Report text available as:

  • TXT
  • PDF   (PDF provides a complete and accurate display of this text.) Tip ?

106th Congress                                                   Report
                                 SENATE                          
 1st Session                                                     106-51
_______________________________________________________________________

                                     

                                                       Calendar No. 120




                   SATELLITE TELEVISION ACT OF 1999

                               __________

                              R E P O R T

                                 of the

           COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                                    on

                                 S. 303

                             together with

                             MINORITY VIEWS






                  May 20, 1999.--Ordered to be printed

                               __________

                    U.S. GOVERNMENT PRINTING OFFICE
69-010                     WASHINGTON : 1999



       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
                       one hundred sixth congress
                             first session

                     JOHN McCAIN, Arizona, Chairman
TED STEVENS, Alaska                  ERNEST F. HOLLINGS, South Carolina
CONRAD BURNS, Montana                DANIEL K. INOUYE, Hawaii
SLADE GORTON, Washington             JOHN D. ROCKEFELLER IV, West 
TRENT LOTT, Mississippi                  Virginia
KAY BAILEY HUTCHISON, Texas          JOHN F. KERRY, Massachusetts
OLYMPIA SNOWE, Maine                 JOHN B. BREAUX, Louisiana
JOHN ASHCROFT, Missouri              RICHARD H. BRYAN, Nevada
BILL FRIST, Tennessee                BYRON L. DORGAN, North Dakota
SPENCER ABRAHAM, Michigan            RON WYDEN, Oregon
SAM BROWNBACK, Kansas                MAX CLELAND, Georgia
                       Mark Buse, Staff Director
                  Martha P. Allbright, General Counsel
     Ivan A. Schlager, Democratic Chief Counsel and Staff Director
                Kevin Kayes, Democratic General Counsel

                                  (ii)


                                                       Calendar No. 120

106th Congress                                                   Report
                                 SENATE
 1st Session                                                     106-51

======================================================================



 
                    SATELLITE TELEVISION ACT OF 1999

                                _______
                                

                  May 20, 1999.--Ordered to be printed

                                _______


       Mr. McCain, from the Committee on Commerce, Science, and 
                Transportation, submitted the following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                         [To accompany S. 303]

    The Committee on Commerce, Science, and Transportation, to 
which was referred the bill (S. 303) ``A bill to amend the 
Communications Act of 1934 to enhance the ability of direct 
broadcast satellite and other multichannel video providers to 
compete effectively with cable television systems, and for 
other purposes'', having considered the same, reports favorably 
thereon with an amendment (in the nature of a substitute) and 
recommends that the bill (as amended) do pass.

                          Purpose of the Bill

  The purpose of the bill is to amend the Communications Act of 
1934 to promote competition in the provision of multichannel 
video service while protecting the availability of free, local 
over-the-air television.

                          Background and Needs

  Cable rates have increased more than 20 percent since the 
enactment of the 1996 Telecommunications Act, far exceeding 
other consumer price increases. Even the Federal Communications 
Commission (FCC) has recognized that cable rates have risen 
excessively in recent years notwithstanding the agency's 
implementation of cable rate regulation rules.
  Regulation of most tiers of cable television service ceased 
on April 1, 1999. This regulatory ``sunset'' date was enacted 
into law based on the belief that, by that date, cable 
television operators would face competition from a number of 
other multichannel video services, including direct-to-home 
satellite television, wireless cable, and telephone company-
provided video dialtone systems.
  This anticipated competition failed to develop as expected. 
Technical and operational problems resulted in financial 
difficulties for wireless cable systems, telephone companies 
concentrated their efforts on voice and data delivery rather 
than on video, and direct-to-home satellite service struggled 
due to a series of statutorily-imposed limitations on the 
nature and terms of the service it could offer.
  Despite these adverse occurrences, the cable rate regulation 
sunset took place as required by statute on April 1. Therefore, 
under current circumstances, most cable television systems have 
become virtually unregulated providers of a monopoly service, 
with unconstrained power to raise consumer rates due to the 
lack of an effectively competitive alternative provider of 
multichannel video service.
  Recognizing this fact, the cable industry has volunteered to 
hold future subscriber rate increases to around 5 percent 
annually. This, however, would still be more than twice the 
projected inflation rate, and no voluntary commitment, however 
sincerely intentioned, can actually be enforced.
  Return to a prescriptive rate regulation regime would not be 
a satisfactory alternative. Experience shows that cable rate 
regulation is ineffective in holding cable rates down without 
also hurting investment in cable service. In 1992 the FCC 
reduced cable rates 17 percent and imposed limits on subsequent 
rate increases. Investment in programming and in cable plant 
improvements was immediately and sharply curtailed. Total 
capital investment plunged from $8.17 billion in 1989 to $1.9 
billion in 1993. In contrast, with rate deregulation slated to 
take effect on April 1, capital flow from debt, equity, and 
other sources has increased 25 percent each year since 1996. 
And because many cable systems are making the substantial 
investment needed to provide high-speed cable modem service, 
reimposition of rate regulation now would impede cable's 
capital flow at precisely the time it is most needed.
  Conversely, experience shows that competition is effective in 
constraining cable rates without harming cable service. In 
fact, it has been shown to produce improved service at lower 
rates. Testimony before the Committee last year showed that 
head-to-head competition between cable systems typically caused 
the incumbent cable operator to increase the number of channels 
offered while cutting monthly rates dramatically, in one case 
almost in half. Effective competition from other providers of 
multichannel video service remains the only workable antidote 
to cable rate increases.
  Direct-to-home satellite service, commonly referred to as 
Direct Broadcast Service (DBS), \1\ is currently the best 
potential competitor to cable television. DBS systems are the 
fastest-growing consumer electronics product in history: the 
number of DBS subscribers jumped an astonishing 97 percent in 
1996 and another 30 percent the following year. However, 
despite this growth, some current statutes and regulations 
impede DBS's ability to compete with cable.
---------------------------------------------------------------------------
    \1\ For purposes of this report, unless otherwise indicated, the 
terms ``direct-to-home satellite service'', ``DBS'', and ``satellite 
television'' are used interchangeably and synonymously.
---------------------------------------------------------------------------
  Satellite television companies are prohibited under the terms 
of the Satellite Home Viewer Act (SHVA) and the Copyright Act 
from providing their subscribers with signals from local 
network stations as a component of their satellite television 
service. Cable television providers, however, face no such 
prohibitions. They can, and do, provide local television 
stations to their customers.
  Direct-to-home satellite service providers' inability to 
offer local television stations as part of an integrated 
service package puts it at a significant competitive 
disadvantage to cable television service. When the FCC surveyed 
people who ``investigated'' DBS systems but did not buy them, 
55 percent of these people reported that they did not buy a DBS 
system because of a lack of local television networks. 
Therefore, to compete effectively with cable television 
systems, DBS must be allowed to provide local television 
stations to subscribers.
  Under current law, satellite television providers are also 
prohibited from providing distant network signals to a 
subscriber unless that subscriber resides in an area considered 
to be ``unserved'' by the local television station. 
``Unserved'' areas are in turn defined as being those beyond 
the local television station's predicted Grade B contour.
  The area closest to the television station is referred to as 
the station's ``Grade A'' contour. This area is where the 
television station's over-the-air signal strength is likely to 
be strongest and is the core of the local television station's 
market.
  The Grade B contour extends beyond the Grade A contour. The 
Grade B contour was adopted by the FCC in the 1950's to prevent 
interference between two television stations at the outer 
limits of their signal coverage areas. It was not intended to 
define whether a given consumer actually receives a 
satisfactory television signal. As a result, satellite 
television subscribers within a station's Grade B contour can 
find their off-air reception unsatisfactory, yet still be 
ineligible to receive distant network signals under the terms 
of SHVA.
  As a result, many consumers who subscribed to direct-to-home 
satellite service believed that, because they got poor 
reception of their local stations off-air, they lived in an 
``unserved'' area and were entitled to receive distant network 
signals from their satellite television provider. It has been 
estimated that over 2,000,000 satellite television subscribers 
received distant network signals although they resided in the 
local television station's predicted Grade A and Grade B 
contours, and therefore were ineligible to receive them under 
the terms of SHVA.
  In 1997 and 1998, a number of lawsuits were brought under 
SHVA by broadcasters against satellite carriers, alleging that 
the satellite carriers were distributing the signals of distant 
network-affiliated television broadcast stations to subscribers 
that were not unserved households within the meaning of SHVA. 
Perhaps the most far-reaching of these was brought before the 
United States District Court for the Southern District of 
Florida in Miami by CBS, Fox, and several affiliates against 
PrimeTime 24.
  Finding that PrimeTime 24 had willfully provided distant 
network programming to served households in violation of SHVA, 
the Miami court issued a preliminary and, later, a permanent 
injunctionordering PrimeTime 24 not to deliver CBS or Fox 
television network programming to any customer living in a ``served'' 
household. The court further enjoined PrimeTime 24 from providing 
distant network signals to any house predicted by a computer model to 
be served without first either: (1) obtaining the written consent of 
the affected stations; or (2) providing the affected station with 
copies of a signal intensity test showing that the household in 
question is actually unserved.
  The preliminary injunction took effect on February 28, 1999, 
and the permanent injunction was to have taken effect on April 
30, 1999. The preliminary injunction has resulted in the 
termination of network signals to the estimated 700,000 to one 
million subscribers nationwide who subscribed to PrimeTime 24 
after the networks filed their lawsuit on March 11, 1997. The 
permanent injunction, which applies to the PrimeTime 24 
customers who subscribed before March 11, 1997, could affect an 
additional 1.5 million subscribers nationwide. The total number 
of PrimeTime 24 subscribers affected by the Miami injunctions 
could therefore reach 2.2-2.5 million.
  In a similar lawsuit, a federal district court in North 
Carolina ruled against PrimeTime 24, and in favor of a local 
ABC affiliate. This court found a pattern and practice of 
willful copyright infringement, and therefore enjoined 
transmission of ABC network programming within the Raleigh, 
North Carolina region. PrimeTime 24 has provided network 
services to as many as 35,000 households in the ABC affiliates 
Raleigh/Durham market.
  In addition to the PrimeTime 24 proceedings, several other 
lawsuits have been filed by broadcasters and satellite carriers 
in the federal courts. In Amarillo, Texas, an NBC affiliate has 
sued PrimeTime 24 in federal district court. EchoStar, another 
satellite carrier, filed suit against the networks and network-
owned or affiliated stations in a federal district court in 
Colorado, asking the court for a declaratory ruling that it is 
not in violation of SHVA. The broadcast interests have in turn 
filed a suit against EchoStar before the district court in 
Miami, and the Miami court has joined EchoStar in the Miami 
proceeding.
  In July and August 1998, EchoStar and the National Rural 
Telecommunications Cooperative filed petitions with the Federal 
Communications Commission asking the FCC to take various 
actions with respect to its definition of Grade B intensity. 
Specifically, these parties asked the Commission to: (1) adjust 
the values of Grade B intensity to better reflect which 
households actually receive adequate signals; (2) endorse a 
predictive model arguably more accurate than that adopted by 
the Miami court; and (3) revise its procedures for measuring 
broadcast signal strength at the home. These proposals were 
opposed by the broadcast industry.
  The FCC conducted a rulemaking and received comments from 
various interested parties. In January 1999, the FCC released 
its Grade B Order, in which it made several decisions with 
respect to Grade B intensity. The FCC found, first, that it has 
no authority to adopt a higher value for Grade B intensity 
specifically for SHVA purposes. Second, it adopted new testing 
procedures for measuring television signal intensity at 
individual households. Third, the FCC endorsed the so-called 
Individual Location Longley-Rice (ILLR) model for predicting 
whether or not individual households can receive signals of 
Grade B intensity. Finally, it identified several options for 
improving SHVA and the Communications Act to better serve 
customers, including: confirming that copyright law allows 
satellite companies to provide local television stations to 
local markets; finding a better, but still objective, standard 
for determining which households are unserved; repealing the 
90-day waiting period for former cable customers; and providing 
for a clear statutory acceptance of predictive models and loser 
pays mechanisms.
  While the FCC's actions were helpful in resolving certain 
technical questions with respect to the implementation of its 
Grade B standard, and the Miami federal court modified its 
injunction orders to reflect the rulings of the FCC, the FCC 
itself acknowledged that its action could not definitively 
resolve the problems associated with the implementation of 
SHVA. Indeed, in its Notice of Proposed Rulemaking, the FCC 
noted:
          The SHVA limits the proposals we can make to address 
        the petitions. Further, we do not appear to have the 
        statutory authority to prevent most of PrimeTime 24's 
        subscribers from losing their network service under the 
        Miami preliminary injunction (and under a possible 
        permanent injunction). The evidence in the Miami and 
        Raleigh court cases strongly suggests that many, if not 
        most, of those subscribers do not live in unserved 
        households under any interpretation of that term.
  Directelevision and the networks have recently announced an 
agreement that incorporates several of the standards announced 
in the FCC's Grade B Order. This agreement settles litigation 
before the Miami federal court, under which the networks had 
obtained a restraining order imposing on Directelevision the 
court's earlier PrimeTime 24 injunctions. Under the agreement, 
Directelevision will temporarily restore distant CBS and Fox 
network signals to its estimated 700,000 customers who lost 
network service on February 28. However, subscribers predicted 
(using the FCC's ILLR predictive model) to receive a Grade A 
signal would be disconnected from distant network service on 
June 30, 1999. Those predicted to receive a Grade B signal will 
have distant network service cut off on December 31, 1999. 
These cut-off households can have their service restored if 
actual signal measurements show them to be unable to receive a 
Grade B signal. The settlement also requires Directelevision to 
provide its cut-off subscribers a substantial discount on 
outdoor over-the-air antennas.
  While it may serve as a partial stop-gap measure, that 
agreement does not lessen the need for congressional action to 
avoid the disenfranchising of millions of consumers. This 
agreement does not change the fact that, as a result of the 
litigation, millions of satellite television subscribers stand 
to lose the distant network stations that they have enjoyed 
receiving for some time. Many will be required to go to the 
trouble and expense of installing off-air antennas to improve 
their reception of local television signals. For those 
satellite television subscribers living at the fringes of the 
predicted Grade B contour, these measures may still not allow 
for reception of television signals that these viewers consider 
acceptable.
  The direct-to-home satellite service providers argue that 
consumers should not be arbitrarily deprived of channels that 
enablethem to enjoy decent network television signals and more 
program options, and whose carriage has not appeared to injure local 
television stations. Many consumers agree. However, broadcasters argue 
that satellite television companies should not be rewarded for breaking 
the law, that the Grade B contour does in fact predict adequate 
television service, that satellite carriage of distant network stations 
is, in fact, harming local network television stations, and that local 
stations give television subscribers sufficient access to network 
programming.

                          Legislative History

    S. 303, the Satellite Television Act of 1999, was 
introduced by Senator McCain on January 25, 1999, and referred 
to the Committee on Commerce, Science, and Transportation. A 
full Committee hearing was held on the bill on February 23, 
1999. By a vote of 12-8 on March 10, 1999, the Committee 
ordered S. 303 reported to the Senate with an amendment in the 
nature of a substitute.

                      Summary of Major Provisions

  This bill removes statutory impediments to direct-to-home 
satellite service providers' ability to compete with cable 
television. This will benefit consumers by increasing the 
competitive pressures on ever-escalating cable rates. The 
bill's approach recognizes the legitimate but competing 
interests of the satellite television operators and the local 
television stations and strikes a balance between them. It also 
affords satellite television subscribers who face losing their 
distant network signals sufficient time to install off-air 
reception devices or secure necessary authorization to continue 
receiving them.
  The bill authorizes direct-to-home satellite service 
providers to offer their subscribers local television station 
broadcasts. Providing local stations will enable satellite 
television operators to offer a service package combining 
broadcast and nonbroadcast channels comparable to that offered 
by cable television operators, thus allowing satellite 
television to compete more effectively with incumbent cable 
television systems.
  To assure that satellite television subscribers have the same 
access to local off-air television stations as cable television 
systems, the bill would also require direct-to-home satellite 
service providers to comply with the must-carry rules that 
apply to cable television operators no later than January 1, 
2002.
  To implement a better way of determining whether prospective 
satellite television subscribers receive a Grade B-strength 
signal from a local television station, the bill requires the 
use of the ILLR methodology. For those consumers who may 
disagree with an ILLR measurement showing they receive Grade B 
service, the bill sets out the elements of a consumer-friendly 
waiver process and directs

the FCC to complete a single rulemaking within 90 days to adopt 
implementing rules. These provisions will give consumers who 
perceive their off-air local television reception to be 
unsatisfactory a timely way to have their concerns addressed.
  With regard to satellite television subscribers who are 
currently receiving distant network signals inconsistent with 
the terms of SHVA, the bill allows this distant signal carriage 
to continue until December 31, 1999. This will allow additional 
time for consumers to be tested under the ILLR methodology, the 
FCC to develop its waiver process, and for consumers to seek a 
waiver.
  Local network affiliates argue strenuously that this existing 
distant signal carriage is harming them. However, 
notwithstanding a series of hearings the Committee has had on 
this issue, they have failed to present convincing evidence to 
show that the current degree of distant signal carriage poses 
any realistic threat to the maintenance of a healthy, local 
over-the-air broadcasting system. We therefore find that the 
interest of satellite television consumers in not being 
suddenly and arbitrarily deprived of existing service outweighs 
the interests of local broadcasters in summary deletion.
  After December 31, 1999, satellite television consumers 
residing in a local network affiliate's Grade A contour will 
not be eligible to receive distant stations affiliated with the 
same network unless an ILLR analysis shows that an individual 
consumer is in reality unserved or unless the consumer receives 
a waiver from the local network station. As stated previously, 
the Grade A contour is commonly considered to be the core of 
the local station's market. Just as important, it is the area 
where signal reception is normally very good, and where local 
audiences are more oriented towards local stations and less 
likely to need distant signals in order to receive network 
television service. On balance, therefore, we find that at the 
end of the current year subscribers in this area whose 
reception is Grade B or better and who do not receive waivers 
grandfathering the distant station carriage would not be 
materially harmed by the cessation of distant signal carriage.
  After December 31, 1999, satellite television consumers 
residing in a local network affiliate's predicted Grade B 
contour may continue to receive distant network signals. These 
subscribers, unlike those within the Grade A contour, are not 
in the core of the local station's market and are more likely 
to experience inadequate off-air reception. It is estimated 
that the majority of illegal distant signal carriage is 
occurring within the Grade A contour, not the Grade B contour. 
Therefore, given the absence of any demonstrable harm to local 
broadcasting from illegal signal carriage in both the Grade A 
and Grade B contours, the Committee finds it unlikely that 
substantial harm will occur if distant signal carriage is 
permitted to continue to the minority of DBS subscribers 
receiving it who reside within the Grade B contour.
  Nevertheless, the Committee remains aware that, 
notwithstanding the failure of local broadcasters to 
demonstrate harm as a general matter, there may be individual 
stations or markets where the continuation of distant network 
signal carriage even within the Grade B contour could cause 
cognizable harm to a local affiliate. To assure that we have 
struck the correct balance, the bill directs the FCC to 
institute rulemaking proceedings to examine whether distant 
signal carriage within this outer-market area should be subject 
to any of its existing program exclusivity rules.
  Direct-to-home satellite service providers have argued that 
the imposition of exclusivity rules on their distant network 
signal carriage would be onerous at best and impossible at 
worst. While the precise nature and extent of these 
difficulties has not been determined, the Committee does not 
find it necessary to do so. The Committee finds that the local 
broadcasters' failure to produce any verifiable evidence that 
existing distant network signal carriage is causing substantial 
harm warrants our not imposing these requirements in the 
legislation itself, but rather requiring the Commission, as the 
expert agency, to impose any such requirements.
  In view of the lack of evidence of existing harm to 
broadcasters, and the possibility that imposing such 
requirements on satellite carriers could seriously impact their 
operations, the Commission's rulemaking authority is carefully 
circumscribed. The bill states that the Commission may not 
impose any such rules unless it finds it technically and 
economically feasible to do so, and is otherwise required by 
the public interest.
  The bill continues to allow all consumers outside the Grade B 
contour, i.e. the unserved areas, to continue to receive 
distant network signals. Because DBS subscribers in these areas 
by definition do not receive off-air service from one or more 
local network stations, distant network signal carriage in 
unserved areas would not be subject to any exclusivity rules 
the FCC might ultimately adopt.

                        Constitutional Analysis

  The bill does not create any new constitutional issues. The 
Supreme Court has already ruled that must-carry rules are 
constitutional. (Turner Broadcasting vs. The Federal 
Communications Commission, 520 U.S. 180, 137 L. Ed. 2d 369, 117 
S.Ct. 1174 (1997)). Specifically, the Supreme Court held that 
the ``must-carry'' provisions of the Cable Television Consumer 
Protection Act of 1992 are consistent with the free speech 
guarantees of the federal Constitution's First Amendment. The 
court recognized that content-neutral regulations are subject 
to a less rigorous intermediate scrutiny test because content-
neutral regulations do not pose the same inherent dangers to 
free expression as content-based regulations. The Court held 
that the ``must-carry'' provisions advanced important 
government interests such as preserving the benefits of free 
over-the-air local broadcast television, and did not burden 
substantially more speech than was necessary to further those 
interests.

                            Estimated Costs

  In accordance with paragraph 11(a) of rule XXVI of the 
Standing Rules of the Senate and section 403 of the 
Congressional Budget Act of 1974, the Committee provides the 
following cost estimate, prepared by the Congressional Budget 
Office:

                                     U.S. Congress,
                               Congressional Budget Office,
                                    Washington, DC, April 12, 1999.
Hon. John McCain,
Chairman, Committee on Commerce, Science, and Transportation,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 303, the Satellite 
Television Act of 1999.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Mark Hadley 
(for federal costs), Hester Grippando (for revenues), and Jean 
Wooster (for the private-sector impact).
            Sincerely,
                                          Barry B. Anderson
                                    (For Dan L. Crippen, Director).
    Enclosure.

               CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

S. 303--Satellite Television Act of 1999

    Summary: S. 303 would allow a local broadcast station to 
require, by January 1, 2002, satellite carriers that serve 
customers in its market to transmit its signal. (Satellite 
carriers are companies that use satellite transmissions to 
provide television signals directly to consumers.) This 
provision is similar to the requirements now faced by the cable 
industry. S. 303 would require satellite carriers that 
knowingly and willfully provide distant network signals to 
customers in violation of the Communications Act of 1934 to 
forfeit $50,000 per day per violation. Also, the bill would 
require the Federal Communications Commission (FCC) to conduct 
several rulemakings and issue a report.
    As of April 30, 1999, a permanent injunction issued by a 
federal district court will prohibit Prime Time 24 from 
transmitting CBS and FOX network broadcasts to about two 
million customers. However, S. 303 would allow Primetime 24 to 
transmit CBS and FOX programs to those customers through 
December 31, 1999.
    CBO estimates that enacting S. 303 would increase revenues 
from royalty fees paid by Prime Time 24 by about $3 million in 
2000. With higher royalty collections, the payments to 
copyright holders would also be higher under S. 303, by an 
estimated $3 million over the 2000-2004 period. The bill also 
would increase forfeiture payments to the government, but CBO 
estimates that such payments would be less than $500,000 each 
year. Because S. 303 would affect both revenues and direct 
spending, it would be subject to pay-as-you-go procedures. 
Assuming availability of appropriated funds, CBO estimates 
implementing S. 303 would cost the FCC less than $500,000 in 
2000.
    S. 303 would impose a private-sector mandate, as defined by 
the Unfunded Mandates Reform Act (UMRA), on satellite carriers. 
The cost of the mandate would not exceed the annual threshold, 
established by UMRA, for private-sector mandates ($100 million 
in 1996, adjusted for inflation). S. 303 contains no 
intergovernmental mandates as defined in UMRA and would impose 
no costs on state, local or tribal governments.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of S. 303 is shown in the following table. The 
costs of this legislation fall within budget function 370 
(commerce and housing credit).

----------------------------------------------------------------------------------------------------------------
                                                            By fiscal year, in millions of dollars--
                                               -----------------------------------------------------------------
                                                   1999       2000       2001       2002       2003       2004
----------------------------------------------------------------------------------------------------------------
                                        REVENUES AND DIRECT SPENDING \1\

Receipts and Spending Under Current Law:
    Estimated Revenues \2\....................        244        185        118        112        107        101
    Estimated Budget Authority \3\............        272        281        219        142        131        121
    Estimated Outlays.........................        209        207        259        264        220        182
Proposed Changes:
    Estimated Revenues........................          0          3      (\4\)      (\4\)      (\4\)      (\4\)
    Estimated Budget Authority................          0          3      (\4\)      (\4\)      (\4\)          0
    Estimated Outlays.........................          0          0          1          0          2          0
    Net Increase or Decrease (-) in Surplus...          0          3         -1      (\4\)         -2      (\4\)
Receipts and Spending Under S. 303:
    Estimated Revenues \2\....................        244        188        118        112        107        101
    Estimated Budget Authority \3\............        272        284        219        142        131        121
    Estimated Outlays.........................        209        207        260        264        222        182
----------------------------------------------------------------------------------------------------------------
\1\ In addition to the effects shown in the table, S. 303 would increase spending subject to appropriation by
  about $500,000 in fiscal year 2000.
\2\ Includes royalty fee collections from cable television stations, satellite carriers, and digital audio
  devices.
\3\ Payments to copyright owners include interest earnings on securities held by the Copyright Office.
\4\ Less than $500,000.

    Basis of estimate: For purposes of this estimate, CBO 
assumes the bill will be enacted by June 30, 1999. CBO also 
assumes that payments from the federal government to copyright 
holders for satellite transmissions would follow historical 
patterns.
            Revenues
    Pursuant to the Satellite Home Viewer Act of 1988, 
satellite carriers pay a monthly royalty fee for each 
subscriber to the U.S. Copyright Office for the right to 
retransmit network and superstation signals by satellite to 
subscribers for private home viewing. The Copyright Office 
later distributes the fees to those who own copyrights on the 
material retransmitted by satellite. Under current law, 
satellite carriers send payments to the U.S. Copyright Office 
in January for those fees accrued during the previous six 
months. The requirement for satellite carriers to pay royalty 
fees is set to expire on December 31, 1999, so the last payment 
will be in January 2000.
    S. 303 would allow the PrimeTime 24--a satellite carrier--
to retransmit the signal of a distant station, which is a CBS 
affiliate, and a Fox network signal to about two million 
customers. PrimeTime 24 entered into a private contract with 
Fox, so PrimeTime 24's transmissions of the Fox signal are not 
subject to royalty fees. Thus, under S. 303, PrimeTime 24 would 
pay the royalty fee for each of the two million customers that 
would receive the CBS affiliate's signal each month. Based on 
information from the satellite industry, CBO estimates that 
revenues from that royalty fee would be about $3 million in 
2000.
    S. 303 also would require satellite carriers that knowingly 
and willfully provide distant network signals to customers in 
violation of the Communications Act of 1934 to forfeit $50,000 
per violation. Such forfeiture payments are recorded as 
governmental receipts (revenues). Based on information from the 
FCC, CBO estimates that any such receipts would be less than 
$500,000 in any year.
            Payments to copyrights holders
    After review by an arbitration panel, royalty fees are paid 
by the federal government to copyright owners, along with 
accrued interest earnings; therefore, S. 303 would result in 
additional spending. Historical spending patterns indicate that 
copyright holders may receive the fees and interest up to 10 
years after the Copyright Office has collected the revenues. 
CBO estimates that most of the $3 million in additional 
royalties would be disbursed between 2001 and 2003.
            Spending subject to appropriation
    S. 303 would require the FCC to conduct four rulemaking 
proceedings concerning technical and business relationships 
between satellite carriers and local broadcast stations. The 
billalso would require the FCC to report on methods for 
facilitating the delivery of local signals in local markets, especially 
small markets. Based on information from the FCC, CBO estimates that 
implementing S. 303 would cost the commission less than $500,000 in 
2000, subject to the availability of appropriated funds.
    Pay-as-you-go considerations: The Balanced Budget and 
Emergency Deficit Control Act sets up pay-as-you-go procedures 
for legislation affecting direct spending or receipts. The net 
changes in outlays and governmental receipts that are subject 
to pay-as-you-go procedures are shown in the following table. 
For the purposes of enforcing pay-as-you-go procedures, only 
the effects in the current year, the budget year, and the 
succeeding four years are counted.

----------------------------------------------------------------------------------------------------------------
                                                       By fiscal year, in millions of dollars--
                                    ----------------------------------------------------------------------------
                                      1999   2000   2001   2002   2003   2004   2005   2006   2007   2008   2009
----------------------------------------------------------------------------------------------------------------
Changes in outlays.................      0      0      1      0      2      0      0      0      0      0      0
Changes in receipts................      0      3      0      0      0      0      0      0      0      0      0
----------------------------------------------------------------------------------------------------------------

    Estimated impact on State, local, and tribal governments: 
S. 303 contains no intergovernmental mandates as defined in 
UMRA and would impose no costs on state, local, or tribal 
governments.
    Estimated impact on the private sector: S. 303 would impose 
a private-sector mandate, as defined by the UMRA, on satellite 
carriers. The cost of the mandate would not exceed the annual 
threshold, established by UMRA, for private-sector mandates 
($100 million in 1996, adjusted for inflation).
    Satellite carriers would be required to use the Individual 
Location Longley-Rice (ILLR) methodology to determine if a new 
subscriber would be eligible to receive distant network 
signals. In February 1999, the FCC recommended the use of this 
model to determine the signal strength for a specific house 
rather than a general area. This mandate would affect five 
satellite carriers. Based on information from those carriers, 
CBO expects that most of them will be using the ILLR model by 
the time this bill would be enacted. Those who have not 
implemented the model would be required to do so. CBO estimates 
that the additional costs that the satellite carriers would 
incur would be negligible, and thus, significantly below the 
annual threshold for private-sector mandates ($100 million in 
1996, adjusted for inflation).
    Previous CBO estimates: On March 8, 1999, CBO transmitted a 
cost estimate for S. 247, the Satellite Home Viewers 
Improvements Act, as ordered reported by the Senate Committee 
on the Judiciary on February 25, 1999. That bill would reduce 
the royalty fee and extend the requirement that satellite 
carriers pay royalty fees until December 31, 2004. On April 7, 
1999, CBO transmitted an estimate for H.R. 851, the Satellite 
Competition and Consumer Protection Act, as ordered reported by 
the House Committee on Commerce on March 24, 1999. That bill 
would reduce the royalty fee and permanently extend the 
requirement that satellite carriers pay royalty fees. Thus, CBO 
estimated that S. 247 and H.R. 851 would each have a 
significant impact on revenues and direct spending, in contrast 
to the much more limited effects estimated for S. 303.
    Estimate prepared by: Federal costs--Mark Hadley; 
revenues--Hester Grippando; impact on the private sector--Jean 
Wooster.
    Estimate approved by: Robert A. Sunshine, Deputy Assistant 
Director for Budget Analysis.

                      Regulatory Impact Statement

  In accordance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee provides the 
following evaluation of the regulatory impact of the 
legislation, as reported:

                       number of persons covered

  The Committee believes that the bill will not subject any 
individuals or businesses affected by the bill to any 
additional regulation.

                            economic impact

  After full implementation of the bill, individuals and 
businesses will benefit from increased opportunities for 
competition in the provision of multichannel video services. 
Consumers will benefit from new choices in the multichannel 
video marketplace, competitive pricing and product offerings 
from both cable and satellite carriers. Increased competition, 
and the resulting choices in the marketplace will provide 
consumers with better and more product for their dollar, as 
well as potentially freeing up their resources for other 
pursuits.
  Local stations and businesses that advertise on them will 
find their market reach as wide as ever, if not increased due 
to increased numbers of consumers able to clearly watch their 
programming. For those viewers residing in the Grade B contour 
and denied access to distant network signals, S. 303's simpler 
and more predictable waiver process will ensure that those 
legitimately unserved viewers will finally have access to 
watchable network television. The networks will benefit, at no 
detriment to local stations not being watched due to poor 
signal reception, as network viewership increases, providing a 
larger audience to national advertisers.
  Finally, CBO's analysis indicates increased payments to 
copyright holders as a result of increased access to 
copyrighted programs for multichannel video service providers. 
These benefits will be realized at a negligible cost to the 
federal government, with no cost to State, local, and tribal 
governments.

                                privacy

  There will be no impact on personal privacy as a result of 
this legislation.

                               paperwork

  The paperwork resulting from this legislation will be 
primarily due to the FCC proceedings to develop a consumer 
waiver process and to determine whether any distant signal 
carriage should be made permanent.

                      Section-by-Section Analysis


Section 1. Short Title

  This section provides a short title of the reported bill, the 
``Satellite Television Act of 1999.''

Section 2. Findings

  This section provides Congressional findings. These findings 
recite that, notwithstanding the passage of the 1996 
Telecommunications Act, cable rates have increased because 
cable television services still do not face adequate effective 
competition. The findings then cite the inability of direct-to-
home satellite service providers to carry local television 
stations as a major impediment to their ability to compete with 
cable. However, the findings also recognize that maintaining 
free over-the-air-television is a preeminent public interest 
and that all multichannel video subscribers should be able to 
receive at least one affiliate of each of the major broadcast 
networks. The findings therefore conclude that it is in the 
public interest to allow direct-to-home satellite service 
providers to continue existing carriage of a distant network 
affiliate station's signal where: (1) there is no local network 
affiliate; (2) the local network affiliate cannot be adequately 
received off-air; or (3) continued carriage would not harm the 
local network station.

Section 3. Purpose

  This section states the purpose of the reported bill, which 
is to promote competition in the provision of multichannel 
video services while protecting the viability of free, local, 
over-the-air television.

Section 4. Must-Carry for Satellite Carriers Retransmitting Television 
        Broadcast Signals Carriage of Local Stations by Satellite 
        Carriers

  The bill requires that the mandatory carriage or ``must 
carry'' provisions of Sections 614 and 615 of the Act will 
apply for all local stations, both commercial and non-
commercial, no later than January 1, 2002. Given the tremendous 
number of satellite transponders that would be required to 
enable direct-to-home satellite service providers to beam all 
local signals into the markets they serve today, requiring 
satellite television providers to comply with must-carry rules 
now would impose an impossible burden incompatible with their 
ability to continue to compete in the multichannel video 
marketplace.
  The date January 1, 2002, was selected because it is the 
earliest date estimated by which Capitol Broadcasting, a 
company formed by broadcasters for the express purpose of 
making local broadcast signals available to direct-to-home 
satellite service providers for satellite carriage into local 
markets, will be able to offer its proposed service.
  Until satellite television must-carry rules take effect, 
satellite television service providers may offer any package of 
local television signals they wish, or none at all.
  The cost of providing a good quality signal to the satellite 
carrier's designated receive facility is to be borne by the 
television broadcast station. However, the satellite carrier is 
prohibited from selecting a receive facility that would 
effectively frustrate the must-carry provisions. The FCC is 
directed to adopt rules within 180 days that implement this 
section in a way that does not impose any undue economic burden 
on either broadcasters or direct-to-home satellite service 
providers.
  The bill stipulates that the must carry provisions do not 
apply to the carriage of digital signals of television 
broadcast stations by cable television systems.
            Provision of Distant Television Stations By Direct-to-Home 
                    Satellite Service Providers
  Section 338 of the bill contains different provisions with 
regard to distant network signal carriage by direct-to-home 
satellite service providers, depending on whether the 
subscriber is a new or existing one, and, if an existing 
subscriber, on where in the local television market the 
subscriber resides.
  For new subscribers, defined as those initially subscribing 
after July 10, 1998, the bill provides that satellite 
television operators are permitted to provide at least one 
affiliate of each television network. As explained more fully 
below, this minimum four-network affiliate provision will apply 
to consumers who became DBS subscribers after July 10, 1998, 
and who receive Grade B or better signal strength from each 
local affiliate of the ABC, CBS, FOX, and NBC television 
networks. Allowing DBS providers to offer at least one 
affiliate of each of the major national networks will enable 
DBS to compete more effectively with cable television.
  The cut-off date of July 10, 1998, was selected because it is 
the date of the preliminary injunction issued by the U.S. 
District Court in Miami in the CBS et al. v. PrimeTime 24 
Partners case. The Committee finds that, in light of the 
widespread attention given to this development, after July 10, 
1998, all DBS providers should have known that they needed to 
take more care in determining prospective subscribers' 
eligibility for distant network signal packages before signing 
them up for service. This cut-off date avoids rewarding 
companies for what can be considered to be reckless violation 
of the law.
  In order to determine the eligibility of new satellite 
subscribers to receive distant network signal service, the 
provision creates a new eligibility regime. Under the bill a 
new subscriber can receive one or more distant signals from 
stations affiliated with ABC, CBS, FOX or NBC, if the 
subscriber cannot receive an off-air signal of Grade B 
intensity from the corresponding local network station by using 
a conventional rooftop antenna. The methodology to be used is 
the Individual Location Longley-Rice (ILLR) predictive 
methodology recommended by the Commission in Docket 98-201.
  A post-July 10, 1998, DBS subscriber who cannot receive a 
signal of Grade B intensity from a local network station is not 
limited to receiving only one distant station affiliated with 
the same network. As noted previously, this subscriber, by 
definition, is not ``served'' by the local affiliate. The local 
affiliate therefore cannot, as a practical matter, count that 
subscriber as a part of its audience and revenue base. Thus, it 
is immaterial how many duplicating distant network affiliates 
an unserved DBS subscriber receives. The local affiliate need 
not incur programming expenses on behalf of that subscriber, 
nor should it include that subscriber in its revenue base.
  As stated previously, the Grade B standard was originally 
developed decades ago by the FCC to measure interference 
levels, not the quality of the signal the viewer actually 
receives. Thus, for purposes of SHVA, the Grade B standard is 
being used to define something that it was not originally 
intended to define: the quality of over-the-air reception from 
the consumer's perspective. As a result, many consumers, 
particularly those at the outer edge of a television station's 
service area, are not satisfied with their local off-air 
reception, and even less satisfied with being advised that it 
is considered acceptable enough under the law to bar them from 
getting superior service from a distant network station offered 
as part of a DBS package.
  Despite its unsuitability for the purposes for which it is 
being used in SHVA, the fact remains that the Grade B standard 
has been used by broadcasters for many years to define the 
practical limits of their local markets. To change that 
standard now, even where the case is as strong as it is here, 
would be to introduce an uncertainty into local broadcast 
operations that would have unpredictable ramifications beyond 
the issue of DBS distant signal carriage.
  Because of this, the bill does not redefine what constitutes 
adequate off-air service, but instead provides a process 
through which consumers can seek a waiver and receive a distant 
network signal if they do not feel that they are truly 
``served,'' or if they have other special needs or 
circumstances, or even if they just want the added program 
diversity.
  The FCC is directed to develop and adopt such a consumer 
waiver process within 90 days of the bill's enactment. To 
guarantee that the rules primarily reflect the interests of the 
consumers affected by this problem, the bill specifies that 
this process shall not impose any unnecessary burdens on a 
subscriber seeking a waiver. To balance the competing interests 
of direct-to-home satellite service providers and broadcasters, 
the bill also requires that the FCC fairly allocate 
responsibilities between these two industries. To make sure 
that consumers' waiver requests do not languish without action 
by the responsible parties, the bill mandates time limits. To 
encourage the DBS and broadcast industries to work as 
cooperatively as possible with consumers and not ``game'' the 
process by encouraging potential subscribers to pursue waiver 
requests they know to be without merit, the bill provides that 
the costs of testing to determine whether a subscriber meets 
the waiver standard will be paid by the local television 
station if the consumer's signal does not meet the minimum 
standard, and by the DBS provider if it does.
  To deter DBS providers from deliberately ignoring the law and 
to underscore the importance of preserving local broadcasting, 
the bill also provides that any satellite television provider 
that knowingly and willfully provides one or more distant 
network signals to ineligible subscribers shall be liable for 
forfeiture in the amount of $50,000 per day, per violation.
  The most difficult issue to resolve in the course of 
considering the bill was the issue of what should be done about 
distant network signal carriage that predated July 10, 1998.
  There is no question that DBS companies violated the law by 
providing distant network signals to consumers who reside 
within a local television station's Grade B contour. However, 
DBS subscribers purchased their satellite service in good 
faith. For many of these subscribers, distant signals provide 
the only source of adequate network television reception. This 
is particularly true in rural areas. Yet, despite the fact that 
DBS subscribers are customers, not accomplices, of the 
companies that actually broke the law, and despite the fact 
that local broadcasters have not been able to show that they 
are suffering any substantial harm as a result, the court 
orders requiring DBS providers to delete their distant network 
signals effectively requires these consumers to pay the 
consequences of the DBS operators' actions.
  An amendment to the bill protects consumers who received 
distant network signals before January 1, 1999, from disruptive 
summarysignal termination. Under the bill, all consumers who 
reside in the local affiliate's Grade A or Grade B contour and received 
distant network signals before January 1, 1999, may continue receiving 
these signals until December 31, 1999. This will allow time for DBS 
providers to apply the Longley-Rice method and authoritatively 
determine which of its existing subscribers are actually outside the 
Grade B contour and thus eligible to continue receiving distant 
signals. The moratorium on distant signal termination will also enable 
DBS subscribers who reside within the Grade B contour, but are not 
satisfied with the quality of their over-the-air reception, to apply 
for a waiver under the new consumer waiver process.
  After December 31, 1999, a satellite television subscriber in 
the Grade A contour will no longer be grandfathered unless a 
Longley-Rice analysis determines that the subscriber is 
``unserved.'' Because it considers factors such as terrain, the 
Longley-Rice analysis may determine that the local topography 
prevents a subscriber located in a Grade A contour from 
receiving the local over-the-air signal. In such a case, the 
subscriber will be allowed to continue receiving the 
satellite's distant network signal. Because that subscriber is 
not within the local affiliate's audience, any program 
exclusivity rules adopted by the FCC would not apply, and the 
DBS provider may offer that subscriber other distant stations 
affiliated with the same network. A subscriber in the Grade A 
contour may also continue to receive the distant network signal 
if the subscriber applies for and receives a waiver from the 
local broadcast station under the new subscriber waiver 
process.
  The bill would, therefore, terminate distant signal carriage 
after December 31, 1999, for those satellite television 
subscribers in the Grade A contour who fail to qualify for 
distant signal coverage under a Longley-Rice analysis, or who 
cannot obtain a waiver from the local affiliate of the distant 
stations at issue. As explained previously, the Grade A contour 
defines the area closest to the local television station; it is 
typically the core of the local station's market for audience 
support and advertiser revenue and the area the local station 
is presumed to cover with a strong, clear off-air signal. For 
these reasons it is also the area in which satellite television 
companies' carriage of distant network signals is most likely 
to have been a deliberate flouting of the law, the area where 
the distant signals' continued carriage would have a 
particularly adverse effect on the local broadcaster, and the 
area satellite television subscribers would likely find local 
stations to be acceptable substitutes for the distant ones 
given their proximity to the local stations' community of 
license.
  In contrast, the area outside of the Grade A contour, but 
within the Grade B contour, is the area in which subscribers 
most often find their local signal's off-air reception 
subjectively unsatisfactory. Thus, summary deletion of the 
distant signals is likely to be much more objectionable to 
these subscribers.
  For these reasons, the bill does not require the termination 
of distant signals for DBS subscribers who reside between the 
margins of the local station's predicted Grade A and Grade B 
contours. It instead directs the FCC to complete a rulemaking 
within 180 days that would determine whether, and to what 
extent, this distant signal carriage should be subject to any 
of the FCC's current program exclusivity rules. These rules 
variously require cable television system operators to delete 
the network, syndicated, and sports programming broadcast on 
distant stations that duplicates programming that a local 
station is licensed to carry.
  Although the cable television industry is currently subject 
to the program exclusivity rules, the Committee recognizes that 
there are fundamental differences between program distribution 
by cable and program distribution by a satellite service. 
Programming delivered to all subscribers within a cable 
operator's local franchise area is controlled at the cable 
operator's head-end and can be easily blacked out throughout 
the franchised area. However, satellite television providers 
would face a much more complex problem. Satellite television 
providers could be overwhelmed by the complexity involved in 
providing alternative programming to blacked-out areas while 
still providing the original programming to areas not subject 
to the blackout. In addition, the sheer volume of potentially 
thousands of requests for blackouts from across the nation on a 
daily basis could prove impossible to manage. Thus, there may 
be unreasonable technical, economic, and administrative burdens 
imposed on DBS providers if they were required to comply with 
program exclusivity rules on the same individual-household 
basis as cable television system operators, and the Committee 
requires that they should be taken into account when the 
Commission conducts its proceeding. Thus, the Committee has 
prohibited the Commission from imposing program exclusivity 
rules on DBS providers unless the Commission finds that it 
would be technically and economically feasible to do so, and 
otherwise in the public interest.
  Technical feasibility is required because of the extent of 
the burden that DBS providers would have to incur to comply 
with these rules. Economic feasibility is required to avoid 
imposing regulatory burdens that would stifle the very 
competitiveness of the DBS industry that this legislation seeks 
to enhance.
  Finally, in the context of this section, the term ``public 
interest'' has a very specific meaning. It means that, even if 
the FCC were to ultimately find that imposing program black-out 
rules were technically and economically feasible, it must still 
make a further finding, based on substantial evidence in the 
record, that imposing any such rules would be necessary to 
assure the continued vitality of local over-the-air television 
service. The ``public interest'' standard as used in this 
Section confers no authority on the Commission to impose any 
conditions or adopt any other requirements whatsoever with 
regard to DBS providers' carriage of distant network signals.
  Finally, the bill specifies that any no provision of this 
bill prohibits a local broadcast station from authorizing the 
provision of distant network signals. And the bill clarifies 
that DBS providers may continue to provide distant network 
signals to a subscriber who is outside the Grade B contour, and 
is thus ``unserved,'' or if the signal carriage is consistent 
with rules adopted by the FCC.

Section 5. Retransmission Consent

  This section generally restates the existing law governing 
retransmission consent, but makes several changes. Section 5 
modifies the retransmission consent provision of the 
Communications Act. Section 325(b) modifies an existing 
exemption from theretransmission consent provision of the 
Communications Act. Currently, section 325(b) exempts from the 
retransmission consent requirement the so-called ``superstations'' that 
have been distributed nationally by satellite carriers for cable, DBS 
and home use. But this exemption precludes exempt ``superstations'' 
from being owned, operated, or affiliated with a network. Some 
superstations have become affiliates of newly-emerging networks like WB 
and UPN. This threatens to nullify the exemption and defeat 
Congressional intent that popular superstation signals remain available 
to consumers. The amendment to section 325(b)(2) allows viewers 
continued access to current superstations that have become network 
stations since 1991. At the same time, the amendment limits the 
exemption to those stations that still are distributed nationally by 
satellite carriers pursuant to section 119 of title 17, United States 
Code.
  Additionally, under current law local non-commercial stations 
cannot opt to negotiate for retransmission consent. This 
section amends the current retransmission consent statute to 
extend the retransmission consent option to noncommercial 
stations. This change will allow public television stations to 
negotiate carriage arrangements with satellite television 
service carriers.

Section 6. Designated Market Areas

  This section allows the FCC to revise the designated market 
areas or to reassign those areas if the revision or 
reassignment is done in the same manner and to the same extent 
as applies in the context of the Commission's cable television 
mandatory carriage rules.

Section 7. Severability

  This section constitutes a standard severability clause, 
providing that if any provision of the legislation or any 
provision of an amendment made by the legislation, or the 
application thereof to particular persons or circumstances, is 
held to be unconstitutional, any remaining provisions or the 
application thereof to other persons or circumstances shall 
remain unaffected.

Section 8. Secondary Transmissions

  This section amends section 119 of Title 17 to permit 
continued secondary transmissions of the remaining superstation 
signals pursuant to the statutory license in that section even 
if the superstation has affiliated with a network.

Section 9. Definitions

  This section conforms definitions preexisting in the 
Communications Act to those provided in the Satellite 
Television Act.

                      Rollcall Votes in Committee

  In accordance with paragraph 7(c) of rule XXVI of the 
Standing Rules of the Senate, the Committee provides the 
following description of the record votes during its 
consideration of S. 303:
  Senator Hollings offered an amendment in the nature of a 
substitute. By a rollcall vote of 8 yeas and 12 nays, the 
amendment was defeated:
        YEAS--8--                     NAYS--12
Mr. Stevens \1\                     Mr. McCain
Mr. Ashcroft \1\-                   Mr. Burns \1\
Mr. Hollings-                       Mr. Gorton
Mr. Inouye \1\ -                    Mr. Lott \1\
Mr. Kerry \1\-                      Mrs. Hutchison
Mr. Dorgan--                        Ms. Snowe
Mr. Wyden--                         Mr. Frist \1\
Mr. Cleland--                       Mr. Abraham \1\---
                                    Mr. Brownback---
                                    Mr. Rockefeller---
                                    Mr. Breaux \1\ ---
                                    Mr. Bryan

    \1\ By proxy.

                        Changes in Existing Law

  In compliance with paragraph 12 of rule XXVI of the Standing 
Rules of the Senate, changes in existing law made by the bill, 
as reported, are shown as follows (existing law proposed to be 
omitted is enclosed in black brackets, new material is printed 
in italic, existing law in which no change is proposed is shown 
in roman):

                       Communications Act of 1934

                Title III--Provisions Relating to Radio

                        PART I. GENERAL PROVISIONS


SEC. 325. FALSE DISTRESS SIGNALS; REBROADCASTING; STUDIOS OF FOREIGN 
                    STATIONS.

  (a) No person within the jurisdiction of the United States 
shall knowingly utter or transmit, or cause to be uttered or 
transmitted, any false or fraudulent signals of distress, or 
communication relating thereto, nor shall any broadcasting 
station rebroadcast the program or any part thereof of another 
broadcasting station without the express authority of the 
originating station.
  [(b)(1) Following the date that is one year after the date of 
enactment of the Cable Television Consumer Protection and 
Competition Act of 1992, no cable system or other multichannel 
video programming distributor shall retransmit the signal of a 
broadcasting station, or any part thereof, except--
          [(A) with the express authority of the originating 
        station; or
          [(B) pursuant to section 614, in the case of a 
        station electing, in accordance with this subsection, 
        to assert the right to carriage under such section.
  [(2) The provisions of this subsection shall not apply to--
          [(A) retransmission of the signal of a noncommercial 
        broadcasting station;
          [(B) retransmission directly to a home satellite 
        antenna of the signal of a broadcasting station that is 
        not owned or operated by, or affiliated with, a 
        broadcasting network, if such signal was retransmitted 
        by a satellite carrier on May 1, 1991;
          [(C) retransmission of the signal of a broadcasting 
        station that is owned or operated by, or affiliated 
        with, a broadcasting network directly to a home 
        satellite antenna, if the household receiving the 
        signal is an unserved household; or
          [(D) retransmission by a cable operator or other 
        multichannel video programming distributor of the 
        signal of a superstation if such signal was obtained 
        from a satellite carrier and the originating station 
        was a superstation on May 1, 1991.
[For purposes of this paragraph, the terms ``satellite 
carrier'', ``superstation'', and ``unserved household'' have 
the meanings given those terms, respectively, in section 119(d) 
of title 17, United States Code, as in effect on the date of 
enactment of the Cable Television Consumer Protection and 
Competition Act of 1992.
  [(3)(A) Within 45 days after the date of enactment of the 
Cable Television Consumer Protection and Competition Act of 
1992, the Commission shall commence a rulemaking proceeding to 
establish regulations to govern the exercise by television 
broadcast stations of the right to grant retransmission consent 
under this subsection and of the right to signal carriage under 
section 614, and such other regulations as are necessary to 
administer the limitations contained in paragraph (2). The 
Commission shall consider in such proceeding the impact that 
the grant of retransmission consent by television stations may 
have on the rates for the basic service tier and shall ensure 
that the regulations prescribed under this subsection do not 
conflict with the Commission's obligation under section 
623(b)(1) to ensure that the rates for the basic service tier 
are reasonable. Such rulemaking proceeding shall be completed 
within 180 days after the date of enactment of the Cable 
Television Consumer Protection and Competition Act of 1992.
  [(B) The regulations required by subparagraph (A) shall 
require that television stations, within one year after the 
date of enactment of the Cable Television Consumer Protection 
and Competition Act of 1992 and every three years thereafter, 
make an election between the right to grant retransmission 
consent under this subsection and the right to signal carriage 
under section 614. If there is more than one cable system which 
services the same geographic area, a station's election shall 
apply to all such cable systems.
  [(4) If an originating television station elects under 
paragraph (3)(B) to exercise its right to grant retransmission 
consent under this subsection with respect to a cable system, 
the provisions of section 614 shall not apply to the carriage 
of the signal of such station by such cable system.
  [(5) The exercise by a television broadcast station of the 
right to grant retransmission consent under this subsection 
shall not interfere with or supersede the rights under section 
614 or 615 of any station electing to assert the right to 
signal carriage under that section.
  [(6) Nothing in this section shall be construed as modifying 
the compulsory copyright license established in section 111 of 
title 17, United States Code, or as affecting existing or 
future video programming licensing agreements between 
broadcasting stations and video programmers.]
  (b)(1) No cable system or other multichannel video 
programming distributor shall retransmit the signal of a 
broadcasting station, or any part thereof, except--
          (A) with the express authority of the station; or
          (B) pursuant to section 614 or section 615, in the 
        case of a station electing, in accordance with this 
        subsection, to assert the right to carriage under that 
        section.
  (2) The provisions of this subsection shall not apply to--
          (A) retransmission of the signal of a television 
        broadcast station outside the station's local market by 
        a satellite carrier directly to subscribers if--
                  (i) that station was a superstation on May 1, 
                1991;
                  (ii) as of July 1, 1998, such station's 
                signal was transmitted under the compulsory 
                license of section 119 of title 17, United 
                States Code, by satellite carriers directly to 
                at least 250,000 subscribers; and
                  (iii) the satellite carrier complies with any 
                program exclusivity rules that may be adopted 
                by the Federal Communications Commission 
                pursuant to section 338.
          (B) retransmission of the distant signal of a 
        broadcasting station that is owned or operated by, or 
        affiliated with, a broadcasting network directly to a 
        home satellite antenna, if the subscriber resides in an 
        unserved household; or
          (C) retransmission by a cable operator or other 
        multichannel video programming distributor (other than 
        by a satellite carrier direct to its subscribers) of 
        the signal of a television broadcast station outside 
        the station's local market, if that signal was obtained 
        from a satellite carrier and--
                  (i) the originating station was a 
                superstation on May 1, 1991; and
                  (ii) the originating station was a network 
                station on December 31, 1997, and its signal 
                was retransmitted by a satellite carrier 
                directly to subscribers.
  (3) Any term used in this subsection that is defined in 
section 337(d) of this Act has the meaning given to it by that 
section.

           *       *       *       *       *       *       *


SEC. 338. CARRIAGE OF LOCAL TELEVISION STATIONS BY SATELLITE CARRIERS.

  (a) Application of Mandatory Carriage to Satellite 
Carriers.--The mandatory carriage provisions of sections 614 
and 615 of this Act will apply in a local market no later than 
January 1, 2002, to satellite carriers retransmitting any 
television broadcast station in that local market pursuant to 
the compulsory license provided by section 122 of title 17, 
United States Code.
  (b) Good Signal Required.--
          (1) Costs.--A television broadcast station eligible 
        for carriage under subsection (a) may be required to 
        bear the costs associated with delivering a good 
        quality signal to the designated local receive facility 
        of the satellite carrier. The selection of a local 
        receive facility by a satellite carrier shall not be 
        made in a manner that frustrates the purposes of this 
        Act. The Commission shall implement the requirements of 
        this section without imposing any undue economic burden 
        on any party.
          (2) Rulemaking required.--The Commission shall adopt 
        rules implementing paragraph (1) within 180 days after 
        the date of enactment of the Satellite Television Act 
        of 1999.
  (c) Cable Television System Digital Signal Carriage Not 
Covered.--Nothing in this section applies to the carriage of 
the digital signals of television broadcast stations by cable 
television systems.
  (d) Definitions.--In this section:
          (1) Television broadcast station.--The term 
        ``television broadcast station'' means a full power 
        local television broadcast station, but does not 
        include a low-power or translator television broadcast 
        station.
          (2) Network station.--The term ``network station'' 
        means a television broadcast station that is owned or 
        operated by, or affiliated with, a broadcasting 
        network.
          (3) Broadcasting network.--The term ``broadcasting 
        network'' means a television network in the United 
        States which offers an interconnected program service 
        on a regular basis for 15 or more hours per week to at 
        least 25 affiliated broadcast stations in 10 or more 
        States.
          (4) Distant television station.--The term ``distant 
        television station'' means any television broadcast 
        station that is not licensed and operating on a channel 
        regularly assigned to the local television market in 
        which a subscriber to a direct-to-home satellite 
        service is located.
          (5) Local market.--The term ``local market'' means 
        the designated market area in which a station is 
        located. For a noncommercial educational television 
        broadcast station, the local market includes any 
        station that is licensed to a community within the same 
        designated market area as the noncommercial educational 
        television broadcast station.
          (6) Satellite carrier.--The term ``satellite 
        carrier'' has the meaning given it by section 119(d) of 
        title 17, United States Code.

SEC. 339. CARRIAGE OF DISTANT TELEVISION STATIONS BY SATELLITE 
                    CARRIERS.

  (a) Provisions Relating to New Subscribers.--
          (1) In general.--Except as provided in subsection 
        (d), direct-to-home satellite service providers shall 
        be permitted to provide the signals of 1 affiliate of 
        each television network to any household that initially 
        subscribed to direct-to-home satellite service on or 
        after July 10, 1998.
          (2) Eligibility determination.--The determination of 
        a new subscriber's eligibility to receive the signals 
        of one or more distant network stations as a component 
        of the service provided pursuant to paragraph (a) shall 
        be made by ascertaining whether the subscriber resides 
        within the predicted Grade B service area of a local 
        network station. The Individual Location Longley-Rice 
        methodology described by the Commission in Docket 98-
        201 shall be used to make this determination. A direct-
        to-home satellite service provider may provide the 
        signal of a distant network station to any subscriber 
        determined by this method to be unserved by a local 
        station affiliated with that network.
          (3) Rulemaking Required.--
                  (A) Within 90 days after the date of 
                enactment of the Satellite Television Act of 
                1999, the Commission shall adopt procedures 
                that shall be used by any direct-to-home 
                satellite service subscriber requesting a 
                waiver to receive one or more distant network 
                signals. The waiver procedures adopted by the 
                Commission shall--
                          (i) impose no unnecessary burden on 
                        the subscriber seeking the waiver;
                          (ii) allocate responsibilities fairly 
                        between direct-to-home satellite 
                        service providers and local stations;
                          (iii) prescribe mandatory time limits 
                        within which direct-to-home satellite 
                        service providers and local stations 
                        shall carry out the obligations imposed 
                        upon them; and
                          (iv) prescribe that all costs of 
                        conducting any measurement or testing 
                        shall be borne by the direct-to-home 
                        satellite service provider, if the 
                        local station's signal meets the 
                        prescribed minimum standards, or by the 
                        local station, if its signal fails to 
                        meet the prescribed minimum standards.
          (4) Penalty for violation.--Any direct-to-home 
        satellite service provider that knowingly and willfully 
        provides the signals of 1 or more distant television 
        stations to subscribers in violation of this section 
        shall be liable for forfeiture in the amount of $50,000 
        per day per violation.
  (b) Provisions Relating to Existing Subscribers.--
          (1) Moratorium on termination.--Until December 31, 
        1999, any direct-to-home satellite service may continue 
        to provide the signals of distant television stations 
        to any subscriber located within predicted Grade A and 
        Grade B contours of a local network station who 
        received those distant network signals before July 11, 
        1998.
          (2) Continued carriage.--Direct-to-home satellite 
        service providers may continue to provide the signals 
        of distant television stations to subscribers located 
        between the outside limits of the predicted Grade A 
        contour and the predicted Grade B contour of the 
        corresponding local network stations after December 31, 
        1999, subject to any limitations adopted by the 
        Commission under paragraph (3).
          (3) Rulemaking Required.--
                  (A) Within 180 days after the date of 
                enactment of the Satellite Television Act of 
                1999, the Commission shall conclude a single 
                rulemaking, compliant with subchapter II of 
                chapter 5 of title 5, United States Code, to 
                examine the extent to which any existing 
                program exclusivity rules should be imposed on 
                distant network stations provided to 
                subscribers under paragraph (2).
                  (B) The Commission shall not impose any 
                program exclusivity rules on direct-to-home 
                satellite service providers pursuant to 
                subparagraph (A) unless it finds that it would 
                be both technically and economically feasible 
                and otherwise in the public interest to do so.
  (c) Waivers Not Precluded.--Notwithstanding any other 
provision in this section, nothing shall preclude any network 
station from authorizing the continued provision of distant 
network signals inunaltered form to any direct-to-home 
satellite service subscriber currently receiving them.
  (d) Certain Signals.--Providers of direct-to-home satellite 
service may continue to carry the signals of distant network 
stations without regard to subsections (a) and (b) in any 
situation in which--
          (1) a subscriber is unserved by the local station 
        affiliated with that network;
          (2) a waiver is otherwise granted by the local 
        station under subsection (c); or
          (3) if the carriage would otherwise be consistent 
        with rules adopted by the Commission in CS Docket 98-
        201.
  (e) Report Required.--Within 180 days after the date of 
enactment of the Satellite Television Act of 1999, the 
Commission shall report to Congress on methods of facilitating 
the delivery of local signals in local markets, especially 
smaller markets.

           *       *       *       *       *       *       *


                      Title 17, United States Code

            Chapter 1. Subject Matter and Scope of Copyright

Sec.  119. Limitations on exclusive rights: Secondary transmissions of 
                    superstations and network stations for private home 
                    viewing

  (a) Secondary Transmissions by Satellite Carriers.--
          (1) Superstations.--Subject to the provisions of 
        paragraphs (3), (4), and (6) of this subsection and 
        section 114(d), secondary transmissions of a primary 
        transmission made by a superstation and embodying a 
        performance or display of a work shall be subject to 
        statutory licensing under this section if the secondary 
        transmission is made by a satellite carrier to the 
        public for private home viewing, and the carrier makes 
        a direct or indirect charge for each retransmission 
        service to each household receiving the secondary 
        transmission or to a distributor that has contracted 
        with the carrier for direct or indirect delivery of the 
        secondary transmission to the public for private home 
        viewing.
          (2) Network stations.--
                  (A) In general.--Subject to the provisions of 
                subparagraphs (B) and (C) of this paragraph and 
                paragraphs (3), (4), (5), and (6) of this 
                subsection and section 114(d), secondary 
                transmissions of programming contained in a 
                primary transmission made by a network station 
                and embodying a performance or display of a 
                work shall be subject to statutory licensing 
                under this section if the secondary 
                transmission is made by a satellite carrier to 
                the public for private home viewing, and the 
                carrier makes a direct or indirect charge for 
                such retransmission service to each subscriber 
                receiving the secondary transmission.
                  [(B) Secondary transmissions to unserved 
                households.--The statutory license provided for 
                in subparagraph (A) shall be limited to 
                secondary transmissions to persons who reside 
                in unserved households.]
                  (B) Secondary transmissions to unserved 
                households.--Except as provided in paragraph 
                (5)(E) of this subsection, the license provided 
                for in subparagraph (A) shall be limited to 
                secondary transmissions to persons who reside 
                in unserved households.
                  (C) Submission of subscriber lists to 
                networks.--A satellite carrier that makes 
                secondary transmissions of a primary 
                transmission made by a network station pursuant 
                to subparagraph (A) shall, 90 days after 
                commencing such secondary transmissions, submit 
                to the network that owns or is affiliated with 
                the network station a list identifying (by name 
                and street address, including county and zip 
                code) all subscribers to which the satellite 
                carrier currently makes secondary transmissions 
                of that primary transmission. Thereafter, on 
                the 15th of each month, the satellite carrier 
                shall submit to the network a list identifying 
                (by name and street address, including county 
                and zip code) any persons who have been added 
                or dropped as such subscribers since the last 
                submission under this subparagraph. Such 
                subscriber information submitted by a satellite 
                carrier may be used only for purposes of 
                monitoring compliance by the satellite carrier 
                with this subsection. The submission 
                requirements of this subparagraph shall apply 
                to a satellite carrier only if the network to 
                whom the submissions are to be made places on 
                file with the Register of Copyrights a document 
                identifying the name and address of the person 
                to whom such submissions are to be made. The 
                Register shall maintain for public inspection a 
                file of all such documents.
          (3) Noncompliance with reporting and payment 
        requirements.--Notwithstanding the provisions of 
        paragraphs (1) and (2), the willful or repeated 
        secondary transmission to the public by a satellite 
        carrier of a primary transmission made by a 
        superstation or a network station and embodying a 
        performance or display of a work is actionable as an 
        act of infringement under section 501, and is fully 
        subject to the remedies provided by sections 502 
        through 506 and 509, where the satellite carrier has 
        not deposited the statement of account and royalty fee 
        required by subsection (b), or has failed to make the 
        submissions to networks required by paragraph (2)(C).
          (4) Willful alterations.--Notwithstanding the 
        provisions of paragraphs (1) and (2), the secondary 
        transmission to the public by a satellite carrier of a 
        primary transmission made by a superstation or a 
        network station and embodying a performance or display 
        of a work is actionable as an act of infringement under 
        section 501, and is fully subject to the remedies 
        provided by sections 502 through 506 and sections 509 
        and 510, if the content of the particular program in 
        which the performance or display is embodied, or any 
        commercial advertising or station announcement 
        transmitted by the primary transmitter during, or 
        immediately before or after, the transmission of such 
        program, is in any way willfully altered by 
        the satellite carrier through changes, deletions, or 
        additions, or is combined with programming from any other 
        broadcast signal.
          (5) Violation of territorial restrictions on 
        statutory license for network stations.--
                  (A) Individual violations.--The willful or 
                repeated secondary transmission by a satellite 
                carrier of a primary transmission made by a 
                network station and embodying a performance or 
                display of a work to a subscriber who does not 
                reside in an unserved household is actionable 
                as an act of infringement under section 501 and 
                is fully subject to the remedies provided by 
                sections 502 through 506 and 509, except that--
                          (i) no damages shall be awarded for 
                        such act of infringement if the 
                        satellite carrier took corrective 
                        action by promptly withdrawing service 
                        from the ineligible subscriber, and
                          (ii) any statutory damages shall not 
                        exceed $5 for such subscriber for each 
                        month during which the violation 
                        occurred.
                  (B) Pattern of violations.--If a satellite 
                carrier engages in a willful or repeated 
                pattern or practice of delivering a primary 
                transmission made by a network station and 
                embodying a performance or display of a work to 
                subscribers who do not reside in unserved 
                households, then in addition to the remedies 
                set forth in subparagraph (A)--
                          (i) if the pattern or practice has 
                        been carried out on a substantially 
                        nationwide basis, the court shall order 
                        a permanent injunction barring the 
                        secondary transmission by the satellite 
                        carrier, for private home viewing, of 
                        the primary transmissions of any 
                        primary network station affiliated with 
                        the same network, and the court may 
                        order statutory damages of not to 
                        exceed $250,000 for each 6-month period 
                        during which the pattern or practice 
                        was carried out; and
                          (ii) if the pattern or practice has 
                        been carried out on a local or regional 
                        basis, the court shall order a 
                        permanent injunction barring the 
                        secondary transmission, for private 
                        home viewing in that locality or 
                        region, by the satellite carrier of the 
                        primary transmissions of any primary 
                        network station affiliated with the 
                        same network, and the court may order 
                        statutory damages of not to exceed 
                        $250,000 for each 6-month period during 
                        which the pattern or practice was 
                        carried out.
                  (C) Previous subscribers excluded.--
                Subparagraphs (A) and (B) do not apply to 
                secondary transmissions by a satellite carrier 
                to persons who subscribed to receive such 
                secondary transmissions from the satellite 
                carrier or a distributor before November 16, 
                1988.
                  (D) Burden of proof.--In any action brought 
                under this paragraph, the satellite carrier 
                shall have the burden of proving that its 
                secondary transmission of a primary 
                transmission by a network station is for 
                private home viewing to an unserved household.
                  (E) Exception.--The secondary transmission by 
                a satellite carrier of a primary transmission 
                made by a network station to subscribers who do 
                not reside in unserved households shall not be 
                an act of infringement if--
                          (i) that station was a superstation 
                        on May 1, 1991; and
                          (ii) that station was lawfully 
                        retransmitted by satellite carriers 
                        directly to at least 250,000 
                        subscribers as of July 1, 1998.
          (6) Discrimination by a satellite carrier.--
        Notwithstanding the provisions of paragraph (1), the 
        willful or repeated secondary transmission to the 
        public by a satellite carrier of a primary transmission 
        made by a superstation or a network station and 
        embodying a performance or display of a work is 
        actionable as an act of infringement under section 501, 
        and is fully subject to the remedies provided by 
        sections 502 through 506 and 509, if the satellite 
        carrier unlawfully discriminates against a distributor.
          (7) Geographic limitation on secondary 
        transmissions.--The statutory license created by this 
        section shall apply only to secondary transmissions to 
        households located in the United States.
          (8) Transitional signal intensity measurement 
        procedures.--
                  (A) In general.--Subject to subparagraph (C), 
                upon a challenge by a network station regarding 
                whether a subscriber is an unserved household 
                within the predicted Grade B Contour of the 
                station, the satellite carrier shall, within 60 
                days after the receipt of the challenge--
                          (i) terminate service to that 
                        household of the signal that is the 
                        subject of the challenge, and within 30 
                        days thereafter notify the network 
                        station that made the challenge that 
                        service to that household has been 
                        terminated; or
                          (ii) conduct a measurement of the 
                        signal intensity of the subscriber's 
                        household to determine whether the 
                        household is an unserved household 
                        after giving reasonable notice to the 
                        network station of the satellite 
                        carrier's intent to conduct the 
                        measurement.
                  (B) Effect of measurement.--If the satellite 
                carrier conducts a signal intensity measurement 
                under subparagraph (A) and the measurement 
                indicates that--
                          (i) the household is not an unserved 
                        household, the satellite carrier shall, 
                        within 60 days after the measurement is 
                        conducted, terminate the service to 
                        that household of the signal that is 
                        the subject of the challenge, and 
                        within 30 days thereafter notify the 
                        network station that made the challenge 
                        that service to that household has been 
                        terminated; or
                          (ii) the household is an unserved 
                        household, the station challenging the 
                        service shall reimburse the satellite 
                        carrier for the costs of the signal 
                        measurement within 60 days after 
                        receipt of the measurement results and 
                        a statement of the costs of the 
                        measurement.
                  (C) Limitation on measurements.--
                          (i) Notwithstanding subparagraph (A), 
                        a satellite carrier may not be required 
                        to conduct signal intensity 
                        measurements during any calendar year 
                        in excess of 5 percent of the number of 
                        subscribers within the network 
                        station's local market that have 
                        subscribed to the service as of the 
                        effective date of the Satellite Home 
                        Viewer Act of 1994.
                          (ii) If a network station challenges 
                        whether a subscriber is an unserved 
                        household in excess of 5 percent of the 
                        subscribers within the network's 
                        station local market within a calendar 
                        year, subparagraph (A) shall not apply 
                        to challenges in excess of such 5 
                        percent, but the station may conduct 
                        its own signal intensity measurement of 
                        the subscriber's household after giving 
                        reasonable notice to the satellite 
                        carrier of the network station's intent 
                        to conduct the measurement. If such 
                        measurement indicates that the 
                        household is not an unserved household, 
                        the carrier shall, within 60 days after 
                        receipt of the measurement, terminate 
                        service to the household of the signal 
                        that is the subject of the challenge 
                        and within 30 days thereafter notify 
                        the network station that made the 
                        challenge that service has been 
                        terminated. The carrier shall also, 
                        within 60 days after receipt of the 
                        measurement and a statement of the 
                        costs of the measurement, reimburse the 
                        network station for the cost it 
                        incurred in conducting the measurement.
                  (D) Outside the predicted grade b contour.--
                          (i) If a network station challenges 
                        whether a subscriber is an unserved 
                        household outside the predicted Grade B 
                        Contour of the station, the station may 
                        conduct a measurement of the signal 
                        intensity of the subscriber's household 
                        to determine whether the household is 
                        an unserved household after giving 
                        reasonable notice to the satellite 
                        carrier of the network station's intent 
                        to conduct the measurement.
                          (ii) If the network station conducts 
                        a signal intensity measurement under 
                        clause (i) and the measurement 
                        indicates that--
                                  (I) the household is not an 
                                unserved household, the station 
                                shall forward the results to 
                                the satellite carrier who 
                                shall, within 60 days after 
                                receipt of the measurement, 
                                terminate the service to the 
                                household of the signal that is 
                                the subject of the challenge, 
                                and shall reimburse the station 
                                for the costs of the 
                                measurement within 60 days 
                                after receipt of the 
                                measurement results and a 
                                statement of such costs; or
                                  (II) the household is an 
                                unserved household, the station 
                                shall pay the costs of the 
                                measurement.
          (9) Loser pays for signal intensity measurement; 
        recovery of measurement costs in a civil action.--In 
        any civil action filed relating to the eligibility of 
        subscribing households as unserved households--
                  (A) a network station challenging such 
                eligibility shall, within 60 days after receipt 
                of the measurement results and a statement of 
                such costs, reimburse the satellite carrier for 
                any signal intensity measurement that is 
                conducted by that carrier in response to a 
                challenge by the network station and that 
                establishes the household is an unserved 
                household; and
                  (B) a satellite carrier shall, within 60 days 
                after receipt of the measurement results and a 
                statement of such costs, reimburse the network 
                station challenging such eligibility for any 
                signal intensity measurement that is conducted 
                by that station and that establishes the 
                household is not an unserved household.
          (10) Inability to conduct measurement.--If a network 
        station makes a reasonable attempt to conduct a site 
        measurement of its signal at a subscriber's household 
        and is denied access for the purpose of conducting the 
        measurement, and is otherwise unable to conduct a 
        measurement, the satellite carrier shall within 60 days 
        notice thereof, terminate service of the station's 
        network to that household.
  (b) Statutory License for Secondary Transmissions for Private 
Home Viewing.--
          (1) Deposits with the register of copyrights.--A 
        satellite carrier whose secondary transmissions are 
        subject to statutory licensing under subsection (a) 
        shall, on a semiannual basis, deposit with the Register 
        of Copyrights, in accordance with requirements that the 
        Register shall prescribe by regulation--
                  (A) a statement of account, covering the 
                preceding 6-month period, specifying the names 
                and locations of all superstations and network 
                stations whose signals were transmitted, at any 
                time during that period, to subscribers for 
                private home viewing as described in 
                subsections (a)(1) and (a)(2), the total number 
                of subscribers that received such 
                transmissions, and such other data as the 
                Register of Copyrights may from time to time 
                prescribe by regulation; and
                  (B) a royalty fee for that 6-month period, 
                computed by--
                          (i) multiplying the total number of 
                        subscribers receiving each secondary 
                        transmission of a superstation during 
                        each calendar month by 17.5 cents per 
                        subscriber in the case of superstations 
                        that as retransmitted by the satellite 
                        carrier include any program which, if 
                        delivered by any cable system in the 
                        United States, would be subject to the 
                        syndicated exclusivity rules of the 
                        Federal Communications Commission, and 
                        14 cents per subscriber in the case of 
                        superstations that are syndex-proof as 
                        defined in section 258.2 of title 37, 
                        Code of Federal Regulations;
                          (ii) multiplying the number of 
                        subscribers receiving each secondary 
                        transmission of a network station 
                        during each calendar month by 6 cents; 
                        and
                          (iii) adding together the totals 
                        computed under clauses (i) and (ii).
          (2) Investment of fees.--The Register of Copyrights 
        shall receive all fees deposited under this section 
        and, after deducting the reasonable costs incurred by 
        the Copyright Office under this section (other than the 
        costs deducted under paragraph (4)), shall deposit the 
        balance in the Treasury of the United States, in such 
        manner as the Secretary of the Treasury directs. All 
        funds held by the Secretary of the Treasury shall be 
        invested in interest-bearing securities of the United 
        States for later distribution with interest by the 
        Librarian of Congress as provided by this title.
          (3) Persons to whom fees are distributed.--The 
        royalty fees deposited under paragraph (2) shall, in 
        accordance with the procedures provided by paragraph 
        (4), be distributed to those copyright owners whose 
        works were included in a secondary transmission for 
        private home viewing made by a satellite carrier during 
        the applicable 6-month accounting period and who file a 
        claim with the Librarian of Congress under paragraph 
        (4).
          (4) Procedures for distribution.--The royalty fees 
        deposited under paragraph (2) shall be distributed in 
        accordance with the following procedures:
                  (A) Filing of claims for fees.--During the 
                month of July in each year, each person 
                claiming to be entitled to statutory license 
                fees for secondary transmissions for private 
                home viewing shall file a claim with the 
                Librarian of Congress, in accordance with 
                requirements that the Librarian of Congress 
                shall prescribe by regulation. For purposes of 
                this paragraph, any claimants may agree among 
                themselves as to the proportionate division of 
                statutory license fees among them, may lump 
                their claims together and file them jointly or 
                as a single claim, or may designate a common 
                agent to receive payment on their behalf.
                  (B) Determination of controversy; 
                distributions.--After the first day of August 
                of each year, the Librarian of Congress shall 
                determine whether there exists a controversy 
                concerning the distribution of royalty fees. If 
                the Librarian of Congress determines that no 
                such controversy exists, the Librarian of 
                Congress shall, after deducting reasonable 
                administrative costs under this paragraph, 
                distribute such fees to the copyright owners 
                entitled to receive them, or to their 
                designated agents. If the Librarian of Congress 
                finds the existence of a controversy, the 
                Librarian of Congress shall, pursuant to 
                chapter 8 of this title, convene a copyright 
                arbitration royalty panel to determine the 
                distribution of royalty fees.
                  (C) Withholding of fees during controversy.--
                During the pendency of any proceeding under 
                this subsection, the Librarian of Congress 
                shall withhold from distribution an amount 
                sufficient to satisfy all claims with respect 
                to which a controversy exists, but shall have 
                discretion to proceed to distribute any amounts 
                that are not in controversy.
  (c) Adjustment of Royalty Fees.--
          (1) Applicability and determination of royalty 
        fees.--The rate of the royalty fee payable under 
        subsection (b)(1)(B) shall be effective unless a 
        royalty fee is established under paragraph (2) or (3) 
        of this subsection.
          (2) Fee set by voluntary negotiation.--
                  (A) Notice of initiation of proceedings.--On 
                or before July 1, 1996, the Librarian of 
                Congress shall cause notice to be published in 
                the Federal Register of the initiation of 
                voluntary negotiation proceedings for the 
                purpose of determining the royalty fee to be 
                paid by satellite carriers under subsection 
                (b)(1)(B).
                  (B) Negotiations.--Satellite carriers, 
                distributors, and copyright owners entitled to 
                royalty fees under this section shall negotiate 
                in good faith in an effort to reach a voluntary 
                agreement or voluntary agreements for the 
                payment of royalty fees. Any such satellite 
                carriers, distributors, and copyright owners 
                may at any time negotiate and agree to the 
                royalty fee, and may designate common agents to 
                negotiate, agree to, or pay such fees. If the 
                parties fail to identify common agents, the 
                Librarian of Congress shall do so, after 
                requesting recommendations from the parties to 
                the negotiation proceeding. The parties to each 
                negotiation proceeding shall bear the entire 
                cost thereof.
                  (C) Agreements binding on parties; filing of 
                agreements.--Voluntary agreements negotiated at 
                any time in accordance with this paragraph 
                shall be binding upon all satellite carriers, 
                distributors, and copyright owners that are 
                parties thereto. Copies of such agreements 
                shall be filed with the Copyright Office within 
                30 days after execution in accordance with 
                regulations that the Register of Copyrights 
                shall prescribe.
                  (D) Period agreement is in effect. The 
                obligation to pay the royalty fees established 
                under a voluntary agreement which has been 
                filed with the Copyright Office in accordance 
                with this paragraph shall become effective on 
                the date specified in the agreement, and shall 
                remain in effect until December 31, 1999, or in 
                accordance with the terms of the agreement, 
                whichever is later.
          (3) Fee set by compulsory arbitration.--
                  (A) Notice of initiation of proceedings.--On 
                or before January 1, 1997, the Librarian of 
                Congress shall cause notice to be published in 
                the Federal Register of the initiation of 
                arbitration proceedings for the purpose of 
                determining a reasonable royalty fee to be paid 
                under subsection (b)(1)(B) by satellite 
                carriers who are not parties to a voluntary 
                agreement filed with the Copyright Office in 
                accordance with paragraph (2). Such arbitration 
                proceeding shall be conducted under chapter 8.
                  (B) Establishment of royalty fees.--In 
                determining royalty fees under this paragraph, 
                the copyright arbitration royalty panel 
                appointed under chapter 8 shall establish fees 
                for the retransmission of network stations and 
                superstations that most clearly represent the 
                fair market value of secondary transmissions. In 
                determining the fair market value, the panel shall 
                base its decision on economic, competitive, and 
                programming information presented by the 
                parties, including--
                          (i) the competitive environment in 
                        which such programming is distributed, 
                        the cost of similar signals in similar 
                        private and compulsory license 
                        marketplaces, and any special features 
                        and conditions of the retransmission 
                        marketplace;
                          (ii) the economic impact of such fees 
                        on copyright owners and satellite 
                        carriers; and
                          (iii) the impact on the continued 
                        availability of secondary transmissions 
                        to the public.
                  (C) Period during which decision of 
                arbitration panel or order of Librarian 
                effective.--The obligation to pay the royalty 
                fee established under a determination which--
                          (i) is made by a copyright 
                        arbitration royalty panel in an 
                        arbitration proceeding under this 
                        paragraph and is adopted by the 
                        Librarian of Congress under section 
                        802(f), or
                          (ii) is established by the Librarian 
                        of Congress under section 802(f), shall 
                        become effective as provided in section 
                        802(g) or July 1, 1997, whichever is 
                        later.
                  (D) Persons subject to royalty fee.--The 
                royalty fee referred to in subparagraph (C) 
                shall be binding on all satellite carriers, 
                distributors, and copyright owners, who are not 
                party to a voluntary agreement filed with the 
                Copyright Office under paragraph (2).
  (d) Definitions.--As used in this section--

           *       *       *       *       *       *       *

          (2) Network station.--The term ``network station'' 
        means--
                  (A) a television broadcast station, including 
                any translator station or terrestrial satellite 
                station that rebroadcasts all or substantially 
                all of the programming broadcast by a network 
                station, that is owned or operated by, or 
                affiliated with, one or more of the television 
                networks in the United States which offer an 
                interconnected program service on a regular 
                basis for 15 or more hours per week to at least 
                25 of its affiliated television licensees in 10 
                or more States; or
                  (B) a noncommercial educational broadcast 
                station (as defined in section 397 of the 
                Communications Act of 1934.
          (3) Primary network station.--The term ``primary 
        network station'' means a network station that 
        broadcasts or rebroadcasts the basic programming 
        service of a particular national network.

           *       *       *       *       *       *       *

          (9) Superstation.--The term ``superstation'' means a 
        television broadcast station, other than a network 
        station, licensed by the Federal Communications 
        Commission that is secondarily transmitted by a 
        satellite carrier.
          (10) Unserved household.--The term ``unserved 
        household'', with respect to a particular television 
        network, means a household that--
                  (A) cannot receive, through the use of a 
                conventional outdoor rooftop receiving antenna, 
                an over-the-air signal of Grade B intensity (as 
                defined by the Federal Communications 
                Commission) of a primary network station 
                affiliated with that network; and
                  (B) has not, within 90 days before the date 
                on which that household subscribes, either 
                initially or on renewal, to receive secondary 
                transmissions by a satellite carrier of a 
                network station affiliated with that network, 
                subscribed to a cable system that provides the 
                signal of a primary network station affiliated 
                with that network.
  (e) Exclusivity of This Section With Respect to Secondary 
Transmissions of Broadcast Stations by Satellite to Members of 
the Public.--No provision of section 111 of this title or any 
other law (other than this section) shall be construed to 
contain any authorization, exemption, or license through which 
secondary transmissions by satellite carrier for private home 
viewing of programming contained in a primary transmission made 
by a superstation or a network station may be made without 
obtaining the consent of the copyright owner.

Minority Views of Senator Hollings, Senator Stevens, Senator Kerry, and 
                            Senator Cleland

  We support a majority of the significant public policy 
objectives furthered by this bill as reported out of Committee. 
We object, however, to the legislation's treatment of one 
critically important issue, and therefore feel compelled to 
file minority views. In brief, we oppose provisions in the 
legislation that sanction the illegal behavior of direct 
broadcast satellite service providers. These provisions 
permanently grandfather the transmission of distant network 
signals to subscribers residing outside of the Grade A contour, 
but within the Grade B contour, regardless of whether those 
subscribers may actually be able to receive clear over-the-air 
broadcast signals from their local stations. These provisions 
put Congress squarely in the position of sanctioning illegal 
behavior. The role of Congress is to enact sound laws, not to 
condone the actions of those who break the laws we enact.
  Competition has not developed in the cable television 
marketplace as rapidly as Congress had envisioned. Therefore, 
we support policies that promote viable competitors to cable in 
the multichannel video programming market. DBS's ability to 
become a viable competitor to cable is hampered by the current 
regulatory landscape which imposes outdated limits on the 
provision of DBS service. Therefore, legislation that 
ultimately passes the U.S. Senate should permit satellite 
providers to transmit local broadcast signals into local 
markets, and eliminate the 90 day waiting period for existing 
cable subscribers who wish to switch to satellite service. We 
also support the implementation of full must-carry by January 
1, 2002, as required by the legislation reported by this 
Committee. Absent these pivotal changes in the law, DBS will 
continue to be hamstrung in its efforts to compete with cable.
  In order to provide some protection to DBS subscribers, we 
support the compromise contained in the Committee reported bill 
that permits a temporary continuance of satellite transmission 
of distant network signals for existing subscribers within the 
Grade A contour. This compromise, which permits the 
transmission of those signals until December 31, 1999, would 
permit consumers to receive signals temporarily while the FCC 
develops an orderly and fair waiver process so that citizens 
who cannot in fact receive their local broadcast stations may 
legally receive distant network signals. This compromise also 
appropriately provides a date certain for termination of the 
transmission of distant network signals to served customers 
within the Grade A contour in recognition of the overwhelming 
likelihood that the transmission of such signals is in fact 
illegal.
  While we favor these significant and constructive changes in 
the law, we opposed one significant aspect of the substitute 
amendment approved during the Committee's consideration of S. 
303 for the simple reason that it ignores the legal framework 
that governs the relationship between local broadcasters, 
satellite providers, and customers. Under SHVA, satellite 
companies, through the use of a copyright compulsory license, 
can deliver distant network signals to unserved households. 
Satellite providers are not permitted under SHVA to provide 
distant network signals to served households. Under the 
approach adopted by the Commerce Committee, however, existing 
satellite subscribers who reside between the Grade A and Grade 
B contour lines, and who qualify as served customers, may 
continue to receive their distant network signals indefinitely. 
Such an approach cannot be justified simply by its proponents' 
unsupported contention that all DBS subscribers purchased their 
satellite service in good faith. Nor is the sanctioning of such 
illegality supported by the argument, voiced in the Majority 
views, that ``local broadcasters have not been able to show 
that they are suffering any substantial harm as a result'' of 
the illegal transmission of distant network signals within the 
Grade B contour. Laws are often broken ``in good faith'' 
without causing ``substantial harm,'' but the U.S. Congress 
does not normally sanction such illegal activity. Moreover, 
when Congress has allowed conduct to be grandfathered in the 
past, our actions were premised on a change in the law that 
necessitated protecting prior legal behavior. The grandfather 
provision approved by this Committee, however, protects the 
prior illegal behavior of the satellite providers.
  We also note with interest the fact that the permanent 
grandfather approach goes well beyond a settlement that was 
recently agreed to by representatives of the broadcast and 
satellite industries. The settlement terminates, for over 2 
million consumers, the delivery of distant network signals into 
the Grade B contour at the end of this year. Finally, 
permitting the permanent transmission of distant network 
signals within the Grade B contour completely ignores the legal 
rules governing the satellite industry--as set forth in the 
Satellite Home Viewer Act and interpreted in recent federal 
district court opinions--that prohibit the sending of such 
signals to served households.
  Perhaps in recognition of its significant departure from 
governing statutory and federal court authority, the 
legislation does attempt to address the adverse impact it could 
have on the many local broadcasters whose markets include 
thousands of customers within the Grade B contour. 
Specifically, the legislation requires the FCC to determine 
whether to apply program exclusivity rules to distant network 
stations' signals that are provided to existing subscribers 
residing between the Grade A and Grade B contours. The 
legislation directs the FCC, however, not to apply such program 
exclusivity rules unless it finds that it would ``be both 
technically and economically feasible and otherwise in the 
public interest to do so.''
  The trouble with this approach is multifaceted. First, the 
FCC may determine that the application of exclusivity rules to 
distant network signals is in fact warranted. In that event, 
subscribers who would at first be grandfathered under the bill 
could subsequently have their distant network programming 
blacked out to a significant degree. Such a result would place 
Congress in a posture similar to that in which it finds itself 
today--inundated with thousands of consumer complaints that 
satellite network signals are being terminated. Although we 
recognize the importance of exclusivity rules in protecting 
local broadcasters from the transmission of distant network 
signals into their markets, we cannot agree with an approach 
that could place us unnecessarily in the cross hairs of 
thousands of angry constituents yet again.
  Moreover, the legislation reported by the Committee grants 
the FCC the discretion to refrain from applying program 
exclusivity rules even if such application might protect local 
broadcasters from the entrance of distant network signals into 
their local market. Indeed, the FCC could decide not to apply 
exclusivity rules at all under the legislation as it stands 
today. Such a determination by the FCC, however, would result 
in the permanent grandfathering of the illegal transmission of 
distant network signals--an outcome that this Congress should 
not endorse.
  What makes the approach taken in this legislation all the 
more imponderous, is its alleged distinction between illegal 
behavior involving Grade A satellite subscribers and illegal 
behavior involving Grade B subscribers. With respect to the 
satellite carriers' transmission of distant network signals to 
Grade A subscribers, the legislation requires that the illegal 
transmission should be terminated by a date certain. Yet, with 
respect to served subscribers residing between the Grade A and 
Grade B contours, the legislation could legalize the 
transmission of distant network signals.
  We simply cannot support that approach as the best means for 
helping consumers who may otherwise have had their network 
signals terminated. Instead, we advocated an alternative during 
the Committee's consideration of the legislation that we 
thought provided a better balance in addressing the competing 
concerns of satellite providers, broadcasters, and consumers. 
That alternative would have permitted subscribers between the 
outlines of the Grade A and B contours to continue to receive 
distant network signals by satellite--regardless of whether 
they are considered served or unserved--until December 31, 
1999. During this grace period, the FCC would have been 
required to develop a fair and orderly waiver process so that 
consumers who could not receive local signals would be granted 
a prompt waiver to permit the delivery of distant network 
signals by satellite.
  Those subscribers deemed to be served under the refined 
Individual Location Longely-Rice (ILLR) methodology would have 
their signals terminated as of December 31, 1999. Well before 
this date, they would receive ample notice of such termination, 
and their DBS provider would have a significant incentive to 
retain them as customers. Therefore, they would likely inform 
subscribers about obtaining over-the-air antennas. Customers 
deemed to be unserved under the new ILLR model would be 
permitted to continue to receive their distant network signals 
after the December 31, 1999, cutoff date.
  While our approach provides a date certain for termination of 
illegally transmitted network signals, it also gives the 
satellite consumer the proverbial three bites at the apple. 
First, the utilization of the revised ILLR predictive model 
will more accurately determine which customers are likely to be 
able to receive their local network programming over the air. 
Those deemed unable to receive such programming would be able 
to continue to receive distant network signals via satellite. 
Second, those customers who are deemed served by the new model, 
but who cannot in fact receive clear signals from their local 
broadcasters, would be afforded access to an orderly waiver 
process through which they could continue to receive network 
programming through their satellite provider. Finally, if the 
request for a waiver is denied, the customer could request 
testing (to be paid for by industry) at the home to provide a 
more accurate determination of his or her ability to receive 
local broadcast signals. This alternative approach provides 
ample opportunity for consumers who truly cannot receive their 
local network stations to continue to receive distant network 
signals. In contrast, the approach approved by the Commerce 
Committee would either: permanently grandfather the illegal 
transmission of distant network signals by satellite providers; 
or facilitate the blacking out of such signals through the 
imposition of exclusivity rules by the FCC.
  In offering these dissenting views, we do not wish to suggest 
that Congress ignore the necessity for a federal solution to 
two important problems: (1) the absence of a viable, 
sustainable competitor to cable in the multichannel video 
programming marketplace; and (2) the need for a national 
solution to the ongoing fight between satellite providers and 
broadcasters over consumers receiving network programming. If 
these problems remain unaddressed, the multichannel video 
programming consumer will continue to suffer as cable rates 
rise and further litigation threatens additional terminations 
of network programming transmitted by satellites. The agreement 
on the need to address these problems in the immediate future 
provided the justification for the Committee to report S. 303 
favorably. The disagreement as to how to help customers who may 
have their network programming terminated in the future 
required the filing of these minority views.

                                   Max Cleland.
                                   John Kerry.
                                   Ernest Hollings.
                                   Ted Stevens.