[Federal Register Volume 81, Number 206 (Tuesday, October 25, 2016)]
[Proposed Rules]
[Pages 73368-73377]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-25568]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 76
[MB Docket No. 16-41; FCC 16-129]
Promoting the Availability of Diverse and Independent Sources of
Video Programming
AGENCY: Federal Communications Commission.
ACTION: Proposed rule.
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SUMMARY: In this document, the Federal Communications Commission
(Commission) proposes to adopt rules that prohibit certain practices
some multichannel video programming distributors (MVPDs) use in their
negotiations for carriage of video programming that may impede
competition, diversity, and innovation in the video marketplace.
Specifically, the document proposes to prohibit the inclusion of
``unconditional'' most favored nation (MFN) provisions and unreasonable
alternative distribution method (ADM) provisions in program carriage
agreements between MVPDs and independent video programming vendors.
DATES: Comments are due on or before December 27, 2016; reply comments
are due on or before January 23, 2017.
ADDRESSES: You may submit comments, identified by MB Docket No. 16-41,
by any of the following methods:
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
Federal Communications Commission's Web site: http://fjallfoss.fcc.gov/ecfs2/. Follow the instructions for submitting
comments.
Mail: Filings can be sent by hand or messenger delivery,
by commercial
[[Page 73369]]
overnight courier, or by first-class or overnight U.S. Postal Service
mail. All filings must be addressed to the Commission's Secretary,
Office of the Secretary, Federal Communications Commission.
People with Disabilities: Contact the FCC to request reasonable
accommodations (accessible format documents, sign language
interpreters, CART, etc.) by email: [email protected] or phone: (202) 418-
0530 or TTY: (202) 418-0432.
FOR FURTHER INFORMATION CONTACT: For additional information on this
proceeding, contact Raelynn Remy or Calisha Myers of the Policy
Division, Media Bureau at [email protected], [email protected],
or (202) 418-2120.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Notice
of Proposed Rulemaking, FCC 16-129, adopted and released on September
29, 2016. The full text is available for public inspection and copying
during regular business hours in the FCC Reference Center, Federal
Communications Commission, 445 12th Street SW., Room CY-A257,
Washington, DC 20554. This document will also be available via ECFS at
https://ecfsapi.fcc.gov/file/0929819517733/FCC-16-129A1.pdf. Documents
will be available electronically in ASCII, Microsoft Word, and/or Adobe
Acrobat. 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 [email protected] or calling the Commission's Consumer and
Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432
(TTY).
Synopsis
1. We propose to adopt rules that prohibit the inclusion of
unconditional most favored nation and unreasonable alternative
distribution method provisions in carriage agreements between MVPDs and
independent video programming vendors.\1\ We seek comment below on our
authority to adopt these rules pursuant to Section 616(a) of the Act,
which directs the Commission to ``establish regulations governing
program carriage agreements and related practices between [MVPDs] and
video programming vendors.'' \2\ We believe that our proposed rules
will serve the objectives of Section 616 and the public interest by
removing obstacles to enhanced competition, programming diversity, and
innovation in the marketplace.
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\1\ The prohibitions we propose herein are targeted only at
contract clauses that harm competition, diversity and innovation
while providing no apparent public interest benefits. If these
proposals are adopted, independent programmers and MVPDs would have
latitude to include conditional MFN and reasonable ADM provisions in
their carriage agreements.
\2\ 47 U.S.C. 536(a).
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2. Application to ``Independent Video Programming Vendors.'' We
propose to apply the following rules to program carriage agreements
between MVPDs \3\ and ``independent video programming vendors.'' \4\ In
the NOI, we defined ``independent programmer'' as a programmer that is
not vertically integrated with an MVPD.\5\ Several commenters pointed
out, however, that for purposes of this proceeding, we should define
that term more narrowly to exclude established programmers that control
a significant share of the video programming marketplace and therefore
have bargaining leverage in carriage negotiations. Given this, we seek
comment on whether, for purposes of the proposed rules, the term
``independent video programming vendor'' should be defined more
narrowly to reflect that certain large programmers that are not
vertically integrated with an MVPD do not confront the same obstacles
in securing carriage for their content as smaller or niche programmers.
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\3\ Id. 522(13) (defining the term ``multichannel video
programming distributor'' to mean ``a person such as, but not
limited to, a cable operator, a multichannel multipoint distribution
service, a direct broadcast satellite service, or a television
receive-only satellite program distributor, who makes available for
purchase by subscribers or customers, multiple channels of video
programming''); 47 CFR 76.1000(e) (defining MVPD as ``an entity
engaged in the business of making available for purchase, by
subscribers or customers, multiple channels of video programming.
Such entities include, but are not limited to, a cable operator, a
BRS/EBS provider, a direct broadcast satellite service, a television
receive-only satellite program distributor, and a satellite master
antenna television system operator, as well as buying groups or
agents of all such entities.'').
\4\ Under this proposal, an ``independent video programming
vendor'' would be a subset of the ``video programming vendors''
covered by Section 616 of the Act. 47 U.S.C. 536. See also Liberman
Broadcasting, Inc. v. Comcast Corporation, MB Docket No. 16-121,
Memorandum Opinion and Order, 2016 WL 4494601, at *1. As noted in
the NOI, we do not address in this proceeding issues relating to
retransmission consent negotiations between MVPDs and broadcast
stations. NOI, 81 FR at 10243, n.3.
\5\ Id. at 10243, n.4.
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3. For example, as suggested by ITTA, should we define an
independent video programming vendor as a video programming vendor that
is not affiliated with a broadcast network, movie studio or MVPD?
Alternatively, or in combination with this approach, should we define
an independent video programming vendor based on whether such vendor
earns less than a threshold amount of annual gross revenue? If we were
to define an independent programmer based on its annual gross revenue,
what is the appropriate revenue threshold? Should we consider adopting
a revenue threshold that is based solely on programming license fees
and/or advertising revenue? Or are there other sources of revenue that
we should consider? An alternative to using a threshold based on
revenue is to define an independent programmer based on a programmer's
total assets or a combination of revenue and total assets.\6\ Under
this approach, what is the appropriate threshold for determining that a
programming vendor is ``independent,'' and how should that threshold be
calculated? If we were to define independent programmer based on its
revenue and/or assets, should a programmer that is affiliated with a
MVPD, a broadcaster, or another video programming vendor be attributed
with the revenue and/or assets of such affiliated entities? \7\ Or,
instead, should we exclude from the definition any programmer that is
affiliated with an MVPD, a broadcaster, or another video programming
vendor, regardless of its annual revenue or total assets? We also seek
comment on how a programmer could establish that it satisfies whatever
definition of independent video programming vendor we adopt. In
addition, we seek input on whether excluding larger programmers from
the protections that would be afforded by our proposed rules would have
any adverse impact on the video marketplace or consumers. To what
extent are larger programmers subject to the types of contract
provisions we are proposing to prohibit? Given the costs involved in
bringing a complaint to the Commission, would larger programmers be
more likely than smaller programmers to pursue relief through the
filing of a complaint? We seek comment on any other potential way to
define ``independent video programing
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vendor'' and on how any such definition would further the objectives of
this proceeding. Finally, we seek comment on whether certain of the
possible definitions of independent programmer would raise First
Amendment concerns.
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\6\ See 47 CFR 24.709(a)(1) (1994) (setting the threshold for
small entities at an annual gross revenue of less than $125 million
and total assets of less than $500 million).
\7\ The Commission has stated that, for the purpose of
determining whether a video programming vendor is affiliated with an
MVPD under Section 616, it would apply the attribution standards
applicable to its program access rules. Implementation of Sections
12 and 19 of the Cable Television Consumer Protection and
Competition Act of 1992, Development of Competition and Diversity in
Video Programming and Distribution, Second Report and Order, 9 FCC
Rcd 2642, 2650, para. 19 (1993) (Program Carriage Second Report and
Order).
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4. Prohibition on ``Unconditional'' MFN Provisions. We propose to
adopt a rule that prohibits the inclusion of unconditional MFN
provisions in carriage agreements between MVPDs and independent video
programming vendors. For the purpose of applying this rule, we propose
to define an unconditional MFN provision as ``a provision that entitles
an MVPD to contractual rights or benefits that an independent video
programming vendor has offered or granted to another video programming
distributor,\8\ without obligating the MVPD to accept any terms and
conditions that are integrally related, logically linked, or directly
tied \9\ to the grant of such rights or benefits in the other video
programming distributor's agreement, and with which the MVPD can
reasonably comply technologically and legally.'' \10\
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\8\ The term ``video programming distributor'' as used herein
includes both traditional MVPDs and alternative distributors of
video programming, such as OVDs. See ACA August 26 Ex Parte Letter
at 1, 8.
\9\ The phrase ``integrally related, logically linked, or
directly tied'' derives from DOJ's Proposed Final Judgment in its
review of the Charter Communications-Time Warner Cable (Charter-TWC)
transaction. U.S. v. Charter Communications, Inc. et al., Proposed
Final Judgment, Civil Action No. 16-cv-00759 at 5, Section IV.B.2.i.
(2016) (DOJ Charter-TWC Proposed Final Judgment). The relevant
merger condition, among other things, bars Charter-TWC from entering
into any agreement with a video programmer that creates incentives
to limit such programmer's provision of programming to OVDs,
including agreements that entitle Charter-TWC to receive contractual
benefits granted to an OVD ``without requiring [Charter-TWC] to also
accept any obligations, limitations, or conditions . . . that are
integrally related, logically linked, or directly tied to the . . .
grant of such . . . benefits.'' Id. (emphasis added). DOJ used this
phrase in crafting this condition because it found that such
language is consistent with that contained in conditional MFN
provisions industrywide. DOJ Charter-TWC Competitive Impact
Statement at 17, n.8.
\10\ The phrase ``reasonably comply technologically and
legally'' also derives from DOJ's Proposed Final Judgment in the
Charter-TWC transaction. DOJ Charter-TWC Proposed Final Judgment at
6, Section IV.B.2.ii. The relevant provision, which DOJ also found
to be consistent with conditional MFN provisions throughout the
industry, generally relieves Charter-TWC from having to comply with
related terms and conditions if it is unable to do so for
technological or regulatory reasons. DOJ Charter-TWC Competitive
Impact Statement at 17, n.8. See also DOJ Charter-TWC Proposed Final
Judgment at 6.
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5. In proposing this rule, we acknowledge that MFN provisions,
which have long been common in the industry, may have legitimate public
interest justifications, such as facilitating efficient negotiations by
enabling well-informed positions, encouraging investment in programming
by enabling MVPDs to adjust contract terms after an initial agreement
is executed, and broadening MVPD subscribers' access to video content
by allowing MVPDs to secure additional rights to programming. However,
we are not persuaded based on the record that such justifications exist
for MFN provisions that are unconditional and thus permit ``cherry
picking'' of the best contract terms. Because, as noted above,
unconditional MFN provisions entitle an MVPD to the most favorable
terms granted to other distributors without obligating the MVPD to
provide the same or equivalent consideration in exchange for those
terms, such provisions appear designed to discourage or foreclose the
wider distribution of video content, including on online platforms.
6. The record reflects, moreover, that this category of MFN
provisions can apply upward pressure on both wholesale and retail
prices for program content by reducing a programmer's incentive to cut
its carriage rates to any one distributor out of fear that doing so
would require it to reduce the rates charged to distributors with
unconditional MFN status without receiving any reciprocal benefits. As
a consequence, unconditional MFN provisions effectively limit the
flexibility of content providers to enter into unique deals with new
and emerging distributors, thereby impeding entry into program
production and distribution marketplaces and reducing consumer
choice.\11\ We also note that agreements resulting from the exercise of
unconditional MFN rights may not reflect marketplace conditions because
they disregard the balance struck in bilateral negotiations between the
programmer and rival distributor. While some MVPDs generally defend MFN
clauses on the basis that they provide certain pro-consumer benefits,
no party has identified any public interest benefits that accrue from
making such provisions unconditional. For these reasons, and consistent
with conditions imposed by the Department of Justice in approving the
Charter-TWC transaction,\12\ we tentatively conclude that the potential
harms to competition, diversity and innovation resulting from
unconditional MFN provisions outweigh any potential public interest
benefits.\13\
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\11\ See, e.g., Milunovich Remarks at 62:03; Newton Remarks at
130:30. See also Charter-TWC Order, 2016 WL 2858801, at *63, para.
221. The Commission has rejected the argument that MFN provisions
included in agreements between cable operators and local franchising
authorities reduce the incentives of a local franchising authority
to agree to a more favorable deal with overbuilders new to the
market. See, e.g., Implementation of Section 621(A)(1) of The Cable
Communications Policy Act of 1984, as amended by The Cable
Television Consumer Protection and Competition Act of 1992, Order on
Reconsideration, 30 FCC Rcd 810, 814 n.39 (2015). We note the
distinction between the incentives and interests of government
entities such as local franchising authorities (among them, public
interest concerns such as consumer costs) and those of commercial
programmers (for example, profit maximization). In the context of
wireline competition, the Commission has concluded that allowing
competitive local exchange carriers (CLECs) to cherry-pick terms and
conditions of service from incumbent local exchange carriers'
(ILECs) interconnection agreements with other ILECs impeded give-
and-take negotiations between ILECs and resulted in ``largely
standardized agreements with little creative bargaining,'' whereas
requiring CLECs to accept all terms of an agreement between an ILEC
and another party (``all-or-nothing'' approach) would encourage
ILECs to make trade-offs in negotiations that they were reluctant to
make under the ``pick and choose'' approach. Review of the Section
251 Unbundling Obligations of Incumbent Local Exchange Carriers,
Second Report and Order, 69 FR 43762, 43764, paras. 10-12 (July 22,
2004), aff'd, New Edge Network, Inc. v. FCC, 461 F.3d 1105, 1109-10
(9th Cir. 2006).
\12\ See, e.g., DOJ Charter-TWC Proposed Final Judgment at 5,
Section IV.B.2. But see AT&T-DIRECTV Order, 30 FCC Rcd at 9222,
para. 237. Although the Commission, in the AT&T-DIRECTV merger
proceeding, declined to adopt a transaction-specific condition due
to the absence of a supporting record, we have since developed
through the instant proceeding a record that demonstrates the
competitive harms resulting from unconditional MFN provisions.
\13\ As noted above, the record reveals no public interest
benefits that result from unconditional MFN provisions.
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7. We seek comment on this tentative conclusion and on whether the
purposes of Section 616 and the public interest would be served by
adopting the proposed rule. In addition, we seek comment on our
proposed definition of unconditional MFN provision and on any
alternative definitions. Should we be concerned that the proposed
definition is too narrow and thus would permit MVPDs to draft contract
language that avoids application of the prohibition? If so, how should
we address such concerns? Should any rules we adopt address MFN
provisions that are partially unconditional or effectively discourage
or foreclose wider distribution of content? We also seek input on our
proposal to ban unconditional MFN provisions that entitle an MVPD to
contractual rights that an independent programmer has negotiated with
any other video programming distributor. Should we be uniquely
concerned about the use of unconditional MFN provisions to harm
competition from nascent OVDs? Accordingly, should we prohibit only
unconditional MFN provisions that apply to terms an independent
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programmer has negotiated with an OVD? Recent merger conditions adopted
in DOJ's Proposed Final Judgment in the Charter-TWC merger have
precluded only unconditional MFN provisions that apply to terms
negotiated with OVDs.\14\ Should we take a similar approach in this
proceeding, or is it in the public interest to prohibit unconditional
MFN provisions that apply to a broader range of video programming
distributors? We seek comment on the costs and benefits of the rules
proposed above and any other rules that commenters assert would better
serve the public interest. To the extent possible, commenters should
quantify any identified costs and benefits. Are there any circumstances
in which unconditional MFN provisions may be beneficial to competition
or programming diversity? If so, are the potential public interest
benefits of allowing such provisions outweighed by the benefits of our
proposed prohibition?
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\14\ DOJ Charter-TWC Proposed Final Judgment at 5-6, Section
IV.A-C.
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8. We also seek comment on which, if any, of the Commission's
program carriage rules would need to be amended if we adopted the
proposed rule.\15\ What remedies and penalties should we impose on an
MVPD that violates the proposed prohibition on unconditional MFN
provisions? \16\ For example, would it be appropriate to order that the
unconditional MFN provision would be unenforceable starting on the
effective date of any new rule, or that it be replaced with a
conditional MFN provision? \17\ If we preclude MVPDs from enforcing
unconditional MFN provisions in existing contracts, should we also
afford parties some period of time to reform their contracts before the
Commission will take enforcement action? To what extent, if at all,
would costs, or other concerns, associated with pursuing a program
carriage complaint affect the ability of independent programmers to
obtain relief? Finally, we seek comment on what types of circumstances
could justify waiver of a rule precluding the use of unconditional MFN
provisions. Given the potential detrimental impact that such provisions
have on competition, programming diversity and innovation in the
marketplace, what, if any, situations would constitute ``good cause''
for permitting MFN provisions that otherwise would be precluded under
our proposed rules? \18\
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\15\ 47 CFR 76.1300-1302. In particular, we seek comment on
whether any rule revisions would be needed in addition to, or
instead of, those set forth herein.
\16\ We note that Section 616 of the Act and its implementing
rules authorize the Commission to prescribe appropriate penalties
and remedies, including carriage, for a violation of the program
carriage provisions. See 47 U.S.C. 536(a)(5); 47 CFR 76.1302(j).
\17\ See DOJ Charter-TWC Proposed Final Judgment at 5, Section
IV.A.
\18\ See 47 CFR 1.3.
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9. Prohibition on ``Unreasonable'' ADM Provisions. We also propose
to adopt a rule that prohibits the inclusion of an unreasonable ADM
provision in a carriage agreement between an MVPD and an independent
video programming vendor. As with MFN clauses, we recognize that ADM
provisions, which are a form of exclusivity, can have valid public
interest justifications. For example, they may incentivize MVPDs to
invest in new or emerging programming sources, including independent or
niche content and/or content targeted to underserved audiences. We also
recognize that, as with MFN provisions, the use of ADM clauses is a
longstanding industry practice, and that there is a broad variety of
ADM restrictions in programming contracts today. Based on the record,
however, it appears that certain restrictive ADM provisions have no
discernibly pro-competitive justifications and have an adverse impact
on the provision of diverse programming sources to consumers. As DOJ
has found, such provisions also ``negatively affect OVDs' business
models and undermine their ability to provide robust video offerings
that compete with the offerings of traditional MVPDs,'' \19\ which can
lead to ``lower-quality services, fewer consumer choices, and higher
prices.'' \20\
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\19\ DOJ Charter-TWC Competitive Impact Statement at 14.
\20\ Id.
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10. We tentatively conclude that in determining whether a
particular ADM provision is ``unreasonable,'' we will consider, among
other factors, the extent to which an ADM provision prohibits an
independent programmer from licensing content to other distributors,
including OVDs. Although the issue of whether a particular ADM clause
is ``unreasonable'' would be fact-specific and determined in the
context of a complaint proceeding brought under Section 616 of the Act
under our proposal,\21\ certain ADM provisions appear unlikely to yield
any procompetitive benefits that would outweigh the attendant public
interest harms. Such ADM provisions include those that: (i) Bar an
independent programmer from licensing content, for an extended time
period or indefinitely, to an OVD that distributes content for free to
consumers; \22\ (ii) bar an independent programmer from licensing
content, for any period of time, to an OVD that distributes content to
paying subscribers; \23\ (iii) bar an independent programmer from
licensing content to an OVD unless or until the OVD meets conditions
that are difficult to satisfy in a timely manner or are designed to
undermine the OVD's ability to compete; \24\ or (iv) provide for any
pecuniary or non-pecuniary penalty or adverse impact on an independent
programmer for the provision of its video programming to an OVD.\25\ We
tentatively conclude that ADM provisions that include any of these
factors should be deemed presumptively unreasonable.
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\21\ 47 CFR 76.1302.
\22\ See DOJ Charter-TWC Competitive Impact Statement at 12.
\23\ The only type of ADM provisions permissible under DOJ's
Proposed Final Judgment in Charter-TWC are those that restrict the
free distribution of programming online. The Proposed Final Judgment
therefore restricts all ADM provisions that apply to paid
distribution online. DOJ Charter-TWC Proposed Final Judgment at 5-6,
Section IV.B-C.
\24\ DOJ cited this as another example of a problematic ADM
provision in its review of the Charter-TWC transaction. For example,
DOJ noted one instance in which an ADM clause in one MVPD's contract
with a video programmer prohibited the programmer from licensing its
content to any OVD unless the OVD offered a package that included 35
channels, including at least two channels each from three out of a
list of six large programmers. DOJ Charter-TWC Competitive Impact
Statement at 12, n.5. See also Richard Greenfield Remarks, Media
Bureau Workshop on the State of the Video Marketplace, at 71:58
(Mar. 21, 2016), https://www.fcc.gov/news-events/events/2016/03/media-bureau-workshop-state-video-marketplace#acc2.
\25\ For example, such penalties could include rate reductions,
re-tiering or repositioning penalties, termination rights for the
MVPD, or loss or waiver of any rights or benefits otherwise
available to the video programmer. DOJ Charter-TWC Proposed Final
Judgment at 5, Section IV.B.1.
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11. We believe that our proposed rule, which proscribes only
``unreasonable'' ADM provisions, would ensure that MVPDs cannot use ADM
provisions to harm the development of nascent competition, while
preserving independent programmers' and distributors' respective
incentives to develop quality program content and invest in independent
and diverse programming sources. Or would prohibiting such ADM
provisions make it less likely that MVPDs would agree to carry
independent programmers or would seek to enter into exclusive
programming agreements with them that would limit rather than expand
their carriage opportunities? We seek comment on our tentative
conclusions and proposed framework for determining whether an ADM
clause is unreasonable. How should we define an ``extended time
period'' for the purpose
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of our first proposal in the preceding paragraph? In addition, we seek
comment on how an MVPD could rebut an independent programmer's showing
that the ADM provisions noted above are unreasonable.
12. In addition, we tentatively conclude that an ADM provision that
prohibits an independent video programming vendor from distributing
programming, for which the MVPD has agreed to pay, to consumers for
free over the Internet for a limited period after the programming's
initial airing on a linear MVPD service should be deemed presumptively
reasonable. Establishing such a presumption would be consistent with
conditions imposed in the Comcast-NBCU and Charter-TWC merger
proceedings that permit the respective combined entities to prevent a
programmer from making its content available on the Internet for free
for 30 days after its initial airing, if such entities paid a fee for
that content.\26\ We seek comment on this proposed presumption and on
the time frame that should apply if we adopt it. Should it be
presumptively reasonable for a carriage agreement to include an
exclusivity window of 30 days vis-[agrave]-vis the free provision of
programming online, or should the window be shorter or longer? Is
allowing an MVPD to restrict free online distribution for 30 days
generally consistent with industry practice? In addition, does a 30-day
limit adequately balance our interest in ensuring ADM provisions do not
inhibit the development of OVDs, while at the same time affording MVPDs
a reasonable opportunity to protect their investment in high quality
programming? Should the specified window (e.g., 30 days) apply only to
certain types of programming (e.g., scripted programming)? Would a
different time period be more reasonable in the case of ``time
sensitive'' programming (e.g., live sports or news) that may lose its
value to the public before thirty days after its initial airing?
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\26\ Applications of Comcast Corporation, General Electric
Company and NBC Universal, Inc. for Consent to Assign Licenses and
Transfer Control of Licensees, Memorandum Opinion and Order, 26 FCC
Rcd 4238, 4361, App. A, Condition IV.B.3.a. (Comcast-NBCU Order);
DOJ Charter-TWC Proposed Final Judgment at 6, Section IV.C.1. In its
review of the Charter-TWC transaction, DOJ explained that such
limitations on free distribution were ``ubiquitous in the industry''
and that there was ``no evidence that such provisions are harmful to
competition.'' DOJ Charter-TWC Competitive Impact Statement at 17.
See also Comcast-NBCU Comments at 31.
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13. We also seek input on the type of evidence that would be needed
to rebut a positive presumption. What type of showing should be
sufficient to overcome the presumption of reasonableness? As an
alternative to establishing rules based on presumptions, should we
adopt a bright line rule that defines and expressly prohibits certain
types of ADM provisions?
14. We also tentatively conclude that an ADM provision that grants
an MVPD the universally exclusive right to distribute an independent
video programming vendor's content should be deemed presumptively
reasonable. We recognize that this type of blanket exclusivity long has
been common in the video programming industry and does not appear to
raise the same competitive concerns as ADMs targeted at OVDs.\27\ This
type of presumption also would be consistent with the conditions
imposed by DOJ in the Charter-TWC merger proceeding.\28\ We seek input
on this proposed presumption. What type of showing would be sufficient
to overcome this presumption of reasonableness? As an alternative to
establishing this presumption, should we deem an ADM provision that
grants an MVPD the universally exclusive right to distribute
independent programming content to be outside the scope of the proposed
rule, and thus permissible?
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\27\ AT&T-DIRECTV Order, 30 FCC Rcd at 9198, para. 179.
\28\ DOJ Charter-TWC Proposed Final Judgment at 6, Section
IV.C.2.
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15. We also seek comment on whether adoption of a rule prohibiting
unreasonable ADM provisions and our proposed framework for the rule
would warrant any rule revisions besides those set forth herein. In
particular, which, if any, of the Commission's program carriage rules
would need to be amended if we adopted the proposed rule? What remedies
and penalties should we impose on an MVPD that violates the proposed
prohibition on unreasonable ADM provisions? \29\ For example, would it
be appropriate for the Media Bureau to order that an unreasonable ADM
provision not be enforced or be replaced with an ADM provision with
reasonable terms? If we adopt rules prohibiting the use of certain
types of ADM clauses, should we preclude MVPDs from enforcing existing
contracts that include such a clause? If we preclude MVPDs from
enforcing unreasonable ADM provisions in existing contracts, would it
be necessary to require them to amend their contracts? If so, how much
time should be afforded for these amendments?
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\29\ In implementing Section 616, the Commission stated that if
it were to find that a carriage agreement ``includes a coerced . . .
exclusivity requirement in violation of Section 616, the appropriate
remedy may simply be to determine that such terms are unenforceable
by the [MVPD], and to revise the existing agreement, ordering
carriage on the same terms negotiated in that agreement without the
. . . coerced promise of exclusivity.'' Program Carriage Second
Report and Order, 9 FCC Rcd at 2653, n.47.
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16. To what extent, if at all, would the costs associated with
pursuing a program carriage complaint affect the ability of independent
programmers to obtain relief? We seek comment on the costs and benefits
of the proposals above and any others that commenters assert would
better serve the public interest. To the extent possible, commenters
should quantify any identified costs and benefits. We also seek comment
on whether there are any circumstances in which the kinds of ADM
provisions we propose to prohibit are beneficial to competition or
programming diversity. If so, are the potential public interest
benefits of allowing such provisions outweighed by the benefits of a
prohibition?
17. In addition, we seek comment on whether there are other kinds
of ADM provisions that we should deem to be presumptively reasonable or
presumptively unreasonable. We also invite comment on what
circumstances could justify waiver of a rule prohibiting the use of
unreasonable ADM provisions in agreements between MVPDs and independent
video programming vendors. In light of the potential detrimental impact
that unreasonable ADM provisions have on competition, diversity, and
innovation in the marketplace, what, if any, situations would
constitute ``good cause'' for permitting an MVPD to include in a
carriage contract an ADM provision that otherwise would be precluded
under our proposed rules?
18. Additional Rules. We also seek comment on whether, if we were
to adopt the rules proposed above, we should adopt additional
provisions that protect against retaliation by MVPDs if independent
programmers bring complaints with regard to unconditional MFN or
unreasonable ADM provisions.\30\ Alternatively, should we consider
adopting a rule that prohibits a broader range of retaliatory conduct
by MVPDs, including retaliation against
[[Page 73373]]
programmers that refuse to agree to unconditional MFN clauses,
unreasonable ADM clauses, or other carriage-related demands? We note,
for example, that conditions imposed in the Comcast-NBCU and Charter-
TWC transaction proceedings include provisions that bar retaliatory
conduct by the combined entities.\31\ Such rules also would be
harmonious with Section 616(a)(2) and its implementing rules, which
prohibit MVPDs from, among other things, retaliating against video
programming vendors for failing to provide exclusive rights against
other MVPDs as a condition of carriage.\32\ Parties urging the adoption
of rules to address retaliatory conduct should specify the kinds of
actions that should be restricted or prohibited. Should we adopt other
rules designed to protect independent programmers from retaliation,
such as rules that provide for a heightened level of confidentiality
when a programmer brings a complaint to the Commission?
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\30\ We note that the Commission in 2011 proposed to amend its
rules to prohibit an MVPD from, among other things, retaliating
against a video programming vendor for filing a program carriage
complaint if the effect of such conduct is to unreasonably restrain
the ability of the video programming vendor to compete fairly.
Revision of the Commission's Program Carriage Rules, MB Docket Nos.
07-42, 11-131, Second Report and Order and Notice of Proposed
Rulemaking, 76 FR 60675, 60692-94, paras. 60-67 (Sept. 29, 2011)
(Program Carriage NPRM).
\31\ See Comcast-NBCU Order, 26 FCC Rcd at 4363-64, App. A,
Condition IV.G.1.d.; id. at 4287, para. 121; DOJ Charter-TWC
Competitive Impact Statement at 18-19.
\32\ 47 U.S.C. 536(a)(2); 47 CFR 76.1301(b). See also H.R. Rep.
No. 102-628, 102d Cong., 2d Sess. at 110 (1992) (House Report)
(stating that ``[t]he regulations [to implement Section 616(a)(2)]
should be designed to prevent a cable operator from taking any kind
of retaliatory action against a programmer for refusing to grant
exclusivity to the operator''); H.R. Rep. No. 102-862, 102d Cong.,
2d Sess. at 83 (1992) (Conference Report).
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19. We also seek comment on what, if any, additional rules we
should consider to advance competition, diversity, and innovation in
the marketplace. In particular, are there other specific actions we can
take to provide greater opportunities for distribution of programming
from new video programming vendors, including minorities and women, or
programming directed at minority, underserved, or female viewers? Are
there any actions we can take to protect consumers from programming
disruptions resulting from an MVPD's decision to drop an independent
video programmer from its lineup? For example, would the public
interest be served, as RFD-TV suggests, by adopting a rule that permits
MVPD subscribers to cancel, without penalty, a subscription television
package within a specified time period, e.g., 90 days, after the MVPD
has dropped such programmer from its lineup? \33\ In addition, we seek
comment on whether MVPDs engage in other negotiating practices that
hamper the ability of independent programmers to secure distribution of
their content. To the extent MVPDs engage in such practices, we seek
comment on whether the public interest would be served by requiring
MVPDs to negotiate carriage agreements with independent video
programming vendors in good faith.\34\ We also seek further comment on
bundling practices by video programming vendors.\35\ Specifically, how,
if at all, do bundling practices affect MVPDs' ability to carry
independent programmers? Is bundling by large programmers as widespread
as some in the record suggest? Do small MVPDs face greater demands to
accept bundles than large MVPDs? Do programmers act differently in
their negotiations with buying groups, such as the National Cable
Television Cooperative (NCTC), than they do in negotiations with MVPDs
that negotiate on their own behalf? Do programmers insist on bundling
even with respect to capacity constrained MVPDs, or do they provide
relief for such systems? What is the impact of bundling on small MVPDs
relative to large MVPDs? How does bundling impact consumer costs,
choice, and access to diverse programming? Are there other marketplace
conditions that magnify the effects (harmful or beneficial) of
bundling?
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\33\ We note that the rules currently require customers to be
notified of any changes in rates, programming services, or channel
positions as soon as possible in writing, and with an advanced
notice of 30 days or more if the change is within the operator's
control. 47 CFR 76.1603(b).
\34\ We note that in the 2011 Program Carriage NPRM, the
Commission proposed to adopt a good faith negotiation requirement
under Section 616 of the Act that would apply to vertically
integrated MVPDs. Program Carriage NPRM, 76 FR at 60694-95, paras.
68-71.
\35\ NOI, 81 FR at 10244-45.
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20. Legal Authority. We seek comment on the Commission's legal
authority under Section 616 of the Act \36\ to adopt rules prohibiting
the use of unconditional MFN and unreasonable ADM provisions in program
carriage agreements between MVPDs and independent video programming
vendors, as proposed above. Section 616(a) provides, in relevant part,
that ``the Commission shall establish regulations governing program
carriage agreements and related practices between cable operators or
other [MVPDs] and video programming vendors.'' \37\ We believe this
provision reasonably can be read to grant general rulemaking authority
to the Commission to adopt a prohibition on unfair, unreasonable, and/
or anticompetitive practices employed by MVPDs when negotiating
carriage agreements, including the use of certain contract provisions
in agreements with independent programmers.
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\36\ 47 U.S.C. 536.
\37\ Id. 536(a). In addition, Section 616(b) defines the term
``video programming vendor'' as ``a person engaged in the
production, creation, or wholesale distribution of video programming
for sale.'' Id. 536(b).
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21. Specifically, we seek comment on whether the Commission's grant
of authority under Section 616(a) to adopt rules ``governing program
carriage agreements and related practices between [MVPDs] and video
programming vendors'' is sufficiently broad to enable us to prohibit
the use of unconditional MFN or unreasonable ADM provisions. As noted
above, the rules we propose will apply to agreements between MVPDs and
``independent video programming vendors,'' which are encompassed within
the term ``video programming vendor.'' \38\ We believe these rules will
advance Congress's intent in enacting Section 616 ``to stem and reduce
the potential for abusive or anticompetitive actions [by MVPDs] against
programming entities.'' \39\ Congress expressed concern that MVPDs may
be able ``to extract concessions from programmers'' which ``could
discourage entry of new programming services, restrict competition,
impact adversely on diversity, and have other undesirable effects on
program quality and viewer satisfaction.'' \40\ Consistent with the
intent of Section 616, our proposals are designed to enhance
competition in the video programming marketplace and are predicated on
the belief that ``competition is essential both for ensuring diversity
in programming and for protecting consumers from potential abuses by
cable operators possessing market power'' and other MVPDs.\41\
---------------------------------------------------------------------------
\38\ 47 U.S.C. 536(b).
\39\ House Report at 27.
\40\ Id. at 42-43.
\41\ Id. at 43.
---------------------------------------------------------------------------
22. Some commenters argue that Section 616 is only a limited grant
of authority to the Commission. For example, AT&T contends that the
Commission has authority under Section 616 only to address conduct that
violates one of three proscriptions set forth in the subsections of
Section 616(a). Consistent with our previous determination that
``[Section 616] does not preclude the Commission from adopting
additional requirements beyond the six listed in the statute,'' we are
not persuaded that Congress intended to limit the Commission's
regulatory authority to only those practices specifically listed in
Section 616(a).\42\ The introductory language in Section 616(a) grants
the Commission broad authority to ``establish regulations governing
program carriage agreements
[[Page 73374]]
and related practices between cable operators and multichannel video
programming distributors and video programming vendors,'' and nothing
in the statute expressly precludes the Commission from establishing
rules besides those specifically listed.\43\ Furthermore, the
subsections relating to substantive requirements, subsections
616(a)(1)-(a)(3), are introduced by the verbs ``include'' or
``contain,'' which suggests that such requirements are not exhaustive.
Where Congress intends to limit the Commission's rulemaking authority
to specified areas, it has done so expressly.\44\
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\42\ Program Carriage NPRM, 76 FR at 60693, para. 65.
\43\ See generally 47 U.S.C. 536.
\44\ See, e.g., id. 613(f)(1), (2) (directing the Commission to
reinstate its video description regulations adopted in Report and
Order, 65 FR 54805 (Sept. 11, 2000), and to modify those rules
``only as follows'').
---------------------------------------------------------------------------
23. Although the first sentence of Section 616(a) directs the
Commission to adopt implementing rules ``[w]ithin one year after
October 5, 1992,'' \45\ we do not believe that the timing requirement
in Section 616(a) means that the Commission's rulemaking authority
under that Section expired more than 20 years ago. As we have explained
previously, the Commission's authority under a statutory provision does
not expire when a statutory deadline for implementation passes.\46\
Indeed, the view that the Commission's authority expires with passage
of a deadline would be at odds with judicial precedent regarding
statutory deadlines, which are generally considered directory rather
than mandatory.\47\
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\45\ Id. 536(a).
\46\ Review of the Commission's Program Access Rules, First
Report and Order, 25 FCC Rcd 746, 752, n.23 (2010), aff'd in part
and vacated in part on other grounds, Cablevision v. FCC, 649 F.3d
695 (2011). See also Connect America Fund et al., Report and Order
and Further Notice of Proposed Rulemaking, 26 FCC Rcd 17663, 17918,
para. 767, n.1381 (2011); Brock v. Pierce County, 476 U.S. 253, 260,
262 (1986); Gottlieb v. Pe[ntilde]a, 41 F.3d 730, 733 (D.C. Cir.
1994).
\47\ We note that, although the Commission amended its program
carriage rules several times after October 5, 1993, no party has
challenged those actions on the grounds that the Commission lacked
authority to adopt or revise such rules after that date.
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24. We also believe that our proposed rules are consistent with the
overall structure and intent of Section 616(a). Although Sections
616(a)(1) and 616(a)(2) prohibit an MVPD from ``requiring'' or
``coercing'' programmers to accept certain terms as a condition of
carriage on its systems,\48\ we do not believe that our rulemaking
authority under Section 616(a) is limited to those practices delineated
in the subsections. In any case, based on the record, we find that
independent programmers generally do not agree to unconditional MFN or
unreasonable ADM provisions voluntarily, but rather, are forced to
accept such provisions because they lack sufficient bargaining leverage
to resist MVPDs' demands for such provisions. Thus, we find it
reasonable to conclude that independent programmers agree to
unconditional MFN and unreasonable ADM provisions only because MVPDs
require them as a condition of carriage. We seek comment on this
analysis. Does the use of the terms ``requiring'' and ``coercing'' in
the subsections of 616(a) affect the scope of our rulemaking authority
under this provision? We also seek comment on whether or to what extent
Congress's particular concerns about vertical integration as expressed
in Section 616's legislative history should factor into our
determination about the scope of our authority to prohibit the use of
unconditional MFN and unreasonable ADM provisions under Section
616.\49\ In addition, we seek comment on any constitutional issues that
we should consider in determining whether to adopt the proposed rules.
---------------------------------------------------------------------------
\48\ 47 U.S.C. 536(a)(1) through (a)(2).
\49\ See, e.g., S. Rep. No. 102-92, 102d Cong., 2d Sess., at 24-
29 (1991) (Senate Report); House Report at 41.
---------------------------------------------------------------------------
25. We seek comment on whether other provisions of the Act provide
an alternative or an additional basis for the adoption of rules
addressing restrictive MFN and ADM provisions. For example, does
Section 616(a)(3) of the Act provide a basis for proscribing
restrictive MFN and ADM provisions? Section 616(a)(3) directs the
Commission to adopt rules ``designed to prevent [an MVPD] from engaging
in conduct the effect of which is to unreasonably restrain the ability
of an unaffiliated video programming vendor to compete fairly by
discriminating in video programming distribution on the basis of
affiliation or nonaffiliation of vendors in the selection, terms, or
conditions for carriage of video programming provided by such
vendors.'' \50\ Is the Commission authorized under that provision, for
example, to adopt rules that prohibit vertically integrated MVPDs from
including unconditional MFN and unreasonable ADM clauses in carriage
agreements with independent video programming vendors, where such MVPDs
do not include the same clauses in carriage agreements with affiliated
programming networks? If so, would the application of such rules only
to vertically integrated MVPDs adequately address the competition and
diversity concerns raised by restrictive MFN and ADM clauses? Would a
nondiscrimination requirement be effective given that an MVPD could
enter into the same restrictive MFN and/or ADM provision with both the
affiliated and unaffiliated programming network but simply not exercise
its rights with respect to the affiliated network? To the extent that
parties assert that Section 616(a)(3) authorizes adoption of the
proposed rules, we seek comment on whether an independent video
programming vendor would have ready access to the kind of information
needed to prove unlawful program carriage discrimination under Section
616(a)(3), given that such clauses are contained in carriage contracts
that are not generally subject to public disclosure.
---------------------------------------------------------------------------
\50\ 47 U.S.C. 536(a)(3).
---------------------------------------------------------------------------
26. We also seek input on whether any provisions of Section 628
serve as a valid basis for establishing rules to address restrictive
MFN and ADM provisions. Consistent with the goal of our proposed rules,
we note that the purpose of Section 628 is to ``increase[e] competition
and diversity in the [MVPD] market . . . and to spur the development of
communications technologies.'' \51\ In addition, Section 628(b)
prohibits ``a cable operator . . . or a satellite broadcast programming
vendor [from engaging] in unfair methods of competition or unfair or
deceptive acts or practices, the purpose or effect of which is to
hinder significantly or to prevent any [MVPD] from providing . . .
programming to subscribers or consumers.'' \52\ And Section 628(c)(1)
directs the Commission to ``prescribe regulations to specify particular
conduct that is prohibited by [Section 628(b)]'' in order to
``increase[e] competition and diversity in the [MVPD] market and the
continuing development of communications technologies.'' \53\ Given
that Section 628(b) appears to target only methods, acts, and practices
that adversely affect MVPDs, can the Commission lawfully invoke this
provision to proscribe, as an ``unfair'' method, act or practice, the
use of certain MFN and ADM provisions in agreements between MVPDs and
independent video programming vendors? For example, could Section
628(b) be invoked based on evidence that such MFN and ADM provisions
adversely affect small MVPDs? Given
[[Page 73375]]
that direct broadcast satellite (DBS) carriers are not subject to the
provisions of Section 628, would reliance on that provision to limit
the use of restrictive MFN and ADM provisions lead to a disparity in
regulatory treatment among MVPDs? Finally, we seek comment on whether
there are other provisions of the Act that potentially vest the
Commission with authority to adopt rules addressing restrictive MFN and
ADM provisions.\54\
---------------------------------------------------------------------------
\51\ Id. 548(a).
\52\ Id. 548(b). The term ``satellite broadcast programming
vendor'' means ``a fixed service satellite carrier that provides
service pursuant to Section 119 of title 17, United States Code,
with respect to satellite broadcast programming.'' Id. 548(i)(4); 47
CFR 76.1000(g).
\53\ 47 U.S.C. 548(c)(1).
\54\ Although we suggested in the NOI that Section 257 of the
Act could provide a basis for adopting such rules, we note that
section 257(a) directs the Commission, among other things, to
``complete a proceeding for the purpose of identifying and
eliminating, by regulations pursuant to its authority under this Act
(other than [Section 257]), market entry barriers for entrepreneurs
and other small businesses in the provision and ownership of
telecommunications and information services, or in the provision of
parts or services to providers of telecommunications services and
information services.'' 47 U.S.C. 257(a) (emphasis added). We read
this provision, therefore, to authorize the adoption of rules to
eliminate the specified entry barriers only if such rules are
expressly authorized by provisions of the Act other than Section
257. But see TheBlaze Comments at 10. We seek comment on our
interpretation.
---------------------------------------------------------------------------
Initial Paperwork Reduction Act Analysis
27. This document does not contain proposed new or revised
information collection requirements subject to the Paperwork Reduction
Act of 1995, Public Law 104-13 (44 U.S.C. 3501-3520). In addition,
therefore, it does not contain any new or modified ``information burden
for small business concerns with fewer than 25 employees'' pursuant to
the Small Business Paperwork Relief Act of 2002, Public Law 107-198,
see 44 U.S.C. 3506(c)(4).
A. Ex Parte Rules
28. Permit-But-Disclose. This proceeding shall be treated as a
``permit-but-disclose'' proceeding in accordance with the Commission's
ex parte rules.\55\ Persons making ex parte presentations must file a
copy of any written presentation or a memorandum summarizing any oral
presentation within two business days after the presentation (unless a
different deadline applicable to the Sunshine period applies). Persons
making oral ex parte presentations are reminded that memoranda
summarizing the presentation must (i) list all persons attending or
otherwise participating in the meeting at which the ex parte
presentation was made, and (ii) summarize all data presented and
arguments made during the presentation. If the presentation consisted
in whole or in part of the presentation of data or arguments already
reflected in the presenter's written comments, memoranda or other
filings in the proceeding, the presenter may provide citations to such
data or arguments in his or her prior comments, memoranda, or other
filings (specifying the relevant page and/or paragraph numbers where
such data or arguments can be found) in lieu of summarizing them in the
memorandum. Documents shown or given to Commission staff during ex
parte meetings are deemed to be written ex parte presentations and must
be filed consistent with rule 1.1206(b). In proceedings governed by
rule 1.49(f) or for which the Commission has made available a method of
electronic filing, written ex parte presentations and memoranda
summarizing oral ex parte presentations, and all attachments thereto,
must be filed through the electronic comment filing system available
for that proceeding, and must be filed in their native format (e.g.,
.doc, .xml, .ppt, searchable .pdf). Participants in this proceeding
should familiarize themselves with the Commission's ex parte rules.
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\55\ 47 CFR 1.1200 et seq.
---------------------------------------------------------------------------
B. Filing Requirements
29. Comments and Replies. Pursuant to Sections 1.415 and 1.419 of
the Commission's rules, 47 CFR 1.415, 1.419, interested parties may
file comments and reply comments on or before the dates indicated on
the first page of this document. Comments may be filed using the
Commission's Electronic Comment Filing System (ECFS). See Electronic
Filing of Documents in Rulemaking Proceedings, 63 FR 24121 (1998).
Electronic Filers: Comments may be filed electronically
using the Internet by accessing the ECFS: http://fjallfoss.fcc.gov/ecfs2/.
Paper Filers: Parties who choose to file by paper must
file an original and one copy of each filing. If more than one docket
or rulemaking number appears in the caption of this proceeding, filers
must submit two additional copies for each additional docket or
rulemaking number.
Filings can be sent by hand or messenger delivery, by commercial
overnight courier, or by first-class or overnight U.S. Postal Service
mail. All filings must be addressed to the Commission's Secretary,
Office of the Secretary, Federal Communications Commission.
30. Availability of Documents. Comments, reply comments, and ex
parte submissions will be available for public inspection during
regular business hours in the FCC Reference Center, Federal
Communications Commission, 445 12th Street SW., CY-A257, Washington, DC
20554. These documents will also be available via ECFS. Documents will
be available electronically in ASCII, Microsoft Word, and/or Adobe
Acrobat.
31. People with Disabilities. To request materials in accessible
formats for people with disabilities (Braille, large print, electronic
files, audio format), send an email to [email protected] or call the FCC's
Consumer and Governmental Affairs Bureau at (202) 418-0530 (voice),
(202) 418-0432 (TTY).
C. Additional Information
32. For additional information on this proceeding, contact Raelynn
Remy or Calisha Myers of the Policy Division, Media Bureau, at
[email protected], [email protected], or (202) 418-2120.
Initial Regulatory Flexibility Act Analysis
33. As required by the Regulatory Flexibility Act of 1980, as
amended (RFA),\56\ the Commission has prepared this present Initial
Regulatory Flexibility Act Analysis (IRFA) concerning the possible
significant economic impact on small entities by the policies and rules
proposed in the Notice of Proposed Rulemaking (NPRM). Written public
comments are requested on this IRFA. Comments must be identified as
responses to the IRFA and must be filed by the deadlines for comments
provided on the first page of the NPRM. The Commission will send a copy
of the NPRM, including this IRFA, to the Chief Counsel for Advocacy of
the Small Business Administration (SBA).\57\ In addition, the NPRM and
IRFA (or summaries thereof) will be published in the Federal
Register.\58\
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\56\ 5 U.S.C. 603. The RFA, 5 U.S.C. 601 through 612, has been
amended by the Small Business Regulatory Enforcement Fairness Act of
1996 (SBREFA), Public Law 104-121, Title II, 110 Stat. 857 (1996).
The SBREFA was enacted as Title II of the Contract with America
Advancement Act of 1996 (CWAAA).
\57\ 5 U.S.C. 603(a).
\58\ Id.
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A. Need for, and Objectives of, the Proposed Rules
34. In the NPRM, we propose to adopt rules that prohibit certain
practices used by some multichannel video programming distributors
(MVPDs) in their negotiations for carriage of video programming that
impede competition, diversity and innovation in the video marketplace.
Specifically, we propose to prohibit the inclusion of:
[[Page 73376]]
(i) ``unconditional'' most favored nation (MFN) provisions; and (ii)
unreasonable alternative distribution method (ADM) provisions in
program.
B. Legal Basis
35. The proposed action is authorized pursuant to sections 4(i),
4(j), 157, 257, 303(r), 616 and 628 of the Communications Act of 1934,
as amended, 47 U.S.C. 154(i), 154(j), 157, 257, 303(r), 536, and 548.
C. Description and Estimate of the Number of Small Entities to Which
the Proposed Rules Will Apply
36. The RFA directs agencies to provide a description of, and where
feasible, an estimate of the number of small entities that may be
affected by the proposed rules, if adopted.\59\ The RFA generally
defines the term ``small entity'' as having the same meaning as the
terms ``small business,'' ``small organization,'' and ``small
governmental jurisdiction.'' \60\ In addition, the term ``small
business'' has the same meaning as the term ``small business concern''
under the Small Business Act.\61\ A small business concern is one
which: (i) Is independently owned and operated; (ii) is not dominant in
its field of operation; and (iii) satisfies any additional criteria
established by the SBA.\62\ Below, we provide a list of such small
entities.
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\59\ 5 U.S.C. 603(b)(3).
\60\ Id. 601(6).
\61\ Id. 601(3) (incorporating by reference the definition of
``small-business concern'' in 15 U.S.C. 632). Pursuant to 5 U.S.C.
601(3), the statutory definition of a small business applies
``unless an agency, after consultation with the Office of Advocacy
of the Small Business Administration and after opportunity for
public comment, establishes one or more definitions of such term
which are appropriate to the activities of the agency and publishes
such definition(s) in the Federal Register.'' Id.
\62\ Id. 632.
Wired Telecommunications Carriers
Cable Television Distribution Services
Cable Companies and Systems
Cable System Operators
Direct Broadcast Satellite (DBS)
ServiceSatellite Master Antenna Television (SMATV) Systems,
also known as Private Cable Operators (PCOs)
Home Satellite Dish (HSD) Service
Broadband Radio Service and Educational Broadband Service
Fixed Microwave Services
Open Video Systems
Cable and Other Subscription Programming
Small Incumbent Local Exchange Carriers
Incumbent Local Exchange Carriers (ILECs)
Competitive Local Exchange Carriers
Competitive Access Providers (CAPs)
Shared-Tenant Service Providers
Other Local Service Providers
Internet Publishing and Broadcasting and Web Search Portals
Television Broadcasting
D. Description of Projected Reporting, Recordkeeping, and Other
Compliance Requirements
37. Reporting Requirements. The NPRM does not propose to adopt
reporting requirements.
38. Recordkeeping Requirements. The NPRM does not propose to adopt
recordkeeping requirements.
39. Other Compliance Requirements. The NPRM proposes to prohibit
use of the following contract provisions in program carriage agreements
between MVPDs and independent video programming vendors:
Unconditional MFN provisions; and
unreasonable ADM provisions.
E. Steps Taken To Minimize Significant Economic Impact on Small
Entities and Significant Alternatives Considered
40. The RFA requires an agency to describe any significant
alternatives that it has considered in reaching its proposed approach,
which may include the following four alternatives (among others): ``(i)
The establishment of differing compliance or reporting requirements or
timetables that take into account the resources available to small
entities; (ii) the clarification, consolidation, or simplification of
compliance and reporting requirements under the rule for such small
entities; (iii) the use of performance, rather than design standards;
and (iv) an exemption from coverage of the rule, or any part thereof,
for small entities.'' \63\
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\63\ 5 U.S.C. 603(c)(1) through (c)(4).
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41. Although the rules proposed in the NPRM would apply to all
MVPDs, including those that are small, we do not believe such rules
would have a significant economic impact on a substantial number of
small MVPDs. The record indicates that small MVPDs do not appear to
obtain the kinds of contractual restrictions the proposed rules would
proscribe. In addition, the NPRM seeks comment on what circumstances
could justify waiver of the proposed rules. We note further that to the
extent small MVPDs are aggrieved by contractual restrictions imposed by
larger MVPDs, small MVPDs would have standing to seek relief by filing
a program carriage complaint under our existing rules.\64\
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\64\ 47 CFR 76.1302(a).
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42. With regard to the impact on other small video programming
distributors (such as online video distributors), and small video
programming vendors (including independent content creators), based on
the record, such small entities generally would benefit from Commission
action addressing unconditional MFN and unreasonable ADM provisions.
Because such entities likely would support the rules proposed in the
NPRM, we find that no further analysis of alternatives on their behalf
is necessary.
F. Federal Rules That May Duplicate, Overlap, or Conflict With the
Proposed Rule
43. None.
44. We adopt this NPRM pursuant to the authority found in sections
1, 4(i), 4(j), 157, 257, 303(r), 616 and 628 of the Communications Act
of 1934, as amended, 47 U.S.C. 151, 154(i), 154(j), 157, 257, 303(r),
536 and 548.
Federal Communications Commission.
Gloria J. Miles,
Federal Register Liaison Officer, Office of the Secretary.
Proposed Rules
For the reasons discussed in the preamble, the Federal
Communications Commission proposes to amend 47 CFR part 76 as follows:
PART 76 -- MULTICHANNEL VIDEO AND CABLE TELEVISION SERVICE
0
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, 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 and 573.
0
2. Section 76.1300 is amended by redesignating paragraphs (b), (c),
(d), and (e) as paragraphs (c), (d), (e), and (g), and adding new
paragraph (b) and paragraph (f) to read as follows:
Sec. 76.1300 Definitions.
* * * * *
(b) Alternative distribution method provision. The term
``alternative distribution method provision'' means a provision that
prohibits or restricts a video programming vendor from exhibiting its
programming on alternative, non-traditional video distribution
platforms for a specified period of time following the programming's
original linear airing, or until certain conditions are met.
* * * * *
(f) Unconditional most favored nation provision. The term
``unconditional most favored nation provision'' means a provision that
entitles a multichannel
[[Page 73377]]
video programming distributor to contractual rights or benefits that an
independent video programming vendor has offered or granted to another
video programming distributor, without obligating the multichannel
video programming distributor to accept any terms and conditions that
are integrally related, logically linked, or directly tied to the grant
of such rights or benefits in the other video programming distributor's
agreement, and with which the multichannel video programming
distributor can reasonably comply technologically and legally.
* * * * *
0
3. Section 76.1301 is amended by adding paragraphs (d) and (e) to read
as follows:
Sec. 76.1301 Prohibited Practices.
* * * * *
(d) Unconditional Most Favored Nation Provisions. No multichannel
video programming distributor shall enter into an agreement with an
independent video programming vendor that contains an unconditional
most favored nation provision.
(e) Unreasonable Alternative Distribution Method Provisions. No
multichannel video programming distributor shall enter into an
agreement with an independent video programming vendor that contains an
unreasonable alternative distribution method provision.
(1) The following alternative distribution method provisions shall
be deemed to be presumptively unreasonable:
(i) A provision that prohibits an independent video programming
vendor from licensing content, for an extended time period or
indefinitely, to an online video distributor that distributes content
for free to consumers;
(ii) A provision that prohibits an independent video programming
vendor from licensing content, for any period of time, to an online
video distributor that distributes content to paying subscribers;
(iii) A provision that prohibits an independent video programming
vendor from licensing content to an online video distributor unless or
until such distributor meets conditions that are difficult to satisfy
in a timely manner or are designed to undermine such distributor's
ability to compete; or
(iv) A provision that imposes any pecuniary or non-pecuniary
penalty or adverse impact on an independent video programming vendor
for the provision of its video programming to an online video
distributor.
(2) The following alternative distribution method provisions shall
be deemed to be presumptively reasonable:
(i) A provision that prohibits an independent video programming
vendor from distributing programming, for which the multichannel video
programming distributor has agreed to pay, to consumers for free over
the Internet for a limited period after the programming's initial
linear airing; and
(ii) A provision that grants a multichannel video programming
distributor the universally exclusive right to distribute an
independent video programming vendor's content.
[FR Doc. 2016-25568 Filed 10-24-16; 8:45 am]
BILLING CODE 6712-01-P