Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 In the Matter of) ) Closed Captioning and Video Description) of Video Programming ) )MM Docket No. 95-176 Implementation of Section 305 of the ) Telecommunications Act of 1996) ) Video Programming Accessibility) REPORT AND ORDER Adopted: August 7, 1997Released: August 22, 1997 By the Commission: Chairman Hundt and Commissioner Chong issuing separate statements. Table of Contents Paragraph I.INTRODUCTION . . . . . . . . . . . . . . . . . . 1 II.SECTION 713 . . . . . . . . . . . . . . . . . . 5 A.Statutory Requirements of Section 713 . . . . . . .. .. . .. . .5 B.Background. . . . . . . . . . . . . . . . . . 7 C.Summary of the Rules Adopted to Implement Section 713.. .. . .. . .18 III.RESPONSIBILITY FOR COMPLIANCE . . . . . . . . . . . 19 IV. TRANSITION RULES. . . . . . . . . . . . . . . . . 31 A.Transition Rules For New Programs. . . . . . . . .. .. . .31 B.Transition Rules For Pre-Rule Programming . . . . .. .. . .48 V.MEASURING COMPLIANCE WITH THE RULES . . . . . . . . .. .67 VI.EXEMPTIONS FROM THE CLOSED CAPTIONING RULES. . . . . . 87 A.Exemptions Based on "Economically Burdensome" Standard .. . .. . .. . .87 B.Exemptions Based on Existing Contracts. . . . . . .. .. . .169 C.Exemptions Based on the Undue Burden Standard. . . .. .. . . 182 VII.STANDARDS FOR QUALITY AND ACCURACY . . . . . . . . .206 A.Standards for the Technical Aspects of Closed Captioning.. . .. . .. . .208 B.Standards for the Non-Technical Aspects of Captioning.. .. . .. . .214 C.Certification of Stenocaptioners . . . . . . . . .. .. . .226 VIII.ENFORCEMENT AND COMPLIANCE REVIEW MECHANISMS . . . . .231 IX.OTHER ISSUES . . . . . . . . . . . . . . . . . .247 X.FINAL REGULATORY FLEXIBILITY ANALYSIS . . . . . . . .. .258 XI.PAPERWORK REDUCTION ACT OF 1995 ANALYSIS . . . . . . .. . 299XII.ORDERING CLAUSES.. . .. . .. . .. . .. . .. . .. . .. . .301 APPENDICES Appendix A:List of Commenters Appendix B: Rules I.INTRODUCTION 1.By this Report and Order, the Commission adopts rules implementing Section 713 of the Communications Act of 1934, as amended ("Communications Act"). Section 713, Video Programming Accessibility, was added to the Communications Act by Section 305 of the Telecommunications Act of 1996 ("1996 Act"). Section 713 generally requires that video programming be closed captioned. It requires the Commission to prescribe, by August 8, 1997, rules and implementation schedules for the closed captioning of video programming and to establish appropriate exemptions. In crafting rules to implement Section 713, we have endeavored to ensure that persons with hearing disabilities have access to video programming while at the same time taking into consideration the effect of our rules on the video programming industry. 2. Closed captioning is an assistive technology designed to provide access to television for persons with hearing disabilities. Closed captioning is similar to subtitles in that it displays the audio portion of a television signal as printed words on the television screen. To assist viewers with hearing disabilities, captions may also identify speakers, sound effects, music and laughter. Unlike subtitles, however, closed captioning is hidden as encoded data transmitted within the television signal. To view the closed captioning, a viewer must use a set-top decoder or a television receiver with built in decoder circuitry. 3.The Commission's Notice of Proposed Rulemaking ("Notice") in this proceeding sought comment on proposed rules and implementation schedules to fulfill the statutory mandate of Section 713. In the Notice, the Commission discussed proposals intended to maximize the amount of programming containing closed captioning with appropriate exemptions and reasonable timetables to take into account the relevant technical and cost issues involved. We received 120 comments and 67 reply comments in response to the Notice. 4.In Section II of this Report and Order, we set out the provisions of Section 713, discuss the objectives of Section 713 and summarize the rules adopted by the Commission to implement the statute. In Section III, we discuss the responsibility for compliance with the rules we adopt. In Section IV, we address obligations as to programming first published or exhibited after the effective date of our rules ("new programming") and programming first published or exhibited prior to the effective date of our rules ("pre- rule programming"), including phase-in schedules. In Section V, we discuss the measurement of compliance with the rules. In Section VI, we consider the exemptions authorized by Congress: (a) based on the "economically burdensome" standard; (b) based on existing contracts; and (c) under the undue burden standard. Section VII discusses standards for quality and accuracy of closed captioning. In Section VIII, we establish mechanisms for enforcement and compliance review. Finally, in Section IX, we address other issues relating to implementation of Section 713 and matters for future review. II.SECTION 713 A.Statutory Requirements of Section 713 5.Section 713(b) requires the Commission to adopt rules within 18 months of enactment to ensure that: (1) video programming first published or exhibited after the effective date of such regulations is fully accessible through the provision of closed captions, except as provided in subsection (d); and (2) video programming providers or owners maximize the accessibility of video programming first published or exhibited prior to the effective date of such regulations through the provision of closed captions, except as provided in subsection (d). Section 713(c) provides that: Such regulations shall include an appropriate schedule of deadlines for the provision of closed captioning of video programming. Notwithstanding the provisions of Section 713(b), the statute permits certain exemptions of closed captioning requirements. Specifically, under Section 713(d): (1) the Commission may exempt by regulation programs, classes of programs, or services for which the Commission has determined that the provision of closed captioning would be economically burdensome to the provider or owner of such programming; (2) a provider of video programming or the owner of any program carried by the provider shall not be obligated to supply closed captions if such action would be inconsistent with contracts in effect on the date of enactment of the Telecommunications Act of 1996, except that nothing in this section shall be construed to relieve a video programming provider of its obligations to provide services required by Federal law; and (3) a provider of video programming or program owner may petition the Commission for an exemption from the requirements of this section, and the Commission may grant such petition upon a showing that the requirements contained in this section would result in an undue burden. Section 713(e) states that: The term "undue burden" means significant difficulty or expense. In determining whether the closed captions necessary to comply with the requirements of this paragraph would result in an undue economic burden, the factors to be considered include -- (1) the nature and cost of the closed captions for the programming; (2) the impact on the operation of the provider or program owner; (3) the financial resources of the provider or program owner; and (4) the type of operations of the provider or program owner. In addition, Section 713(h) reads: Nothing in this section shall be construed to authorize any private right of action to enforce any requirement of this section or any regulation thereunder. The Commission shall have exclusive jurisdiction with respect to any complaint under this section. 6.As we previously stated, the provisions of Section 713 apply to all types of video programming delivered electronically to consumers, regardless of the entity that provides the programming or the category of programming. In the Notice, we stated that the proposed rules and implementation schedules for closed captioning requirements would apply to various distribution technologies used to deliver this programming to consumers, including over-the-air broadcast television service (both commercial and noncommercial) and all multichannel video programming distributors ("MVPDs"). Among these MVPDs are: cable television, direct-to-home ("DTH") satellite services, including direct broadcast satellite ("DBS") services and home satellite dishes ("HSD"); wireless cable systems using the multichannel multipoint distribution service ("MMDS"), instructional television fixed service ("ITFS") or local multipoint distribution service ("LMDS"); satellite master antenna television ("SMATV") services; and open video systems ("OVS"). B.Background 7.Section 713 is intended to ensure that video programming is closed captioned and accessible to persons with hearing disabilities. The closed captioning of television programming began over 20 years ago and today is a common feature of much widely available and popular programming. Through the voluntary efforts of the video programming industry and with financial support from the Department of Education ("DOE") and private entities, a considerable amount of television programming is currently accessible to persons with hearing disabilities. As Congress recognized, there has been a significant increase in captioning since the enactment of TDCA of 1990, which required all television sets with screens of 13 inches or larger to have the capability to decode closed captioning. However, as the number of channels of video programming continues to increase and the variety of program offerings expands, a large amount of video programming remains uncaptioned. As the legislative history notes, Congress was concerned "that video programming through all delivery systems should be accessible . . . ." In accordance with this congressional mandate, we seek to make closed captioning an integral part of video programming as soon as possible to provide persons with hearing disabilities with the same opportunity to share in the benefits provided by television programming that is available to others. 8.As we reported to Congress, virtually all of the prime time programming distributed by the six major national commercial broadcast networks (i.e., ABC, CBS, NBC, Fox, WB and UPN) is closed captioned. These networks also caption a significant amount of their other programming, including news, children's programming, daytime programming and sports. The Public Broadcasting Service ("PBS") captions all its children's programs, prime time programming and the Newshour with Jim Lehrer and requires the closed captioning of all programming funded by PBS' National Program Service. Furthermore, many local broadcast television stations caption their local programming. 9.The nonbroadcast networks that are available to the greatest number of MVPD subscribers and achieve the highest viewing levels also caption many of their programs, especially those distributed in prime time. There is also a significant amount of captioned programming that is distributed by both broadcast and nonbroadcast video programming providers. The highest rated and most widely available first-run syndicated programs (e.g, Oprah and Wheel of Fortune) are closed captioned. Further, as newer network programming (e.g., Roseanne and Seinfeld) goes into syndication, an increasing number of these programs contain captions and some earlier off-network programs that remain popular have been captioned (e.g., I Love Lucy). Almost all widely-distributed motion pictures currently produced and distributed by member companies of the Motion Picture Association of America ("MPAA") are closed captioned for distribution over broadcast television, MVPDs and home video following their theatrical release. Finally, many commercials are captioned by the advertising agencies that produce them. 10.However, we note that during time periods other than prime time, the amount of closed captioning remains limited. There are approximately 165 national nonbroadcast networks, 50 regional nonbroadcast networks, and much locally originated programming offered by broadcast television stations and cable systems. 11.Section 713 and the rules we adopt in this Report and Order are intended to further increase the amount of programming with closed captions to expand the accessibility of video programming for persons with hearing disabilities. We recognize the important role that video programming plays in American society today as a source of information and entertainment. Thus, we seek to maximize the amount of video programming that is available to the 8.6% of the nation's population who are hearing disabled as rapidly as practical. This goal is consistent with the statute and its legislative history that clearly indicate that Congress intended for video programming to be captioned and available to persons with hearing disabilities. At the same time, the statute directs us to consider the realities of the video programming marketplace, including the many programs yet to be captioned, the financial resources of video programming providers and current limitations on the supply of captioners. In order to balance the important need for closed captioned video programming against these market conditions, we consider a number of factors in developing rules to make video programming accessible as soon as possible. 12.First, we seek to increase the amount of closed captioned video programming incrementally over time. Our rules contain transition periods, during which the amount of closed captioned programming will increase. There is an eight year transition period for new programming, and a ten year transition period for pre-rule programming. In setting these deadlines, we have considered the limited number of available captioners and captioning services in existence, the increased demand for captioning which has been created by Section 713, and the cost of captioning. Allowing a transition period ensures that Section 713 is implemented in an efficient and practical manner. In addition, the rules require that any program received by a provider with captioning, and for which the captions do not require reformatting, must be passed on to consumers with the captions intact. We believe that these rules will ensure accessibility in a reasonable amount of time, with significant increases in captioning throughout these periods. 13.Second, we seek to have a wide array of video programming with captions, recognizing that persons with hearing disabilities desire as wide a choice of programming to be accessible as do members of the public generally. Under our rules, compliance is measured on a channel-by-channel basis, and thus the captioned programs will reflect the overall diversity of the many channels of programming now available. Further, while requiring increasing amounts of programming to be captioned until we reach the degree of accessibility provided by Section 713, our rules allow significant discretion in their implementation by video programming providers because we believe that video programming providers are in the best position to respond to the preferences of their viewers. 14.Third, we seek to promote competition among sources of video programming, consistent with the 1996 Act's overall intent. Our rules apply evenhandedly to all video programming providers and are not intended to intrude upon video programming providers' editorial decisions. In this manner, we maintain competition among video programming distributors regardless of the technologies used, continue to foster diversity of video programming and encourage new types of video programming to become available to all viewers. 15.Fourth, we seek to provide appropriate and reasonable exemptions, as required by Section 713(d), while ensuring that a substantial amount of programming gets captioned. The statute provides for exemptions where captioning would impose an economic burden. We exempt a limited number of programming types from the closed captioning requirements on the basis of economic burden. We also permit some smaller video programming providers to caption less than the specified benchmark amounts of their programming by permitting them to cap their spending on closed captioning, based on their gross revenues. Our rules also provide sufficient flexibility to consider unusual cases under the undue burden standard. 16.Fifth, we seek to adopt rules and procedures that are straightforward and easy to enforce with minimal administrative burdens on the Commission, affected industries and consumers. We adopt a relatively simple enforcement process that places a limited burden on the complainant and permits the video programming provider to demonstrate compliance without a significant paperwork burden. 17.Finally, we seek to place maximum reliance on competitive market forces to develop efficient and cost effective methods for captioning and for ensuring a high level of quality for all captions. Our rules recognize that time must be allowed for the video marketplace to adjust to these new rules. We are aware that those who distribute programming and their program suppliers must coordinate their efforts to determine the most efficient ways to caption programming. In situations where multiple entities in the distribution chain use the same programming, there is a need to determine the best means for captioning programming so that all will have access to such programming without duplication of effort. We also know that some programming providers may not have taken the costs of captioning into account when developing programming budgets. Yet, closed captioning must become an integral part of the production of new programming and programming providers need time to begin to incorporate captioning at the outset of the production process. We want to allow time for these entities to find sources of funding or sponsors to underwrite the additional costs of captioning. In addition, captioning resources must expand to meet the increased demand for captioned programming. While the number of captioners may be sufficient to meet current demand, it appears that we must allow time for the pool of captioners to grow, which is dependent on the training of additional stenocaptioners, and for the number of captioning agencies to increase to meet the demand for captioning of pre-recorded programming. Moreover, as competition for captioning services increases and new technologies are developed, the cost of captioning is likely to decrease. Accordingly, while it would be ideal to require all video programming to be captioned within a minimal amount of time, we must consider the realities of the marketplace and its need to adjust to the new requirements. C.Summary of the Rules Adopted to Implement Section 713 18.The following summarizes the rules we adopt to implement the closed captioning requirements under Section 713, which become effective on January 1, 1998: Responsibility for compliance with captioning requirements: Section 713 refers to the closed captioning of programming by providers and owners of video programming. Because it is efficient and will focus responsibility for rule compliance, we will generally place the responsibility for compliance with our closed captioning rules on video programming distributors, defined as all entities who provide video programming directly to customers' homes, regardless of distribution technology used (i.e., broadcasters and MVPDs). Video programming distributors, however, will not be responsible for the captioning of programming that is not subject to their editorial control. The responsibility for compliance with respect to such programming will be placed on the providers and owners of such programming. Transition schedule: New Programming - Section 713(b)(1) requires the Commission to adopt rules to ensure that video programming first published or exhibited after the effective date of our rules ("new programming") be fully accessible through closed captioning. For new programming that does not meet any of our criteria for exemption, we adopt an eight year transition period with benchmarks specified as a number of hours of required captioning. We will define full accessibility as the captioning of 95% of all new, non- exempt programming to provide for unforeseen difficulties that may arise. Compliance will be measured on a channel-by-channel basis for MVPDs and will be measured over each calendar quarter. During the transition period, each channel of programming will be required to meet the specified benchmark unless the amount of new nonexempt programming offered on the channel is less than the benchmark. In such instances, at least 95% of the new, non-exempt programming on the channel will be required to be captioned. After the transition period, all channels will be required to caption 95% of their new, non-exempt programming. We also will require video programming providers to continue to provide closed captioning at a level substantially the same as the average level of captioning that they provided during the first six months of 1997, even if the amount of captioned programming exceeds that required under the benchmarks. Video programming distributors are required to pass through to consumers any programming they receive with closed captioning, even if they have already met their benchmarks, when they do not edit the programming. Pre-rule programming - For video programming first published or exhibited on or before the effective date of our rules ("pre-rule programming"), Section 713 requires that we maximize the accessibility of such programming through the provision of closed captions. With respect to pre-rule programming that does not meet any of our criteria for exemption, at least 75% of such programming must contain closed captions after the end of a ten year transition period. Compliance will be measured on a per- channel, quarterly basis. We expect that the amount of captioning of such programming will increase incrementally over the transition period. While we will not set specific benchmarks as we are doing for new programming, we will monitor distributors' efforts to increase the amount of captioning of pre-rule programming to determine whether channels are progressing toward the 75% requirement. After four years, we will reevaluate our decision not to establish specific benchmarks and will reevaluate whether the 75% threshold for maximizing the accessibility of pre-rule programming is the appropriate amount to meet the goals of the statute. Exemption based on economic burden: Section 713(d)(1) permits the Commission to exempt by regulation programs, classes of programs or services for which we determine a requirement to provide closed captioning will be economically burdensome. We will exempt from our closed captioning rules several specific classes of programs for which such requirements would be economically burdensome. These include non-English language programming, primarily textual programming, programming distributed between 2 a.m. and 6 a.m., interstitial announcements, promotional programming and public service announcements, advertising, certain locally-produced and distributed programming, non-vocal musical programming, ITFS programming and programming on new networks. We further exempt any video programming provider from closed captioning requirements where the provider has annual gross revenues of less than three million dollars. In addition, we will not require any video programming provider to spend more than 2% of its annual gross revenues on closed captioning. Under this provision, we minimize the economic burden of captioning video programming while at the same time requiring efforts to increase video accessibility by as many entities as possible. Exemptions based on existing contracts: We will exempt any programming subject to a contract in effect on February 8, 1996, for which compliance with the closed captioning requirements would constitute a breach of contract. Exemptions based on undue burden: Under Section 713(d)(3), the Commission is required to consider petitions for exemption from the closed captioning rules if the requirements would impose an undue burden, which is defined as a significant burden or expense. Parties shall file requests for exemption based on the undue burden standard. A petition may be submitted by any party in the programming distribution chain. Petitions must include information that demonstrates how the programming for which the exemption is sought meets one or more of the statutory criteria for undue burden exemptions. Petitioners may also submit any other information they deem appropriate for our evaluation of their situations. Depending on the individual circumstances, we may grant partial exemptions and may consider proposals that programming be made accessible through alternative means (e.g., additional text or graphics). Standards for quality and accuracy: Video programming providers will be required to deliver intact the closed captioning they receive as part of the programming they distribute to viewers where the captions do not need to be reformatted. Video programming providers must maintain and monitor their equipment to ensure the technical quality of the closed captioning they transmit. We will not adopt standards for the non-technical aspects of closed captioning. We will, however, monitor the captions that result from implementation of our rules, and, if necessary, revisit this issue at a later date. We will not establish any standards for captioners. We will not restrict the use of captioning methodology generally. Video programming providers may use the electronic newsroom ("ENR") method of closed captioning. The enforcement process: Complaints alleging violation of our closed captioning rules must first be directed in writing to the video programming provider responsible for distribution of the programming. A complaint must be filed with the video programming provider no later than the end of the calendar quarter following the calendar quarter in which the alleged violation occurred. The video programming provider must provide a written response to a complaint within 45 days after the end of the calendar quarter in which the violation occurred or 45 days after receipt of the complaint, whichever is later. If a video programming provider fails to respond to a complaint or a dispute remains following this initial procedure, a complaint may be filed with the Commission. A video programming provider will have 15 days to respond to the complaint filed with the Commission. If the Commission determines that a violation has occurred, we may impose penalties, including a requirement that the video programming provider deliver programming containing closed captioning in an amount exceeding that required by the rules. We will not adopt any specific recordkeeping requirements. In response to a complaint, however, a video programming provider is obligated to provide the Commission with sufficient records and documentation to demonstrate that it is in compliance with the rules. We also will permit video programming providers to rely on certifications from program suppliers for compliance. III.Responsibility for Compliance A.Background 19.In the Notice, we proposed to place the responsibility for compliance with our closed captioning requirements on video programming distributors, which we defined as all entities who provide video programming directly to a customer's home, regardless of the distribution technologies employed by such entities. We sought comment as to the possible effect such a rule would have on video programming providers, and the effect that our proposal might have on the diversity of available programming as well as the availability of closed captioned programming. We also sought comment as to whether this proposed placement of responsibility might create any anomalous situations. In addition, we sought comment on whether the use of the term "program providers and owners" in Section 713 may have been intended to provide the Commission with jurisdiction over producers of video programming, given the statement in the legislative history that "[t]he term 'provider' contained throughout [this section] refers to the specific television station, cable operator, cable network or other service that provides programming to the public." We solicited comment on the feasibility of having program owners and providers share responsibility for compliance obligations with our closed captioning rules. 20.A variety of commenters, including commenters representing persons with hearing disabilities, support our proposal to place responsibility for compliance on video programming distributors, noting that we have never exercised direct jurisdiction over networks or producers. WGBH notes that efficiency dictates that captioning be done by the original program producers, but asserts that the ultimate responsibility for compliance must rest with a single entity. MPAA claims that holding program owners responsible for closed captioning would require the Commission to "parse complex contractual relationships" to determine which of several entities holding concurrent rights to a particular video product is responsible for a violation. MPAA also contends that joint responsibility for captioning would be unworkable because neither consumers nor the Commission would know to whom complaints should be addressed, and both video programming providers and distributors could disclaim responsibility for closed captioning. According to MPAA, we should allow the parties' contract negotiations to allocate responsibility, similar to the approach which has proven workable in enforcing children's commercial limits imposed by the Children's Television Act of 1990. 21.Some commenters representing persons with hearing disabilities assert that placing compliance responsibility on video programming distributors will make it easier for us to monitor and enforce our closed captioning requirements, especially since it will eliminate the need for the Commission to track who produced a particular program. At the same time, however, several commenters note that placing responsibility for captioning at the production stage would be the most efficient method for ensuring compliance. For example, LHH states that closed captioning when handled by the original program producers will ensure efficiency and accuracy, and will avoid duplication of efforts. Similarly, NAD notes that there may be instances where captioning costs could be too burdensome for the distributor, but not for the producer, and contends that Congress intended producers to provide closed captioning in such situations. 22.Captivision states that shared responsibility may be appropriate for certain live broadcast programming carried by MVPDs. NCI contends that it may make sense to impose closed captioning responsibility on national or regional video programming distributors with respect to programs they control, but not on distributors that do not control the bulk of their distributed programming. NCI states that it is important to place captioning responsibility at the point in the production and distribution process where it makes best economic sense to do so. Several commenters support joint responsibility for compliance, but generally offer no proposals for how such joint responsibility should be apportioned. 23.Video programming distributors generally oppose our proposal to make them primarily responsible for compliance with our closed captioning rules. A number of commenters cite the statute's explicit references to program "owners" in Section 713 as support for our jurisdiction over such entities. Distributors assert that the consensus that closed captioning can be most efficiently and accurately accomplished at the production stage dictates placement of the captioning burden on producers, not distributors. In light of our assumption that distributors could transfer closed captioning responsibility to producers by refusing to purchase uncaptioned programs, AlphaStar asserts that we should just place the compliance burden on producers. Encore argues that distributors are unlikely to be able to pass captioning responsibility on to producers by simply refusing to purchase uncaptioned programs in light of the current video programming marketplace. Encore claims that contracts with producers typically extend for seven year terms, and that refusal to accept a particular film or program may breach a long-term contract and could force a distributor to find other programming to fill a spot at considerable, duplicative expense. 24.Several MVPDs, including satellite and wireless cable distributors, raise concerns specific to their medium. Satellite distributors argue that they typically have little or no control over the programs which they distribute and that they merely obtain the right to retransmit programming, unaltered and in its entirety, through retransmission and affiliation agreements, but do not purchase programming directly from producers. AlphaStar claims that the general terms of its programming distribution licenses prohibit it from adding captions, as its licenses require AlphaStar to retransmit programs in their entirety, without deletion or modification. TCI contends that its affiliation agreements explicitly reserve to the programmer all rights not specified in the agreement, and that the right to caption the programming is not granted to TCI in any of those agreements. Primestar maintains that DTH distributors are technically incapable of producing captions and inserting them after a program has been created due to the mechanics of DTH transmission and technical configuration of the systems themselves. Time Warner argues that cable operators who refuse to carry leased access programming, must-carry stations or public, educational or governmental ("PEG") access programming due to lack of closed captioning could be in violation of the Communications Act or franchise or retransmission consent agreements. 25.In addition, several distributors argue that copyright law may prevent them from closed captioning the programming they distribute. United Video maintains that Section 119(a)(4) of the Copyright Act of 1976 "forbids any willful alteration of the content of any satellite broadcast signal secondarily transmitted by a satellite carrier," and argues that any material related to a particular program which a satellite carrier might insert into line 21 would constitute an alteration of the broadcast signal and thus copyright infringement. USSB is concerned that it might violate intellectual property rights if it captions someone else's work. AlphaStar and Bell Atlantic claim that permission from the original author to publish the dialogue of a video program may be needed to avoid copyright infringement issues. 26.Finally, a number of commenters express concern that program owners or producers might not offer captioned programming to all distributors, forcing smaller distributors with less bargaining power to caption programming that is offered to other distributors already captioned. Several commenters urge us to prohibit discrimination against any distributors by requiring program owners and producers or syndicators to offer captioned programming equally to all distributors. B.Discussion 27.Both Section 713 and the legislative history indicate that Congress intended to give us sufficient jurisdiction to ensure the accessibility of video programming. Section 713 refers to the closed captioning of programming by providers and owners of video programming. The legislative history defines the term "providers" to include the specific television station, cable operator, cable network or other service that provides programming to the public. We believe that we should craft our captioning rules in a manner that will increase the availability of video programming with closed captions most expeditiously as well as focus compliance responsibility. In order to accomplish these goals, we believe it desirable to hold video programming distributors, defined as all entities who provide video programming directly to a customer's home, regardless of the distribution technologies employed by such entities, responsible for compliance with our closed captioning rules. Accordingly, broadcasters, cable operators, wireless cable operators, ITFS or LMDS, SMATV operators, DBS providers, DTH providers, HSD providers and OVS operators will be responsible for compliance with our rules. We believe that placing compliance obligations on distributors will allow us to monitor and enforce these rules more efficiently. By holding distributors responsible for captioning, there typically will be a single entity to which complaints must be addressed, and there will be no need for tracking the entities responsible for producing programs alleged to violate the rules. However, as described below, we will measure compliance with our closed captioning on the basis of each channel of video programming provided to consumers. 28.Although we are placing the ultimate responsibility on program distributors, we expect that distributors will incorporate closed captioning requirements into their contracts with producers and owners, and that parties will negotiate for an efficient allocation of captioning responsibilities. The references to program "owners" in Section 713 reflect Congress' recognition that it is most efficient to caption programming at the production stage, and the assumption that owners and producers will be involved in the captioning process. We therefore expect that program owners and producers will cooperate with distributors to ensure that nonexempt programming is closed captioned in accordance with our rules. We will allow distributors to demonstrate compliance with these rules by relying on certifications from program sources, such as producers, networks or syndicators, that expressly state that the programming is either captioned or exempt from our closed captioning rules, similar to the rules concerning commercial limits imposed by the Children's Television Act of 1990. Distributors will not be held responsible for situations where a program source falsely certifies that programming delivered to the distributor meets our captioning requirements if the distributor is unaware that the certification is false. We anticipate that it would be reasonable for video programming providers to rely on the accuracy of certifications, and we would take appropriate action if there were deliberate falsifications. 29.In some instances, a program distributor is prohibited by law from exercising editorial control over certain types of programming it offers, such as public, educational and governmental ("PEG") or leased access. In these situations, the distributor shall be exempt from captioning such programming. Thus, for example, a satellite provider that secondarily transmits broadcast signals pursuant to the compulsory copyright licensing provisions of Section 111 and 119 of the Copyright Act will not be required to caption those signals, nor will a distributor be required to caption PEG, leased access or must-carry programming that is delivered to the provider uncaptioned. Distributors will not be penalized for transmitting such programming without captions, and need not refuse to carry such programming due to lack of captions where an addition of captions or refusal to carry could violate the Communications Act or their franchise or retransmission consent agreements. Instead, video program producers and owners will be responsible for captioning in situations where the program distributors may not refuse to carry the programming pursuant to Federal law, to the extent the programming is not otherwise exempt under the rules we adopt in this Report and Order. 30.We believe that commenters' concerns that producers will refuse to caption programming before delivery to the distributor are overstated. The video programming industry, providers and producers alike, must adapt to the changes mandated by Section 713. Cooperation between video programming distributors and producers is necessary if video programming is to be captioned as required by Section 713. Video programming providers may no longer view closed captioning as an option in the production process, but as a requirement, the cost of which must be factored in with the costs and budgets for video programming generally. Our captioning rules will be applied to all distributors, which will prevent producers and program suppliers from "shopping around" for distributors who have no closed captioning obligations. There will be few, if any, outlets for programming that are not captioned as the transition period progresses. The inherent need to increase viewership will create an incentive for many program owners and producers to provide captioning to gain carriage on other systems. Thus, we believe the realities of the marketplace will result in shared responsibility for the closed captioning of video programming, although ultimate responsibility for compliance will generally be on the video programming distributor who distributes the programming to viewers. IV. TRANSITION RULES A. Transition Rules for New Programming 1.Background 31.Transition Schedules. We proposed an eight-year transition schedule for programming first published or exhibited after the effective date of our rules ("new programming"), which would phase in closed captioning of all non-exempt new programming by 25% increments every two years. We also offered an alternative proposal under which closed captioning of non-exempt new programming would be phased in over ten years, with 25% captioned after three years, 50% after five years, 75% after seven years, and 100% after ten years. Under our proposal, program providers would have significant discretion regarding what to caption to meet the requirements and how to use funding available for captioning. We noted that the level of captioned programming currently offered by some programmers may exceed these benchmarks, and that we expected current levels of closed captioning to continue. 32.Numerous commenters, including video programming distributors and providers, captioners and deaf advocates, support the proposed eight-year or ten-year schedules. In addition, some commenters find merit in both proposals. NCD states that eight years "may be the shortest practicable" transition schedule, but that we should adopt a ten-year schedule if the relevant industry groups could guarantee that all new programming would be made fully accessible in that time span. 33.Several commenters qualify their support for the proposed transition schedules, based on our adoption of certain requested exemptions, a decision not to adopt non-technical quality standards, or the application of the rules to program owners. NCD recommends that distributors show some evidence of progress each year, aggregating to 25% every two years. Similarly, Captivision contends that we should require some increase in closed captioning levels within the first year after the rules become effective, if we adopt the eight-year transition period. MCS supports adoption of the proposed eight-year transition period, provided that we use current captioning levels as the starting point from which the amount of captioned programming would be increased. 34.Commenters that oppose our proposals primarily represent persons with hearing disabilities. They propose alternative implementation schedules generally ranging from one to five years. Many commenters argue that shorter time frames are reasonable because closed captioning technology has been available for 20 years; the technology is widely available and affordable; caption services are abundant and competitive; and programmers and owners have been aware that they would be required to provide closed captioning since the passage of the 1996 Act. 35.SHHH notes that the proposed schedules would allow major networks to do nothing for the first seven years, and could allow them to decrease current levels of closed captioning. Numerous commenters assert that the percentage increments should be over and above current captioning levels. WGBH argues that it is unlikely that Congress intended Section 713 to result in a cutback in current closed captioning levels, and recommends using February 8, 1996, as the baseline upon which the 25% thresholds are added. In addition, several commenters express doubt about the continuance of current captioning levels, and note that reductions in closed captioning have occurred already. 36.A number of commenters suggest that our final benchmark for closed captioning of non- exempt new programming should be less than 100%. Some of these commenters propose that allowing "substantial compliance" with our closed captioning rules will ease the burden on distributors and lessen the drain on Commission resources engendered by requests for individual exemptions under Section 713(d)(3). Other commenters claim that without a "de minimis" exemption a distributor would have no time to request an exemption when a program is received shortly before its scheduled air time and is uncaptioned, and the programming might simply be pulled from the schedule. Alternatively, these commenters claim that such situations could arise quite frequently, and that we would therefore be overwhelmed with individual exemption requests, as it will be difficult to anticipate and address in this proceeding every valid exemption situation that could arise in the future. The proposed "de minimis" or "substantial compliance" thresholds range from 80% to 98% captioning of all non-exempt new programming. 37.Closed Captioning Priorities. We solicited comment on whether certain types of programming should be subject to an accelerated implementation schedule. We also noted that a significant portion of funding for current levels of closed captioning comes from DOE grants and the availability of such funding in the future is unclear, which could affect the amount of captioning that can be provided. We asked commenters to consider whether other factors, including the type of programming, the time of day the program is offered, audience size, the type of program provider, the number of households served by the distributor (e.g., homes in the television market or homes passed by the cable system), or some combination of these factors should be incorporated into our phase in schedules or be the basis of alternative proposals. 38.With respect to possible earlier implementation of closed captioning for certain types of programming, comments from organizations representing persons with hearing disabilities strongly support priority captioning of news, emergency announcements, current affairs and educational programs, while comments from others support our proposal to let providers decide what programs should be captioned first. MCS and HBO agree that programmers should have discretion in determining how best to allocate closed captioning resources. HBO also claims that market forces will continue to be the significant catalyst for captioning that such forces have been to date, ensuring that the most desirable programming will be captioned first. C-SPAN contends that the "spoken word intensive character" of news and public affairs programming supports the need for a longer transition period for closed captioning of such programming. NACDA claims that sports programming should be given a later implementation schedule than other programming so that scarce live captioning resources can be devoted to news and public affairs programming first. 39. Captivision contends that current closed captioning levels should not be reduced, regardless of the availability of federal funds for captioning. This commenter claims that DOE funding for captioning was intended merely to "kick-start" the captioning process and allow stations to garner their own financial support for closed captioning. MCS expresses concern that the proposed transition rules will allow programmers the flexibility to reduce their captioned programming if the level of federal support for closed captions decreases. MCS submits that this could result in a net reduction of the current level of captioned hours, which would be inconsistent with the intent of the statute. 40.NCI proposes that a distinction be made between programs with large and small potential audiences. NCI contends that such a distinction makes economic sense because the cost of closed captioning widely available programming is de minimis in relation to production costs and distribution revenues of such programming. NCI submits that where the video market is large and captioning costs are low, a significant time lag for implementation of closed captioning is unnecessary and illogical. In addition, NCI states that video programming distributors or providers that do not voluntarily caption programming intended for wide audiences should be required to caption programs reaching wide audiences first and then caption other types of programming. Allnewsco contends, however, that market size and geographic location bear no relationship to the burden of closed captioning on a particular type of programming. 2.Discussion 41.We adopt an eight year transition period for video programming first published or exhibited after the effective date of our rules ("new programming"). During this transition period, distributors will be required to increase over time the amount of closed captioned video programming they distribute until full accessibility of new programming is achieved. Our goal, consistent with the intent of Section 713, is to make all new video programming fully accessible as soon as possible. However, we must take into consideration that this goal cannot be reached immediately due to the limited number of available captioners and captioning services in existence, the increased demand for captioning which will be created by Section 713, and the cost of captioning. With respect to cost, we note that the cost of captioning varies with the type of programming and method used. As we reported to Congress, off-line captioning of prerecorded programming is estimated to be between $800 and $2500 an hour. For live programming requiring real time stenocaptioning, cost estimates range from $120 to $1200 an hour. For scripted live programming that uses a teleprompter from which captions can be created, the cost of installing the captioning capability, referred to as electronic newsroom, is between $2500 and $5000. We also note that, according to NCI, the cost of captioning all types of video programming has decreased considerably over the past several years. Further, we are also concerned that requiring distributors to implement captioning immediately could reduce the availability of certain types of video programming in the near term, or pose implementation problems where distributors and producers have entered into long term contracts which do not address the responsibility for captioning. We believe that the rules we adopt provide a balanced approach that will result in full accessibility in a reasonable amount of time with significant increases as captioning is phased in. Allowing a transition to full captioning to occur over a period of years will help to ensure that the goal of the statute is met in an efficient and practical manner. 42.We are not convinced by those commenters arguing for a shorter transition period than either of those we proposed in the Notice. We agree that closed captioning technology has been available for many years, and that the video industry has been aware since the passage of the 1996 Act that closed captioning would no longer be voluntary. However, we recognize that existing closed captioning resources may not be able to achieve full accessibility immediately. The record in this proceeding demonstrates that although there may be sufficient captioning resources available to meet current demand, the amount of closed captioning to be undertaken in compliance with our rules will significantly increase demands on these resources. For example, while the broadcast networks and the most widely available and popular non- broadcast networks caption significant amounts of their programming, a large amount of programming will be captioned for the first time. We note that the number of captioners, especially the number of real time stenocaptioners needed for live programming, is currently limited. While we expect the pool of captioners to expand to meet the increased demand for closed captioning, that expansion is dependent on individuals acquiring captioning skills. We are also not persuaded that a longer transition period offers significant advantages over an eight year period. 43.Our rules will require that, at the end of the transition period, 95% of all new programming that does not fall within any of our exemptions will be closed captioned. Because we recognize that there are unforeseen difficulties that could arise that might unintentionally result in video programming providers being unable to provide such new programming with captions, we believe it is reasonable to define full accessibility at the end of the transition period as slightly less than 100% of all new nonexempt programming. The 95% requirement provides some leeway to accommodate these difficulties. Although the statute uses the term "fully accessible" in describing the amount of new programming to be captioned under our rules, the statute also includes provisions for exemptions from the captioning rules, an acknowledgement that some new programming will not be captioned. In addition, the legislative history states that "the Committee expects that most new programming will be closed captioned," indicating Congress' recognition that something less than all new programming would be captioned. A final requirement that at least 95% of all new nonexempt programming be captioned will ease the burden on distributors that receive programs without captions shortly before their scheduled air times, allowing distributors to air such programs without having to seek last-minute waivers, and will also accommodate occasional technical lapses which may occur due to circumstances beyond a distributor's control. 44.The transition schedule will phase in closed captioning for new nonexempt video programming until full accessibility is reached after the end of the eight year transition period. We believe that some time is needed to permit video programming distributors sufficient time to determine the availability of programming with closed captioning and to make whatever arrangements are necessary to ensure that they are able to provide programming with closed captioning to viewers in compliance with our requirements. Therefore, the initial benchmark for captioning is set for the first calendar quarter of 2000. Beginning with the first calendar quarter of 2000, distributors will be required to meet increasing closed captioning benchmarks for new nonexempt programming. 45.We establish three benchmarks during the transition period. As described below, compliance with and measurement of these benchmarks will determined on a per channel and calendar quarter basis. (Also as described below, video programming providers will be permitted to treat as exempt up to four hours of late night programming.) These benchmarks are based on average amounts of required captioning of new nonexempt programming of approximately five hours per day after two years, ten hours per day after four years and 15 hours per day after six years. These requirements are measured over the course of the calendar quarter, so, for example, the first benchmark requires that at least 450 hours of new nonexempt programming be captioned per calendar quarter in 2000 and 2001. We recognize that many channels provide a mix of new, pre-rule and exempt programming and we believe that all channels should be afforded the benefit of captioning 95% rather than 100% of new nonexempt programming. Therefore, our rules provide that, when the closed captioning requirements specified in our rules exceed the number of hours of new nonexempt programming on a channel during the calendar quarter, 95% of the new nonexempt programming on such channel must contain captions. For example, during the first calendar quarter of 2002 (i.e., January, February and March 2002), if a channel has 850 hours of new nonexempt programming (an amount less than the 900 hours benchmark requirement), then it is in compliance if 807« hours (95% of 850) are captioned. We expect video programming distributors to plan to deliver to consumers captioned programming sufficient to maintain the needed flexibility for the occasional situations where unintended difficulties arise. 46.Finally, notwithstanding the specific transition requirements and the exemptions otherwise provided for in the rules, in order to make sure that the level of captioning is generally increasing, we will also require video programming providers to continue to provide closed captioning at level substantially the same as the average level of captioning that they provided during the first six months of 1997, even if the amount of captioned programming exceeds that requirement under the benchmarks. We reject, however, the implicit suggestion of some of the commenting parties that entities that already captioned large amounts of programming should be required to complete the transition process at an earlier date. 47.Finally, we decline to adopt an expedited schedule for captioning of any particular type of programming. Although we recognize the importance of, for example, news and community affairs programming to viewers, we believe that distributors can best determine what programs to caption first, and we expect that consumer demand, among other factors, will be taken into account in making those determinations. We wish to emphasize that the ultimate goal of the statute is to make video programming accessible to persons with hearing disabilities, which we believe is accomplished by our rules. All new programming, less the 5% allowance for unforeseen difficulties, will be captioned after the transition period. This will represent a significant increase in the amount and variety of captioned programming available to viewers with hearing disabilities. B.Transition Rules for Pre-Rule Programming 1.Background 48.In the Notice, we referred to the statutory distinction between the closed captioning requirements for programming first published or exhibited after the effective date of our rules ("fully accessible") and programming first published or exhibited before that date ("maximize accessibility"). Because of this distinction, we believe that Congress did not intend that all programming published prior to the effective date of our rules would be captioned. We also noted that a requirement that nearly all programming be captioned could present a significant burden, as well as the possibility that distributors would elect to remove older, uncaptioned programming from their scheduled offerings rather than captioning such programs. We sought comment on whether our rules should require that a percentage of pre-rule programming, perhaps 75%, ultimately be captioned or whether it may be unnecessary to require that pre- rule programming be captioned by a date certain. 49.Definition. Several commenters seek clarification of the definition of pre-rule programming. For example, MPAA, HBO and Viacom suggest clarifying our definition of pre-rule programming such that "first published or exhibited" refers to the time when the work was first publicly distributed in its original form in any medium. These commenters would define programs first exhibited in any medium prior to August 8, 1997 as "pre-rule programming" for the purposes of our rules. Thus, theatrical films and home videos first publicly distributed prior to the effective date of our rules would not be considered "new programming," even though such works might first be aired on television after the effective date of the rules. NCD asks whether colorizing, remastering or otherwise restoring or modifying a vintage film "in accordance with contemporary technology and tastes" would transform the film from pre-rule programming to new material. NCD claims that, even if such modifications are not deemed to re-classify the material as new programming for the purposes of our rules, in many cases the costs of captioning may represent only a small portion of or minor addition to the overall modification costs, making economic arguments against captioning less persuasive in such situations. MPAA and NCTA contend that a reformatted version of a previously-published program should not be re-categorized as "new." 50.MPAA and Viacom argue that once a new program is ten years old, it should no longer be considered new and should be subject to the less stringent standard, while HBO would remove a program from the new category one year after it is first exhibited. MPAA and Viacom claim that, as new programs age, their value diminishes, and eventually the burden of captioning or reformatting existing captions becomes uneconomical. HBO contends that it would be illogical for all programs first publicly distributed after October 31, 1997 to be considered "new" in perpetuity. 51.NAB agrees that the definition of pre-rule programming in the Notice may be too narrow, and that it would implicitly deprive broadcasters and producers of flexibility in implementing captions. NAB maintains that our proposed schedule allows stations to air declining amounts of new programs without captions until full captioning requirements are in place. Thus, if programs that were properly produced and aired without captions during the transition period are not reclassified, they would have to be captioned for any further exhibition, even if the burden of doing so would be high. The alternative to captioning such programs would be to remove them from distribution, which would contravene Congress' intent. Thus, NAB proposes that the definition of "pre-rule programming" include both programs first published or exhibited before the effective date of our rules and programs first published or exhibited after that date without captions. 52.In addition, numerous commenters request clarification that any captioning requirements apply only to programs that are actually aired subsequent to the effective date of the rules, rather than to all previously produced programming. 53.Pre-Rule Programming Benchmarks. Video industry commenters addressing this topic recommend that we set no requirements or even targets for pre-rule programming. They assert that market forces have resulted in high levels of captioning of library product to date, and will continue to ensure the captioning of such materials. They contend that: (a) a captioning requirement for pre-rule programming will reduce the amount and variety of programming available to all viewers; (b) the percentage of captioned "library" materials will naturally increase as the phase-in schedule for non-exempt new programming progresses and new programs "age" into "library" programs; and (c) it would be consistent with the intent of the statute to refrain from imposing a mandatory captioning requirement on pre-rule materials, as Congress did not intend to deter providers from airing pre-rule programming due to the costs of captioning. In contrast, VITAC maintains that statistics and anecdotal evidence strongly suggest that a significant number of widely distributed programs would never be voluntarily made accessible to the viewers who rely upon or use captions. MPAA and Viacom recommend a requirement that, at most, 50% of the pre-rule programs that are actually aired be captioned, claiming that any higher percentage will result in a reduction of program variety. 54.Several commenters also express concern that a captioning requirement for pre-rule programs will unfairly burden networks dedicated to airing vintage material, and also new programming networks, which tend to rely more heavily on older materials in their early stages. NCTA claims that new programming can be expected to have a "multi-year, multi-outlet life cycle" over which a provider can recover the costs of captioning, whereas older programming generally does not. Some commenters also note that providers often acquired these programs without contemplating the cost of or need for adding captions at a later date, and that a captioning requirement for pre-rule programming would result in programs purchased or licensed prior to the advent of the captioning mandate being archived rather than aired, effectively causing a loss of funds spent to acquire such programs. 55.A number of commenters contend that there are now large amounts of previously captioned video material which are repeatedly transmitted without captions, and that we should first ensure that, regardless of editing or licensing of rights, once a program has been captioned for any venue, those captions will be reused even if slight reformatting is necessary. Several commenters would have program providers compile an inventory of all existing captioned programming, which would be submitted to the Commission shortly after the rules take effect. 56.Commenters representing persons with hearing disabilities oppose our proposal for captioning pre-rule programs. Several commenters urge us to require that all pre-rule programming be captioned. ALDA and CAN contend that our proposal to limit any captioning requirement to 75% of pre- rule materials is arbitrary and unsupported by law. NAD claims that both the statutory language and the legislative history make clear that our proposed 75% requirement is not what Congress intended, while LHH contends that the 75% goal falls "far short" of what would be a reasonable requirement for pre-rule programming. Others maintain that Section 713(b)(2) requires the maximization of captioning for pre-rule programming "except as provided in subsection (d)," and that our proposal to exempt 25% of that programming would not fall within any Section 713(d) exception. 57.One commenter with a hearing disability notes that older programming predominates the video offerings of many cable networks, and argues that an exemption for such programming will leave cable television largely inaccessible to persons with hearing disabilities. NCD claims that, where a programmer offers few or no new programs, a captioning requirement for some pre-rule material potentially involves no greater cost than would be incurred by a station which airs mainly new material. NCD asserts that Congress did not intend Section 713(b)(2) to create incentives for programmers to rely on older video materials as a means of avoiding our captioning requirements. 58.Transition Schedule. APTS supports a captioning requirement for 75% of any pre-rule materials still in use after the initial eight or ten year transition period for captioning of new programming, within a subsequent eight year period. APTS contends that the initial phase in will allow stations to build collections of captioned materials, and the subsequent period will allow time to identify and caption pre-rule programming that will have recurrent use. MPAA and Viacom suggest a 15 year transition period for captioning pre-rule programs, with 10% increments every three years and with compliance calculated as a percentage of annual hours delivered by the provider to consumers. GSN requests that we adopt a lower percentage requirement, perhaps 25%, and allow 16 years for implementation. 59.Commenters representing persons with hearing disabilities propose time frames for pre-rule programming ranging from three to ten years. Several commenters propose that such programs be captioned within the same time frame as new programs. A few propose a seven year transition period, while LHH urges a goal of captioning 100% of pre-rule nonexempt programming over ten years, with increasing 20% increments every two years. Captivision similarly suggests that captioning for pre-rule programs could be addressed with a longer implementation period of ten years, or by captioning 75% of the movies or series that are shown most often. 2.Discussion 60.Section 713 requires that we maximize the accessibility of video programming first published or exhibited prior to the effective date of our rules through the provision of closed captions. With respect to the definition of pre-rule programming, the statute refers exclusively to video programming which was "first published or exhibited prior to the effective date" of the rules promulgated in this Report and Order. Thus, a program either will or will not have been first published or exhibited prior to the effective date of our rules. We clarify that the relevant date of first exhibition or publication of a program is its first exhibition or publication, by any distribution method. Finally, although the standard setting process for closed captioning decoders for high definition and digital television receivers is well underway, final standards for such receivers do not yet exist, making it difficult for entities preparing to broadcast or transmit to such receivers to finally format closed caption content for these uses. Accordingly, we believe it appropriate to also define material prepared for such transmission as "pre-rule" until such time as the necessary decoder standard rules have been adopted by the Commission and are effective. 61.Our rules establish a ten year transition period for captioning of pre-rule programming, and require that 75% of all pre-rule nonexempt programming delivered to consumers during the first quarter of 2008 and thereafter must be captioned. The requirement for pre-rule nonexempt programming will only apply to such programming that is actually aired by distributors. As with new programming, compliance with the 75% requirement for pre-rule programming as of 2008 shall be measured channel-by-channel, averaged over each calendar quarter. 62.We believe that the legislative history, in conjunction with the statute's distinction between captioning requirements for pre-rule and new programming, supports an interpretation of the statute that requires captioning of a lesser amount of pre-rule nonexempt programming than new programming over a longer transition period. The legislative history of the statute illustrates Congress' expectation that something less than all pre-rule programming would ultimately be captioned: "[T]he Committee expects that . . . preexisting programming will be captioned to the maximum extent possible, with the recognition that economic or logistical difficulties make it unrealistic to caption all previously produced programming." In contrast, the legislative history states, with respect to new programming, "the Committee expects that most new programming will be closed captioned." Thus, we believe that at this time we should not implement a rule that will require that all pre-rule programming be captioned. In addition, given the vast amount of such programming in existence, the limited captioning resources available to produce captions for all programming at present, and Congress' concern that pre-rule programs not be relegated to the archives due to the cost of captioning, we believe that the longer, ten year transition period we adopt is the "appropriate schedule" for captioning of pre-rule programming. We expect that allowing additional time to achieve the pre-rule captioning requirement will help to alleviate some of the initial strain on captioning resources which will be created by our rules, and will ensure a more orderly, efficient transition to maximized accessibility of pre-rule programming. 63.We believe that this rule strikes the proper balance between the statutory obligation to increase the amount of programming accessible through captions, without reducing the amount of pre-rule programs aired, and the economic and logistical concerns raised by captioning large amounts of pre-existing programs. While we sought comment on leaving decisions regarding the captioning of pre-rule programming to the marketplace, we are concerned that, without any requirements, much of this programming may remain inaccessible. We note that many nonbroadcast networks and many broadcast stations not affiliated with major networks rely on significant amounts of older programming. Without captioning requirements for such programs, we believe the viewing choices of persons with hearing disabilities could be significantly diminished. Requiring that 75% of pre-rule nonexempt programming be captioned as of 2008 will provide a substantial increase in the accessibility of such programs, while allowing significant flexibility in achieving this goal. 64.We will not establish interim benchmarks for pre-rule programming at this time. Our presumption is that market forces will foster increased captioning of pre-rule programs over time, rather than leaving the bulk of such programming to be captioned at the end of the transition period. We expect all distributors to make reasonable efforts to incrementally increase the amount of captioned older programming they offer prior to the pre-rule captioning deadline. We will monitor distributors' efforts to increase the amount of captioning of pre-rule programs to determine whether channels are progressing toward the 75% requirement. If sufficient progress is not evident, we may institute specific percentage requirements for the remaining years of the transition period. We will also reevaluate the 75% requirement after four years to determine whether it is appropriate or whether a different percentage should be required. We recognize that the expansion of captioning resources and technological developments which may be made during the course of the transition period may lessen the costs and other difficulties involved with captioning pre-rule programs such that captioning a greater percentage of such programs will not pose a significant burden. By the same token, it might be that a 75% requirement is more burdensome than expected. By reviewing the status of captioning of pre-rule programming, we will be able to make adjustments to our rules, if warranted, to ensure that distributors are maximizing the accessibility of older video programming, while allowing significant flexibility in achieving this goal. 65. We expect that video programming providers will use the flexibility granted by the transition period to determine cost-effective and practical usage of captioning resources for pre-rule programming. We also expect that this flexibility will address commenters' claims that distributors can neither bargain for captioning to be included in the license, nor refuse to buy uncaptioned programming in the near term, due to standard, long-term film licensing contracts, which typically extend for several years. A ten year transition period for captioning pre-rule programs will allow time for most existing contracts to expire and for distributors and owners to negotiate for an efficient provision of captioning in new and existing contracts. 66.With respect to commenters' suggestions that we create an inventory of pre-rule programming that has already been closed captioned, we recognize that such an inventory could assist distributors in meeting our captioning requirements, but we believe that the administrative burden of establishing and maintaining such an inventory is not suited to the regulatory process. Producers and programmers that have made the effort to caption their video programs should know which of their programs have captions and which do not. We encourage programmers to create inventories of their captioned programs, and to make such information publicly available, including available to entities that license or purchase such programs. V.MEASURING COMPLIANCE WITH THE RULES A.Background 67.With respect to MVPDs, we sought comment as to whether the percentages of programming that must be captioned should be applied on a system-wide basis or to each program service or channel transmitted by an MVPD. A few commenters support our proposal for a system-wide approach. For example, DirecTV states that a system-wide application of the percentage requirements would make a market-driven allocation of closed captioning resources possible. Encore claims that this approach will allow for minor variations among channels and differences in captioning burdens among the programs carried by different networks. Primestar and HBO recommend that we allow MVPDs to elect either system-wide or per-channel compliance. 68.The majority of commenters who addressed this issue, however, support a channel-by- channel application, noting that this would be fairer and result in more closed captioning than our system- wide proposal. For example, CBS and several others contend that under the system-based approach MVPDs could pressure one service to caption more programming so that others could caption little, if any, programming. NCD submits that we should allow MVPDs some variation within the per-channel approach, but requests that we prohibit any practices that tend to restrict the viewing options of closed captioning users. We also solicited comment on how to determine closed captioning requirements for programming services using multiplexing to offer multiple programs simultaneously. NAB states that since the captions are embedded in each individual program, the program will contain captions before the signal is multiplexed, and therefore captions can simply be passed through on the multiplexed channel. SBC argues that any closed captioning offered on multiplexed channels should count toward a provider's captioning quota, if providers are held responsible for closed captioning compliance. Captivision contends that, at a minimum, the passing through of existing closed captions for multiplexing should be mandatory. 69.We also sought comment on whether a determination that a percentage requirement has been met should be based on the amount of programming with closed captioning that has been shown over a month, a week, or some other period of time. A few commenters with hearing disabilities maintain that distributors should be required to comply on a daily basis. Supporters of weekly measurements note that most distributor's schedules are set up on a weekly basis, and that data collection burdens could become too great if the time frame were longer than a week. Commenters advocating monthly measurements note that such a time frame is reasonable, will reduce the recordkeeping burden on distributors, and will allow programmers flexibility to determine where to best spend limited captioning dollars, at least in the initial compliance periods. TVFN supports monthly measurements, but adds that the time frame should not be shorter than a week in any event. 70.Some commenters recommend quarterly measurements. Lifetime, for example, supports this approach and states that compliance measurements on a quarterly basis will permit optimum flexibility for packaging of programming especially during featured periods (e.g., special events months). A few others propose annual compliance measurements. MPAA contends that annual measurements are appropriate because the volume of new programs aired varies according to the program season. According to MPAA, measuring compliance on a weekly or monthly basis would not take seasonal variances into account, and would provide an incomplete or inaccurate assessment of closed captioning efforts, whereas measuring compliance annually would give programmers needed flexibility in scheduling. Similarly, ABC recommends annual review because it will give providers flexibility during the phase-in period to select those programs best suited for closed captioning and will encourage the most efficient use of resources for captions. 71. We requested comment on whether compliance with our rules should be the responsibility of the MVPD or broadcaster where a broadcast station is retransmitted by an MVPD. Producers and distributors are concerned about the apportionment of responsibility for closed captioning of broadcast programs that are retransmitted by MVPDs. In such instances, CBS contends that the broadcast station's obligation to the MVPD should not go beyond the station's ordinary closed captioning responsibilities under the rules. On the other hand, SBC maintains that broadcast stations should bear exclusive responsibility for captioning their programming, if distributors are held responsible for captioning generally. Persons with hearing disabilities generally oppose a rule which would allow MVPDs to count broadcast captioning towards their percentage requirements. As CAN contends, such a rule would allow some distributors to make no increase in closed captioning for several years. 72.HBO requests clarification that any non-English language program captioning requirement ultimately adopted does not extend to services which offer a second language soundtrack, as this would require a single program to be captioned twice, doubling the cost of captioning. HBO also seeks clarification that non-English language programming which already contains English subtitles need not be captioned, and that discrete portions of programs which contain non-English dialogue (e.g., an English language war film that includes scenes where foreign soldiers speak in another language without translation) need not be captioned. 73.In the Notice, we tentatively concluded that it would not be appropriate or necessary to restrict captioning methodologies. We were concerned that any restrictions on the method of captioning would prevent certain types of programming from being captioned. For example, we noted that the ENR method does not provide complete captioning when not all aural portions of a program are scripted, yet it has the advantage over other methods in that once an initial investment is made in equipment and software, it is relatively cost free. 74.Comments on this issue focus on whether the ENR method of captioning should be acceptable for compliance with our rules. Parties supporting our proposal not to restrict the use of this method generally state that its use will permit the captioning of certain types of programming, especially local news and other live programs, that otherwise would not be captioned in the short term. RTNDA claims that the ENR method of captioning can yield highly reliable captions for the majority of live, local news content at modest cost. In this regard, Pulitzer asserts that the content of the limited amount of non- scripted material is often communicated in other ways (e.g., weather reports that contain graphical and visual elements). WGBH states that, if carefully and intelligently prepared, ENR captioning can provide access to large portions of news programs. In this regard, WGBH states that we should indicate that users of the ENR method need to enter additional script transcriptions into their systems. It suggests that we require that a percentage of a program (e.g., 50% or 75%) be accessible through captions if ENR is used. Similarly, MCS states that a program should not count towards compliance if more than 20% is not captioned. 75.Several commenters are concerned about the cost of real-time captioning should it be mandated for their live programming. For example, RTNDA claims that a requirement for real-time captioning could add at least $100,000 to a station's annual budget. Time Warner estimates that the cost of stenocaptioning its 24-hour local news service would be $500,000 a year. Allnewsco indicates that its ENR system cost $100,000 and that a requirement to use real-time captioning would double the per hour cost of its programming. These commenters assert that the costs of mandated real-time captioning would likely result in the reduction or elimination of the local news services they offer. In addition, commenters indicate that, if ENR is declared inadequate, it is not certain that all programs currently captioned would remain captioned, and a loss of accessibility might result. 76.Alternatively, NAD, Captivision, and Cassidy maintain that the use of the ENR method is not sufficient to satisfy the intent of Section 713 to make video programming "fully accessible." They contend that ENR does not satisfy full accessibility since it does not provide captions for many elements of a news program and, therefore, is not the functional equivalent of the audio portion of the program. NAD rejects any proposals to find the use of ENR acceptable, including those proposals to permit the use of ENR if a specified percentage of the programming is captioned using this method. While noting our concern about the availability of a sufficient number of stenocaptioners, NAD argues that, as captioning becomes required, the number of captioners will increase to fill the need. On this basis, NAD and a few other commenters state that any rule which permits ENR captioning should be limited to one or two years at most. 77.We further proposed that a distributor that receives a program with captions, and does not edit that program, be required to deliver that programming with captions, regardless of whether the distributor has already met any percentage requirement. Most commenters that address this issue agree with this proposal. We also sought comment on whether distributors that edit pre-recorded captioned programming should be required to reformat the captions of such programming. Many commenters support a requirement that previously captioned programming be reformatted if necessary, citing the relatively low cost of reformatting. NAD opines that a rule for previously captioned programming that does not encompass reformatting will not significantly improve access. LHH contends that distributors accept certain costs of editing to add commercials, and that reformatting should be viewed as part of those costs. 78.In contrast, NAB states that a requirement that previously captioned programs be transmitted with captions is unnecessary, because this is current practice for programming that is not edited prior to airing. However, NAB argues that it would be unreasonable to expect broadcasters that receive programs with captions that are damaged or in need of reformatting to bear the burden of repairing or reformatting those captions. According to NAB, this would require broadcasters to screen every program that is delivered to the station, determine what the original text of the captions was and how it was formatted, and then repair or reformat the captions. MPAA and CBS also oppose a rule which would require previously-captioned material to be reformatted. CBS contends that the costs of reformatting are substantial and should not be imposed on a distributor that is already meeting its obligations. MPA claims that such a rule would impose unnecessary costs and discourage distributors from editing programs to add local content or meet other local requirements. B.Discussion 79.Compliance with our closed captioning requirements will be measured on a channel-by- channel basis. Measurement of compliance on a channel-by-channel basis was supported by the majority of commenters on this issue. We are persuaded that the system-wide approach proposed in the Notice would allow MVPDs to require some services to offer more captioning to balance out services that offer little or no captioning. In addition, MVPDs might be required to monitor the amount of captioning on each channel they carry and then determine whether they meet an overall system average. Moreover, by measuring compliance on a channel-by-channel basis, a network will be able to set budgets and hire staff based on the requirements applicable for its own programming, without having to factor in the efforts of others. Thus, we conclude that a system-wide approach would prove administratively burdensome for video programming distributors. Furthermore, we do not believe that a system-based approach is consistent with the goal of ensuring captioning of diverse programming services. We believe that it is important to increase the availability of closed captioning on each channel of video programming over the transition period to provide persons with hearing disabilities a wide range of programming choices. 80.We believe that holding video programming distributors responsible for captioning, and measuring compliance with our rules on a channel-by-channel basis, adequately address commenters' concerns regarding captioning responsibility for broadcast stations retransmitted by MVPDs. Broadcast stations will be responsible for ensuring their compliance with our rules in their role as video programming distributors. Broadcasters will caption to meet their requirements, and MVPDs will be required to pass through those captions intact. Also, in view of our channel-by-channel compliance requirement, each channel of a multiplexed signal will be obligated to meet the minimum requirements of our rules. We recognize, however, that in some situations, such as where a "video on demand" type of service is in operation or the content of a channel is otherwise dependent on specific subscriber requests, it may be difficult, if not impossible, to schedule programming with the advance knowledge that it will meet the applicable standards. In such situations, we will only require that a reasonable judgment be made in advance as to the likely output of the channel, with captioning provided based on this estimate. To the extent necessary, Commission guidance also may be sought in advance regarding the appropriate methodology for determining this estimate and for compliance with our captioning requirements. 81.Compliance with our rules will be measured on a quarterly basis. We believe that a calendar quarter for measuring compliance with our closed captioning rules provides a reasonable balance among the various alternative time periods suggested, especially during the transition period. Commenters indicate that programmers often set aside weeks or months for special programming. Thus, by measuring compliance over a calendar quarter, programmers will have the flexibility to incorporate specials and thematic programming into their schedules while still meeting our closed captioning benchmarks. Shorter compliance periods would hinder such flexibility and could prove administratively burdensome. Periods such as a day or a week also may not take into account normal scheduling differences. For example, program schedules often differ between weekdays and weekends. Similarly, there may be unusual weeks of scheduling, such as a local sports tournament or elections. We believe that a programmer should have the flexibility to consider the nature of these programming differences when determining how best to meet the captioning requirements. We also reject longer measurement periods, such as six months or a year. We are concerned that these longer periods for measuring compliance would make it more difficult to enforce the rules during the transition period and after our permanent captioning requirements take effect. In particular, it would take months for complaints to be resolved since a period of up to a year may have to elapse before we will be able to determine whether an alleged violation has occurred. 82.We establish a number of additional rules with respect to the measurement of compliance. For determining the hours of programming with captioning, a video programming distributor may consider a program to be the length of the time period for which it is scheduled. We will permit video programming distributors to count any new exempt programming that is captioned towards their requirements, except that which is distributed during late night hours during the eight year transition period. During the transition period, distributors may not count any pre-rule captioned programming toward the new programming benchmark. Any captioned pre-rule exempt programming may be counted towards the requirements for pre-rule programming after they become effective in 2008. In addition, when video programming is no longer exempt, then it becomes subject to the rules applicable to all programming. Moreover, we recognize that MVPDs sometimes combine portions of different full-time programming networks and services to create one channel that is distributed to viewers. Where a video programming distributor combines the programming of two or more programming networks (or other sources of programming) to create a single channel, that channel will be considered to be in compliance if each of the programming sources is in compliance where it is carried on a full time basis. That is, each network carried on a shared basis will be deemed in compliance based on its programming and not just the hours selected by the distributor for its shared channel. 83.We also will permit video programmers to count towards compliance with our rules any program that is open, rather than closed captioned. Open captioning provides the same information as closed captions but includes this information as part of the primary video signal instead of carrying the captions on line 21 of the VBI. Thus, the information is available to all viewers without decoding. Because this technique ensures the same accessibility as closed captioning, we will permit video programming providers and distributors to use open captioning. Similarly, we permit subtitles that are available to all viewers to count towards compliance if they are in the language of the target audience. While we recognize that subtitles may provide only the dialogue of a program visually, and not some of the other audio portions of the programming, we believe that they can make programming that might not otherwise be accessible available to persons with hearing disabilities. In addition, where a program includes a second language soundtrack on its secondary audio programming ("SAP") signal, the second audio signal need not be captioned. We also conclude that discrete portions of programs which contain non-English dialogue, such as where characters in an English language film speak in another language without translation, need not be captioned. 84.We will not adopt any limits on the methodology that can be used to create closed captioning and will permit the use of ENR. We may alter this policy in the future, but, at this time, it appears reasonable to permit its use. We are concerned that certain portions of live newscasts often remain uncaptioned even with the use of ENR because they are not scripted, and as commenters representing persons with hearing disabilities point out this method is not the functional equivalent of the audio portion of the programming. However, the record before us provides conflicting evidence regarding the number of real- time captioners for programming, primarily live newscasts, for which ENR is an alternative method. For example, MATP reports that there are 542 court reporters certified as real-time stenocaptioners and hundreds more registered with real-time captioning skills, yet VITAC, one of the larger captioning agencies, states that there is a shortage of qualified stenocaptioners for real-time captioning. However, we recognize that an enormous amount of programming that has not been captioned up until this time will soon have to be captioned. We believe that the interests of persons with hearing disabilities and the video industry are served by permitting the use of ENR at this time. We conclude that ENR will permit such programming to be made accessible under the transition schedule we adopt at a reasonable cost. Accordingly, consistent with Section 713, our decision to permit ENR will promote accessibility without imposing a captioning requirement that is an economic or undue burden. We also hope that once an entity invests in the software needed to convert a teleprompter script into captions, it will have an incentive to use this equipment for all or a significant portion of its live programming (e.g., all its newscasts), and not just the amount of programming needed to satisfy the transition benchmarks. Thus, additional programming may be made accessible at a faster rate. We expect to revisit this issue in the future to evaluate whether ENR provides sufficient captioning of news programming that is of such importance to persons with hearing disabilities. In the meantime, we urge video programming providers to script additional portions of their programming, especially weather and sports reports. We also believe that, if ENR is used, an introduction to or short description of the non-captioned segment (e.g., live remote) should be provided to allow persons with hearing disabilities to be aware of the topic of the story. We believe that it may be appropriate to reconsider the use of ENR as a means of captioning once the cost of real-time captioning declines, the availability of captioners increases, and the technology to provide live captioning from remote locations becomes more readily available. 85.In addition, we will require distributors to pass through existing captions where the programming they distribute is received with captions, regardless of whether the distributor has already met the relevant captioning benchmark. This requirement will apply to both new and pre-rule programming when distributors deliver programming to consumers without editing. This requirement will not impose a burden on distributors, as all distributors have the technical ability to pass through captioning and it simply requires them to ensure that their technical facilities are in proper working order to pass through the captioning data. Thus, all video programming distributors will be required to deliver all programming they receive that contains closed captioning, regardless of the programming source, to consumers with the captions intact. 86.We recognize that persons with hearing disabilities find it frustrating when a program previously viewed with captions is shown at another time without captions. In some instances, the reason for this is that the program has been edited, which may require that the captions be reformatted. We recognize that reformatting involves some expense and effort in order to ensure that the captions correspond to the edited program. We believe that the reformatting of captions when programming is edited is an important part of providing access to video programming consistent with the intent of Section 713. Thus, we expect that video programming providers will make the reformatting of captions a common practice when programs are edited. However, we are aware that a requirement, in addition to the other requirements of our rules, that every program that has previously been captioned have its captions reformatted before it is redistributed to consumers could be economically burdensome in some cases because of the type or amount of editing that is done. Accordingly, we will not at this time adopt a requirement for reformatting, although we strongly encourage video programming providers to reformat captions as part of the editing process. We also anticipate that more reformatting of captions will be done as the marketplace evolves, video programming providers become more accustomed to captioning their programming and technological changes make reformatting easier, less expensive and less onerous. We intend to review this decision as our closed captioning rules are implemented to determine whether our expectation that reformatting will become an industry practice is fulfilled. At that time, we will consider whether a reformatting requirement is necessary. VI. EXEMPTIONS FROM THE CLOSED CAPTIONING RULES A. Exemptions Based on "Economically Burdensome" Standard 1.Background a.Exempt Classes of Programming 87.The statute allows the Commission to "exempt by regulation programs, classes of programs, or services" for which the Commission determines that "the provision of closed captioning would be economically burdensome." We sought to establish a number of general classifications of programming that would be exempt from our requirements because captioning would be economically burdensome. We requested detailed comments regarding the appropriate class exemptions that would be consistent with the statutory mandate to make video programming fully accessible to individuals with hearing disabilities. In particular, we sought comment on whether a definition of economic burden should be based on factors such as relative market size, degree of distribution, audience ratings or share, relative programming budgets or revenue base, lack of repeat value, or a combination of factors. We also requested comment on whether specific types of programming should be encompassed by our general class exemptions. 88.Commenters representing persons with hearing disabilities and captioners generally argue that any class exemptions we adopt should be narrowly drawn, with some commenters recommending that there be virtually no general exemptions. SHHH and NCI ask that any class exemptions we adopt be subject to review within two years, arguing that Congress did not intend to exempt certain types of new programming forever. Captivision contends that general exemptions should not apply wherever a program has high public interest value and would affect "the deaf community's interaction with their environment." NCI argues that we should address exemption requests by adopting longer implementation periods for the types of programming for which exemptions are sought. CAN asserts that exemptions should be conditioned on the use of textual and graphic summaries, to the maximum extent reasonable. 89.AIM maintains that budget size should be a factor for determining exemptions, while Captivision states that factors such as market size, degree of distribution, audience, ratings or share are irrelevant to Congress' intent of full accessibility. USSB contends that, in crafting exemptions to our closed captioning rules, we should consider all the factors enumerated in the Notice, as well as the nature and cost of providing captions and the impact of captioning upon the operations of providers, owners and programmers. Another commenter urges that, as with the Americans with Disabilities Act ("ADA"), consideration for exemptions should take into account the revenue base of a programmer's parent company. 90.Commenters define a few classes of programming that should be exempt or criteria for determining whether a captioning requirement would be economically burdensome. Principally, however, commenters addressed specific types of programming, particular programming services, and classes of providers and whether they should be exempt under this standard. We first describe the class exemptions proposed by commenters, including new programming networks, overnight programming, local origination programming, certain locally produced public television programming, non-profit programmers, and programming for which captioning costs would represent 10% or more of the production budget. Next we discuss the comments regarding specific types of programming that were enumerated in the Notice. Then, we present the comments of BIT, QVC, the Weather Channel, GSN, and Prevue that seek waivers as individual services. Finally, we describe the comments regarding exemptions for classes of providers, such as ITFS licensees, wireless cable operators using ITFS frequencies, LPTV stations, and cable systems. 91.New Networks. Numerous commenters recommend an exemption, at least initially, for programming offered by new programming networks, arguing that the economic burden of captioning could mean the difference between success and failure of a new network. Such an exemption, Viacom contends, is consistent with Congress' objective of eliminating market entry barriers for small entities. Commenters assert that launching a new network can cost $100 million or more, and that it generally takes at least five years for new networks to reach the break even point. Outdoor Life maintains that affiliation fees and advertising revenues, which are the main sources of cash flow for programming networks, are limited for new networks initially because many multiple system operators ("MSOs") demand one or more years of free programming service in exchange for carriage on a cable system, and major advertisers are unwilling to place advertisements on new networks until they reach a threshold subscriber base of 15 to 20 million subscribers. A few of these commenters ask that we exempt new networks from our captioning requirements for at least the first five years from their launch dates, and thereafter allow these networks the same amount of time to phase in captioning of new programming that established networks are granted under our rules. Several parties urge us to exempt networks that have limited subscriber bases from captioning requirements even after their first five years. These parties argue that a network should be exempt from our requirements until it reaches a minimum number of subscribers, with the suggested subscriber thresholds ranging from 15 to 50 million. In support of this proposal, Outdoor Life notes that exempting low-penetrated networks will affect programming that is provided to only 17% of the collective number of subscribers to all national, basic, nonbroadcast networks. Additionally, it proposes that a network that reaches the 20 million mark but later falls below it would not revert to exempt status. Rather, such a network would be required to seek an exemption from captioning requirements under the undue burden procedure. 92.Late Night Programming. A number of programmers seek a class exemption for overnight news feed services that are distributed during the late night or early morning hours. These programs are typically compiled from a variety of sources, and consist of unscripted, uncaptioned materials edited together and redistributed to network affiliates around the country. Commenters contend that such compilations would require real-time captioning, the cost of which is not warranted for programming aired late at night when viewership and advertising revenues are low, and where the programming has no residual market value. Others request an exemption for all late night programming, citing the low viewership, license fees and advertising revenues generated by programs aired between 2:00 a.m. and 6:00 a.m. and the limited resources available for captioning of all programs as support for such an exemption. 93.Local Origination Programming. Some commenters suggest that local origination programming should be exempt from our captioning rules because it serves significant community public interests, but operates on extremely low budgets. According to commenters, much of this programming consists of unscripted, live programs such as talk shows, local sporting and charity events, and public affairs programming, which would be very expensive to caption. US West and SCBA note the similarities between local origination and PEG access programming, which we tentatively proposed to exempt. Time Warner and CBA contend that our rules should balance the need for captioning against the risk of suppressing this type of programming. 94.Noncommercial Programming. APTS requests an exemption for all local programs produced by small noncommercial television stations and for all locally produced programs offered to the Program Exchange Service. APTS defines small noncommercial stations as those that operate with annual budgets of less than three million dollars. APTS claims that both non-commercial programs and programming produced locally and distributed through the Program Exchange Service have minimal budgets, and that a captioning requirement for these programs will cause stations to stop producing them, as captioning costs will significantly increase the costs of production for such programming. Similarly, APS proposes a general exemption for public broadcasters, citing funding concerns for all public broadcast stations and programming. USSB seeks an exemption for the noncommercial educational and informational programming DBS providers will be required to provide under Section 335(b)(1) of the Communications Act, claiming that these programs typically operate on relatively small budgets and captioning is likely to place a heavy burden on the producers of such programs. 95.Nonprofit Networks. A few commenters propose that we exempt nonprofit program networks from our captioning requirements. EWTN seeks an exemption for all nonprofit networks as a class, noting that Congress specifically enumerated nonprofit status as a factor we should consider in crafting our exemptions. In the alternative, EWTN seeks a six-year exemption for all nonprofit networks that have not broken even in any one of the five years preceding the effective date of our rules, or for which captioning costs are estimated to exceed 25% of the programming budget in any phase in period. Using its experience as an example, EWTN contends that nonprofit programmers typically receive no advertising revenues or subscriber fees, but are supported by viewer contributions. EWTN claims that captioning costs will add significantly to programming expenses for nonprofit programmers, noting that viewer contributions may not cover existing expenses and are unlikely to cover the additional costs of captioning. Similarly, the California Channel proposes an exemption for regional or state public affairs cable networks which televise legislative proceedings and are recognized as exempt organizations under section 501(c)(3) of the Internal Revenue Code. California Channel is also funded exclusively by contributions and offers no advertising, and contends that a captioning requirement will result in either the significant reduction or elimination of its service. 96.Program Budget Concerns. Kaleidoscope proposes that programming for which captioning costs would amount to more than 10% of the program budget should be exempt from our captioning requirements. Kaleidoscope asserts that caption costs above this threshold may make captioning economically burdensome. Similarly, Viacom requests an exemption for programs which are either produced on budgets of $100,000 or less, or that earn license fees of up to $10,000. Viacom claims that such an exemption will nurture alternative programming sources and diversity of programming. 97.Non-English Language Programming. We observed that captioning of non-Latin-based- language programming is not technically feasible at this time. A number of commenters concur with this observation. However, some commenters claim that advanced television captioning standards are incorporating provisions for non-Latin-based alphabets and recommend that we reconsider any exemption of non-Latin-based language programs when technology to caption such programming becomes widely available. 98.Most providers that comment on the issue support a complete exemption of non-English language programming from our captioning requirements. Some of these commenters request, at a minimum, an exemption for all non-English language programming that is produced in or acquired from foreign sources. They assert that: (a) the scarcity of captioning services for non-English language captioning is greater than that for English captioning; (b) much non-English language programming is imported from countries which do not have captioning requirements; (c) the market for such programs in the U.S. is small, as are the advertising revenues these programs generate, but the costs of non-English language captioning are higher than those for English captioning; and (d) a captioning requirement would likely result in a reduction in the amount of non-English language programming offered to all viewers. Lincoln and KCSI note that English language captioning of non-English language programming would be of little use, given that the intended audience for such programs is viewers who speak little or no English. 99.Commenters representing persons with hearing disabilities favor a captioning requirement for programming in non-English languages using Latin-based alphabets. For example, AIM asserts that where there are large, non-English-speaking populations, captioning of essential news and information should be required at a minimum. ALDA declares that non-English language program captioning is warranted to make non-English language programming accessible to late-deafened adults who are already fluent in those languages, and to give viewers with hearing disabilities the same opportunities that other viewers have to learn non-English languages through video programming. NAD and LHH assert that non- English language captioning resources are readily available since many captioning agencies employ captioners proficient in other languages, including Spanish, French and German. However, CAN acknowledges that a temporary exemption for smaller providers of non-English language programming may be warranted. 100.We also sought information on the benefits of captioning non-English language programming that serves significant population groups, such as Spanish language programming. Televisa claims that the market for Spanish language captioning is extremely limited, estimating that there are only 1,733,000 Spanish-speaking persons with hearing disabilities in the U.S., and that only 185,000 of those individuals speak only Spanish. VITAC submits that few schools teach Spanish stenotypy, and claims it would take at least four years to train Spanish-speaking stenocaptioners to real time caption Spanish newscasts. The company knows of no stenocaptioners capable of non-English real time captioning in any other languages. Due to these limitations, VITAC recommends that the transition period for real time Spanish language captioning be 25% in six years, 50% in eight years, and 100% in ten years. It notes, however, that off-line Spanish or other Latin-based alphabet captioning could be started within a matter of months. 101.Primarily Textual Programming. We proposed to include video programming that is primarily textual, including channels dedicated to on-screen program schedules or guides, stock tickers and bulletin boards, and possibly other selected programs, in the classes of exempt programming. We also requested commenters to consider what, if any, definition of primarily textual video programming is needed for our rules. Commenters that address this proposal generally agree that textual programming should be exempt. A number of commenters suggest that the definition of such programming should take into account the purpose of the audio and whether the audio track provides any information necessary to understand the program, while SHHH would evaluate the audio track for content and whether or not it is duplicated in text. Prevue proposes that the Commission exempt: any programming service which is substantially comprised of alpha-numeric text, with or without accompanying video or graphic elements, and provides viewers with (i) television programming listings, (ii) program schedule information and/or (iii) promotional and/or purchase information regarding programming or services, which in each case are specific to such viewers' multichannel video programming distributor. 102.PEG Access Programming. We solicited comment on whether PEG access programming should be encompassed by our general exemptions, and whether there are certain types of PEG access programming for which we should require captioning. Most commenters who discuss this proposal favor a complete exemption of PEG access programming from our closed captioning rules. Many agree with our initial assessment that a captioning requirement would be financially burdensome for PEG programming due to the modest budgets on which most PEG programming operates. A number of commenters contend that requiring captions will defeat the goal of providing mass media access to those who otherwise would not have it, by effectively turning free access into access at $500 to $2500 an hour (i.e., the cost to caption). Some others note that a captioning requirement will likely result in a reduction of the amount of PEG programming offered to all viewers. 103.Many commenters urge us to either adopt a blanket exemption of PEG access programming and programmers from our captioning requirements or "identify and provide for alternative funding sources" to allow for some captioning of PEG programs. BellSouth maintains that it would be more efficient to leave PEG captioning requirements to negotiation between local franchising authorities and cable operators rather than to have producers besiege the Commission with individual exemption requests. Kansas City contends that a federal requirement that cities expend public money to caption government access programming could result in the limitation of available PEG programming or preclude the use of local funds for activities preferred by local residents. 104.Commenters representing persons with hearing disabilities oppose an exemption for PEG access programming. Most claim that PEG access provides information about important community events and issues, and that many communities already are or plan to provide captions for some of this programming. Many also assert that there are low cost options for captioning such programming, such as new do-it-yourself hardware and software. They also state that a small fee can be added to monthly cable bills to finance PEG captioning, as has been done by the City of Fremont, California. In addition, NAD notes that the ADA requires effective communications access to local government hearings and information provided by PEG programming. NAD suggests that, where real-time captioners or court- assisted reporting services are used to provide access to local government meetings, the captions generated could be used for simultaneous television transmission of those proceedings. Captivision declares that captioning costs could be cut by having the captions manually rolled or pop-up instead of time-coded onto the master tape, and preparation time could be reduced by making scripts available on disk. This commenter acknowledges that live programs would have to be real time captioned, but notes that such programs could be recorded and the provider could then use a captioned submaster for rebroadcast. 105. Leased Access Programming. We did not propose to exempt leased access channels from our captioning requirements since these channels are intended to serve as commercial outlets for programming and, to some extent, are expected to be used by nationally-distributed programming networks. Commenters generally support our position. However, Alphastar declares that leased access programming, including nonprofit educational and informational programming which may ultimately meet the DBS public service obligations, should be exempt. 106.Instructional Programming. We sought comment as to whether locally produced and distributed instructional programming should be encompassed by our general exemptions, and requested comment on whether there are alternatives to an exemption for this class of programming that would allow it to be closed captioned without imposing significant economic burdens that would result in a loss of certain programs. We also solicited comment regarding whether nationally-distributed instructional programming should be encompassed by our exemptions. A number of commenters generally support an exemption for instructional programming. Encore contends that the cost of captioning educational and instructional programming is prohibitive for the producing institutions, and would exceed the license fees paid by Encore to the producers. Encore claims that it would be forced to drop instructional programming if captioning costs were to increase license fees for the programs by more than 100%. APTS supports an exemption for locally produced and distributed educational and instructional programming, as well as for ITFS programs, noting that such programs have low budgets. It also states that an APTS survey indicates that public stations would not be able to provide such programs if captions were required. 107.Commenters representing persons with hearing disabilities oppose exempting instructional programming from our captioning requirements. For example, AIM asserts that prerecorded, nationally produced instructional programming should be captioned, and declares that large cable companies should help pay for the captioning of local instructional programming. ALDA contends that educational programs broadcast by colleges and universities should not be exempted, while another commenter claims that such programming should be captioned by the school since this is covered by earlier education laws. 108.ITFS providers and wireless cable entities request a specific exemption for ITFS programming. These commenters assert that the effect of a captioning mandate for ITFS would be the reduction or withdrawal of such programming from distribution. A few commenters claim that they have never received a request for captioning of their ITFS programming. Most of these commenters also argue that other federal laws already require ITFS providers to accommodate their students' disabilities on a more individualized basis, and that therefore an exemption for such programming generally will not result in a deprivation of service to the disabled. Furthermore, Arizona State Board notes that ITFS programming is clearly defined in Section 74.931 of the Commission's rules, and can therefore be narrowly defined as a class for exemption purposes. 109.Although it does not explicitly oppose an exemption for instructional programming, WGBH urges us to consider the range of instructional programming budgets, the growing use of such programming in schools, and the lack of accessible programming for deaf and hard-of-hearing students when considering exemptions for this type of programming. Lansing maintains that educational programming should have high priority in the requirements for captioning and that, under the ADA and the Rehabilitation Act of 1973 ("Rehabilitation Act"), there should be no exemption for educational materials. 110.Advertising. We sought comment on whether all or only certain types of advertising should be encompassed by our general exemptions. Many commenters support an exemption for all short-form commercials, arguing that sufficient market incentive exists to encourage increased voluntary captioning of such programs. Most of these parties also support our conclusion that the cost of captioning commercials will be more burdensome for local advertisers, and may prevent local commercials from airing. ALTV contends that keeping track of whether commercials are captioned for purposes of compliance with the proposed transition benchmarks would pose an inordinate burden on local television stations. 111.Some parties argue that all advertising, including long-form or infomercial advertising, should be exempt from our captioning requirements. Similarly, NAB requests that television stations not be required to caption advertisements, infomercials or similar programs that the station is paid to air and that are produced by entities not under the station's control. CBS argues that requiring providers to caption commercials or infomercials would effectively force providers to subsidize advertisers' messages. Access TV contends that the low production budgets and limited audience base for infomercials, along with the unavailability of DOE captioning funds for such programs, support a determination that it would be economically burdensome to require infomercials to be captioned. Commenters assert that much of the pertinent information presented in the audio track of the infomercial is also presented graphically or textually on screen, and that adding captions could block much of the information already displayed textually. DMA and NIMA maintain that the Commission's Telephone Relay Service ("TRS") requirements will help to ensure that viewers with hearing disabilities are able to access telephone information about the products offered in the infomercial. 112.Commenters representing persons with hearing disabilities disagree. For example, a few commenters argue that many, if not most, businesses who make use of television advertising can easily afford the cost of captioning, which these commenters claim is only about $200 per commercial. AIM maintains that national commercials certainly should be captioned, and suggests that captioning of local commercials could be phased in over time. 113.Home Shopping Programming. We tentatively concluded that home shopping programming should not be exempt from our captioning requirements because all of the descriptive material and information provided by home shopping program hosts is not currently available in textual form on the television screen. Captioners and organizations representing persons with hearing disabilities support this proposal. Captivision maintains that a portion of the revenues generated by home shopping can fund captioning. ALDA argues that, without captioning, consumers with hearing disabilities will be unable to make the same informed decisions in making their purchases as those who depend on audio information. 114.Producers of home shopping programs and others involved in direct marketing urge exemption of home shopping programs, contending that all pertinent information which is necessary to make a buying decision is displayed graphically, and that captions would obscure some of this information. QVC asserts that the question should not be whether the home shopping host's oral presentation is completely reproduced in on-screen text or graphics, but whether the programming, taken as a whole, is accessible. HSN recommends that we require electronic retailers to provide product, price and payment information as visual text a substantial percentage of the time, but exempt electronic retailers from general captioning requirements. In addition, the commenters note that, since home shopping programs are generally telecast live, captioning would require real time captioners, but the quality and error problems associated with real time captioning could cause consumer confusion or misinformation about products offered. QVC observes that such inaccuracies could inadvertently raise disclosure and deceptive advertising issues, and argues that a class exemption for home shopping programming is particularly warranted in light of limited captioning resources available to produce real time captions. The commenters also state that home shopping programs are highly perishable, which would prevent captioning costs from being spread out over multiple airings. DMA and NIMA maintain that the economics of home shopping programs require any increase in the costs of program production to be reflected in the cost of the products sold, which could make some products unmarketable. 115.Interstitials, Promotional Announcements and Public Service Announcements. We tentatively concluded that interstitials and promotional advertisements should be exempt from our captioning requirements, provided that the basic information provided by these types of announcements is displayed in some textual or graphic form in order to provide accessibility to persons with hearing disabilities. Program producers and providers favor an exemption for interstitials and promotional advertisements. ABC asserts that funds spent captioning such material would be better spent on new program captioning. Others cite the large number of such programs,