Implementation of the Satellite Home Viewer Extension and Reauthorization Act of 2004; Implementation of Section 340 of the Communications Act; Report and Order

(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 [47 U.S.C. 397]). 17 U.S.C. 119(d)(2). The SHVERA also relies on section 339(d) for the definition of ``television network,'' which is slightly different from the ``network'' definition in title 17. (See 47 U.S.C. 340(i)(2); 47 U.S.C. 339(d)(5); 47 CFR 76.66(a)(5) (defining television network in the context of satellite broadcast signal carriage)). Section 339(d)(5) provides: ``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.'' 47 U.S.C. 339(d)(5). We note the difference in language between ``affiliated television licensees'' in title 17 compared with ``affiliated broadcast stations'' in section 339 of the Communications Act, but we do not find the difference significant.

34. In the NPRM, we tentatively concluded that the SHVERA prevented us from updating our significantly viewed rules because it requires that we retain the standard we have used since April 15, 1976. (See 17 U.S.C. 119(a)(3)(A), as amended by section 102 of the SHVERA (the statutory copyright license applies to retransmission of significantly viewed network station or superstation to a subscriber in a community on the Commission's list and limits significantly viewed to the Commission's rules in effect on April 15, 1976)). Therefore, we proposed to harmonize the apparent inconsistencies by continuing to use the definition of network and independent station in our rules for purposes of determining whether a station is significantly viewed for placement on the SV List, which thereby excludes noncommercial stations from eligibility for the SV List. However, as also required by the SHVERA, we proposed to use the copyright definition of network station and superstation for purposes of subscriber eligibility and the other applications of the significantly viewed provisions. 35. We adopt our proposal in the NPRM to harmonize the conflicting definitions of network station. Most commenters on this issue support our proposal. The SHVERA required use of the rules in effect as of April 15, 1976, and thus precludes us from applying definitions of ``full network station,'' ``partial network station'' and ``independent station'' different from the April 15, 1976, standard incorporated by reference in the statute. Thus, as proposed in the NPRM, we will use our rule's definitions for purposes of determining whether a station is significantly viewed and use the Copyright Act's definitions for purposes of determining subscriber eligibility. 36. We reject, at this time, NAB's request to change the definitions of ``full network station,'' ``partial network station,'' and ``independent station'' in Sec. 76.5(j), (k), and (l) to track the Copyright Act definitions of ``network station'' and ``superstation'' in 47 U.S.C. 119(d). We recognize that our rules will treat stations owned by Fox or affiliated with the Fox Network as ``independent stations'' under the Commission's definitions in Sec. 76.5, and not as network stations, whereas these stations are treated as ``network stations'' under the Copyright Act definition. (Similarly, other networks that may satisfy the copyright definition of ``network,'' will be treated as ``independent stations'' under our rules.) But the statute requires that we use the rules in effect as of April 15, 1976, which would include our rule's definition of network station. 37. We also take this opportunity to respond to an ex parte question raised by Capitol Broadcasting Company, Inc. (CBC). CBC asks, with respect to a petition to impose network non-duplication and syndicated exclusivity on a station on the SV List, what standard applies if the station has subsequently changed its status to or from a network station. In addressing such petitions, we have found that petitioners seeking to demonstrate that a station no longer meets the significantly viewed criteria (and that therefore a waiver of the exemption from network non-duplication and syndicated exclusivity is warranted) must use the standard that applies to the listed station at the time the survey is conducted. The initial determination that a station is significantly viewed is based on a comparison of the submitted audience data with the significantly viewed standard applicable to the station affiliation status. Thus, when challenging whether a station is still entitled to invoke the significant viewing exemption under the network non-duplication and/or syndicated exclusivity rules, it is appropriate for a petitioner to make the determination of whether a waiver is warranted based on the criteria applicable to the station's affiliation at the time the survey was conducted. So, in CBC's example in which a listed station changed from a network station when initially listed to an independent station at the time of the survey to show the station is no longer significantly viewed, the petitioner should apply the independent standard to determine if the listed station no longer meets the criteria for significantly viewed status. 5. Limitations on Carriage of Significantly Viewed Stations Based on Network Non-Duplication and Syndicated Exclusivity 38. Section 340(a)(1) limits satellite carriage of a station included on the SV List ``to the extent such signal is prevented from being carried by a cable system in such community under the Commission's network non-duplication and syndicated exclusivity rules.'' In the NPRM, we noted the complexity of applying the network non-duplication and syndicated exclusivity rules to the

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satellite context. The exclusivity rules do not apply to satellite carriage of network stations, but only to carriage of ``nationally distributed superstations,'' as provided by section 339(b)(1)(A), which was enacted by the SHVIA in 1999. (See 47 U.S.C. 339(b)(1)(A)). The existing satellite exclusivity rules provide for an exception to their application in the event that the nationally distributed superstation is also a station that is significantly viewed in the area in which the satellite carrier is offering them. (See 47 CFR 76.122(j)(ii) and 76.123(k)(2)). Section 340(e) maintains the status quo by providing that the exclusivity rules shall not apply to distant network stations. (See 47 U.S.C. 340(e)(2), enacted by section 202 of the SHVERA: ``(2) LIMITATION. Nothing in this subsection or Commission regulations shall permit the application of network non-duplication or syndicated exclusivity regulations to the retransmission of distant signals of network stations that are carried by a satellite carrier pursuant to a statutory license under section 119(a)(2)(A) or (B) of title 17, United States Code, with respect to persons who reside in unserved households, under section 119(a)(4)(A), or under section 119(a)(12), of such title.''). Section 340(e)(1), however, authorizes the Commission to adopt rules to permit assertion of the exclusivity rules by stations and distributors with respect to stations carried by satellite carriers pursuant to the new significantly viewed provisions. (See section 340(e)(1), enacted by section 202 of the SHVERA: ``(1) NOT APPLICABLE EXCEPT AS PROVIDED BY COMMISSION REGULATIONS. Signals eligible to be carried under this section are not subject to the Commission's regulations concerning network non-duplication or syndicated exclusivity unless, pursuant to regulations adopted by the Commission, the Commission determines to permit network non-duplication or syndicated exclusivity to apply within the appropriate zone of protection;'' 47 U.S.C. 340(e)(1)). 39. In the NPRM, we said this provision required us to (1) create a limited right for a station or distributor to assert exclusivity with respect to a station carried by a satellite carrier as significantly viewed; (2) allow that significantly viewed station to assert the significantly viewed exception, just as a station would with respect to cable carriage; and (3) allow the station or distributor asserting exclusivity to petition us for a waiver from the exception. Thus, Congress directs the Commission to ensure parity between cable operators and satellite carriers so that a station's programming that is subject to blackout deletions with respect to a cable system serving a cable community would also be subject to deletions for a satellite carrier's subscribers within the same cable community or within a satellite community. 40. In the NPRM, we proposed to implement these SHVERA requirements, first, by denoting on the SV List which stations in which communities have been subjected to deletions such that duplicating programming must be blacked out by cable operators. In Appendix B, SV List, we used a pound sign () to indicate the stations and communities subjected to programming deletions pursuant to the Commission's exclusivity rules. Satellite carriers using the SV List may carry these stations, but are subject to the same programming deletions that apply to cable systems. Second, we proposed to amend our rules so that stations and distributors may assert exclusivity rights with respect to satellite carriage of significantly viewed stations but only insofar as they can prove that the conditions supporting a waiver of the significantly viewed exception from the exclusivity rules would apply. 41. As proposed, we adopt a rule for satellite carriage that mirrors the rules for cable carriage. (See 47 CFR 76.92(f)). Specifically, the new rule allows a station or distributor with exclusive rights to network or syndicated programming to petition the Commission to require satellite carriers to delete such programming from stations that are carried because they are on the SV List. Such SV stations may respond to such petitions by claiming the exception to the network nonduplication and syndicated exclusivity rules that applies to significantly viewed stations (``the significantly viewed exception''). (See e.g., 47 CFR 76.122(j)(2) and 76.123(k)(2)). The party petitioning for network nonduplication or syndicated exclusivity protection may request a waiver of the significantly viewed exception by demonstrating that the station is no longer significantly viewed in a particular community or communities. If the waiver is granted, the duplicating programming must be deleted by a cable operator or satellite carrier if the station is carried in a community in which the station has been shown to no longer be significantly viewed. The station is not removed from the SV List and may continue to be carried, provided the necessary programming deletions are made; (See House Commerce Committee Report at 14-15 (noting that stations are not removed from the SV List but rather that blackout deletions are re-imposed)). 42. Commenters split on this issue, with NAB supporting it and EchoStar seeking a simpler de-listing procedure instead. We agree with NAB that broadcast stations or program suppliers should be able to petition the Commission for waiver of the significantly viewed exception to the network non-duplication and syndicated exclusivity rules for satellite carriers in the same manner as is permissible in the cable context. We reject EchoStar's proposed de-listing procedure because the network non-duplication and syndicated exclusivity deletions only apply to specific programming, and not the entire signal. Thus, it would not be appropriate to remove the signal from the list. Accordingly, we will revise Sec. Sec. 76.122 and 76.123, as proposed. 6. Definition of ``Satellite Community'' 43. The SHVERA required the Commission to define ``community'' in the satellite context. Under the SHVERA, a ``community'' is either (1) a county or a cable community under the Commission's rules (applicable to significantly viewed signals), or (2) a satellite community as defined by the Commission in implementing the statute. 47 U.S.C. 340(i)(3) states that ``[t]he term `community' means--(A) a county or a cable community, as determined under the rules, regulations, and authorizations of the Commission applicable to determining with respect to a cable system whether signals are significantly viewed; or (B) a satellite community, as determined under such rules, regulations, and authorizations (or revisions thereof) as the Commission may prescribe in implementing the requirements of this section.'' The concept of a ``community'' is important in the SHVERA because the term describes the geographic area where a subscriber is permitted to receive a significantly viewed signal. In the NPRM, we considered both how to apply SV determinations for existing communities to satellite, and how to define future communities for both satellite and cable. a. Existing Communities 44. The first issue concerns how best to apply existing cable communities to the satellite context. Existing significantly viewed determinations are limited to cable communities because our rules have previously applied only to cable carriage of significantly viewed signals. In the cable context, the

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Commission defined a community unit in terms of a ``distinct community or municipal entity'' where a cable system operates or will operate. 47 CFR 76.5(dd) defines ``community unit'' as: ``A cable television system, or portion of a cable television system, that operates or will operate within a separate and distinct community or municipal entity (including unincorporated communities within unincorporated areas and including single, discrete unincorporated areas).'' (See Amendment of Part 76 of the Commission's Rules and Regulations with Respect to the Definition of a Cable Television System and the Creation of Classes of Cable Systems, 63 FCC 2d 956, 966 (1977) (defining ``community unit'' for, inter alia, the significantly viewed rules, as that part of a cable system that is located within a single community)). Due to the localized nature of cable systems, cable communities were easily defined by the geographic boundaries of a given cable system, which were often, but not always, coincident with a municipal boundary and varied as determined on a case-by-case basis. (See Amendment of Parts 21, 74, and 91 to Adopt Rules and Regulations Relating to the Distribution of Television Broadcast Signals By Community Antenna Television Systems, and Related Matters, Docket 15971, 2 FCC 2d 725, 785-6, para. 149 (1966) (``community'' as used in the rules must be determined case-by-case depending on the circumstances involved); Telerama, Inc., 3 FCC 2d 585 (1966), Mission Cable TV Inc., 4 FCC 2d 236 (1966), Calvert Telecommunications Corp., 49 FCC 2d 200 (1974), and St. Louis Telecast, Inc., 12 RR 1289, 1369 (1957)). 45. The SHVERA required satellite carriers to use the existing defined cable communities on the SV List. (See 47 U.S.C. 340(a)(1)). Most of the listings on the SV List are by county because the study to establish significantly viewed signals was based on a survey of every station existing in 1972 and its audience on a county-wide basis. (See 1972 R&O, 36 FCC 2d at 175-6, para. 85; 1972 Recon Order, 36 FCC 2d at 162-63, para. 53). Where a station satisfied the requirements to be considered significantly viewed in a county, the Commission provided that this status was applicable to every community within that county. Following the creation of the initial SV List in 1972, significantly viewed determinations generally were made based on community listings. In rare circumstances, though, a petitioner could show that a county could be a community containing a significantly viewed station under Sec. 76.54(b). Further, the Commission's rules (as in effect as of April 15, 1976) permit county-wide showings for new stations not included in the initial SV List pursuant to Sec. 76.54(d). Unlike community showings, in order to make such a showing on a county-wide basis, parties must include audience survey data from the station's first three years of operation, regardless of when the station, cable operator or satellite carrier decide to make the showing. Thus, the existing list includes counties, communities, such as cities or municipalities, and unincorporated areas. In the NPRM, the Commission asked whether satellite carriers would be able to determine which of their subscribers are in existing communities and, if not, how best to apply existing cable communities to the satellite context. 46. We find that the statute requires satellite carriers to use existing listings in offering significantly viewed signals, whether defined as a county, a non-county community (e.g., a city or municipality), or as an unincorporated area. Thus, satellite carriers may provide a station to a subscriber as significantly viewed if that station is on the SV List for the community in which the subscriber is located. DIRECTV states, however, that it would have a problem using existing community listings that are not county-wide or that do not follow zip code boundaries. No other commenters express any problems with using such non-county listings. Although DIRECTV says it cannot provide service to subscribers based on non-county listings, DIRECTV says it can determine which zip codes are contained within a non-county boundary and provide service to subscribers based on those zip codes. 47. We recognize that DIRECTV may face a subscriber identification issue in situations where zip codes may cross over community lines and may be only partially contained within an existing SV community listing. We find, however, that the statute requires that only subscribers within existing SV community listings are eligible to receive significantly viewed stations associated with these communities. (See 47 U.S.C. 340(a)). DIRECTV, itself, acknowledges the validity of this statutory interpretation. We recognize that limiting significantly viewed carriage to subscribers within an existing community listing would mean that DIRECTV would not be able to serve some subscribers eligible to receive a SV station because they are in a zip code which partially extends beyond the existing community boundary. But this result is due to DIRECTV's limitations and appears unavoidable in light of the statute. EchoStar does not suggest that it is similarly affected by DIRECTV's technical limitation, but nevertheless disagrees with this approach. EchoStar argues that this statutory interpretation is too conservative and suggests that satellite carriers should be able to serve subscribers in zip codes that extend beyond an established community or county boundary if 10 percent or more of the zip code's population is contained within the existing community listing. We reject EchoStar's ``10 percent overlap'' proposal. We agree with MPAA and NAB that EchoStar's proposal is contrary to the statute's limitations on station eligibility for SV carriage. (See 47 U.S.C. 340(a)). 48. We will not assign zip codes to each community identified in the SV List, as requested by EchoStar, because that would be unnecessarily burdensome on Commission resources. It is much easier for satellite carriers to make such determinations on an as-needed basis. Thus, it is the satellite carrier's responsibility to determine whether a particular subscriber resides within a listed community and is eligible for significantly viewed status, whether by use of zip code, street address or other means. b. Future Communities 49. The second issue concerns how best to define communities in the future when stations seek carriage by satellite carriers as significantly viewed, while satisfying Congress' intent for regulatory parity between satellite and cable. In the NPRM, we provided that cable operators would continue to define future cable communities as they always have. But the statute authorizes the Commission to define a ``satellite community'' in a manner appropriate for the nature of satellite service where there is no existing cable community. (See 47 U.S.C. 340(i)(3)(B)). In the NPRM, we proposed two options for defining future satellite communities. The first option would allow a satellite carrier to seek significantly viewed status for a given station with respect to one or more specified five-digit zip code areas. The second option proposed to define a satellite community based on a separate and distinct community or municipal entity. 50. We adopt our second option. Thus, where there is no pre-existing cable community (i.e., no cable system serving the community as defined in Sec. 76.5(dd)), a satellite carrier may define a new community for purposes of the

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SV List by reference to an existing separate and distinct community or municipal entity (e.g., political jurisdiction, incorporated city or town). In the absence of a separate and distinct community or municipal entity (e.g., an unincorporated area), a satellite community may be defined by one or more adjacent five-digit zip code areas. In addition, satellite carriers (like cable operators) may also demonstrate significantly viewed status for a new station on a county-wide basis, pursuant to Sec. 76.54(d). A county showing under Sec. 76.54(d) is separate from the community showing under 76.54(b). Unlike community showings, in order to make such a showing on a county-wide basis, parties must include audience survey data from the station's first three years of operation, regardless of when the station or cable operator or satellite carrier decides to make the showing. Because the statute requires the Commission to use the rules in effect as of April 15, 1976, application of the county-wide standard in Sec. 76.54(d) must apply to the satellite context as it applies to cable. 51. Our definition of a ``satellite community'' best balances the statutory requirement of regulatory parity with the unique nature of satellite service. Unlike cable service, which reaches subscribers via local franchises across the country, satellite service is generally a national service. Moreover, satellite service is offered in areas of the country that do not have cable service, and thus are not cable communities. We agree with Gulf and NAB that regulatory parity requires that a satellite community resemble existing cable communities as much as possible. We also agree with MPAA about the importance of applying consistent rules to both satellite and cable. Our definition will also make it more likely that a cable system subsequently built in such an area would serve a ``community'' similar to the satellite community, thus making the SV List more easily used by both cable and satellite providers. In the NPRM, we asked what we should do if a cable operator subsequently offers cable service in a community after it has been defined as a ``satellite community.'' We believe our definition of satellite community avoids the need to redefine the community to the extent it overlaps with the franchise area of the new cable community. 52. We reject our first proposal that would allow use of one or more zip codes to define a satellite community. Commenters split on this issue. While some commenters favored the use of zip codes to offer ``greater certainty to consumers,'' others expressed concerns about regulatory parity and cherry-picking communities. We are persuaded that our first proposal is not the preferred choice. As we noted in the NPRM, it would ignore an existing town, village, municipality or other geopolitical entity that constitutes a ``community'' in the more traditional sense. As noted by NAB, zip codes would unfairly allow satellite carriers to cherry-pick areas of traditional communities in a manner cable operators may not do. We note that cable operators are not permitted under Sec. 76.54(b) to demonstrate significantly viewed status for only a portion of a recognized community. In contrast to traditional communities, we do not share this concern with respect to unincorporated areas that do not track a traditional community. We agree with DIRECTV that unincorporated areas may not constitute a community in the traditional sense any more than would a zip code. Thus, we find, in this limited circumstance, satellite carriers may use one or more adjacent five-digit zip code areas to define an unincorporated area. We are requiring that, if multiple five-digit zip code areas are to be used, then such areas must be adjacent to each other to prevent carriers from cherry-picking their service to these areas. It is also permissible to demonstrate significant viewing in an individual zip code or in several zip codes as long as each one is shown to have significant viewing. If a satellite carrier aggregates more than one zip code, a single survey may be taken, provided that the sample includes over-the-air television homes from each zip code that are proportional to the population. 53. We disagree with NAB's contention that an additional demonstration is required by satellite carriers to show that the ``community'' satisfies the section 307(b) concept of community. Our definition ensures that a satellite community will resemble a community in a traditional sense, and alleviates concern about the creation of ``artificial communities.'' Our definition will also adequately prevent local broadcast stations from being subject to cherry-picking or so-called ``Swiss-cheesing'' of their program exclusivity rights because it requires carriers to use community boundaries and would not allow carriers to use zip codes to exclude portions of a traditional community. c. Natural Growth of Communities 54. In the NPRM, we recognized that communities may grow or change over time, either through annexation or other means, and tentatively concluded that these communities should generally be interpreted to encompass the area of natural growth of the community. This concept applies to both existing communities now on the SV List, as well as both cable and satellite communities that may be created in the future. We will affirm our conclusion, which was supported by EchoStar, the sole commenter on this issue. It would be unnecessarily burdensome for the Commission to determine community boundaries based on when they were accorded SV status. It has been our practice to recognize the area of natural growth of communities, and we will continue to do so. Thus, we will apply the community listing or description on the SV List to the community so denominated today, or as it may become in the future. 7. Significantly Viewed Carriage Not Mandatory; Retransmission Consent Rights Not Affected 55. The SHVERA did not require satellite carriers to carry significantly viewed stations. (See 47 U.S.C. 340(d)(1) (``Carriage of a signal under this section is not mandatory, and any right of a station licensee to have the signal of such station carried under section 338 is not affected by the eligibility of such station to be carried under this section.'')). This provision also makes clear that any right of a station to have its signal carried in a local market under the ``carry-one, carry-all'' satellite must carry requirement is not affected by the significantly viewed status of the signal in another market. The SHVERA also did not change the requirements for retransmission consent (See 47 U.S.C. 340(d)(2) (``The eligibility of the signal of a station to be carried under this section does not affect any right of the licensee of such station to grant (or withhold) retransmission consent under section 325(b)(1).'')). Based on the statutory language, we tentatively concluded in the NPRM that carriage of significantly viewed stations will require retransmission consent under section 325(b) of the Act, unless an exception to the requirement applies. 56. Based on the SHVERA's statutory language, we affirm our conclusions in the NPRM. Satellite carriers are not required to carry significantly viewed stations. The statute is clearly permissive in this regard. (See 47 U.S.C. 340(d)(1)). The statute is also clear that it does not change any retransmission consent requirements. (See 47 U.S.C. 340(d)(2)). Thus, it follows that, like a cable operator, a satellite carrier must obtain retransmission consent to carry a station as a significantly viewed signal.

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In the NPRM, we noted that a satellite carrier is exempt under section 325(b) from having to obtain retransmission consent when providing a distant signal of a network to an unserved subscriber who cannot receive an over-the-air signal from an affiliate of the same network. 8. Significantly Viewed Signals and the Single Dish Requirement 57. Pursuant to section 338(g) of the Act, satellite carriers must carry all local stations on a single dish by June 8, 2006. (See 47 U.S.C. 338(g)(1), as amended by section 203 of the SHVERA (analog local television stations in a market must be carried by means of a single reception antenna and associated equipment)). In the NPRM, we asked whether the SHVERA required satellite carriers to carry both local and significantly viewed stations on a single dish. 58. We find that the SHVERA did not impose a requirement on satellite carriers to carry both local and significantly viewed stations on a single dish. The only two commenters on this issue, DIRECTV and EchoStar, support such a finding. Section 340 does not specify any such requirement. Rather, the single dish requirement is found only in section 338(g), amended by section 203 of the SHVERA, and refers to the retransmission of only ``local'' signals. (See 47 U.S.C. 338(g)(1) (``Each satellite carrier that retransmits the analog signals of local television broadcast stations in a local market shall retransmit such analog signals in such market by means of a single reception antenna and associated equipment.''). We, thus, agree with DIRECTV that the single-dish restriction is limited to local--and not significantly viewed--signals. In this regard, the statutory framework is instructive. As noted by DIRECTV, section 338 of the Act governs the retransmission of local signals, section 339 of the Act governs the retransmission of distant signals, and new section 340 of the Act governs the retransmission of significantly viewed signals. In addition, carriage of ``local'' signals is governed by section 122 of the copyright provisions; but carriage of significantly viewed signals is based on the section 119 statutory copyright license that governs distant signals. 9. Definition of ``Satellite Carrier'' 59. The SHVERA defined the term ``satellite carrier'' in new section 338(k) by reference to the definition in 17 U.S.C. 119. This definition includes entities providing services as described in 17 U.S.C. 119(d)(6) using the facilities of a satellite or satellite service licensed under part 25 of the Commission's rules to operate in Direct Broadcast Satellite (DBS) or Fixed-Satellite Service (FSS) frequencies. Part 100 of the Commission's rules was eliminated in 2002 and now both FSS and DBS satellite facilities are licensed pursuant to part 25 of the rules. Policies and Rules for the Direct Broadcast Satellite Service, 17 FCC Rcd 11331 (2002); 47 CFR 25.148. As a general practice, not mandated by any regulation, DBS licensees usually own and operate their own satellite facilities as well as package the programming they offer to their subscribers. In contrast, satellite carriers using FSS facilities often lease capacity from another entity that is licensed to operate the satellite used to provide service to subscribers. These carriers using FSS facilities package their own programming and may or may not be Commission licensees themselves. In addition, a third situation may include an entity using a non-U.S. licensed satellite to provide programming to subscribers in the United States pursuant to a blanket earth station license. (See e.g., Application of DIRECTV Enterprises, LLC, Request for Special Temporary Authority for the DIRECTV 5 Satellite; Application of DIRECTV Enterprises, LLC, Request for Blanket Authorization for 1,000,000 Receive Only Earth Stations to Provide Direct Broadcast Satellite Service in the U.S. Using the Canadian Authorized DIRECTV 5 Satellite at the 72.5[deg] W.L. Broadcast Satellite Service Location, 19 FCC Rcd. 15529 (Sat. Div. 2004)). In the NPRM, we tentatively concluded that the definition of ``satellite carrier'' would include all three types of entities described above. 60. We will adopt our proposed interpretation of a satellite carrier. Our interpretation flows directly from the statute. The commenters on this issue, EchoStar and NAB, support our conclusion.

B. Subscriber Eligibility To Receive ``Significantly Viewed'' Signals

61. In addition to the statutory requirements concerning station eligibility, the SHVERA also limited the subscribers who are eligible to receive the signals of significantly viewed stations. In general, subscribers are not eligible to receive out-of-market significantly viewed signals of a network station unless they are already receiving the local signal of an affiliate of the same network via satellite. (See 47 U.S.C. 340(b); 17 U.S.C. 119(a)(3)(B)). Application of this general principle differs, however, depending on whether the significantly viewed signal is analog or digital, with additional restrictions imposed on digital signals. The subscriber eligibility limitations also provide for an exception where there is no local network station present in the relevant market or when a local network station waives the subscriber eligibility requirements. 1. Definition of ``Subscriber'' 62. The SHVERA defined the term ``subscriber'' in new section 338(k) by reference to the definition in 17 U.S.C. 122(j)(4), which provides that a subscriber is ``a person who receives a secondary transmission service from a satellite carrier and pays a fee for the service, directly or indirectly, to the satellite carrier or to a distributor.'' The NPRM said the definition in 17 U.S.C. 122 differs slightly from the definition of subscriber contained in 17 U.S.C. 119, which establishes the significantly viewed compulsory copyright license for satellite carriers. We noted that the definition in 17 U.S.C. 119 limits ``subscribers'' to individuals in private homes, but said that Congress intended to use the broader definition in 17 U.S.C. 122 for significantly viewed signals. 63. However, the definition in 17 U.S.C. 119 was amended by section 107 of the SHVERA to strike the reference to ``private home viewing.'' Section 107 of the SHVERA amends 17 U.S.C. 119(d)(8) to define a subscriber as ``an individual or entity that receives a secondary transmission service by means of a secondary transmission from a satellite carrier and pays a fee for the service, directly or indirectly, to the satellite carrier or to a distributor in accordance with the provisions of this section.'' This definition is not identical to the definition in 17 U.S.C. 122, but is essentially the same after the SHVERA's amendment. Thus, we agree with DIRECTV and MPAA that the two Copyright Act definitions (in 17 U.S.C. 119 and 122) are for present purposes largely the same, and there is no need to distinguish between them. 64. In the NPRM, we proposed to amend the definition of subscriber in our rules to include subscribers to satellite service. We will adopt our proposed amendment to the definition contained in Sec. 76.5(ee) of our rules. Defining a satellite subscriber for our rules is consistent with the SHVERA and furthers regulatory parity. We received no comments on this proposal. 2. Analog Service Limitations; Receipt of Local Affiliate Required 65. Section 340(b)(1) of the Act explains the nature of subscriber eligibility to receive an out-of-market

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significantly viewed analog signal as follows:

With respect to a signal that originates as an analog signal of a network station, this section shall apply only to retransmissions to subscribers of a satellite carrier who receive retransmissions of a signal that originates as an analog signal of a local network station from that satellite carrier pursuant to section 338.

In the NPRM, we generally interpreted section 340(b)(1) to mean that subscribers receiving ``local-into-local'' service from their satellite carrier are eligible to also receive significantly viewed signals. We tentatively concluded that, as a general rule, a satellite carrier must be offering local-into-local service and a subscriber must be receiving this service as a pre-condition to offering an out-of-market significantly viewed station's signal to that subscriber.

66. We also tentatively concluded that the SHVERA, as a whole, contemplated that subscribers in a market in which ``local-into-local'' service is not being offered are not eligible for significantly viewed stations retransmitted by satellite carriers, except where there is no affiliate of a given network in the market as provided for in section 340(b)(3). And we tentatively concluded that satellite subscribers would not qualify for significantly viewed signals if they obtain local stations via an over-the-air TV antenna, including one that is integrated with a satellite dish. 67. Finally, we asked what happens if a local network station fails to request local carriage, refuses to grant retransmission consent, or is otherwise ineligible for local carriage. If a subscriber subscribes to and receives the satellite carrier's local-into-local service, but does not receive a particular local network station because such station is not carried by the satellite carrier, is that subscriber eligible to receive the significantly viewed station affiliated with that network? We said the result was not clear, but tentatively concluded that, as an exception to the general rule, ``a subscriber should not be deprived of access to a significantly viewed station because the local station refused to grant retransmission consent or was otherwise ineligible for local carriage.'' 68. Subscription to and receipt of ``local-into-local'' service generally required. We conclude that section 340(b)(1) of the Act allows a subscriber to receive a significantly viewed signal provided that the subscriber receives local-into-local service from its satellite carrier. This conclusion flows from the language in the statute, which expressly permits the retransmission of significantly viewed signals only to subscribers ``who receive retransmissions of a signal * * * of a local network station * * *'' (See 47 U.S.C. 340(b)(1)). While the commenters disagree on the ultimate meaning and intent of this language, they all agree on this initial premise that local-into-local service must be offered in a market (DMA) before significantly viewed signals may be offered to subscribers in that market and that individual subscribers must receive the local package to be eligible for out-of-market significantly viewed signals. We note that Nielsen changes the DMAs to which counties are assigned based on viewing patterns that vary from year to year. We anticipate that such adjustments would be consistent with significant viewing patterns as well. To the extent, however, that such changes result in compliance problems, we will address these on a case-by-case basis. In the cable context, we permit established service to continue in the absence of a complaint. (See Definition of Markets for Purposes of the Cable Television Signal Carriage Rules, 14 FCC Rcd 8366, 8381, para. 35 (1999); 47 CFR 76.55(e)(5). To the extent permitted by the statutes involved, we will follow the same procedures here SHVIA Signal Carriage Order, 16 FCC Rcd at 1935-36, para. 39). 69. Subscriber receipt via satellite required. We find that satellite subscribers do not qualify for significantly viewed signals if they are receiving local stations via an over-the-air TV antenna, including one that is integrated with a satellite dish. Such subscribers are not receiving their local service via satellite as required by the statute. The statute specifically applies to the receipt of local service ``pursuant to section 338.'' Section 338 of the Act applies only to local stations retransmitted by satellite and delivered to the subscriber via the satellite antenna. Coincidental receipt of local signals over-the-air does not constitute satellite carriage of local signals pursuant to section 338. The commenters on this issue support this conclusion. 70. Subscriber receipt of local affiliate required. We find that section 340(b)(1) requires that subscribers receive a specific local network station before they may receive a significantly viewed station that is affiliated with the same network as the local station, subject to the statutory exemption described below. (See section IV.B.4., infra, discussing section 340(b)(3), which applies where there is no affiliate of a given network in the market). Subscriber receipt of ``local-into-local'' service is unambiguously required by the statute. Subscriber receipt of a specific local network affiliate, as a condition precedent for eligibility to receive the significantly viewed signal of an out-of-market affiliate of that network, is the best reading of section 340(b)(1) in the overall context of section 340. NAB comments that section 340(b)(1) creates a ``condition precedent to delivery of a duplicating significantly viewed out-of-market station'' that a subscriber must ``receive'' the local affiliate before receiving an out-of-market significantly viewed signal. DIRECTV and EchoStar disagree and contend that the statute merely requires receipt of ``a'' local signal, which they say equates to local-into-local service, and that the statute does not require receipt of ``the'' local station affiliated with the same network as the significantly viewed station. In explaining this ``definite article'' argument, EchoStar states that ``the references to `a' signal of `a' local network station mean that this signal may originate from any of the local network stations that the satellite carrier carries--not that that the signal must emanate from a particular station, namely the one affiliated with the same network as the significantly viewed station.'' 71. We believe the better reading of the statute is that receipt of the local network station is required before a subscriber may receive the significantly viewed station affiliated with the same network. The meaning of section 340(b)(1) becomes clear when considered in context with related statutory provisions (47 U.S.C. 340(b)(2), (3) and (4)) and legislative history. First, the legislative history repeatedly reflects Congressional concern that the amendments permitting carriage of out-of-market significantly viewed signals not detract from localism. Specifically, the House Commerce Committee Report said ``absent section 340(b)(1), a satellite operator could retransmit into a market a distant significantly viewed signal of a network affiliate without also retransmitting a signal of any local affiliate of the network.'' Moreover, the satellite carriers' ``definite article'' argument overlooks the language in sections 340(b)(3) and (4). As described below, section 340(b)(3) permits subscribers to receive a significantly viewed signal of an out-of-market network affiliate if there is no local affiliate of that network in the subscriber's local market. It states that the limitation in section 340(b)(1) ``shall not prohibit a retransmission under this

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section to a subscriber located in a local market in which there are no network stations affiliated with the same television network as the station whose signal is being retransmitted pursuant to this section.'' If section 340(b)(1) only required receipt of any local-into-local service as a prerequisite to receiving significantly viewed signals, as opposed to receiving the local affiliate of the network with which the significantly viewed station is affiliated, there would be no need for section 340(b)(3) to apply to section 340(b)(1). Using similar contextual reasoning, we consider section 340(b)(4), which provides authority for the network station in the local market in which the subscriber is located, and that is affiliated with the same television network, to grant station-specific waivers. If section 340(b)(1) only required receipt of any local-into-local service as a prerequisite to receiving significantly viewed signals, there would be no reason for Congress to allow for waivers from specific network stations. Statutory requirements should be read to have meaning and not be superfluous. (See Zimmerman v. Cambridge Credit Counseling Corp., 409 F.3d 473, 476 (1st Cir. 2005) (recognizing principle of statutory construction that ``all words and provisions of statutes are intended to have meaning and are to be given effect, and no construction should be adopted which would render statutory words or phrases meaningless, redundant, or superfluous''); Preston v. State, 735 N.E.2d 330, 334 (Ind.App. 2000) (noting that ``there is a strong presumption that the legislature did not enact a useless provision'')). The best reading of subsection (b)(1), therefore, is to require subscriber receipt of the local station affiliated with the same network as the significantly viewed signal sought to be carried. 72. In addition, as described below, section 340(b)(2)(A) plainly requires that, as a prerequisite to receiving a significantly viewed digital signal, a subscriber must receive ``the digital signal of a network station in the subscriber's local market that is affiliated with the same television network.'' The legislative history indicates that Congress intended sections 340(b)(1) and 340(b)(2)(A) to achieve similar ends. (See Davaz v. Priest River Glass Co., Inc., 125 Idaho 333, 870 P.2d 1292 (1994) (``In construing a statute, not only must we examine the literal wording of the statute * * * but we also must study the statute in harmony with its objective''); Tallman v. Brown, 7 Vet. App. 453, 99 Ed. Law Rep. 467 (1995) (``When the language of a statute is ambiguous * * * the task of interpreting the statute's meaning may require recourse to the legislative history to decipher Congress' intended purpose in enacting the legislation'')). The House Commerce Committee Report provides: ``Like section 340(b)(1), section 340(b)(2)(A) protects localism by helping ensure that the satellite operator cannot retransmit into a market a significantly viewed digital signal of a network broadcast station from a distant market without also retransmitting into the market a digital signal of any local affiliate from the same network.'' This supports NAB's point that this provision is intended to ``prevent satellite carriers from by-passing local stations or using the threat of delivery of out-of-market stations to extract more favorable retransmission consent terms.'' 73. In sum, we are persuaded that the statute does not allow a satellite carrier to retransmit a significantly viewed signal to a subscriber receiving local-into-local service but which local service does not include an affiliate of the network with which the significantly viewed station is affiliated, unless the exemption in section 340(b)(3) or the waiver provision in section 340(b)(4) applies. We thus revise our proposed rule to reflect our conclusion. 74. NAB, Gulf, DIRECTV, and EchoStar advocated policy considerations to influence the interpretation of section 340(b)(1) based on the impact of the interpretation on retransmission consent and on smaller market stations. In light of our reading of the statutory requirements, it is not necessary to rely on these policy issues. We also note that DIRECTV raised concerns about bad faith retransmission consent negotiations, and remind all parties of their obligation to negotiate in good faith. (See Implementation of Section 207 of the Satellite Home Viewer Extension and Reauthorization Act of 2004; Reciprocal Bargaining Obligation, FCC 05-119 (rel. Jun. 7, 2005) (Reciprocal Bargaining Order) (extending the good faith retransmission consent bargaining obligation to multichannel video programming distributors); Implementation of the Satellite Home Viewer Improvement Act of 1999, Retransmission Consent Issues: Good Faith Negotiation and Exclusivity, 15 FCC Rcd 5445 (2000) (Good Faith Order)). We decline at this time, as sought by DIRECTV, to find that broadcast stations would violate their duty to negotiate in good faith if they make demands to limit the carriage of other stations. We will consider such issues on a case-by-case basis. 3. Digital Service Limitations; Receipt of Local Digital Affiliate Required 75. Similar to section 340(b)(1), section 340(b)(2) limits satellite delivery of significantly viewed digital signals only to statutorily eligible subscribers. Section 340(b)(2) provides:

With respect to a signal that originates as a digital signal of a network station, this section shall apply only if--(A) the subscriber receives from the satellite carrier pursuant to section 338 the retransmission of the digital signal of a network station in the subscriber's local market that is affiliated with the same television network * * *'' (See 47 U.S.C. 340(b)(2); House Commerce Committee Report at 12; Barton Floor Statement at 2 (``[s]ection 340(b)(2)(A) conditions retransmission to a subscriber of a significantly viewed digital signal of a distant network broadcast station on retransmission to that subscriber of a digital signal broadcast by a local affiliate of the same network.'')).

76. In the NPRM, we generally interpreted section 340(b)(2)(A) to mean that a satellite subscriber must be receiving a digital signal from a local affiliate of a network via satellite in order to be eligible to receive a significantly viewed digital signal from a station affiliated with the same network. As we found in the analog context, we find that receipt of the local station's digital signal is required before a subscriber may receive the digital signal of an affiliated significantly viewed station. Unlike the ambiguity in its sister analog provision, section 340(b)(2)(A) is clear in requiring a subscriber to receive ``the digital signal of a network station in the subscriber's local market that is affiliated with the same television network.'' 4. Exception to Subscriber Eligibility Limitations; Rule Not Applicable Where No Local Network Affiliates Being Retransmitted 77. The SHVERA provided for a statutory exception to the subscriber eligibility requirements in sections 340(b)(1) and (2). Section 340(b)(3) provides:

The limitations in paragraphs (1) and (2) shall not prohibit a retransmission under this section to a subscriber located in a local market in which there are no network stations affiliated with the same television network as the station whose signal is being retransmitted pursuant to this section.

Thus, the subscriber eligibility requirements in sections 340(b)(1) and (2) do not apply to the receipt of the signal of a significantly viewed network station for which there is no local network affiliate broadcasting in the relevant local market. This exception permits a satellite carrier to retransmit

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a significantly viewed station to a subscriber when there is no local affiliate of the same network present in that market.

78. The statutory copyright license for significantly viewed carriage, however, does not include language comparable to the exception in section 340(b)(3). Instead, section 119(a)(3)(B) of title 17 provides that the statutory copyright license contained in section 119(a)(3)(A):

shall apply only to secondary transmissions of the primary transmissions of network stations and superstations to subscribers who receive secondary transmissions from a satellite carrier pursuant to the statutory license under section 122.

79. The NPRM asked whether we should require that local-into-local service be offered to subscribers in a market as a pre-condition to offering the signal of a significantly viewed station affiliated with a network that has no affiliate in the market in question. We sought comment on the effect of the difference between the copyright and Communications Act provisions on subscriber eligibility for significantly viewed signals. Finally, we considered the situation where a local network station is present in the market but is not broadcasting in digital format. 80. We find that a satellite carrier may retransmit a significantly viewed station to a subscriber when there is no local affiliate of the same network present in that market, provided that the subscriber subscribes to and receives the carrier's local-into-local service. Although section 340(b)(3) does not require local-into-local service, we conclude that we should read this provision together with the compulsory license restriction in section 119(a)(3)(B) of title 17, which does require the subscriber's receipt of local-into-local service. We agree with NAB that the compulsory license restriction compels this finding. EchoStar argues that this finding would deny the effect of section 340(b)(3), but any authority conferred by section 340(b)(3) would mean little without the authority of a compulsory copyright license. Instead, we agree with NAB that the better reading of the statute requires us to consider both provisions together. 81. We affirm our conclusion that where a local network station is not broadcasting in a digital format, for reasons recognized as legitimate by the Commission, then the local network station should not be penalized by having an out-of-market significantly viewed digital signal imported into its market. We recognize that, in this case, subscribers will not have the opportunity to receive local digital service from a significantly viewed network station. We note that most stations are broadcasting a digital signal. As of June 2, 2005, 100 percent of the network affiliates in the Top 30 markets are broadcasting in digital, and 87 percent of all other commercial network affiliates are broadcasting in digital. (See http://www.fcc.gov/mb/video/files/dtvonairsum.html). Nevertheless, the local station may have a legitimate reason for not broadcasting in digital format. Because the station is present in the market, we find the statute prohibits subscribers from receiving the digital signal of a significantly viewed station unless the subscriber is receiving the local station's digital signal. We note that the legislative history suggests an intention to treat differently stations whose reason for failing to broadcast in digital is not excused by the Commission. Notably, the House Commerce Committee Report: states: ``section 340(b)(3) does not allow provision of an out-of-market significantly viewed digital signal of a network broadcast station if a local affiliate from the same network is present in the market but not yet broadcasting a digital signal. Section 340(b)(3) operates in this fashion to ensure that a satellite carrier may not retransmit the out-of-market significantly viewed digital signal of a network broadcast station if an affiliate of that network is present in the local market but has never begun to offer a digital signal for a reason excused by the FCC.'' We will consider carriage of significantly viewed digital signals on a case-by-case basis in situations in which the satellite carrier shows that the local station has not been excused or has been sanctioned by the Commission with respect to its digital build-out. 5. Privately Negotiated Waivers 82. The SHVERA permited a satellite carrier to privately negotiate with the local network station to obtain a waiver of the subscriber eligibility restrictions in sections 340(b)(1) and 340(b)(2). Section 340(b)(4) provides:

Paragraphs (1) and (2) shall not prohibit a retransmission of a network station to a subscriber if and to the extent that the network station in the local market in which the subscriber is located, and that is affiliated with the same television network, has privately negotiated and affirmatively granted a waiver from the requirements of paragraph (1) and (2) to such satellite carrier with respect to retransmission of the significantly viewed station to such subscriber.

Thus, if such negotiations are successful, a satellite subscriber who is not receiving the local network affiliate via satellite may nevertheless receive the signal of a significantly viewed station affiliated with that same network. In the NPRM, we tentatively concluded that local broadcasters could determine the scope of such a waiver.

83. We affirm our conclusion that a waiver pursuant to this provision may be as broad or as narrow as desired by the local network affiliate. (See House Commerce Committee Report at 13 (``The waiver can be as broad or as narrow as the affiliate wants.'')). As noted by the House Commerce Committee Report, section 340(b)(4) enables a local network affiliate to waive the subscriber eligibility restrictions of sections 340(b)(1) or 340(b)(2) with respect to one or more consumers in the local market, and with respect to one or more specific significantly viewed affiliates of the same network. The local network affiliate may do so as part of a negotiated agreement and for any reason, including common ownership among the stations. 84. In addition, the statutory copyright provisions contained in 17 U.S.C. 119, as amended by the SHVERA, describe the waiver process in greater detail. Section 102 of the SHVERA provided:

(i) IN GENERAL. A subscriber who is denied the secondary transmission of the primary transmission of a network station under subparagraph (B) may request a waiver from such denial by submitting a request, through the subscriber's satellite carrier, to the network station in the local market affiliated with the same network where the subscriber is located. The network station shall accept or reject the subscriber's request for a waiver within 30 days after receipt of the request. If the network station fails to accept or reject the subscriber's request for a waiver within that 30-day period, that network station shall be deemed to agree to the waiver request. Unless specifically stated by the network station, a waiver that was granted before the date of the enactment of the Satellite Home Viewer Extension and Reauthorization Act of 2004 under section 339(c)(2) of the Communications Act of 1934 shall not constitute a waiver for purposes of this subparagraph. (ii) SUNSET. The authority under clause (i) to grant waivers shall terminate on December 31, 2008, and any such waiver in effect shall terminate on that date.''

In the NPRM, we sought comment on the effect, if any, of this statutory copyright license waiver provision, in particular the sunset provision, on waivers granted pursuant to section 340(b)(4). We also tentatively concluded not to intervene in the section 340(b)(4)

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waiver process, and that such waivers are not subject to the section 325 good-faith negotiation requirement. 85. To carry a significantly viewed station via a privately negotiated waiver, a satellite carrier must have both the authority under section 340(b)(4) and the statutory copyright license under 17 U.S.C. 119(a)(3)(C). As a practical matter, both of these provisions must be satisfied, because a significantly viewed station cannot be carried without the authority under section 340(b)(4) and the statutory copyright license in 17 U.S.C. 119. Section 340(b)(4) requires that a local station affirmatively grant a waiver request to a satellite carrier. We agree with NAB that section 340(b)(4) is clear on this point. The statutory copyright license waiver provision in 17 U.S.C. 119 requires that a local station act on such waiver requests within 30 days, and will deem that the local station agrees to the copyright license waiver request if it does not act within that time frame. EchoStar argues that finding a requirement that a local station affirmatively act on a request for a section 340(b)(4) waiver would in effect nullify this provision. While this may be true as a practical matter, we believe that the SHVERA will require an affirmative grant of authority under section 340(b)(4), even though it will grant a statutory copyright license through inaction under 17 U.S.C. 119(a)(3)(C). Both provisions must be given effect. 86. In addition, we find that the copyright waiver provision in 17 U.S.C. 119 terminates the authority to grant a waiver on December 31, 2008, and also terminates all existing waivers on that date. We agree with NAB that carriage of a significantly viewed station via a waiver granted pursuant to section 340(b)(4) is subject to the sunset provision in 17 U.S.C. 119 because the right to carriage under section 340(b)(4) would essentially be meaningless without the statutory copyright license. 87. We affirm our decision not to intervene in the waiver process. We agree with NAB that the statute is clear that waivers are to be ``privately negotiated.'' Language in the House Commerce Committee Report is equally clear: ``The Committee does not intend the FCC to grant these waivers or preside over the waiver process.'' The decision to grant a waiver is a decision to be made solely by the local network station based on its own business judgment. Because such waivers are voluntary and expressly outside the Commission's purview, we find there is no need for rules or procedures concerning waiver arrangements between stations and satellite carriers. Thus, we reject EchoStar's request to intervene in the waiver process. We will not grant waivers pursuant to section 340(b)(4), nor will we preside over the waiver process. We note, however, that the presence or absence of a waiver may be relevant in an enforcement proceeding concerning significantly viewed carriage. 88. We also affirm our conclusion that waivers or agreements pursuant to section 340(b)(4) are not subject to the section 325 good-faith negotiation requirement. Because such privately negotiated waivers do not pertain to retransmission consent for the signal of the station that would be granting the waiver, we agree with NAB that the section 325 good-faith negotiation requirement does not apply to any waiver privately negotiated between a local network station and a satellite carrier. Language in the House Commerce Committee Report supports this finding: ``Nor does the Committee intend such waivers or agreements to be subject to the section 325 good-faith negotiation requirement.'' 89. We revise our proposed rule, Sec. 76.54(g), to add a new Sec. 76.54(g)(2) to expressly provide for the exception created by section 340(b)(4)'s waiver provision. 6. Additional Digital Service Limitations; Definitions of ``Equivalent Bandwidth'' and ``Entire Bandwidth'' 90. In addition to the digital service limitations in section 340(b)(2)(A), the SHVERA specified certain ``bandwidth'' requirements in section 340(b)(2)(B) for the retransmission of the local network station's digital signal when a satellite carrier opts to retransmit the digital signal of a significantly viewed affiliate station. Section 340(b)(2)(B) provides: