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Carriage of Digital Television Broadcast Signals Rules.

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Released: February 10, 2012

Federal Communications Commission

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Before the

Federal Communications Commission

Washington, D.C. 20554

In the Matter of
)
)

Carriage of Digital Television Broadcast
)
CS Docket 98-120
Signals: Amendment to Part 76 of the
)
Commission’s Rules
)

FOURTH FURTHER NOTICE OF PROPOSED RULEMAKING

AND DECLARATORY ORDER

Adopted: February 10, 2012

Released: February 10, 2012

Comment Date:

[25 days after date of publication in the Federal Register]

Reply Comment Date: [35 days after date of publication in the Federal Register]

By the Commission:

I.

INTRODUCTION

1.
In 2007, the Commission adopted certain rules to protect consumers as the transition to
digital television (DTV) approached.1 Specifically, in order to ensure that cable operators continued to
comply with the statutory obligation to make must-carry television stations2 “viewable” to all
subscribers,3 the Commission adopted a rule providing cable operators two options to comply with the
viewability requirement: (1) carry the digital signal in analog format to all analog cable subscribers, or
(2) carry the signal only in digital format, provided that all subscribers have the necessary equipment to
view the broadcast content.4 In order to retain flexibility to deal with concerns arising after the DTV
transition, the Commission stated that the viewability rule would sunset three years after the transition,
subject to review during the last year of this period to determine if it should be extended, revised, or
allowed to sunset.5 This rule will therefore expire on June 12, 2012 unless we take action to extend it.


1 See generally Carriage of Digital Television Broadcast Signals, CS Docket No 98-120, Third Report and Order
and Third Further Notice of Proposed Rulemaking, 22 FCC Rcd 21064 (2007) (“Viewability Order” or “Third
Further Notice”
). As discussed below, the DTV transition was finalized on June 12, 2009.
2 “Must-carry” stations are those stations subject to mandatory cable carriage (unless they elect to be carried only
with their consent). These include both commercial (47 U.S.C. 534(a)) and non-commercial educational (47 U.S.C.
535(a)) full-power television stations.
3 See 47 U.S.C. 534(b)(7) (“Signals carried in fulfillment of the requirements of this section [i.e., commercial must-
carry signals] shall be provided to every subscriber of a cable system. Such signals shall be viewable via cable on
all television receivers of a subscriber which are connected to a cable system by a cable operator or for which a
cable operator provides a connection”); 47 U.S.C. 535(h) (“Signals carried in fulfillment of the carriage obligations
of a cable operator under this section [i.e., non-commercial must-carry signals] shall be available to every
subscriber”).
4 47 CFR 76.56(d)(3).
5 47 C.F.R. § 76.56(d)(5) (“The requirements set forth in paragraph (d)(3) of this section shall cease to be effective
three years from the date on which all full-power television stations cease broadcasting analog signals, unless the
Commission extends the requirements in a proceeding to be conducted during the year preceding such date.”).
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2.
Also in 2007, the Commission adopted a related rule regarding the prohibition on
material degradation of broadcast signals when carried by cable systems. One aspect of this rule is the
requirement that any signal broadcast in high definition (“HD”) also be carried by cable operators in HD.
In response to concerns from commenters about cost and technical capacity, the Commission granted a
three-year exemption from this HD carriage rule to the operators of certain small cable systems. As with
the viewability rule, the Commission held that the small cable HD exemption would sunset in three years
absent action by the Commission to revise or extend it. Thus, this exemption will also expire on June 12,
2012 unless the Commission takes action to extend it.
3.
We initiate this Fourth Further Notice of Proposed Rulemaking (Fourth FNPRM) in the
DTV cable carriage docket to determine whether it would be in the public interest to extend this rule and
exemption. For the reasons described below, we seek comment on whether to extend the “viewability”
rule for three more years to ensure that all cable subscribers, including those with analog equipment,
continue to have access to must carry television signals. Given the apparent widespread reliance of small
cable operators on the HD exemption, we propose to extend it for an additional three years, but ask
whether this should be the final extension. We note that both rule and exemption would have expired on
February 17, 2012 if the DTV transition had not been delayed by Congress. The Commission is therefore
concurrently issuing a Declaratory Order clarifying that both the viewability rule and the HD Carriage
Exemption will sunset on June 12, 2012, absent Commission action to extend them.6

II.

BACKGROUND

4.
Pursuant to Section 614(b)(4)(B) of the Communications Act of 1934, as amended (the
“Act”),7 the Commission initially opened this docket in 1998 to address the responsibilities of cable
television operators with respect to carriage of digital broadcast stations in light of the nation’s transition
to digital television.8 The 2007 Viewability Order, among other things, established a rule ensuring the
viewability of must-carry signals on cable systems, as required by statute.9 That order also established the
requirement for cable systems to carry HD broadcast signals in HD, in order for the signals to be carried
without material degradation.10 Based on further comments, the follow-up Fourth Report & Order
granted an exemption from this latter requirement for the operators of certain small cable systems.11 As
mentioned above, both the viewability rule and the HD carriage exemption were scheduled to sunset three
years after the conclusion of the full-power transition, subject to review during the last year of this period
to determine whether they should be extended, revised, or allowed to sunset.12

III.

VIEWABILITY RULE

5.
In the Viewability Order, the Commission found that “viewability” of must-carry digital
signals was mandated by the Communications Act just as it had been for must-carry analog signals, and


6 As discussed in detail in Section V, infra.
7 47 U.S.C. § 534(b)(4)(B).
8 Carriage of the Transmissions of Digital Television Broadcast Stations: Amendment to Part 76 of the
Commission’s Rules
, CS Docket No. 98-120, Notice of Proposed Rulemaking, 13 FCC Rcd 15092, 15093, ¶¶ 1-2
(1998).
9 See generally Viewability Order.
10 Viewability Order at ¶ 4.
11 See generally, Carriage of Digital Television Broadcast Signals, CS Docket No. 98-120, Fourth Report and
Order, 23 FCC Rcd 13618 (2008) (“Fourth Report & Order”).
12 Viewability Order at ¶ 16; Fourth Report & Order at ¶ 12.
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adopted a rule to ensure that these signals would be available to all cable subscribers.13 The Commission
recognized the need for flexibility in enforcing “the most fundamental interest expressed in the must carry
rules,”14 and that it is bound by statute to ensure that must-carry signals are actually viewable by all
subscribers. This review provides an opportunity for us to determine whether extending the current rule
is necessary to fulfill that statutory mandate, given the current state of technology and the marketplace.
6.
Since passage of the 1992 Cable Act, the Commission has consistently found that “mere
transmission of the must-carry signal is not sufficient to meet the requirements” of the statute.15 As
explained in 1993:
We believe that the 1992 Act is clear in its requirement that all local commercial
television stations carried in fulfillment of the must-carry requirements must be provided
to every cable subscriber and must be viewable on all television sets that are connected to
the cable system by a cable operator for which the cable operator provides a connection.
The Act does not give the Commission authority to exempt any class of subscribers from
this requirement.16
Therefore, must-carry stations must be viewable.17 After the DTV transition, “the signals of must-carry
stations [would have been] completely unavailable to analog cable subscribers” absent Commission
action.18 That is, because after the transition these signals are broadcast only in digital, cable subscribers
that do not own a digital television or subscribe to a digital tier (and therefore lease or own a digital
navigation device) would no longer be able to view these stations through their cable operator. Although
the digital signals of these must-carry stations could theoretically be accessed over-the-air with the use of
a digital converter box, the statute does not require subscribers to take that approach.19 Moreover, even
were the law to contemplate that approach, we note that, as a technical matter, not all analog cable
subscribers are covered by the signals from their local must-carry stations or even own an antenna that
would permit them to receive the signal if it were available. As stated in 2007, we remain “bound by
statute to ensure that commercial and non-commercial mandatory carriage stations are actually viewable
by all cable subscribers,”20 and “[t]hese statutory requirements plainly apply to cable carriage of digital


13 Viewability Order at ¶ 15.
14 Viewability Order at ¶ 34.
15 Carriage of Digital Television Broadcast Signals, CS Docket No. 98-120, Second Further Notice of Proposed
Rulemaking, 22 FCC Rcd 8803 (2007) (“Second FNPRM”).
16 Implementation of the Cable Television Consumer Protection and Competition Act of 1992, etc., MM Docket No.
92-259, Report and Order, 8 FCC Rcd. 2965, 2974 (1993) (“Analog Must Carry Report and Order”).
17 We note that although Sections 614(b)(7) (commercial) and 615(h) (noncommercial) of the Act use different
language, the Commission consistently has treated them as imposing identical obligations with regard to viewability.
See, e.g., Analog Must Carry Report and Order, 8 FCC Rcd. at 2974, at ¶ 32 (noting that all must-carry signals must
be available to all subscribers); see also Implementation of Section 302 of the Telecommunications Act of
1996: Open Video Systems
, CS Docket No. 96-46, Second Report and Order, 11 FCC Rcd 18223, 18308, at ¶ 162
(1996) (“Pursuant to Section 614(b)(7) and 615(h), the operator of a cable system is required to ensure that signals
carried in fulfillment of the must-carry requirements are provided to every subscriber of the system.”).
18 Viewability Order at ¶ 55.
19 The Commission has long held, and the Supreme Court has agreed, that cable subscribers’ use of an “A/B switch”
to access over-the-air signals is not a legitimate replacement for access to those signals on the cable system itself.
Turner Broadcasting System, Inc. v. FCC, 520 U.S. 180 at 219-221 (1997) (“Turner Two”). An “A/B switch” is a
method of manually toggling between cable and broadcast programming without changing the viewing device.
20 Viewability Order at ¶ 31.
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broadcast signals.”21
7. As the Commission also made clear in 2007, viewability of broadcast signals is not only
mandated by statute, but is also of vital importance to the broadcast stations that rely on the
Commission’s “must carry” rules and to all consumers of television programming. The Commission
noted that,
“[i]f cable operators did not downconvert the digital signals, broadcasters would stand to
lose an audience of millions of households that are analog cable subscribers and the
concomitant advertising revenues, thus jeopardizing their continued health and viability.
Should these stations deteriorate or cease to exist, the impact of these lost programming
options would fall most heavily on those that most need them: the roughly fifteen
percent of Americans who rely solely on over-the-air television, which disproportionately
consist of low-income and minority households.”22
Furthermore, the Commission found that, without action, “analog cable subscribers and households that
rely solely on over-the-air broadcast television may well face ‘a reduction in the number of media voices’
and the loss of ‘the widest possible dissemination of information from diverse and antagonistic
sources.’”23 The Commission, in the Viewability Order, explained that at the time half of all consumers
relied on the analog tuners in the equipment that they owned, and that the welfare of those consumers
“drives the Commission’s decisions on viewability.”24 Thus, in adopting the Viewability Order, the
Commission acted in light of both the statutory directive and the important governmental interests of
preserving the benefits of free, over-the-air local broadcast television for analog cable subscribers and
over-the-air viewers alike, and promoting the widespread dissemination of information from a
multiplicity of sources.
8. In order to ensure that digital signals would be actually viewable by all subscribers, the
Commission adopted a two-part rule and allowed systems to choose how they would comply. Section
76.56(d)(3) of the Commission’s rules provides:
(3) The viewability and availability requirements of this section require that, after the
broadcast television transition from analog to digital service for full power television
stations cable operators must either:
(i) Carry the signals of commercial and non-commercial must-carry stations in analog
format to all analog cable subscribers, or
(ii) For all-digital systems, carry those signals in digital format, provided that all
subscribers, including those with analog television sets, that are connected to a cable
system by a cable operator or for which the cable operator provides a connection have the
necessary equipment to view the broadcast content.25


21 Viewability Order at ¶ 15; see also, e.g., ¶ 22 (the digital viewability requirement is “based on a straightforward
reading of the relevant statutory text”); ¶ 24 (“this language reflects Congress’s unambiguous determination that
broadcast signals must be viewable by all cable subscribers”); ¶ 34 (“[i]f we declined to enforce the viewability
requirement it would render the regime almost meaningless, contrary to the clearly expressed will of the Congress as
upheld by the Supreme Court”).
22 Id. at ¶ 55 (internal citations omitted).
23 Id.
24 Id. at n. 131.
25 47 C.F.R. § 76.56(d)(3).
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This rule ensures that all subscribers are able to view must-carry programming, while still providing
flexibility to operators who have been, and continue to be, transitioning to an all-digital system on their
own schedules. 26 Once a particular cable operator has begun transmitting its content exclusively in a
digital format, all subscribers will have access to digital broadcast signals via the digital equipment
necessary to view all of the other programming offered by the cable operator. Thus, under the current
rule, an all-digital cable operator can comply by transmitting all of its content in a digital format to all of
its subscribers.
9.
We seek comment on whether we should extend the viewability rule or permit it to
sunset.27 The proceeding we begin today provides an opportunity for us to consider whether extending
this rule best fulfills the statutory mandate, by reviewing it “in light of the potential cost and service
disruption to consumers, and the state of technology and the marketplace.”28 As discussed below, the
available market evidence seems to indicate that the viewability requirements remain important to
consumers. 29 In 2007 there were approximately 40 million analog-only cable subscribers,30 and there are
still millions today. According to data provided by NCTA, the rate at which customers switch to digital
has slowed since the DTV transition,31 and as of the third quarter of 2011, more than twelve million cable
households were reliant on analog cable delivery.32 Moreover, the vast majority of cable subscribers are
served by “hybrid” systems that provide both analog and digital service, even if they receive digital
service to one or more television sets.33 A number of these digital subscribers still rely on analog cable


26 Under this rule, in combination with the material degradation rule, discussed infra, a “hybrid” system (providing
both analog and digital service) would also have to carry an HD broadcast signal in HD. As the Commission has
previously explained, “there should be no perceivable difference between” SD digital and analog picture quality, so
“our rules do not require cable operators… to carry an SD digital version of a broadcast station's signal, in addition
to the analog version” as long as all subscribers can view the channel. See supra n. 12, Fourth Report & Order at ¶
5.
27 If we decide to extend the term of the viewability rule, we propose that the Commission should conduct a further
review of this rule prior to June 12, 2015, and if the Commission does not act to extend it by that date, the
viewability rule will sunset.
28 Viewability Order at ¶ 16.
29 The data upon which we rely includes data gathered by the Commission via the Annual Cable Operator Report
and the annual Cable Price Survey, and commercially produced data such as that provided by SNL Kagan. See, e.g.,
infra notes 31-34.
30 Viewability Order at note 3.
31 NCTA Industry Data, http://www.ncta.com/Statistics.aspx,
http://www.ncta.com/Stats/CableAvailableHomes.aspx, http://www.ncta.com/Stats/BasicCableSubscribers.aspx,
visited 2/9/12.
32 As of the third quarter of 2011, Kagan indicates that there are more than 58 million cable subscribers, of whom
approximately 46 million are digital cable subscribers. Q3 video subscriber trends improve but still lack real
strength,
BROADBAND TECHNOLOGY (SNL Kagan, Charlottesville, VA), November 25, 2011, at 2. The vast
majority of these digital cable subscribers are served by hybrid, rather than all-digital, systems. Staff analysis of
2010 Annual Cable Operator Report (Form 325) (indicating fewer than eight million cable subscribers were served
by all-digital systems).
33 Staff analysis of 2010 Annual Cable Operator Report (Form 325) (indicating fewer than eight million cable
subscribers were served by all-digital systems). The Viewability Order stated that “[t]o assist the Commission in
this review, we will include questions in our annual Cable Price Survey to assess, for example, digital cable
penetration, cable deployment of digital set-top boxes with various levels of processing capabilities, and cable
system capacity constraints.” Id. at n. 39. Based on data submitted to the Commission as part of the 2010 Cable
Price Survey, only 9.4% of subscribers are served by all-digital systems.
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for second televisions in the home, meaning that there are potentially millions more subscribers who rely
on analog to some extent.34 We seek comment on whether the figures discussed above reflect the current
market for cable service and how that should impact the Commission’s decision on whether to allow the
viewability rule to sunset.
10.
The sunset of the viewability rule would potentially impact millions of subscribers, and
the broadcasters who would be unable to reach them.35 There are hundreds of broadcast stations that rely
on the must carry rules to ensure carriage on cable systems – in 2010, almost 40 percent of all broadcast
stations elected or defaulted to must carry rather than electing retransmission consent.36 Without the
viewability rule, many cable subscribers would be required to pay more for access to must-carry
broadcast stations, by replacing existing and still-functional analog equipment with digital equipment or
leasing set top boxes to view the complete service they currently pay for and receive in analog.37 As the
Supreme Court has made clear, “preserving the benefits of free, over the air local broadcast television” is
an “important governmental interest” at the very heart of the must-carry regime.38 In this regard, we seek
comment on how the sunset of the viewability requirement would impact the financial resources of must
carry stations. We seek specific information that will allow us to build a solid record that supports either
the retention or the sunset of the viewability rule. Also, given that “viewability” of must-carry digital
signals is mandated by the Communications Act, we seek comment on whether it is necessary to extend
the rule in its current form as opposed to relying on stations to file carriage complaints to enforce
compliance with the statutory mandate.39
11.
As discussed in the Viewability Order, compliance with this rule may result in some costs
to cable operators.40 In some cases operators may be required to carry more than one version of a
channel, using more bandwidth than they would if they carried only a single version, and in some cases
they may be required to down-convert a broadcast signal to make the additional version available to
analog subscribers. At the time of the Viewability Order, however, these costs were not only determined
to be necessary to carry out the statutory “viewability” directive, but were determined to be outweighed
by the benefits of the viewability rule. Although many broadcast stations elect must-carry status, a cable


34 A recent survey indicates that 31 percent of homes do not have a digital television. See CES: Over Two Thirds of
U.S. Homes Have HDTVs
, Broadcasting & Cable tvfax, Jan. 5, 2012, at 4-5 (discussing the results of a survey
conducted by the Leichtman Research Group, Inc.).
35 See In the Matter of TiVo, Inc, 26 FCC Rcd 12743, 12747 (2011) (“NCTA notes, however, that although the cable
industry has significantly increased the penetration of its digital services since the Commission adopted the Digital
Plug and Play Order
in 2003, many cable systems ‘continue to carry substantial numbers of channels only in
analog,’ and ‘even on systems that simulcast all channels in digital, some customers may subscribe only to analog
service.’”) (NCTA Comments at 2-3).
36 Staff analysis of 2010 Annual Cable Operator Report (Form 325) (indicating approximately 780 of approximately
2000 stations elected or defaulted to must carry). Based on data submitted to the Commission as part of the 2010
Cable Price Survey, over 96% of cable systems carry at least one must-carry station, and, on average, each system
carries more than seven must-carry stations.
37 Subscribers to Direct Broadcast Satellite systems must have boxes for all televisions in the home; this requirement
was not changed as a result of the DTV transition. Similarly, subscribers to all-digital cable systems must either
have a box for each set, or own equipment capable of displaying digital signals without a box. In this case,
subscribers face no additional expense or effort to receive must-carry signals in digital.
38 Turner Two, supra n. 21.
39 Carriage complaints may only be filed by the affected station, not by viewers or other parties. 47 C.F.R. § 76.61.
40 Viewability Order, at ¶¶ 26-35.
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system carries many more non-broadcast channels. The Commission explained that the comparatively
small number of must-carry stations carried by any given system meant that the incremental additional
bandwidth consumed by compliance with this requirement would be “negligible”41 even for hybrid
systems, which are required by this rule to devote at least one 6 MHz channel to each must-carry station.42
We seek comment on the extent to which these conclusions still hold true today.
12.
Furthermore, the Commission affirmed in the Viewability Order that the “one-third
carriage cap,” under which cable operators need dedicate no more than one-third of their channel capacity
to commercial broadcast stations, remains in effect in the digital carriage context, and that all versions of
a signal would count toward this cap.43 As a result, no cable system need ever dedicate more than one-
third of their bandwidth to carriage of commercial broadcast stations, and may choose which signals not
to carry if they ever reach this cap. We seek comment on whether the situation has changed regarding
bandwidth usage, and whether any cable system has reached the one-third carriage cap. Regarding the
cost of downconversion, some commenters in the 2007 viewability proceeding claimed they would face
large costs to down-convert broadcast signals.44 The Commission was skeptical of at least some of these
claims, all of which concerned up-front expenses. Given the up-front nature of the claimed expenses,
they presumably would have already been incurred by now and would not impose an additional cost. We
seek comment on the accuracy of this presumption in the current marketplace. Would retention of the
viewability rule impose any additional expenses on cable operators? If so, we request a detailed
description of any claimed expenditures and associated cost information.
13.
We note that some cable operators, such as RCN and BendBroadband, transmit only
digital signals and have eliminated analog service in all of their systems.45 As discussed above, these
providers can comply fully with their viewability obligations by simply carrying a must-carry signal in
digital, often in the same manner as it is provided by the broadcast station. We therefore also seek
comment about costs associated with transitioning to an all-digital system, rather than carrying analog
versions of must-carry signals. According to information in the 2007 record, virtually all cable operators
are planning to eventually transition to all-digital systems, regardless of our decision on the viewability
rule.46 How many hybrid systems plan to go all-digital in the near future, and how many subscribers will
be impacted by this shift? What is the range of costs per digital box for cable operators, and the range of
rental fees charged to subscribers who are first-time digital subscribers? How has the rate at which
consumers voluntarily drop analog service changed in the time since the DTV transition? What is the
current rate at which they are doing so? We seek comment on the business environment in which hybrid
systems operate. Are competitive pressures on these systems such that they are transitioning to all-digital
service at a faster rate than customers are switching on their own? Are any cable operators considering
transitioning to an all-digital system more quickly than originally planned specifically because of the
viewability obligations? What additional costs would be associated with an early transition?
Commenters stating that they intend to or know of cable systems that intend to transition early due to the


41 Viewability Order, at ¶ 26.
42 The bandwidth that must be allotted (due to the related prohibition on material degradation, discussed infra)
increases only slightly if the must-carry station is broadcasting in high definition, due to the efficiencies of digital
carriage.
43 Viewability Order, at ¶ 36.
44 Viewability Order, at ¶ 35.
45 Basic Service Tier Encryption; Compatibility Between Cable Systems and Consumer Electronics Equipment, FCC
11-153, Notice of Proposed Rulemaking, 26 FCC Rcd 14870, 14876, ¶8 (2011).
46 Viewability Order, at ¶ 20.
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viewability rule should provide a detailed description of the claimed expenditures and cost information
that they would face as the result of this early transition.
14.
We seek comment on whether to extend the existing viewability rule. To the extent the
Commission decides to retain the rule, we seek comment on whether it should be retained for another
three years or a different period of time. Is three years too long or is a sunset at some later date more
advisable? The Commission considered possible alternative rules in the Viewability Order, but each was
rejected. The alternatives were rejected in each case because the Commission did “not believe we have
the authority to exempt any class of subscribers from this requirement,”47 and each of these alternative
approaches would result in some subscribers losing access to must-carry signals.48
15.
Unlike the alternatives proposed, the rule the Commission adopted in 2007 ensures
viewability by all subscribers, while simultaneously giving cable operators the flexibility to choose the
best option for complying with their viewability obligations.49 We seek comment on whether this rule is
still necessary to ensure subscriber access to must-carry signals and support the continued viability of
must-carry stations. What are the costs and benefits, for subscribers, broadcasters, and cable operators, of
retaining this rule for another three years? To the extent feasible, commenters should quantify in dollars
any asserted costs or benefits. We have not received any complaints under this rule, nor have we received
any requests to waive it, from cable systems large or small. This speaks well of the compliance efforts of
operators. It also seems to indicate that the burden of compliance has been relatively minimal and that the
actual costs of compliance have likely not been onerous. We seek comment on whether this observation
is accurate. How many subscribers, particularly those with some digital service, still rely in part on
analog cable service? We seek comment generally on the cost and service disruption to consumers if the
current rule was allowed to sunset. In particular, we seek comment on the number of cable subscribers
whose residences lie outside the digital noise limited service contour of their local broadcast must carry
stations and therefore would have difficulty receiving a quality broadcast signal over the air.50 Further,
we seek comment on the number of cable subscribers that own antennas capable of receiving their local
broadcast must carry stations where such signals are available.


47 Viewability Order at ¶ 39.
48 For instance, Entravision, licensee of a number of commercial broadcast stations, proposed requiring all must-
carry stations to be provided in analog to all of a cable system’s subscribers until 85 percent of the served population
had the means to view a digital signal. At that point, the operator could drop the analog version of all must-carry
signals. Viewability Order at ¶ 39. The Commission rejected this proposal because it concluded that its statutory
authority precluded the exemption of any class of subscribers from the viewability rule no matter how small that
class might be. Id. Comcast and other cable operators proposed a rule that would allow them to carry must-carry
signals in digital so long as they made equipment available for lease or sale to subscribers that would allow the
subscribers to view the digital signal. Id. at ¶ 22. The Commission rejected this proposal because it would
essentially require current analog subscribers to pay extra for the digital tier to watch must-carry signals they have a
statutory right to receive on every tier of service, noting that “[f]or every receiver ‘connected to a cable system by a
cable operator or for which a cable operator provides a connection,’ that operator must ensure that the broadcast
signals in question are actually viewable on their subscribers’ receivers.” Id., citing 47 U.S.C. § 534(b)(7). The
National Association of Broadcasters proposed a rule that would require all broadcast signals to be carried in the
same manner by a cable system – that is, “if one must carry station is carried in analog, all broadcasters, whether
carried pursuant to retransmission consent or must carry, would be carried in analog.” Id. at ¶ 21. A system could
therefore decline to provide any broadcast signals in analog without violating this comparative rule, even if that
disenfranchised all of its analog subscribers. In each of the proposals outlined above, there is the potential, if not a
certainty, that must-carry signals would not be viewable by analog subscribers.
49 Viewability Order at ¶ 38.
50 See e.g., 47 C.F.R. §73.622(e).
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16. Finally, we seek comment on any other proposals that would achieve the results necessary to
assure the viewability of must carry signals through an approach different than that of our existing rule.
To the extent any parties find the current rule burdensome, we seek comment on proposals that will
satisfy the statute in a less burdensome manner. Is any rule necessary to effectuate the statutory intent? If
so, any proposals for an alternative rule to ensure the actual viewability of must carry signals should
include specific proposed wording, as well as an analysis of how the proposal is consistent with the
statute.51 In the Viewability Order, we previously determined that the viewability rule was consistent with
constitutional requirements.52 We seek comment on any marketplace or other changes that have since
occurred that may impact our analysis of the constitutional issues. To the extent that we allow the rule to
sunset, we seek comment on how, as a legal and technical matter, the Commission would ensure cable
operators’ compliance with the statutory requirement to make all must-carry broadcast signals actually
viewable to all subscribers.53

IV.

HD CARRIAGE EXEMPTION

17.
The Act also requires that cable operators carry broadcast signals “without material
degradation.”54 As the Commission has interpreted the Act in the context of carriage of digital signals,
this requirement has two parts: cable operators may not discriminate in their carriage between broadcast
and non-broadcast signals, and HD broadcast signals must be carried to viewers in HD.55 In the Third
Further Notice
, the Commission sought comment on alternatives to these rules56 that would “minimize
the economic impact for small cable operators while still complying with the statutory requirements.”57
18.
Based on the comments received in response to that Notice, and in consideration of the
effect of this requirement on operators of small cable systems, the Fourth Report & Order adopted a
temporary exemption from the HD carriage requirement for certain small systems.58 Commenters in that
proceeding argued that, without an exemption from the material degradation rules, “small systems
[would] be forced to absorb or impose significant and unsustainable price increases, or in some instances
to shut down altogether.”59 This is because some small systems did not have the technical capability or
system capacity to carry high definition digital signals, and in some cases had so few subscribers that per-
subscriber costs to upgrade to that capacity would be so high as to make it not worthwhile to continue


51 To the extent we retain the rule for a specified period, we believe that it is appropriate to again consider the state
of the marketplace before allowing the rule to sunset.
52 Viewability Order, 22 FCC Rcd at 21083-21099.
53 47 U.S.C. 534(b)(7); 47 U.S.C. 535(h).
54 See 47 U.S.C. § 534(b)(4)(A) (“The signals of local commercial television stations that a cable operator carries
shall be carried without material degradation. The Commission shall adopt carriage standards to ensure that, to the
extent technically feasible, the quality of signal processing and carriage provided by a cable system for the carriage
of local commercial television stations will be no less than that provided by the system for carriage of any other type
of signal.”) and § 535(g)(2) (“A cable operator shall provide each qualified local noncommercial educational
television station whose signal is carried in accordance with this section with bandwidth and technical capacity
equivalent to that provided to commercial television broadcast stations carried on the cable system and shall carry
the signal of each qualified local noncommercial educational television station without material degradation.”).
55 Viewability Order at ¶ 4.
56 See 47 C.F.R. § 76.62.
57 Third Further Notice at ¶ 80, citing the Second FNPRM at ¶ 12.
58 See generally Fourth Report & Order.
59 National Cable & Telecommunications Association Comments at 12 (March 3, 2008).
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operating the system.60 The exemption adopted by the Commission applies to operators of cable systems
with 2,500 or fewer subscribers that are not affiliated with a cable operator serving more than 10 percent
of all MVPD subscribers, and to those with an activated channel capacity of 552 MHz or less. It permits
such systems to carry broadcast signals in standard definition (SD) digital or analog, even if the signals
are provided in HD.61
19.
The exemption was not intended to be permanent, however. The Commission instead
provided it for a three-year window, in order to give small systems “a clear opportunity to come into
compliance with the rules by spreading their effort and costs over an extended period.”62 Recognizing the
connection to the viewability rule, which was adopted at the same time as the HD carriage requirement
and also has an impact on cable carriage of broadcast signals, the Commission determined that this
exemption should be reviewed in conjunction with that rule.63
20.
We tentatively conclude that it is in the public interest to extend the small-system HD
exemption for another three years because the number of systems relying on the exemption indicates that
three years did not provide sufficient time for some small systems to come into compliance in a cost-
effective way.64 As discussed above, the Commission originally declined to make this exemption
permanent in order to retain flexibility, and in order to have an opportunity to review the state of the
marketplace several years after the digital broadcast transition.65 Although the Commission anticipated
that the three year exemption would give small systems an opportunity to come into compliance by
making relatively large expenditures over a longer period of time, based on the most recent available data
from the Annual Cable Operator Report, 37 percent of small systems that reported data, and that would be
eligible for the exemption, were still not providing any HD service.66 To the extent that most markets
have at least one station broadcasting in HD, a system is almost certainly relying on the exemption if it is
not carrying any signals in HD.67 Thus, the Form 325 data indicate that a large number of small systems
are relying on the exemption.68 Form 325 does not provide information about why these small systems
are not providing HD service, but at the time the exemption was adopted the Commission anticipated that
the most likely reason would be the savings from not upgrading the cable plant to provide digital signals.
We seek comment on this analysis. How many small cable operators are currently relying on this
exemption? We seek comment on why they are doing so, rather than offering HD programming to their
subscribers. We seek comment on the business environment in which these systems operate; are
competitive pressures from direct broadcast satellite providers and over builders on these systems such
that they would be carrying broadcast signals in HD if it were cost effective? As we stated we would in
the Fourth Report & Order, we seek comment on the “cost and service disruption to consumers” who


60 Fourth Report & Order at ¶¶ 6-7.
61 Fourth Report & Order at ¶ 18.
62 Fourth Report & Order at ¶ 11.
63 Id. at ¶ 12.
64 We propose to have the Commission conduct a further review of this exemption during the last year of the three
year period (between June 12, 2014 and June 12, 2015), and if the Commission does not decide to extend it, the
exemption will sunset.
65 Fourth Report & Order at ¶ 11.
66 Staff analysis of 2010 Annual Cable Operator Report (Form 325).
67 Approximately 99% of non-eligible cable systems are carrying at least one HD signal. Staff analysis of 2010
Annual Cable Operator Report (Form 325).
68 See infra Appendix B (discussing our analysis of FCC Form 325 data).
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subscribe to these cable systems and do not receive any high definition programming, and on any
disruptions that would occur if we retain the exemption. Have any broadcasters or cable operators
received viewer complaints concerning the lack of HD programming from subscribers to such systems?
21.
As noted above, the central purpose of the exemption was to provide small systems with
additional time to upgrade and, where necessary, expand their systems to come into full compliance with
the material degradation provisions of the carriage rules by carrying HD versions of all HD broadcast
signals without making relatively large expenditures over a short period of time.69 Have systems taken, or
are systems taking, the opportunity to do so? As discussed above, commenters cited in the Fourth Report
& Order
argued that the costs of providing digital service were simply too high for some systems to
bear.70 Will any of these systems still lack sufficient opportunity to upgrade if the exemption is extended
for three years? Given that not all eligible systems are taking advantage of the exemption,71 and no non-
eligible system has sought an exemption from this requirement, should the definition of “small system”
for the purposes of this exemption be narrowed? Are there any systems providing some HD service but
not carrying all broadcast signals in high definition? Should we consider revising the exemption such that
stations would be required to carry all local broadcast signals in HD if they provide any HD service? We
particularly seek data regarding any systems that have taken advantage of the exemption, but either
already have begun or have firm plans to begin providing HD broadcast signals in HD. We also seek
comment more generally on the costs and benefits of the exemption, for subscribers, broadcasters, and
small cable operators. For example, has the exemption benefited small cable system operators by
allowing them to direct capital expenditures to upgrade or introduce new services? Conversely, has the
exemption unnecessarily allowed small cable operators simply to delay compliance with their material
degradation obligations, thereby denying subscribers access to HD broadcast signals? To the extent
feasible, commenters should quantify in dollars any asserted costs or benefits.
22.
Comments at the time of the initial grant of this exemption indicated that it was necessary
to protect the economic health of some small systems, and indeed that some systems might become too
expensive to continue operation without the exemption.72 We seek comment on whether and to what
extent this remains the situation today. We seek comment more generally on “the state of technology and
the marketplace” as they relate to this exemption. Finally, we seek comment on whether the benefits to
the operators of small cable systems of extending this exemption for three years would outweigh the costs
to subscribers and broadcasters. In proposing to extend the HD carriage exemption, we are guided by the
Commission’s determination in the Fourth Report and Order that “[a] three-year sunset provides the
Commission with the opportunity after the transition to review these rules in light of the potential cost and
service disruptions to consumers, and the state of technology and the marketplace.”73 We are unaware of
any marketplace changes that would make extension of the exemption for three additional years
inadvisable. However, we assume the need for this exemption will not be permanent; if we extend the
exemption, should we clarify that the Commission will not consider another extension? If the proposal to
extend for three more years is adopted, small systems will have had a total of six additional years to come
into compliance with the HD carriage requirement. We seek comment on whether three years is an
appropriate amount of time, or if the HD carriage exemption should be retained for a different period of
time.


69 Fourth Report & Order at ¶ 11.
70 See supra ¶ 16.
71 See infra Appendix B.
72 Fourth Report & Order at ¶ 7.
73 Fourth Report & Order, at ¶ 11.
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V.

DECLARATORY ORDER

23. Subsequent to the Commission’s adoption of the Viewability Order and the Fourth Report
and Order, the full-power transition was successfully completed on June 12, 2009, after Congress chose
to delay it from the originally scheduled conclusion on February 17, 2009.74 When adopting the
Viewability Order, the Commission stated that, barring later action, the sunset of the viewability rule
would occur “three years from the date on which all full-power television stations cease broadcasting
analog signals,” which will be June 12, 2012.75 The HD carriage exemption was intended to be “in force
for three years from the date of the digital transition” and reviewed “simultaneously with the viewability
rule[].”76 The Commission stated that the exemption would therefore be in force “from February 18,
2009 through February 17, 2012,” or three years after the originally scheduled conclusion of the
transition.77 The Commission expressed a clear intent to have the HD carriage exemption and viewability
sunsets running in parallel, and did not at the time anticipate the subsequent congressionally mandated
extension of analog broadcasting. It is clear from the text of the Viewability Order and the Fourth Report
and Order
that the Commission intended the rule/exemption to remain in effect 3 full years from the
conclusion of the transition, and thus having them sunset four months early in February 2012 would be
contrary to the stated intent of the Commission.78 Therefore, we hereby issue this Declaratory Order that
the HD carriage exemption, like the viewability rule, will be in effect up to and until June 12, 2012,
absent further Commission action.

VI.

PROCEDURAL MATTERS

A.

Initial Regulatory Flexibility Analysis

24.
With respect to the Fourth Further Notice of Proposed Rulemaking, an Initial Regulatory
Flexibility Analysis (“IRFA”), see generally 5 U.S.C. § 603, is contained in Appendix B. Comments
must be identified as responses to the IRFA and must be filed by the deadlines for comments on the
Fourth Further Notice of Proposed Rulemaking specified above. The Commission will send a copy of
the Notice of Proposed Rulemaking, including the IRFA, to the Chief Counsel for Advocacy of the Small
Business Administration.79

B.

Initial Paperwork Reduction Act of 1995 Analysis

25.
The Fourth FNPRM has been analyzed with respect to the Paperwork Reduction Act of
1995 (“PRA”).80 This document does not contain new or modified information collection requirements
subject to the PRA, Public Law 104-13. In addition, therefore, it does not contain any new or modified
“information collection burden for small business concerns with fewer than 25 employees,” pursuant to
the Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4).


74 Full-Power TV Broadcasters Go All-Digital, Federal Communications Commission, Press Release (June 13,
2009).
75 Viewability Order at ¶ 16.
76 Fourth Report & Order at ¶¶ 11-12.
77 Id. at ¶¶ 12, 18.
78 See Viewability Order, at ¶ 16; Fourth Report and Order, at ¶ 11.
79 See 5 U.S.C. § 603(a). In addition, the Notice of Proposed Rulemaking and the IRFA (or summaries thereof) will
be published in the Federal Register.
80 Paperwork Reduction Act of 1995 (“PRA”), Pub. L. No. 104-13, 109 Stat 163 (1995) (codified in Chapter 35 of
Title 44 U.S.C.).
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C.

Ex Parte Rules

26.
The proceeding this Notice initiates shall be treated as a “permit-but-disclose” proceeding
in accordance with the Commission’s ex parte rules.81 Persons making ex parte presentations must file a
copy of any written presentation or a memorandum summarizing any oral presentation within two
business days after the presentation (unless a different deadline applicable to the Sunshine period applies).
Persons making oral ex parte presentations are reminded that memoranda summarizing the presentation
must (1) list all persons attending or otherwise participating in the meeting at which the ex parte
presentation was made, and (2) summarize all data presented and arguments made during the
presentation. If the presentation consisted in whole or in part of the presentation of data or arguments
already reflected in the presenter’s written comments, memoranda or other filings in the proceeding, the
presenter may provide citations to such data or arguments in his or her prior comments, memoranda, or
other filings (specifying the relevant page and/or paragraph numbers where such data or arguments can be
found) in lieu of summarizing them in the memorandum. Documents shown or given to Commission
staff during ex parte meetings are deemed to be written ex parte presentations and must be filed
consistent with rule 1.1206(b). In proceedings governed by rule 1.49(f) or for which the Commission has
made available a method of electronic filing, written ex parte presentations and memoranda summarizing
oral ex parte presentations, and all attachments thereto, must be filed through the electronic comment
filing system available for that proceeding, and must be filed in their native format (e.g., .doc, .xml, .ppt,
searchable .pdf). Participants in this proceeding should familiarize themselves with the Commission’s ex
parte
rules.

D.

Filing Requirements

27.
Pursuant to sections 1.415 and 1.419 of the Commission’s rules, 47 CFR §§ 1.415, 1.419,
interested parties may file comments and reply comments on or before the dates indicated on the first
page of this document. Comments may be filed using the Commission’s Electronic Comment Filing
System (ECFS). See Electronic Filing of Documents in Rulemaking Proceedings, 63 FR 24121 (1998).
§
Electronic Filers: Comments may be filed electronically using the Internet by accessing the
ECFS: http://fjallfoss.fcc.gov/ecfs2/.
§
Paper Filers: Parties who choose to file by paper must file an original and one copy of each
filing. If more than one docket or rulemaking number appears in the caption of this proceeding,
filers must submit two additional copies for each additional docket or rulemaking number.
Filings can be sent by hand or messenger delivery, by commercial overnight courier, or by first-
class or overnight U.S. Postal Service mail. All filings must be addressed to the Commission’s
Secretary, Office of the Secretary, Federal Communications Commission.
§
All hand-delivered or messenger-delivered paper filings for the Commission’s Secretary
must be delivered to FCC Headquarters at 445 12th St., SW, Room TW-A325,
Washington, DC 20554. The filing hours are 8:00 a.m. to 7:00 p.m. All hand deliveries
must be held together with rubber bands or fasteners. Any envelopes and boxes must be
disposed of before entering the building.


81 47 C.F.R. §§ 1.1200 et seq.
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§
Commercial overnight mail (other than U.S. Postal Service Express Mail and Priority
Mail) must be sent to 9300 East Hampton Drive, Capitol Heights, MD 20743.
§
U.S. Postal Service first-class, Express, and Priority mail must be addressed to 445 12th
Street, SW, Washington DC 20554.
28.
People with Disabilities: To request materials in accessible formats for people with
disabilities (braille, large print, electronic files, audio format), send an e-mail to fcc504@fcc.gov or call
the Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), 202-418-0432 (tty).
29.
Availability of Documents. Comments, reply comments, and ex parte submissions will
be available for public inspection during regular business hours in the FCC Reference Center, Federal
Communications Commission, 445 12th Street, S.W., CY-A257, Washington, D.C., 20554. These
documents will also be available via ECFS. Documents will be available electronically in ASCII,
Microsoft Word, and/or Adobe Acrobat.
30.
Additional Information. For additional information on this proceeding, contact Steven
Broeckaert, Steven.Broeckaert@fcc.gov, or Lyle Elder, Lyle.Elder@fcc.gov, of the Media Bureau, Policy
Division, and (202) 418-2120.

VII.

ORDERING CLAUSES

31.

IT IS ORDERED

that, pursuant to Sections 4, 303, 614, and 615 of the Communications
Act of 1934, as amended, 47 U.S.C. §§ 154, 303, 534, and 535, this Fourth Further Notice Of Proposed
Rulemaking
and Declaratory Order is ADOPTED.
32.

IT IS FURTHER ORDERED

that, pursuant to Sections 5(d) of the Administrative
Procedure Act, Sections 4, 303, 614, and 615 of the Communications Act of 1934, as amended, and 1.2 of
the Commission’s rules, 5 U.S.C. § 554(e); 47 U.S.C. §§ 154, 303, 534, 535; 47 C.F.R. § 1.2, the
viewability rule and the HD Carriage exemption will be in effect up to and until June 12, 2012, absent
further Commission action.
33.

IT IS ORDERED

that the Reference Information Center, Consumer and Governmental
Affairs Bureau, shall send a copy of this Notice of Proposed Rulemaking, including the Initial Regulatory
Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business Administration.
FEDERAL COMMUNICATIONS COMMISSION
Marlene H. Dortch
Secretary
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APPENDIX A

Proposed Rule

1
We propose to amend Part 76 of Title 47 of the Code of Federal Regulations as follows:
Part 76 – Multichannel Video and Cable Television Services
1.

The authority citation for Part 76 continues to read as follows:

AUTHORITY: 47 U.S.C. 151, 152, 153, 154, 301, 302, 302a, 303, 303a, 307, 308, 309, 312, 315, 317,
325, 339, 340, 341, 503, 521, 522, 531, 532, 534, 535, 536, 537, 543, 544, 544a, 545, 548, 549, 552, 554,
556, 558, 560, 561, 571, 572, 573.
2. Section 76.56 is amended by revising paragraph (d)(5) to read as follows:
§ 76.56 Signal carriage obligations.
* * * * *
(d) Availability of signals.
* * * * *
(5) The requirements set forth in paragraph (d)(3) of this section shall cease to be effective

June 12,
2015

three years from the date on which all full-power television stations cease broadcasting analog
signals, unless the Commission extends the requirements prior to that datein a proceeding to be
conducted during the year preceding such date.


1 Deletions are indicated in strikethrough, additions in bold.
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APPENDIX B

325 Data Analysis for Viewability Sunset
1. The FCC collects data from cable operators annually on the “Annual Report of Cable
Systems” also called “Form 325.” Through this form, the FCC collects basic operational information
from cable television systems nationwide, including data about their architecture, capacity and number of
subscribers. Each year the FCC designates a sample of cable systems having fewer than 20,000
subscribers and all systems having 20,000 or more subscribers to file Form 325. Staff performed an
analysis of the Form 325 data from the 2010 filing year for use in the viewability proceeding.

Must Carry/Retransmission Consent:

2. Filers of Form 325 report information on the channels carried, including for broadcast
channels whether the channel is carried pursuant to a must-carry designation or a retransmission consent
agreement. Staff analyzed the 2010 filings and found that approximately 780 of 2000 full-service and
low-power stations elected or defaulted to must carry.
3. To make this approximation, staff first extracted from the Form 325 database all records
where a cable operator marked a channel as either retransmission-consent or must-carry. A single
broadcast station often has multiple entries on the Form 325 if the operator carried multiple versions to
comply with the viewability requirements or if the operator chose to carry multicast streams of a single
station. For example, WXXX-TV was reported 92 times by 25 cable systems with 7 different spellings.
WXXX
WXXX WEATHER NOW
WXXX 7
WXXX-TV
WXXX WEATHER
WXXX HD
WXXX RETRO TV NETWORK
4. Next, the staff reduced the number of entries per cable system to one by considering that if at
any one of those entries was marked as must-carry, then that station was must-carry on that cable system.
The dataset for WXXX was then reduced to one report for each of the 25 cable systems. If any one of the
entries for a cable system was marked as must-carry, the report for that cable system was must-carry.
5. Due to either different elections on different cable systems or accidental misreporting by
cable operators, many stations had a mixture of must-carry and retransmission-consent reports.
Must-Carry
Retransmission-Consent
WXXX 2
23
6. The staff aggregated the reports, and if operators reported a station as must-carry as or more
often as operators reported that station as retransmission-consent, the staff considered that station to
prefer must-carry. In this case, the majority of cable systems reports retransmission consent, so WXXX
was assigned a single preference:
WXXX
Retransmission-Consent
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7.
The process was repeated for each of the approximately 2000 broadcast stations listed in
the 325 reports. In the event of an equal number of systems reporting must-carry and retransmission
consent, the station was considered to have chosen must-carry.

Subscribers served by hybrid cable systems

8.
Staff analyzed the “number of digital channels activated” and “number of analog
channels activated” data fields in the Form 325 reports from filing year 2010. A hybrid system has at
least one activated analog channel and at least one activated digital channel. As the Form 325 is collected
by a sample of cable systems, staff performed the below analysis to determine that 56.8 million of the 62
million cable subscribers are on hybrid systems.
9.
Of the 565 systems that reported more than 20,000 subscribers, 542 were hybrid systems,
with those systems serving 46.6 million subscribers. No scaling factor was necessary as reports must be
filed by all systems with more than 20,000 subscribers.
10.
Of the 249 systems that reported between 5,000 and 20,000 subscribers, 233 were hybrid
systems serving 2.7 million subscribers. A representative sample of systems with between 5,000 and
20,000 is asked to file reports each year. Based on previous years’ Form 325 reports and other research,
staff estimated that there are 451 such systems in total. When the data was extrapolated, staff estimated
that 422 of the 451 systems are hybrid. Thus, the 2.7 million subscribers were scaled by a multiple of
(422/233), yielding an estimated total of 4.9 million subscribers.
11.
Of the 154 systems that reported fewer than 5000 subscribers, 91 were hybrid systems
serving 184 thousand subscribers. A representative sample of systems with fewer than 5000 subscribers
is asked to file reports each year. Based on previous years’ Form 325 reports and other research, staff
estimated that there are 4450 such systems in total. When the data was extrapolated, staff estimated that
2630 of the 4450 systems are hybrid. When scaled by a multiple of (2630/91), staff estimated that there
are a total of 5.3 million subscribers served by these systems.
12.
Staff summed the total number of subscribers served by hybrid systems and came up with
a result of 56.8 million such subscribers (46.6 million + 4.9 million + 5.3 million).
13.
Staff used a similar process as described above to estimate the total number of cable
subscribers in the US as approximately 62 million. This total is close to other publicly available estimates
of cable subscribers.
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APPENDIX C

Initial Regulatory Flexibility Analysis

1.
As required by the Regulatory Flexibility Act of 1980, as amended (“RFA”)
2.
1 the Commission has prepared this Initial Regulatory Flexibility Analysis (“IRFA”) of
the possible economic impact on a substantial number of small entities by the policies and rules proposed
in this Fourth Notice of Proposed Rulemaking (“Notice”). Written public comments are requested on this
IRFA. Comments must be identified as responses to the IRFA and must be filed by the deadlines for
comments on the Notice as indicated on its first page. The Commission will send a copy of the Notice,
including this IRFA, to the Chief Counsel for Advocacy of the Small Business Administration (“SBA”).2
In addition, the Notice and IRFA (or summaries thereof) will be published in the Federal Register.3

A.

Need for, and Objectives of, the Proposals

3.
This Notice seeks comment on rules relating to the manner in which broadcast DTV
content will be displayed when it is carried by a cable system. The current viewability rule and the
exemption from the HD carriage rule for certain small systems were both intended to expire three years
after the conclusion of the transition, subject to a simultaneous review during the prior year. This Notice
seeks comment on whether to extend for three years the current viewability rule, which requires that cable
operators must either carry the signals of commercial and non-commercial must-carry stations in analog
format to all analog cable subscribers, or, for all-digital systems, carry those signals in digital format,
provided that all subscribers, including those with analog television sets, that are connected to a cable
system by a cable operator or for which the cable operator provides a connection, have the necessary
equipment to view the broadcast content. Viewability of must-carry signals is required by the
Communications Act, and as a result the current rule must be extended or replaced by an alternative that
provides the same level of subscriber access to must-carry programming. The Notice also proposes to
extend for three years the HD carriage exemption, which exempts certain small systems from the
obligation to carry HD broadcast signals in HD. The exemption applies to operators of cable systems
with 2,500 or fewer subscribers that are not affiliated with a cable operator serving more than 10% of all
MVPD subscribers, and to those with an activated capacity of 552 MHz or less. The Notice seeks
comment on the exemption’s impact and importance.

B.

Legal Basis

4.
The authority for the action proposed in this rulemaking is contained in Sections 4, 303,
614, and 615 of the Communications Act of 1934, as amended, 47 U.S.C. §§ 154, 303, 534, and 535.

C.

Description and Estimate of the Number of Small Entities to Which the Proposals
Will Apply

5.
The RFA directs the Commission to provide a description of and, where feasible, an
estimate of the number of small entities that will be affected by the proposed rules if adopted.4 The RFA
generally defines the term “small entity” as having the same meaning as the terms “small business,”
“small organization,” and “small governmental jurisdiction”5 In addition, the term “small business” has


1 See 5 U.S.C. § 603. The RFA, see 5 U.S.C. §§ 601 – 612, has been amended by the Small Business Regulatory
Enforcement Fairness Act of 1996 (“SBREFA”), Pub. L. No. 104-121, Title II, 110 Stat. 857 (1996).
2 See 5 U.S.C. § 603(a).
3 See id.
4 5 U.S.C. § 603(b)(3).
5 5 U.S.C. § 601(b).
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the same meaning as the term “small business concern” under the Small Business Act.6 A “small
business concern” is one which: (1) is independently owned and operated; (2) is not dominant in its field
of operation; and (3) satisfies any additional criteria established by the Small Business Administration
(SBA).7 The rule changes proposed herein will directly affect small television broadcast stations and
small cable operators. A description of these small entities, as well as an estimate of the number of such
small entities, is provided below.
6.
Television Broadcasting. The SBA defines a television broadcasting station as a small
business if such station has no more than $14.0 million in annual receipts.8 Business concerns included in
this industry are those “primarily engaged in broadcasting images together with sound.”9 The
Commission has estimated the number of licensed commercial television stations to be 1,392.10
According to Commission staff review of the BIA/Kelsey, MAPro Television Database (“BIA”) as of
April 7, 2010, about 1,015 of an estimated 1,380 commercial television stations11 (or about 74 percent)
have revenues of $14 million or less and, thus, qualify as small entities under the SBA definition. The
Commission has estimated the number of licensed noncommercial educational (NCE) television stations
to be 390.12 We note, however, that, in assessing whether a business concern qualifies as small under the
above definition, business (control) affiliations13 must be included. Our estimate, therefore, likely
overstates the number of small entities that might be affected by our action, because the revenue figure on
which it is based does not include or aggregate revenues from affiliated companies. The Commission
does not compile and otherwise does not have access to information on the revenue of NCE stations that
would permit it to determine how many such stations would qualify as small entities.
7.
In addition, an element of the definition of “small business” is that the entity not be
dominant in its field of operation. We are unable at this time to define or quantify the criteria that would


6 5 U.S.C. § 601(3) (incorporating by reference the definition of “small-business concern” in the Small Business
Act, 15 U.S.C. § 632). Pursuant to 5 U.S.C. § 601(3), the statutory definition of a small business applies “unless an
agency, after consultation with the Office of Advocacy of the Small Business Administration and after opportunity
for public comment, establishes one or more definitions of such term which are appropriate to the activities of the
agency and publishes such definition(s) in the Federal Register.”
7 15 U.S.C. § 632.
8 See 13 C.F.R. § 121.201, NAICS Code 515120 (2007).
9 Id. This category description continues, “These establishments operate television broadcasting studios and
facilities for the programming and transmission of programs to the public. These establishments also produce or
transmit visual programming to affiliated broadcast television stations, which in turn broadcast the programs to the
public on a predetermined schedule. Programming may originate in their own studios, from an affiliated network, or
from external sources.” Separate census categories pertain to businesses primarily engaged in producing
programming. See Motion Picture and Video Production, NAICS code 512110; Motion Picture and Video
Distribution, NAICS Code 512120; Teleproduction and Other Post-Production Services, NAICS Code 512191; and
Other Motion Picture and Video Industries, NAICS Code 512199.
10 See News Release, “Broadcast Station Totals as of December 31, 2009,” 2010 WL 676084 (F.C.C.) (dated Feb.
26, 2010) (“Broadcast Station Totals”); also available at http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-
296538A1.pdf.
11 We recognize that this total differs slightly from that contained in Broadcast Station Totals, supra, note 83;
however, we are using BIA's estimate for purposes of this revenue comparison.
12 See Broadcast Station Totals, supra, note 83.
13 “[Business concerns] are affiliates of each other when one concern controls or has the power to control the other
or a third party or parties controls or has to power to control both.” 13 C.F.R. § 121.103(a)(1).
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establish whether a specific television station is dominant in its field of operation. Accordingly, the
estimate of small businesses to which rules may apply do not exclude any television station from the
definition of a small business on this basis and are therefore over-inclusive to that extent. Also, as noted,
an additional element of the definition of “small business” is that the entity must be independently owned
and operated. We note that it is difficult at times to assess these criteria in the context of media entities
and our estimates of small businesses to which they apply may be over-inclusive to this extent.
8.

Cable and Other Program Distribution.

Since 2007, these services have been defined
within the broad economic census category of Wired Telecommunications Carriers; that category is
defined as follows: “This industry comprises establishments primarily engaged in operating and/or
providing access to transmission facilities and infrastructure that they own and/or lease for the
transmission of voice, data, text, sound, and video using wired telecommunications networks.
Transmission facilities may be based on a single technology or a combination of technologies.”14 The
SBA has developed a small business size standard for this category, which is: all such firms having 1,500
or fewer employees.15 According to Census Bureau data for 2007, there were a total of 955 firms in this
previous category that operated for the entire year.16 Of this total, 939 firms had employment of 999 or
fewer employees, and 16 firms had employment of 1000 employees or more.17 Thus, under this size
standard, the majority of firms can be considered small and may be affected by rules adopted pursuant to
the Notice.
9.

Cable Companies and Systems

. The Commission has developed its own small business
size standards, for the purpose of cable rate regulation. Under the Commission’s rules, a “small cable
company” is one serving 400,000 or fewer subscribers, nationwide.18 Industry data indicate that, of 1,076
cable operators nationwide, all but eleven are small under this size standard.19 In addition, under the
Commission’s rules, a “small system” is a cable system serving 15,000 or fewer subscribers.20 Industry
data indicate that, of 7,208 systems nationwide, 6,139 systems have under 10,000 subscribers, and an
additional 379 systems have 10,000-19,999 subscribers.21 Thus, under this second size standard, most
cable systems are small and may be affected by rules adopted pursuant to the Notice.


14 U.S. Census Bureau, 2007 NAICS Definitions, “517110 Wired Telecommunications Carriers” (partial definition),
http://www.census.gov/naics/2007/def/ND517110.HTM#N517110.
15 13 C.F.R. § 121.201, NAICS code 517110 (2007).
16 U.S. Census Bureau, 2007 Economic Census, Subject Series: Information, Table 5, Employment Size of Firms for
the United States: 2007, NAICS code 5171102 (issued Nov. 2010).
17 See id.
18 See 47 C.F.R. § 76.901(e). The Commission determined that this size standard equates approximately to a size
standard of $100 million or less in annual revenues. See Implementation of Sections of the 1992 Cable Television
Consumer Protection and Competition Act: Rate Regulation
, MM Docket Nos. 92-266, 93-215, Sixth Report and
Order and Eleventh Order on Reconsideration, 10 FCC Rcd 7393, 7408 para. 28 (1995).
19 These data are derived from R.R. BOWKER, BROADCASTING & CABLE YEARBOOK 2006, “Top 25 Cable/Satellite
Operators,” pages A-8 & C-2 (data current as of June 30, 2005); WARREN COMMUNICATIONS NEWS, TELEVISION &
CABLE FACTBOOK 2006, “Ownership of Cable Systems in the United States,” pages D-1805 to D-1857.
20 See 47 C.F.R. § 76.901(c).
21 WARREN COMMUNICATIONS NEWS, TELEVISION & CABLE FACTBOOK 2006, “U.S. Cable Systems by Subscriber
Size,” page F-2 (data current as of Oct. 2005). The data do not include 718 systems for which classifying data were
not available.
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FCC 12-18

10.

Cable System Operators

. The Act also contains a size standard for small cable system
operators, which is “a cable operator that, directly or through an affiliate, serves in the aggregate fewer
than 1 percent of all subscribers in the United States and is not affiliated with any entity or entities whose
gross annual revenues in the aggregate exceed $250,000,000.”22 The Commission has determined that an
operator serving fewer than 677,000 subscribers shall be deemed a small operator, if its annual revenues,
when combined with the total annual revenues of all its affiliates, do not exceed $250 million in the
aggregate.23 Industry data indicate that, of 1,076 cable operators nationwide, all but ten are small under
this size standard.24 We note that the Commission neither requests nor collects information on whether
cable system operators are affiliated with entities whose gross annual revenues exceed $250 million,25 and
therefore we are unable to estimate more accurately the number of cable system operators that would
qualify as small under this size standard.
11.

Open Video Services

. The open video system (“OVS”) framework was established in
1996, and is one of four statutorily recognized options for the provision of video programming services
by local exchange carriers.26 The OVS framework provides opportunities for the distribution of video
programming other than through cable systems. Because OVS operators provide subscription services,27
OVS falls within the SBA small business size standard covering cable services, which is “Wired
Telecommunications Carriers.”28 The SBA has developed a small business size standard for this
category, which is: all such firms having 1,500 or fewer employees. According to Census Bureau data
for 2007, there were a total of 3,188 firms in this previous category that operated for the entire year.29 Of
this total, 3,144 firms had employment of 999 or fewer employees, and 44 firms had employment of 1000
employees or more.30 Thus, under this size standard, most cable systems are small and may be affected
by rules adopted pursuant to the Notice. In addition, we note that the Commission has certified some
OVS operators, with some now providing service.31 Broadband service providers (“BSPs”) are currently


22 47 U.S.C. § 543(m)(2); see also 47 C.F.R. § 76.901(f) & nn.1–3.
23 47 C.F.R. § 76.901(f); see FCC Announces New Subscriber Count for the Definition of Small Cable Operator,
Public Notice, 16 FCC Rcd 2225 (Cable Services Bureau 2001).
24 These data are derived from R.R. BOWKER, BROADCASTING & CABLE YEARBOOK 2006, “Top 25 Cable/Satellite
Operators,” pages A-8 & C-2 (data current as of June 30, 2005); WARREN COMMUNICATIONS NEWS, TELEVISION &
CABLE FACTBOOK 2006, “Ownership of Cable Systems in the United States,” pages D-1805 to D-1857.
25 The Commission does receive such information on a case-by-case basis if a cable operator appeals a local
franchise authority’s finding that the operator does not qualify as a small cable operator pursuant to § 76.901(f) of
the Commission’s rules.
26 47 U.S.C. § 571(a)(3)-(4). See Annual Assessment of the Status of Competition in the Market for the Delivery of
Video Programming
, MB Docket No. 06-189, Thirteenth Annual Report, 24 FCC Rcd 542, 606 para. 135 (2009)
(“Thirteenth Annual Cable Competition Report”).
27 See 47 U.S.C. § 573.
28
U.S. Census Bureau, 2007 NAICS Definitions, “517110 Wired Telecommunications Carriers”;
http://www.census.gov/naics/2007/def/ND517110.HTM#N517110.
29 U.S. Census Bureau, 2007 Economic Census, Subject Series: Information, Table 5, Employment Size of Firms for
the United States: 2007, NAICS code 5171102 (issued Nov. 2010).
30 See id.
31 A list of OVS certifications may be found at http://www.fcc.gov/mb/ovs/csovscer.html.
21

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FCC 12-18

the only significant holders of OVS certifications or local OVS franchises.32 The Commission does not
have financial or employment information regarding the entities authorized to provide OVS, some of
which may not yet be operational. Thus, again, at least some of the OVS operators may qualify as small
entities.

D.

Description of Projected Reporting, Record Keeping, and other Compliance
Requirements for Small Entities

12.
The Notice seeks comment on a rule revision that would extend for three years the
existing viewability rule, which would affect small television broadcast stations and cable operators by
requiring cable systems to continue to make must-carry broadcast signals viewable in analog on hybrid
systems, or in digital on all-digital systems. This should impose no compliance burden on small cable
systems, because they will simply be continuing current practices, and should continue to have a positive
impact on small television broadcast stations. The Notice also seeks comment on extending the HD
carriage exemption, which would affect small television broadcast stations and cable operators. It is
beneficial to small cable operators by providing them with flexibility, and imposes no compliance burden
on small television broadcast stations who need take no action as a result of this proposed extension.

E.

Steps Taken to Minimize Significant Economic Impact on Small Entities, and
Significant Alternatives Considered

13.
The RFA requires an agency to describe any significant alternatives that it has considered
in reaching its proposed approach, which may include the following four alternatives (among others): (1)
the establishment of differing compliance or reporting requirements or timetables that take into account
the resources available to small entities; (2) the clarification, consolidation, or simplification of
compliance or reporting requirements under the rule for small entities; (3) the use of performance, rather
than design, standards; and (4) an exemption from coverage of the rule, or any part thereof, for small
entities.33 We seek comment on the applicability of any of these alternatives to affected small entities.
14.
The requirements proposed in the Notice would in most cases create minimal economic
impact on small entities, and in some cases would provide positive impact. The viewability requirement
has been mandated by Congress, and continuation of the current rule could minimize economic impact on
small cable systems and television broadcast stations by maintaining the status quo and not requiring any
additional investment in engineering or legal services. The HD carriage exemption does not impose a
negative economic impact on any small cable operator, and provides a positive economic impact to any
operator of a system that chooses to take advantage of the exemption. The exemption does not impose
any significant burdens on small television stations. We invite small entities to submit comment on the
impact of extension or sunset of the viewability rule and the HD carriage exemption, and on how the
Commission could further minimize potential burdens on small entities.

F.

Federal Rules that May Duplicate, Overlap, or Conflict with the Proposed Rules

15. None.


32 See Thirteenth Annual Cable Competition Report, 24 FCC Rcd at 606-07 para. 135. BSPs are newer firms that
are building state-of-the-art, facilities-based networks to provide video, voice, and data services over a single
network.
33 5 U.S.C. § 603(c)(1) – (c)(4).
22

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