[Federal Register Volume 82, Number 230 (Friday, December 1, 2017)]
[Proposed Rules]
[Pages 56926-56939]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-25487]
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LIBRARY OF CONGRESS
U.S. Copyright Office
37 CFR Part 201
[Docket No. 2005-6]
Statutory Cable, Satellite, and DART License Reporting Practices
AGENCY: U.S. Copyright Office, Library of Congress.
ACTION: Notice of proposed rulemaking.
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SUMMARY: The U.S. Copyright Office (``Office'') is seeking comment on
proposed rules governing the royalty reporting practices of cable
operators under section 111 and proposed revisions to the Statement of
Account forms, and on proposed amendments to the Statement of Account
filing requirements. With this Notice of Proposed Rulemaking, the
Office intends to resolve issues raised in an earlier Notice of Inquiry
directed towards cable reporting practices,\1\ as well as address
additional issues that have subsequently arisen. Further, to the extent
this rulemaking proposes changes to the Office's section 111
regulations governing the processing of refunds, supplemental or
amended payments, or calculation of interest, as well as case
management procedures, the Office proposes similar changes with regard
to the regulations governing the statutory licenses for satellite
carriers and digital audio recording devices or media.
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\1\ 71 FR 45749 (Aug. 10, 2006).
DATES: Written comments must be received no later than 11:59 p.m.
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Eastern Time on January 16, 2018.
ADDRESSES: For reasons of government efficiency, the Copyright Office
is using the regulations.gov system for the submission and posting of
public comments in this proceeding. All comments are therefore to be
submitted electronically through regulations.gov. Specific instructions
for submitting comments are available on the Copyright Office Web site
at https://copyright.gov/rulemaking/section111. If electronic
submission of comments is not feasible due to lack of access to a
computer and/or the internet, please contact the Office using the
contact information below for special instructions.
FOR FURTHER INFORMATION CONTACT: Sarang V. Damle, General Counsel and
Associate Register of Copyrights, by email at [email protected], Regan A.
Smith, Deputy General Counsel, by email at [email protected], or Anna
Chauvet, Assistant General Counsel, by email at [email protected], or any
of them by telephone at 202-707-8350.
SUPPLEMENTARY INFORMATION:
I. Background
Section 111 of the Copyright Act (``Act''), title 17 of the United
States Code, provides cable operators with a statutory license to
retransmit a performance or display of a work embodied in a ``primary
transmission'' made by a television station licensed by the Federal
Communications Commission (``FCC''). Cable operators that retransmit
broadcast signals in accordance with this provision are required to pay
royalty fees to the Copyright Office (``Office''), among other
requirements. Payments made under section 111 are remitted semi-
annually to the Office, which invests the royalties in United States
Treasury securities pending distribution of these funds to copyright
owners eligible to receive a share of the royalties.\2\ In conjunction
with royalty payments, cable operators must also complete and file
statements of account (``SOAs''), which provide a record regarding the
cable operators' retransmissions and royalty payments to ``promote
uniform and accurate reporting, assist cable operators in meeting their
obligations under the Act and regulations, and aid copyright owners,
the Copyright Office, and the Copyright [Royalty Judges] in reviewing
and using the information provided.'' \3\ Information provided on SOAs
includes, among other things, the number of channels on which the cable
system made secondary transmissions, the number of subscribers to the
cable system, and the gross amount paid to the cable system by
subscribers for the basic service of providing secondary
transmissions.\4\ Cable operators file the SOAs with the Office using
an appropriate form provided by the Office.\5\
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\2\ The Office distributes those royalties in accordance with
periodic distribution orders entered by the Copyright Royalty Board.
\3\ 42 FR 61051, 61054 (Dec. 1, 1977) (explaining benefits of
using a standard SOA form, referencing the Copyright Royalty
Tribunal, a precursor to the current Copyright Royalty Judges
system).
\4\ 37 CFR 201.17(e)(5)-(7).
\5\ Id. 201.17(d). The SOA forms are available in PDF and Excel
format on the Office's Web site at https://www.copyright.gov/licensing/sec_111.html.
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[[Page 56927]]
In 2005, the Motion Picture Association of America, Inc.
(``MPAA''), on behalf of its member companies and other producers and/
or distributors of movies and television series (hereinafter, ``Program
Suppliers''), filed a petition for rulemaking with the Copyright Office
requesting the commencement of a proceeding to address several issues
related to the SOA reporting practices of cable operators under section
111 (the ``Petition''). The Petition asked the Office to adopt a number
of changes to its section 111 regulations and SOAs to ``improve the
nature of the information reported on the SOAs by cable operators,''
believing them to be ``critical to efficient and effective compliance
review'' of SOAs by copyright owners.\6\ The Office published a notice
of inquiry (``NOI'') seeking comment on Program Suppliers' proposals
and recommendations,\7\ and multiple parties filed comments in response
to the NOI, as well as reply comments.\8\
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\6\ Program Suppliers, Petition for Rulemaking 2 (June 7, 2005)
(``Petition'').
\7\ 71 FR 45749.
\8\ The initial and reply comments have been posted on the
Office's Web site at https://copyright.gov/rulemaking/section111.
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Since the Office issued that NOI, the Satellite Television
Extension and Localism Act of 2010 (``STELA'') and STELA
Reauthorization Act of 2014 (``STELARA'') updated section 111 in
several respects.\9\ Among other things, STELA modified the calculation
of royalty rates paid by cable operators, and updated certain
provisions to accommodate the transition to digital television
broadcasts.\10\ In addition, pursuant to STELA, the Copyright Office
issued a regulation implementing a confidential procedure under which a
qualified independent auditor working on behalf of all copyright owners
can ``confirm the correctness of the calculations and royalty payments
reported'' on a cable SOA filed for accounting periods commencing on or
after January 1, 2010.\11\ STELARA, in turn, amended section 111 to
expand the local service area of low power television stations.\12\
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\9\ See Satellite Television Extension and Localism Act of 2010,
Public Law 111-175, 124 Stat. 1218 (2010) (``STELA''); STELA
Reauthorization Act of 2014, Public Law 113-200, 128 Stat. 2059
(2014) (``STELARA'').
\10\ 17 U.S.C. 111(d)(1)(B)-(F), (f)(4); see generally 75 FR
56868 (Sept. 17, 2010) (interim rule implementing STELA).
\11\ 17 U.S.C. 111(d)(6); 37 CFR 201.16(h), (l), (o).
\12\ 17 U.S.C. 111(f)(5).
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This notice of proposed rulemaking (``NPRM'') addresses issues
raised in response to the NOI that are still relevant, and notes where
intervening statutory and/or regulatory changes may have mooted some
issues. This NPRM also proposes revisions to SOA forms and/or the
Office's regulations that are intended to streamline administration of
SOAs by the Office's Licensing Division, some of which would also apply
to remitters making use of the section 119 (satellite) or chapter 10
(``DART'') licenses.
The Office welcomes public input on the following proposed changes,
as well as other suggestions on streamlining or otherwise improving
reporting practices for the section 111 license.
II. Proposed Section 111--Specific Changes
A. Relationship Between Gross Receipts (Space K) and Subscriber and
Rate Information (Space E)
Section 111 requires cable operators to report, in public filings
to the Copyright Office, a variety of information regarding the
secondary transmissions licensed under the statute, including the
number of channels by which the system made secondary transmissions,
the names and locations of all primary transmitters used, and, as
particularly relevant here, the ``total number of [cable system]
subscribers'' and the ``gross amounts'' paid to the cable system by
these subscribers ``for the basic service of providing secondary
transmissions of primary broadcast transmitters.'' \13\ Cable operators
pay a percentage from these reported gross receipts ``for the
privilege'' of providing such secondary transmissions (that is, a base
rate), and additional amounts for any distant signal equivalent
(``DSEs'') carried by the cable system. These amounts in turn are
distributed as royalty fees to copyright owners whose works have been
broadcast pursuant to the statutory license.\14\ The statute further
provides that copyright owners may conduct confidential audits to
verify the information provided on the SOAs, including the number of
subscribers and relevant subscription rates, as well as the total
amount of gross receipts collected from these subscribers at the
reported rates, to ensure that they have received accurate compensation
under the statutory license.\15\
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\13\ 17 U.S.C. 111(d)(1)(A).
\14\ Id. 111(d)(1)(B)(i)-(iv).
\15\ Id. 111(d)(6).
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In accordance with this statutory design, the Copyright Office has
implemented these requirements through its regulations \16\ and SOA
forms. The Office addressed the statutory requirements to report the
``number of subscribers'' and ``gross amounts'' paid to cable operators
as part of its initial regulations implementing section 111. In a
notice of proposed rulemaking, the Office noted that reporting ``[t]he
`number of subscribers' alone will serve no real purpose.'' \17\
Instead, the Office concluded that the statutory requirement was
``intended to provide copyright owners with a basis for a comparison
with the reported gross receipts.'' \18\ Accordingly, the Office
``proposed . . . that the number of subscribers be accompanied by
certain related information concerning subscriber categories and
charges in order reasonably to accomplish this purpose.'' \19\ In a
subsequent final rule adopting regulatory language almost identical to
the present section 201.17(e)(6), the Office noted that ``although this
information `will not provide a definitive or detailed comparison with
the reported gross receipts,' it will be useful for at least a rough
comparison with the reported gross receipts, and gives meaning to the
statutory requirement that the `number of subscribers' be given.'' \20\
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\16\ 37 CFR 201.17(e)(6)-(7).
\17\ 42 FR at 61054.
\18\ Id.
\19\ Id.
\20\ 43 FR 958, 959 (Jan. 5, 1978).
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To facilitate this ``rough comparison with the reported gross
receipts,'' under section 201.17(e)(6) cable operators must provide
``[a] brief description of each subscriber category for which a charge
is made by the cable system for the basic service of providing
secondary transmissions of primary broadcast transmitters''; ``[t]he
number of subscribers to the cable system in each such subscriber
category''; and ``[t]he charge or charges made per subscriber to each
such subscriber category for the basic service of providing such
secondary transmissions.'' \21\ These regulatory requirements are
reflected in Space E of the SOA forms (titled ``Secondary Transmission
Service: Subscribers and Rates''), which requests information that
``should cover all categories of secondary transmission service of the
cable system,'' including ``the number of subscribers to the cable
system, broken down by categories of secondary transmission service,''
and the ``rate charged for each category of service.'' \22\ Section
201.17(e)(7) of the Office's regulation addresses the statutory
reference to ``gross amounts'' and is reflected in Space K (titled
``Gross Receipts''), which requires cable
[[Page 56928]]
operators to ``[e]nter the total of all amounts (gross receipts) paid
to [the] cable system by subscribers for the system's secondary
transmission service (as identified in Space E) during the accounting
period.'' \23\
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\21\ 37 CFR 201.17(e)(6)(i)-(iii).
\22\ Paper Form SA1-2 at 2, Space E (``Short Form SOA''); Paper
Form SA3 at 2, Space E (``Long Form SOA'').
\23\ Short Form SOA at 6, Space K; Long Form SOA at 7, Space K;
see also 37 CFR 201.17(e)(6)-(7) (describing corresponding SOA
requirements).
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Many of the issues raised by Program Suppliers' Petition address
whether the subscriber and rate information provided by cable operators
under the Office's current regulations is sufficient to provide the
copyright owner with the intended ``rough comparison'' with the
required gross receipts information, a concern the Office understands
remains germane as the cable marketplace continues to evolve since the
regulation was first promulgated. Program Suppliers stated that SOAs do
not ``require adequate information for a meaningful comparison between
Space E and Space K,'' \24\ and requested the Office to ``require
greater congruity between the `gross receipts' information and the
subscriber and rate information provided on the SOAs,'' and ``greater
detail concerning the nature of revenues that a cable operator includes
and excludes in its `gross receipts.' '' \25\ As explained below, while
the Office tentatively concludes that it is not advisable to adopt all
of the Program Suppliers' recommendations, the Office proposes some
changes to the information sought in Space E to better facilitate the
ability of copyright owners to verify gross receipts and other
information provided on SOAs through the auditing mechanism set forth
in 37 CFR 201.16.
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\24\ Program Suppliers Comments at 6. Broadcast Music, Inc., The
American Society of Composers, Authors and Publishers, Broadcast
Music Inc., and SESAC, Inc. (collectively, ``Music Claimants'')
submitted their own comments in response to the NOI, stating that
``as a general matter, [they] support MPAA's comments and proposed
revisions to the SOAs.'' Music Claimants Comments at 2.
\25\ Petition at 3; see also Program Suppliers Comments at 5-7.
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1. Proposed Requirement to Explain Variation in Data Between Spaces E
and K
In proposing that the Office require ``greater congruity'' between
these spaces, Program Suppliers specifically requested that the Office
instruct remitters that the gross receipts reported in Space K should
approximate calculated gross receipts (i.e., the number of subscribers
in each category identified in Space E, multiplied by the applicable
rate) and require cable operators to explain briefly in Space K any
variation of more than 10% between calculated and reported gross
receipts.\26\ National Association of Broadcasters (``NAB'') supported
this proposal, stating that ``requiring greater congruity between the
`gross receipts' information in Space K . . . and the subscriber and
rate information in Space E would allow the Office to conduct its
compliance reviews with the benefit of more readily comparable base
data.'' \27\
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\26\ Program Suppliers Comments at 5-6, 8.
\27\ NAB Comments at 1.
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Cable associations National Cable & Telecommunications Association
(``NCTA'') and American Cable Association (``ACA'') opposed this
suggestion. Specifically, ACA maintained that title 17 does not require
such detailed reporting and suggested that instead, copyright owners
should request additional information about individual SOAs if the
filing appeared questionable.\28\ NCTA stated that even if the Office
adopted all of the Program Suppliers' proposed changes to the SOA
(discussed further below), the ``calculated gross receipts'' derived
from Space E and actual gross receipts would still not be identical.
For example, NCTA asserted that simply multiplying tier charges by the
number of subscribers per tier would not equal gross receipts since
both tier charges and subscribership fluctuate over six months due to,
among other things, periodic rate adjustments to ``reflect inflation,
changes in the channels offered, [and] increased programming costs for
the basic tier.'' \29\ NCTA also stated that variations between gross
receipts derived from using the data in Space E and the actual gross
receipts reported under Space K result because the number of
subscribers in Space E are reported as of the last day of the
accounting period, whereas gross receipts are accumulated over the
entire six-month period.\30\
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\28\ ACA Comments at 5-6.
\29\ NCTA Comments at 5.
\30\ Id.
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The Office understands Program Suppliers' position that a variance
explanation requirement would aid copyright owners in making a rough
comparison between the amount of ``gross receipts'' given in Space K
and the result of multiplying the number of subscribers by the rates
given in Space E. This requirement, however, would go beyond what has
traditionally been required of remitters and may be inappropriate in
light of differences in how data is reported in the two spaces. For
example, the amount in Space K may vary depending on whether the cable
system's accounting is done on an accrual or cash basis and, as noted
by NCTA, a comparison between Spaces E and K is difficult since the
information in the two spaces reflects different time periods (i.e.,
Space E calls for figures as of the last day of the accounting period
whereas Space K calls for gross receipts for the entire accounting
period).
The Office is also concerned that a variance explanation
requirement could increase burdens on the Office, by requiring its
Licensing Division examiners to assume a far greater role in
examination of SOAs than has traditionally been the case. Under the
current examination scheme, the Office simply checks whether SOAs
contain ``obvious errors or omissions''--not to identify all possible
deficiencies.\31\ It has never been the Office's practice to compute
totals in Space E and compare the result with Space K, or otherwise
attempt to validate the information provided in those spaces. The
variance explanation requirement, however, apparently envisions a role
of the Office in calculating the proposed 10% variance that would go
beyond checking for obvious errors and omissions.
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\31\ See 37 CFR 201.17(c)(2).
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For the same reasons, while the Office is considering adding an
instruction to its SOAs generally explaining that Space E is intended
to allow for a rough comparison with reported gross receipts, the
Office tentatively concludes that it is not appropriate to adopt
Program Suppliers' related proposal to explicitly instruct remitters
that the gross receipts reported in Space K should approximate the
number of subscribers in each category identified in Space E,
multiplied by the applicable rate.
2. Proposed Requirement To Provide More Detailed Reporting of
Subscriber and Rate Information (Space E)
As noted above, Program Suppliers' Petition proposed ``greater
congruity'' between gross receipts and subscriber and rate information
on SOAs. In response, the Office agrees that it may be advisable to
update the subscriber and rate information required by Space E to
provide private parties with more granular information to make a rough
comparison with the gross receipts information provided in Space K,
including by making use of the audit mechanism provided by the
regulations.\32\ With the exception of one amendment to the regulatory
usage of the word ``converter,'' which, as discussed below, is intended
to be technical, these proposed changes are to
[[Page 56929]]
the Office's forms and not its regulations.
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\32\ Id. Sec. 201.16.
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While the audit right established by STELA provides a mechanism for
copyright owners to verify information provided by cable operators and
ensure they are being accurately compensated for use of their
intellectual property under the compulsory license, these audits are
limited in various ways, including by accounting period, frequency, and
scope of initial and expanded audits as proscribed in the Offices
regulations.\33\ These audits are not intended to substitute for
accurate and complete information provided by cable operators on the
SOAs; nor is there an expectation that every single SOA would be
audited. Indeed, it is important for SOAs to provide meaningful
information to facilitate copyright owners' determination of whether or
not to initiate an audit. Accordingly, this section outlines proposed
changes or clarifications to reporting requirements in Space E
concerning categories of service and other rate information.
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\33\ 17 U.S.C. 111(d)(6); 37 CFR 201.16.
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Space E implements 37 CFR 201.17(e)(6), which requires remitters to
provide ``[a] brief description of each subscriber category for which a
charge is made by the cable system for the basic service of providing
secondary transmissions of primary broadcast transmitters.'' \34\ The
regulation further states that ``[e]ach entity (for example, the owner
of a private home, the resident of an apartment, the owner of a motel,
or the owner of an apartment house) . . . shall be considered one
subscriber'' \35\ subject to charges by the cable system for the basic
service of providing secondary transmissions. These requirements are
intended to complement the regulatory definition of ``gross receipts,''
which includes ``the full amount of monthly (or other periodic) service
fees for any and all services or tiers of services which include one or
more secondary transmissions of television or radio broadcast signals,
for additional set fees, and for converter fees.'' \36\
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\34\ 37 CFR 201.17(e)(6)(i).
\35\ Id. 201.17(e)(6)(iii)(B).
\36\ Id. 201.17(e)(b)(i).
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As depicted below, Space E currently requires cable operators to
report their number of subscribers and corresponding rate, ``broken
down by categories of secondary transmission service'' offered to
subscribers.\37\ As the form instructs, ``[t]he information in Space E
should cover all categories of secondary transmission service of the
cable system, that is, the retransmission of television and radio
broadcasts by your system to subscribers.'' This information is
reported through ``Block 1,'' which ``lists the categories of secondary
transmission service that cable systems most commonly provide to their
subscribers,'' and ``Block 2,'' which allows cable systems to add brief
descriptions of additional categories for secondary transmission
service that they offer to customers:
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\37\ Short Form SOA at 2, Space E; Long Form SOA at 2, Space E.
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Block 1 Block 2
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Category of service Number of subscribers Rate Category of service Number of subscribers Rate
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Residential:
[thinsp]Service to ...................... ...................... ...................... ..................... .....................
first set
[thinsp]Service to ...................... ...................... ...................... ..................... .....................
additional set(s)
[thinsp]FM radio (if ...................... ...................... ...................... ..................... .....................
separate rate)
Motel, hotel ...................... ...................... ...................... ..................... .....................
Commercial ...................... ...................... ...................... ..................... .....................
Converter: ...................... ...................... ...................... ..................... .....................
[thinsp]Residential ...................... ...................... ...................... ..................... .....................
[thinsp]Non- ...................... ...................... ...................... ..................... .....................
residential
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As the Petition suggested, and as the Licensing Division's
examination of recently filed SOAs illustrates, there appear to be
opportunities to improve the consistency and quality of information
reported in Space E. Specifically, Program Suppliers noted that there
currently is ``scant information'' about the tiers of service (e.g.,
basic, expanded, digital) offered by cable operators that contain
broadcast signals.\38\ Program Suppliers requested that the Office
revise its SOAs to require a variety of information, including:
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\38\ Petition at 8 (citing 37 CFR 201.17(e)(7)).
(1) Each tier of service they provide for a separate fee, noting
which tiers contain broadcast signals, (2) the rates associated with
each service tier, and whether the fees collected for each package
are included or excluded from their gross receipts calculation, (3)
the number of subscribers receiving each service tier, (4) the
lowest tier of service including secondary broadcast transmissions
that is available for independent subscription, and (5) any tier of
service or equipment for which purchase is required as a
prerequisite to obtaining another tier of service.\39\
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\39\ Id. at 9-10.
In addition, the Office of the Commissioner of Baseball, National
Basketball Association, National Football League, National Hockey
League, Women's National Basketball Association, and the National
Collegiate Athletic Association (a group collectively referred to as
``Joint Sports Claimants'' or ``JSC'') expressed concerns that cable
operators could limit the reporting of gross receipts to revenues
derived solely from the lowest priced tier of service carrying
broadcast signals and exclude revenues derived from higher priced tiers
that also carry such signals.\40\
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\40\ JSC Comments at 2-3.
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While the Office does not endorse every proposal of the Petition,
in light of the increased variation in rates offered by cable
operators, the Office agrees with revising Space E to require a
somewhat more granular breakdown of the number of subscribers and rates
charged for the various pertinent categories of service provided to
subscribers. Remitters would be instructed to list the total number of
subscribers for each category of service as well as the corresponding
rate (or range of rates), and to mark ``N/A'' if they did not offer
service in a given category. The Office hopes that these changes will
make it easier for cable operators to more accurately report the number
of subscribers for the various services they offer.
Specifically, the Office proposes to update the various bolded
categories of service--currently listed in Block 1 of Space E as
``Residential,'' ``Motel, hotel,'' ``Commercial,'' and ``Converter.''
The Office proposes to replace these categories with the following:
``Single-unit residential,'' ``Multi-unit
[[Page 56930]]
residential,'' ``Motel, hotel,'' ``Commercial,'' ``Other MDU,'' and
``Equipment.'' In addition, the Office proposes to add additional space
below each category for providers to provide a further breakdown that
captures each relevant category of retransmission of television and
radio broadcasts offered to subscribers. In doing so, the proposed rule
would replace the existing categories of service listed under what is
currently labeled ``Residential''-- ``Service to first set,'' ``Service
to additional set(s),'' and ``FM radio (if separate rate)''--with the
more generic categories ``basic service 1,'' ``service 2,'' and
``service 3.'' In addition, the proposed rule would list these same
categories underneath most of the additional types of subscribers
(e.g., ``motel, hotel,'' or ``commercial''). The category ``equipment''
would retain the current subcategories ``residential'' and ``non-
residential.'' Remitters could add additional categories of service as
relevant to their business in empty lines, currently labeled ``Block
2'' of Space E. The Office is also considering whether space should be
provided for cable operators to briefly describe these additional
services to reflect the specific offering (e.g., ``expanded'' or
``sports and news bundle''). Finally, the Office proposes clarifying in
its instructions that cable operators should separately list the number
of subscribers and rate information for each cable service offered that
contains any broadcast signals.
The proposal to break up the existing ``Residential'' category into
single- and multi-unit sub-categories is intended to alleviate some
discrepancy in reporting practices for residential multiple-dwelling
units (``MDUs''), as noted in earlier stakeholder comments, as well as
better organize the type of rate information provided. For example, in
their Petition, Program Suppliers stated that while some cable
operators report the ``total subscriber counts'' for each of the MDUs
they serve (albeit in a manner that leaves it unclear how these numbers
are derived), others report each MDU simply as one subscriber, while
still others leave the lines relating to ``motel, hotel'' or
``commercial'' categories of service blank.\41\ Under the proposal
here, the Office intends for remitters to report single-family homes
and individual unit apartment or condominium subscribers on the
``single-unit residential'' space, and subscribers on behalf of an
overall apartment or condominium building on the ``multi-unit
residential'' space. If an operator has a single contract for cable
service on behalf of the residents or occupants of a multi-unit
residential building, the operator should report that building served
as one multi-unit residential subscriber, and the rate (or range of
rates) the operator receives for cable service from those
subscribers.\42\ In addition, the replacement of the term ``converter''
with ``equipment'' on the SOA forms and in the regulation is simply
intended to modernize regulatory terminology. The Office seeks comment
on these proposed changes, including whether it would be advisable to
specifically add the category of ``other MDU,'' which could encompass
subscriptions for non-commercial multi-dwelling units such as
penitentiaries, churches, or schools, or whether it is sufficient to
allow cable operators to add categories of service as needed in the
blank section of Space E.
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\41\ Petition at 6-7 (citing Short Form SOA at 2, Space E; Long
Form SOA at 2, Space E); see also 71 FR at 45750 (noting Program
Suppliers' concerns over Space E).
\42\ See 37 CFR 201.17(e)(6)(iii)(B) (listing a private home
owner, apartment owner, apartment resident, motel owner as
subscriber examples).
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These proposed changes are also intended to recognize the increased
variety in cable subscription rates by providing a flexible table to
allow cable operators to report each category of service ``for which a
charge is made by the cable system for the basic service of providing
secondary transmissions of primary broadcast transmitters.'' \43\ For
example, since the Petition was received, the cable marketplace has
experimented with a variety of service offerings, ranging from tiers of
packages offering over 400 channels to skinny bundles emphasizing
family friendly or sports-related programming. Meanwhile, the Office
recognizes that it is no longer commonplace for cable operators to
charge additional fees for ``service to additional sets'' or ``FM
radio,'' but any remitter who does offer these services for a separate
fee could list them as a separate service.
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\43\ Id. 201.17(e)(6)(i).
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In addition, for each service offered to a category of subscribers,
the Office proposes to allow cable operators to report a range of rates
that the cable operator actually charged on the last day of the
accounting period.\44\ This instruction is intended to address pricing
variations, as well as concerns from NCTA that reporting each rate
charged to MDU subscribers based on individual negotiations would be
``enormously difficult, and would unfairly require operators to divulge
competitively sensitive information.'' \45\ As noted above, cable
operators could also add additional categories of services to report
rates that correspond to different types of service. The Office invites
comment on whether there should be a limit on the variance that may be
reported for a single service, such as a requirement that the highest
amount may be no more than 100% of the lowest amount in a range (e.g.,
a range of $14.99-$26.99 would be permissible, but not a range of
$24.00-$78.00), and whether any variance limit should be higher for
MDUs to reflect the more individualized nature of services offered.
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\44\ See Petition at 7; Program Suppliers Reply Comments at 12-
14.
\45\ NCTA Comments at 6.
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Finally, the Office proposes that information regarding categories
of service shall not be left blank.\46\ If a cable operator does not
serve a specific category, a ``zero'' or a ``N/A'' (not applicable)
should be reported in the appropriate space. These revisions are
intended to facilitate the review of cable SOAs.
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\46\ See Program Suppliers Reply Comments at 12-14.
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Further, the Office intends to revise Space E's instructions and
its regulatory definition of ``gross receipts'' to specifically note
that cable operators' gross receipts must include revenue from
subscription to non-broadcast tier(s) and/or from equipment sales or
leases if they are required to obtain tiers with broadcast signals. If
a tier or other service has no broadcast signals, and is not required
to be purchased to obtain access to broadcast signals, it need not be
reported in Space E. This addition does not represent a substantive
change in policy, but is intended to provide more detailed guidance in
furtherance of the Office's current regulatory definition of ``gross
receipts.'' \47\ This change is also in accordance with Cablevision v.
MPAA, which found this definition and the Office's longstanding
requirement that ``revenues from all tiers other than pay cable and
from all channels within each included tier must be included in gross
receipts'' to be reasonable.\48\
---------------------------------------------------------------------------
\47\ See 37 CFR 201.17(b)(1).
\48\ Cablevision Sys. Dev. Co. v. Motion Picture Ass'n of Am.,
Inc., 836 F.2d 599, 602, 611 (D.C. Cir. 1988).
---------------------------------------------------------------------------
In sum, by updating the pre-populated categories listed in Space E
and requiring more detail regarding the categories of service offered
(i.e., by breaking out currently-reported subscriptions into separate
tiers of service and listing the per-tier rate or range of rates), the
Office hopes to address concerns about the adequacy of reported
information. At the same time, the Office does not propose to adopt
every information category proposed by
[[Page 56931]]
Program Suppliers, tentatively agreeing with NCTA and ACA that
requiring filers to provide information on offerings that do not
contain broadcast signals (or are not prerequisites to obtaining
service containing any broadcast signals) would be inappropriate, as
those tiers do not contribute to gross receipts.\49\
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\49\ See NCTA Comments at 7; ACA Comments at 7-8.
---------------------------------------------------------------------------
3. Reporting of Bundled Services in Gross Receipts and Subscriber Rates
(Spaces E and K)
For years, cable operators and other multichannel video programming
distributors have marketed video, internet data, and voice services as
a single bundle of communication products to subscribers for a set
price. Bundling offers certain subscriber benefits, such as price
discounts and a single monthly bill. While pricing models vary,
subscribers generally pay less for a bundled package than if purchasing
each service individually.
From time to time, the Office receives questions on how to report
the price of cable television service in gross receipts on their SOAs
when it is sold as part of a bundle of services. The Office is
considering whether to amend its regulations to provide specific
guidance on how remitters should report cable television services sold
as a bundled service. The Office welcomes comments on how cable
operators currently report the price of cable television service in
gross receipts on their SOAs when it is sold as part of a bundle of
services, and whether the Office's regulations should be amended to
provide more guidance.
B. Definition of Cable System
The Office proposes to amend the regulatory definition of ``cable
system'' to reflect both the Copyright Office's longstanding position
that such systems are limited to systems providing only localized
retransmissions of limited availability, and the uniform case law
holding that internet-based retransmission services are excluded from
the section 111 compulsory license.\50\
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\50\ See, e.g., Fox Television Stations, Inc. v. Aereokiller,
LLC, 851 F.3d 1002, 1007 n.1 (9th Cir. 2017) (noting that seven
other federal courts held that ``Internet-based transmission
services'' did not qualify as a ``cable systems'' under the
Copyright Act).
---------------------------------------------------------------------------
As the Ninth Circuit recently explained, Congress did not intend
for section 111 ``to service the entire secondary transmission
community . . . without regard to the technological makeup of its
members,'' and instead limited the cable license to a narrower subset
of providers that the statute defines in a ``detailed, if arguably
ambiguous, way.'' \51\
---------------------------------------------------------------------------
\51\ Id. at 1009.
---------------------------------------------------------------------------
The Act requires a ``cable system'' to make secondary transmissions
by ``wires, cables, microwave, or other communications channels.'' \52\
As the Ninth Circuit recognized, when read in conjunction with the
whole of section 111 and the rest of the Copyright Act, it is clear
that Congress did not intend section 111 ``to sweep in secondary
transmission services with indifference to their technological
profile.'' \53\ As the Office has previously noted, ``at the time
Congress created the cable compulsory license, the FCC regulated the
cable industry as a highly localized medium of limited availability,
suggesting that Congress, cognizant of the FCC's regulations and the
market realities, fashioned a compulsory license with a local rather
than a national scope.'' \54\ Indeed, the localized nature of the cable
statutory license is reflected throughout section 111. For example, in
defining ``cable system,'' section 111 states that two or more systems
operating from ``one headend'' \55\ are considered a single system; the
same section also makes references to ``contiguous communities.'' \56\
Thus, as the Ninth Circuit properly concluded, the Office's established
understanding of the section 111 license ``aligns with [section] 111's
many instances of location-sensitive language.'' \57\
---------------------------------------------------------------------------
\52\ 17 U.S.C. 111(f)(3).
\53\ Aereokiller, 851 F.3d at 1009.
\54\ 62 FR 18705, 18707 (Apr. 17, 1997); see also Aereokiller,
851 F.3d at 1014 (quoting same).
\55\ Under FCC regulations, a ``principal headend'' is defined
as ``(1) the headend, in the case of a cable system with a single
headend or, (2) in the case of a cable system with more than one
headend, the principal headend designated by the cable operator,
except that such designation shall not undermine or evade [the
broadcast signal carriage requirements.]'' 47 CFR 76.5(pp).
\56\ 17 U.S.C. 111(f)(3).
\57\ Aereokiller, 851 F.3d at 1013.
---------------------------------------------------------------------------
Indeed, the overall operation of the section 111 license assumes
cable systems operate as localized retransmission services. The royalty
structure for the license is predicated upon determining whether the
retransmission of television programming is ``local'' to or ``distant''
from the local service area of the primary transmitter of such
programming.\58\ Specifically, royalty rates for larger (i.e., Long
Form SOA) cable systems are calculated based on a value known as the
``distant signal equivalent,'' \59\ which is calculated based on the
type and number of stations with ``non-network television programming
carried by a cable system in whole or in part beyond the local service
area of the primary transmitter of such programming.'' \60\ The
statute, in turn, defines ``local service area'' in precise geographic
terms. For example, for low power stations, the statute itself defines
the local service area in terms of a specific radius in miles around a
transmitter site.\61\ Accordingly, for a cable station to accurately
calculate royalties under the statutory license, it must know with some
precision the locations to which the cable system has retransmitted a
broadcast station's signal--and whether that retransmission was within
or outside the local service area of that station. This is something
that is possible with traditional, hard-wired cable systems and their
equivalent, because of the localized nature of their retransmission
services.
---------------------------------------------------------------------------
\58\ See 17 U.S.C. 111(d)(1), (f)(4), (5).
\59\ See, e.g., id. 111(d)(1)(B).
\60\ Id. 111(f)(5)(i) (emphasis added).
\61\ See 17 111(f)(4). Specifically, the statute defines the
local service area for ``low power stations'' as comprising ``the
designated market area . . . that encompasses the community of
license of such station,'' plus communities outside the designated
market area that are either ``wholly or partially within 35 miles of
the transmitter site'' or, in the case of stations located in larger
metropolitan areas, ``wholly or partially within 20 miles of such
transmitter site.'' Id.; see also id. 122(j)(2)(C) (defining
``designated market area'').
---------------------------------------------------------------------------
Other aspects of the statutory scheme similarly underscore the
localized nature of the statutory license. As discussed in greater
detail below, for purposes of categorizing cable systems for royalty
purposes, the statute specifies that two or more cable systems
constitute a single cable system for purposes of section 111 if they
are under common ownership or control and ``are located in the same or
contiguous communities.'' \62\ Similarly, the Office's section 111
regulations require cable operators to report the communities served by
each cable system (i.e., the cities or towns).\63\ Thus, determining
what ``community'' a cable system serves requires knowing with some
precision where retransmitted signals are being sent, which necessarily
implies that a ``cable system'' is one that operates via a localized
transmission system.\64\
---------------------------------------------------------------------------
\62\ Id. 111(f)(3).
\63\ 37 CFR 201.17(e)(4).
\64\ Cf. Aereokiller, 851 F.3d at 1013-14 (deferring to
Copyright Office interpretation based on section 111's use of
``location-sensitive language'').
---------------------------------------------------------------------------
Consistent with this understanding of the overall legislative
scheme, the Office in prior rulemakings has held a consistent view that
a ``cable system'' under the meaning of section 111 must operate in an
inherently localized retransmission medium. For instance, in 1992 and
1997, in the context of
[[Page 56932]]
rulemakings to determine whether satellite and wireless cable
retransmission systems could qualify for the section 111 license, the
Office concluded that the section 111 license ``applies only to
localized retransmission services,'' \65\ and that ``a provider of
broadcast signals [must] be an inherently localized transmission media
of limited availability to qualify as a cable system.'' \66\ Applying
this standard, the Office found that satellite carriers could not
qualify as cable systems.\67\ The Eleventh Circuit upheld the
reasonableness of that determination.\68\ Congress established the
section 119 and 122 licenses to provide for a separate statutory
licensing scheme for satellite carriers.\69\ Thus, as the Ninth Circuit
recently noted, ``if Congress meant Sec. 111 to sweep in secondary
transmission services with indifference to their technological profile,
then it was strange for Congress to have provided separate compulsory
license provisions--Sec. Sec. 119 and 122--for broadcast
retransmissions by satellite carriers.'' \70\
---------------------------------------------------------------------------
\65\ 57 FR 3284-01, 3292 (Jan. 29, 1992) (codified at 37 CFR pt.
201).
\66\ 62 FR 18705, 18707 (Apr. 17, 1997) (codified at 37 CFR pt.
201).
\67\ 57 FR at 3292, 3296. In this 1992 rulemaking, the Copyright
Office also concluded that ``wireless'' cable systems could not
qualify as ``cable systems'' under section 111. Id. at 3293-95.
Congress amended section 111 in 1992 to reverse that decision.
Satellite Home Viewer Act of 1994, Public Law 103-369, 108 Stat.
3477 (1994); 59 FR 67635 (Dec. 30, 2004). In doing so, however,
Congress did not question the Copyright Office's conclusion that the
statute was limited to localized retransmission services. To the
contrary, Congress recognized that such wireless cable systems would
have to be treated the same as wired systems for purposes of
calculating distant signal royalties under the statutory license.
See S. Rep. No 103-407 at 14 (1994); H.R. Rep. No. 103-703 at 19
(1994); see generally 62 FR at 18709 (discussing legislative
history).
\68\ Satellite Broad. & Commc'ns Ass'n of Am. v. Oman, 17 F.3d
344, 346-48 (11th Cir. 1994); see also 37 CFR 201.17(k) (1992)
(``Satellite carriers, [and] satellite resale carriers . . . are not
eligible for the cable compulsory license based upon an
interpretation of the whole of section 111 of title 17 of the United
States Code.'').
\69\ Satellite Home Viewer Act of 1994, Public Law 103-369, 108
Stat. 3477 (1994); 59 FR 67635 (Dec. 30, 2004).
\70\ Aereokiller, 851 F.3d at 1009.
---------------------------------------------------------------------------
Similarly, in policy reports and testimony before Congress, the
Office consistently communicated its position that internet-based
retransmission services are not ``cable systems'' under section
111.\71\ As explained in more detail in those reports, the Office's
view was based on an understanding that, unlike other systems
qualifying for the cable license, online streaming services are not
closed, localized systems, and so are outside the statutory license. By
contrast, in a 2008 policy report, the Office opined that video
programming distribution systems using Internet Protocol technology, by
virtue of the fact that they were inherently closed systems delivering
content to a limited set of subscribers at their homes, could meet the
definition of ``cable system'' \72\
---------------------------------------------------------------------------
\71\ See, e.g., Register of Copyrights, A Review of the
Copyright Licensing Regimes Covering Retransmission of Broadcast
Signals 97-99 (1997), https://www.copyright.gov/reports/study.pdf;
Copyrighted Webcast Programming on the Internet: Hearing Before the
H. Subcomm. on Courts and Intell. Prop., 106th Cong. 5-6 (2000)
(statement of Marybeth Peters, Register of Copyrights and Dir., U.S.
Copyright Office); Register of Copyrights, Satellite Home Viewer
Extension and Reauthorization Act Section 109 Report 193-94 (2008),
http://www.copyright.gov/reports/section109-final-report.pdf
(``Section 109 Report''); Register of Copyrights, Satellite Home
Viewer Extension and Localism Act Section 302 Report 47-49 (2011),
https://www.copyright.gov/reports/section302-report.pdf.
\72\ Section 109 Report at 197-99; see also id. at 200
(concluding that retransmission of broadcast signals to mobile
devices should be outside statutory license).
---------------------------------------------------------------------------
In sum, in light of the Office's understanding of section 111, its
longstanding policy views, and the uniform direction of case law, the
Office proposes adding the following sentence to its regulatory
definition of ``cable system'': ``A provider of broadcast signals must
be an inherently localized and closed transmission system of limited
availability to qualify as a cable system.''
C. Interpretation of Community and Reporting of Area Served (Space D)
1. Cable Headend Location
Section 111(f) of the Copyright Act states in relevant part that:
``For purposes of determining the royalty fee under subsection (d)(1),
two or more cable systems in contiguous communities under common
ownership or control or operating from one headend shall be considered
as one system.'' \73\ Moreover, two cable systems operating from the
same headend are considered to be one system for purposes of
calculating the section 111 royalties ``even if they are owned by
different entities.'' \74\ Currently, a cable operator is required to
identify on its SOA only the community or communities in which it
operates and not the location of the headend(s) serving those
communities.\75\
---------------------------------------------------------------------------
\73\ 17 U.S.C. 111(f)(3); see also 37 CFR 201.17(b)(2).
\74\ Short Form SOA at ii; Long Form SOA at ii; see also 43 FR
at 958.
\75\ See 37 CFR 201.17(e)(4); Short Form SOA at 1b, Space D;
Long Form SOA at 1b, Space D.
---------------------------------------------------------------------------
In their Petition, Program Suppliers requested that the Office
revise Space D of the SOA form to require cable operators to identify
the location of each headend and the specific communities served from
that headend.\76\ Program Suppliers stated that this information will
help them determine whether cable operators are, in fact, complying
with the section 111(f) requirement to treat all cable systems
operating from a common headend as a single cable system and suggested
that a headend identification requirement would not burden cable
operators, as the FCC already requires them to maintain records of the
location of principal headends.\77\ As to which headend a cable
operator should report where there are multiple headends, Program
Suppliers stated that an operator should be required to identify the
location of each headend that serves communities listed by its
systems.\78\ NAB concurred that including the specific location of
headends would enhance the Office's review of SOAs.\79\
---------------------------------------------------------------------------
\76\ Petition at 10-11.
\77\ See Program Suppliers Comments at 12-13 (citing 47 CFR
76.1708, 76.1716). The Office notes that the FCC recently eliminated
the requirement that cable operators maintain for public inspection
the designation and location of the cable system's principal
headend. In re Revisions to Public Inspection File Requirements--
Broadcaster Correspondence File & Cable Principal Headend Location,
32 FCC Rcd. 1565 (2017), https://apps.fcc.gov/edocs_public/attachmatch/FCC-17-3A1.pdf.
\78\ Id. at 13.
\79\ NAB Comments at 1-2.
---------------------------------------------------------------------------
By contrast, NCTA remarked that if a single system uses more than
one headend, it should make no difference to copyright owners which one
is identified; in that instance, an operator has already determined
that it operates a single system for copyright purposes.\80\ ACA
commented that if a Program Supplier has a legitimate question
regarding the location of a headend, it can request clarification from
that particular operator, and that Program Suppliers have employees and
outside counsel devoted to precisely that type of activity.\81\
---------------------------------------------------------------------------
\80\ NCTA Comments at 8.
\81\ ACA Comments at 11.
---------------------------------------------------------------------------
The Office tentatively concludes that it is not clear that
artificial fragmentation by cable systems seeking to avoid paying a
higher royalty rate (i.e., a Long Form SOA cable system reporting as
several Short Form cable systems) is currently a pressing concern, or
that requiring the reporting of headend information would significantly
help lessen this issue, compared to the additional burden imposed upon
cable operators. Given the lack of a strong record demonstrating the
need for this information, the Office declines to adopt
[[Page 56933]]
a headend-reporting requirement at this time.
2. County Information
The Office's regulations currently require a cable operator to
report the name of the community or communities served by its cable
system.\82\ Space D of the SOAs require a cable operator to identify
the communities it serves, including by listing the ``city or town''
and ``state'' served.\83\ The SOAs do not currently require
identification of the county in which the given community is located,
although some operators report counties on a voluntary basis.
---------------------------------------------------------------------------
\82\ 37 CFR 201.17(e)(4).
\83\ Short Form SOA at 1b, Space D; Long Form SOA at 1b, Space
D.
---------------------------------------------------------------------------
In their Petition, Program Suppliers requested that the Office
require cable operators to identify the county where each cable
community is located, in addition to the city and state.\84\ They
commented that this information would help clarify whether a signal is
local, distant, or partially distant (i.e., distant to some subscribers
but local to others) for section 111 purposes.\85\ NCTA agreed that the
absence of county designations has hampered legitimate efforts to
review certain SOAs and did not object to modification of the SOA forms
to require inclusion of county information in Space D.\86\ Similarly,
ACA stated that this requirement will impose minimal additional burdens
and will facilitate review of SOAs by the Licensing Division.\87\
---------------------------------------------------------------------------
\84\ Petition at 11-13.
\85\ Id. at 12.
\86\ NCTA Comments at 9.
\87\ ACA Comments at 4.
---------------------------------------------------------------------------
Because the parties agreed that inclusion of the county on the SOA
would be beneficial, the Office proposes that Space D should be revised
to require ``county'' information, but seeks comment on whether this
proposed change remains desirable to stakeholders. The Office concludes
that regulatory change is not necessary to implement this update to the
form.
3. Definition of ``Community''
Under the Copyright Act and the Office's regulations, two or more
cable systems constitute a single cable system for purposes of section
111 if, as relevant here, they are under common ownership or control
and are located in the same or ``contiguous communities.'' \88\ Where
common ownership of cable systems is established, defining the
``community'' served is important to determine whether two or more
cable facilities operate in ``contiguous communities,'' and whether
those facilities should file as a single cable system, preventing
artificial fragmentation of large cable systems into multiple smaller
systems to avoid the higher royalty payments Form 3 cable systems pay
under section 111.\89\
---------------------------------------------------------------------------
\88\ 17 U.S.C. 111(f)(3); 37 CFR 201.17(b)(2).
\89\ See 43 FR 958 (Jan. 5, 1978) (``[T]he legislative history
of the Act indicates that the purpose of this sentence [in section
111(f)] is to avoid the artificial fragmentation of cable
systems.'').
---------------------------------------------------------------------------
The Office's regulations currently state that a cable system's
``community,'' for purposes of section 111, is the same geographic area
as that specified under the definition of ``community unit'' as defined
in the FCC's rules and regulations.\90\ FCC regulations define
``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).'' \91\
---------------------------------------------------------------------------
\90\ 37 CFR 201.17(e)(4); see also Short Form SOA at 1b, Space
D; Long Form SOA at 1b, Space D.
\91\ 47 CFR 76.5(dd).
---------------------------------------------------------------------------
Program Suppliers requested that the Office amend the regulatory
definition of the term ``community'' so that a cable operator's
``franchise area'' should be the de facto regulatory boundary for
defining cable communities instead of the FCC's community unit
definition. In support, Program Suppliers noted that the FCC itself, in
written opinions, has interpreted ``community unit'' to mean cable
franchise areas.\92\ But while it may be true that the FCC has itself
at times equated its regulatory definition of ``community unit'' with a
given cable system's franchise area, that is, the political
jurisdiction for which a local government body has granted it the right
to provide cable television to its residents, the regulatory definition
refers more broadly to a ``distinct community'' and the Petition itself
suggests the FCC has not been uniform in that interpretation. In its
NOI, the Office asked if there is a general pattern of disaggregation
by cable operators to support a rule change, and if so, whether it
would be reasonable to equate the term ``community'' with a cable
operator's ``franchise area.'' \93\
---------------------------------------------------------------------------
\92\ Petition at 16 (citation omitted).
\93\ 71 FR at 45752.
---------------------------------------------------------------------------
In comments, NCTA suggested that the FCC community unit concept was
part of a long-established cable copyright paradigm.\94\ It explained
that the cable industry's signal carriage obligations under current FCC
rules, notably the syndicated exclusivity rules, continue to depend on
the community unit definition, and were necessary under the FCC's
former distant signal rules for establishing whether a distant signal
is permitted for copyright purposes. NCTA further stated that Program
Suppliers offered no evidence that Congress intended franchise areas to
play a decisive role in defining a single cable system for copyright
purposes. NCTA noted that with the advent of statewide franchising in
some states, the proposed rule change could result in the artificial
joinder of systems that could be hundreds of miles apart and not
interconnected in any way.\95\ In reply comments, NAB agreed that the
Copyright Office should continue to rely upon the FCC's regulatory
definition of community unit, and suggested that a literal application
of those rules would prevent artificial fragmentation by requiring
cable operators to list all contiguous units that shared a franchise
authority.\96\
---------------------------------------------------------------------------
\94\ NCTA Comments at 11.
\95\ Id. at 11-13.
\96\ NAB Reply Comments at 12-13.
---------------------------------------------------------------------------
The Copyright Office tentatively concludes that the facts and the
law do not support replacing the community unit definition with a
franchise area definition. Moreover, since the receipt of the Petition,
the Office has not noted a practice of fragmentation, and has learned
that this issue may be of less interest to stakeholders. The Office
invites public comments on whether this issue is still significant to
stakeholders.
D. Grade B Contour (Parts 6 and 7)
Under the Copyright Act, the definition of ``local service area of
a primary transmitter'' establishes the difference between ``local''
and ``distant'' signals and ``therefore the line between signals which
are subject to payment under the compulsory license [under section 111]
and those that are not.'' \97\ The shifting technologies used for
television transmission, as reflected in STELA, have led the Copyright
Office to question whether certain parts of its regulations and SOA
forms should be modified or eliminated.
---------------------------------------------------------------------------
\97\ H.R. Rep. No. 94-1476, at 99 (1976), as reprinted in 1976
U.S.C.C.A.N. 5659, 5714.
---------------------------------------------------------------------------
Specifically, the parts of the Long Form SOA which reference the
``Grade B contour,'' an FCC construct used for many years in the
context of analog television stations, appear to be obsolete. Section
111 imported this construct, as detailed in FCC rules and regulations,
with respect to determining the local service area of certain
signals.\98\ Subsequently, with the advent
[[Page 56934]]
of digital television signals, the FCC has recognized a new standard
known as the ``noise-limited service contour.'' STELA amended section
111 by adding to the definition of ``local service area'' any area
``within the noise-limited contour as defined in 73.622(e)(1) of title
47, Code of Federal Regulations.'' \99\
---------------------------------------------------------------------------
\98\ 17 U.S.C. 111(f)(4).
\99\ STELA at sec.104, 124 Stat. at 1235; 17 U.S.C. 111(f)(4).
---------------------------------------------------------------------------
Two parts of the form appear to have been overtaken by these
technological developments. First, the Long Form SOA asks for certain
information related to certain UHF signals within a Grade B contour,
for purposes of calculating royalties paid under a 3.75% fee in Part 6,
Block B of the form. Under the FCC's old ``market quota'' rules, which
were incorporated by reference into section 111, a cable operator could
carry a certain number of distant signals based upon a complex scheme
involving the type of the television market and the type of signal
available. A cable operator, however, could carry more signals than its
market quota of distant signals if the station was considered
``permitted'' by the FCC's 1976-era rules. The concept of ``permitted''
stations has been imported into the section 111 license. Under section
111, an operator that carries a non-permitted signal above its market
quota is generally subject to a 3.75% fee for carriage of that signal,
in lieu of the minimum royalty rate.\100\ There are several bases of
``permitted'' carriage, however, for which retransmission will not
trigger the 3.75% fee. One of these bases--basis ``G''--includes
carriage of commercial UHF stations within a Grade B contour.\101\ On
cable SOAs, permitted signals, including those under basis ``G,'' must
be reported in Part 6, Block B, or be subject to the 3.75% fee
calculation in Part 6/Block C.\102\
---------------------------------------------------------------------------
\100\ See 37 CFR 387.2. All cable systems filing Long Form SOAs
must pay at least the minimum fee which is 1.064% of gross receipts.
The cable system pays either the minimum fee or the sum of the base
rate fee and the 3.75% fee, whichever is larger, and a Syndicated
Exclusivity Surcharge, as applicable. Long Form SOA at 10.
\101\ See Long Form SOA at 13.
\102\ See Long Form SOA at 13.
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The Office, in a 2008 Notice of Proposed Rulemaking concerning
digital broadcast signals (``Digital Signals NPRM'') that pre-dated
STELA,\103\ made initial conclusions concerning the continued relevance
of the ``basis G'' for the cable retransmission of digital television
signals. With regard to commercial UHF stations placing a Grade B
contour over a cable system, the Office noted that the Grade B contour
could not be replaced by the noise limited service contour as the
appropriate measurement to determine whether a commercial UHF station
is ``permitted'' for copyright purposes because the new contour
parameters were not in use at the time Section 111 was enacted.\104\
---------------------------------------------------------------------------
\103\ See 73 FR 31399 (June 2, 2008). Because STELA confirmed
the application of section 111 to digital broadcast signals, the
Office considers the Digital Signals NPRM to be closed.
\104\ Id. at 31408-409.
---------------------------------------------------------------------------
As noted, after the Digital Signals NPRM, STELA amended the
definition of ``local service area of a primary transmitter'' in
section 111 so that such area would include the area within the noise
limited service contour.\105\ This amendment confirms to the Office
that the noise limited service contour is the proper standard by which
to measure the reach of digital television signals with respect to the
section 111 license, including digital UHF signals. And, as most
relevant here, the amendment appears to render ``basis G'' obsolete as
it currently exists. That is because, as stated above, royalty rates
under the section 111 license are calculated based on the ``secondary
transmission of any non-network television programming carried by a
cable system in whole or in part beyond the local service area of the
primary transmitter of such programming.'' \106\ Any digital signals
within the noise-limited service contour are ``local'' and thus are not
subject to the section 111 royalty rate. Thus, it appears that there is
no need to treat any station within the noise limited contour as
``permitted,'' because locally retransmitted stations do not count
against the market quota in the first place.
---------------------------------------------------------------------------
\105\ See STELA at sec.104, 124 Stat. at 1235; 17 U.S.C.
111(f)(4).
\106\ 17 U.S.C. 111(f)(5) (emphasis added).
---------------------------------------------------------------------------
To the extent that the ``Grade B contour'' construct theoretically
may continue to apply to analog signals, the Office questions whether
it has become obsolete as a practical matter. From running database
queries on submitted SOAs, the Office has learned that permitted basis
``G'' in Part 6/Block B is rarely, if ever, used. Moreover, in the few
cases where cable operators have reported the permitted basis of
carriage category ``G,'' the Office believes the cable operators may
have used the noise-limited contour (for digital signals)
interchangeably with the Grade B contour (for analog signals) because
they historically reported ``G'' in the all-analog world (prior to the
mandated FCC digital conversion in 2009), and continue to report the
``G'' permitted basis out of habit. Accordingly, the Office proposes
eliminating permitted basis ``G'' in Part 6/Block B on the cable SOAs
(i.e., commercial UHF stations within a Grade B contour). The Office
invites public comment on this proposal. The Office is particularly
interested in learning whether cable operators still retransmit
broadcast signals using analog signals, and if so, to what extent the
permitted basis ``G'' is relevant to this carriage.
Second, the Grade B contour has, in the past, had relevance to
other aspects of the statutory license under section 111, including the
calculation of a ``syndicated exclusivity surcharge.'' Cable systems
located in whole or in part within a major television market, as
defined by FCC rules and regulations, must calculate a syndicated
exclusivity surcharge for the carriage of any commercial VHF station
that places a Grade B contour, in whole or in part, over the cable
system that would have been subject to the FCC's syndicated exclusivity
rules in effect on June 24, 1981.\107\ Cable operators report any
syndicated exclusivity surcharge in Part 7, Block B of cable Long Form
SOAs.
---------------------------------------------------------------------------
\107\ See 37 CFR 201.17(i)(1)(ii), (i)(2)(ii).
---------------------------------------------------------------------------
From running database queries on submitted SOAs, however, the
Office has learned that the last time Part 7 of the cable SOA was used
(i.e., Computation of the Syndicated Exclusivity Charge) was in 2013,
on a single SOA. Accordingly, the Office invites public comment on
whether Part 7 of the cable SOA should be amended, and whether, more
generally, the Office's related regulations should be amended to remove
references to a Grade B contour.
E. Changes to SOA Due to Copyright Royalty Board's Proposed Rule
Relating to the Retransmission of Sports Programming
In May 2017, the Copyright Royalty Board (``CRB'') issued a notice
of proposed settlement and proposed rule to require covered cable
systems to pay a separate per-telecast royalty (a ``Sports Surcharge'')
in addition to the other royalties that cable systems must pay under
section 111.\108\ In September, the CRB issued an additional notice
concerning whether non-participants to the settlement could be eligible
to receive royalties stemming from the Sports Charge, but did not
otherwise alter its proposed rule.\109\ Under the CRB's proposed rule,
the ``Sports Surcharge would amount to 0.025 percent of the cable
system's `gross receipts' during the relevant semi-annual accounting
period for the secondary transmission of each affected
[[Page 56935]]
broadcast of a sports event, provided that all of the conditions of the
proposed rule are satisfied.'' \110\ ``Thus, if a covered cable system
made a secondary transmission of one affected broadcast, it would pay
0.025 percent of `gross receipts' during the relevant semi-annual
accounting period for that transmission; if it made secondary
transmissions of two affected broadcasts, it would pay 0.025 percent of
`gross receipts' during the relevant semi-annual accounting period for
each of those transmissions (or a total of 0.050 percent of its `gross
receipts').'' \111\
---------------------------------------------------------------------------
\108\ 82 FR 24611 (May 30, 2017).
\109\ 82 FR 44368 (Sept. 22, 2017).
\110\ 82 FR at 24612.
\111\ Id.
---------------------------------------------------------------------------
Assuming the CRB's rule is adopted, the Office intends to amend its
cable SOA forms to account for the new Sports Surcharge for semi-annual
accounting periods by adding a new Space R that would allow for
calculations of this surcharge. No amendments to the Office's
regulations are needed to accommodate this change.
F. Interest Payments and Copyright Infringement Liability
The Office's current regulations require cable operators to pay
interest on late or underpaid royalty payments.\112\ In their Petition,
Program Suppliers asserted that such payments do not preclude copyright
owners from bringing an action against cable operators for copyright
infringement during the time period in which the cable operators'
royalty payments were not properly remitted, and requested that the
Office amend its regulations and revise its SOA forms to include
language clarifying that the assessment of interest does not absolve
cable operators from copyright infringement liability for failure to
make timely royalty payments.\113\ Cable associations disagreed, with
ACA stating that ``[s]ound policy supports maintaining the ability of a
cable operator to correct an[y] SOA and pay additional royalties with
interest, without the imminent threat of copyright infringement,'' and
that the ability to file amended or late SOAs with interest ``provides
an efficient means to correct good faith errors in filings[,] while at
the same time providing copyright claimants with their full
compensation plus interest.'' \114\
---------------------------------------------------------------------------
\112\ See 37 CFR 201.17(k)(4); see also Short Form SOA at 8,
Space Q; Long Form SOA at 9, Space Q.
\113\ Petition at 13.
\114\ ACA Comments at 12; see also NCTA Comments at 9.
---------------------------------------------------------------------------
The Office declines Program Suppliers' suggestion to modify the SOA
to state that a payment made after the due date does not bar an
infringement action against the cable operator. While section
111(d)(1)(A) directs the Register to issue regulations governing the
filing of SOAs, including identification of all secondary
retransmissions of broadcast stations, number of subscribers, and gross
revenues paid to the cable system, it does not require the Office to
determine the scope of liability for copyright infringement; in the
Office's view, this question is more properly reserved for the courts
in appropriate cases.\115\
---------------------------------------------------------------------------
\115\ There are two other provisions, aside from 17 U.S.C.
111(d)(1)(A), which require action by the Register in the cable
statutory licensing context. These are the authority to set filing
fees for SOAs under 17 U.S.C. 111(d)(1)(G) and the authority to
issue audit regulations under 17 U.S.C. 111(d)(6).
---------------------------------------------------------------------------
G. Removing Outdated References to the Satellite Television Extension
and Localism Act
After Congress enacted STELA in 2010, the Office issued
implementing regulations that, among other things, established the
accounting period for which the new cable operator royalty fee rates
would take effect.\116\ In the seven years since STELA was enacted,
however, some references to STELA in the Office's regulations appear to
have become outdated and unnecessary. The Office understands that cable
operators rarely file SOAs for periods dating back further than the
last five years (i.e., for periods prior to the enactment of STELA).
Accordingly, the Office proposes amending section 201.17 by deleting
outdated references to STELA, and adding language for remitters to
contact the Licensing Division for instructions should they need to
file SOAs for accounting periods further back than the last five years.
The Office invites public comment on this proposal.
---------------------------------------------------------------------------
\116\ 37 CFR 201.17(g)(4).
---------------------------------------------------------------------------
H. Technical Amendments
The Office's current regulations provide a number of instructions
to cable operators on how to complete SOAs, many of which duplicate the
instructions on the SOA forms themselves.\117\ The Office proposes
removing regulatory provisions that are duplicative of information
provided on cable operator SOA forms and/or on the Office's Web site.
---------------------------------------------------------------------------
\117\ See id. 201.17(e)(1)-(4), (8), (10)-(13).
---------------------------------------------------------------------------
In addition, the Office's current regulations instruct which
information must be provided as part of the electronic funds transfer
(``EFT'') to pay royalty fees.\118\ The Office proposes removing this
language from the regulations and incorporating it into the
instructions for the SOA forms themselves.
---------------------------------------------------------------------------
\118\ Id. 201.17(k)(1).
---------------------------------------------------------------------------
These changes are intended to improve the readability of existing
regulations and do not represent substantive changes in policy.
III. Reporting Practices--Cable, Satellite and DART
The Office has identified a number of additional issues relating to
cable SOA reporting practices, and finds it is administratively
efficient to address these new cable reporting practice matters here
rather than initiate a new proceeding. Because some of these issues are
also pertinent to the filing of SOAs for other statutory licenses, the
Office proposes to amend certain reporting rules for cable operators
(under section 201.17), satellite carriers (under section 201.11) and
digital audio recording equipment manufacturers and importers (under
sections 201.27 and 201.28), where applicable, so that there are
parallel requirements for all three licenses in the Office's
regulations. Each of the following proposed changes are reflected in
the updated proposed regulatory language below.
A. Closing Out Statements of Account
During an initial examination of SOAs, the Office's Licensing
Division often makes inquiries of cable system operators regarding the
information provided in the SOA.\119\ Generally, the Office does not
make an entire SOA available to the public until the cable operator has
responded to the Office's inquiry and the initial examination process
has been completed. But oftentimes, the Office may not receive a
response to its inquiry until long after the Office's letter or email.
In some cases, replies are not received in the Office until years
later. Currently, if this happens, the Office re-examines the original
SOA in light of the request.
---------------------------------------------------------------------------
\119\ These inquiries generally seek missing or clarifying
information pertaining to an element(s) of the SOA and might raise
the possibility that there has been an underpayment or overpayment
of the royalty fee.
---------------------------------------------------------------------------
To streamline the administrative process and encourage timely
responses to Office inquiries, the Office proposes to close out SOA
examination if a filer fails to reply to an Office correspondence
request after 90 days from the date of the last correspondence from the
Office. After an SOA is closed, it would be placed with other publicly
available SOA records. At that point, a cable operator wishing to
submit a reply or pay additional royalties or make necessary
corrections would need to file an amended SOA along with a filing fee
as prescribed in 37 CFR 201.3(e). But, to
[[Page 56936]]
be clear, operators failing to respond within the prescribed 90-day
window would forfeit any potential refund of an overpayment associated
with any issue with the SOA identified by the Office in its
correspondence.
The Office tentatively concludes that 90 days is a reasonable
timeframe for operators to reply to any issues arising from examination
of an SOA and that the proposed amendments will facilitate the timely
disposition of SOAs. The Office proposes harmonizing this practice
across regulations affecting SOAs for cable operators, satellite
carriers, and digital audio recording equipment manufacturers and
importers.
B. Royalty Refunds
Because the administrative cost of issuing royalty refunds of less
than $50.00 can exceed the amount actually refunded, under the Office's
proposed rule, refunds for amounts of $50.00 or less will issue only
where the refund is specifically requested before the SOA is closed and
made available for public inspection. If a refund is not requested
before the SOA is closed, the amount will be added to the relevant
royalty pool. The proposed rule will harmonize this practice across
regulations affecting royalty refunds for cable operators, satellite
carriers, and digital audio recording equipment manufacturers and
importers.
C. Payment of Supplemental Royalty Fees and Filing Fees by EFT
The Office proposes to amend its regulations to require payment of
supplemental royalty fees and filing fees by EFT for cable operators,
satellite carriers, and digital audio recording equipment manufacturers
and importers, and eliminate the ability to pay by paper check or money
order. Use of EFT has enhanced the efficiency of the Office's royalty
collection process by avoiding problems associated with a paper check
or money order (e.g., lost checks or delays in processing mail) and by
lessening the Office's administrative workload.
D. Interest Assessment
Current regulations regarding the treatment of interest assessment
for late payments or underpayments of royalties are similar, but not
uniform, for cable operators, satellite carriers, and digital audio
recording equipment manufacturers and importers. The Office proposes to
harmonize these regulations so that interest begins accruing on the
first day after the close of the period for filing SOAs for all
underpayments or late payments of royalties; the accrual period shall
end on the date the payment submitted by the remitter is received by
the Office; and the applicable interest rate shall be the Current Value
of Funds Rate, established by section 8025.4 of the Treasury Finance
Manual. In addition, interest payments shall not be required if the
interest charge is less than $5.00.
IV. Conclusion
The Copyright Office hereby seeks comment from the public on the
amendments proposed in this Notice of Proposed Rulemaking.
List of Subjects in 37 CFR Part 201
Cable television, Copyright, Recordings, Satellites.
Proposed Regulations
For the reasons stated in the preamble, the Copyright Office
proposes to amend 37 CFR part 201 as follows:
PART 201--GENERAL PROVISIONS
0
1. The authority citation for part 201 continues to read as follows:
Authority: 17 U.S.C. 702.
0
2. Amend Sec. 201.11 by:
0
a. Revising paragraph (f)(1).
0
b. Revising paragraph (h)(3)(iv).
0
c. Adding paragraph (h)(3)(vii).
0
d. Adding paragraphs (h)(5) and (h)(6).
The revisions and additions read as follows:
Sec. 201.11 Satellite carrier statements of account covering
statutory licenses for secondary transmissions.
* * * * *
(f) * * *
(1) All royalty fees, including supplemental royalty payments, must
be paid by a single electronic funds transfer (EFT), and must be
received in the designated bank by the filing deadline for the relevant
accounting period. Satellite carriers must provide specific information
as part of the EFT and as part of the remittance advice, as listed in
the instructions for the Statement of Account form.
* * * * *
(h) * * *
(3) * * *
(iv) All requests for correction or refunds must be accompanied by
a filing fee in the amount prescribed in Sec. 201.3(e) for each
Statement of Account involved, paid by EFT. No request will be
processed until the appropriate filing fees are received, and no
supplemental royalty fee will be deposited until an acceptable
remittance in the full amount of the supplemental royalty fee has been
received.
* * * * *
(vii) A refund payment in the amount of fifty dollars ($50.00) or
less will not be refunded unless specifically requested before the
statement of account is closed, at which point any excess payment will
be treated as part of the royalty fee. A request for a refund payment
in an amount of over fifty dollars ($50.00) is not necessary where the
Licensing Division, during its examination of a Statement of Account or
related document, discovers an error that has resulted in a royalty
overpayment. In this case, the Licensing Division will affirmatively
send the royalty refund to the satellite carrier owner named in the
Statement of Account without regard to the time limitations provided
for in paragraph (h)(3)(i) of this section.
* * * * *
(5) Interest on late payments or underpayments. Royalty fee
payments submitted as a result of late or amended filings shall include
interest. Interest shall begin to accrue beginning on the first day
after the close of the period for filing statements of account for all
underpayments or late payments of royalties for the satellite carrier
statutory license for secondary transmissions for private home viewing
and viewing in commercial establishments occurring within that
accounting period. The accrual period shall end on the date the full
payment submitted by a remitter is received by the Copyright Office.
The interest rate applicable to a specific accounting period beginning
with the 1992/2 period shall be the Current Value of Funds Rate, as
established by section 8025.40 of the Treasury Financial Manual and
published in the Federal Register, in effect on the first business day
after the close of the filing deadline for that accounting period.
Satellite carriers wishing to obtain the interest rate for a specific
accounting period may do so by consulting the Federal Register for the
applicable Current Value of Funds Rate, or by consulting the Copyright
Office Web site. Interest is not required to be paid on any royalty
underpayment or late payment from a particular accounting period if the
interest charge is less than or equal to five dollars ($5.00).
(6) A statement of account shall be considered closed in cases
where a licensee fails to reply within ninety days to the request for
further information from the Copyright Office or, in the case of
subsequent correspondence that may be necessary,
[[Page 56937]]
ninety days from the date of the last correspondence from the Office.
0
3. Amend Sec. 201.17 by:
0
a. Revising paragraphs (b)(1) and (2).
0
b. Revising paragraph (c) introductory text and paragraph (c)(3).
0
c. Adding paragraph (c)(5).
0
d. Revising paragraph (d).
0
e. Revising paragraph (e) introductory text.
0
f. Removing paragraphs (e)(1) through (4), (e)(8), and (e)(10) through
(13).
0
g. Redesignating paragraph (e)(5) as (e)(1), paragraph (e)(6) as
(e)(2), paragraph (e)(7) as (e)(3), paragraph (e)(9) as (e)(4), and
paragraph (e)(14) as (e)(5).
0
h. Removing ````Secondary Transmission Service: Subscribers and
Rates'','' and adding in its place ````Secondary Transmission Service:
Subscribers and Rates,'''' in the newly redesignated paragraph (e)(2).
0
i. Adding ``or, in the case of a cable system ceasing operations during
the accounting period, the facts existing on the last day of
operations'' after ``Statement'' in the newly redesignated paragraph
(e)(2)(iii)(A).
0
j. Revising newly redesignated paragraph (e)(2)(iii)(B).
0
k. Adding paragraph (e)(2)(iii)(C).
0
l. Removing ````Gross Receipts'','' and adding in its place ````Gross
Receipts,'''' in the newly redesignated paragraph (e)(3).
0
m. Removing ``Television'','' and adding in its place ``Television,''''
and removing ``and required to be specially identified by paragraph
(e)(11) of this section,'' in the newly redesignated paragraph (e)(4)
in the introductory text.
0
n. Revising newly redesignated paragraph (e)(4)(iv).
0
o. Removing paragraphs (g)(2) and (g)(4).
0
p. Redesignating paragraph (g)(3) as paragraph (g)(2).
0
q. Revising paragraph (k) introductory text and paragraph (k)(1).
0
r. Removing ``satellite carrier'' and adding in its place ``cable
operator'' in paragraph (k)(4).
0
s. Revising paragraph (l)(1).
0
t. Removing ``(m)(4)'' and adding in its place ``(l)(4)'' in paragraph
(l)(2).
0
u. Removing ``, for any reason except that mentioned in paragraph
(m)(2)(iii) of this section,'' in paragraph (l)(2)(ii).
0
v. Removing ``(m)(2)'' and adding in its place ``(l)(2)'' in paragraph
(l)(4).
0
w. Removing ``(m)(2)(i)'' and adding in its place ``(l)(2)(i)'' in
paragraph (l)(4)(iii)(A).
0
x. Removing ``(m)(2)(ii)'' and adding in its place ``(l)(2)(ii)'' in
paragraph (l)(4)(iii)(B).
0
y. Revising paragraph (l)(4)(iv).
0
z. Removing ``(m)'' and adding in its place ``(l)'', and removing
``(e)(14)'' and adding in its place ``(e)(5)'' in paragraph (l)(4)(v).
0
aa. Removing ``(m)(4)(i)'' and adding in its place ``(l)(4)(i)'' in
paragraph (l)(4)(vi).
0
bb. Adding paragraph (l)(4)(vii).
0
cc. Redesignating paragraph (l)(5) as (l)(7).
0
dd. Revising newly redesignated paragraph (l)(5).
0
ee. Adding paragraph (l)(6).
0
ff. Removing ``(m)'' and adding in its place ``(l)'' in newly
redesignated paragraph (l)(7).
The revisions and additions read as follows:
Sec. 201.17 Statements of Account covering compulsory licenses for
secondary transmissions by cable systems.
* * * * *
(b) * * *
(1) Gross receipts for the ``basic service of providing secondary
transmissions of primary broadcast transmitters'' include the full
amount of monthly (or other periodic) service fees for any and all
services or tiers of services which include one or more secondary
transmissions of television or radio broadcast signals. Gross receipts
also include fees for non-broadcast tier(s) of services if such
purchase is required to obtain tiers of services with broadcast
signals, and fees for any other type of equipment or device necessary
to receive broadcast signals that is supplied by the cable operator. In
no case shall gross receipts be less than the cost of obtaining the
signals of primary broadcast transmitters for subsequent
retransmission. All such gross receipts shall be aggregated and the
distant signal equivalent (DSE) calculations shall be made against the
aggregated amount. Gross receipts for secondary transmission services
do not include installation (including connection, relocation,
disconnection, or reconnection) fees, separate charges for security,
alarm or facsimile services, charges for late payments, or charges for
pay cable or other program origination services: Provided that, the
origination services are not offered in combination with secondary
transmission service for a single fee. In addition, gross receipts
shall not include any fees collected from subscribers for the sale of
Internet services or telephony services when such services are bundled
together with cable service; instead, when cable services are sold as
part of a bundle of other services, gross receipts shall include fees
in the amount that would have been collected if such subscribers
received cable service as an unbundled stand-alone product.
(2) A cable system is a facility, located in any State, Territory,
Trust Territory, or Possession, that in whole or in part receives
signals transmitted or programs broadcast by one or more television
broadcast stations licensed by the Federal Communications Commission,
and makes secondary transmissions of such signals or programs by wires,
cables, microwave, or other communications channels to subscribing
members of the public who pay for such service. A provider of broadcast
signals must be an inherently localized and closed transmission system
of limited availability to qualify as a cable system. A system that
meets this definition is considered a ``cable system'' for copyright
purposes, even if the FCC excludes it from being considered a ``cable
system'' because of the number or nature of its subscribers or the
nature of its secondary transmissions. The Statements of Account and
royalty fees to be deposited under this section shall be recorded and
deposited by each individual cable system desiring its secondary
transmissions to be subject to compulsory licensing. The owner of each
individual cable system on the last day of the accounting period
covered by a Statement of Account is responsible for depositing the
Statement of Account and remitting the copyright royalty fees. For
these purposes, and the purpose of this section, an ``individual''
cable system is each cable system recognized as a distinct entity under
the rules, regulations, and practices of the Federal Communications
Commission in effect on the last day of the accounting period covered
by a Statement of Account, in the case of the preparation and deposit
of a Statement of Account and copyright royalty fee. For these
purposes, two or more cable facilities are considered as one individual
cable system if the facilities are either:
(i) In contiguous communities under common ownership or control or
(ii) Operating from one headend.
* * * * *
(c) Submission of Statement of Account, accounting periods, and
deposit.
* * * * *
(3) Statements of Account and royalty fees received before the end
of the particular accounting period they purport to cover will not be
processed by the Copyright Office except for cases where the cable
system has ceased operation before the account period closes.
Statements of Account and royalty fees received after the filing
deadlines of July 30 or January 30, respectively, will be accepted for
[[Page 56938]]
whatever legal effect they may have, if any.
* * * * *
(5) A cable system that changes ownership during an accounting
period is obligated to file only a single Statement of Account at the
end of the accounting period. Statements of Account and royalty fees
received after the filing deadlines of August 29 or March 1,
respectively, will be accepted for whatever legal effect they may have,
if any.
(d) Statement of Account forms and submission. Cable systems should
submit each Statement of Account using an appropriate form provided by
the Copyright Office on its Web site and following the instructions for
completion and submission provided on the Office's Web site or the form
itself. To file a Statement of Account for an accounting period that
includes dates prior to five years from submission of the form, please
contact the Licensing Division for instructions.
(e) Contents. In addition to the instructions for completion and
submission provided on the Office's Web site or the form itself, each
Statement of Account shall contain the following information:
* * * * *
(2) * * *
(iii) * * *
(A) The description, the number of subscribers, and the charge or
charges made shall reflect the facts existing on the last day of the
period covered by the Statement or, in the case of a cable system
ceasing operations during the accounting period, the facts existing on
the last day of operations; and
(B) Each entity (for example, the owner of a private home, the
resident of an apartment, the owner of a motel, or the owner of an
apartment house) which is charged by the cable system for the basic
service of providing secondary transmissions shall be considered one
subscriber. For short-stay multiple dwelling units (e.g., motel,
hotels), the operator shall report each building served as one
subscriber if the operator has a single agreement for cable service
with the units' proprietor, landlord, or owner on behalf of the
residents or occupants of the structure. If the operator does not serve
any type of multiple dwelling unit, residential or commercial, or any
hotel or motel, a ``zero'' or a ``N/A'' (for ``not applicable'') must
be reported in the appropriate space on the statement of account form.
(C) A cable operator shall on its Statement of Account separately
report, line by line, for both single and multiple dwelling unit
buildings, the number of subscribers served, gross receipts for the
sale of each tier containing broadcast programming, any revenue derived
from non-broadcast tier(s) of services if such purchase is required to
obtain tiers of services with broadcast signals, and fees for any other
type of equipment or device necessary to receive broadcast signals that
is supplied by the cable operator. Information regarding multiple
dwelling units shall not be left blank.
* * * * *
(4) * * *
(iv) A designation as to whether that primary transmitter is a
``network station,'' an ``independent station,'' or a ``noncommercial
educational station.''
* * * * *
(k) Royalty fee payment. (1) All royalty fees, including
supplemental royalty fees, must be paid by a single electronic funds
transfer (EFT), and must be received in the designated bank by the
filing deadline for the relevant accounting period. Cable systems must
provide specific information as part of the EFT and as part of the
remittance advice, as listed in the instructions for the Statement of
Account form.
* * * * *
(l) * * *
(1) To amend or request a refund relating to a Statement of Account
for an accounting period that includes dates prior to five years from
submission of the form, please contact the Licensing Division for
instructions.
* * * * *
(4) * * *
(iv) All requests for correction or refunds must be accompanied by
a filing fee in the amount prescribed in Sec. 201.3(e) for each
Statement of Account involved, paid by EFT. No request will be
processed until the appropriate filing fees are received, and no
supplemental royalty fee will be deposited until an acceptable
remittance in the full amount of the supplemental royalty fee has been
received.
* * * * *
(vii) A refund payment in the amount of fifty dollars ($50.00) or
less will not be refunded unless specifically requested before the
statement of account is closed, at which point any excess payment will
be treated as part of the royalty fee. A request for a refund payment
in an amount of over fifty dollars ($50.00) is not necessary where the
Licensing Division, during its examination of a Statement of Account or
related document, discovers an error that has resulted in a royalty
overpayment. In this case, the Licensing Division will affirmatively
send the royalty refund to the cable system owner named in the
Statement of Account.
* * * * *
(5) Interest on late payments or underpayments. Royalty fee
payments submitted as a result of late or amended filings shall include
interest. Interest shall begin to accrue beginning on the first day
after the close of the period for filing statements of account for all
underpayments or late payments of royalties for the cable statutory
license occurring within that accounting period. The accrual period
shall end on the date the payment submitted by a remitter is received
by the Copyright Office. The interest rate applicable to a specific
accounting period beginning with the 1992/2 period shall be the Current
Value of Funds Rate, as established by section 8025.40 of the Treasury
Financial Manual and published in the Federal Register, in effect on
the first business day after the close of the filing deadline for that
accounting period. Cable operators wishing to obtain the interest rate
for a specific accounting period may do so by consulting the Federal
Register for the applicable Current Value of Funds Rate, or by
consulting the Copyright Office Web site. Interest is not required to
be paid on any royalty underpayment or late payment from a particular
accounting period if the interest charge is less than or equal to five
dollars ($5.00).
(6) A statement of account shall be considered closed in cases
where a licensee fails to reply within ninety days to the request for
further information from the Copyright Office or, in the case of
subsequent correspondence that may be necessary, ninety days from the
date of the last correspondence from the Office.
* * * * *
0
4. Amend 201.28 by:
0
a. Revising paragraph (h)(1).
0
b. Revising paragraph (j)(3)(v).
0
c. Adding paragraph (j)(3)(viii)
0
d. Adding paragraphs (j)(4) and (j)(5).
The revisions and additions read as follows:
Sec. 201.28 Statement of Account for digital audio recording devices
or media.
* * * * *
(h) * * *
(1) All royalty fees, including supplemental royalty fee payments,
must be paid by a single electronic funds transfer (EFT), and must be
received in the designated bank by the filing deadline for the relevant
accounting period. Remitters must provide specific information as part
of the EFT and as part of the remittance
[[Page 56939]]
advice, as listed in the instructions for the Statement of Account
form.
* * * * *
(j) * * *
(3) * * *
(v) All requests for correction or refunds must be accompanied by a
filing fee in the amount prescribed in Sec. 201.3(e) for each
Statement of Account involved, paid by EFT. No request will be
processed until the appropriate filing fees are received, and no
supplemental royalty fee will be deposited until an acceptable
remittance in the full amount of the supplemental royalty fee has been
received.
* * * * *
(viii) A refund payment in the amount of fifty dollars ($50.00) or
less will not be refunded unless specifically requested before the
statement of account is closed, at which point any excess payment will
be treated as part of the royalty fee. A request for a refund payment
in an amount of over fifty dollars ($50.00) is not necessary where the
Licensing Division, during its examination of a Statement of Account or
related document, discovers an error that has resulted in a royalty
overpayment. In this case, the Licensing Division will affirmatively
send the royalty refund to the manufacturing or importing party named
in the Statement of Account.
(4) Interest on late payments or underpayments. Royalty fee
payments submitted as a result of late or amended filings shall include
interest. Interest shall begin to accrue beginning on the first day
after the close of the period for filing statements of account for all
underpayments or late payments of royalties for the digital audio
recording obligation occurring within that accounting period. The
accrual period shall end on the date the payment submitted by a
remitter is received by the Copyright Office. The interest rate
applicable to a specific accounting period beginning with the 1992/2
period shall be the Current Value of Funds Rate, as established by
section 8025.40 of the Treasury Financial Manual and published in the
Federal Register, in effect on the first business day after the close
of the filing deadline for that accounting period. Manufacturers or
importing parties wishing to obtain the interest rate for a specific
accounting period may do so by consulting the Federal Register for the
applicable Current Value of Funds Rate, or by consulting the Copyright
Office Web site. Interest is not required to be paid on any royalty
underpayment or late payment from a particular accounting period if the
interest charge is less than or equal to five dollars ($5.00).
(5) A statement of account shall be considered closed in cases
where a licensee fails to reply within ninety days to the request for
further information from the Copyright Office or, in the case of
subsequent correspondence that may be necessary, ninety days from the
date of the last correspondence from the Office.
Sarang V. Damle,
General Counsel and Associate Register of Copyrights.
[FR Doc. 2017-25487 Filed 11-30-17; 8:45 am]
BILLING CODE 1410-30-P