[Federal Register: November 14, 2000 (Volume 65, Number 220)]
[Rules and Regulations]               
[Page 68082-68107]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr14no00-11]                         

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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 73 and 76

[CS Docket No. 00-2; FCC 00-388]

 
Implementation of the Satellite Home Viewer Improvement Act of 
1999: Application of Network Nonduplication, Syndicated Exclusivity, 
and Sports Blackout Rules to Satellite Retransmissions of Broadcast 
Signals

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: This document adopts regulations to implement certain aspects 
of the Satellite Home Viewer Improvement Act of 1999, which was enacted 
on November 29, 1999. Among other things, the act authorizes satellite 
carriers to add more local and national broadcast programming to their 
offerings and seeks to place satellite carriers on an equal footing 
with cable operators with respect to availability of broadcast 
programming. This document adopts regulations that apply current cable 
rules for network non-duplication, syndicated program exclusivity and 
sports blackout to satellite carriers.

DATES: Effective November 29, 2000.

ADDRESSES: Federal Communications Commission, 445 12th Street, SW, 
Washington, DC 20554.

FOR FURTHER INFORMATION CONTACT: Eloise Gore at (202) 418-7200 or via 
internet at egore@fcc.gov.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Report 
and Order (``Order''), FCC 00-388, adopted October 27, 2000; released 
November 2, 2000. The full text of the Commission's Order is available 
for inspection and copying during normal business hours in the FCC 
Reference Center (Room CY-A257) at its headquarters, 445 12th Street, 
SW, Washington, DC 20554, or may be purchased from the Commission's 
copy contractor, International Transcription Service, Inc., (202) 857-
3800, 1231 20th Street, NW, Washington, DC 20036, or may be reviewed 
via internet at http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.fcc.gov/csb/ For copies in alternative 
formats, such as braille, audio cassette or large print, please contact 
Sheila Ray at ITS.

Paperwork Reduction Act

    This Report and Order contains new or modified information 
collection(s) subject to the Paperwork Reduction Act of 1995 (PRA), 
Public Law 104-13. The Commission is requesting Office of Management 
and Budget (``OMB'') approval, under the emergency processing 
provisions of the 1995 Act (5 CFR 1320.13), of the information 
collection requirements contained in this Report and Order.

Synopsis of the Order

Introduction

    1. In this Report and Order (``Order''), we adopt network non-
duplication, syndicated exclusivity, and sports blackout rules for 
satellite carriers. These rules implement provisions of the Satellite 
Home Viewer Improvement Act of 1999 (``SHVIA,'' Public Law 106-113, 113 
Stat. 1501, 1501A-526 to 1501A-545 (Nov. 29, 1999)), which provides 
statutory copyright licenses for satellite carriers to provide 
additional local and national broadcast programming to subscribers. In 
enacting the SHVIA, Congress sought to create parity between satellite 
carriers and cable operators with regard to the retransmission of 
broadcast programming and to expand the availability of such 
programming to consumers. Prior to enactment of the SHVIA, the 
copyright laws made it virtually impossible for satellite subscribers 
to receive television broadcast programming by satellite. In adopting 
these rules, the Commission implements the statutory requirements and 
seeks to facilitate competition in the multichannel video programming 
distribution marketplace.
    2. Section 1008 of the SHVIA creates a new section 339 of the 
Communications Act of 1934, as amended (``Communications Act'') 
entitled ``Carriage of Distant Television Stations by Satellite 
Carriers.'' Section 339(b) directs the Commission to apply

[[Page 68083]]

the network non-duplication, syndicated exclusivity, and sports 
blackout rules, previously applicable only to cable television systems, 
to satellite carriers' retransmission of nationally distributed 
superstations to satellite subscribers. Congress also requires the 
Commission to apply the cable sports blackout rule to satellite 
carriers' retransmission of network stations, but only ``to the extent 
technically feasible and not economically prohibitive.'' The Commission 
released a Notice of Proposed Rulemaking (``NPRM'') on January 7, 2000, 
seeking comment on how best to apply these rules to satellite carriers 
(65 FR 4927, February 2, 2000). The Commission received 22 comments and 
14 reply comments to the NPRM.

Background

    3. The network non-duplication, syndicated exclusivity, and sports 
blackout rules (collectively referred to herein as ``the exclusivity 
rules''), as applied in the cable context, generally protect exclusive 
contractual rights that have been negotiated between program providers 
and broadcasters or other rights holders. These exclusive contractual 
rights are potentially threatened by cable systems that are capable of 
importing duplicative programming from distant sources beyond the 
control of the contracting parties. The cable exclusivity rules provide 
that specific programs must be deleted from distant television 
broadcast signals delivered to cable subscribers if the programs are 
subject to exclusive rights pursuant to contracts with local stations. 
Additionally, pursuant to the sports blackout rule, sporting events 
carried on distant stations must be deleted when carriage would violate 
sporting teams' or leagues' arrangements to protect gate receipts in 
the local market.
    4. Section 339(b)(1)(A) of the Communications Act, as amended by 
the SHVIA, requires the Commission ``to apply network non-duplication 
protection (47 CFR 76.92), syndicated exclusivity protection (47 CFR 
76.151), and sports blackout protection (47 CFR 76.67) to the 
retransmission of the signals of nationally distributed superstations 
by satellite carriers to subscribers.'' Section 339(b)(1)(B) requires 
the Commission to ``apply sports blackout protection (47 CFR 76.67) to 
the retransmission of the signals of network stations by satellite 
carriers to subscribers'' ``to the extent technically feasible and not 
economically prohibitive.'' The SHVIA requires that the Commission 
implement these new rules so that they will be ``as similar as 
possible'' to the rules applicable to cable operators.

Summary of Decision

    5. In implementing these sections of the SHVIA, the Commission 
attempts to be faithful to the clear Congressional intent to place 
satellite carriers on an equal footing with cable operators, while 
taking into consideration that the operational structures of these two 
Multichannel Video Programming Distributors (``MVPD''s) are very 
different. In the context of the SHVIA, which is fundamentally part of 
the copyright laws, we are cognizant also of the important protection 
that the exclusivity rules provide to broadcasters and copyright 
holders. The SHVIA facilitates satellite carriage of additional 
broadcast stations through the use of a statutory copyright license. By 
applying the cable exclusivity rules to satellite carriers, Congress 
sought to keep the competitive marketplace in balance by protecting the 
broadcasters' private contractual arrangements and ensuring that 
satellite carriers have regulatory obligations that are as similar as 
possible to cable operators. The statutory language unambiguously 
directs us to apply all three of the cable exclusivity rules to 
satellite carriers with respect to retransmission of nationally 
distributed superstations. The SHVIA further requires that only the 
sports blackout rule be applied to satellite carriers' retransmission 
of network stations and limits application of the cable rule in this 
context ``to the extent technically feasible and not economically 
prohibitive.'' Congressional intent, as expressed in the Joint 
Explanatory Statement, places a heavy burden on showing that rules 
similar to the cable rules would be ``economically prohibitive'' for 
satellite carriers.
    6. In general, under the new statutory provisions, the network non-
duplication and syndicated exclusivity rules apply when a satellite 
carrier retransmits a nationally distributed superstation to a 
household within a local broadcaster's zone of protection, and the 
nationally distributed superstation carries a program to which the 
local station has exclusive rights. The program may fall under either 
the definition of network program (delivered simultaneously to more 
than one broadcast station, (47 CFR 76.5(m)) or the definition of 
syndicated program (sold, licensed, distributed or sold to licensees in 
more than one market (47 CFR 76.5(ii)). In addition, the sports 
blackout rules will apply when a subject sporting event will not be 
aired live by any local television station, and a satellite carrier 
retransmits a nationally distributed superstation or a distant network 
station carrying that sporting event to a household within the zone of 
protection of the holder of exclusive distribution rights to the event. 
In all of these cases, the television broadcast station or other rights 
holder may require the satellite carrier to blackout these particular 
programs for the satellite subscriber households within the protected 
zone.
    7. In the NPRM we sought comments on how we could follow the 
Congressional mandate to apply the cable exclusivity rules as closely 
as possible to satellite carriers while taking account of the 
differences between the two industries. In general, the comments did 
not provide specific data on cost or technical difficulties in applying 
the exclusivity rules to satellite carriers and leave us with the 
conclusion that, in most cases, these rules can be applied directly to 
satellite carriers. There is a general consensus, however, that the 
``community units'' used for identification of cable systems are 
inapplicable in the satellite context. We decide here to use zip codes 
in lieu of community units to define the various zones of protection 
afforded under the satellite exclusivity rules adopted today. In large 
part, the notification provisions of the cable exclusivity rules can be 
applied in the satellite context, except with respect to the sports 
blackout requirements, for which we have the statutory flexibility and 
record to support slightly different requirements. In a further effort 
to provide comparable treatment for the cable and satellite rules, we 
adapt the exceptions to the cable exclusivity rules for small systems 
to the satellite context. We also require that the contractual language 
granting exclusive rights in a market clearly apply to satellite 
carriage, and we provide a period of time for satellite carriers to 
phase-in implementation of the new rules. Finally, we decline to take 
the steps advocated by the National Football League to go beyond the 
statutory requirements to delete non-duplicating sports programming 
that is part of a sports program ``unitary'' package because it would 
unnecessarily and unjustifiably further limit the ability of consumers 
to view the programming of their choice.

Statutory Interpretation and Definitional Issues

    8. Section 339(b)(1), as created by the SHVIA, applies to 
``satellite carriers.'' Section 339(d)(4) defines ``satellite carrier'' 
by reference to the Copyright Act definition as


[[Page 68084]]


an entity that uses the facilities of a satellite or satellite 
service licensed by the Federal Communications Commission and 
operates in the Fixed-Satellite Service under part 25 of title 47 of 
the Code of Federal Regulations or the Direct Broadcast Satellite 
Service under part 100 of title 47 of the Code of Federal 
Regulations, to establish and operate a channel of communications 
for point-to-multipoint distribution of television station signals, 
and that owns or leases a capacity or service on a satellite in 
order to provide such point-to-multipoint distribution, except to 
the extent that such entity provides such distribution pursuant to 
tariff under the Communications Act of 1934, other than for private 
home viewing. (17 U.S.C. 119(d)(6))

Contrary to the arguments of several commenters, there is nothing in 
the SHVIA or the legislative history that suggests that satellite 
carriers operating in the C-Band were intended to be exempted from the 
requirements of section 339(b)(1). C-Band satellite carriers are 
licensed under part 25 of the Commission's rules. We do not agree that 
an isolated and ambiguous colloquy between two Senators overrides 
unambiguous statutory language. We recognize, however, that C-Band 
carriers operate differently from DBS carriers and that the number of 
C-Band subscribers is steadily decreasing, and to the extent C-Band 
satellite carriers can be subject to exceptions from any of the 
exclusivity rules we adopt today, they are specifically described 
below. In the absence of specific language distinguishing C-Band 
satellite carriers, references to ``satellite carriers'' in this Order 
refer to all satellite carriers that meet the definition in the SHVIA.
    9. Section 339(b)(1)(A) of the Communications Act requires the 
Commission to apply network non-duplication protection, syndicated 
exclusivity protection, and sports blackout protection to the 
retransmission of the signals of nationally distributed superstations 
by satellite carriers to subscribers. For these purposes, a 
``nationally distributed superstation'' is a term that is defined as a 
television broadcast station, licensed by the Commission, that meets 
the following three criteria:
    (A) is not owned or operated by or affiliated with a television 
network that, as of January 1, 1995, offered interconnected program 
service on a regular basis for 15 or more hours per week to at least 25 
affiliated television licensees in 10 or more States;
    (B) on May 1, 1991, was retransmitted by a satellite carrier and 
was not a network station at that time; and
    (C) was, as of July 1, 1998, retransmitted by a satellite carrier 
under the statutory license of section 119 of title 17, United States 
Code.
    Television network means ``a television network in the United 
States which offers an interconnected program service on a regular 
basis for 15 or more hours per week to at least 25 affiliated broadcast 
stations in 10 or more States'' (47 U.S.C. 339(d)(5)). A ``network 
station'' is ``(A) a television broadcast station, including any 
translator station or terrestrial satellite station that rebroadcasts 
all or substantially all of the programming broadcast by a network 
station, that is owned or operated by, or affiliated with, one or more 
of the television networks in the United States which offer an 
interconnected program service on a regular basis for 15 or more hours 
per week to at least 25 of its affiliated television licensees in 10 or 
more States'' or ``(B) a noncommercial educational broadcast station 
(as defined in section 397 of the Communications Act of 1934)'' except 
that the term does not include ``the signal of the Alaska Rural 
Communications Service, or any successor entity to that service.'' (17 
U.S.C. 119(d)(2).)
    10. In the NPRM, we stated that the television broadcast stations 
that meet the foregoing criteria are limited to KTLA-TV (Los Angeles), 
WPIX-TV (New York), KWGN-TV (Denver), WSBK-TV (Boston), WWOR-TV (New 
York) and WGN-TV (Chicago). KTLA, WPIX and KWGN are all now affiliates 
of the Warner Brothers Network (``WB''). In addition, WSBK and WWOR 
currently are affiliated with the UPN Network. WGN is affiliated with 
WB but provides a different ``syndex/nondupe proof'' signal for uplink 
and carriage as a superstation. We note that WB and UPN did not qualify 
as ``television networks'' as of January 1, 1995, the operative date 
referenced in section 339(d)(2)(A) because they did not satisfy each of 
the statutory criteria as of that date. We also stated that since no 
other station could meet these criteria in the future due to the date-
specific conditions set forth in the definition, the foregoing 
constitutes a finite list of the nationally distributed superstations 
covered by the statute. Commenters directly addressing this issue 
generally agree with our conclusion that this list of nationally 
distributed superstations is complete and finite.
    11. By creating this special category known as nationally 
distributed superstations, Congress permits satellite carriers to 
retransmit these superstations to subscribers regardless of whether 
they are ``served'' or ``unserved'' pursuant to the Copyright Act. The 
amended copyright provision provides that the retransmission of 
nationally distributed superstations to subscribers who do not reside 
in ``unserved households'' shall not violate the compulsory copyright 
license. (An unserved household is defined in part as one that cannot 
receive over-the-air a signal of Grade B intensity for a primary 
television network station (17 U.S.C. 119(d)(10)).) Thus, we conclude 
that as a result of section 1005(b), there is no geographic restriction 
on the retransmission of ``nationally distributed superstations'' 
pursuant to the compulsory copyright license.
    12. In addition, the SHVIA amended the retransmission consent 
section of the Communications Act, which generally prohibits MVPDs from 
retransmitting the signals of a broadcaster absent the broadcaster's 
written authorization. The SHVIA allows a satellite carrier to 
retransmit the signal of a superstation outside the station's local 
market without the station's consent if: (i) The station was a 
superstation on May 1, 1991, and (ii) the station was retransmitted by 
the satellite carrier as of July 1, 1998, provided the satellite 
carrier complies with the Commission's non-duplication, syndicated 
exclusivity, and sports black out rules. This provision differs 
slightly from the definition of a nationally distributed superstation 
in that it does not specify that the superstation must not be 
affiliated with a network that existed as such as of January 1, 1995. 
At this time, this distinction is without practical significance 
because the six television stations cited above meet the relevant 
criteria of either definition, and there are no additional stations 
that are included or excluded by operation of this third criterion. As 
discussed in the NPRM, we conclude that, pursuant to these new 
statutory mandates in the SHVIA, satellite carriers are permitted to 
retransmit the signals of the nationally distributed superstations 
covered by section 339(b)(1)(A) outside the station's local market to 
both served and unserved households without the station's consent and 
without geographic restriction. In a similar but not identical 
provision, the SHVIA permits a cable operator or other MVPD (other than 
a satellite carrier) to retransmit a television broadcast station 
outside of its local market without its consent, provided the MVPD 
obtains the signal from a satellite, and the station was a superstation 
on May 1, 1991 and was retransmitted by a satellite carrier under the 
Section 119 statutory license as of July 1, 1998.
    13. In addition to applying the existing cable exclusivity rules to 
nationally distributed superstations, Section 339(b)(1)(B) requires the

[[Page 68085]]

Commission to apply sports blackout protection to the retransmission of 
the signals of network stations by satellite carriers to subscribers 
``to the extent technically feasible and not economically 
prohibitive.'' By its terms, Section 339(b)(1)(B) applies only to 
``network stations,'' which are television broadcast stations owned or 
operated by, or affiliated with, the television networks. Affiliates of 
these networks are the only entities that meet the definition of a 
television network station contained in the Copyright Act and are the 
only stations covered by Section 339(b)(1)(B). In the cable context, 
the Commission's sports blackout rule applies to any television 
broadcast station and is not limited to network stations. Consistent 
with the provisions of the statute, we confine the application of the 
satellite sports blackout rule to retransmission of network stations. 
The SHVIA statutory license for satellite carriers applies only to 
retransmission of distant network stations. Thus it is consistent for 
the sports blackout provisions to be similarly limited pursuant to 
Section 339(b)(1)(B).
    14. In the NPRM we observed that the title of new Section 339, 
``Carriage of Distant Television Stations by Satellite Carriers,'' 
indicates that this section is intended to apply to satellite 
retransmission of distant network stations, notwithstanding that the 
text of Section 339(b)(1) does not specifically so state. The cable 
exclusivity rules were originally created and apply today to address 
cable importation of distant stations. We conclude, and most commenters 
agree, that it was Congress' intent to apply the sports blackout rules 
to retransmission of distant network stations and not to local network 
stations. We note, too, that the statutory copyright license for 
satellite carriage of distant network stations relies upon the 
definition of ``network station'' in the copyright provisions.
    15. We also sought comment in the NPRM on whether stations based in 
foreign countries are affected by the SHVIA provisions requiring 
application of the cable exclusivity and sports blackout rules to 
satellite retransmissions. Certain commenters addressing this issue 
argue that while the blackout protection afforded by the rules should 
apply to a foreign station's programming carried by a U.S. satellite 
carrier, a foreign station cannot invoke these protections against 
satellite importation of programming into its home market. Grupo 
Televisa, on the other hand, argues that the rules should apply in 
favor of non-U.S. licensed border stations serving U.S. markets and 
affiliated with U.S. networks, citing the inclusion of such stations in 
the compulsory license of Section 1002 of the SHVIA. We agree with MPAA 
and NHL that foreign stations are beyond our jurisdiction and therefore 
unable to invoke the protection of the exclusivity and sports blackout 
rules. With respect to retransmission of a foreign station's 
programming into U.S. markets by a U.S. licensed satellite carrier, we 
conclude that the satellite rules will apply as they do with respect to 
the exclusivity rules governing cable systems. The definition of 
``television broadcast station'' in 47 CFR 76.5(b) includes stations 
licensed by a foreign government but provides that such foreign station 
not entitled to assert program exclusivity. Also, in the DISCO II Order 
the Commission explained that it will license the earth stations that 
use a non-U.S. licensed satellite to provide service to subscribers in 
the United States, rather than re-license foreign satellite operators. 
The earth station operators providing service in the United States 
through these non-U.S. licensed satellites are ``satellite carriers'' 
as defined in the SHVIA because they are licensed under either part 25 
or part 100 of the Commission's rules.

Section 339(B)(1)(A): Application of Network Non-Duplication, 
Syndicated Exclusivity, and Sports Blackout to Retransmission of 
Nationally Distributed Superstations

    16. Section 339(b)(1)(A) requires the Commission to apply network 
non-duplication protection, syndicated exclusivity protection, and 
sports blackout protection to the retransmission of signals of 
nationally distributed superstations by satellite carriers. In this 
section, we address the application of the network non-duplication and 
syndicated exclusivity rules to nationally distributed superstations 
together because these two rules are similar in significant respects.
    17. The Commission's cable television network non-duplication rule 
allows a television broadcast station that has purchased exclusive 
rights to network programming within a specified area to protect its 
exclusivity against carriage of duplicating programming on local cable 
systems. The ``specified'' or ``protected'' zone is the smaller of 
either the area protected by the terms of the contract or the 35 or 55 
mile area designated by the rules. In the satellite rules, this area is 
generally termed the ``zone of protection'' or protected zone. (47 CFR 
76.92). The rule allows a local television broadcast station to demand 
that a local cable system's duplicate carriage of the same program from 
an otherwise distant station be blacked out. ``Network program'' is 
something of a misnomer in terms of common usage as it appears to 
suggest a program provided by a recognized network. In fact, it is 
defined as ``any program delivered simultaneously to more than one 
broadcast station regional or national, commercial or noncommercial'' 
(47 CFR 76.5(m)). It is not necessary that the program be delivered by 
a ``television network.'' (In addition to full power television 
stations, 100 watt translator stations are allowed to demand network 
non-duplication protection under certain circumstances. Translator 
stations are not entitled to syndicated exclusivity protection (47 CFR 
76.92(d)). Due to differential carriage rights, we are not replicating 
this provision in the satellite non-duplication rules.) A station may 
assert its exclusivity rights regardless of whether its signal is 
carried by the cable system in question. Under the cable network non-
duplication rule, a television station is entitled to assert its 
exclusivity rights against a cable system serving any ``cable community 
unit'' within the station's ``specified zone'' that is carrying 
duplicative programming for which the local station has obtained 
exclusive distribution rights. (Cable systems are comprised of one or 
more ``community units'' that correspond to separate and discrete 
communities or municipal entities. The rule applies on a community unit 
basis by requiring the cable system for a particular community unit to 
black out a specific program based on the priorities established in the 
rule. The ``specified zone'' of a television broadcast station is the 
35 mile area surrounding its community of license. The 35 mile 
specified zone, as well as all other mileage zones used in applying the 
exclusivity rules, is measured from the relevant station's ``reference 
point'' in its community of license. The rules provide a list of the 
reference points to identify television market boundaries used for this 
purpose. See 47 CFR 76.5(e), (dd); 76.53; and 76.92(a).) A television 
station's rights within these areas are limited by the terms of the 
contractual agreement between the station and the holder of the rights 
to the program (``rights holder''). In addition, for local programming 
to be protected, the local programming must be the same as the distant 
programming that is being imported into a local station's market. Even 
the use of different camera crews and announcers during the production 
of an imported program may result in the distant program not being

[[Page 68086]]

considered the same, per Major League Baseball, 6 FCC Rcd. 5573 (1991).
    18. The Commission's syndicated program exclusivity rule allows 
local stations to protect their exclusive distribution rights for 
syndicated programming on local cable systems in a local market. (A 
syndicated program is defined as ``any program sold, licensed, 
distributed or offered to television station licensees in more than one 
market within the United States other than as network programming. * * 
*'') This rule is similar in operation to the network non-duplication 
rule, but it applies to exclusive contracts for syndicated programming, 
rather than for network programming. In this rule, too, a local 
television station is entitled to assert its exclusivity rights within 
a specified zone of 35 miles surrounding the television station's city 
of license. Unlike the network non-duplication rule, however, the 
maximum zone of protection allowed under the rules is 35 miles 
surrounding a television station's city of license in a non-hyphenated 
television market and 35 miles surrounding each named city in any size 
hyphenated market; the zone of protection is not greater in smaller 
markets.
    19. As with network non-duplication, the syndicated exclusivity 
rule applies on a community unit basis by requiring the cable system 
for a particular community unit to black out a specific program based 
on the priorities established in the rule. In addition, the geographic 
limits for exclusivity under the Commission's rules are limited by the 
terms of the contractual agreement between the station and the holder 
of the rights to the program. As with network non-duplication, the 
protected zone is the smaller of either the area of exclusivity 
provided in the contract or the 35 mile area surrounding the relevant 
reference point(s). Thus, if the rights holder grants the television 
station a zone of protection of ten miles, then that station would be 
precluded from exercising its exclusivity rights against any cable 
system located more than ten miles from that station's city of license. 
In addition, as with the network non-duplication rules, for syndicated 
programming to be protected, the programming covered by the contract 
must be the same as the distant programming. We note that under both of 
these cable rules, it is not necessary that the broadcast station or 
rights holder asserting protection actually be carried on the cable 
system in question, nor is it required that the rights holder asserting 
its rights actually display the programming for which it asserts 
protection. These cable rules protect contractual rights and apply even 
if the programming is not shown at all or if the subscribers subject to 
the deletion do not have another source to receive the programming.
Separate Satellite Rules
    20. Initially, we sought comment on whether we should incorporate 
the rules we adopt to implement Sec. 339(b)(1)(A) into the existing 
Commission rules, or whether we should adopt separate rules for 
satellite carriers. Commenters generally recommend that the Commission 
adopt separate rules for satellite carriers patterned after the cable 
exclusivity rules. We concur that, even though Congress specifically 
cited the existing rule sections in the statute, it will be less 
confusing and simpler to implement a separate set of rules in the 
satellite context. We agree with DirecTV that new rules will be easier 
to understand and comply with if they are contained in a parallel, but 
distinct, section, which will allow the differences between the rules 
applicable to the satellite and cable industries to be highlighted. 
This will enable the Commission to maintain consistency in its rules, 
while adopting the minor adjustments that are necessary to properly 
apply the rules to satellite carriers (e.g., application only to 
nationally distributed superstations). In this regard, we do not agree 
with WB that the direct references to the corresponding cable rules 
indicate that Congress intended the rules to be identical. The 
statutory language directs us to develop rules that apply the 
exclusivity protections in the satellite context, not merely to add the 
words ``satellite carriers'' in the existing cable rules. While we are 
establishing a separate rule section for the exclusivity rules that 
apply to satellite carriers, these rules will not be substantially 
different from the equivalent cable rules.
    21. Some satellite industry commenters argue that we must take into 
account the distinctive characteristics of satellite services and the 
associated issues of technical feasibility and the cost of compliance. 
EchoStar contends that the rules for satellite carriers should be 
significantly different from the cable rules due to the characteristics 
of satellite services and the onerous burdens of compliance. Echostar 
raises a variety of technical and administrative issues, such as the 
need to develop a database to determine affected subscribers and the 
addition of ``untold layers of complexity to its authorization/
unscrambling procedures'' to delete different programs in different 
areas of the country if we merely apply the cable exclusivity rules to 
satellite without change. EchoStar asserts that unless appropriately 
mitigated, the rules could lead to the cessation of satellite carriage 
of superstations, which would contravene the legislative goal of parity 
between cable and satellite operators. EchoStar also argues that if 
Congress intended for the Commission to automatically employ the cable 
rules in the satellite context it would not have directed the 
Commission to conduct a rulemaking. Alternatively, in support of a 
separate rule section, DirecTV asserts that, given the technological 
differences between cable and satellites, in certain situations it does 
not make sense, or is simply not technologically feasible, to merely 
``lift'' the cable rules.
    22. We reject the arguments that the satellite exclusivity rules 
should be substantially different from the cable rules due to technical 
considerations and the burdens of compliance. Congress directed the 
Commission to make the rules ``as similar as possible'' to the cable 
rules and to protect the contractual exclusivity rights purchased by 
broadcasters and sold by program rights holders. The statute 
specifically cites the existing network non-duplication and syndicated 
exclusivity rules as guidance. In particular, the statute does not 
provide for any exemption from these rules based on technical 
feasibility or economic hardship as it does for the application of the 
sports blackout rules to network stations. We believe, however, that in 
considering the application of these rules to satellite carriers we 
must consider several modifications that reflect the practical 
differences between the two industries and the different delivery 
systems they employ, as detailed herein.
    23. Some broadcasters argue that for there to be parity between 
cable and satellite providers, the Commission should extend the 
protections of network non-duplication to all distant network carriage 
to protect emerging networks and notes that the existing cable rules 
are not statutorily mandated. Because Congress provided for the 
application of the sports blackout rule to network stations, but not 
for the network non-duplication or syndicated exclusivity rules, we 
believe that extending the rules in this manner is beyond what Congress 
intended. We reject this proposal on the same basis that we reject the 
satellite industry's request to adopt significantly different rules for 
satellite carriers due to technical considerations.

[[Page 68087]]

Zone of Protection
    24. Under the network non-duplication rules, a commercial or 
noncommercial television station licensed to a major television market 
may assert exclusivity rights within its specified zone. That zone is 
generally the 35-mile area surrounding a broadcast television station's 
community of license. The zone of protection for stations licensed to 
smaller television markets extends an additional 20 miles (``secondary 
zone''), for a total of 55 miles surrounding its community of license. 
Pursuant to the syndicated exclusivity rules, a local commercial 
television station is entitled to assert its exclusivity rights only 
within a 35-mile geographic zone. There is no extended zone of 
protection for smaller market stations. For both rules, a station 
licensed to a hyphenated television market, as defined in the rules, is 
entitled to assert exclusivity within 35 miles surrounding each named 
city. However, the zone of protection may not exceed the area agreed 
upon between the program supplier or network and the television station 
nor the area within which the station has acquired broadcast 
territorial exclusivity rights. For purposes of all of the rules 
discussed in this Order, we refer generally to a ``zone of protection'' 
or ``protected zone'' to apply to the entire area protected by the 
rules' provisions.
    25. A majority of commenters support the adoption of the same zones 
of protection for broadcast stations in this context because they 
provide a definitive area within which exclusivity rights may be 
asserted. We agree. We also concur that, as with the cable rules, the 
zone of protection should be limited by the terms of the contractual 
agreement between the station and the program rights holder, with the 
applicable geographic zone set forth in the rules providing an outside 
limit on the permitted zone of protection. Several commenters mention, 
but reject, the use of other zones of protection, such as a station's 
grade B contour or a zone of protection coextensive with the boundaries 
of ``local market'' for retransmission consent purposes. As Tribune 
observes, since Congress did not mention a zone different from that of 
the cable rules, it appears appropriate to use the existing specified 
zone. We also believe that this conclusion is consistent with the 
congressional directive to make these rules as similar as possible to 
the cable rules. We further believe that implementation in the 
satellite context is feasible because existing methods (e.g., the 
geocoding techniques used to determine served and unserved households) 
can be used to determine whether a household is located in a specified 
zone. Accordingly, local broadcast television stations will be entitled 
to assert exclusivity protection throughout the same zones of 
protection as those specified in the cable rules.
    26. We reject EchoStar's proposal that a satellite carrier should 
not be required to comply with requests for exclusivity (either network 
or syndicated) unless the program deletion is requested by qualified 
broadcast stations whose geographic zones (not counting overlaps) cover 
a substantial majority of the nation. The ``geographic zone'' is 
limited to the 35/55 mile area around the reference point in the 
community of license. EchoStar argues that this requirement is needed 
in order to deal with the mosaic of diverse deletion requests for the 
same feed. EchoStar's proposal ignores the exclusivity rights of 
individual broadcasters and undermines regulatory objectives, contrary 
to congressional intent and, in our view, defeats the purpose of the 
statutory mandate to protect the exclusivity rights of local broadcast 
stations. Moreover, while EchoStar claims that it would have to develop 
a huge database to determine whether a subscriber is within the 
specified zone, we observe that satellite carriers already maintain 
such databases of subscribers for determining eligibility for local-
into-local and network signals, for information on the particular 
services to which a household subscribes, and for billing purposes. In 
addition, even though satellite carriers use a nationwide or multi-
state footprint to deliver programming, they provide signals on a 
household-by-household basis that enables them to deliver different 
programming to different households based upon which programming 
package the subscriber selects. Satellite carriers currently delete 
programming when it is required by contracts negotiated in the 
marketplace. Furthermore, as a practical matter, the programming 
deletions affect only five of the six nationally distributed 
superstations because WGN is ``largely, if not completely syndex and 
nondupe-proof.'' With respect to network program deletions, we expect 
significant uniformity across markets where affiliates of WB or UPN 
assert their rights since each superstation is affiliated with one of 
these networks. With respect to syndicated programming, the 
superstations are large market stations, which typically acquire the 
most popular syndicated programming that is sold in the vast majority 
of markets, making EchoStar's fear of a crazy quilt pattern of 
deletions largely unfounded. Moreover, the statute unambiguously 
requires that we apply the exclusivity rules in these situations. 
Adopting EchoStar's proposal to limit application of the rules to the 
non-existent circumstance in which the broadcaster's geographic zone 
would cover most of the nation effectively eliminates the application 
of the exclusivity rules. The statutory language does not give us this 
choice. We also reject EchoStar's proposal to establish a procedure to 
exempt satellite carriers on a case-by-case basis upon a showing of 
extraordinary hardship. We believe that such a policy is contrary to 
the intent of the statute to protect the rights of local broadcast 
licensees. We also note that, in adopting exclusivity rules in 1988, we 
eliminated a similar waiver process.
Use of Zip Codes To Determine the Location of Affected Households
    27. The cable rules apply the exclusivity rules on a community unit 
basis within a station's zone of protection. Community units are 
political jurisdictions (i.e., a city, town, or county) or portions of 
political jurisdictions for which a local government body has granted a 
franchise to operate a cable system. These separate areas may or may 
not encompass an entire city or county. Several commenters support the 
application of these rules on a community unit basis in order that they 
be as similar as possible to the cable rules and to eliminate the 
possible confusion to customers in the same neighborhood that would be 
caused by a program being blacked out if a household subscribed to 
cable, but not if it subscribed to a satellite service. In order to 
promote parity between cable operators and satellite carriers, they 
argue that it is important that the blackout areas for satellite 
carriers be as congruent as possible with the blackout areas for 
competing cable systems. They further state that requiring satellite 
carriers to black out programming on the same community unit basis as 
is applied to cable is the most easily applied, understood, and 
enforced approach for providers and residents. Other commenters claim 
that it is impossible or inappropriate to import the community unit 
concept from cable to satellite as cable systems have specific, 
municipally-granted franchises to serve discrete communities, the 
boundaries of which are difficult to determine and unnecessarily 
complex to apply. They propose that subscribers

[[Page 68088]]

subject to the blackout rules be ascertained by means of their zip 
code, a method currently used by satellite carriers for other purposes. 
These commenters argue that since satellite providers do not have 
identifiers assigned to the communities they serve, as is the case for 
cable, a comparable method for determining the areas to which the zone 
of protection applies involves reliance on zip codes. This method, like 
the use of cable community units, is not a perfect means to achieve 
congruence between the zip code boundary and that of the specified 
zone, but it is a workable compromise using a fairly stable identifier. 
Moreover, in their reply comments, several proponents of the use of 
community units state that they would be willing to support a zip code 
approach as a reasonable alternative as long the rules would apply 
throughout the entire zip code.
    28. We conclude that it is appropriate to use zip codes rather than 
community units in the satellite context. There are approximately 
38,000 five-digit zip codes in the United States, compared with nearly 
33,000 community units. There is no readily applicable measure that 
will precisely match specified zones in either the cable or satellite 
context. However, zip codes are already used by satellite providers to 
determine the location of subscribers for other purposes and it would 
be more difficult to determine which satellite subscribers are located 
within a cable community unit, which is tied to the cable franchise 
process. As with the cable community unit concept, reliance on zip 
codes can often be overinclusive of the zone covered by the exclusivity 
rights to be protected. To closely align the rules for satellite 
carriers with the cable rules, we have been urged to require a 
satellite provider to provide protection in all relevant zip codes that 
fall, in whole or in part, within the zone of protection. We conclude, 
as described below, that if technology permits satellite carriers to 
more closely align their deletions to the precise areas of the 
protected zone, they may do so.
    29. Satellite interests generally propose that the broadcaster or 
rights holder asserting its exclusivity rights provide the satellite 
carrier with an electronic file of the affected zip codes that 
corresponds to the specified zone. Alternatively, broadcasters contend 
that the satellite carriers already have zip code information that they 
use for other purposes and they should be responsible for determining 
which subscribers are located in the areas where the programming must 
be blacked out. Since exclusivity contracts vary in their coverage 
areas and it is the broadcast station or rights holder that has 
negotiated such contracts, we conclude that the party seeking 
exclusivity protection will be responsible for identifying the affected 
zip code areas along with the other information that must be provided 
to the satellite carrier. This approach is consistent with our existing 
cable rules that place the notification burdens on the party seeking to 
assert its exclusivity rights. We do not believe that this requirement 
places an undue burden on a broadcaster seeking exclusivity. In many 
cases, the contracts will provide for exclusivity up to the limits of 
the specified zone and the broadcaster will only have to determine the 
appropriate zip codes once to cover such contracts. Accordingly, we 
will require broadcast stations or rights holders to provide satellite 
carriers with the list of affected zip codes, although we will not 
mandate that it be in any specific format (e.g., we will not require an 
electronic file). We encourage satellite carriers and broadcasters to 
work together to effectuate the provisions of the statute, even though 
we place the onus of determining the affected zip codes on the party 
seeking exclusivity protection. We see no reason to make special or 
separate provisions for satellite carriers to verify that the list of 
zip codes is accurate. If it comes to light that the list is 
inaccurate, the satellite carrier may object to the broadcaster or 
rights holder.
    30. We believe that for purposes of complying with these and other 
provisions of the SHVIA, satellite operators must generally be aware of 
the actual physical location of a subscriber. Several commenters 
express concerns regarding the accurate location of a subscriber whose 
address is a post office box (e.g., a U.S. Post Office Box or a private 
post office box) or rural route number, stating that a non-street 
address makes it impossible to apply any rule that relies on a 
geographic location. Since accurate addresses are the linchpin of a 
system that relies on geographic location, they propose that satellite 
carriers be required to certify that they have no basis for believing 
that subscribers have provided inaccurate addresses for purposes of 
evading the rules. In opposition, DirecTV argues that there is no 
parallel provision in the cable rules to serve as a basis for imposing 
this additional obligation on satellite carriers. In addition, 
proposals to impose a number of restrictions on satellite carriers to 
``reduce if not obviate both the domestic and external grey marketing'' 
of satellite programming are rejected as they are beyond the scope of 
this proceeding.
    31. On the basis of the record, there is general agreement that 
rural route numbers reasonably approximate the actual location of the 
subscriber and are acceptable because they are generally located close 
to the residential address where the subscriber receives the satellite 
programming. Accordingly, we will allow satellite carriers to use the 
zip codes associated with rural route numbers to determine the location 
of such subscribers. However, where a subscriber chooses to provide a 
post office box for a billing address, we will require that satellite 
carriers obtain a residential street address--or simply a zip code--
where the service is actually being received. Upon request, satellite 
carriers may verify the data provided by broadcasters and vice versa. 
We decline to adopt the reporting and auditing procedures proposed in 
the comments, as they would place an undue burden on broadcasters, 
satellite carriers and the Commission.
    32. In addition, MPAA proposes that in instances in which the 
satellite carriers serve individual households that are within a zip 
code but outside the specified zone, such subscribers should be 
permitted to petition for a waiver so that their programming is not 
blacked out. It contends that, since the satellite rules apply on a 
household basis, this waiver process would serve the purposes of the 
statute (i.e., parity with cable and protection of rights holders) 
without unduly depriving satellite subscribers beyond the specified 
zone of programming. We acknowledge the cable rules require cable 
operators to provide exclusivity protection throughout community units, 
even if some of their subscribers in that unit are located outside the 
specified zone. This requirement is based on our understanding that it 
is not technically feasible for cable operators to black out 
programming to individual households. On the grounds of maintaining 
regulatory parity, NCTA advocates requiring satellite carriers to 
delete programming throughout zip code areas that in whole or part 
overlap the broadcaster's zone of protection. Notwithstanding our 
general interest in regulatory parity, we are reluctant to require 
satellite carriers to delete programming beyond the boundaries of the 
broadcaster's or rights holder's zone of protection if they have the 
technical capacity to accommodate such fine-tuning. Due to the 
unavoidable difference in coverage between the zip code areas and the 
community units, there are likely to be some differences between cable 
and satellite subscribers

[[Page 68089]]

in terms of programming required to be deleted. Therefore, there is no 
reason to require deletions outside the protected zone on the grounds 
of parity. The satellite rules provide that satellite carriers must 
delete protected programming from subscribers within the zone of 
protection, but need not delete programming from subscribers who live 
in the part of a zip code area that extends beyond the zone of 
protection.
Terms of Contractual Agreements
    33. Pursuant to Sec. 76.93, television stations are entitled to 
exercise network non-duplication protection in accordance with their 
network agreements. The syndicated exclusivity rules allow television 
stations to exercise exclusivity rights in accordance with their 
syndicated program license agreement, consistent with the requirements 
to invoke protection specified in Sec. 76.159. Under Sec. 76.159, to be 
eligible for syndicated exclusivity protection, a station must have a 
contract or other written indicia that it holds syndication rights for 
the programming. Section 76.159 requires that contracts contain special 
language for the licensee to invoke such protection.
    34. We find that the current situation is analogous to that of 1988 
when the Commission reinstated syndicated exclusivity rights, and the 
rule we adopt treats these new rights in the same manner as we did 
syndicated exclusivity contracts at that time. That is, we will give 
effect to new or existing contracts that unambiguously grant such 
rights against satellite carriage and permit existing contracts to be 
clarified or amended if they are ambiguous or did not anticipate a 
change in the law.
    35. The cable rules do not prescribe specific language needed to 
invoke network non-duplication protection. Such exclusivity is provided 
in the contractual provisions of network-affiliate agreements that give 
individual stations the right to be the exclusive distributor of a 
network's programming in an area, generally within 35 miles of its city 
of license. Where a network-affiliation agreement does not provide for 
network non-duplication protection against satellite carriage of 
superstations because this right was unanticipated or the contract is 
ambiguous regarding such rights, parties will be given an opportunity 
to amend their agreements to include clear, specific language, as 
described below.
    36. Some commenters contend that if the special language required 
by the cable syndicated exclusivity rules appears in a contract, it is 
applicable to satellite carriers. They contend that this language 
invokes the two essential elements for protection--retransmission 
pursuant to the compulsory license and reference to the Commission's 
rules. They state that any station with exclusivity rights vis-a-vis 
cable should be considered to hold the same rights with respect to 
satellite carriers and that parties should not be required to 
renegotiate existing exclusivity contracts. We disagree. We cannot 
assume that the parties to these existing contracts negotiated for 
protection against satellite carriage when duplicating carriage by 
satellite was not covered by the Commission's exclusivity rules. We 
agree with other commenters who counter that the rules should only give 
effect to contracts that unambiguously grant exclusive rights vis-aa-
vis satellite carriers. They assert that existing contracts should not 
be enforceable against satellite carriers unless it is clear that the 
licensee or rights holder has negotiated for and received such rights. 
Until the SHVIA was enacted on November 29, 1999, there was no 
certainty of satellite exclusivity requirements. Arguably, parties 
could not have a reasonable expectation of exclusivity protection until 
the rules adopted by this Order take effect. Accordingly, we conclude 
that only those exclusive contracts that specifically cover satellite-
delivered programming or are broad enough to encompass the delivery of 
duplicating programming by any delivery means (e.g., cable, satellite, 
wireless cable) entitle a station to assert exclusivity rights under 
these rules. Without such specificity, it is not clear whether the 
party granting the exhibition rights for the programming intended to 
convey network non-duplication or syndicated exclusivity rights to the 
broadcaster in the satellite context.
    37. In reinstituting the syndicated exclusivity rules in 1988, the 
Commission allowed an opportunity for parties to amend their contracts 
to reflect the newly granted rights. Because government protection of 
both network non-duplication and syndicated exclusivity rights vis a 
vis satellite retransmission did not exist before November 29, 1999, 
consistent with this precedent we will provide a transition period of 
six months to allow parties to amend or clarify their network 
affiliation or syndicated exclusivity agreements to cover the 
exclusivity rights provided in Sec. 339(b)(1)(A) and the rules we adopt 
today. We will require also that contracts entered into after release 
of this Order must include special words to invoke protection against 
duplication of programming imported under the satellite statutory 
copyright license. The special words in the satellite context are 
similar to those required to assert enforceable cable syndicated 
exclusivity. Parties may use this statement to reference either or both 
the cable and satellite network non-duplication and syndicated 
exclusivity rules, depending upon whether their negotiated exclusivity 
covers protection against cable, satellite or both. Existing affiliate 
agreements and other contracts that apply to network program non-
duplication only in the cable context need not be revised to be 
effective to provide non-duplication protection pursuant to Sec. 76.92. 
These special words shall apply to both the network non-duplication and 
syndicated exclusivity rules to ensure that, in either instance, the 
contracting parties contemplated protection from satellite carriage. 
Where existing contracts expressly provide for exclusivity against 
satellite carriage, albeit without using these special words, there is 
no need for renegotiation, nor for a six month period for parties to 
renegotiate. In these situations of remarkable prescience in the 
contract terms, the normal notification requirements will apply.
    38. We will not require, as Echostar proposes, that the contracts 
be non-discriminatory or be exercised in a non-discriminatory fashion. 
We believe that such requirements are inconsistent with the rights of 
parties to negotiate the extent of exclusivity that they determine to 
be in their best interests and were not contemplated by the statute. 
Such requirements would also be inconsistent with the cable exclusivity 
rules.
Notification Requirements
    39. In order to exercise network non-duplication rights, a 
television station must notify each cable system operator of the 
protection sought. The syndicated exclusivity rules contain similar 
notification procedures with respect to broadcasters or distributors 
notifying cable systems of the exclusivity sought. In both cases, the 
notices must identify the party seeking non-duplication protection and 
the affected programming. Notices must be provided within 60 calendar 
days of the signing of the contract. Exclusivity protection begins on 
the date specified in the notice or the first day of the calendar week 
that begins 60 days after the cable operator receives notice from the 
broadcaster. In addition, cable operators may rely on published 
information sources (e.g., newspapers) to determine which programs must 
be deleted or obtain the information from the station seeking 
protection or the station whose

[[Page 68090]]

programming is to be deleted. Furthermore, the rules require that the 
party exercising its exclusivity rights must provide a copy of the 
relevant portions of its contract to the cable system, upon request.
    40. A number of commenters observe that the current notification 
procedures have proven workable for the parties in the cable context 
and generally support the same notification requirements and time 
periods for satellite carriers. For example, DirecTV states that 
stations should be required to notify satellite carriers of any 
exclusivity rights in the same manner required under the cable rules. 
We agree and will model the satellite notification rules on the cable 
requirements. We apply the same 60-day notice requirement following the 
signing of a contract providing exclusivity and impose the same 
contract disclosure requirements for satellite carriers. As in the 
cable context, the satellite carrier will have sufficient lead time to 
act on the exclusivity request. Accordingly, exclusivity protection 
will beginning on the later of: (a) the date specified in the notice; 
or (b) the first day of the calendar week (Sunday-Saturday) that begins 
60 days following the satellite carrier's receipt of the notice from 
the broadcaster or other rights holder. Using the same notification 
periods reduces the administrative burden on rights holders and 
stations and allows them to send a single set of notices to cable 
systems and satellite carriers, rather than forcing them to send one 
notice to cable systems at one time and a virtually identical notice to 
satellite carriers at another time. In this manner, we also minimize 
the possibility that protection would be lost inadvertently because of 
differing requirements. It is also consistent with the general goal of 
making the cable and satellite rules parallel as much as possible.
    41. We will require that the notice asserting exclusivity rights 
contain the same identifying information about the programming to be 
deleted and the extent of the exclusivity (e.g., the dates on which 
exclusivity is to begin and end). As indicated above, the notice must 
identify the zip codes included in the zone of protection (i.e., the 
specified zone or other permitted area covered by the exclusivity 
contract). Satellite carriers may request a copy of the relevant 
contractual provisions, as cable operators may do, but it is not 
required in the notice. We adopt the suggestion that the notice should 
be served on satellite carriers with the carrier having the obligation 
to disseminate the information to their distributors (distributors 
include parties with exclusive territories for the sale and service of 
satellite systems, including those distributors that are authorized by 
the satellite carrier to authorize or de-authorize programming for 
subscribers), if necessary, since they are in the best position to know 
which distributors serve which areas. Several commenters suggest that 
satellite carriers be required to designate (e.g., on their Web sites) 
the name, title, and address to whom the notices should be sent, with 
this information updated as necessary to avoid delay and 
miscommunications. While we recognize that such information might be 
useful, it should not be necessary to ensure the compliance with 
exclusivity requests. We have not required cable systems or operators 
to provide this information and see no reason to do so in the satellite 
context. Satellite carriers must promptly direct their mail to the 
appropriate staff. Notice received by the corporation is considered 
receipt of the notice for purposes of triggering the deletion 
requirements, so it will be in the best interests of satellite carriers 
to assure that broadcasters and rights holders have the necessary 
current information to reach the right person. We urge stations and 
rights holders to follow DirecTV's suggestion that exclusivity notices 
be addressed to the ``Director of Programming Operations'' or marked 
``Attention: Program Exclusivity Request'' to assist satellite carriers 
in ensuring that the information is directed to the proper department.
    42. The cable rules provide that to determine the scheduling of 
programs that must be deleted, cable operators may rely on newspapers 
and other published sources, the broadcaster seeking exclusivity 
protection, or the broadcast station subject to the requested deletion. 
Similarly, the provision we adopt allows satellite carriers to rely on 
such published sources, the broadcaster seeking protection, or the 
nationally distributed superstation. We received no comments on this 
provision and believe the cable model will work as well for satellite 
carriers.
    43. Under the cable syndicated exclusivity rules, ``distributors'' 
of syndicated programming, who own the rights to the programming for 
purposes of syndication, are entitled to exercise exclusive rights for 
a period of one year from the initial broadcast syndication licensing 
of such programming, although not in areas in which the programming has 
already been licensed. This cable provision is intended to give holders 
of syndication rights a one year period in which to negotiate their 
agreements in each market. It originated with private consensus 
agreements among rights holders, broadcasters and cable operators in 
1971. If the programming in question were shown in the market before 
the syndicator had an opportunity to negotiate for exclusivity, it 
would diminish the value of the program. In the NPRM, we requested 
comment on whether to apply this provision in the satellite context, 
and whether the rights holder should notify the satellite carrier 
directly. MPAA contends that allowing rights holders to notify carriers 
directly, as holders of syndication rights can do with cable systems, 
gives holders a means to protect the value of their programs as well as 
providing parity in the operation of the rules in the cable and 
satellite contexts. DirecTV, however, argues that it is unnecessary to 
import this rule to the satellite context since the rules will apply to 
a discrete universe of superstations. We believe that it is appropriate 
to allow distributors to notify satellite carriers directly. We agree 
they are often the rights holders with the greatest need and incentive 
to protect their rights. In the satellite context, syndicated 
exclusivity protection is limited to the six nationally distributed 
superstations. Allowing the distributor that has the exclusive 
syndication rights a one year period to negotiate exclusive 
arrangements for each market has worked well in the cable context and 
should be applied here in the absence of a specific reason to treat 
satellite carriers differently in this regard.
    44. We also acknowledge that, as with the cable rules, a broadcast 
station, syndicator, or other rights holder is entitled to assert 
exclusivity protection based upon contractual rights, as discussed 
above. It is not necessary that either the entity requesting protection 
or the program to be protected actually be carried by the satellite 
carrier. Thus we recognize that in some cases subscribers will not be 
able to receive the deleted programming from any television broadcast 
station carried by the satellite carrier. The Commission's network non-
duplication and syndicated exclusivity rules protect contractual 
rights. The rights may apply even in situations in which the rights 
holder chooses not to display the protected programming or in which the 
cable system is not carrying the broadcast station asserting 
protection. We specifically recognize that in markets in which the 
satellite carrier chooses not to provide local-into-local carriage, a 
local station may assert network non-duplication or syndicated 
exclusivity protection for programming that subscribers in that market 
cannot

[[Page 68091]]

receive via satellite because the station demanding protection is not 
carried on satellite. Viewers may be able to receive this programming, 
however, through use of over-the-air antennas or on cable.
Substitute Programming
    45. The cable syndicated exclusivity rules expressly allow a cable 
operator to substitute programming from another television station when 
programming is required to be deleted, provided carriage is consistent 
with all the exclusivity rules, such as sports blackout. No comparable 
provision is included in the network non-duplication rules, but cable 
operators are free to substitute any programming--broadcast or cable--
to which they have the legal rights. Commenters addressing this issue 
generally support a provision to allow satellite carriers to offer 
substitute programming for the programming covered by exclusivity 
agreements. We agree that it is reasonable to permit substitute 
programming so that viewers need not be faced with a blank screen or a 
slide stating that contractual limitations require programming to be 
deleted.
    46. Carriage of programming by satellite carriers is governed by a 
number of laws and regulations, including the Copyright Act, the 
Communications Act, and Commission rules, which differ from those 
applicable to cable programming. In reinstating the syndicated 
exclusivity rules in 1988, the Commission encouraged the substitution 
of programming in response to consumer demands that a distant program 
be available in place of the original programming that is deleted. At 
that time, we also noted that such substitution of programming was 
consistent with the compulsory license provisions of the Copyright Act 
and the syndicated exclusivity rules repealed in 1981. Unlike the cable 
compulsory license, however, the satellite statutory license does not 
include provisions for the substitution of programming. In considering 
permissible substitute programming under these rules, we observe that 
there are statutory provisions that impose a number of limits on the 
retransmission of signals by satellite carriers. Under these 
provisions, distant network station signals are limited to two per 
network per day and restricted to unserved households, local signals 
may be provided only in their own markets, and the satellite carrier 
must have retransmission consent for carriage of any local broadcast 
signal. To the extent that carriage of a program is permissible under 
these laws and regulations, and the satellite carrier has the authority 
to offer the programming, we believe that satellite carriers should be 
permitted to use substitute programming. In addition, commenters ask 
that we not limit substitute programming to broadcast programming. We 
see no reason to place such a limit on what is permissible and will 
allow non-broadcast programming to be used as a substitute, as long as 
its carriage is consistent with the applicable statutory and regulatory 
provisions, and it is clear to viewers that the substitute programming 
is not provided by the same broadcast station as the programming for 
which it is substituted.
    47. We further note that the cable rules do not expressly provide 
for the substitution of programming when a program is deleted pursuant 
to network non-duplication protection. The absence of an express 
provision does not necessarily prevent the cable operator from 
substituting programming to which it has the rights. However, we 
recognize that if a cable operator were required to delete network 
programming from a station, and the network programming subject to 
deletion constitutes a high percentage of the station's programming, 
the cable operator would likely drop the entire station from carriage. 
When the Commission originally adopted the network non-duplication 
rules, there were only three commercial broadcast networks, and network 
programming constituted the majority of the programming distributed to 
viewers by each network affiliate. The superstations affected by these 
new rules are affiliated with emerging networks (i.e., WB, UPN). These 
networks distribute significantly fewer hours of programming to their 
affiliates each day and week than the older commercial networks. Thus, 
we believe that when, for satellite carriers, the non-duplication rules 
are applied only to nationally distributed superstations, it is likely 
that a smaller percentage of the programming will be subject to 
deletion. It is hoped that satellite carriers will continue to provide 
the nationally distributed superstations to their subscribers, and, 
thus, the question of substitution programming is relevant. To prevent 
the possibility of a blank screen and undesirable disruptions for 
consumers, we will specifically provide for substitution for non-
duplication deletions with any programming that the satellite carrier 
is authorized to carry. Accordingly, we will adopt rules permitting the 
use of authorized substitute programming for any programs deleted to 
comply with network non-duplication or syndicated exclusivity 
protection, or sports blackout. We note that the copyright laws do not 
provide a statutory copyright license for substitute programming for 
satellite carriers as they do for cable operators. Therefore, unless 
the statutory provisions are changed, satellite carriers may only 
substitute programming for which they have copyright and retransmission 
consent, or otherwise have legal rights to carry.
Transition Period
    48. When the Commission reinstated the syndicated exclusivity 
rules, it recognized that cable systems would need several months to 
implement the new regulatory requirements. Satellite industry 
commenters in this proceeding requested a similar transition period to 
implement these new rules. Echostar suggests that broadcasters and 
other rights holders should submit their deletion requests during the 
transition period, but satellite carriers' compliance would be tolled 
for one year. We agree that satellite carriers today, like cable 
operators in 1988, need time to phase-in compliance with these new 
exclusivity rules. We reject, however, proposals for a transition 
period one year in duration. The transition period for cable operators 
was necessary, in part, to allow time to develop and implement new 
equipment needed to perform the deletions required by the rule. In this 
proceeding, apart from the concerns raised by the C-Band carriers and 
discussed below, the satellite carriers have not asserted that they 
need time to develop new equipment. In addition, we do not believe that 
EchoStar's one-year proposal would serve its stated purpose of enabling 
satellite carriers to review deletion notices and plan a year in 
advance before the implementing the deletions. We believe rights 
holders would not bother to submit deletion requests knowing that they 
will not be acted upon for a year.
    49. We will allow satellite carriers a reasonable period of time 
after the new satellite network non-duplication and syndicated 
exclusivity rules take effect to adjust to the new requirements, to 
review the contract language, to ensure that they have adequate 
equipment and personnel to implement the deletions, and to arrange for 
programming that can be used to substitute for deleted programming. 
Normally, as set forth above, exclusivity protection begins, at the 
earliest, within 60 days of notification. However, as described above, 
broadcasters will have up to six months from the effective date of this 
Order to renegotiate contracts, and they

[[Page 68092]]

must notify satellite carriers of deletion requests within 60 days of 
signing the renegotiated contract. When no renegotiation is necessary 
because the existing contract clearly pertains to satellite as well as 
cable carriage, broadcasters must notify satellite carriers of their 
exclusivity protection and deletion requests within 60 days of the 
effective date of this Order. In these instances, satellite carriers 
will have 120 days in which to implement deletion requests (e.g., this 
Order is effective on November 29, 2000, therefore a broadcaster could 
provide deletion notice on January 8, 2001, and the deletion would take 
effect on or after May 10, 2001). To provide time for satellite 
carriers to adjust to the new requirements, for notices provided before 
June 1, 2001, satellite carriers will have 120 days before they are 
required to implement the necessary deletions. For notices provided to 
satellite carriers after June 1, 2001, the normal time requirements 
will apply.
    50. Echostar also proposes, as an alternative or complement to the 
transition period, a ``grandfathering'' provision that would exempt 
from application of the network non-duplication and syndicated 
exclusivity rules all of EchoStar's 700,000 current superstation 
subscribers. We reject this proposal because there is nothing in the 
statute to support it, and it is contrary to the letter and the intent 
of the SHVIA provision requiring the Commission to apply the 
exclusivity rules to satellite carriers. This proposal is also 
inconsistent with the goal of placing comparable requirements on cable 
operators and satellite carriers. Cable subscribers' viewing options 
are currently subject to the cable exclusivity rules, which allow for 
the same deletions that affect satellite subscribers. In fact, cable 
subscribers are generally subject to a greater impact from deletions 
because the cable rules apply to deletions of programming carried on 
network stations and other broadcast stations, not only that 
programming carried on the specially defined six superstations. 
Adopting EchoStar's proposal would perpetuate the disparity between 
cable and satellite that Congress clearly sought to eliminate. 
Moreover, when the Commission implemented the network non-duplication 
rules and reinstituted the syndicated exclusivity rules with respect to 
cable operators, it did not provide for grandfathering of existing 
cable customers. As the Commission explained in those proceedings, the 
potential impact of the rules is ultimately determined by the 
negotiations among the parties for exclusivity rights and the decision 
whether or not to assert them in a given market. Protecting parties' 
rights to engage in contract negotiations with the knowledge that 
exclusive agreements would not be abrogated by importation of distant 
signals was fundamental to the Commission's purpose in creating the 
exclusivity rules in the cable context, and is relevant today to 
application of these rules to satellite carriers.
Small System Exception and C-Band Carriers
    51. Sections 76.95(a) and 76.156(b) (amended rule Sec. 76.106(b)) 
provide that small cable systems serving fewer than 1,000 subscribers 
are exempt from the network non-duplication and syndicated exclusivity 
requirements, respectively. The Commission originally adopted these 
exceptions in the mid-1970s to balance the costs of compliance for 
small cable systems against the impact on broadcast stations. The 
Commission was concerned that the costs of equipment and manpower 
needed to comply with the cable exclusivity rules would have a 
substantial impact on such systems when viewed in relation to their 
gross revenues. In addition, the Commission concluded that the 
cumulative number of homes served by small systems nationwide 
constituted a very small percentage of the total number of television 
households and there would be no significant adverse economic impact on 
broadcasters. When the Commission reinstituted the syndicated 
exclusivity rules and modified the network non-duplication rules in 
1988, it again exempted cable systems with fewer than 1,000 subscribers 
out of the same concern.
    52. Some commenters representing the satellite industry seek 
similar exceptions that take into account the technical feasibility and 
cost of compliance for satellite carriers. While offering no specific 
proposal, EchoStar argues that the only way to ensure equivalent 
protections for satellite operators is to go back to the rationale for 
the exception. However, since the original rationale for the small 
system exception was based on the relative cost of compliance compared 
to such systems' gross revenues, and none of the commenters has 
provided cost data to justify such an exception, we are unable to 
conclude that a comparable situation exists in the satellite context. 
Satellite carriers are among the largest providers of television 
programming and are not comparable to the ``Mom and Pop'' cable 
operators for which the small system exception was designed. Each of 
the satellite carriers serves millions of subscribers nationally, is 
well-capitalized and capable of purchasing necessary equipment, is 
managed through centralized control centers, and already blacks out 
programming consistent with existing contracts and the programming 
packages selected by individual subscribers. We conclude that, with no 
specific evidence to the contrary, the costs of compliance with these 
rules, on a per subscriber basis and relative to total revenues, will 
be small given the large subscriber base of each DBS satellite carrier.
    53. In contrast to DBS carriers, however, we note that C-Band 
satellite carriers, while still serving 1.3 million subscribers 
nationwide, are experiencing a steady decline in subscribers from a 
high in 1995 of nearly 2.4 million. C-Band commenters contend that 
Congress intended to exempt them from application of the exclusivity 
rules. However, they offer only an isolated and ambiguous colloquy 
between two Senators in support of this assertion. C-Band commenters 
describe their subscribers as primarily rural and note that many live 
in areas that are not served by cable systems or are beyond the reach 
of over-the-air broadcasters. They contend that their centralized 
system of program delivery and authorization would make deletion and 
substitution of programming economically prohibitive. As these 
commenters note, in 1991 the Commission considered applying the 
syndicated exclusivity rules to C-Band retransmission of television 
broadcast programming. At that time, Congress had directed the 
Commission to apply the cable syndicated exclusivity rules to C-Band 
carriers if the Commission found it would be feasible for the C-Band 
carriers to comply. The Commission sought comment and concluded that 
the equipment needed for satellite carriers to implement exclusivity 
protection was not available and could not be developed and implemented 
before the expiration in 1994 of the interim compulsory copyright 
license under which C-Band carriers retransmitted broadcast 
programming. C-Band commenters contend that nothing has changed in 
their capability of deleting duplicating programming. They argue that 
network non-duplication requirements may apply to at least 93 markets, 
30 weekly programs, with different times for each program. They ask 
that we either exempt them from application of the cable exclusivity 
rules or defer application until after 2004.

[[Page 68093]]

    54. The circumstances today differ significantly from 1991 in that 
the provision in the SHVIA does not allow for consideration of 
feasibility. Congress could have provided an exemption for C-Band 
carriers from application of the exclusivity rules, but did not. 
Congress did provide a more generous copyright license to C-Band 
carriers, than to DBS carriers, to retransmit distant network stations 
to virtually all C-Band subscribers. As noted, the network non-
duplication and syndicated exclusivity rules do not apply to satellite 
retransmission of network stations. Currently, C-Band carriers provide 
only four of the six nationally distributed superstations (C-Band 
carries KTLA, WPIX, KWGN, and WGN. WOR-TV (New York) and WSBK-TV 
(Boston) are no longer available.) One of these, WGN, provides a 
satellite feed from which all duplicating programming has been deleted. 
Thus, the burden on C-Band carriers under the new network non-
duplication and syndicated exclusivity rules is to delete programming 
from only three nationally distributed superstations. The information 
provided by the satellite commenters in this record describes serious 
technical and economic difficulties in accomplishing deletions and 
substituting replacement programming. C-Band carriers contend that 
Geolocs cannot accomplish the numerous simultaneous deletions that the 
network non-duplication and syndicated exclusivity rules may require. 
However, it appears that these comments contemplate more widespread 
deletions and substitutions than the statute calls for and more than we 
impose here on either C-Band or DBS carriers.
    55. Notwithstanding that we may not provide a blanket exemption for 
C-Band carriers, we have considered their proposal that we defer 
application of the rules until after 2004 or pending a further 
rulemaking proceeding. We determine to do neither. We note that the 
Commission deferred application of the syndicated exclusivity rules in 
1991 due to the expectation of full copyright liability in 1994. Now we 
are urged again, for the same reasons, to defer because the statutory 
copyright license is set to expire in 2004. We are not willing to defer 
application until 2004, and then find that the copyright license is 
again extended and we are faced again with the same issues and 
arguments. We believe that C-Band carriers will be able to implement 
these new regulations, in the limited circumstances in which they will 
apply to C-Band subscribers, using existing technology modified as 
necessary. We also believe that this proceeding has given all sides on 
this issue ample opportunity to present evidence and see no need for a 
further rulemaking. We do note, however, that we can apply to C-Band 
carriers an exception comparable to the cable exceptions for small 
systems. C-Band has persuasively argued that the demands of network 
non-duplication, syndicated exclusivity, and sports blackout, 
cumulatively, may exceed the capacity of their existing system. In this 
case, the C-Band carriers would have to develop a new system or 
substantially modify their existing system. We believe that this can be 
a costly burden, and that it is appropriate to provide an exception 
that recognizes the relatively small size of the C-Band carriers, as 
compared with the DBS carriers. Therefore, insofar as any C-Band 
carrier has fewer than 1,000 subscribers within the zone of protection, 
as expressed by zip code areas within the zone, it is not required to 
delete programming subject to network non-duplication or syndicated 
exclusivity protection. (See Secs. 76.122(l), 76.123(m), and 
76.127(e).) The language of these exceptions is not limited to C-Band 
carriers and may apply, as well, to any satellite carrier with a 
similarly small subscriber base, such as a new carrier in the future. 
We will consider, if presented to us, additional information on how 
best to tailor a small system exemption that would be meaningful for C-
Band carriers without being significantly broader than the exemption 
for small cable systems. Finally, if Congress amends the SHVIA to 
expressly exempt C-Band carriers from application of any or all of the 
exclusivity rules (including sports blackout, discussed below), we can 
conduct a rulemaking proceeding to exempt C-Band from our rules 
accordingly.
Exceptions Preventing One Local Station From Blacking Out Another
    56. The cable rules contain a number of exceptions that prevent one 
local station from asserting exclusivity protection against another 
station that has been deemed ``local.'' Often these situations arise 
because the rules contain several definitions of ``local'' station. 
These exceptions--for significantly viewed stations, stations whose 
Grade B includes the community unit to be blacked out, and overlapping 
specified zones--were adopted to ensure that cable subscribers receive 
the same programming that would be available to over-the-air viewers in 
their communities. Consideration of these exceptions in the context of 
satellite carriage is made more complicated because superstations could 
have dual identities. In the NPRM, we sought comment on the treatment 
of superstations within their own markets. We noted that for must carry 
purposes, superstations are treated as local signals in their local 
markets (DMAs) and distant signals elsewhere. In its own market, a 
nationally-distributed superstation acts as any other local station and 
is treated as a local station within its local market. In the context 
of satellite retransmission of nationally distributed superstations, 
however, there is an important difference between a station carried as 
a superstation or carried as a local station. As described above, 
satellite carriers are not required to obtain retransmission consent to 
carry the superstations, but are required to obtain retransmission 
consent to carry a local station within its local market. The SHVIA, as 
it amended the retransmission consent provisions in the Communications 
Act, permits satellite carriers to retransmit the six stations that 
meet the definition of nationally distributed superstation without 
their consent provided they are transmitted outside their local 
markets. We believe that the presence or absence of a requirement for 
retransmission consent for nationally distributed superstations is key 
to Congress' determination to apply the cable exclusivity and sports 
blackout rules in this satellite context. Therefore, within their local 
markets, the nationally distributed superstations are not subject to 
deletions because they are carried as local stations. However, when a 
satellite carrier is retransmitting the station as a nationally 
distributed superstation, without its retransmission consent, it must 
be treated as a superstation, and the exclusivity and sports blackout 
rules will apply. Even in those instances in which the superstation's 
terrestrial over-the-air signal is significantly viewed, or the 
protected zone is within its Grade B contour, if the satellite 
retransmission is outside the station's local market, we will look to 
the manner of carriage to determine whether the station is treated as a 
superstation subject to deletions and blackouts, or as a local station 
that cannot be blacked out by another, overlapping local station. To 
the extent the exceptions for overlapping areas in the cable 
exclusivity rules are relevant in the satellite context, we will adopt 
them, as described below.
    57. With respect to the ``significantly viewed signal exception,'' 
a broadcast television station can be declared ``significantly viewed'' 
outside what is usually considered its local market on the basis of its 
over-the-air viewing in a

[[Page 68094]]

community. Significantly viewed status confers local treatment on a 
station under a number of rules and is intended to ensure that cable 
subscribers have the same local broadcast service that is available to 
noncable subscribers in their communities. Section 76.92(f) provides 
that a community unit is not required to delete the duplicating network 
programming of a significantly viewed signal. Similarly, under Section 
76.156 (amended rule Sec. 76.106), syndicated programming covered by an 
exclusivity agreement need not be deleted from a significantly viewed 
signal. A few comments note that a superstation could be significantly 
viewed in areas surrounding its city of license based on over-the-air 
viewing. DirecTV argues that this exception could only apply in a few 
cases in which the superstation is functioning as a local station and 
since local stations are not covered by this section of SHVIA, the 
significantly viewed exception should not be present in the satellite 
context. We believe that pursuant to the SHVIA, the local-into-local 
copyright license can only apply within the station's DMA. Thus, once 
carried outside the DMA, the station cannot be considered a ``local'' 
station. Therefore, we believe the significantly viewed and Grade B 
contour exceptions will rarely, if ever, be applicable in the satellite 
context.
Overlapping Specified Zones
    58. In a related matter, under the network non-duplication rules, 
if a cable community is located in one or more overlapping specified 
zones, neither station can blackout the other station's duplicating 
programming because both stations have equal priorities. The NPRM 
stated that we did not believe that a similar situation could occur in 
the satellite context and sought comment on this issue. The one 
commenter addressing this issue contends this exception will not be 
triggered in the satellite context since superstations do not have 
specified zones outside their local markets and SHVIA only applies 
network non-duplication to nationally distributed superstations. As 
mentioned above, a nationally distributed superstation is a ``local 
station'' when carried by a satellite carrier within its local market. 
When carried as a local station, the network non-duplication and 
syndicated exclusivity rules do not apply to delete its programming. To 
the extent the overlapping zones situation could occur, it will be 
covered by the exception for significantly viewed or Grade B contour 
discussed above.
NCE Must-Carry Exception
    59. Under Section 76.92(g) of the rules, a cable community unit is 
not required to delete the duplicating network programming of any 
qualified noncommercial educational (``NCE'') broadcast television 
station that is carried pursuant to the must carry rules. Congress 
mandated that this provision be added to the cable network non-
duplication rules as part of the must carry requirements. Congress 
recognized that in some situations an NCE station could be considered 
``local'' under the must-carry rules, which are based on a 50-mile zone 
around the station's community of license, and ``distant'' for purposes 
of the network non-duplication rules, which are based on a 35-mile 
specified zone. No commenters addressed this issue and we believe that 
this exception is not relevant in this context. The SHVIA provision 
applies only to a local station asserting exclusivity rights against 
one of six nationally distributed superstations, none of which is an 
NCE licensee.
Section 339(B)(1)(A) and (B): Application of Sports Blackout to 
Retransmission of Nationally Distributed Superstations and Network 
Stations
    60. In addition to requiring application of the network non-
duplication and syndicated exclusivity rules, section 339(b)(1)(A) also 
requires that we apply the sports blackout rule to retransmission of 
nationally distributed superstations, and section 339(b)(1)(B) requires 
that we apply the sports blackout rule to satellite retransmission of 
network stations. Unlike the other cable rules we are required to apply 
to satellite carriers, only the sports blackout rule applies to 
retransmission of both nationally distributed superstations and network 
stations. In the case of retransmission of network stations, we are 
instructed to apply the cable sports blackout rule only ``to the extent 
technically feasible and not economically prohibitive.
    61. The Commission's sports broadcasts rule (``sports blackout 
rule'') is designed to allow the holder of the exclusive distribution 
rights to local programming, in this case sporting events, to control, 
through contractual agreements, the display of that event on local 
cable systems. The purpose of the sports blackout rule is to ensure the 
continued general availability of sports programming to the public. The 
Commission adopted this rule based on a concern that sports teams would 
refuse to sell the rights to their local games to television stations 
serving distant markets due to their fear of losing gate receipts if 
the local cable system imported the local sporting event carried on a 
distant station. The cable sports blackout rule is triggered when a 
subject sporting event will not be aired live by any local television 
station carried on a community unit cable system. Under the cable 
sports blackout rule, the holder of the rights to the event (e.g., a 
sports team or league, rather than a broadcaster) has the power to 
demand that the local cable system blackout the distant importation of 
the subject sporting event. The zone of protection afforded by the 
sports blackout rule is generally 35 miles surrounding the reference 
point of the broadcast station's community of license in which the live 
sporting event is taking place. The 35 mile zone of protection is 
measured from a television station's reference point based upon the 
list of reference points in 47 CFR 76.53. The same reference point 
applies to all stations licensed to the same community regardless of 
where their transmitter or studios are located. When sports facilities 
are located in suburban areas, the downtown reference points may be 
inappropriate for purposes of calculating the protected zone (e.g., the 
New England Patriots play mid way between Boston and Providence). 
Therefore, the Commission has expressed its willingness to consider 
waivers ``to substitute a zone of protection extending out 35 miles 
from the site of a sports event for the television station specified 
zone designated by the rule.'' As with the Commission's exclusivity 
rules, the sports blackout rule specifies notification procedures 
regarding the sports programming to be deleted. However, the time frame 
allowed for notification is significantly shorter in the case of the 
sports blackout rule than for network non-duplication and syndicated 
exclusivity. Notification for sports blackout can be given as little as 
24 hours in advance. Notifications for regularly scheduled events 
subject to the sports blackout rule must be received no later than the 
Monday preceding the calendar week during which the deletion is to be 
made. Notifications for events not regularly scheduled, or when the 
schedule is revised, must be received within 24 hours after the time of 
the deleted telecast is known, but in no event less than 24 hours 
before the event will take place. The sports blackout rule does not 
apply to any community unit with fewer than 1,000 subscribers. This 
exemption is based on the cost of the equipment needed to delete 
programming.

[[Page 68095]]

Technical and Economic Effects of Sports Blackout on Satellite Carriers
    62. With respect to retransmission of nationally distributed 
superstations, the SHVIA requires us to apply the sports blackout rule 
from the cable context to satellite carriers. With respect to 
retransmission of network stations, however, the SHVIA provides that 
the sports blackout rules should be applied only to the extent 
technically feasible and not economically prohibitive. The language 
limits the application of the sports blackout rules in this narrow 
circumstance but only if the technical and economic difficulties are 
serious and harmful to the satellite carriers. In the NPRM we asked for 
specific information on the technical and economic problems that would 
be encountered by satellite carriers. We requested per subscriber cost 
data and asked whether the existing conditional access mechanisms would 
work for this purpose. We did not receive specific data or descriptions 
of how the requirement to black out sporting events on network stations 
would be unfeasible or economically prohibitive to the degree of posing 
a serious economic threat to the health of satellite carriers.
    63. DirecTV argues that the Commission should invoke the technical/
economic hardship exception of section 339(b)(1)(B) and not apply any 
sports blackout requirements on satellite retransmission of network 
stations but does not explain why the methods it uses to perform the 
blackouts required by its contracts with sports leagues cannot be used 
to black out network stations. DirecTV does explain that the actual 
blackouts are ``manually triggered'' by a person who can watch and 
monitor only four events at a time. DirecTV states that additional 
personnel would be needed to monitor and trigger the additional events 
that will be covered by the sports blackout rule. It asserts there will 
be ``vast numbers of subscribers'' and ``thousands of blackout 
requests'' creating a ``monumental, expensive, and time-consuming 
task.'' There are no specific costs provided. The Echostar comments 
offer even less specific information. Echostar provides no information 
about particular burdens that would be imposed by the requirement to 
black out sport events from network stations.
    64. As the Network Affiliates point out, no commenting party 
explains why it would be infeasible to develop the technology to black 
out sports programming, if such technology is not already in use, nor 
does any commenter offer cost figures to demonstrate that the 
technology would be cost prohibitive. We agree with those commenters 
that observe that the statutory language and expressions of legislative 
intent place a high burden to justify not imposing the sports blackout 
requirements for satellite retransmission of network stations. Such 
burden cannot be satisfied by the vague assertions and undocumented 
conclusions offered in this record. In contrast, the record provides 
unrefuted information that the technology to implement the network 
station sports blackout exists. Indeed, the satellite carriers 
currently black out sports programming pursuant to geographic 
restrictions in their contracts with regional sports networks and 
sports leagues. Consequently, we find that the heavy burden is not met 
to justify not applying the sports blackout obligations to satellite 
carriers with respect to network stations.
Notification
    65. In one aspect of the sports blackout rules, however, the timing 
of notification, we find that the record supports some modification 
from the notification periods in the cable sports blackout rules. 
DirecTV and Echostar urge that we lengthen the notification periods 
with respect to sports blackouts. In this respect, DirecTV describes a 
blackout system that is notably more complex than that of a cable 
operator. The cable operator controls the programming at a headend, 
which facilitates blacking out a particular area of limited geographic 
size. The satellite carrier, in contrast, is controlling programming on 
a national basis:

    First the programmer must notify DirecTV and provide information 
about the program to be blacked out, as well as the areas (by zip 
code) affected. The information provided by the programmer must then 
be reformatted for DirecTV compatibility. Traffic department 
employees must then build the blackout by entering the data into the 
system and notify the scheduling department. The blackout is then 
scheduled and the data regarding the blackout is processed. The 
blackout is checked again for accuracy before it hits the air. 
Finally the actual blackout itself must be manually triggered, both 
in and out, by an employee who determines when the actual event 
begins and ends by watching an actual signal of the event.

DirecTV also notes the difficulty of re-programming the time period 
that has been blacked out, especially with very short advance notice.
    66. While the process generally described by DirecTV does not 
appear to present such a serious technical or economic burden as to 
excuse compliance with the sports blackout rules altogether, it does 
suggest that the challenge of implementing multiple, simultaneous 
blackouts and identifying and arranging substitute programming is 
greater for satellite carriers than for cable operators. DirecTV 
correctly notes that the time frame allowed for notification for sports 
blackouts is significantly shorter than it is for either network non-
duplication or syndicated exclusivity, and recognizes that rights 
holders may not always have the ability to provide more than 24 hours 
notice. The cable sports blackout rules require notice for regularly 
scheduled events to be received on the Monday preceding the calendar 
week during which the deletion is to be made, and, for events not 
regularly scheduled or revisions to previously submitted notices, 
within 24 hours after the time of the telecast is known and no later 
than 24 hours before the telecast is to occur. This timing was 
instituted in 1975 to address sports interests' concerns that playoffs 
and weather cancellations often afford little advance notice of 
scheduling changes. DirecTV explains that while it may be capable of 
deleting a sporting event on short notice, it cannot accomplish the 
reprogramming necessary in such a short period of time. DirecTV 
proposes a notification period of 60 days prior to the start of a 
season for sports with a specific season, 60 days prior to the event 
for nonseasonal but regularly scheduled events, 30 days for events not 
regularly scheduled, and 10 working days for revisions to previously 
submitted notices.
    67. Commenters respond to DirecTV's proposal that, while they 
sometimes can provide notice as soon as a season's games are scheduled, 
the televising schedule may not be set until a later date. We agree 
that a 60 day advance notice may allow time for the games to be 
scheduled but not for the telecasts to be arranged. Often the 
televising schedule is not finally decided until a week before the 
beginning of the season. We find that the satellite carriers, although 
not providing sufficient data to warrant an exemption from the sports 
blackout requirements, have offered reasonable arguments in support of 
revising the notification periods in the satellite sports blackout 
rules to the extent possible without depriving the teams and leagues of 
their contractual rights by establishing time frames that afford no 
practical protection.
    68. In light of the differences in the structure and operation of 
the satellite and cable industries, we are persuaded that some 
adjustment in the application of the sports blackout rules is justified 
and consistent with Congressional recognition of these differences. We 
find, however, that the lack of specific information in the record 
limits our ability to finely tailor the requirements

[[Page 68096]]

while providing the protection the statute requires. Moreover, we take 
note that satellite carriers currently comply with contractually 
mandated blackouts, which require that they delete sporting events and 
provide subscribers with replacement programming. We believe it is 
appropriate to adjust the notification requirements for satellite 
carriers to ensure that the holders of rights to sporting events will 
provide the required notice as promptly as possible. The sports 
blackout rules for satellite carriers will, therefore, retain the same 
advance notice requirements for regularly scheduled events, including 
those events that have a specific season (notice must be received the 
Monday before the calendar week in which the deletion is to be made) 
but will also require that rights holders notify satellite carriers 
within forty-eight hours of the time the telecast is scheduled. We will 
not make the same requirement for events not regularly scheduled due to 
the last minute nature of such events. For these unscheduled events, as 
well as for last minute revisions to previously scheduled events, we 
must take into account the realities for the sports interests of last 
minute revisions, particularly due to weather. Therefore, we retain the 
24 hour advance notice minimum to revise previously scheduled 
deletions. We hope that where satellite carriers have had adequate time 
to line up substitute programming, they will be able to shift the 
substitute programming into the revised time slot even with only 24 
hours notice. Because this adjustment to the notification requirements 
reflects legitimate differences between satellite carriers and cable 
operators, we see no reason to limit this distinction to retransmission 
of network stations. For purposes of uniformity and clarity, the same 
notification requirements will apply to all sports blackout 
requirements imposed on satellite carriers, whether with respect to 
network stations or nationally distributed superstations.
Use of Zip Codes To Determine the Location of Households Subject to 
Sports Blackout
    69. As with the network non-duplication and syndicated exclusivity 
rules, most commenters agree that the sports blackout rule can best be 
applied to satellite carriers by reference to zip codes rather than 
community units. For the same reasons discussed in connection with 
network non-duplication and syndicated exclusivity, we agree that the 
zip codes that comprise the specified zones are appropriate for this 
purpose. As in the cable sports blackout rule, the holder of the 
broadcast rights, or its agent, shall be responsible for including the 
appropriate information identifying areas subject to deletion with its 
blackout notification to the satellite carrier. The notification must 
include a list of the appropriate zip codes.
Exception for Small Community Units, as Applied to Satellite Carriers
    70. DirecTV advocates excepting satellite carriers from the sports 
blackout requirement if the blackout would affect fewer than 5% of the 
television households in the relevant DMA, on a provider-by-provider 
basis. DirecTV asserts that this would have a de minimis impact on 
rights holders. The holders of rights to sporting events strongly 
disagree. The Commissioner of Baseball states that satellite 
subscribers generally constitute less than 5% of households in most 
DMAs and contends such an exception would eliminate sports blackouts in 
most cases. We agree that there should be exceptions to the blackout 
requirements imposed on satellite carriers that are analogous to the 
exceptions for cable systems. We do not agree that 5% of television 
households in a DMA (which would include cable subscribers as well as 
satellite subscribers) is analogous to the small community unit 
exception for cable systems.
    71. The cable sports blackout rule does not apply ``to any 
community unit having fewer than 1,000 subscribers.'' Much has been 
made by some commenters of the difference between the language of this 
small system exception and the small system exceptions for non-
duplication and syndicated exclusivity, which specifically exempt cable 
systems with fewer than 1,000 subscribers. However, there appears to be 
no basis in past Commission Orders for emphasizing this difference in 
the rule language. The Commission's rationale for exempting either 
small systems or small community units is the cost of the equipment for 
the cable system, and the relatively de minimis effect on the protected 
rights holder of exempting such a small system. Because there is no 
specific cost information in the record in this proceeding, it is 
difficult for us to draw a direct connection from the Commission's 
concerns for small cable systems due to the cost of their blackout 
equipment to the satellite carriers who, by all reports, already 
possess the necessary equipment to perform the sports blackouts 
required by statute.
    72. We believe that the same type of exception we apply to the 
satellite network non-duplication and syndicated exclusivity rules is 
warranted here. Our primary concern here is for the affected 
subscribers, as well as the expense imposed upon satellite carriers 
relative to the number of subscribers who will be blacked out. The 
Commission has found in previous considerations of the cable sports 
blackout rule that the effect of excepting up to 1,000 subscribers from 
a blackout requirement will have a de minimis effect on the gate 
receipts. Insofar as we are using zip codes in lieu of community units, 
we believe an exception based upon the number of satellite subscribers, 
per carrier, in the zip codes affected by a sports blackout request is 
analogous to the exception in the cable sports blackout rule for 
community units with fewer than 1,000 subscribers. In this satellite 
context we find again that an exception for fewer than 1,000 
subscribers per carrier, per zip code area comprising a protected zone, 
will not be so detrimental to the sports interests as to warrant the 
expense to satellite carriers and the loss of sports programming for 
viewers. We will reexamine this issue if, in the future, we receive 
information that the loss of 1,000 satellite subscribers is more costly 
to the sports interests than the comparable loss of 1,000 cable 
subscribers where the small system exception applies in the cable 
sports blackout rule.
Other Provisions of Sports Blackout Rule for Satellite Carriers
    73. Apart from the changes in the use of zip codes and in the 
notification requirements described above, we do not change the other 
provisions of the cable sports blackout rules in their application to 
satellite carriers. Based upon the general consensus in the comments, 
the same 35 mile zone of protection that applies to cable systems will 
apply to satellite carriers, and the same willingness to consider 
waivers for suburban stadiums applies to the satellite sports blackout 
rules as well as to the cable sports blackout rules. The rights holder 
will have the obligation of providing a list of the relevant zip codes 
to the satellite carrier with its deletion notice. If satellite 
carriers want to evaluate each subscriber's address and black out only 
those households within the 35 mile zone, the rules will not prevent 
them from doing so. For the same reasons cited in the network non-
duplication and syndicated exclusivity rules, we will not require an 
electronic list of zip codes, nor will we require that satellite 
carriers designate a particular name or address for receipt of the 
notification. We do not have such a requirement for cable systems, 
which

[[Page 68097]]

are far more numerous and varied, and we see no reason to require it 
from satellite carriers. As in the cable sports blackout rule, 
satellite carriers may substitute other programming during the time 
scheduled for a sporting event that must be blacked out. Satellite 
carriers may only use substitute programming for which they have 
copyrights, and, when required, retransmission consent. They may 
substitute a different distant network station provided they do not 
retransmit more than two network stations affiliated with the same 
network in a single day. Of course the substitute programming must also 
comply with the network non-duplication and syndicated exclusivity 
rules.
    74. In addition, to afford satellite carriers an opportunity to 
adjust their schedules to these new regulatory requirements, we will 
require that sports rights holders provide 60 days advance notice for 
any sports blackout to occur on or before March 31, 2001. As of April 
1, 2001, the regular notice requirements, including 24 hour notice for 
changes in previously scheduled blackouts, will apply. Because 
satellite carriers are currently complying with contractually required 
sports blackouts, we do not believe it is necessary to provide the same 
length of time to phase-in the implementation of the sports blackout 
rules as we find warranted for the network non-duplication and 
syndicated exclusivity. We believe that this 60 day period will be 
adequate for satellite carriers to adjust to the additional sports 
blackout requests.

Other Issues

Digital Signals
    75. In the NPRM, we stated that section 339(b)(1) and the relevant 
part of the Joint Explanatory Statement are silent regarding 
application of the exclusivity and sports blackout rules to the 
retransmission of digital broadcast signals. We noted that in the 
pending proceeding considering cable mandatory carriage of digital 
signals, we requested comment on how these cable rules would function 
for cable carriage of digital signals. In the Notice, we repeated our 
question of whether Congress intended to apply these rules to satellite 
retransmission of digital broadcast signals. We noted that the SHVIA 
may be read to apply to both analog and digital broadcast signals. An 
alternative interpretation we posited was that Congress was only 
concerned about the carriage of analog signals given that elsewhere in 
the statute Congress expressly mentioned digital signals and, 
presumably, could have done so in this context as well. We sought 
comment on whether and how the exclusivity rules could apply to 
satellite carriage of digital broadcast signals, and whether there is a 
meaningful distinction between analog and digital carriage issues for 
satellite carriers in this context.
    76. The responses we received concerning this matter are aligned by 
industry. Echostar argues that there is no legislative authority for 
the extension of the exclusivity rules to digital signals. NAB argues 
that the SHVIA requires exclusivity and sports blackout protection to 
apply to both analog and digital signals. Other broadcast groups, such 
as Tribune, argue that Congress did not indicate an intent that digital 
signals should be excluded from the new exclusivity rules and therefore 
that there should be no distinction between analog and digital signals 
under the new rules. MPAA asserts that syndicated exclusivity should 
apply to both digital and analog signals, pointing out that Congress 
made exceptions for digital signals in certain instances but did not do 
so for syndicated exclusivity.
    77. Because digital exclusivity issues are closely related to 
digital carriage issues, we believe that it would be premature to 
resolve the matters related to this issue at this time. Exclusivity 
requirements cannot be fully fashioned until both cable operators and 
satellite carriers know what their carriage responsibilities will be 
for digital broadcast television. The digital exclusivity issues should 
be decided either when the Commission issues a Report and Order in the 
Digital Must Carry proceeding or in another proceeding that discusses a 
satellite carrier's digital broadcast signal carriage responsibilities.
    78. We do address one aspect of this issue here. We are 
disinclined, in the early stage of the DTV transition, to allow a 
broadcaster to use an exclusive contract that applies only to digital 
programming to prevent a cable system or satellite carrier from 
providing that programming in analog form to its subscribers. However, 
to the extent contractual rights protect a broadcaster's exclusivity 
for both the analog and digital versions of the same program, we see no 
reason to limit the effectiveness of the contract to protect only 
analog exclusivity. Therefore, contractual language that expressly 
applies to analog and digital format of the same program content will 
be effective to require deletion of both. That is, the rule will 
provide that neither satellite carriers nor cable operators will be 
permitted to carry the digital version of a program when the analog 
version is required to be deleted and the contract expressly provides 
exclusivity for both, any, or all formats.
NFL Proposal to Expand Exclusivity Rules To Apply to Unitary Program 
Packages
    79. The NPRM sought comment on an additional issue concerning the 
distribution of sports programming that is related to, but not directly 
covered by, the SHVIA. The National Football League sells packages of 
programming to networks on a national basis, but different games are 
broadcast locally on a regional basis, often in two-game packages. To 
the extent that broadcasts of games are carried into local markets on 
distant broadcast signals via satellite, the network non-duplication 
and other rules involved in this proceeding appear to offer neither the 
stations nor the leagues involved any protection beyond the rights to 
the particular games that local stations are authorized to broadcast. 
We sought comment on the question of how the patterns of sports 
carriage involved are addressed by the new law, and whether they can 
and should be addressed in the regulations the Commission is required 
to adopt pursuant to it.
    80. The NFL asks the Commission to ``complete the work that 
Congress began'' by applying the network non-duplication and syndicated 
exclusivity rules to network stations as well as to nationally 
distributed superstations. The NFL admits that damage to stations' 
contractual rights is limited because only unserved and grandfathered 
households can receive such stations but argues that the numbers of 
viewers involved are significant nonetheless. The NFL further contends 
that the Commission should also recognize the unitary nature of the NFL 
or any other regional television plan and allow local affiliates to 
exercise network non-duplication protections to black out other games 
played at the same time but broadcast in other regions of the country 
(e.g., Redskins versus Cowboys could blackout Giants versus Packers). 
Similarly, the National Hockey League expresses concern that a 
satellite carrier that offers local-into-local service could have 
access to the four games that the NHL plans to regionalize on ABC this 
year and could thereby create a multi-game hockey package to compete 
unfairly with the ``Center Ice'' package on ABC. We note that in the 
case of local-into-local carriage, retransmission consent is required, 
and, presumably, the stations in question could contractually prevent 
this from occurring.

[[Page 68098]]

    81. The advocates of this expanded application of network non-
duplication have not described why such action would be in the public 
interest, although we are persuaded it could be in the Leagues' 
interest. The NFL and other sports interests advocating this change ask 
us to revise the existing cable rules to require deletion of 
programming that does not duplicate protected programming. As noted in 
the discussion of the network non-duplication rules, supra, the 
Commission has determined in the cable context that the use of 
different camera crews and announcers for a sporting event results in 
the distant program not being considered the same as the local program. 
Here, the NFL asks us to reach a contrary result and decide that a 
different event between different teams ``duplicates'' the protected 
event. The NFL and others ask us to expand the scope of the new 
satellite exclusivity rules beyond what Congress mandated. In light of 
the SHVIA's restrictions on households that are eligible to receive 
distant network signals, it is not clear to what extent carriage of 
distant signals providing different games merits remedial action. The 
NFL asserts that allowing satellite carriers (and, presumably, cable 
systems as well) to import distant signals carrying different games 
would undermine the NFL's regional television plan. The NFL cautions 
that it might ``be forced'' to alter its distribution plan in 
unspecified ways that would be ``less pro-consumer.'' However, we 
believe it would not be pro-consumer to take the action the sports 
interests request. There can be no doubt of the negative impact on 
viewers of losing access to more and more sports programming. The 
sports interests have not provided a compelling need for this 
additional protection, and other commenters have argued that it would 
deprive viewers unnecessarily. For the reasons given, we decline to 
expand the exclusivity rules to apply to regional or so-called unitary 
packages. If the program for which protection is sought is not, in 
fact, duplicated by the distant programming imported by the cable 
system or satellite carrier, then neither the network non-duplication 
nor syndicated exclusivity rules apply.
Two Network Affiliates in One DMA
    82. In the NPRM we asked for comment on the possibility and 
ramifications of a ``two-affiliates-in-one market scenario'' with 
respect to the sports blackout rule. We described the possibility that, 
in areas in which there are two affiliates of the same network within 
the same DMA, a subscriber would be eligible to receive both network 
stations based on the satellite carrier's ``local-into-local'' license 
because the subscriber resides in the DMA of both stations. Thus, in 
this circumstance, the sports blackout requirement of the SHVIA could, 
conceivably, apply to retransmission of local, rather than distant, 
network stations where the geographic area for purposes of the sports 
blackout zone surrounding one of the affiliates is smaller than the 
DMA. If one of the affiliates is not carrying the event, the sports 
blackout rule might be triggered. If the second affiliate is carrying 
the event, then the satellite carrier might be required to black out 
the event being transmitted by the second affiliate to subscribers 
within the 35 mile zone. We received scant response to this scenario. 
We believe these comments confirm that this situation is unlikely ever 
to occur because the contractual arrangements allow the rights holder 
to prohibit both affiliates from broadcasting the event in question. 
Therefore, we see no reason at this time to provide for this situation 
in the rules.
Technical Revisions to the Rules: Sec. 76.5(gg)
    83. The NPRM identified several of the cable exclusivity rules that 
contain out-dated cross-references to other sections. We sought comment 
on how these editorial corrections should be made. In particular, we 
noted that the cable sports blackout rule (Sec. 76.67, amended rule 
Sec. 76.111) contains a cross-reference to Sec. 76.5(gg) to determine 
when the sports blackout rule is triggered. Section 76.5(gg) was 
eliminated for reasons unrelated to the operation of the sports 
blackout rule, and no replacement reference is provided. The NPRM asked 
whether we should simply reinstate a standard based on the original 
criteria incorporated into former Sec. 76.5(gg) or adopt a new 
standard.
    84. Former Sec. 76.5(gg) of the Commission's rules referred to the 
1972 must carry rules to determine whether a station was considered 
``local.'' The cable sports blackout rule is intended to be triggered 
only when no ``local'' television station carried by a cable system is 
broadcasting the subject sporting event for which protection is sought. 
In general, the 1972 must carry rules considered a television station 
``local'' if the subject cable community served was located within the 
station's specified zone. In contrast, the current must carry rules 
consider a television station ``local'' if it is located in the same 
DMA as a cable community. The National Hockey League (NHL) maintains 
that any replacement for Sec. 76.5(gg) should incorporate the 1972 must 
carry rules definition of a ``local'' television station's market area. 
We agree. The use of DMA's would unnecessarily undermine the 
application of the sports blackout rule because DMAs may encompass 
hundreds of miles. In such a DMA, stations carrying the event located 
hundreds of miles distant from the relevant protected zone would be 
considered ``local.'' If considered ``local,'' the holder of the rights 
to the event could not assert the sports blackout rule without blacking 
out such distant over-the-air carriage if the station had must carry 
rights.
    85. For the limited purpose of the application of the sports 
blackout rule, the provisions of the former Sec. 76.5(gg) can be 
substantially shortened and consolidated. Because the purpose of the 
sports blackout rule is simply to ensure that the rights holders to 
local events can exercise their contractual exclusivity rights, it is 
unnecessary to re-instate the complex definition of ``local'' that was 
used for the 1972 must carry regime or the 1987 rate regulations. It is 
not our intention to change the operation of the cable sports blackout 
rule. This revision merely incorporates within the cable and satellite 
sports blackout rules the relevant concept from the former 
Sec. 76.5(gg).
Other Technical Corrections
    86. The NPRM also included, in Appendix C, two other provisions 
that require minor, technical corrections. No comments were received 
regarding these provisions. In the absence of any objection, we make 
these modifications, as proposed, including an editorial change to the 
top 100 market list contained in the rules (correcting the markets 
listed at Sec. 76.51(a)(2) and (a)(28)), and a correction to Sec. 76.5 
to reflect that the reference to Sec. 76.5(o) in Sec. 76.5(ii) should 
be Sec. 76.5(m).
    87. In addition, we note that Sec. 73.658(m) contains a reference 
to the Arbitron list of smaller markets. As discussed in the 
Commission's recent Market Modification Order, Arbitron is no longer 
tracking television viewership. The Nielsen Research Company produces a 
similar list of markets, which is current. We will, therefore, revise 
this section of the rules to accomplish this updated cross-reference.
    88. We are also taking this opportunity to delete several 
provisions from the cable exclusivity rules (Secs. 76.94, 76.105 
(formerly Sec. 76.155), 76.97 and 76.163) that have no further

[[Page 68099]]

applicability. We find that notice and comment are unnecessary under 
section 553(b) of the Administrative Procedure Act because the rules 
are outdated and have no further applicability.

Procedural Matters

    89. The SHVIA requires that these rules become effective within one 
year of enactment. The SHVIA was enacted on November 29, 1999. We find 
good cause exists under the Administrative Procedure Act (``APA'') to 
have the rules adopted in this Report and Order take effect with fewer 
than 30 days advance publication in the Federal Register pursuant to 
section 553(d)(3) of the APA due to the statutory deadline. The APA 
generally requires publication in the Federal Register of substantive 
rules 30 days prior to their effective date but permits substantive 
rules to become effective with less than 30 days advance publication 
for good cause. The Commission has acted expeditiously to adopt these 
complex rules, and they will be adopted and published in the Federal 
Register before the statutory deadline. We note that the rules 
contemplate a phase-in period to allow parties to implement the new 
requirements, and thus parties will have time to consider the effect of 
the rules before they commence implementation.

Final Regulatory Flexibility Analysis

    90. As required by the Regulatory Flexibility Act (``RFA''), see 5 
U.S.C. 603,