ACTION:
Final rule.
SUMMARY:
In this document, the Commission adopts satellite television market modification rules to implement section 102 of the Satellite Television Extension and Localism Act Reauthorization (STELAR) Act of 2014. The STELAR gives the Commission authority to modify a commercial television broadcast station's local television market for purposes of satellite carriage rights. In this document, the Commission revises the current cable market modification rule to apply also to satellite carriage, while adding provisions to address the unique nature of satellite television service. The document also makes conforming and other minor changes to the cable market modification rules.
DATES:
Effective November 2, 2015, except §§ 76.59(a) and (b) which contain information collection requirements that have not been approved by OMB. The Commission will publish a document in the Federal Register announcing when OMB approval for this information collection has been received and these rules will take effect.
FOR FURTHER INFORMATION CONTACT:
Evan Baranoff, Evan.Baranoff@fcc.gov, of the Media Bureau, Policy Division, (202) 418-2120. For additional information concerning the Paperwork Reduction Act information collection requirements contained in this document, send an email to PRA@fcc.gov or contact Cathy Williams at (202) 418-2918.
SUPPLEMENTARY INFORMATION:
This is a summary of the Commission's Report and Order, FCC 15-111, adopted and released on September 2, 2015. The full text of this document is available electronically via the FCC's Electronic Comment Filing System (ECFS) Web site at http://fjallfoss.fcc.gov/ecfs2/ or via the FCC's Electronic Document Management System (EDOCS) Web site at http://fjallfoss.fcc.gov/edocs_public/. (Documents will be available electronically in ASCII, Microsoft Word, and/or Adobe Acrobat.) This document is also available for public inspection and copying during regular business hours in the FCC Reference Information Center, Federal Communications Commission, 445 12th Street SW., CY-A257, Washington, DC, 20554. The complete text may be purchased from the Commission's copy contractor, 445 12th Street SW., Room CY-B402, Washington, DC 20554. Alternative formats are available for people with disabilities (Braille, large print, electronic files, audio format), by sending an email to fcc504@fcc.gov or calling the Commission's Consumer and Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432 (TTY).
I. Introduction
1. In this Report and Order, the Commission adopts rules to enable commercial television stations, satellite carriers and cable operators to better serve the interests of their local communities. These rules implement an important provision in the Satellite Television Extension and Localism Act Reauthorization Act of 2014 (“STELAR”) to promote carriage of in-state and other relevant local television programming. Specifically, in the STELAR, Congress recognized that satellite subscribers in some communities across the country are not able to access broadcast stations in their own states via the local television packages offered by satellite carriers. This problem results from the way TV stations are defined as “local” for purposes of satellite carriage. In some cases, subscribers may be included in a local television programming market that is served exclusively, or almost exclusively, by television stations in a neighboring state. As a result, these subscribers are not receiving news, politics, sports, emergency information and other television programming relevant to their home state. The STELAR seeks to address this problem by changing the laws to provide for “market modifications” that add flexibility to the current definition of a local television programming market. Market modifications allow the Commission, upon request, to modify the local market assignment of a station to include such neighboring communities that are located in the same state as the station. As required by the STELAR, the Commission determines whether to grant a market modification based on consideration of five statutory factors that allow petitioners to demonstrate that they provide local service to the community. Significantly, in the STELAR, Congress included a factor requiring consideration of access to television stations that are located in the same state as the community considered for modification. Congress also added this factor to the existing market modification statutory factors applicable to cable operators. Our rules implement the STELAR to achieve the goal of better service for consumers. Finally, Congress recognized that satellite carriage of additional stations might be technically or economically infeasible in some circumstances. Accordingly, our rules implement this exception to the carriage requirements that would otherwise apply for modified markets. We recognize that the ability of the market modification rules to successfully address the problem of consumer access to in-state stations will depend in large part on broadcasters' willingness to grant retransmission consent to be carried in the new community and satellite carriers' technical ability to provide the in-state stations in the new community. Therefore, we strongly urge broadcasters and satellite carriers to work together to provide relief to consumers and achieve the goals of the STELAR (to promote access to in-state programming) in cases where carriage is technically feasible.
2. In this Report and Order, we adopt satellite television market modification rules to implement section 102 of the STELAR. 1
The STELAR amended the Communications Act (“Act”) and the Copyright Act to give the Commission authority to modify a commercial television broadcast station's local television market for purposes of satellite carriage rights. 2
The Commission previously had such authority to modify markets only in the cable carriage context. 3
With section 102 of the STELAR, Congress provides regulatory parity in this regard in order to promote consumer access to in-state and other relevant television programming. 4
3. Section 102 of the STELAR, and the Commission's actions in this Report and Order, seek to establish a market modification process for the satellite carriage context and, to the extent possible, address satellite subscribers' inability to receive in-state programming in certain areas, sometimes called “orphan counties.” 5
In this Report and Order, consistent with Congress' intent that the Commission model the satellite market modification process on the current cable market modification process, we implement section 102 of the STELAR by revising the current cable market modification rule, section 76.59, to apply also to satellite carriage, while adding provisions to the rules to address the unique nature of satellite television service. 6
In addition to authorizing satellite market modifications, section 102 of the STELAR makes certain conforming amendments to the cable market modification statutory provision 7
and also directs the Commission to consider whether to make other changes to the cable market modification rules. 8
Accordingly, as part of our implementation of the STELAR, we make conforming and other minor changes to the cable market modification rules.
4. The following are among the key conclusions adopted in this Report and Order:
• We amend the cable market modification rule, section 76.59 of our rules, to apply also to satellite market modifications, and amend the rule to reflect the STELAR provisions that uniquely apply to satellite carriers, such as an exception if the resulting carriage is “not technically and economically feasible.”
• We conclude that the involved commercial broadcast station, satellite carrier, and county government have standing to file a satellite market modification petition. Petitions must be filed in accordance with the procedures for filing Special Relief petitions in section 76.7 of our rules.
• We conclude that the new in-state factor, 9
when applicable, favors any market modification that would promote consumers' access to an in-state station. When applicable, this in-state factor serves as an enhancement, the particular weight of which depends on the strength of showing by the petitioner.
• We conclude that the evidentiary requirements for cable market modifications will apply to satellite market modifications. In addition, to satisfy the new in-state factor when applicable, we require a petitioner to make a statement in its petition that the station is licensed to a community within the same state as the new community.
• We conclude that market modifications will be considered separately in the cable and satellite contexts and that, in the satellite context, market modifications will apply only to the specific stations, satellite carriers, and communities addressed in a particular market modification petition.
• We conclude that prior cable market modification determinations will not automatically apply in the satellite context, nor will such prior decisions be afforded a presumption; however, we note that we are required to consider historic carriage under the first statutory factor.
• We conclude that a television broadcast station that becomes eligible for mandatory satellite carriage by operation of a market modification may elect retransmission consent or mandatory carriage with respect to a satellite carrier within 30 days after the market determination. We conclude that a satellite carrier must commence carriage within 90 days after receiving the station's request for carriage.
• We conclude that it is per se not technically and economically feasible for a satellite carrier to provide a station to a new community that is outside of the relevant spot beam on which that station is currently carried.
• We conclude that, if a satellite carrier can provide the station at issue in a market modification request to only part of a new community, then it must do so.
• We conclude that the satellite carrier has the burden to demonstrate that the resulting carriage from a market modification is technically and economically infeasible.
• We will allow satellite carriers to demonstrate spot beam coverage infeasibility by providing a detailed certification under penalty of perjury.
• We conclude that a satellite carrier must raise any technical or economic impediments either in the market modification proceeding or prior to such proceeding in response to a prospective petitioner's inquiry about feasibility of carriage resulting from a contemplated market modification.
• We establish a process that will allow a prospective petitioner to obtain a certification from a satellite carrier about whether or not (and to what extent) it is technically and economically feasible for the carrier to provide the station to a new community. We will not grant a market modification petition if such grant could not create a new carriage obligation for the carrier at that time due to a finding of technical or economic infeasibility.
• We recognize that there may be other bases than spot beam coverage for a carrier to assert that carriage would be technically or economically infeasible and will review these assertions on a case-by-case basis.
• We define a “satellite community” as a county for purposes of a satellite market modification. We retain our existing definition of a “cable community” for purposes of a cable market modification.
II. Background
5. The STELAR, enacted December 4, 2014, is the latest in a series of statutes that have amended the Communications Act and Copyright Act to set the parameters for the satellite carriage of television broadcast stations. The 1988 Satellite Home Viewer Act (SHVA) first established a “distant” statutory copyright license to enable satellite carriers to offer subscribers who could not receive the over-the-air signal of a broadcast station access to broadcast programming via satellite. 10
The 1999 Satellite Home Viewer Improvement Act (SHVIA) established a “local” statutory copyright license and expanded satellite carriers' ability to offer broadcast television signals directly to subscribers by permitting carriers to offer “local” broadcast signals. 11
The 2004 Satellite Home Viewer Extension and Reauthorization Act (SHVERA) reauthorized the distant signal statutory copyright license until December 31, 2009 and expanded that license to allow satellite carriers to carry “significantly viewed” stations. 12
The 2010 Satellite Television Extension and Localism Act (STELA) extended the distant signal statutory copyright license through December 31, 2014, 13
moved the significantly viewed station copyright provisions to the local statutory copyright license (which does not expire), and revised the “significantly viewed” provisions to facilitate satellite carrier use of that option. 14
With the STELAR, Congress extended the distant signal statutory copyright license for another five years, through December 31, 2019, and, among other things, authorized market modification in the satellite carriage context and revised the market modification provisions for cable to promote parity for satellite and cable subscribers and competition between satellite and cable operators. 15
6. Section 338 of the Communications Act authorizes satellite carriage of local broadcast stations into their local markets, which is called “local-into-local” service. 16
Specifically, a satellite carrier provides “local-into-local” service when it retransmits a local television signal back into the local market of that television station for reception by subscribers. 17
Generally, a television station's “local market” is defined by the Designated Market Area (DMA) in which it is located, as determined by the Nielsen Company (Nielsen). 18
DMAs describe each television market in terms of a group of counties and are defined by Nielsen based on measured viewing patterns. 19
The United States is divided into 210 DMAs. 20
Unlike cable operators, satellite carriers are not required to carry local broadcast television stations. However, if a satellite carrier chooses to carry a local station in a particular DMA in reliance on the statutory copyright license, it generally must carry any qualified local station in the same DMA that makes a timely election for retransmission consent or mandatory carriage. 21
This is commonly referred to as the “carry one, carry all” requirement. If a broadcaster elects retransmission consent, the satellite carrier and broadcaster negotiate the terms of a retransmission consent agreement. With respect to those stations electing mandatory carriage, satellite carriers are generally not required to carry a station if the station's programming “substantially duplicates” 22
that of another station carried by the satellite carrier in the DMA, 23
and satellite carriers are not required to carry more than one affiliate station of a particular network in a DMA (even if the affiliates do not substantially duplicate their programming), unless the stations are licensed to communities in different states. 24
Satellite carriers are also not required to carry an otherwise qualified station if the station fails to provide a good quality signal to the satellite carrier's local receive facility. 25
7. STELAR section 102, which adds section 338(l) of the Act, creates a satellite market modification regime very similar to that in place for cable, while adding provisions to address the unique nature of satellite television service. 26
Market modification, which has been available in the cable carriage context since 1992, 27
will allow the Commission to modify the local television market of a commercial television broadcast station to enable those broadcasters and satellite carriers to better serve the interests of local communities. 28
Market modification provides a means to avoid rigid adherence to DMA designations and to promote consumer access to in-state and other relevant television programming. 29
To better reflect market realities and effectuate these purposes, section 338(l), like the corresponding cable provision in section 614(h)(1)(C), permits the Commission to add communities to, or delete communities from, a station's local television market following a written request. 30
Furthermore, as in the cable carriage context, the Commission may determine that particular communities are part of more than one television market. 31
As in the cable carriage context, when the Commission modifies a station's market to add a community for purposes of carriage rights, the station is considered local and is covered by the local statutory copyright license and may assert mandatory carriage (or pursue retransmission consent) by the applicable satellite carrier in the local market. 32
Conversely, if the Commission modifies a station's market to delete a community, the station is considered “distant” and loses its right to assert mandatory carriage (or retransmission consent) on the applicable satellite carrier in the local market. 33
We note that, in the cable carriage context, market modifications pertain to individual stations in specific cable communities and apply only to the particular cable system named in the petition. 34
8. Section 338(l) states that, in ruling on requests for market modifications for purposes of satellite carriage, the Commission must afford particular attention to the value of localism by taking into account the following five factors:
(1) Whether the station, or other stations located in the same area—(a) have been historically carried on the cable system or systems within such community; and (b) have been historically carried on the satellite carrier or carriers serving such community;
(2) Whether the television station provides coverage or other local service to such community;
(3) Whether modifying the local market of the television station would promote consumers' access to television broadcast station signals that originate in their State of residence;
(4) Whether any other television station that is eligible to be carried by a satellite carrier in such community in fulfillment of the requirements of this section provides news coverage of issues of concern to such community or provides carriage or coverage of sporting and other events of interest to the community; and
(5) Evidence of viewing patterns in households that subscribe and do not subscribe to the services offered by multichannel video programming distributors within the areas served by such multichannel video programming distributors in such community. 35
These statutory factors largely mirror those originally set forth for cable in section 614(h)(1)(C)(ii) of the Act. To the extent the factors differ from the previous factors applicable to cable, the STELAR section 102 makes conforming changes to the cable factors. 36
These include adding a fifth factor (inserted as factor number three) to section 614(h)(1)(C)(ii) to “promote consumers' access to television broadcast station signals that originate in their State of residence.” 37
Thus, STELAR creates parallel factors for satellite and cable. 38
9. The STELAR, however, provides a unique exception applicable only in the satellite context, providing that a market modification:
shall not create additional carriage obligations for a satellite carrier if it is not technically and economically feasible for such carrier to accomplish such carriage by means of its satellites in operation at the time of the determination. 39
Also unique to satellite, the STELAR provides that a market modification will not have “any effect on the eligibility of households in the community affected by such modification to receive distant signals pursuant to section 339 [of the Act].” 40
Like the cable provision, section 338(l) gives the Commission 120 days to act on a request for market modification and does not allow a carrier to delete from carriage the signal of a commercial television station during the pendency of any market modification proceeding. 41
10. On March 26, 2015, we began this proceeding by issuing a Notice of Proposed Rulemaking (NPRM). 42
We received 12 comments and five reply comments in response. With this Report and Order, we satisfy the STELAR's mandate that the Commission adopt final rules in this proceeding on or before September 4, 2015. 43
III. Discussion
11. Consistent with the STELAR's goal of regulatory parity, we largely model the satellite market modification process on the existing process for cable and adopt our proposal to amend section 76.59 of our rules—the current cable market modification rule—to apply in both the cable and satellite contexts. 44
We also adopt our proposal to amend section 76.59 to reflect the STELAR provisions that apply uniquely to satellite carriers, such as affording carriers with an exception if the resulting carriage is “not technically and economically feasible .” Finally, we define a “satellite community” for purposes of market modification and retain our existing definition of a “cable community.”
A. Standing and Procedures To Request Market Modification
12. We conclude that the involved broadcaster, satellite carrier and county government may file a satellite market modification petition. 45
We choose a slightly modified alternative to the procedure proposed in the NPRM, 46
and deviate from the cable rule which allows only the involved broadcaster and cable operator to file cable petitions, in order to more fully effectuate the core purpose of this provision of the STELAR to promote consumer access to in-state and other relevant programming.
13. Section 338(l)(1) of the Act permits the Commission to modify a local television market “following a written request,” but does not specify the appropriate party to make such requests. 47
The corresponding cable statutory provision in section 614(h)(1)(C)(i) of the Act contains nearly identical language in this regard. 48
In interpreting the cable provision, the Commission concluded that the involved broadcaster and cable operator are the only appropriate parties to file market modification requests. 49
Section 102(d) of the STELAR, however, directs the Commission to ensure in both the cable and satellite contexts that “procedures for the filing and consideration of a written request . . . fully effectuate the purposes of the amendments made by this section.” 50
In the NPRM, consistent with the cable rule, we proposed to allow only the involved commercial broadcast station or the satellite carrier to file a satellite market modification request because only these entities have carriage rights or obligations at stake. 51
The NPRM sought comment on any alternative approaches and observed that some local governments had previously sought the ability to petition for market modifications on behalf of their citizens. 52
The NPRM tentatively concluded to limit the participation of local governments and individuals to filing comments in support of, or in opposition to, particular market modification requests and sought comment on this tentative conclusion. 53
Broadcasters and the satellite carriers supported the NPRM's proposal, asserting that only the involved station or satellite carrier “have rights or obligations that are directly affected by a market modification” and therefore only such entities should have standing to file requests to modify these rights or obligations. 54
Some commenters, however, advocate that county governments should be allowed to petition for market modifications on behalf of their citizens. 55
14. Upon further consideration pursuant to section 102(d) of the STELAR, we conclude that we will better effectuate the purposes of the STELAR (to promote consumer access to in-state programming) by also permitting a county governmental entity (such as a county board, council, commission or other equivalent subdivision) to file a satellite market modification petition, as advocated by some commenters. 56
Allowing a county government to petition for market modification for its community is appropriate given our decision to define a satellite community on a county basis. 57
We also are mindful of the record in the In-State Programming Report proceeding, which reflects numerous examples of counties in which consumers have little or no access to in-state broadcast stations. 58
We acknowledge that station carriage relies in part on business decisions involving broadcasters and satellite carriers and that without the willing participation of the affected broadcaster, modifying the market of a particular television station, in itself, would not result in consumer access to that station. 59
However, by allowing a county government to file a satellite market modification on behalf of its residents, we seek to empower orphan counties to eliminate certain legal barriers which may have deprived local residents of the cultural, sports, political and local news relevant to the state in which they reside. 60
We recognize that our rules require petitioners to provide specific evidence to demonstrate the five statutory factors and that much of this information may not be easily obtained by county governments. 61
To avoid dismissal based on a failure to meet our specific evidentiary requirements, we strongly encourage county government petitioners to enlist the aid and cooperation of the station they wish to bring to their county. Moreover, to the extent the involved station opposes carriage in the county, a county government may not want to go through the time and expense of filing a petition to expand such station's market to include its county.
15. We acknowledge that we are implementing a procedural aspect of section 338(l)(1) in a manner that differs from our implementation of section 614(h)(1)(C)(i), despite the nearly identical language of the two provisions. 62
We find that a different procedure is appropriate to implement STELAR's directive in section 102(d) for purposes of filing a market modification petition in the satellite context. Significantly, the record and case studies in the 2011 In-State Programming Report show that the problem of subscriber access to in-state stations disproportionately affects satellite subscribers. 63
Notably, the Commission frequently receives satellite consumer calls about this problem and other complaints about not receiving the consumers' desired local station via satellite, while cable consumers rarely complain about this issue. 64
This may be a product of the localized nature of cable systems as opposed to the national nature of satellite service. 65
The remote geographic location of orphan counties also contributes to the disproportionate impact on satellite subscribers. In the In-State Programming Report record, DIRECTV observed that “[b]ecause many orphan counties tend to be isolated, their residents tend to rely more on satellite than on cable for access to television programming.” 66
We also observe that the cable market modification process has worked well for more than 20 years and there is nothing in the record to suggest that changing the cable petition process to include local governments is necessary to effectuate the goals of the STELAR (to promote access to in-state programming) at this time.
16. We adopt our proposal to require petitioners ( i.e., broadcast stations, satellite carriers and county governments) to file market modification requests for satellite carriage purposes in accordance with the procedures for filing Special Relief petitions in section 76.7 of the rules. 67
Commenters on this issue generally support our proposal. 68
Consistent with section 76.7, a petitioner must serve a copy of its market modification request on any MVPD operator, station licensee, permittee, or applicant, or other interested party who is likely to be directly affected if the relief requested is granted, and we amend section 76.7(a)(3), accordingly, to reference “any MVPD operator.” 69
The NPRM sought comment on whether franchising authorities or certain local government entities (such as cities, counties, or towns) that may represent subscribers and local viewers in affected communities should be considered “interested parties” and served with market modification petitions. 70
Consistent with our decision above to permit a county government to file a petition, we find that the relevant county government is an “interested party” that must also be served with a satellite market modification petition. 71
B. Statutory Factors and Evidentiary Requirements
17. As discussed above, the purpose of market modification is to permit adjustments to a particular station's local television market (which is initially defined by the DMA in which it is located) to better serve the value of localism by ensuring that satellite subscribers receive the broadcast stations most relevant to them. 72
To this end, the STELAR requires the Commission to consider five statutory factors when evaluating market modification requests. 73
As noted, the STELAR added a fifth factor (inserted as the new third statutory factor) for both cable and satellite to “promote consumers' access to television broadcast station signals that originate in their State of residence.” 74
In the NPRM, we tentatively concluded that this new third statutory factor is intended to favor a market modification to add a new community 75
if doing so would increase consumer access to in-state programming. 76
In the record, NAB and DISH appear to support this general conclusion; however, DISH states that we should consider under this factor whether the new community lacks any (or an adequate number of) in-state stations, while NAB states that the statutory language imposes no such requirement. 77
In addition, NCTA expresses concerns about how we may evaluate market modification petitions under this new in-state factor, particularly in situations that would grant cable carriage rights to previously uncarried in-state stations. 78
18. We conclude that the in-state factor favors any market modification that would promote consumers' access to an in-state station. 79
The language of this new statutory factor speaks clearly in this regard. 80
Therefore, a petitioner will be afforded credit for satisfying this factor simply by showing that the involved station is licensed to a community within the same state as the new community. 81
We disagree with those commenters that sought a requirement for more substantial showings, such as the lack of in-state stations in the new community, in order to get credit for satisfying this factor. 82
We find that such additional showings are not necessary to satisfy this factor. We read the statutory language—in requiring the Commission to consider whether the prospective modification would “promote” consumers' access to television broadcast station “signals” that originate in their state of residence—as applying to any situation that would increase access to in-state stations, regardless of whether there are other in-state stations present in the new community. 83
However, we find that such additional showings can increase the weight afforded to this factor. For example, this factor may be found to weigh more heavily in favor of modification if the petitioner shows the involved station provides programming specifically related to subscribers' state of residence, and may be given even more weight if such subscribers in the new community had little (or no) access to such in-state programming. 84
We find that this interpretation of the factor will better effectuate its purpose, observing that the legislative history expresses Congress' concern that “many consumers, particularly those who reside in DMAs that cross State lines or cover vast geographic distances,” may “lack access to local television programming that is relevant to their everyday lives” and indicates Congress' intent that the Commission “consider the plight of these consumers when judging the merits of a [market modification] petition . . ., even if granting such modification would pose an economic challenge to various local television broadcast stations.” 85
We clarify, however, that this new factor is not universally more important than any of the other factors and its relative importance will vary depending on the circumstances in a given case. 86
In sum, in market modification petitions involving the addition of an in-state broadcaster, the in-state factor does not serve as a trump card negating the other four statutory factors. Instead, where applicable, we believe the in-state factor serves as an enhancement, the particular weight of which depends on the strength of showing by the petitioner. Ultimately, each petition for market modification will turn on the unique facts of the case. 87
19. We adopt our tentative conclusion that the new in-state factor is not intended to bar a market modification simply because it would not result in increased consumer access to an in-state station's programming. 88
In such cases, we find that this new in-state factor would be inapplicable and the modification request would be evaluated based on the other statutory factors. 89
Commenters on this issue support these tentative conclusions. 90
We agree with commenters that the statute intended to promote access to in-state programming, but did not intend to disfavor other market modification requests. 91
20. Evidentiary Requirements. We adopt our proposal to apply the evidentiary requirements for cable market modifications to satellite market modifications. 92
Commenters on this issue support this proposal. 93
We find it appropriate, and that it promotes parity, to apply the same evidentiary requirements in both contexts, particularly given the same language is used in both the cable and satellite statutory factors and the record provides no basis for adopting a different interpretation in the satellite versus cable context. 94
In addition, to implement our decision (above) that the in-state factor favors any market modification that would promote consumers' access to an in-state station, we require the petitioner to make a statement in its petition whether or not the station is licensed to a community within the same state as the new community. 95
We find this sufficient evidence to show that a station's petition satisfies this factor. Accordingly, market modification requests for both satellite carriers and cable system operators must include the following evidence: 96
(1) A map or maps illustrating the relevant community locations and geographic features, station transmitter sites, cable system headend or satellite carrier local receive facility locations, terrain features that would affect station reception, mileage between the community and the television station transmitter site, transportation routes and any other evidence contributing to the scope of the market;
(2) Noise-limited service contour maps (for full-power digital stations) or protected contour maps (for Class A and low power television stations) delineating the station's technical service area and showing the location of the cable system headends or satellite carrier local receive facilities and communities in relation to the service areas.
(3) Available data on shopping and labor patterns in the local market.
(4) Television station programming information derived from station logs or the local edition of the television guide.
(5) Cable system or satellite carrier channel line-up cards or other exhibits establishing historic carriage, such as television guide listings.
(6) Published audience data for the relevant station showing its average all day audience ( i.e., the reported audience averaged over Sunday-Saturday, 7 a.m.-1 a.m., or an equivalent time period) for both multichannel video programming distributor (MVPD) and non-MVPD households or other specific audience indicia, such as station advertising and sales data or viewer contribution records.
(7) If applicable, a statement that the station is licensed to a community within the same state as the relevant community.
As discussed above, DISH and NCTA sought additional evidentiary requirements for a petitioner to satisfy the in-state factor. 97
Because we decide that the in-state factor generally favors any market modification that would promote consumers' access to an in-state station, we reject the suggestions by DISH and NCTA to require more evidence in this regard. As explained above, however, a petitioner may offer evidence concerning whether the television station provides programming specifically related to the subscribers' state of residence, as well as the lack of other in-state stations providing service to subscribers in the new community, to demonstrate that the in-state factor should be afforded even greater weight. 98
21. In addition, we adopt our proposal to revise section 76.59(b)(2) of the rules to add a reference to the digital noise-limited service contour (NLSC), which is the relevant service contour for a full-power station's digital signal. 99
NAB, the only commenter on this issue, supports our proposal. 100
Section 76.59(b)(2) requires petitioners seeking a market modification to provide Grade B contour maps delineating the station's technical service area; 101
however the Grade B contour defines an analog television station's service area. 102
Since the completion of the full power digital television transition on June 12, 2009, there are no longer any full power analog stations and, therefore, the Commission uses the NLSC set forth in 47 CFR 73.622(e), 103
in place of the analog Grade B contour set forth in 47 CFR 73.683(a), to describe a full power station's technical service area. 104
Since the DTV transition, the Media Bureau has required full power stations to provide NLSC maps, in place of Grade B contour maps, for purposes of cable market modifications. 105
Therefore, we adopt our tentative conclusion that section 76.59(b)(2) should be updated for purposes of market modifications in both the cable and satellite contexts. We also delete the reference in the rule to the Grade B contour because that reference has no relevance in the absence of full-power analog stations. We observe that, in the rare situation in which a Class A or LPTV station might seek a market modification, the relevant service contour for such stations would be its “protected contour.” 106
Accordingly, we revise our rule to reflect this contour.
22. Consistent with the cable carriage rule, we adopt our proposals that satellite market modification requests that do not include the required evidence be dismissed without prejudice and that they may be supplemented and re-filed at a later date with the appropriate filing fee. 107
In addition, consistent with the cable carriage rule, we adopt our proposal that, during the pendency of a market modification petition before the Commission, satellite carriers will be required to maintain the status quo with regard to signal carriage and must not delete from carriage the signal of an affected commercial television station. 108
NAB, the only commenter on these issues, supports our proposals. 109
We adopt our proposals, which create regulatory parity with cable.
C. Market Determinations
23. We adopt our tentative conclusion that market modifications in the satellite carriage context will apply only to the specific stations and communities addressed in a particular market modification petition. 110
NAB, the only commenter on this issue, supports our conclusion. 111
Our conclusion is consistent with the cable carriage rules 112
and is based on the statute's language granting authority to modify markets “with respect to a particular commercial television broadcast station.” 113
It is also reasonable because market modification determinations are highly fact-specific and turn on whether a particular commercial television broadcast station serves the needs of a specific community.
24. We also adopt our tentative conclusion that we will consider market modification requests separately in the cable and satellite contexts. 114
NAB and DISH, the only commenters on this issue, support our conclusion. 115
We find this preferable given the differences in service area and community sizes between cable systems and satellite carriers. 116
In contrast to the cable context, we must also consider the technical and economic capability of the satellite carriers at issue to effectuate a satellite market modification. 117
25. Finally, we adopt our tentative conclusion that market modification requests will apply only to the satellite carrier or carriers named in the request. 118
NAB and DISH support our conclusion, 119
although DIRECTV believes this is unnecessary if we allow each satellite carrier to carry a station based on its respective spot beam coverage. 120
We disagree with DIRECTV that this is unnecessary. Instead, we find that a modification may not always appropriately apply to both carriers. For example, the carriers' spot beams may be different, even though they are serving the same market, and thus one may have an infeasibility defense while the other may not.
26. Prior Determinations. We adopt our tentative conclusion that prior cable market modification determinations will not automatically apply in the satellite context. 121
We also decline to establish a presumption that prior cable determinations should apply to satellite markets. 122
DISH, NAB, and DIRECTV support these conclusions, 123
while Gray proposes that we establish a presumption that prior cable market modification determinations should apply to satellite markets. 124
We find the same reasoning that requires us to consider market modification requests separately in the cable and satellite contexts also makes it inadvisable to apply prior cable market determinations to satellite markets. As discussed above, market modifications are specific to the stations, operators/carriers, and communities addressed in a particular market modification petition, as of the time of the petition. Given the differences in service areas and community sizes between cable systems and satellite carriers, and changes that may have occurred since the time of the cable petition, we conclude that it would not be reasonable to automatically apply prior cable market determinations to satellite carriers or establish a rebuttable presumption. We note that Gray's proposal would have us establish a presumption for an entire county based on a finding with respect to a single cable community or several cable communities within a county. 125
Moreover, we note that satellite carriers did not have the opportunity to participate in these prior market modification proceedings. 126
We also agree with DIRECTV that establishing a presumption would be inconsistent with our statutory obligation to evaluate modifications based on the statutory factors. 127
However, as noted in the NPRM, historic carriage is one of the five factors the Commission must consider in evaluating market modification requests and would carry weight in a market modification determination in the satellite context. 128
We agree with NAB that consideration of this factor will give sufficient weight to prior decisions without the need to establish a presumption. 129
27. Carriage after a market modification. We adopt our tentative conclusion that television broadcast stations that become eligible for mandatory carriage with respect to a satellite carrier (pursuant to section 76.66 of the rules) by virtue of a change in the market definition (by operation of a market modification pursuant to section 76.59 of the rules) may, within 30 days of the effective date of the new definition, elect retransmission consent or mandatory carriage with respect to such carrier. 130
This is consistent with the cable rule. 131
NAB and Gray support this conclusion, 132
while DISH expresses concern that, as a result of a market modification (and an existing retransmission consent agreement with the involved station), it could have to carry and pay retransmission consent fees to two stations from different states but that are affiliated with the same network. 133
DISH proposes that a station's election with respect to the communities added by a market modification should be limited to must-carry for the remainder of the carriage election cycle. 134
NAB responds that “[s]atellite carriers cannot lawfully obtain a ‘free pass’ to carry retransmission consent stations without negotiating the prices, terms and conditions of such consent in any geographic area. 135
Alternatively, DISH asks the Commission to “clarify that notwithstanding any retransmission consent agreements that would automatically entitle the station to carriage in additional geographic areas due to a market modification, the station must negotiate a new retransmission consent agreement for the new areas.” 136
NAB responds that “DISH and other satellite carriers must abide by provisions of the Communications Act and FCC rules governing retransmission consent and must-carry within a station's market, including areas affected by a market modification.” 137
28. We reject DISH's proposal to mandate a must-carry election for the remainder of the current election cycle because it directly contravenes section 325 of the Act and would be inconsistent with our satellite carriage rules. 138
As with any other election for satellite carriage, we find that when a station's market is modified for purposes of satellite carriage, then the station is entitled to elect either retransmission consent pursuant to section 325 or mandatory carriage pursuant to section 338 with respect to the new community or communities added to its market by the modification. 139
This is also consistent with the cable market modification process 140
and, moreover, is required by application of sections 325 and 338 of the Act. 141
Section 338(a)(1) requires that a satellite carrier must carry upon request all local television stations seeking carriage in any market in which the carrier provides local-into-local service, subject to section 325(b) of the Act. 142
Section 325(b)(1) prohibits an MVPD from retransmitting the signal of a broadcast station except “with the express authority of the originating station.” 143
The statute provides for no exception in the market modification context to the retransmission consent requirement. Thus, we reject DISH's argument that the silence of section 102 of the STELAR with respect to retransmission consent means that Congress could not have intended retransmission consent to apply to the carriage of stations in communities added by market modification. 144
To the contrary, considering the provisions together in context, we believe the better reading of the statute is that the retransmission consent requirement applies in this context given the absence of an express indication otherwise in either section 102 of STELAR or the retransmission consent provisions. 145
We note that, while the network programming may be the same, the two stations would likely be providing very different local programming ( e.g., different news, sports, advertising and political programming), each of which may be of interest to the new community, because the stations are licensed to different communities and particularly if the stations are located in different states. Finally, with respect to DISH's proposal that we prevent application of an existing retransmission consent agreement containing a provision requiring carriage pursuant to its terms in the event the Commission modifies a given market, DISH provides no reasoning that persuades us to abrogate a bargained-for and agreed-to contractual provision between a broadcaster and a satellite carrier that expressly contemplates the addition of communities through the market modification process. 146
We note, however, that the very purpose of this provision of the STELAR is to provide consumers with access to news, politics, sports, emergency and other programming specifically related to their home state. 147
Accordingly, we expect broadcasters and satellite carriers alike will make the needs and expectations of orphan county consumers the priority in negotiating retransmission consent following a successful modification petition. 148
We will monitor this situation closely and will take further action if such monitoring indicates that the purpose of this provision is not being effectuated.
29. We also adopt our tentative conclusion that a satellite carrier must commence carriage within 90 days of receiving the request for carriage from the television broadcast station. 149
In the record, NAB and Gray support the 90-day deadline, 150
while DISH asks for 120 days. 151
The 90-day deadline is consistent with our cable rules, 152
as well as with existing carriage procedures involving the addition of a new station to a carrier's lineup 153
and we see no reason to deviate from the 90-day deadlines in these similar contexts. 154
Thus, we conclude that 90 days is an appropriate amount of, time for satellite carriers to commence carriage. We note that, as is the case in the cable context, the filing of a petition for reconsideration or application for review does not automatically stay the effect of a Bureau order to add a station to a new community; however, based on the directive in section 338(l)(3)(B)—the satellite counterpart to cable's section 614(h)(1)(C)(iii)—a petition for reconsideration or application for review would automatically stay a Bureau order to delete a station in a community. 155
Finally, we adopt our tentative conclusion that the carriage election must be made in accordance with the procedures set forth in section 76.66(d)(1). 156
D. Technical or Economic Infeasibility Exception for Satellite Carriers
30. We adopt our proposal to codify the language of section 338(l)(3), which provides that “[a] market determination . . . shall not create additional carriage obligations for a satellite carrier if it is not technically and economically feasible for such carrier to accomplish such carriage by means of its satellites in operation at the time of the determination.” 157
In enacting this provision, Congress recognized that the unique nature of satellite television service may make a particular market modification difficult for a satellite carrier to effectuate and, thus, exempted the carrier from the resulting carriage obligation. 158
According to the record, spot beam coverage and capacity constraints (discussed below) are the primary technical and economic impediments to carriage facing both satellite carriers. Based on the constraints described in the record, we conclude that it is per se not technically and economically feasible for a satellite carrier to provide a station to a new community 159
that is, or to the extent to which it is, 160
outside the relevant spot beam 161
on which that station is currently carried. 162
We adopt our tentative conclusion that the satellite carrier has the burden to demonstrate that the resulting carriage from a market modification “is not technically and economically feasible . . . by means of [a carrier's] satellites in operation.” 163
In this regard, we will allow satellite carriers to demonstrate spot beam coverage infeasibility by providing a detailed and specialized certification, under penalty of perjury (as described herein). 164
In addition, with respect to other possible bases for a carrier to assert that carriage would be technically or economically infeasible, such as costs associated with changes to customer satellite dishes to accommodate reception from different orbital locations, we will review these assertions on a case-by-case basis. To avoid unnecessary burdens on broadcasters, satellite carriers, county governments and the Commission, we establish a process for prospective petitioners to obtain information from a satellite carrier regarding feasibility of carriage by the carrier prior to the filing of a market modification petition. We require satellite carriers to respond to broadcaster and county government requests for information about the feasibility of prospective market modifications with certifications and afford prospective petitioners with a process for Commission review of such certifications before filing a market modification petition. The Commission will not proceed to evaluate the five factors for a market modification with respect to a particular satellite carrier where it is shown that the resulting carriage obligation would not be technically and economically feasible at the time of the market determination.
1. Technical or Economic Impediments to Carriage
31. The NPRM sought comment on the types of technical or economic impediments contemplated by section 338(l)(3) that would make satellite carriage infeasible in a new community. 165
The NPRM also sought comment on any objective criteria by which the Commission could determine technical or economic infeasibility, such as spot beam coverage constraints. 166
In response, we received very few comments on potential impediments except infeasibility due to insufficient spot beam coverage and due to costs of making changes to customer satellite dishes. DIRECTV described spot beam coverage and capacity constraints as being the key technical and economic impediments to carriage. 167
DIRECTV asserted, and DISH agreed, that carriage should be considered per se infeasible if the new community is outside the coverage of the spot beam that carries the station. 168
The carriers explain that if the spot beam on which a station is being carried does not cover the new community, a satellite carrier “has no good [carriage] options available to it.” 169
Even if the spot beam on which a station is being carried covers the new community, DISH adds that carriage of the station may be infeasible if the station is carried on a different satellite at a different orbital position than the satellite providing the existing local broadcast stations to the market. 170
DISH explains that “it is possible” that this situation could require DISH to make equipment changes at “all or most households” in the new community. 171
The broadcast comments do not substantively refute spot beam coverage and capacity constraints as legitimate technical or economic impediments, except to say that such constraints must be appropriately demonstrated, consistent with the statute and legislative history. 172
32. We are persuaded by the satellite carriers that if the relevant spot beam does not cover the new community, then it is not technically and economically feasible for the carrier to provide the station to such new community. 173
In such a scenario, the only available options would be to place the station on the satellite carrier's CONUS beam 174
to reach subscribers in the new community, redirect each and every spot beam on the satellite in order to enable the relevant spot beam to cover the new community, 175
or place the station on a second, neighboring spot beam that does cover the new community, if such a beam exists and has capacity. DIRECTV argues that it would be an “inefficient use of resources to devote a CONUS beam, which can be seen throughout the United States, to provide coverage to a single or handful of communities.” 176
Next, DIRECTV argues that, if the new community is covered by a different, neighboring spot beam than the one on which the station is carried, it would almost always lack space on such neighboring spot beam. 177
Moreover, DIRECTV explains that, even if there were space, it “would have to reserve capacity on the entire `neighboring' spot beam—capacity that could otherwise be used for a new station or a multicast signal carried throughout the neighboring market.” 178
Thus, it would be inefficient for the carrier to use that space on the neighboring spot beam for a station that could only be received by subscribers in a small part of the local market served by such spot beam. 179
Finally, DIRECTV argues that redirecting the entire array of spot beams on the satellite, would cause unacceptable consequences to existing local service. 180
We agree with these points and conclude that each of these options are per se technically and economically infeasible. 181
Accordingly, we conclude that “it is per se technically and economically infeasible for a satellite carrier to provide a station to subscribers who live in an area outside of the spot beam on which that station is currently carried.” 182
This conclusion is consistent with the Commission's past recognition and acceptance of the service constraints associated with the use of spot beams. 183
This means that, if a carrier shows that the relevant spot beam does not provide coverage to the new community, then that is a per se demonstration of infeasibility. Thus, for example, a carrier would not need to show that there is no space on a neighboring spot beam or that it cannot reconfigure a spot beam to effectuate carriage.
33. We recognize that there may be other technical or economic impediments to carriage that could qualify for the infeasibility exception. For example, DISH explains that it provides local broadcast stations from spot beams on several satellites at a variety of different orbital locations and that each subscriber's satellite dish must be pointed and configured to receive signals from a particular orbital location. 184
Therefore, even if the station is on a spot beam that covers the new community, carriage of the station in the new community could still be infeasible if the station is carried on a different satellite at a different orbital location than the satellite providing local service to that community, because such carriage would require DISH to install a second satellite dish, replace an existing satellite dish, or reposition an existing satellite dish, at “all or most households” in the new community. 185
We do not have sufficient information in the record to determine that the costs of customer equipment changes to accommodate reception from different orbital positions should be treated as per se infeasible. We will therefore consider assertions of this and other types of infeasibility on a case-by-case basis.
34. Partial Spot Beam Coverage. The NPRM sought comment on how to handle a situation in which only part of a community could be served with the relevant spot beam. 186
The satellite carriers oppose having to serve part of a community if the entire community is not covered by the spot beam, 187
but DIRECTV says it determines spot-beam coverage based on zip codes and asserts that it would be able to serve a community defined as a county based on those zip codes within the county. 188
NAB argues, however, that if carriage is viable within portions of a community that is the subject of a market modification request, then satellite carriers should be required to carry the station in those areas. 189
We conclude that, if a satellite carrier can provide the station to only part of a new community, then it must do so.
35. As discussed above, the statute requires a satellite carrier to carry a station pursuant to a market modification, unless it is not technically and economically feasible for the carrier to do so. Given the relatively large size of many counties, we conclude that it would be a disservice to consumers, and would not fully effectuate the mandate of the satellite market modification provisions of the STELAR, to presume that partial carriage to a county-defined community is per se infeasible. We are not persuaded by DISH that requiring such partial coverage of a county would necessarily “be burdensome and cause customer confusion for a satellite carrier to target the carriage of a station down to such a granular level, for example by providing a different local broadcast station to a subset of subscribers.” 190
DISH provides no evidence of the burdens associated with partial carriage. Any “confusion” is outweighed by the benefits of providing the added station to the customers who can receive it, consistent with Congressional intent in expanding market modification to satellite carriage. On a case-by-case basis, we will consider whether the area of a new community in which service is feasible is so de minimis that addition of that community to the station's market is effectively infeasible. We also disagree with DIRECTV to the extent that it claims that “there is no underlying requirement to provide service in any particular area to begin with,” and therefore “the Commission need not ‘excuse’ any particular [market modification].” 191
Pursuant to the “carry one, carry all” statutory requirement, a satellite carrier must carry, on request, all local television broadcast stations' signals in local markets in which the satellite carrier carries at least one local television broadcast signal pursuant to the statutory copyright license. 192
Furthermore, the statutory language of the infeasibility exception in section 338(l)(3) contemplates that a carriage obligation would result from a market modification. 193
If carriage were merely discretionary for the carrier, then there would be no need for the infeasibility exception to relieve the carrier of a carriage obligation. Therefore, if the carrier is providing local television broadcast stations to the new community pursuant to the local statutory copyright license, then it must also provide a station that becomes eligible for carriage as a local station in the new community by operation of the market modification. 194
2. Demonstrating Infeasibility
36. Based on the record, we expect the vast majority of satellite carrier claims of infeasibility will be related to insufficient spot beam coverage. Because of the technical complexities involved in demonstrating spot beam coverage infeasibility, including the use of proprietary confidential information, we establish a streamlined process for carriers to demonstrate spot beam coverage infeasibility through the use of detailed certifications under penalty of perjury, based on a proposal by DIRECTV. Because of the limited record with respect to other possible claims of infeasibility, and our expectation that such other claims will be relatively rare, we do not at this time establish a detailed certification process for demonstrating other types of infeasibility. Instead, carriers will be required to demonstrate other types of infeasibility through the submission of evidence specifically demonstrating the technical or economic reason that carriage is infeasible. Although prospective petitioners will have two options for seeking a Commission determination about the carrier's claim of infeasibility ( i.e., filing a market modification petition or filing a separate petition beforehand solely with respect to the infeasibility issue), the requirements for demonstrating infeasibility are the same for both options.
37. The NPRM tentatively concluded that the satellite carrier has the burden to demonstrate technical or economic infeasibility and invited comment on the type of evidence needed to prove such infeasibility claims. 195
Most commenters, including the broadcasters and DISH, agree that the statute places the burden on satellite carriers to demonstrate infeasibility; 196
however, satellite carriers contend that a certification should be sufficient to meet its burden, 197
while broadcasters say an “unverifiable” certification would be inadequate to meet their burden under the statute and that a carrier should be required to provide documentation that demonstrates infeasibility. 198
38. We adopt our tentative conclusion that the statute places the burden on satellite carriers to demonstrate infeasibility if they assert that carriage of a station in a new community would be technically or economically infeasible. Our conclusion is consistent with the legislative history that claims of infeasibility be “well substantiated and carefully examined by the [Commission].” 199
Moreover, we agree with commenters that, as a practical matter, only the satellite carriers have the specific information necessary to determine if the carriage contemplated in a market modification would not be technically and economically feasible by operation of their satellites. 200
39. We adopt a certification process for carriers to demonstrate spot beam coverage infeasibility that should avoid imposing undue expense on, or compromising the confidential business information of, the satellite carriers while also providing the Commission with an appropriate basis for making market modification determinations. We conclude that a detailed certification submitted under penalty of perjury would satisfy the carrier's burden under the statute to substantiate their claims of insufficient spot beam coverage and allow us to carefully examine such claims of infeasibility. 201
Broadcasters argue that “the mere `certification' proposed by satellite carriers would not comport with the legislative intent of the technical and economic infeasibility provision” and that “an approach that involves only an unverifiable certification would be inadequate.” 202
Instead, broadcasters argue that satellite carriers should be required to make detailed technical showings related to spot-beam coverage. 203
NAB argues that if the Commission chooses to use a certification approach, then we should at least require certain supporting documentation be provided with the certification or in the event of a Commission audit of a certification. 204
We agree that a simple certification would not be appropriate, but we also agree with DIRECTV that it would be anomalous to require compendious and detailed evidentiary showings for spot beam coverage of modified local markets when such showings are not (and have never been) required for the provision of local service to unmodified local markets. 205
Therefore, we adopt a certification process that requires satellite carriers to evaluate the feasibility of providing the station to the new community in the same manner that it currently uses to determine where in the relevant DMA it can provide the current local broadcast stations. 206
These “detailed certifications” about spot beam coverage infeasibility must contain sufficient detail to ensure that the analysis performed by the carrier was appropriate and valid, and they will be subject to penalties for perjury to ensure its reliability. The Commission's review of the detailed certification will generally be limited to determining whether it satisfies the procedural and content requirements described herein. 207
Although we will not require carriers to provide supporting documentation as part of their certification, as an additional check the Commission may decide to look behind any certification and require supporting documentation when we deem it appropriate, such as when there is evidence that the certification may be inaccurate. 208
40. Supporting Documentation. In the event that we require supporting documentation, we will require a satellite carrier to provide its “satellite link budget” calculations that were created for the new community. DIRECTV explains that a “satellite link budget is a calculation that accounts for certain factors that affect a radio signal as it travels from an uplink earth station to a space station and back down through the atmosphere to the customer's earth station receiver” and that this technical document “generally takes the form of a table, with entries that include (among other things) transmit power from the uplink earth station and from the satellite, antenna gains, system noise, intersystem interference, and atmospheric attenuation including the effects of ‘rain fade.’ ” 209
DIRECTV states that the net result of this satellite link budget calculation “is an estimation of end-to-end satellite link performance.” 210
DIRECTV pointed out that the supporting materials suggested by NAB are in fact inputs for “link budgets.” 211
We agree with DIRECTV and NAB that it would be appropriate to require a carrier to submit satellite link budget information if the Commission were to determine in a given case that supporting documentation should be provided to support a detailed certification. 212
Thus, we require satellite carriers to retain such supporting documentation in the event that the Commission determines further review by the Commission is necessary. Satellite carriers must retain such supporting documentation throughout the pendency of Commission or judicial proceedings involving the certification and any related market modification petition. 213
We find this retention period will provide parties with a reasonable amount of time to challenge certifications. If satellite carriers have concerns about providing proprietary and confidential information underlying their analysis, they may request confidentiality. 214
41. Content of Spot Beam Coverage Infeasibility Detailed Certification. Based on DIRECTV's proposed detailed certification, 215
a satellite carrier's certification of infeasibility due to insufficient spot beam coverage must contain the following elements in order to be used and relied upon as evidence to demonstrate carrier claims of technical and economic infeasibility. First, the detailed certification must explain why carriage is not technically and economically feasible, including a detailed explanation of the “process by which a satellite carrier has determined whether or not the spot beam in question covers the geographic area at issue.” 216
Second, to ensure equal treatment to all stations, the detailed certification must state that the satellite carrier “has conducted this analysis in substantially the same manner and using substantially the same parameters used to determine the geographic area in which it currently offers stations carried on the spot beam.” 217
Finally, the satellite carrier must support its detailed certification with an affidavit or declaration under penalty of perjury, as contemplated under section 1.16 of the Commission's rules and 28 U.S.C. 1746, 218
signed and dated by an authorized officer of the satellite carrier with personal knowledge of the representations provided in the certification, verifying the truth and accuracy of the information therein. 219
42. We will consider on a case-by-case basis other claims of technical or economic infeasibility, such as DISH's claim of infeasibility due to the costs associated with changing customer satellite dishes to accommodate reception from different orbital locations. In addition, there may be circumstances of technical and economic infeasibility not yet contemplated. As discussed above, a satellite carrier bears the burden of demonstrating that the carriage contemplated in a market modification would not be technically and economically feasible by operation of its satellites. To demonstrate such infeasibility, a carrier must provide detailed technical or economic information to substantiate its claim of infeasibility.
3. Infeasibility Determinations
43. We will resolve disputes about carrier claims of infeasibility either in the context of a market modification proceeding or, at a prospective petitioner's option, in a separate proceeding before a market modification petition is filed. Thus, a prospective petitioner has two options. First, a prospective petitioner may file its market modification petition. In such cases, a satellite carrier would raise any claim of infeasibility in response to the petition and we would make a determination about the validity of such claim (and would not further process a petition for which the resulting carriage is infeasible). We recognize that prospective petitioners may want to know about carrier's claims of infeasibility, and may want a Commission determination about the validity of such claim, before filing a market modification petition. Therefore, a prospective petitioner's second option is to initiate the pre-filing coordination process (described below). Through this process, a prospective petitioner would request information from a carrier about infeasibility and a carrier would raise any claim of infeasibility in response to this request in the form of a certification. A carrier claiming spot beam coverage infeasibility must provide the detailed certification (described above). For all other claims of infeasibility, the certification provided for here is for the purpose of a carrier to notify the prospective petitioner about the carrier's claim of infeasibility prior to a petition being filed. The prospective petitioner can then decide whether it would like to file a special relief petition to obtain a Commission determination about the validity of the carrier's claim of infeasibility. 220
44. The NPRM tentatively concluded that a satellite carrier must raise any technical or economic impediments in the market modification proceeding. 221
The NPRM sought comment on whether the Commission, in the case of satellite market modifications, should require or encourage stations seeking market modifications to contact a satellite carrier before filing a market modification request in order to get an initial determination of whether the carrier considers the request technically and economically feasible. 222
The NPRM observed that such an initial inquiry might save some broadcasters the time and expense of compiling the standardized evidence for a modification that is not technically and economically feasible by alerting them to the technical or economic issue, which they could then take into account in deciding whether to file the request. 223
45. Most commenters support addressing satellite carrier claims of infeasibility before a broadcaster files a prospective market modification petition; 224
however, NAB argues that a satellite carrier's claim of infeasibility should not preclude the filing of a market modification petition. 225
Commenters seem to agree that satellite carriers generally must raise claims of technical and economic infeasibility during, if not before, the market modification proceeding. 226
Broadcasters, however, argue that a satellite carrier should be deemed to have waived technical and economic infeasibility claims if not raised in or before a market modification proceeding, 227
while DIRECTV argues that satellite carriers should not be precluded from raising future claims of infeasibility, such as technical infeasibility due to reduced spot beam coverage. 228
46. We conclude that it is most efficient and practical for stakeholders to consider and resolve satellite carrier claims of technical or economic infeasibility before petitioners go through the time and expense of seeking a prospective market modification and before the Commission uses administrative resources to evaluate the merits of a prospective market modification petition under the five statutory factors. Therefore, we slightly modify our tentative conclusion and proposal. 229
We conclude that a satellite carrier must raise any technical or economic impediments either in the market modification proceeding or prior to the market modification proceeding in response to a broadcaster or county government inquiry about feasibility of carriage resulting from a prospective market modification. 230
47. Pre-Filing Coordination Process. We establish a process that will allow a prospective petitioner (broadcaster or county government), at its option, to obtain a certification from a satellite carrier about whether or not (and to what extent) carriage resulting from a contemplated market modification is technically and economically feasible for such carrier before the prospective petitioner undertakes the time and expense of preparing and filing a market modification petition. 231
To initiate this process, a prospective petitioner may make a request in writing to a satellite carrier for the carrier to provide the certification about the feasibility or infeasibility of carriage. A satellite carrier must respond to this request within a reasonable amount of time by providing a feasibility certification to the prospective petitioner. A satellite carrier must also file a copy of the correspondence 232
and feasibility certification it provides to the prospective petitioner in this docket electronically via ECFS 233
so that the Media Bureau can track these certifications and monitor carrier response time. If the carrier is claiming spot beam coverage infeasibility, then the certification provided by the carrier must be the same type of detailed certification that would be required in response to a market modification petition (discussed above). 234
For any other claim of infeasibility, the carrier's feasibility certification must explain in detail the basis of such infeasibility 235
and must be prepared to provide documentation in support of its claim, in the event the prospective petitioner decides to seek a Commission determination about the validity of the carrier's claim. If carriage is feasible, a statement to that effect must be provided in the certification. To obtain a Commission determination about the validity of the carrier's claim of infeasibility, a prospective petitioner must either file a (separate) petition for special relief 236
or its market modification petition. 237
48. For purposes of determining a reasonable amount of time for a carrier to respond to a request for a feasibility certification, we find a carrier should generally respond within 45 days of receipt of a prospective petitioner's written request; 238
however, we find that it would be reasonable for the carrier to respond in 90 days if the carrier has to process several requests at the same time. 239
If the response is after 45 days, the carrier must provide an explanation for the longer time period in its certification ( e.g. , having to respond to multiple simultaneous requests). 240
With this process, we are trying to balance the need to provide broadcasters' with as fast a response as possible, while recognizing that satellite carriers may have difficulty responding to numerous requests at once.
49. The NPRM proposed that a meritorious market modification request would be granted even if such grant would not create a new carriage obligation at that time, for example, due to a finding of technical or economic infeasibility. 241
The NPRM explained that this would ensure that, if there is a change in circumstances such that it later becomes technically and economically feasible for the satellite carrier to carry the station, then the station could assert its carriage rights pursuant to the earlier market modification. 242
The NPRM also sought comment on whether to impose a reporting requirement on satellite carriers to notify the affected broadcaster if circumstances change at a later time making it technically and economically feasible for the carrier to carry the station. 243
NAB supports the proposal to grant a meritorious market modification request, even if the grant would not create a new carriage obligation at that time because of a finding of technical or economic infeasibility. 244
Commenters split regarding whether to require satellite carriers to provide notice if and when carriage later becomes feasible. Broadcasters support such a requirement, 245
while satellite carriers oppose it. 246
50. We conclude that we will not grant a market modification petition that could not create a new carriage obligation at that time due to a finding of technical or economic infeasibility. We find that our conclusion is more consistent with the statute's requirement that a market modification “shall not create additional carriage obligations for a satellite carrier” if it is infeasible “at the time of the determination.” 247
We also note that claims of infeasibility related to a carrier's satellites are not likely to change for the life of a satellite, which can be as long as 15 years. 248
Because we will not grant a market modification for which carriage would be infeasible, we find it unnecessary to require satellite carriers to provide notice if and when carriage later becomes feasible. Instead, a petitioner may re-initiate the process if at a later time a satellite carrier has deployed new satellites that could change this feasibility determination.
E. No Effect on Eligibility To Receive Distant Signals via Satellite
51. We adopt our proposal to codify the language of section 338(l)(5), which provides that “[n]o modification of a commercial television broadcast station's local market pursuant to this subsection shall have any effect on the eligibility of households in the community affected by such modification to receive distant signals pursuant to section 339, notwithstanding subsection (h)(1) of this section.” 249
We also adopt our interpretation of this provision as an exception to the restrictions on a satellite subscriber's eligibility to receive “distant” (out-of-market) signals. 250
Commenters on this issue supported our proposal. 251
52. The Communications Act and copyright laws set out two key restrictions on a satellite subscriber's eligibility to receive “distant” (out-of-market) signals. 252
First, subscribers are generally eligible to receive a distant station from a satellite carrier only if the subscriber is “unserved” over the air by a local station of the same network. 253
Second, even if “unserved,” a subscriber is not eligible to receive a distant station from a satellite carrier if the carrier is making “available” to such subscriber a local station of the same network. 254
We conclude that section 338(l)(5) is largely intended as an exception to these two subscriber eligibility requirements. In other words, we find that the addition of a new local station to a local television market by operation of a market modification (which might otherwise restrict a subscriber's eligibility to receive a distant station) would not disqualify an otherwise eligible satellite subscriber from receiving a distant station of the same network. For example, a subscriber may be receiving a distant station because the subscriber resides in a “short market,” 255
has obtained a waiver from the relevant network station, 256
or is otherwise eligible to receive distant signals pursuant to section 339. That subscriber will continue to be eligible to receive the distant station after a market modification that adds a new local station of the same network.
53. The NPRM sought comment on whether section 338(l)(5) also means that the deletion of a local station from a local television market by operation of a market modification would not make otherwise ineligible subscribers now eligible to receive a distant station of the same network. 257
We agree with DIRECTV that this provision “was meant to ensure that households would not lose eligibility for distant signals for which they were eligible prior to modification” and should not “be interpreted as denying distant signals to subscribers who newly become eligible for them because they have lost their local signals through market modification.” 258
Thus, the deletion of a local network station from a community by operation of a market modification may allow a satellite carrier to import a distant station of the same network into such community, provided subscribers in such community would now satisfy the requirements for receipt of distant stations (pursuant to section 339).
F. Definition of Community
54. For purposes of a satellite market modification, we define a “satellite community” as a county, which is supported by all commenters on this issue. 259
Consistent with the cable context, in a market modification request, the petitioner will define the satellite community (or communities) to be added or deleted from a particular station's local television market. We also retain our existing definition of a “cable community” for purposes of a cable market modification, having received no comment on this issue.
55. In the NPRM, as directed by the STELAR, 260
we sought comment on how to define a “community” for purposes of market modification in both the cable and satellite contexts. 261
The concept of a “community” is important in the market modification context because the term describes the geographic area that will be added to or deleted from a station's local television market (based on the statutory factors), which in turn determines the stations that must be carried by a cable operator or a satellite carrier to subscribers in that community. 262
Because of the localized nature of cable systems, cable communities are usually easily defined by the geographic boundaries of a given cable system, which are often, but not always, coincident with a municipal boundary and may vary as determined on a case-by-case basis. 263
In the cable carriage context, the Commission considers market modification requests on a community-by-community basis 264
and defines a community unit in terms of a “distinct community or municipal entity” where a cable system operates or will operate. 265
A “satellite community,” however, is not as easily defined as a cable community. Unlike cable service, which reaches subscribers in a defined local area via local franchises, satellite carriers offer service on a national basis, with no connection to a particular local community or municipality. Moreover, satellite service is sometimes offered in areas of the country that do not have cable service, and thus cannot be defined by cable communities.
56. Satellite Community. We define a “satellite community” on a county basis. All commenters on this issue support this definition. 266
DISH and Gray assert that the use of a county definition will better address the orphan county problem. 267
In addition, UCC observes that “[c]ounty-wide data is more easily available than community-specific data.” 268
We agree. DIRECTV, who initially supported only zip codes, stated in its reply that it could support a county-based definition, as long as satellite carriers are not required to provide service to the parts of a modified market outside the market's spot beam. 269
We agree with commenters that a county definition is better suited for the national nature of satellite service and will most effectively promote access to in-state programming for subscribers in orphan counties. In addition, we agree that county-wide data will work effectively and is easily available. We also take note of the support for a county definition from both broadcasters and satellite carriers. Thus, we are persuaded that allowing satellite market modifications on a county basis would best effectuate the satellite market modification provision.
57. We find this approach preferable to defining a “satellite community” on a cable community 270
or zip code basis. In the NPRM, we considered a cable community and/or a zip code as two possible definitions of a satellite community for purposes of market modification. 271
No commenters supported the cable community-based definition. We observed the Commission's use of a cable community-based definition in the significantly viewed context. 272
As noted above, satellite carriers, unlike cable systems, have no connection to a particular local community or municipality. Given this fact, and based on the absence of any support for this definition, we reject a cable community-based definition for the satellite market modification context. DIRECTV supports the use of zip codes, explaining it determines spot-beam coverage based on zip codes, but (as noted above) expressed qualified support for a county-based definition. 273
DISH opposes the use of zip codes, explaining that its systems recognize DMA boundaries based on counties, and that it would be burdensome to do zip-code-based modifications. 274
Given DIRECTV's qualified support for a county-based definition and DISH's difficulties associated with the use of zip codes, we reject a zip-code-based definition for the satellite market modification context.
58. Definition of “Cable Community” for Cable Market Modifications. We adopt our tentative conclusion to retain the existing definition of a “cable community.” 275
No comments were filed on this issue. Section 76.5(dd) of the rules defines a “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).” 276
We conclude that this definition has worked well in cable market modifications for more than 20 years and should not be changed. We find that retaining the cable definition best effectuates the cable market modification provision. Although (as discussed herein) we allow a satellite community to be defined on a county basis, we see no reason to change the definition to allow cable modifications on a county basis. Despite our objective of treating satellite market modifications and cable market modifications similarly where feasible, we find that practical differences justify different treatment on this issue.
IV. Procedural Matters
A. Final Regulatory Flexibility Act Analysis
59. As required by the Regulatory Flexibility Act of 1980, as amended (RFA), 277
an Initial Regulatory Flexibility Analysis (IRFA) was incorporated in the Notice of Proposed Rulemaking (NPRM) in this proceeding. 278
The Commission sought written public comment on the proposals in the NPRM, including comment on the IRFA. The Commission received no comments on the IRFA. This present Final Regulatory Flexibility Analysis (FRFA) conforms to the RFA. 279
1. Need for, and Objectives of, the Rules
60. This Report and Order adopts rules to implement section 102 of the Satellite Television Extension and Localism Act (STELA) Reauthorization Act of 2014 (“STELA Reauthorization Act” or “STELAR”). 280
The STELAR amended the Communications Act and the Copyright Act to give the Commission authority to modify a commercial television broadcast station's local television market for purposes of satellite carriage rights. 281
The Commission previously had the authority to modify markets only in the cable carriage context. 282
With section 102 of the STELAR, Congress provides regulatory parity in this regard in order to promote consumer access to in-state and other relevant television programming. Significantly, the STELAR added a new factor for the Commission to consider when evaluating a market modification petition—“whether modifying the local market of the television station would promote consumers' access to television broadcast station signals that originate in their State of residence.” 283
Section 102 of the STELAR, and the Commission's actions in this Report and Order, seek to establish a market modification process for the satellite carriage context and, to the extent possible, address satellite subscribers' inability to receive in-state programming in certain areas. In this Report and Order, consistent with Congress' intent that the Commission model the satellite market modification process on the current cable market modification process, the Commission adopts rules to implement section 102 of the STELAR by revising the current cable market modification rule, section 76.59, to apply also to satellite carriage, while adding provisions to the rules to address the unique nature of satellite television service. 284
For example, the STELAR recognizes that satellite carriage of additional stations pursuant to a market modification might be technically and economically infeasible in some circumstances. 285
In addition to establishing rules for satellite market modifications, section 102 of the STELAR directs the Commission to consider whether it should make changes to the current cable market modification rules, 286
and it also makes certain conforming amendments to the cable market modification statutory provision. 287
Accordingly, as part of the implementation of the STELAR, the Commission makes conforming and other minor changes to the cable market modification rules.
2. Summary of Significant Issues Raised by Public Comments in Response to the IRFA
61. No public comments were filed in response to the IRFA.
62. Pursuant to the Small Business Jobs Act of 2010, the Commission is required to respond to any comments filed by the Chief Counsel for Advocacy of the Small Business Administration (SBA), and to provide a detailed statement of any change made to the proposed rules as a result of those comments. 288
The Chief Counsel did not file any comments in response to the proposed rules in this proceeding.
3. Description and Estimate of the Number of Small Entities To Which the Rules Will Apply
63. The RFA directs agencies to provide a description of and an estimate of the number of small entities to which the rules will apply. 289
The RFA generally defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small governmental jurisdiction.” 290
In addition, the term “small business” has the same meaning as the term “small business concern” under the Small Business Act. 291
A small business concern is one which: (1) Is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the SBA. 292
The rule changes adopted herein will directly affect small television broadcast stations, small MVPD systems, which include cable system operators and satellite carriers and small county governmental jurisdictions. Below, we provide a description of such small entities, as well as an estimate of the number of such small entities, where feasible.
64. Small Governmental Jurisdictions. The term “small governmental jurisdiction” is defined generally as “governments of cities, counties, towns, townships, villages, school districts, or special districts, with a population of less than fifty thousand.” 293
Census Bureau data for 2011 indicate that there were 89,476 local governmental jurisdictions in the United States. 294
We estimate that, of this total, a substantial majority may qualify as “small governmental jurisdictions.” 295
Thus, we estimate that most governmental jurisdictions are small.
65. Wired Telecommunications Carriers. The North American Industry Classification System (“NAICS”) defines “Wired Telecommunications Carriers” as follows: “This industry comprises establishments primarily engaged in operating and/or providing access to transmission facilities and infrastructure that they own and/or lease for the transmission of voice, data, text, sound, and video using wired telecommunications networks. Transmission facilities may be based on a single technology or a combination of technologies. Establishments in this industry use the wired telecommunications network facilities that they operate to provide a variety of services, such as wired telephony services, including VoIP services; wired (cable) audio and video programming distribution; and wired broadband Internet services. By exception, establishments providing satellite television distribution services using facilities and infrastructure that they operate are included in this industry.” 296
The SBA has developed a small business size standard for wireline firms for the broad economic census category of “Wired Telecommunications Carriers.” Under this category, a wireline business is small if it has 1,500 or fewer employees. 297
Census data for 2007 shows that there were 3,188 firms that operated for the entire year. 298
Of this total, 3,144 firms had fewer than 1,000 employees, and 44 firms had 1,000 or more employees. 299
Therefore, under this size standard, we estimate that the majority of businesses can be considered small entities.
66. Cable Television Distribution Services. Since 2007, these services have been defined within the broad economic census category of Wired Telecommunications Carriers, which category is defined above. 300
The SBA has developed a small business size standard for this category, which is: All such businesses having 1,500 or fewer employees. 301
Census data for 2007 shows that there were 3,188 firms that operated for the entire year. 302
Of this total, 3,144 firms had fewer than 1,000 employees, and 44 firms had 1,000 or more employees. 303
Therefore, under this size standard, we estimate that the majority of businesses can be considered small entities.
67. Cable Companies and Systems. The Commission has also developed its own small business size standards, for the purpose of cable rate regulation. Under the Commission's rate regulation rules, a “small cable company” is one serving 400,000 or fewer subscribers, nationwide. 304
According to the Television and Cable Factbook, there are 856 cable operators. 305
Of this total, all but 10 incumbent cable companies are small under this size standard. 306
In addition, under the Commission's rules, a “small system” is a cable system serving 15,000 or fewer subscribers. 307
Current Commission records show 4,562 cable systems nationwide. 308
Of this total, 4,000 cable systems have fewer than 20,000 subscribers, and 562 systems have 20,000 subscribers or more, based on the same records. Thus, under this standard, we estimate that most cable systems are small.
68. Cable System Operators (Telecom Act Standard). The Communications Act of 1934, as amended, also contains a size standard for small cable system operators, which is “a cable operator that, directly or through an affiliate, serves in the aggregate fewer than 1 percent of all subscribers in the United States and is not affiliated with any entity or entities whose gross annual revenues in the aggregate exceed $250,000,000.” 309
The Commission has determined that an operator serving fewer than 677,000 subscribers shall be deemed a small operator, if its annual revenues, when combined with the total annual revenues of all its affiliates, do not exceed $250 million in the aggregate. 310
Based on available data, we find that all but 10 incumbent cable operators are small under this size standard. 311
We note that the Commission neither requests nor collects information on whether cable system operators are affiliated with entities whose gross annual revenues exceed $250 million. 312
Although it seems certain that some of these cable system operators are affiliated with entities whose gross annual revenues exceed $250,000,000, we are unable to estimate with greater precision the number of cable system operators that would qualify as small cable operators under this definition.
69. Satellite Carriers. The term “satellite carrier” means an entity that uses the facilities of a satellite or satellite service licensed under Part 25 of the Commission's rules to operate in the Direct Broadcast Satellite (DBS) service or Fixed-Satellite Service (FSS) frequencies. 313
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 entities 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. 314
The Commission has concluded that the definition of “satellite carrier” includes all three of these types of entities. 315
70. Direct Broadcast Satellite (DBS) Service. DBS service is a nationally distributed subscription service that delivers video and audio programming via satellite to a small parabolic “dish” antenna at the subscriber's location. DBS, by exception, is now included in the SBA's broad economic census category, Wired Telecommunications Carriers, 316
which was developed for small wireline businesses. Under this category, the SBA deems a wireline business to be small if it has 1,500 or fewer employees. 317
Census data for 2007 shows that there were 3,188 firms that operated for the entire year. 318
Of this total, 3,144 firms had fewer than 1,000 employees, and 44 firms had 1,000 or more employees. 319
Therefore, under this size standard, the majority of such businesses can be considered small. However, the data we have available as a basis for estimating the number of such small entities were gathered under a superseded SBA small business size standard formerly titled “Cable and Other Program Distribution.” The definition of Cable and Other Program Distribution provided that a small entity is one with $12.5 million or less in annual receipts. 320
Currently, only two entities provide DBS service, which requires a great investment of capital for operation: DIRECTV and DISH Network. 321
Each currently offers subscription services. DIRECTV and DISH Network each reports annual revenues that are in excess of the threshold for a small business. Because DBS service requires significant capital, we believe it is unlikely that a small entity as defined by the SBA would have the financial wherewithal to become a DBS service provider.
71. Satellite Master Antenna Television (SMATV) Systems, also known as Private Cable Operators (PCOs). SMATV systems or PCOs are video distribution facilities that use closed transmission paths without using any public right-of-way. They acquire video programming and distribute it via terrestrial wiring in urban and suburban multiple dwelling units such as apartments and condominiums, and commercial multiple tenant units such as hotels and office buildings. SMATV systems or PCOs are now included in the SBA's broad economic census category, Wired Telecommunications Carriers, 322
which was developed for small wireline businesses. Under this category, the SBA deems a wireline business to be small if it has 1,500 or fewer employees. 323
Census data for 2007 shows that there were 3,188 firms that operated for the entire year. 324
Of this total, 3,144 firms had fewer than 1,000 employees, and 44 firms had 1,000 or more employees. 325
Therefore, under this size standard, the majority of such businesses can be considered small.
72. Home Satellite Dish (HSD) Service. HSD or the large dish segment of the satellite industry is the original satellite-to-home service offered to consumers, and involves the home reception of signals transmitted by satellites operating generally in the C-band frequency. Unlike DBS, which uses small dishes, HSD antennas are between four and eight feet in diameter and can receive a wide range of unscrambled (free) programming and scrambled programming purchased from program packagers that are licensed to facilitate subscribers' receipt of video programming. Because HSD provides subscription services, HSD falls within the SBA-recognized definition of Wired Telecommunications Carriers. 326
The SBA has developed a small business size standard for this category, which is: all such businesses having 1,500 or fewer employees. 327
Census data for 2007 shows that there were 3,188 firms that operated for the entire year. 328
Of this total, 3,144 firms had fewer than 1,000 employees, and 44 firms had 1,000 or more employees. 329
Therefore, under this size standard, we estimate that the majority of businesses can be considered small entities.
73. Open Video Services. The open video system (OVS) framework was established in 1996, and is one of four statutorily recognized options for the provision of video programming services by local exchange carriers. 330
The OVS framework provides opportunities for the distribution of video programming other than through cable systems. Because OVS operators provide subscription services, 331
OVS falls within the SBA small business size standard covering cable services, which is Wired Telecommunications Carriers. 332
The SBA has developed a small business size standard for this category, which is: all such businesses having 1,500 or fewer employees. 333
Census data for 2007 shows that there were 3,188 firms that operated for the entire year. 334
Of this total, 3,144 firms had fewer than 1,000 employees, and 44 firms had 1,000 or more employees. 335
Therefore, under this size standard, we estimate that the majority of businesses can be considered small entities. In addition, we note that the Commission has certified some OVS operators, with some now providing service. 336
Broadband service providers (“BSPs”) are currently the only significant holders of OVS certifications or local OVS franchises. 337
The Commission does not have financial or employment information regarding the entities authorized to provide OVS, some of which may not yet be operational. Thus, again, at least some of the OVS operators may qualify as small entities.
74. Wireless cable systems—Broadband Radio Service and Educational Broadband Service. Wireless cable systems use the Broadband Radio Service (BRS) 338
and Educational Broadband Service (EBS) 339
to transmit video programming to subscribers. In connection with the 1996 BRS auction, the Commission established a small business size standard as an entity that had annual average gross revenues of no more than $40 million in the previous three calendar years. 340
The BRS auctions resulted in 67 successful bidders obtaining licensing opportunities for 493 Basic Trading Areas (BTAs). Of the 67 auction winners, 61 met the definition of a small business. BRS also includes licensees of stations authorized prior to the auction. At this time, we estimate that of the 61 small business BRS auction winners, 48 remain small business licensees. In addition to the 48 small businesses that hold BTA authorizations, there are approximately 392 incumbent BRS licensees that are considered small entities. 341
After adding the number of small business auction licensees to the number of incumbent licensees not already counted, we find that there are currently approximately 440 BRS licensees that are defined as small businesses under either the SBA or the Commission's rules. In 2009, the Commission conducted Auction 86, the sale of 78 licenses in the BRS areas. 342
The Commission offered three levels of bidding credits: (i) A bidder with attributed average annual gross revenues that exceed $15 million and do not exceed $40 million for the preceding three years (small business) received a 15 percent discount on its winning bid; (ii) a bidder with attributed average annual gross revenues that exceed $3 million and do not exceed $15 million for the preceding three years (very small business) received a 25 percent discount on its winning bid; and (iii) a bidder with attributed average annual gross revenues that do not exceed $3 million for the preceding three years (entrepreneur) received a 35 percent discount on its winning bid. 343
Auction 86 concluded in 2009 with the sale of 61 licenses. 344
Of the 10 winning bidders, two bidders that claimed small business status won four licenses; one bidder that claimed very small business status won three licenses; and two bidders that claimed entrepreneur status won six licenses.
75. In addition, the SBA's placement of Cable Television Distribution Services in the category of Wired Telecommunications Carriers is applicable to cable-based Educational Broadcasting Services. Since 2007, these services have been defined within the broad economic census category of Wired Telecommunications Carriers, 345
which was developed for small wireline businesses. The SBA has developed a small business size standard for this category, which is: All such businesses having 1,500 or fewer employees. 346
Census data for 2007 shows that there were 3,188 firms that operated for the entire year. 347
Of this total, 3,144 firms had fewer than 1,000 employees, and 44 firms had 1,000 or more employees. 348
Therefore, under this size standard, we estimate that the majority of businesses can be considered small entities. In addition to Census data, the Commission's internal records indicate that as of September 2012, there are 2,241 active EBS licenses. 349
The Commission estimates that of these 2,241 licenses, the majority are held by non-profit educational institutions and school districts, which are by statute defined as small businesses. 350
76. Incumbent Local Exchange Carriers (ILECs). Neither the Commission nor the SBA has developed a small business size standard specifically for incumbent local exchange services. ILECs are included in the SBA's economic census category, Wired Telecommunications Carriers. 351
Under this category, the SBA deems a wireline business to be small if it has 1,500 or fewer employees. 352
Census data for 2007 shows that there were 3,188 firms that operated for the entire year. 353
Of this total, 3,144 firms had fewer than 1,000 employees, and 44 firms had 1,000 or more employees. 354
Therefore, under this size standard, the majority of such businesses can be considered small.
77. Small Incumbent Local Exchange Carriers. We have included small incumbent local exchange carriers in this present RFA analysis. A “small business” under the RFA is one that, inter alia , meets the pertinent small business size standard ( e.g. , a telephone communications business having 1,500 or fewer employees), and “is not dominant in its field of operation.” 355
The SBA's Office of Advocacy contends that, for RFA purposes, small incumbent local exchange carriers are not dominant in their field of operation because any such dominance is not “national” in scope. 356
We have therefore included small incumbent local exchange carriers in this RFA analysis, although we emphasize that this RFA action has no effect on Commission analyses and determinations in other, non-RFA contexts.
78. Competitive Local Exchange Carriers (CLECs), Competitive Access Providers (CAPs), Shared-Tenant Service Providers, and Other Local Service Providers. Neither the Commission nor the SBA has developed a small business size standard specifically for these service providers. These entities are included in the SBA's economic census category, Wired Telecommunications Carriers. 357
Under this category, the SBA deems a wireline business to be small if it has 1,500 or fewer employees. 358
Census data for 2007 shows that there were 3,188 firms that operated for the entire year. 359
Of this total, 3,144 firms had fewer than 1,000 employees, and 44 firms had 1,000 or more employees. 360
Therefore, under this size standard, the majority of such businesses can be considered small.
79. Television Broadcasting. This economic census category “comprises establishments primarily engaged in broadcasting images together with sound.” 361
The SBA has created the following small business size standard for such businesses: Those having $38.5 million or less in annual receipts. 362
The 2007 U.S. Census indicates that 808 firms in this category operated in that year. Of that number, 709 had annual receipts of $25,000,000 or less, and 99 had annual receipts of more than $25,000,000. 363
Because the Census has no additional classifications that could serve as a basis for determining the number of stations whose receipts exceeded $38.5 million in that year, we conclude that the majority of television broadcast stations were small under the applicable SBA size standard.
80. Apart from the U.S. Census, the Commission has estimated the number of licensed commercial television stations to be 1,390 stations. 364
Of this total, 1,221 stations (or about 88 percent) had revenues of $38.5 million or less, according to Commission staff review of the BIA Kelsey Inc. Media Access Pro Television Database (BIA) on July 2, 2014. In addition, the Commission has estimated the number of licensed noncommercial educational (NCE) television stations to be 395. 365
NCE stations are non-profit, and therefore considered to be small entities. 366
Therefore, we estimate that the majority of television broadcast stations are small entities.
81. We note, however, that in assessing whether a business concern qualifies as small under the above definition, business (control) affiliations 367
must be included. Our estimate, therefore, likely overstates the number of small entities that might be affected by our action because the revenue figure on which it is based does not include or aggregate revenues from affiliated companies. In addition, an element of the definition of “small business” is that the entity not be dominant in its field of operation. We are unable at this time to define or quantify the criteria that would establish whether a specific television station is dominant in its field of operation. Accordingly, the estimate of small businesses to which rules may apply does not exclude any television station from the definition of a small business on this basis and is therefore possibly over-inclusive to that extent.
82. Class A TV and LPTV Stations. The same SBA definition that applies to television broadcast stations would apply to licensees of Class A television stations and low power television (LPTV) stations, as well as to potential licensees in these television services. As noted above, the SBA has created the following small business size standard for this category: those having $38.5 million or less in annual receipts. 368
The Commission has estimated the number of licensed Class A television stations to be 431. 369
The Commission has also estimated the number of licensed LPTV stations to be 2,003. 370
Given the nature of these services, we will presume that these licensees qualify as small entities under the SBA definition.
4. Description of Projected Reporting, Recordkeeping, and Other Compliance Requirements for Small Entities
83. The Report and Order revises section 76.59 of the rules to apply also to the satellite television context. The new satellite rules permit commercial television broadcast stations, satellite carriers and county governments to file petitions seeking to modify a commercial television broadcast station's local television market for purposes of satellite carriage rights. 371
Under section 76.59 of the rules, commercial TV broadcast stations and cable system operators may already file such requests for market modification for purposes of cable carriage rights. Consistent with the current cable requirements, the adopted rules require petitioners to file market modification requests and/or responsive pleadings in accordance with the procedures for filing Special Relief petitions in section 76.7 of the rules. 372
Consistent with the current cable requirements, the adopted rules require petitioners to provide specific forms of evidence to support market modification petitions, should they ch0ose to file such petitions. 373
A television broadcast station that becomes eligible for mandatory satellite carriage by operation of a market modification may elect retransmission consent or mandatory carriage with respect to a satellite carrier within 30 days of the market determination. 374
A satellite carrier must commence carriage within 90 days of receiving the station's request for carriage. 375
84. The Report and Order establishes a process that will allow a prospective petitioner ( i.e., broadcaster or county government) to obtain a certification from a satellite carrier about whether or not (and to what extent) carriage resulting from a contemplated market modification is technically and economically feasible for such carrier before the prospective petitioner undertakes the time and expense of preparing and filing a market modification petition. 376
To initiate this process, a prospective petitioner may make a request in writing to a satellite carrier for the carrier to provide the certification about the feasibility or infeasibility of carriage. A satellite carrier must respond to this request within a reasonable amount of time by providing a feasibility certification to the prospective petitioner. 377
A satellite carrier must also file a copy of the correspondence and feasibility certification it provides to the prospective petitioner in this docket electronically via ECFS so that the Media Bureau can track these certifications and monitor carrier response time. If the carrier is claiming spot beam coverage infeasibility, then the certification provided by the carrier must be the same detailed certification that would be required in response to a market modification petition. 378
For any other claim of infeasibility, the carrier's feasibility certification must explain in detail the basis of such infeasibility and must be prepared to provide documentation in support of its claim, in the event the prospective petitioner decides to challenge the carrier's claim. 379
If carriage is feasible, a statement to that effect must be provided in the certification. 380
If a broadcaster or county government has concerns about the adequacy of the carrier's certification, or has some reason to question the validity of the carrier's certification, the broadcaster or county government may raise such concerns in a (separate) petition for special relief or its market modification petition. 381
85. The adopted rules require a satellite carrier to provide a detailed and specialized certification to demonstrate its claim that satellite carriage resulting from a market modification would be technically or economically infeasible due to insufficient spot beam coverage. 382
Satellite carriers will be required to provide supporting documentation upon request by the Commission and must therefore retain such supporting documentation substantiating potential review by the Commission. 383
As noted in section C of this FRFA, neither one of the satellite carriers, DISH nor DIRECTV, qualify as a small entity and small businesses do not generally have the financial ability to become DBS licensees because of the high implementation costs associated with satellite services.
5. Steps Taken To Minimize Significant Economic Impact on Small Entities, and Significant Alternatives Considered
86. The RFA requires an agency to describe the steps the agency has taken to minimize the significant economic impact on small entities consistent with the stated objectives of applicable statutes, including a statement of the factual, policy, and legal reasons for selecting the alternative adopted in the final rule and why each one of the other significant alternatives to the rule considered by the agency which affect the impact on small entities was rejected. 384
87. Consistent with the statute's goal of promoting regulatory parity between cable and satellite service, the Report and Order applies the existing cable market modification rules to the satellite context, while adding provisions to the rules to address the unique nature of satellite television service. Therefore, the adopted rules for the first time allow a commercial television broadcast station to request a modification of its local television market for purposes of satellite carriage. Small TV stations that choose to file satellite market modification petitions must comply with the associated filing and evidentiary requirements (explained in section D of the FRFA); however, the filing of such petitions is voluntary. In addition, small TV stations may want to respond to a petition to modify its market (or the market of a competitor station) filed by a satellite carrier or a competitor station; however, there are no standardized evidentiary requirements associated with such responsive pleadings. Through a market modification process, a small TV station may gain or lose carriage rights with respect to a particular community, based on the five statutory factors, to better reflect localism. 385
88. In the IRFA, we invited small TV stations to comment on whether they are more or less likely, on the whole, to benefit from market modifications. 386
In addition, we invited comment on whether there are any alternatives we should consider to the Commission's proposed implementation of section 102 of the STELAR that would minimize any adverse impact on small TV stations, but which are consistent with the statute and its goals, such as promoting localism and regulatory parity. 387
We received no comments in direct response to these inquiries. In comments to the NPRM, Gray Television, Inc. (“Gray”) proposed that the Commission should establish a presumption in favor of applying prior cable market modification determinations to satellite markets to lower the burden on television broadcast stations, including small stations. 388
In the Report and Order, the Commission rejected Gray's proposal, finding it was inconsistent with the statute's requirement to apply the statutory factors to each market modification petition. 389
The Commission did observe, however, that consideration of historic carriage is one of the five statutory factors that the Commission is required to consider in evaluating market modification requests and explained that consideration under such factor would “give sufficient weight to prior decisions without the need to establish a presumption.” 390
89. Unique to satellite market modifications, the STELAR provides that a satellite carrier is not required to carry a station pursuant to a market modification if it is not technically and economically feasible for the carrier to do so. 391
The Report and Order allows satellite carriers to demonstrate spot beam coverage infeasibility by providing a detailed and specialized certification under penalty of perjury. 392
To avoid unnecessary burdens on broadcasters, satellite carriers, and the Commission, the Report and Order established a process for the parties to exchange information regarding feasibility of carriage prior to the filing of a prospective market modification petition. 393
The adopted rules allow TV broadcast stations to request a certification regarding claims of technical or economic infeasibility from a satellite carrier before filing a prospective market modification petition, and the station may seek review of such certification by filing a petition for special relief before filing a prospective petition for market modification. 394
This process will particularly benefit small stations, allowing them to avoid the time and expense of filing a market modification petition that could not result in carriage of the station. In comments to the NPRM, the Virginia Broadcasting Corp. (“WVIR-TV”) expressed concern that a certification approach would not provide broadcasters with sufficient information to challenge the validity of the satellite carrier's claim of infeasibility. 395
The Report and Order addressed this concern by requiring a detailed and specialized certification that is subject to penalties for perjury and which would contain sufficient detail to ensure that the analysis performed by the satellite carrier was appropriate and valid. 396
90. The adopted rules, for the first time, allow satellite carriers to request market modifications. The adopted rules also allow satellite carriers to assert claims of infeasibility by certification, which will minimize the burden on them, although the Commission may require satellite carriers to provide documentation upon request. 397
As previously discussed, only two entities—DIRECTV and DISH Network—provide direct broadcast satellite (DBS) service, which requires a great investment of capital for operation. As noted in section C of this FRFA, neither one of these two entities qualify as a small entity and small businesses do not generally have the financial ability to become DBS licensees because of the high implementation costs associated with satellite services.
6. Report to Congress
91. The Commission will send a copy of the Report and Order, including this FRFA, in a report to be sent to Congress pursuant to the Congressional Review Act. 398
In addition, the Commission will send a copy of the Report and Order, including this FRFA, to the Chief Counsel for Advocacy of the SBA. A copy of the Report and Order and FRFA (or summaries thereof) will also be published in the Federal Register . 399
B. Final Paperwork Reduction Act Analysis
92. This document contains modified information collection requirements subject to the Paperwork Reduction Act of 1995 (PRA). 400
The requirements will be submitted to the Office of Management and Budget (OMB) for review under section 3507(d) of the PRA. OMB, the general public, and other Federal agencies will be invited to comment on the information collection requirements contained in this proceeding. The Commission will publish a separate document in the Federal Register at a later date seeking these comments. In addition, we note that pursuant to the Small Business Paperwork Relief Act of 2002 (SBPRA), 401
we previously sought specific comment on how the Commission might further reduce the information collection burden for small business concerns with fewer than 25 employees.
C. Congressional Review Act
93. The Commission will send a copy of this Report and Order in a report to be sent to Congress and the Government Accountability Office, pursuant to the Congressional Review Act. 402
V. Ordering Clauses
94. Accordingly, it is ordered that, pursuant to section 102 of the STELA Reauthorization Act of 2014 (STELAR), Public Law 113-200, 128 Stat. 2059 (2014), and sections 1, 4(i), 303(r), 325, 338 and 614 of the Communications Act of 1934, as amended, 47 U.S.C. 151, 154(i), 303(r), 325, 338 and 534, this Report and Order is hereby adopted, effective thirty (30) days after the date of publication in the Federal Register.
95. It is further ordered that the Commission's rules are hereby amended as set forth in Appendix B of the Report and Order and will become effective November 2, 2015, except for 47 CFR 76.59(a) and (b), which contain information collection requirements that have not been approved by OMB. The Federal Communications Commission will publish a document in the Federal Register announcing the effective date.
96. It is further ordered that the Commission's Consumer and Governmental Affairs Bureau, Reference Information Center, shall send a copy of this Report and Order, including the Final Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business Administration.
List of Subjects in 47 CFR Part 76
Broadcast television, Cable television, Satellite television.
Federal Communications Commission.
Marlene H. Dortch,
Secretary.
Final Rules
For the reasons discussed in the preamble, the Federal Communications Commission amends 47 CFR part 76 as follows:
PART 76—MULTICHANNEL VIDEO AND CABLE TELEVISION SERVICE
1. The authority citation for part 76 continues to read as follows:
Authority:
47 U.S.C. 151, 152, 153, 154, 301, 302, 302a, 303, 303a, 307, 308, 309, 312, 315, 317, 325, 338, 339, 340, 341, 503, 521, 522, 531, 532, 534, 535, 536, 537, 543, 544, 544a, 545, 548, 549, 552, 554, 556, 558, 560, 561, 571, 572, 573.
2. Section 76.5 is amended by revising paragraph (gg) to read as follows:
§ 76.5
(gg) Satellite community. (1) For purposes of the significantly viewed rules (see § 76.54), a separate and distinct community or municipal entity (including unincorporated communities within unincorporated areas and including single, discrete unincorporated areas). The boundaries of any such unincorporated community may be defined by one or more adjacent five-digit zip code areas. Satellite communities apply only in areas in which there is no pre-existing cable community, as defined in paragraph (dd) of this section.
(2) For purposes of the market modification rules (see § 76.59), a county.
3. Section 76.7 is amended by revising paragraph (a)(3) to read as follows:
§ 76.7
(a) * * *
(3) Certificate of service. Petitions and Complaints shall be accompanied by a certificate of service on any cable television system operator, multichannel video programming distributor, franchising authority, station licensee, permittee, or applicant, or other interested person who is likely to be directly affected if the relief requested is granted.
4. Section 76.59 is amended by revising paragraphs (a), (b)(1) and (2), and (b)(5) and (6), adding paragraph (b)(7), revising paragraph (d), and adding paragraphs (e) and (f) to read as follows:
§ 76.59
(a) The Commission, following a written request from a broadcast station, cable system, satellite carrier or county government (only with respect to satellite modifications), may deem that the television market, as defined either by § 76.55(e) or § 76.66(e), of a particular commercial television broadcast station should include additional communities within its television market or exclude communities from such station's television market. In this respect, communities may be considered part of more than one television market.
(b) * * *
(1) A map or maps illustrating the relevant community locations and geographic features, station transmitter sites, cable system headend or satellite carrier local receive facility locations, terrain features that would affect station reception, mileage between the community and the television station transmitter site, transportation routes and any other evidence contributing to the scope of the market.
(2) Noise-limited service contour maps (for full-power digital stations) or protected contour maps (for Class A and low power television stations) delineating the station's technical service area and showing the location of the cable system headends or satellite carrier local receive facilities and communities in relation to the service areas.
Note to paragraph (b)(2):
Service area maps using Longley-Rice (version 1.2.2) propagation curves may also be included to support a technical service exhibit.
(5) Cable system or satellite carrier channel line-up cards or other exhibits establishing historic carriage, such as television guide listings.
(6) Published audience data for the relevant station showing its average all day audience ( i.e., the reported audience averaged over Sunday-Saturday, 7 a.m.-1 a.m., or an equivalent time period) for both multichannel video programming distributor (MVPD) and non-MVPD households or other specific audience indicia, such as station advertising and sales data or viewer contribution records.
(7) If applicable, a statement that the station is licensed to a community within the same state as the relevant community.
(d) A cable operator or satellite carrier shall not delete from carriage the signal of a commercial television station during the pendency of any proceeding pursuant to this section.
(e) A market determination under this section shall not create additional carriage obligations for a satellite carrier if it is not technically and economically feasible for such carrier to accomplish such carriage by means of its satellites in operation at the time of the determination.
(f) No modification of a commercial television broadcast station's local market pursuant to this section shall have any effect on the eligibility of households in the community affected by such modification to receive distant signals from a satellite carrier pursuant to 47 U.S.C. 339.
5. Section 76.66 is amended by adding paragraph (d)(6) and revising paragraph (e)(1) introductory text to read as follows:
§ 76.66
(d) * * *
(6) Carriage after a market modification. Television broadcast stations that become eligible for mandatory carriage with respect to a satellite carrier (pursuant to § 76.66) due to a change in the market definition (by operation of a market modification pursuant to § 76.59) may, within 30 days of the effective date of the new definition, elect retransmission consent or mandatory carriage with respect to such carrier. A satellite carrier shall commence carriage within 90 days of receiving the carriage election from the television broadcast station. The election must be made in accordance with the requirements in paragraph (d)(1) of this section.
(e) Market definitions. (1) A local market, in the case of both commercial and noncommercial television broadcast stations, is the designated market area in which a station is located, unless such market is amended pursuant to § 76.59, and
[FR Doc. 2015-24999 Filed 10-1-15; 8:45 am]
BILLING CODE 6712-01-P