doing so, however, Congress did SOA only the community or reporting as several Short Form cable
not question the Copyright Office’s conclusion that systems) is currently a pressing concern,
the statute was limited to localized retransmission
communities in which it operates and
services. To the contrary, Congress recognized that not the location of the headend(s) or that requiring the reporting of
such wireless cable systems would have to be serving those communities.75 headend information would
treated the same as wired systems for purposes of In their Petition, Program Suppliers significantly help lessen this issue,
calculating distant signal royalties under the requested that the Office revise Space D compared to the additional burden
statutory license. See S. Rep. No 103–407 at 14
(1994); H.R. Rep. No. 103–703 at 19 (1994); see of the SOA form to require cable imposed upon cable operators. Given
generally 62 FR at 18709 (discussing legislative operators to identify the location of each the lack of a strong record
history). demonstrating the need for this
68 Satellite Broad. & Commc’ns Ass’n of Am. v.
U.S. Copyright Office); Register of Copyrights, information, the Office declines to adopt
Oman, 17 F.3d 344, 346–48 (11th Cir. 1994); see Satellite Home Viewer Extension and
also 37 CFR 201.17(k) (1992) (‘‘Satellite carriers, Reauthorization Act Section 109 Report 193–94 76 Petition at 10–11.
[and] satellite resale carriers . . . are not eligible for (2008), http://www.copyright.gov/reports/
77 See Program Suppliers Comments at 12–13
the cable compulsory license based upon an section109-final-report.pdf (‘‘Section 109 Report’’);
interpretation of the whole of section 111 of title 17 Register of Copyrights, Satellite Home Viewer (citing 47 CFR 76.1708, 76.1716). The Office notes
of the United States Code.’’). Extension and Localism Act Section 302 Report 47– that the FCC recently eliminated the requirement
69 Satellite Home Viewer Act of 1994, Public Law 49 (2011), https://www.copyright.gov/reports/ that cable operators maintain for public inspection
103–369, 108 Stat. 3477 (1994); 59 FR 67635 (Dec. section302-report.pdf. the designation and location of the cable system’s
jstallworth on DSKBBY8HB2PROD with PROPOSALS
30, 2004). 72 Section 109 Report at 197–99; see also id. at principal headend. In re Revisions to Public
70 Aereokiller, 851 F.3d at 1009. 200 (concluding that retransmission of broadcast Inspection File Requirements—Broadcaster
71 See, e.g., Register of Copyrights, A Review of signals to mobile devices should be outside Correspondence File & Cable Principal Headend
statutory license). Location, 32 FCC Rcd. 1565 (2017), https://
the Copyright Licensing Regimes Covering
73 17 U.S.C. 111(f)(3); see also 37 CFR apps.fcc.gov/edocs_public/attachmatch/FCC-17-
Retransmission of Broadcast Signals 97–99 (1997),
201.17(b)(2). 3A1.pdf.
https://www.copyright.gov/reports/study.pdf; 78 Id. at 13.
74 Short Form SOA at ii; Long Form SOA at ii;
Copyrighted Webcast Programming on the Internet:
79 NAB Comments at 1–2.
Hearing Before the H. Subcomm. on Courts and see also 43 FR at 958.
80 NCTA Comments at 8.
Intell. Prop., 106th Cong. 5–6 (2000) (statement of 75 See 37 CFR 201.17(e)(4); Short Form SOA at 1b,
Marybeth Peters, Register of Copyrights and Dir., Space D; Long Form SOA at 1b, Space D. 81 ACA Comments at 11.
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![Federal Register / Vol. 82, No. 230 / Friday, December 1, 2017 / Proposed Rules 56933
a headend-reporting requirement at this and whether those facilities should file continue to depend on the community
time. as a single cable system, preventing unit definition, and were necessary
artificial fragmentation of large cable under the FCC’s former distant signal
2. County Information
systems into multiple smaller systems to rules for establishing whether a distant
The Office’s regulations currently avoid the higher royalty payments Form signal is permitted for copyright
require a cable operator to report the 3 cable systems pay under section 111.89 purposes. NCTA further stated that
name of the community or communities The Office’s regulations currently Program Suppliers offered no evidence
served by its cable system.82 Space D of state that a cable system’s that Congress intended franchise areas
the SOAs require a cable operator to ‘‘community,’’ for purposes of section to play a decisive role in defining a
identify the communities it serves, 111, is the same geographic area as that single cable system for copyright
including by listing the ‘‘city or town’’ specified under the definition of purposes. NCTA noted that with the
and ‘‘state’’ served.83 The SOAs do not ‘‘community unit’’ as defined in the advent of statewide franchising in some
currently require identification of the FCC’s rules and regulations.90 FCC states, the proposed rule change could
county in which the given community regulations define ‘‘community unit’’ as result in the artificial joinder of systems
is located, although some operators ‘‘[a] cable television system, or portion that could be hundreds of miles apart
report counties on a voluntary basis. of a cable television system, that and not interconnected in any way.95 In
In their Petition, Program Suppliers operates or will operate within a reply comments, NAB agreed that the
requested that the Office require cable separate and distinct community or Copyright Office should continue to rely
operators to identify the county where municipal entity (including upon the FCC’s regulatory definition of
each cable community is located, in unincorporated communities within community unit, and suggested that a
addition to the city and state.84 They unincorporated areas and including literal application of those rules would
commented that this information would single, discrete unincorporated prevent artificial fragmentation by
help clarify whether a signal is local, areas).’’ 91 requiring cable operators to list all
distant, or partially distant (i.e., distant Program Suppliers requested that the contiguous units that shared a franchise
to some subscribers but local to others) Office amend the regulatory definition authority.96
for section 111 purposes.85 NCTA of the term ‘‘community’’ so that a cable The Copyright Office tentatively
agreed that the absence of county operator’s ‘‘franchise area’’ should be concludes that the facts and the law do
designations has hampered legitimate the de facto regulatory boundary for not support replacing the community
efforts to review certain SOAs and did defining cable communities instead of unit definition with a franchise area
not object to modification of the SOA the FCC’s community unit definition. In definition. Moreover, since the receipt
forms to require inclusion of county support, Program Suppliers noted that of the Petition, the Office has not noted
information in Space D.86 Similarly, the FCC itself, in written opinions, has a practice of fragmentation, and has
ACA stated that this requirement will interpreted ‘‘community unit’’ to mean learned that this issue may be of less
impose minimal additional burdens and cable franchise areas.92 But while it may interest to stakeholders. The Office
will facilitate review of SOAs by the be true that the FCC has itself at times invites public comments on whether
Licensing Division.87 equated its regulatory definition of
Because the parties agreed that this issue is still significant to
‘‘community unit’’ with a given cable stakeholders.
inclusion of the county on the SOA system’s franchise area, that is, the
would be beneficial, the Office proposes political jurisdiction for which a local D. Grade B Contour (Parts 6 and 7)
that Space D should be revised to government body has granted it the right Under the Copyright Act, the
require ‘‘county’’ information, but seeks to provide cable television to its definition of ‘‘local service area of a
comment on whether this proposed residents, the regulatory definition primary transmitter’’ establishes the
change remains desirable to refers more broadly to a ‘‘distinct difference between ‘‘local’’ and
stakeholders. The Office concludes that community’’ and the Petition itself ‘‘distant’’ signals and ‘‘therefore the line
regulatory change is not necessary to suggests the FCC has not been uniform between signals which are subject to
implement this update to the form. in that interpretation. In its NOI, the payment under the compulsory license
3. Definition of ‘‘Community’’ Office asked if there is a general pattern [under section 111] and those that are
Under the Copyright Act and the of disaggregation by cable operators to not.’’ 97 The shifting technologies used
Office’s regulations, two or more cable support a rule change, and if so, for television transmission, as reflected
systems constitute a single cable system whether it would be reasonable to in STELA, have led the Copyright Office
for purposes of section 111 if, as equate the term ‘‘community’’ with a to question whether certain parts of its
relevant here, they are under common cable operator’s ‘‘franchise area.’’ 93 regulations and SOA forms should be
In comments, NCTA suggested that modified or eliminated.
ownership or control and are located in
the FCC community unit concept was Specifically, the parts of the Long
the same or ‘‘contiguous
part of a long-established cable Form SOA which reference the ‘‘Grade
communities.’’ 88 Where common
copyright paradigm.94 It explained that B contour,’’ an FCC construct used for
ownership of cable systems is
the cable industry’s signal carriage many years in the context of analog
established, defining the ‘‘community’’
obligations under current FCC rules, television stations, appear to be
served is important to determine
notably the syndicated exclusivity rules, obsolete. Section 111 imported this
whether two or more cable facilities
operate in ‘‘contiguous communities,’’ construct, as detailed in FCC rules and
jstallworth on DSKBBY8HB2PROD with PROPOSALS
89 See 43 FR 958 (Jan. 5, 1978) (‘‘[T]he legislative
regulations, with respect to determining
history of the Act indicates that the purpose of this
82 37 CFR 201.17(e)(4). sentence [in section 111(f)] is to avoid the artificial the local service area of certain
83 Short Form SOA at 1b, Space D; Long Form fragmentation of cable systems.’’). signals.98 Subsequently, with the advent
SOA at 1b, Space D. 90 37 CFR 201.17(e)(4); see also Short Form SOA
84 Petition at 11–13. at 1b, Space D; Long Form SOA at 1b, Space D. 95 Id.at 11–13.
85 Id. at 12. 91 47 CFR 76.5(dd). 96 NAB Reply Comments at 12–13.
86 NCTA Comments at 9. 92 Petition at 16 (citation omitted). 97 H.R. Rep. No. 94–1476, at 99 (1976), as
87 ACA Comments at 4. 93 71 FR at 45752. reprinted in 1976 U.S.C.C.A.N. 5659, 5714.
88 17 U.S.C. 111(f)(3); 37 CFR 201.17(b)(2). 94 NCTA Comments at 11. 98 17 U.S.C. 111(f)(4).
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![Federal Register / Vol. 82, No. 230 / Friday, December 1, 2017 / Proposed Rules 56935
broadcast of a sports event, provided infringement action against the cable instructions for the SOA forms
that all of the conditions of the operator. While section 111(d)(1)(A) themselves.
proposed rule are satisfied.’’ 110 ‘‘Thus, directs the Register to issue regulations These changes are intended to
if a covered cable system made a governing the filing of SOAs, including improve the readability of existing
secondary transmission of one affected identification of all secondary regulations and do not represent
broadcast, it would pay 0.025 percent of retransmissions of broadcast stations, substantive changes in policy.
‘gross receipts’ during the relevant semi- number of subscribers, and gross III. Reporting Practices—Cable,
annual accounting period for that revenues paid to the cable system, it Satellite and DART
transmission; if it made secondary does not require the Office to determine
transmissions of two affected the scope of liability for copyright The Office has identified a number of
broadcasts, it would pay 0.025 percent infringement; in the Office’s view, this additional issues relating to cable SOA
of ‘gross receipts’ during the relevant question is more properly reserved for reporting practices, and finds it is
semi-annual accounting period for each the courts in appropriate cases.115 administratively efficient to address
of those transmissions (or a total of these new cable reporting practice
0.050 percent of its ‘gross receipts’).’’ 111 G. Removing Outdated References to the matters here rather than initiate a new
Assuming the CRB’s rule is adopted, Satellite Television Extension and proceeding. Because some of these
the Office intends to amend its cable Localism Act issues are also pertinent to the filing of
SOA forms to account for the new After Congress enacted STELA in SOAs for other statutory licenses, the
Sports Surcharge for semi-annual 2010, the Office issued implementing Office proposes to amend certain
accounting periods by adding a new regulations that, among other things, reporting rules for cable operators
Space R that would allow for established the accounting period for (under section 201.17), satellite carriers
calculations of this surcharge. No which the new cable operator royalty (under section 201.11) and digital audio
amendments to the Office’s regulations fee rates would take effect.116 In the recording equipment manufacturers and
are needed to accommodate this change. seven years since STELA was enacted, importers (under sections 201.27 and
however, some references to STELA in 201.28), where applicable, so that there
F. Interest Payments and Copyright are parallel requirements for all three
Infringement Liability the Office’s regulations appear to have
become outdated and unnecessary. The licenses in the Office’s regulations. Each
The Office’s current regulations Office understands that cable operators of the following proposed changes are
require cable operators to pay interest rarely file SOAs for periods dating back reflected in the updated proposed
on late or underpaid royalty further than the last five years (i.e., for regulatory language below.
payments.112 In their Petition, Program periods prior to the enactment of A. Closing Out Statements of Account
Suppliers asserted that such payments STELA). Accordingly, the Office
do not preclude copyright owners from During an initial examination of
proposes amending section 201.17 by
bringing an action against cable SOAs, the Office’s Licensing Division
deleting outdated references to STELA, often makes inquiries of cable system
operators for copyright infringement and adding language for remitters to
during the time period in which the operators regarding the information
contact the Licensing Division for provided in the SOA.119 Generally, the
cable operators’ royalty payments were instructions should they need to file
not properly remitted, and requested Office does not make an entire SOA
SOAs for accounting periods further available to the public until the cable
that the Office amend its regulations back than the last five years. The Office
and revise its SOA forms to include operator has responded to the Office’s
invites public comment on this inquiry and the initial examination
language clarifying that the assessment proposal.
of interest does not absolve cable process has been completed. But
operators from copyright infringement H. Technical Amendments oftentimes, the Office may not receive a
liability for failure to make timely response to its inquiry until long after
The Office’s current regulations
royalty payments.113 Cable associations the Office’s letter or email. In some
provide a number of instructions to
disagreed, with ACA stating that cases, replies are not received in the
cable operators on how to complete
‘‘[s]ound policy supports maintaining Office until years later. Currently, if this
SOAs, many of which duplicate the
the ability of a cable operator to correct happens, the Office re-examines the
instructions on the SOA forms
an[y] SOA and pay additional royalties original SOA in light of the request.
themselves.117 The Office proposes To streamline the administrative
with interest, without the imminent removing regulatory provisions that are
threat of copyright infringement,’’ and process and encourage timely responses
duplicative of information provided on to Office inquiries, the Office proposes
that the ability to file amended or late cable operator SOA forms and/or on the
SOAs with interest ‘‘provides an to close out SOA examination if a filer
Office’s Web site. fails to reply to an Office
efficient means to correct good faith In addition, the Office’s current
errors in filings[,] while at the same time correspondence request after 90 days
regulations instruct which information
providing copyright claimants with from the date of the last correspondence
must be provided as part of the
their full compensation plus from the Office. After an SOA is closed,
electronic funds transfer (‘‘EFT’’) to pay
interest.’’ 114 it would be placed with other publicly
royalty fees.118 The Office proposes
The Office declines Program available SOA records. At that point, a
removing this language from the
Suppliers’ suggestion to modify the cable operator wishing to submit a reply
regulations and incorporating it into the
SOA to state that a payment made after or pay additional royalties or make
jstallworth on DSKBBY8HB2PROD with PROPOSALS
the due date does not bar an 115 There are two other provisions, aside from 17
necessary corrections would need to file
U.S.C. 111(d)(1)(A), which require action by the an amended SOA along with a filing fee
110 82 FR at 24612. Register in the cable statutory licensing context. as prescribed in 37 CFR 201.3(e). But, to
111 Id. These are the authority to set filing fees for SOAs
112 See 37 CFR 201.17(k)(4); see also Short Form under 17 U.S.C. 111(d)(1)(G) and the authority to 119 These inquiries generally seek missing or
SOA at 8, Space Q; Long Form SOA at 9, Space Q. issue audit regulations under 17 U.S.C. 111(d)(6). clarifying information pertaining to an element(s) of
113 Petition at 13. 116 37 CFR 201.17(g)(4).
the SOA and might raise the possibility that there
114 ACA Comments at 12; see also NCTA 117 See id. 201.17(e)(1)–(4), (8), (10)–(13).
has been an underpayment or overpayment of the
Comments at 9. 118 Id. 201.17(k)(1). royalty fee.
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![Federal Register / Vol. 82, No. 230 / Friday, December 1, 2017 / Proposed Rules 56939
advice, as listed in the instructions for period if the interest charge is less than Superfund Site, Office of Site
the Statement of Account form. or equal to five dollars ($5.00). Remediation and Restoration, Mail
* * * * * (5) A statement of account shall be Code: OSRR07–1, U.S. Environmental
(j) * * * considered closed in cases where a Protection Agency, Region 1, 5 Post
licensee fails to reply within ninety Office Square, Suite 100, Boston, MA
(3) * * * days to the request for further 02109–3912, email: white.kimberly@
(v) All requests for correction or information from the Copyright Office epa.gov or Emily Bender, Community
refunds must be accompanied by a filing or, in the case of subsequent Involvement Coordinator, Office of the
fee in the amount prescribed in correspondence that may be necessary, Regional Administrator, Mail Code:
§ 201.3(e) for each Statement of Account ninety days from the date of the last ORA01–3, 5 Post Office Square, Suite
involved, paid by EFT. No request will correspondence from the Office. 100, Boston, MA 02109–3912, email:
be processed until the appropriate filing bender.emily@epa.gov. Comments may
fees are received, and no supplemental Sarang V. Damle,
also be submitted electronically or
royalty fee will be deposited until an General Counsel and Associate Register of
Copyrights.
through hand delivery/courier by
acceptable remittance in the full amount following the detailed instructions in
of the supplemental royalty fee has been [FR Doc. 2017–25487 Filed 11–30–17; 8:45 am]
the ADDRESSES section of the direct final
received. BILLING CODE 1410–30–P
rule located in the rules section of this
* * * * * Federal Register.
(viii) A refund payment in the amount FOR FURTHER INFORMATION CONTACT:
of fifty dollars ($50.00) or less will not ENVIRONMENTAL PROTECTION Kimberly White, Remedial Project
be refunded unless specifically AGENCY Manager, U.S. Environmental Protection
requested before the statement of Agency, Region 1, MC: OSRR07–1 5
40 CFR Part 300
account is closed, at which point any Post Office Sq., Boston, MA 02119,
excess payment will be treated as part [EPA–HQ–SFUND–2002–0001; FRL–9971– phone: (617) 918–1752, email:
of the royalty fee. A request for a refund 31-Region 1] white.kimberly@epa.gov.
payment in an amount of over fifty SUPPLEMENTARY INFORMATION: In the
dollars ($50.00) is not necessary where National Oil and Hazardous
Substances Pollution Contingency ‘‘Rules and Regulations’’ Section of
the Licensing Division, during its today’s Federal Register, we are
examination of a Statement of Account Plan; National Priorities List: Deletion
of the Hatheway & Patterson publishing a direct final Notice of
or related document, discovers an error Deletion of Hatheway & Patterson
that has resulted in a royalty Superfund Site
Superfund Site without prior Notice of
overpayment. In this case, the Licensing AGENCY: Environmental Protection Intent to Delete because we view this as
Division will affirmatively send the Agency. a noncontroversial revision and
royalty refund to the manufacturing or ACTION: Proposed rule; notice of intent. anticipate no adverse comment. We
importing party named in the Statement have explained our reasons for this
of Account. SUMMARY: The Environmental Protection deletion in the preamble to the direct
(4) Interest on late payments or Agency (EPA) Region 1 is issuing a final Notice of Deletion, and those
underpayments. Royalty fee payments Notice of Intent to Delete the Hatheway reasons are incorporated herein. If we
submitted as a result of late or amended & Patterson Superfund Site (Site) receive no adverse comment(s) on this
filings shall include interest. Interest located in Mansfield and Foxborough, deletion action, we will not take further
shall begin to accrue beginning on the Massachusetts, from the National action on this Notice of Intent to Delete.
first day after the close of the period for Priorities List (NPL) and requests public If we receive adverse comment(s), we
filing statements of account for all comments on this proposed action. The will withdraw the direct final Notice of
underpayments or late payments of NPL, promulgated pursuant to section Deletion, and it will not take effect. We
royalties for the digital audio recording 105 of the Comprehensive will, as appropriate, address all public
obligation occurring within that Environmental Response, comments in a subsequent final Notice
accounting period. The accrual period Compensation, and Liability Act of Deletion based on this Notice of
shall end on the date the payment (CERCLA) of 1980, as amended, is an Intent to Delete. We will not institute a
submitted by a remitter is received by appendix of the National Oil and second comment period on this Notice
the Copyright Office. The interest rate Hazardous Substances Pollution of Intent to Delete. Any parties
applicable to a specific accounting Contingency Plan (NCP). The EPA and interested in commenting must do so at
period beginning with the 1992/2 period the State of Massachusetts, through the this time.
shall be the Current Value of Funds Massachusetts Department of For additional information, see the
Rate, as established by section 8025.40 Environmental Protection (MassDEP), direct final Notice of Deletion which is
of the Treasury Financial Manual and have determined that all appropriate located in the Rules section of this
published in the Federal Register, in response actions under CERCLA, other Federal Register.
effect on the first business day after the than operation, maintenance,
close of the filing deadline for that monitoring, and five-year reviews, have List of Subjects in 40 CFR Part 300
accounting period. Manufacturers or been completed. However, this deletion Environmental protection, Air
importing parties wishing to obtain the does not preclude future actions under pollution control, Chemicals, Hazardous
jstallworth on DSKBBY8HB2PROD with PROPOSALS
interest rate for a specific accounting Superfund. substances, Hazardous waste,
period may do so by consulting the DATES: Comments must be received by Intergovernmental relations, Penalties,
Federal Register for the applicable January 2, 2018. Reporting and recordkeeping
Current Value of Funds Rate, or by ADDRESSES: Submit your comments, requirements, Superfund, Water
consulting the Copyright Office Web identified by Docket ID No. EPA–HQ– pollution control, Water supply.
site. Interest is not required to be paid SFUND–2002–0001, by mail or email to: Authority: 33 U.S.C. 1321(d); 42 U.S.C.
on any royalty underpayment or late Kimberly White, Remedial Project 9601–9657; E.O. 13626, 77 FR 56749, 3 CFR,
payment from a particular accounting Manager for Hatheway & Patterson 2013 Comp., p. 306; E.O. 12777, 56 FR 54757,
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Document Created: 2018-10-25 10:44:15
Document Modified: 2018-10-25 10:44:15
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Proposed Rules | |
| Action | Notice of proposed rulemaking. | |
| Dates | Written comments must be received no later than 11:59 p.m. | |
| Contact | Sarang V. Damle, General Counsel and Associate Register of Copyrights, by email at [email protected], Regan A. Smith, Deputy General Counsel, by email at [email protected], or Anna Chauvet, Assistant General Counsel, by email at [email protected], or any of them by telephone at 202-707-8350. | |
| FR Citation | 82 FR 56926 | |
| CFR Associated | Cable Television; Copyright; Recordings and Satellites |
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