[Federal Register Volume 81, Number 177 (Tuesday, September 13, 2016)]
[Rules and Regulations]
[Pages 62812-62813]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-20529]
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LIBRARY OF CONGRESS
Copyright Royalty Board
37 CFR Part 387
[Docket No. 15-CRB-0010-CA]
Adjustment of Cable Statutory License Royalty Rates
AGENCY: Copyright Royalty Board, Library of Congress.
ACTION: Final rule.
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SUMMARY: On April 26, 2016, the Copyright Royalty Judges (Judges)
published for comment proposed regulations governing royalty rates and
terms for the distant retransmission of over-the-air television and
radio broadcast stations by cable television systems to their
subscribers. The participants in the proceeding concluded their
negotiations and asked for readoption of the cable rate regulations
without change. The Judges accepted the negotiated settlement and did
not propose any substantive changes to the participants' proposed rates
and terms. However, the Judges' proposed regulations updated terms,
moved the rules to the chapter of the CFR that includes other
applicable rules of the Copyright Royalty Board, and proposed certain
other non-substantive changes to make the rules easier to read. The
Judges received comments from the Phase I parties on the proposed
changes and finding the suggested revisions therein clarified the rule,
accepted all of the proposed changes.
DATES: Effective: September 13, 2016.
Applicability date: January 1, 2015, through December 31, 2019.
ADDRESSES: The final rule is also posted on the agency's Web site
(www.loc.gov/crb).
FOR FURTHER INFORMATION CONTACT: Kimberly Whittle, Attorney Advisor, by
telephone at (202) 707-7658, or by email at [email protected].
SUPPLEMENTARY INFORMATION:
Background
On April 26, 2016, the Copyright Royalty Judges (Judges) published
for comment in the Federal Register proposed regulations governing
royalty rates and terms for the distant retransmission of over-the-air
television and radio broadcast stations by cable television systems to
their subscribers for the period 2015-2019. See 81 FR 24523. The
proposal was the result of a settlement between the National Cable &
Telecommunications Association, the American Cable Association, and a
group referring to itself as the ``Phase I Parties.'' \1\ The
settlement proposed that the extant rates, terms, and gross receipts
limitations remain unchanged through 2019. See 17 U.S.C. 111(d)(1)(B)
and 37 CFR 256.2(c)-(d). The notice included a request for comments
from interested parties as required by 17 U.S.C. 801(b)(7)(A).
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\1\ The ``Phase I Parties'' are the Program Suppliers, Joint
Sports Claimants, Public Television Claimants, Commercial Television
Claimants, Music Claimants, Canadian Claimants Group, National
Public Radio, and Devotional Claimants.
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The Judges received the following comments on the substance of the
proposal from the Phase I Parties:
Proposed Sec. 387.1, second sentence. The proposed language ``.
. . a cable system entity may engage in the activities set forth in
17 U.S.C. 111'' appears to be vague and overly broad as compared to
the scope of the Section 111 statutory license that is limited to
``secondary transmissions to the public by a cable system of a
performance or display of a work embodied in a primary transmission
made by a broadcast station'' under certain conditions that are set
forth in 17 U.S.C. 111(c). Accordingly, the Phase I Parties suggest
the above-quoted language of proposed Sec. 387.1 be changed to ``.
. . a cable system shall be subject to a statutory license
authorizing secondary transmissions of broadcast signals to the
extent provided in 17 U.S.C. 111.''
Proposed Sec. 387.2(a). The proposed language, ``the royalty
fee rates for secondary transmission by cable systems are those
established by 17 U.S.C. 111(d)(1)(B)(i)-(iv), as amended,'' is
potentially ambiguous in light of the express limitation at the
beginning of Section 111(d)(1)(B) that: ``Except in the case of a
cable system whose royalty fee is specified by subparagraph (E) or
(F).'' This limitation means that the royalty rates in subsections
(i)-(iv) of Section 111(d)(1)(B) apply to only one class of cable
systems--those with semi-annual gross receipts of $527,600 or more
(commonly known as ``Form 3 systems'')--not to all ``cable systems''
as the general reference in proposed Sec. 387.2(a) now suggests.
Accordingly, the Phase I Parties suggest that the above-quoted
language of proposed Sec. 387.2(a) be modified to incorporate the
statutory limitation, perhaps by revising the language to state ``.
. . by cable systems not subject to Sec. 387.2(b) of these
regulations . . . ''
Proposed Sec. 387.2(b). The use of ``alternate tiered rates''
in the title and body of this section is potentially confusing
because these rates are not ``alternate'' rates that might apply to
any cable system, but a separate set of rates, established by 17
U.S.C. 111(d)(1)(E) and (F), that apply to cable systems with less
than $527,600 in semi-annual gross receipts (commonly known as
``Form \1/2\ systems''). In addition, use of the phrase, ``tiered
rates,'' could cause some confusion because monthly subscriber fees
for cable service are almost universally based on ``tiered'' bundles
of programming services and rates. Accordingly, the Phase I Parties
suggest that the title of proposed Sec. 387.2(b) be changed to
``Rates for Certain Classes of Cable Systems,'' and the words
``alternate tiered'' be deleted from the text of the regulation.
Proposed Sec. 387.2(e). The language, ``Computation of royalty
fess shall be governed by 17 U.S.C. 111(d)(1)(C),'' is potentially
confusing because it might be read to suggest that any and all
aspects of the royalty fee computation can be determined by
reference to Section 111(d)(1)(C). While that paragraph identifies
the computation to be used in some specific situations that might
apply to some Form 3 systems, it does not address how some other key
components (e.g., gross receipts and distant signal equivalent
values) of the royalty fee calculation are determined, or how the
3.75 percent rate and syndicated exclusivity surcharge are computer.
Accordingly the Phase I Parties suggest that either Sec. 387.2(e)
be deleted in its entirety or it be rewritten to state:
``Computation of royalty fees shall be governed by 17 U.S.C. 111(d)
and 111(f), and 37 CFR 201.17.''
Comments of the Phase I Parties on Proposed Rule at 1-3 (May 17, 2016).
In addition to seeking comments on the proposed settlement, the
Judges also solicited comments on the Judges' proposed relocation of
the regulations to 37 CFR part 387, which includes other applicable
rules of the Copyright Royalty Board. The Judges likewise solicited
comments on certain non-substantive changes to the regulations to make
them easier to read. The Judges received no comments on the editorial
proposals.
The Judges' authority to adopt proposed settlements as statutory
rates and terms is codified in Section 801(b)(7)(A) of the Copyright
Act. That provision of the Act authorizes the Judges to adopt as a
basis for statutory terms and rates an agreement concerning such
matters reached among ``some or all of the participants'' in a
proceeding ``at any time during the proceeding'' except that the Judges
must provide an opportunity to comment on the agreement to those that
would be bound by the agreement. 17 U.S.C. 801(b)(7)(A)(i). In light of
the statutory requirements regarding adoption of settlements and the
absence of any opposition to the proposed settlement, the Judges find
that the proposed settlement (along with the revisions proposed by the
settling parties in their comments), which leaves the current rates and
terms unchanged and adjusts the regulatory language to improve
[[Page 62813]]
clarity and precision, provides a reasonable basis for setting
statutory terms and rates and, therefore, the Judges adopt the
settlement as proposed as well as the improved language.
Moreover, the Judges believe that the proposed change to the
placement of the extant regulations (i.e., relocating them to 37 CFR
part 387) and the non-substantive changes to the regulations are
reasonable and appropriate measures to consolidate related CRB
regulations and to make those regulations more comprehensible.
Therefore, the Judges adopt the regulations as proposed.
List of Subjects in 37 CFR Part 387
Cable television, Copyright, Royalties.
Final Regulations
0
In consideration of the foregoing, the Copyright Royalty Judges amend
37 CFR chapter III by adding part 387 to read as follows:
PART 387--ADJUSTMENT OF ROYALTY FEE FOR CABLE COMPULSORY LICENSE
Sec.
387.1 General.
387.2 Royalty fee for compulsory license for secondary transmission
by cable systems.
Authority: 17 U.S.C. 801(b)(2), 803(b)(6).
Sec. 387.1 General.
This part establishes adjusted terms and rates for royalty payments
in accordance with the provisions of 17 U.S.C. 111 and 801(b)(2)(A),
(B), (C), and (D). Upon compliance with 17 U.S.C. 111 and the terms and
rates of this part, a cable system shall be subject to a statutory
license authorizing secondary transmissions of broadcast signals to the
extent provided in 17 U.S.C. 111.
Sec. 387.2 Royalty fee for compulsory license for secondary
transmission by cable systems.
(a) Royalty fee rates. Commencing with the first semiannual
accounting period of 2015 and for each semiannual accounting period
thereafter, the royalty fee rates for secondary transmission by cable
systems not subject to paragraph (b) of this section are those
established by 17 U.S.C. 111(d)(1)(B)(i)-(iv), as amended.
(b) Rates for certain classes of cable systems. Commencing with the
first semiannual accounting period of 2015 and for each semiannual
accounting period thereafter, the alternate tiered royalty fee rates
for cable systems with certain levels of gross receipts as described in
17 U.S.C. 111(d)(1)(E) and (F), are those described therein.
(c) 3.75 percent rate. Commencing with the first semiannual
accounting period of 2015, and for each semiannual accounting period
thereafter, and notwithstanding paragraphs (a) and (d) of this section,
for each distant signal equivalent or fraction thereof not represented
by the carriage of:
(1) Any signal that was permitted (or, in the case of cable systems
commencing operations after June 24, 1981, that would have been
permitted) under the rules and regulations of the Federal
Communications Commission in effect on June 24, 1981 (former 47 CFR
76.1 through 76.617 (1980)); or
(2) A signal of the same type (that is, independent, network, or
non-commercial educational) substituted for such permitted signal; or
(3) A signal that was carried pursuant to an individual waiver of
(former 47 CFR 76.1 through 76.617 (1980)); in lieu of the royalty
rates specified in paragraphs (a) and (d) of this section, the royalty
rate shall be 3.75 percent of the gross receipts of the cable system
for each distant signal equivalent. Any fraction of a distant signal
equivalent shall be computed at its fractional value.
(d) Syndicated exclusivity surcharge. Commencing with the first
semiannual accounting period of 2015 and for each semiannual accounting
period thereafter, in the case of a cable system located outside the
35-mile specified zone of a commercial VHF station that places a
predicted Grade B contour, in whole or in part, over the cable system,
and that is not significantly viewed or otherwise exempt from the FCC's
syndicated exclusivity rules in effect on June 24, 1981 (former 47 CFR
76.151 through 76.617 (1980)), for each distant signal equivalent or
fraction thereof represented by the carriage of such commercial VHF
station, the royalty rate shall be, in addition to the amount specified
in paragraph (a) of this section:
(1) For cable systems located wholly or in part within a top 50
television market:
(i) 0.599 percent of such gross receipts for the first distant
signal equivalent;
(ii) 0.377 percent of such gross receipts for each of the second,
third, and fourth distant signal equivalents; and
(iii) 0.178 percent of such gross receipts for the fifth distant
signal equivalent and each additional distant signal equivalent
thereafter;
(2) For cable systems located wholly or in part within a second 50
television market:
(i) 0.300 percent of such gross receipts for the first distant
signal equivalent;
(ii) 0.189 percent of such gross receipts for each of the second,
third, and fourth distant signal equivalents; and
(iii) 0.089 percent of such gross receipts for the fifth distant
signal equivalent and each additional distant signal equivalent
thereafter;
(3) For purposes of this section ``first 50 major television
markets'' and ``second 50 major television markets'' shall be defined
as those terms are defined or interpreted in accordance with the
Federal Communications Commission rule ``Major television markets'' in
effect on June 24, 1981 (47 CFR 76.51 (1980)).
(e) Computation of rates. Computation of royalty fees shall be
governed by 17 U.S.C. 111(d) and 111(f) and 37 CFR 201.17.
Dated: June 28, 2016.
Suzanne M. Barnett,
Chief Copyright Royalty Judge.
Approved:
David S. Mao,
Acting Librarian of Congress.
[FR Doc. 2016-20529 Filed 9-12-16; 8:45 am]
BILLING CODE 1410-72-P