[Federal Register: February 12, 1999 (Volume 64, Number 29)]
[Rules and Regulations]               
[Page 7113-7127]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]



47 CFR Part 73

[CS Docket No. 98-201; FCC 99-14]

Satellite Delivery of Broadcast Network Signals under the 
Satellite Home Viewer Act

AGENCY: Federal Communications Commission.

ACTION: Final rule.


SUMMARY: In response to petitions for rulemaking filed by the National 
Rural Telecommunications Cooperative (NRTC) and EchoStar Communications 
Corporation (Echostar) in connection with the Satellite Home Viewer 
Act, this Report and Order amends the Commission's rules to provide a 
procedure for measuring television signal strength at an individual 
location, such as a household. The Report and Order also endorses a 
model to predict signal intensity at individual households. The 
intended effect is to better identify those households that are 
``unserved,'' for purposes of the SHVA.

EFFECTIVE DATE: February 12, 1999.

FOR FURTHER INFORMATION CONTACT: Donnie Fowler at (202) 418-7200 or via 
internet at dfowler@fcc.gov.

SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's 
Report and Order, FCC 99-14, CS Docket No. 98-201, adopted February 1, 
1999 and released February 2, 1999. The full text of this Notice is 
available for inspection and copying during normal business hours in 
the FCC Reference Center, 445 12th Street, SW, Washington, DC 20554, or 
may be purchased from the Commission's copy contractor, International 
Transcription Service (``ITS''), (202) 857-3800, 1231 20th Street, NW, 
Washington, DC 20036, or may be reviewed via internet at <http://
www.fcc.gov/Bureaus/Cable/News__Releases/1999/nrcb8022.html>. For 
copies in alternative formats, such as braille, audio cassette or large 
print, please contact Sheila Ray at ITS.

Paperwork Reduction Act

    The requirements adopted in this Report and Order have been 
analyzed with respect to the Paperwork Reduction Act of 1995 (the 
``1995 Act'') and found to impose new or modified information 
collection requirements on the public. The Commission has requested 
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.
    OMB Approval Number: 3060-0863.
    Title: Satellite Delivery of Network Signals to Unserved Households 
for Purposes of the Satellite Home Viewer Act.
    Type of Review: Revision of a currently approved collection.
    Respondents: Business and other for-profit entities.
    Annual Number of Respondents: 848.
    Estimated Time Per Response: 30 minutes.
    Frequency of Response: On occasion.
    Total Annual Burden to Respondents: 125,000 hours.
    Total Annual Cost to Respondents: $12,500.
    Needs and Uses: The information gathered as part of Grade B signal 
strength tests will be used to indicate whether consumers are 
``unserved'' by over-the-air network signals. The written records of 
test results will be made after testing and predicting the strength of 
a television station's signal. Parties impacted by the test results 
will be consumers; parties using the written test results will 
primarily be the satellite and broadcasting industries.
    Title: Satellite Delivery of Network Signals to Unserved Households 
for Purposes of the Satellite Home Viewer Act.

Synopsis of Report and Order

Introductory Background

    1. In this proceeding, we address an issue involving the television 
broadcast industry, the direct-to-home satellite industry, and 
consumers who subscribe to satellite carriers for their video 
programming. Over nine million households subscribe to satellite 
carriers, and roughly one third of these subscribers pay an additional 
subscription fee to receive broadcast network programming via 
satellite. Broadcasters contend that many of these broadcast network 
subscribers, as well as many potential subscribers, are not eligible 
under the 1988 Satellite Home Viewer Act (``SHVA'') to receive such 
programming using their home satellite service.
    2. The broadcast television industry has the right, through the 
Copyright Act and private contracts, to control the distribution of the 
national and local programming that it transmits. In 1988, Congress 
adopted the SHVA as an amendment to the Copyright Act in order to 
protect the broadcasters' interests while simultaneously enabling 
satellite carriers to provide broadcast programming to those satellite 
subscribers who are unable to obtain broadcast network programming 
over-the-air. (17 U.S.C. 119 (1998), the SHVA

[[Page 7114]]

is part of a copyright law.) Congress considered these subscribers to 
be ``unserved'' by their local stations (to be considered ``unserved,'' 
the SHVA also requires that the household not have subscribed to cable 
in the previous 90 days). A Miami federal district court has recently 
acted to enforce this law by issuing two nationwide injunctions 
requiring the satellite carriers to terminate network service to as 
many as 1 million subscribers by February 28, 1999 and to more than 1 
million additional subscribers by April 30, 1999. Many satellite 
subscribers have contacted the Commission to express concern over this 
imminent termination of service and have asked for the Commission's 
assistance to reduce the impact of the court's injunctions. The 
broadcast industry has urged the Commission not to take any action that 
will undermine the court's decision or harm broadcasters and, 
consequently, the viewers who rely on local broadcast stations. Two 
satellite carriers, the National Rural Telecommunications Cooperative 
(``NRTC'') and EchoStar Communications Corporation (``EchoStar''), 
filed petitions for rulemaking with the Commission asking us to amend 
our rules to help those subscribers who face termination.
    3. In response, the Commission issued a Notice of Proposed Rule 
Making, Satellite Delivery of Network Signals to Unserved Households 
for Purposes of the Satellite Home Viewer Act, (``NPRM'') on November 
17, 1998 (63 FR 67439, December 17, 1998), and announced that it 
expected to complete this rulemaking before the first wave of satellite 
subscribers have their network programming via satellite terminated at 
the end of February, 1999. As stated in the NPRM, the Commission's 
statutory authority under the SHVA is limited so that, regardless of 
action by the Commission, most of the satellite subscribers affected by 
the injunction are likely to have their satellite-delivered network 
programming discontinued. The court has determined that the vast 
majority of subscribers are not within the scope of Congress' copyright 
authorization because they are able to receive broadcast network 
programming over-the-air.
    4. The Commission's role in this matter originates in a provision 
in the SHVA that links the definition of ``unserved households'' to a 
Commission definition of television signal strength known as ``Grade B 
intensity.'' The critical question under the SHVA and in this 
rulemaking is whether a household is able to receive a television 
signal of this strength.
    5. The goal of this rulemaking is to identify more accurately, and 
consistent with the SHVA, those consumers who can and cannot receive 
their local broadcast network stations over-the-air. The Commission's 
actions advance this goal, but cannot satisfy every consumer who wants 
to receive broadcast network stations via satellite. Congress has 
granted the Commission only limited authority to act in this area. We 
have also sought to promote competition among multichannel video 
programming distributors, to the extent possible under the SHVA, and we 
have considered the role that local broadcasters play in their 
communities. Increasing competition among MVPDs was not an express goal 
of Congress in enacting the SHVA however. Several members of Congress, 
however, have recently suggested that changes to the statute could help 
open markets and provide consumers with more choices. Through hundreds 
of e-mails, letters, and phone calls, consumers have expressed 
frustration at being unable to choose a satellite service that provides 
broadcast network stations, although it is unclear how many of these 
consumers do receive terrestrially delivered broadcast signals of Grade 
B intensity.
    6. To give the satellite industry, broadcast industry, and 
consumers a uniform method for determining the signal strength a 
household actually receives, the Commission in this Order adopts a 
method for measuring Grade B signal strength at individual households. 
The measurement rule takes effect upon publication in the Federal 
Register. The expedited effective date for this rule is warranted in 
light of the permanent injunction scheduled to take effect on February 
28, 1999, which will affect 700,000-1,000,000 satellite subscribers. To 
the extent parties may seek the court's permission to use the new 
measurement methodology promulgated in this Order, as well as the 
prediction model endorsed by the Commission, the expedited effective 
date will facilitate the court's review of such requests. The 
Commission has requested permission from the Office of Management and 
Budget for expedited clearance for the Paperwork Reduction Act. We 
expect that this rule will provide the uniformity and certainty needed 
to eliminate many of the controversies that currently surround 
compliance with the SHVA. We believe, consistent with what commenters 
on all sides of this issue have requested, that the measurement 
methodology is practical, reasonably accurate, and relatively 
    7. In this Order the Commission also endorses a computer model to 
predict whether a household is likely to be able to receive a signal of 
the required strength. Although the Commission does not have the 
authority to mandate use of this model in connection with the SHVA, 
this recommendation gives the broadcast and satellite industries, as 
well as consumers, a means of determining eligibility for satellite-
delivered network service that minimizes the need for on-site testing. 
The predictive model is familiar to the broadcast and satellite 
industries and is publicly available for use at this time. It should 
provide a degree of dependability and assurance that will alleviate 
some of the confusion and cost that has contributed to consumer 
    8. This Order, therefore, addresses three major issues. First, we 
consider whether we can and should change the definition of a signal of 
Grade B intensity. We decline to do so in this proceeding. Second, we 
consider and adopt a standardized method for measuring the strength of 
television signals at individual locations. Third, we consider 
endorsing a method for predicting the strength of television signals at 
individual locations that could be used in place of actually taking 
measurements. The prediction method that we endorse could be used to 
create an accurate evidentiary presumption of acceptable television 
service or lack of service. Importantly, the effect of this Order is 
not to increase the number of unserved households that already exist, 
nor to reduce the size of local stations' markets by subtracting 
viewers who are able to receive their signal. Rather, we have developed 
measurement and prediction tools that more accurately identify those 
households that are truly unserved within the meaning of the SHVA.

A. The Satellite Home Viewer Act

    9. In the SHVA, Congress created a limited exception to the 
exclusive programming copyrights enjoyed by television networks and 
their affiliates because it recognized that some households were unable 
to receive network station signals directly over the air. The exception 
is a narrow compulsory copyright license (17 U.S.C. 119(d)(2)) that 
direct-to-home (DTH) satellite video carriers may use to provide 
certain television network stations to subscribers who live in 
``unserved households.'' The SHVA was originally adopted in 1988 to 
cover satellite service via C-Band before ``direct broadcast 
satellite'' (``DBS'') existed. Congress amended the SHVA in 1994 when 
DBS was just reaching the market. After DBS was introduced in

[[Page 7115]]

mid-1994, it gained 6.5 million subscribers in the first 32 months. 
Currently, direct-to-home (``DTH'') satellite services, which include 
C-Band, DBS, and medium power Ku-band services, have more than nine 
million subscribers. The success of the DBS industry benefits consumers 
by providing greater choice among multi-channel video programming 
distributors (``MVPD''). However, as the number of satellite 
subscribers has increased, so has the tension that is inherent in the 
SHVA regarding those who are eligible to receive network programming 
via satellite and those who are not.
    10. The term ``unserved household,'' as relevant here, is defined 
by SHVA as a household that: ``cannot receive, through the use of a 
conventional outdoor rooftop receiving antenna, an over-the-air signal 
of grade B intensity (as defined by the Federal Communications 
Commission) of a primary network station affiliated with that 
network.'' (17 USC 119(d)(10(A)). The SHVA is enforced through private 
actions filed in the federal court system. In such actions, the 
satellite carrier has the burden of proving ``that its secondary 
transmission of a primary transmission by a network station is for 
private home viewing to an unserved household.''
    11. The Satellite Home Viewer Act limits the compulsory copyright 
license to ``unserved'' households, reflecting Congress'' intent to 
protect the role of local broadcasters in providing free, over-the-air 
television to American families. Localism has been a central principle 
of broadcast policy since the Radio Act of 1927. Broadcasters must 
serve their communities by providing programming (e.g., news, weather, 
and public affairs) to meet the needs and interests of those 
communities. Congress was concerned that without some copyright 
protection, the economic viability of those local stations affiliated 
with national networks might be jeopardized, thus undermining one 
source of local information.
    12. The SHVA has two purposes: (1) to make broadcast network 
programming via satellite available to those households beyond the 
reach of a local affiliate, and (2) to protect the integrity of the 
copyrights that make possible the existing free, over-the-air national 
network/local affiliate broadcast distribution system. This Order 
addresses, within the boundaries of the Commission's authority, the 
conflicts that arise between these dual purposes.

Grade B Contours and Signal Intensity

    13. The Grade B signal intensity standard, which is the key to the 
SHVA's definition of ``unserved households'' in Section 119(d)(10)(A), 
is a Commission-defined measure of the strength of a given television 
station's over-the-air signal. This standard was developed in the early 
days of television as a key component of the Commission's channel 
allotment protocol. Generally, if a household receives a television 
signal of Grade B intensity, it should receive an acceptable television 
picture at least 90% of the time. More specifically, Grade B represents 
a field strength that is strong enough, in the absence of man-made 
noise or interference from other stations, to provide a television 
picture that the median observer would classify as ``acceptable'' using 
a receiving installation (antenna, transmission line, and receiver) 
typical of outlying or near-fringe areas.
    14. The Grade B values (which represent the required field strength 
in dB above one micro-volt per meter) are defined for each over-the-air 
television channel in Section 73.683 of the Commission's rules. There 
are also Grade A and ``city grade'' field strength values, which 
represent stronger signals. Because they are stronger, Grade A contour 
and city grade service are generally found closer to a station's 
transmitter (47 C.F.R. 73.683 and 73.685):

                                                                    Grade B dBu     Grade A dBu   City Grade dBu
Channels 2-6....................................................              47              68              74
Channels 7-13...................................................              56              71              77
Channels 14-69..................................................              64              74              80

    The Grade B values assume that the antenna used to receive the 
signal has a 6 db gain for channels 2-13 and an antenna with a 13 db 
gain for channels 14-83. Section 73.684 contains the Commission's 
``traditional'' methodology for predicting station service coverage, 
and Section 73.686 describes a procedure for making field strength 
measurements to determine the likelihood that a signal is available in 
an area or community. Section 73.622(e) describes different values for 
evaluating field strength in connection with digital television (DTV) 
    15. The Commission developed the Grade B standard in the 1950s and 
has used it in a variety of contexts, many of which were not envisioned 
at the time it was created. The primary purpose for creating the Grade 
B standard was to estimate the extent of a television station's 
coverage area. Grade B service areas, or contours, are still used for 
this purpose and predict that the best 50% of locations along the outer 
edge of a contour should get an acceptable television picture at least 
90% of the time. When a particular location receives a signal of Grade 
B intensity 50% of the time, it is, in fact, receiving a signal strong 
enough to provide an acceptable television picture 90% of the time. The 
use of the Grade B construct for determining whether an individual 
household is unserved under the SHVA was not at issue when the standard 
was created, although it is the primary issue in this rulemaking and 
related lawsuits.

The PrimeTime 24 Lawsuits

    16. The most far-reaching lawsuit between satellite carriers and 
broadcasters over the unserved households definition is in the United 
States District Court for the Southern District of Florida. In that 
litigation, CBS, Inc. et al. v. PrimeTime 24 Joint Venture (9 F.Supp.2d 
1333 (S.D. FL., May 13, 1998)), the plaintiff television networks (CBS 
and Fox) and several affiliates brought a copyright infringement action 
against PrimeTime 24, a satellite carrier, for retransmitting distant 
network programming to satellite dish owners in violation of the SHVA. 
The plaintiffs alleged that PrimeTime 24 distributed the signals of 
distant network-affiliated television broadcast stations by satellite 
to subscribers that were not ``unserved households'' within the meaning 
of the SHVA.
    17. Finding that PrimeTime 24 willfully violated the SHVA, the 
court issued a preliminary and, later, a permanent injunction ordering 
PrimeTime 24 not to deliver CBS or Fox television network programming 
to any customer that does not live in an unserved household. The court 
concluded that ``the great majority'' of

[[Page 7116]]

PrimeTime 24's subscribers are capable of receiving at least a signal 
of Grade B intensity using a conventional outdoor rooftop antenna. 
According to the court, PrimeTime 24 has ``simply ignored'' the 
objective Grade B signal standard in signing up ``unserved'' customers 
and had failed to meet its statutory burden of proving that its 
subscribers were eligible for network service via satellite.
    18. The court outlined methods for predicting and measuring signal 
intensity for identifying unserved households and required PrimeTime 24 
to use them. Specifically, PrimeTime 24 was enjoined from providing CBS 
or Fox network programming ``to any customer within an area shown on 
Longley-Rice propagation maps, created using Longley-Rice Version 1.2.2 
in the manner specified by the Federal Communications Commission 
(``FCC'') in OET Bulletin No. 69, as receiving a signal of at least 
grade B intensity of a CBS or Fox primary network station, without 
first either (i) obtaining the written consent of the affected 
station(s) * * * or (ii) providing the affected station(s) with copies 
of signal intensity tests showing that the household cannot receive an 
over-the-air signal of grade B intensity as defined by the FCC from any 
station of the relevant network.'' (See CBS et al. v. Primetime 24, 
Permanent Injunction, slip op. at 2.) The court ruled that the signal 
intensity test requires at least 15 days advance notice to each 
affected station and outlined a specific procedure that the tester must 
follow at each household within a station's area, as predicted by the 
Longley-Rice map. The court also imposed the SHVA's ``loser pays'' 
regime on the testing procedure, whereby the loser to a challenge of a 
subscriber's eligibility pays the costs of the test.
    19. The preliminary injunction is scheduled to take effect on 
February 28, 1999, and the permanent injunction is scheduled for April 
30, 1999. The preliminary injunction could result in the termination of 
network signals to the estimated 700,000 to one million subscribers 
nationwide who subscribed to PrimeTime 24 after the networks filed 
their lawsuit on March 11, 1997. The permanent injunction, which 
applies to the PrimeTime 24 customers who subscribed before March 11, 
1997, could affect an additional 1.5 million subscribers nationwide. 
The total number of PrimeTime 24 subscribers affected could therefore 
reach 2.2-2.5 million.
    20. In a similar lawsuit, a Raleigh, North Carolina, federal 
district court ruled against PrimeTime 24 and in favor of a local ABC 
affiliate (ABC, Inc. v. PrimeTime 24, 17 F.Supp.2d 467 (M.D. N.C., July 
16, 1998)). The court issued a permanent injunction on August 19, 1998 
that applies to all subscribers living within the affiliate's predicted 
Grade B contour of the affiliate's transmitting tower. The court found 
that the SHVA defines unserved households and Grade B using objective 
standards, and stated, ``PrimeTime's screening procedures have 
systematically substituted a subjective inquiry into the quality of the 
picture on a potential subscriber's television set for any signal 
strength showing. PrimeTime has ignored or turned a blind eye to the 
necessity of objective signal strength testing and thus willfully or 
repeatedly provides network programming to subscribers under SHVA.'' 
(See ABC, Inc. v. PrimeTime 24, 1998 WL 544297, *2.) The court found a 
``pattern and practice of willful or repeated copyright infringement'' 
and therefore enjoined transmission within the ``locality or region'' 
as is provided for in the enforcement provisions of the statute. 
PrimeTime 24 has provided network services to as many as 35,000 
households in the ABC affiliate's Raleigh/Durham market. At the time of 
the court's decision, PrimeTime 24 continued to serve more than 9,000 
subscribers within the affiliate's Grade B contour.
    21. Several other lawsuits have been filed by both broadcasters and 
satellite carriers. In Amarillo, Texas, an NBC affiliate has sued 
PrimeTime 24 in federal district court in a case that still awaits 
judgment. In Denver, Colorado, EchoStar filed suit against CBS, Fox, 
NBC, and ABC on October 19, 1998 in federal district court. EchoStar 
has asked the court to find that the Commission has never endorsed a 
particular model for predicting or measuring Grade B intensity for the 
purposes of the SHVA. Echostar wants the court to declare that a 
viewer's own opinion of the quality of his or her signal is adequate 
for determining whether that home is unserved under the SHVA, and asks 
the court to endorse a predictive model for identifying served 
households such that 95% of households receive a Grade B signal 95% of 
the time with a 50% degree of confidence. The networks followed 
EchoStar's action by countersuing in Miami. No decisions have been 
issued in either EchoStar case.

The NRTC and EchoStar Petitions

    22. In its petition for rulemaking, the NRTC, a distributor of 
DirecTV DBS service, has asked the Commission to adopt, exclusively for 
purposes of interpreting the SHVA, a new definition of ``unserved'' 
that includes all households located outside a Grade B contour 
encompassing a geographic area in which 100 percent of the population 
receives over-the-air coverage by network affiliates 100 percent of the 
time using readily available, affordable receiving equipment. EchoStar, 
which is a provider of DBS service, urges the Commission in its 
petition to adopt a prediction model to locate unserved households. 
EchoStar endorses a model that predicts an area where 99 percent of 
households receive a Grade B signal 99 percent of the time with a 99 
percent confidence level. EchoStar also urges adoption of a methodology 
for measuring signal strength that more closely reflects the signal 
that a viewer's television set actually receives. It argues that a 
number of flaws exist in the current measurement and prediction 
processes when they are used for purposes of the SHVA. After receiving 
comment on these Petitions, the Commission issued the NPRM in this 


    23. The SHVA's concern with adequate television signal intensity at 
individual households, rather than across broad areas, is central to 
this rulemaking. This important distinction leads us to consider 
measurement and prediction methodologies that have a different purpose 
from the methodologies for determining Grade B service areas. The 
definition of an unserved household as ``a household that cannot 
receive * * * a signal of Grade B intensity'' most logically refers to 
television signal reception at an individual household and reflects a 
concern for individual viewers that is not at issue in most 
applications of the Grade B standard. Moreover, when Congress created 
the limited compulsory license, it clearly intended to help individual 
consumers who are unable to receive an acceptable, over-the-air 
television picture. In a report accompanying the 1994 reauthorization 
of the SHVA, the House stated that ``households that cannot receive 
over-the-air broadcasts or cable can be supplied with television 
programming via home satellite dishes.'' The Senate, in its 1994 
report, stated that the restriction on satellite delivery of network 
signals refers to ``subscribers [who] are unable to receive the signal 
of a particular network.'' And when originally adopted in 1988, the 
House stated, ``The distribution of network signals is restricted to 
unserved households; that is, those that are unable to receive an 
adequate over-the-air signal.''

[[Page 7117]]

The Commission's Role and Responsibility Under the SHVA

    24. The NPRM raised issues regarding the scope of the Commission's 
authority to conduct this rulemaking and involve itself in matters 
related to the SHVA. The comments reflect a wide range of opinion 
regarding the Commission's authority to act.
    25. Questions concerning the Commission's role and responsibility 
with respect to this matter arise on two levels. Several commenters 
assert the Commission should elaborate on the objectives of the SHVA or 
change its administration to help satellite carriers become more 
competitive with cable television systems. While increased competition 
among service providers is an important and longstanding goal of the 
Commission, we cannot make it a primary goal of this proceeding. The 
SHVA is a copyright law designed to balance owners' and users' rights. 
It is not a communications law with an express purpose of increasing 
competition among MVPDs. The SHVA is primarily administered by the 
Copyright Office and enforced by the federal courts, and contains the 
basic Congressional decisions regarding how and to whom satellite 
distributed network broadcast signals are made available. We may not 
change the policy behind the law, nor may we go beyond two terms 
Congress used in defining ``unserved households.'' First, Congress 
explicitly incorporated the Grade B standard into the definition, so 
only Congress may consider the use of another measure. Second, the law 
demands that a consumer be unable to receive a television signal 
``using a conventional outdoor rooftop antenna'' before qualifying as 
unserved. We may not change that requirement, nor may consumers ignore 
    26. In addition, there are questions about the Commission's 
specific authority to interpret and amend the Grade B standard, whether 
for all purposes or only for the SHVA. We continue to believe, as the 
NPRM preliminarily concluded, that the Commission has the authority to 
change the definition of a signal of Grade B intensity as a general 
    27. We conclude that Congress did not freeze the Grade B rules in 
place when it enacted the SHVA. Congress gave the Commission a 
continuing role when it defined ``unserved households'' as those that 
cannot receive ``an over-the-air signal of Grade B intensity (as 
defined by the Commission).'' When it incorporated Grade B into the 
definition of ``unserved households,'' Congress did not incorporate 
specific values, such as the dBu levels the Commission uses in section 
73.683. Moreover, nothing in the SHVA itself or its legislative history 
indicates that Congress intended to freeze the value of Grade B when it 
passed the law in 1988 or when it renewed it in 1994. When Congress has 
chosen to freeze Commission regulations for other purposes, it has 
explicitly done so. For example, Congress expressly referenced rules 
``in effect on April 15, 1976'' when it froze in place regulations 
relating to copyright compulsory licensing. No such reference exists 
here. Case law also supports the proposition that the meaning of 
``signal of Grade B intensity'' was not frozen when the SHVA was 
enacted. For example, the Supreme Court has held that ``[i]t is of 
course not true that whenever Congress enacts legislation using a word 
that has a given administrative interpretation it means to freeze that 
interpretation in place.'' (Lukhard v. Reed, 481 U.S. 368, 379 (1989)). 
The Supreme Court reasoned that if legislation so constrained an 
agency's ability to conduct rulemaking under its enabling legislation, 
then ``the result would be to read into the grant of express 
administrative powers an implied condition that they were not to be 
exercised unless, in effect, the Congress had consented. We do not 
believe that such impairment of the administrative process is 
consistent with the statutory scheme which the Congress has designed.'' 
(Helvering v. Wilshire, 308 U.S. 90, 101 (1939).)
    28. Although we conclude that the Commission has the authority to 
modify Grade B intensity values for all purposes, we believe that it is 
significant that Congress tied the SHVA compulsory license to the 
Commission's Grade B standard, which was and is used for a multiplicity 
of purposes. We think Congress' use of the widely used Grade B standard 
in the SHVA indicates that we should not adopt a separate Grade B 
intensity standard for purposes of the SHVA alone. Moreover, additional 
considerations also lead us to conclude that it would be inadvisable to 
adopt a separate Grade B standard for SHVA purposes. As discussed 
below, a second set of signal strength values, also called ``Grade B 
signal intensity,'' is likely to create confusion for the broadcast 
industry and others affected by Commission regulations.

Defining a Signal of Grade B Intensity

    29. The SHVA uses an objective standard to determine whether a 
household is ``unserved'' and thus permitted to receive broadcast 
network signals via satellite. SHVA's criterion is whether the 
household can receive ``through the use of a conventional outdoor 
rooftop receiving antenna, an over-the-air signal [of a particular 
network station] of grade B intensity (as defined by the Federal 
Communications Commission).'' By incorporating the objective Grade B 
signal intensity standard into the SHVA, Congress declined to account 
for viewers' individual subjective opinions about the quality of their 
television reception, as well as the adequacy of the household's 
existing antenna. Use of the Grade B signal intensity standard in the 
SHVA both invites and limits the Commission's involvement with this 
statute. The reference to Grade B signal intensity ``as defined by the 
Federal Communications Commission'' brings the Commission's rules and 
our interpretations of our rules into play. But, by using Grade B 
signal intensity to define unserved, the SHVA also limits what the 
Commission can do to address any drawbacks to this standard. The Grade 
B signal intensity values were used in the SHVA as an available 
objective benchmark for determining whether a household is ``served.'' 
While those values may have proven difficult to apply in practice as 
the sole standard for determining whether a household is unserved, this 
is the standard in the statute and must be employed here when 
distinguishing served and unserved households.
    30. The Commission's rules define values for Grade B signal 
intensity in connection with authorizing television stations and the 
stations' service areas or ``contours.'' It was not, however, created 
for evaluating picture quality in individual households. Rather, the 
system was developed to address the very different and difficult 
problem of creating station service areas and to determine the proper 
allocation of television channels in the early days of television. (See 
Television Broadcast Service, Third Notice of Further Proposed Rule 
Making, 16 FR 3072 (1951) and Sixth Report and Order, 41 FCC 148 
(1952).) The Commission created two ``grades of service.'' The 
specifications for ``Grade A'' and ``Grade B'' service were established 
so that ``a quality acceptable to the median observer is expected to be 
available for at least 90 percent of the time at the best 70 percent of 
receiver locations at the outer limits of [Grade A] service. In the 
case of Grade B service the figures are 90 percent of the time and 50 
percent of the locations.'' The service areas were established to 
effectuate the Commission's stated twofold purpose ``to provide 
television service, as far as possible, to all people of the United

[[Page 7118]]

States and to provide a fair, efficient and equitable distribution of 
television broadcast stations to the several states and communities.'' 
The signal intensity values (also referred to as ``field strengths'') 
were determined based on certain assumptions, which differ for the 
Grade A service area, which is urban and suburban, and the Grade B 
service area, which is rural. For example, the type of receiving 
antenna assumed for Grade A service is smaller than the receiving 
antenna assumed for Grade B, and the terrain assumed for Grade A 
differs from that assumed for B.
    31. The ``acceptable quality'' contemplated in these early 
Commission Orders was based on quality levels developed by the 
Television Allocation Study Organization (``TASO''). TASO used data 
from actual viewers. These viewers were shown television pictures and 
were asked to rate them on a scale from 1 (excellent) to 6 (unusable). 
Level 3, on which the Grade B service level was based, was defined as 
``(Passable)--The picture is of acceptable quality. Interference is not 
objectionable.'' Based on the results of viewer ratings, a specific 
signal (or carrier) to noise ratio at the television receiver was found 
to be associated with the grade 3 level--that is, a level of signal 
that the median observer identified as acceptable. In association with 
this level of acceptable quality, and with the primary goal of creating 
service areas with minimal interference and maximum coverage, the 
Commission developed assumptions, generally described as planning 
factors, regarding the environment in which viewing would take place. 
Assumptions were made as to the quality of the television receiver used 
focusing on the amount of electrical noise created in the tuner, the 
signal losses that take place in the wire connection from the receiver 
to the antenna, the nature (gain, directionality, and height) of the 
antenna to be used, and the amount of electrical noise in the 
environment that the signal would have to overcome to be viewable. 
Because radio signal propagation varies over time, certain statistical 
assumptions were built into the definitions used, including the 
assumption that the signal in question would be of acceptable quality 
to the median observer at least 90 percent of the time.
    32. The comments submitted by the satellite industry and consumers 
urge vigorously that for many people the existing Grade B signal 
intensity values do not equate to truly acceptable picture quality. The 
first attack on the existing standards has to do with the possibility 
that viewers' expectations as to signal quality have increased over 
time. If this were the case, a stronger signal would be needed to 
produce a picture that would now be regarded as acceptable. Although 
there is some speculation in the comments that viewer expectations have 
indeed changed, no current study documents this or replicates the 
initial TASO study that correlated viewer judgments of television 
picture quality with specific signal levels. In response to contentions 
that the current values for Grade B signal intensity are erroneous 
because they were based on viewer evaluations of monochrome images, we 
note that the planning factors established in April 1952 (Doc. 8736) 
were revisited in 1959 by TASO, which was established in response to a 
Commission request to study the technical principles which should be 
applied in television channel allocations. TASO studied these issues 
for two years, used 21 inch monochrome and color television sets, and 
essentially confirmed the same carrier to noise ratio as was 
established earlier. Research on subjective evaluations of television 
pictures may show that viewers have raised their level of expected 
performance, but the results of any subjective testing are dependent on 
the testing methodology and conditions. Many of the recent tests were 
conducted by cable television sponsors using viewers who may have 
expected to pay for these better pictures.
    33. In addition to suggesting that viewer expectations are 
different, it is also argued that radio frequency noise in outlying 
areas has increased so that rural areas are today more akin to urban 
areas of the 1950's, that the typical household now has multiple 
television receivers necessitating antenna lead splitters that increase 
line loss, and that antenna gain figures (particularly in the UHF 
frequencies) should be re-evaluated. We believe that the technology of 
receivers and antennas has kept pace with changing consumer 
expectations and with increased noise. Thus, it is necessary to 
consider the totality of changes that have taken place over the past 
fifty years. In the 1950s low cost electronic technology at television 
frequencies was hard to find. Therefore, the planning factors had to be 
set low enough to ensure that television sets could be affordable by 
the public. The noise figure used in the planning factors serves as a 
good example. The noise figure is a measure of the amount of electronic 
noise produced by the components in the television. This must be added 
to the signal budget just like man-made noise and must be overcome to 
produce a passable picture. In the 1950s, the television tuner 
technology consisted of low cost noisy tubes and attached components. 
Today, this technology has progressed to modern solid state components 
that produce lower set noise. Thus, although many developments have 
taken place since the standards were first adopted, it is not clear 
that increases in the values involved are warranted.
    34. We conclude that the record in this proceeding provides an 
inadequate basis for changing the Grade B signal intensity values 
either generally or for purposes of the SHVA specifically. First, the 
evidence in the record suggests that some of the environmental and 
technical changes that have taken place trend in opposite directions 
and tend to cancel each other out. The Commission has examined the 
adequacy of the Grade B standard on several occasions since it was 
adopted in the 1950s, and in each case has decided not to make changes.
    35. Second, we do not believe that we have the authority to create 
a special Grade B solely for the purpose of the SHVA, nor do we believe 
this is an advisable approach to take. Establishing another set of 
values, also called Grade B, is likely to create confusion for the 
broadcast industry. It would risk harm to the network/affiliate 
relationship by creating an implication that another, different Grade B 
definition might be more suitable for other situations that are not 
contemplated in this proceeding. In addition, raising the values for 
Grade B such that they would equal or exceed the Grade A values may 
require reevaluation of the Grade A values, as well. The significant 
and widespread ramifications of changing these definitions demand that 
we have a more complete and conclusive record, and more time to 
evaluate the record, than we have in this rulemaking.
    36. Finally, some commenters raise concerns regarding the ability 
of the existing standard to address interference and other signal 
impairments. Although we are not changing the Grade B values, it is 
important to note that as a matter of general policy we agree that the 
Grade B standard incorporated by Congress into the SHVA implicitly 
includes within the definition a signal that is, in fact, viewable and 
not one so impaired by interference as to be degraded below the 
``acceptable to the median'' observer level. While such problems can be 
identified by qualified engineering personnel through actual 
observations, this is not a matter, as satellite commenters in this 
proceeding acknowledge, that can be resolved by simply adjusting the 
dBu levels involved. No readily usable mechanism

[[Page 7119]]

for addressing this matter through changed definitions has been 
identified in the comments.

Measuring Television Signal Intensity at Individual Locations

    37. For the SHVA to function more effectively, a relatively low 
cost, accurate, and reproducible methodology for measuring the presence 
of a Grade B intensity signal at an individual household is especially 
important. Individual testing is the key mechanism under the SHVA for 
proving that a specific household is unserved and, therefore, eligible 
to receive satellite delivery of network affiliated television 
stations. The Commission's rules include a method for measuring signal 
intensity for describing a station's service area or for propagation 
analysis, but they have not included a method for measuring signal 
intensity at a discrete location, such as an individual household. The 
method created in this Order and included in the Commission's rules 
balances accuracy, affordability, and simplicity.
    38. The Commission's current signal measurement method, requiring a 
so-called 100-foot mobile run, is inadequate for the purposes of the 
SHVA. The method typically involves a truck with a 30-foot antenna that 
takes continuous measurements as it travels a distance of 100 feet (47 
CFR 73.686(b)(2)). Under Commission rules, the antenna must be rotated 
to the best receiving position, and engineers must record factors that 
might affect signal intensity, such as topography, height and type of 
vegetation, buildings, obstacles, and weather conditions. If overhead 
obstacles prevent a 100-foot run, a cluster of five measurements may be 
taken at locations within 200 feet of each other. Testing can cost 
several hundred dollars each time it is performed--an expensive 
proposition for a satellite company or a consumer who wants to prove 
that a household is unserved by over-the-air signals. When multiplied 
over hundreds of households in a station's service area, the cost may 
become prohibitive and may preclude many truly unserved consumers from 
receiving broadcast network service. Mitigating the costs of the 
procedure, without sacrificing the integrity of the testing results, is 
an important goal of the new signal measurement methodology.
    39. In addition to the difficulties inherent in the existing 
measurement test, many of its assumptions do not hold in individual 
situations. The purpose of the procedure currently specified in the 
rules is not to determine the receivability of a signal at a single 
spot, but to determine, through measurements at a series of grid 
intersections over a community, the nature of service to the community. 
Thus, the current procedure has limited use in measuring signal 
intensity at individual locations. For example, many homes do not have 
antennas 30 feet above the ground, especially if they are one-story 
homes. The definition of unserved household only describes reception 
over a conventional outdoor rooftop receiving antenna, so requiring 
measurements on a 30-foot antenna may not reflect what is 
``conventional'' at all locations around the country. Finally, 
requiring tests and a 100-foot mobile run ignores the fact that homes 
are stationary and that reception may vary considerably over a mobile 
run on a nearby street.
    40. Because the SHVA is concerned with adequate television signals 
at individual households, it is entirely proper that the Commission, as 
the originator of the Grade B standard, develop an objective way to 
measure whether or not that standard exists at a particular location. 
In short, the methodology requires a tester to make at least five 
measurements in a cluster as close as possible to the location being 
tested. The median value of the measurements will be the signal 
intensity at the location. In deciding on which measurement methodology 
to adopt, we examined the following factors, discussed in detail 
below--the type of testing antenna and equipment, where and how many 
measurements should be taken, the effect of time and weather on signal 
strength, the height the testing antenna should be raised, the 
orientation of the testing antenna, and what information should be 
recorded. (See rule section, 47 CFR 73.686(d).)
    41. Regarding the preparation for measurements, we considered the 
kind of testing antenna that should be used and conclude that a tuned 
half-wave dipole is the best choice. (A dipole is a wire or telescoping 
metallic antenna consisting of two straight collinear conductors of 
equal length separated by a small gap where the transmission line is 
attached. The ``rabbit ears'' on a television set are a type of 
dipole.) The dipole is widely available, inexpensive, and simple to 
use. In situations where definite readings are required, it has 
advantages over gain antennas that are difficult to characterize 
(calibrate) over a wide range of frequencies. Although dipole antennas 
are susceptible to interference from signals other than the one being 
measured, the cluster measurements that we require will mitigate those 
    42. We considered where the signal measurements should be taken--on 
the roof, in the yard, as close as possible to the house, in the 
driveway, or at the nearest public road. We conclude that the 
measurements should be taken in a cluster as close as possible to a 
reasonable and likely spot for the receiving antenna. In doing so, we 
do not require testers to climb up to the roof or trespass on property 
where they are denied permission to enter. Although we recognize, as 
the satellite carriers argue, that measurements taken at the television 
receiver would most accurately reflect the picture that a consumer 
watches, such an approach would be inconsistent with the intent of the 
SHVA, which requires the use of an outdoor rooftop antenna. 
Measurements at the television receiver are inappropriate for 
determining the ambient signal intensity available at a household's 
    43. We considered how many measurements are necessary and conclude 
that at least five measurements must be taken, each at a pre-determined 
spot. Multiple readings are necessary because a single reading may give 
misleading results. Reflections from surrounding objects could cause a 
reading to be either higher or lower than normal. Multiple readings 
will tend to mitigate these effects. The spots must be chosen before 
measurements are taken to prevent gaming of the results. They must be a 
minimum distance of three meters from each other, an appropriate 
spacing to enable reasonably accurate results. To help ensure the 
objectivity of the tests, we suggest that, if possible, the first 
testing point should be chosen as the center point of an imaginary 
square whose corners are the four other spots. The tester shall 
calculate and report the median of the measurements (in units of dBu) 
as the measurement results. For purposes of the SHVA, this median 
measurement will determine whether a household is unserved. If signals 
of more than one transmitter (e.g., more than one television station) 
are being tested, the tester shall use the same spots for all the 
    44. Regarding measurement procedure, we believe that a one-time 
measurement is sufficient to determine the signal intensity at 
individual locations. Satellite carriers and broadcasters appear to 
agree with this conclusion. We recognize that several measurements over 
time may determine even more accurately the actual signal intensity at 
individual locations, but we have sought to create a testing 
methodology that is both accurate, practical, and relatively 

[[Page 7120]]

    45. We require the tester to measure the field strength of the 
visual carrier with a calibrated instrument with a bandwidth of at 
least 450 kHz, but no greater than one megahertz. The tester must 
perform an on-site calibration of the instrument in accordance with the 
manufacturer's specifications. The instrument must accurately indicate 
the peak amplitude of the synchronizing signal. The tester must use a 
shielded transmission line between the testing antenna and the field 
strength meter. The tester must match the antenna impedance to the 
transmission line, and, if using an unbalanced line, employ a suitable 
balun. Finally, the tester must account for the transmission line loss 
for each frequency being measured.
    46. We considered the effect that time and weather have on signal 
strength. Generally, neither time nor steady-state conditions of 
weather have an appreciable effect on broadcast television frequencies. 
However, in inclement weather or when major weather fronts are moving 
through the measurement area, some noticeable consequence may result. 
The tester should not take measurements at such times.
    47. We considered the effect that signal interference has on the 
strength of the primary signal being measured. We have not found an 
easily reproducible, practical or cost-effective objective process for 
measuring interference that impairs reception. Adding expense and 
complication to the testing methodology would be inconsistent with our 
goal of creating a practical and economical measurement method. While 
we recognize that interference can make signals unviewable at a given 
location, and thus ideally issues of this nature should be reviewed as 
part of the standard measurement process, the only current way to 
include these factors is for all interested parties to undertake a 
common subjective evaluation at the test site and make a common 
judgment on the issue. In the absence of a common subjective judgment, 
it remains necessary to rely on the standard process that does not take 
this factor into account. Because common testing cannot be required and 
because it would add expense to the testing procedure, we believe it 
would be highly desirable for the parties to develop procedures to 
address these concerns through waivers or impartial testing personnel. 
This is especially desirable in those situations where interference is 
predicted or expected to exist. As discussed below, because all sides 
acknowledge that interference affects picture quality and because the 
Longley-Rice prediction model is capable of considering interference in 
its predictions, we include interference in the version of Longley-Rice 
that we endorse in this proceeding. In situations where interference is 
predicted, it is not illogical to give some precedence to the 
prediction involved since interference can be reliably predicted and 
should be confirmable by on-site observation, even if not recordable 
using the standard test procedure. Moreover, where local broadcasters 
are aware of interference, we expect they will be willing to 
acknowledge its effects. We believe that the intent of the SHVA will be 
better realized if parties consider interference when classifying 
households as served or unserved, and we encourage the engineering 
community to focus on this issue to improve objective measurement 
    48. We considered the height of a ``conventional outdoor rooftop 
antenna'' so that the tester would know how high to raise the testing 
antenna. There is evidence that signal intensity varies at different 
heights above the ground, so the height of the testing antenna could 
affect whether a household is deemed unserved. Because the SHVA relates 
to actual ambient signal intensity at individual households, we believe 
that the height of the individual home is significant and, therefore, 
relevant when dictating the height of the testing antenna. In the 
interest of simplicity and consistency, we do not require the tester to 
raise the antenna to 5 feet above the height of the roof, which would 
result in measurements taken at an endless variety of heights and would 
increase dramatically the complexity of the testing and predictive 
models. We also decline to require that the measurement be taken at 30 
feet in all circumstances, primarily because many American homes are 
one-story households that do not, and would not, erect a 30-foot 
antenna. We conclude that the tester should raise the testing antenna 
20 feet (6.1 meters) above the ground for one-story buildings and 30 
feet (9.1 meters) above the ground for buildings taller than one-story. 
This accounts for most households in the country, while maintaining an 
easy-to-administer standard. For example, testers will not be required 
to measure the height of each individual household and they will not 
have to raise an unwieldy testing antenna that is higher than 30 feet. 
The 20 foot/30 foot rule is also consistent with at least one agreement 
between the broadcasters and satellite carriers regarding measuring 
methodology. We recognize that many households are part of multiple 
dwelling units (MDUs) that present special problems. We believe that 
where households have access to a master antenna on the MDU's roof, the 
test should be made there, if possible. If the MDU has no master 
antenna, then the test should be made at the household (outside if 
possible, on a balcony or patio) where the consumer might place a 
conventional antenna. In some instances, particularly in MDUs taller 
than three stories, the signal strength may be adequate inside the 
unit, as with ``rabbit ears'' on the television itself. If the signal 
intensity is stronger inside the unit, in these cases, the measurement 
should be taken inside, near the television and using the prescribed 
testing antenna. We note that MDU residents may require specialized 
attention due to the differences inherent in large or tall multi-unit 
buildings. The rulemaking record is largely directed to issues 
affecting individual homes and does not contain sufficient detail on 
the MDU issue to address every circumstance here.
    49. We considered how the testing antenna should be oriented. The 
maximum gain of the testing antenna (over an isotropic antenna) should 
face the strongest signal coming from the transmitter whose signal is 
being tested. If more than one station's signal is being measured, the 
testing antenna should be oriented separately for each station. This 
orientation is consistent with good engineering practice, with the 
technique required by the Commission's signal measurement rules, and 
with the PrimeStar/Netlink Agreement on determining eligible 
households. It is also consistent with the Copyright Act, which defines 
an unserved household in relation to an individual television station 
rather than to all network affiliates in a market. Section 119(d)(10) 
defines unserved household ``with respect to a particular television 
network'' and states that such a household must be unable to receive 
the signal of ``a primary network station affiliated with that 
network.'' Based on this distinction, we believe that signal testers 
should focus on individual stations. Because one of the primary 
purposes of this Order is to provide a practical and reliable 
measurement methodology, we include in the testing procedure the proper 
orientation, which is essential to ensure the validity and integrity of 
the signal intensity test.
    50. Finally, we considered how to ensure the integrity of the 
signal tests simply and with as little burden as possible. The tester 
shall make and maintain a written record of the measurements that 
includes several items--(i) a list of calibrated equipment

[[Page 7121]]

used in the field strength survey, which for each instrument, specifies 
the manufacturer, type, serial number and rated accuracy, and the date 
of the most recent calibration by the manufacturer or by a laboratory; 
(ii) a detailed description of the calibration of the measuring 
equipment, including field strength meters, measuring antenna, and 
connecting cable; (iii) for each spot at the measuring site, all 
factors which may affect the recorded field, such as topography, height 
and types of vegetation, buildings, obstacles, weather, and other local 
features; (iv) a description of where the cluster measurements were 
made; (v) time and date of the measurements and signature of the person 
making the measurements; (vi) for each channel being measured, a list 
of the measured value of field strength (in units of dBu and after 
adjustment for line loss and antenna factor) of the five readings made 
during the cluster measurement process, with the median value 
highlighted. We note that slight, unintentional departures from these 
written procedures will not invalidate a test if there is no basis to 
believe they affected the outcome.

Predicting Television Signal Intensity at Individual Locations

    51. Although the SHVA appears to require actual signal measurements 
when determining whether households are unserved, broadcasters and 
satellite carriers often use a predictive model to avoid the costs and 
difficulties associated with such on-site measurements. However, they 
do not always agree on which model is most appropriate. Even when 
parties use the same model, they often disagree on the factors that are 
considered in that model. For example, different predictive models may 
or may not account for the effects on signal strength of receiving 
antenna height, vegetation, ground clutter, buildings, signal 
interference, or multipathing. Additionally, predictive models may 
account differently for variability in signal strength over time and 
location, and may predict signal strength with varying levels of 
confidence. Also, values for these parameters may be varied within some 
predictive models.

Usefulness of Predictive Models

    52. In the NPRM, we asked whether we could mandate a model for SHVA 
purposes or merely endorse one. We conclude that predictive models can 
be effective and helpful proxies for individual household measurements 
and that we have the authority to develop and endorse a model for 
making predictions of signal strength at individual locations. The 
Commission has developed and used predictive models for determining 
signal intensity in other contexts (e.g., determination of stations' 
DTV service areas). Two prominent examples are the newer Longley-Rice 
models and the procedure set forth in Section 73.684 of our Rules for 
determining traditional Grade B contours using the radio propagation 
curves for broadcast television set forth in Section 73.699. We believe 
our position as the originator of the Grade B criterion qualifies us to 
determine the effectiveness and accuracy of predictive models that 
relate to it.
    53. The difference in taking actual measurements at individual 
households and using predictive models is significant, because 
measurement requires time, money, and other resources that often 
outweigh the benefits. For example, it may cost more for a satellite 
company to take a measurement than it can recover through subscriber 
and advertising fees. To avoid these costs, satellite providers may 
have refused or terminated service to consumers who are actually 
unserved. Additionally, satellite providers, broadcasters, and 
consumers have often turned to predictive models that erroneously 
permit some served households to receive satellite network service, or, 
conversely, prevent some unserved households from being eligible to 
receive network stations via satellite. When truly unserved households 
are deemed ineligible for broadcast network service via satellite, 
consumers are hurt and the SHVA's intent is thwarted. Likewise, when 
served households are deemed eligible for satellite-delivered broadcast 
network service, network affiliates are harmed and the SHVA's intent is 
also thwarted. We believe the Commission's endorsement of a prediction 
model will address some of the problems that consumers, as well as the 
broadcast and satellite industries, encounter when following the SHVA. 
We expect our endorsement to reduce conflicts regarding which model 
satisfactorily predicts a household's true status as served or 
unserved, and we hope that a single model makes it easy for consumers 
to determine their eligibility for satellite-delivered broadcast 
network service at the time they subscribe to a DTH satellite service 
(at the point of sale).
    54. We recognize that we speak only as the expert agency on the 
Grade B construct, not as the primary enforcer of the SHVA. That role 
belongs to the courts. We also acknowledge that we cannot change 
satellite carriers' burden under the SHVA of proving that a household 
is unserved, and use of the predictive model we endorse is 
discretionary with the parties. While our predictive model need not 
replace actual measurement, it could serve as a presumption of service 
or lack of service for purposes of the SHVA. A presumption should make 
administration of the unserved household rule easier and more cost-
effective for both consumers and the industries. Broadcasters and 
satellite providers should be able to rely on a Commission-endorsed 
model when deciding whether individual consumers are presumed to be 
eligible to receive satellite-delivered network signals. Moreover, we 
recommend that courts accept the model's predictions as sufficient to 
show that a satellite service provider has carried its statutory burden 
of showing that a household is unserved. We believe that such an 
approach is consistent with the Miami federal court's use of one 
variation of the Commission's Longley-Rice predictive methodology in 
its injunctions. (CBS v. PrimeTime 24, Final Ruling, slip op. at 49 and 
Permanent Injunction, slip op., at 2.) Finally, we recommend that the 
rebuttable presumptions created by our model will be combined with in-
court and out-of-court ``loser pays'' mechanisms to help the SHVA 
operate more smoothly. Such a loser pays scheme would require the loser 
of any challenge to a predictive model's presumption to pay the costs 
of an on-site test following the challenge.

Inadequacy of the Traditional Grade B Contour Methodology

    55. In the NPRM, we sought comment on the application of existing 
predictive models in the SHVA context, including our ``traditional'' 
Grade B contour methodology and the Longley-Rice predictive model. We 
tentatively concluded that the Commission's traditional predictive 
methodology for determining a Grade B contour is inappropriate for 
predicting signal strength at individual locations. Our rules state 
that this methodology is for three purposes only: (1) estimation of 
coverage resulting from the selection of a particular transmitter site, 
(2) problems of coverage related to 47 CFR 73.3555 (ownership 
restrictions), and (3) determination of compliance with section 
73.685(a) concerning minimum field strength over the principal 
community. The traditional methodology predicts signal strength on the 
basis of average terrain elevation along radial lines extending only 
ten miles from a television station's transmitter. The traditional 
methodology does not accurately reflect

[[Page 7122]]

all the topographic differences in a station's transmission area, and 
explicitly does not account for interference from other signals. These 
omissions make it an imperfect methodology for predicting whether an 
individual household can receive an adequate signal.

Longley-Rice Point-to-Point Model for Digital Television

    56. We noted in the NPRM that the Commission recently adopted, in 
the digital television (DTV) proceeding, rules for analyzing TV service 
areas using a point-to-point prediction method based on version 1.2.2 
of the Longley-Rice propagation model. (See 47 CFR 73.622(e) and 
Advanced Television Systems: Sixth Report and Order (``DTV Sixth Report 
and Order''), 12 FCC Rcd 14588, 14672-76.) The Longley-Rice model used 
for analysis of DTV and analog TV service in the DTV proceeding is 
described in ``Longley-Rice Methodology for Evaluating TV Coverage and 
Interference,'' OET Bulletin 69, Federal Communications Commission 
(July 2, 1997) <http://www.fcc.gov/oet/info/documents/bulletins/#69>. 
Longley-Rice is the Commission's designated methodology for determining 
where service is provided by a DTV station. We proposed that this 
variation of Longley-Rice be used to determine Grade B service at 
individual households. The Longley-Rice propagation model is the most 
widely-used private means of predicting the existence of a signal of 
Grade B intensity for SHVA purposes. Although it is similar to the 
traditional method for determining a Grade B contour, Longley-Rice 
improves the traditional model by adjusting the predictions for changes 
in terrain (e.g., hills and valleys between the transmitter and the 
house) along the entire path from the transmitter to the specified 
receive site. Thus, while the Commission's traditional contour method 
often results in smooth concentric circles surrounding a transmission 
tower, the Longley-Rice method produces rougher outlines that more 
precisely depict areas of coverage.

A Predictive Model for Individual Locations

    57. The model we endorse is a version of Longley-Rice 1.2.2 that we 
have adapted for predicting signal strength at individual locations. 
Called ``Individual Location Longley-Rice'' or ``ILLR,'' it is similar 
to the point-to-point predictive model we established for digital 
television (DTV) allocations. We believe ILLR is an accurate, 
practical, and readily available model for determining signal intensity 
at individual locations. ILLR has several characteristics, discussed in 
detail below, which make it unique:
    <bullet> the time variability factor is 50% (when the time 
variability factor for the predicted field strength is 50%, an 
acceptable quality picture should be available 90% of the time) and the 
confidence variability factor is 50%;
    <bullet> the model is run in individual mode;
    <bullet> terrain elevation is considered every 1/10 of a kilometer;
    <bullet> receiving antenna height is assumed to be 20 feet above 
ground for one-story buildings and 30 feet above ground for buildings 
taller than one-story;
    <bullet> land use and land cover (e.g., vegetation and buildings) 
shall be included when an accurate method for doing so is developed;
    <bullet> where error codes appear, they shall be ignored and the 
predicted value accepted or the result shall be tested with an on-site 
    <bullet> locations both within and beyond a station's Grade B 
contour shall be examined.
    58. We believe the ILLR can be used for predicting signal strength 
for purposes of the SHVA as well as for other purposes that require 
information about signal intensity at discrete locations. The model 
would not supplant currently-existing approaches for depicting a field 
strength contour or for describing a station's service area. 
Specifically, the ILLR will not replace the current Commission rules 
for field strength contours (47 CFR 73.683) or prediction of coverage 
for non-SHVA purposes (47 CFR 73.684). In fact, the ILLR should not 
affect a station's Grade B contour or service area, because areas are 
irrelevant when predicting what signals exist at a particular location. 
As both satellite carriers and broadcasters have recognized, a 
predictive model for individual locations might identify unserved 
households that lay within a station's Grade B contour or, likewise, 
might identify served households outside a Grade B contour. 
Importantly, our model should not increase or decrease the number of 
truly unserved households. The ILLR model, like the on-site 
measurement, will consider the signal of either the affiliate station 
or its translator, as appropriate, to determine whether a household is 
receiving adequate signal strength. The number of unserved households 
remains finite under any single definition of Grade B intensity, and we 
do not change that definition here. If a household is unserved in 
reality, the ILLR prediction model will not change that situation. 
Likewise, if a household is currently served, the prediction model will 
not change it to an unserved household. A predictive model of any sort 
simply reflects reality without actually testing or observing it, and 
some are better than others at painting the most lifelike picture. The 
ILLR corrects for the mistakes of less-appropriate and less-accurate 
models by more precisely identifying households as served or unserved.

Time, Location, and Confidence Factors

    59. Predictive models are inherently imperfect because they seek to 
replicate reality without actually measuring or observing it. These 
imperfections can be mitigated through statistical means and by varying 
the ``ingredients,'' or factors, included in any particular model. For 
example, although signals of Grade B intensity are defined as discrete 
values measured in dBu, the intensity of broadcast signals at 
particular locations and at particular times cannot be precisely 
determined, regardless of the predictive method used.
    60. One way to account for these factors is to build them directly 
into signal strength values. The Grade B intensity levels are actually 
median signal strengths--i.e., 50% of locations in a particular area 
should receive a Grade B signal or higher at least 50% of the time. 
However, this does not mean that 50% of the locations will receive an 
acceptable picture only 50% of the time. The Grade B values have a 
built-in time factor so that an acceptable picture is predicted at 
least 90% of the time. For example, a signal strength of 41 dBu equals 
an acceptable picture for channels 2-6. To ensure that a location 
receives such a signal 90% of the time, the Grade B value for those 
channels, 47 dBu, includes an extra time factor of 6 dBu. Thus, 
although a location receiving a Grade B signal of 47 dBu will only get 
that signal 50% of the time, that same location will receive a 41 dBu 
signal 90% of the time.
    61. Time, location, and confidence factors can also be built into 
predictive models. However, it is often unnecessary to build an 
additional factor into a predictive model to get the desired results. 
For instance, the Grade B values already predict the existence of an 
acceptable television picture at least 90% of the time, so the model 
need only predict that a signal of Grade B intensity exists at least 
50% of the time. Use of a higher time factor, such as 90%, would amount 
to unnecessary double-counting. The Longley-Rice model used for DTV 
allocations recognizes this and, therefore, incorporates the 50% time 
factor into its calculations. Both broadcasters and satellite carriers 
agree that this is also appropriate for purposes

[[Page 7123]]

of the SHVA. We therefore see no reason to change the number when 
adapting Longley-Rice to the individual location context.
    62. Although the parties generally agree that the time factor 
should be 50%, they do not agree on the appropriate level for the 
confidence factor. Confidence, in this context, is a way of expressing 
how certain the model is that the predicted signal value is at least 
that high. Importantly, it is not a reflection of how accurate the 
model is. Longley-Rice has generally incorporated a 50% confidence 
factor in its calculations. ``Confidence'' does not mean, as the word 
might imply, that the model is more accurate. We believe that 
increasing the ``confidence'' factor above 50% decreases errors of one 
type and increases errors of another type. For example, if we use a 
confidence factor of 90%, the model will ``search'' for a predicted 
signal value at a particular location in which it has 90% confidence 
that the value would, in reality, be that value or higher. The model 
could predict a particular signal value, say 47 dBu, and be 85% 
confident that the signal would be 47 dBu or higher in reality. Such a 
high level of confidence means it would be very likely that the 
location would get a 47 dBu signal. However, because the model is 
searching for a value in which it has 90% confidence, it would not 
predict 47 dBu and would continue searching. Eventually, the model 
would find a signal value in which it has 90% confidence, say 45 dBu, 
and deliver that as the result. Taking the example one step further, 
consider a ``served'' household under the SHVA to be a household that 
receives a signal of at least 47 dBu (the appropriate value for 
channels 2-6). If the model predicts with 90% confidence that a signal 
of at least 45 dBu exists, the 45 dBu household would be classified as 
``unserved,'' even though it is very likely (85% confidence) that it 
receives a signal of at least 47 dBu. We believe it would be 
inconsistent with the SHVA to classify a household as unserved when a 
model could predict it to be served with such a high degree of 
confidence. Therefore, a confidence variability factor of 90% is 
unsuitable for purposes of the SHVA because it overpredicts the number 
of truly unserved households.
    63. A predictive model that includes truly served households in an 
unserved category, even temporarily, creates several undesired effects. 
First, consumers could be confused and frustrated. If the model 
overpredicts the number of unserved consumers, and those consumers 
subscribe to network service via satellite, they will face 
disappointment when the broadcaster forces termination of the broadcast 
network service. Conversely, if the model underpredicts the number of 
unserved consumers, they would be unjustly deprived of broadcast 
network service via satellite. Second, the SHVA protects network 
affiliates by making their served households off limits to satellite 
delivery of broadcast networks. A 90% confidence factor for served 
households would make many truly served households eligible for 
satellite-delivered network service, contrary to the intent of the 
SHVA. Third, if we endorse a model that underpredicts served 
households, broadcasters would have a great incentive to challenge the 
model's prediction by taking an actual measurement. Satellite carriers 
would pursue testing when models consistently underpredict unserved 
households. Either result would defeat the goal of endorsing a 
predictive methodology upon which all parties can rely.
    64. We have chosen to incorporate a 50% confidence factor in the 
ILLR model because it neither overpredicts nor underpredicts served 
households. A 50% confidence factor does not create a statistical bias 
in favor of either satellite carriers or broadcasters. Rather, it 
provides a median result that does not predictably err in one direction 
or the other. We have sought to endorse a confidence factor that is 
fair to both sides. Importantly, broadcasters have accepted the 50% 
confidence factor in their pleadings and in their endorsement of the 
DTV Longley-Rice model in the Miami court case. Similarly, SBCA's 
engineering experts, Hatfield and Dawson, propose using a 50% 
confidence factor in the TIREM model that they endorse. They explain 
that when the confidence factor is 50%, the model predicts the median 
situation and ``the user has no control over this statistical 

Individual Mode

    65. The ILLR will operate in a so-called ``individual mode,'' 
reflecting an observer's point-of-view at a single location. In the 
ILLR, location variability becomes effectively irrelevant because only 
one location (e.g., a single household) is considered. The individual 
mode merges location variability (the measurable or observable 
differences between dissimilar locations) and so-called situational 
variability (the small, often hidden, differences between similar or 
identical locations) into the statistical confidence factor. One expert 
on the issues, George Hufford, states:

    In the individual mode, situation and location variability are 
combined so that there remain this combined variability and time 
variability. Here, the typical user would be the individual receiver 
of a broadcast station for whom reliability means the time 
availability, and confidence means the combined situation/location 

Compare the ``broadcast mode,'' in which the DTV Longley-Rice model 
operates, but which is inappropriate for the purposes of the SHVA. That 
mode reflects the broadcaster's point-of-view when it is determining a 
service area that includes many locations. The DTV allotment proceeding 
utilized the broadcast mode because it was predicting the service areas 
of the new DTV stations, not the status of individual households as 
served or unserved by analog (NTSC) signals.

Terrain Elevation

    66. Because the model seeks to predict signal intensity at 
individual locations, the model we endorse considers terrain elevation 
every \1/10\ of a kilometer. This distance is as precise as current 
technology allows. It contrasts with the DTV Longley-Rice model that 
considers terrain elevation every kilometer.

Antenna Height

    67. The ILLR model approximates the height of the household whose 
signal is being predicted. Current models presume an antenna height of 
30 feet. The model we endorse, when used for purposes of the SHVA, 
shall incorporate an antenna height of 20 feet for one story buildings 
and 30 feet for buildings taller than one story, including MDUs. This 
requirement is generally consistent with our conclusions about the 
height a tester must raise a testing antenna when making actual, on-
site signal measurements. MDU residents may require specialized 
attention due to their unusual circumstances, which will vary from 
person to person and building to building.

Land Use and Land Cover

    68. Satellite carriers and some other commenters argue that 
vegetation and buildings affect signal intensity. Some broadcasters 
agree that vegetation and buildings affect signal propagation, but 
assert that the Longley-Rice model, as well as the Grade B planning 
factors, already account for these effects.
    69. We conclude that land use and land cover affect signal 
intensity at individual locations and shall be used in the ILLR when an 
appropriate application develops. The United States Geological Survey 
maintains a Global Land Information System (``GLIS'')

[[Page 7124]]

database on land use and land cover indicating features such as 
vegetation and man-made structures. (See <http://edcwww.cr.usgs.gov/
Webglis/glisbin/glismain.pl>.) We believe that this information is both 
credible and useful. We acknowledge that larger buildings are usually 
found in urban areas and Congress expected that the SHVA would 
primarily benefit rural consumers, but the definition of ``unserved'' 
is not explicitly limited to those consumers. The statute does not 
impose a mileage limitation or distinguish between urban and rural 
households. While we expect the model to include land use and land 
cover, we are not aware of a standard means of including such 
information in the ILLR that has been accepted by the technical and 
scientific community. When an appropriate application has been 
developed and accepted, this information will be included in the ILLR. 
We challenge interested parties to develop such an application that 
more accurately reflects the signal intensity at an individual 


    70. The Longley-Rice model as used in the DTV Allotment proceeding 
is capable of predicting interference from nearby television stations. 
We believe that the model we endorse, ILLR, should include signal 
interference so that it will more accurately predict picture quality. 
We acknowledge that interference is not formally included in the 
measurement methodology we have established in this Order, primarily 
because of the difficulties that would be created if we required 
testers to attempt to measure for it. However, all sides have 
acknowledged that interference affects picture quality, and we believe 
that, in contrast to the measurement methodology, interference can be 
reliably included in the predictive model, and so it is included to 
provide more accurate results.

Error Codes

    71. Some satellite carriers have argued strongly for alleviation of 
the problems presented by error codes (KWX=3) that the Longley-Rice 
model sometimes presents after analysis of signal intensity at 
particular locations. Error codes result when the model makes a 
prediction of signal intensity, but essentially rejects the prediction 
for a reason that may or may not be significant. We conclude that a 
party should either accept the prediction by ignoring the error code or 
test the result with an on-site measurement. If the result is accepted 
and is high enough to predict service, the household shall be 
classified as served. If the result is low enough to predict lack of 
service, the household shall be classified as unserved.


    72. Several satellite carriers have asked the Commission to endorse 
the TIREM predictive model instead of Longley-Rice. The TIREM 
methodology, jointly developed by the National Telecommunications and 
Information Agency (NTIA) and the Joint Spectrum Center of the Defense 
Department to test specific paths with complex geometry. We believe 
that TIREM shows promise as a tool for predicting signal intensity at 
individual locations, but we decline to endorse it at this time for 
several reasons. NTIA has confirmed the concerns raised by some 
commenters concerning the public availability of a standardized and 
useful version of TIREM. For example, the NTIA states that the latest 
version of TIREM may not be readily available outside of eligible 
government agencies due to federal export restrictions. These 
impediments to access and use would severely impede TIREM's usefulness 
to the industries and to consumers. Further, there is not enough 
information regarding which, if any, version would work best in the 
SHVA context. We are unaware of any empirical information demonstrating 
that publicly available applications of TIREM are substantively more 
accurate than the ILLR. Indeed, the NTIA has run tests comparing the 
publicly available version found on its Internet site with both the 
Commission's traditional Grade B contour projections and a version of 
Longley-Rice similar to ILLR. The NTIA created a chart of sample 
contours for 16 designated market areas and accompanying maps that 
suggest that, in many cases, TIREM Version 3 predicts a station service 
area larger than the Commission's traditional Grade B contour.
    73. In contrast to TIREM, the Commission has many years of 
experience using and evaluating the Longley-Rice model. TIREM and 
Longley-Rice consider the same factors: ``frequency, atmospheric 
conditions, the electrical parameters of the earth, and the shape of 
the terrain between the two points.'' The difference between the models 
is the algorithm used to consider the factors. Neither model's source 
code accounts for vegetation or buildings, but both models could be run 
including this data, as ILLR will be. Further, we are increasing the 
accuracy of the Longley-Rice model for the purpose of predictions for 
individual locations by requiring that terrain elevations be examined 
every one-tenth kilometer. In light of the significance and weight 
conveyed by the Commission's endorsement of a particular model, we 
believe that the ILLR model will provide most, if not all, of the same 
benefits claimed for TIREM by its proponents while avoiding its current 
potential flaws.

Loser Pays

    74. The SHVA contains a ``loser pays'' mechanism that allows a 
party to recover the cost of conducting a signal measurement at a 
subscriber's household. (17 U.S.C. 119(a)(9).) At the present time, the 
loser pays mechanism only applies when parties are in litigation. Under 
the current law, if a broadcast network station questions whether a 
subscriber is unserved, an actual measurement at the subscriber's 
household may be conducted by either the satellite carrier or 
broadcaster to determine eligibility. If a measurement shows that the 
household is unserved, the broadcaster must pay the cost of the test. 
Similarly, if the test shows that the household is served, the 
satellite carrier must assume the cost of the test. From 1994 to 1996, 
the SHVA had ``transitional rules'' that included a ``loser pays'' 
mechanism different from the one currently in effect. This ``loser 
pays'' mechanism was not confined to the context of civil litigation.
    75. In light of the Miami and Raleigh court findings that satellite 
carriers have signed up millions of people who are served, it appears 
that the loser pays mechanisms have not been effective in discouraging 
the enrollment of ineligible subscribers. The record is unclear on the 
reason for this failure, but anecdotal evidence suggests that both 
satellite carriers and broadcasters are disinclined to conduct tests, 
even when they are likely to win, because the tests could annoy their 
customers and generate ill-will.
    76. The loser pays mechanism is part of the SHVA, and the 
Commission has no authority to change this mechanism or to promulgate 
regulations that conflict with it. We believe that the Commission's 
endorsement of a more reliable predictive model in this Order will 
allow the existing loser pays mechanism in the SHVA to work more 
effectively in civil actions.

Future Options

    77. The resolution of the issues surrounding delivery of broadcast 
network signals over satellite should not end with this Order. There 
are several, often competing, public policies involved in the future 
actions that we discuss below. The value of local broadcasting in this 
country has been recognized time and again by Congress

[[Page 7125]]

and the Commission. Local television stations play a vital role in 
delivering news, weather, and public affairs information to their local 
communities. The growing competition between DBS and cable, however, 
benefits consumers by giving them more choices to watch what they want 
and by creating new and higher-quality services. DTH satellite carriers 
have proven to be the most successful competitors to incumbent cable 
companies, but they still serve only 9 million households, which is 
only between 10% and 15% of the multichannel video programming market. 
One significant reason consumers give for not considering satellite 
programming service is the difficulty of getting seamless broadcast 
network service. Congress has informally asked for our opinion on 
options to improve the SHVA and Communications Act to better serve 
consumers. In response to these requests, we identify some possible 
changes Congress could consider. This list is not meant to be 


    78. Congress could consider changes to copyright law to allow 
satellite companies to provide local television stations to local 
markets. Cable companies already do this, to their distinct advantage 
vis a vis the satellite carriers. Broadcasters support local-into-local 
legislation because they do not fear losing their audiences--and the 
advertising dollars that follow. Some satellite carriers accept local-
into-local legislation because it gives them a limited right to provide 
their subscribers with services those subscribers want. Local-into-
local satisfies consumers' demands for broadcast network service via 
satellite without harming localism. Local-into-local also makes 
satellite carriers more attractive to consumers, thus increasing their 
competitive standing with cable companies. However, local-into-local 
cannot provide the solution for every community in the immediate 
future, due to limitations in the satellites' capacity to carry every 
local channel. EchoStar recently predicted that with new spectrum, and 
without full must-carry requirements, it will only be able to serve 20 
major cities within the next three years. Those cities cover about half 
the United States' population. Smaller cities would not be able to 
receive service, even under the best scenario, for about 5 years. 
Viewers who live in communities where local-into-local service is 
unavailable will need other solutions, including DirecTV's practice of 
selling over-the-air antennas with their satellite dishes. However, for 
those that can receive local network stations via satellite, local-
into-local provides a partial solution that should address the needs of 
consumers and the broadcast and satellite industries, as well as 
promote competition to cable.

Change from the Grade B Signal Intensity Standard

    79. We have noted that the Grade B signal intensity standard was 
originally designed to depict a television station's service area, and 
that it may not address all the factors that determine the quality of a 
consumer's television picture. This is especially true if one assumes 
that consumers have higher expectations for their television picture 
than they did in the 1950s and that environmental changes increase the 
effects of the factors that Grade B cannot easily address, such as 
ghosting and signal interference. Although we believe that the Grade B 
standard is still useful for determining signal strength and signal 
intensity, there may be a better, but still objective, standard that 
could be developed for identifying unserved households. The SHVA, 
however, prevents the Commission from exploring an alternative standard 
because it explicitly requires the use of Grade B to measure signal 
intensity and determine whether a household is unserved. This 
undertaking would demand considerable time and significant government 
and industry resources.

90-Day Waiting Period

    80. Before receiving satellite-delivered broadcast networks, the 
SHVA requires an unserved consumer who subscribes to cable to terminate 
that service and wait for 90 days. Once the cable service ends, the 
consumer then would face 90 days with no acceptable network service--
nothing over cable, unattainable over-the-air, and not yet available 
via satellite. This requirement discourages a potential satellite 
consumer from terminating his or her cable service. We believe that 
elimination of the waiting period should be considered.

Predictive Model and Loser Pays Mechanism

    81. The ``loser pays'' mechanism in the SHVA holds promise for 
helping to resolve or avoid the disputes that arise under the law, but 
it currently applies only when the parties are engaged in civil 
litigation over the eligibility of subscribing households to receive 
broadcast network programming via satellite. We believe the loser pays 
mechanism would be more effective if it also applied before litigation 
commences and if used in conjunction with a predictive model. 
Initially, we suggest that clear statutory acceptance of prediction 
models for creating rebuttable presumptions of service or lack of 
service would add certainty to the entire SHVA process. The ILLR 
prediction model that we endorse in this Order will reduce mistakes 
when predicting a household's status as served or unserved and will 
therefore allow parties to be more confident in the predicted result 
and less inclined to conduct or demand a test. A broadly applied loser 
pays mechanism that allocates the cost of testing on the party in 
error, in conjunction with this more reliable prediction model, would 
likely give satellite carriers an economic incentive to avoid enrolling 
consumers who are predicted to be served, and to discourage 
broadcasters from challenging subscribers who are predicted as 
unserved. Less testing means less burden and inconvenience for the 
industries and consumers. Fewer challenges and disputes would reduce 
the number of consumers who are angered and inconvenienced by the 
operation of the SHVA.

Procedural Matters

    82. To minimize possible confusion in connection with the 
injunction scheduled to take effect on February 28, 1999, which will 
affect more than 700,000 satellite subscribers, this Report and Order 
will become effective upon publication in the Federal Register. We find 
good cause exists under the Administrative Procedure Act (``APA'') to 
have the rule adopted in this Report and Order take effect upon 
publication in the Federal Register pursuant to section 553(d)(1) and 
(3) of the APA. (See also 47 CFR 1.427(b).) We believe that making the 
Report and Order and rule effective upon publication in the Federal 
Register will eliminate any confusion should the court in CBS et al. v. 
PrimeTime 24 wish to issue a supplemental order in light of the 
conclusions in this Order.

Final Regulatory Flexibility Analysis

    83. As required by the Regulatory Flexibility Act (``RFA'') an 
Initial Regulatory Flexibility Analysis (``IRFA'') was incorporated 
into the Notice of Proposed Rulemaking (``NPRM'') in this proceeding. 
The Commission sought written public comment on the possible impact of 
the proposed policies and rules on small entities in the NPRM, 
including comments on the IRFA. This Final Regulatory Flexibility 
Analysis (``FRFA'') in this Report and Order (``Order'') conforms to 
the RFA.

[[Page 7126]]

Need for and Objective of the Rules

    84. In this Order, the Commission responds to Petitions for 
Rulemaking filed by the National Rural Telecommunications Cooperative 
and EchoStar Communications Corporation requesting that the Commission 
address the methods for determining whether a household is ``unserved'' 
by network television stations for purposes of the 1988 Satellite Home 
Viewer Act (17 U.S.C. 119). Legal Basis
    85. This Order is authorized under Sections 1, 4(i), 4(j) of the 
Communications Act of 1934, as amended, 47 U.S.C. 151, 154(i), and 
154(j) and Section 119(d)(10)(a) of the Copyright Act, 17 U.S.C. 

Summary of Significant Issues Raised by the Public Comments in 
Response to the IRFA

    86. Small Cable Business Association (SCBA) filed comments 
regarding the possible impact of this proceeding on small cable 
operators. SCBA contends that since small cable and satellite carriers 
draw from the same customer base, any Commission action broadening the 
``unserved'' household definition could adversely affect small cable 
operators. SCBA contends that its members represent an important link 
in the distribution of local programming, especially in rural areas, 
and should not be overlooked in this proceeding. SCBA does not object 
to satellite delivery of broadcast network signals, so long as 
satellite providers are required to provide carriage of all broadcast 
signals within a single community. National Association of Broadcasters 
(NAB), and others, maintain that any expansion of unserved viewers 
could have a substantial impact on television broadcast stations 
serving smaller markets. The ability of these stations to purchase 
programming and to serve their viewers would be impacted by lower 
advertising revenues should the Commission's actions dramatically 
expand the numbers of unserved households in their market place. 
National Rural Telecommunications Cooperative urges the Commission to 
revisit the conclusion in its IRFA that because small businesses do not 
have the financial resources necessary to become DBS licensees, none 
will be affected by the proposed action.

Description and Estimate of the Number of Small Entities To Which 
the Rules Will Apply

    87. The RFA directs the Commission to provide a description of and, 
where feasible, an estimate of the number of small entities that will 
be affected by the proposed action. The RFA defines the term ``small 
entity'' as having the same meaning as the terms ``small business,'' 
``small organization,'' and ``small business concern'' under Section 3 
of the Small Business Act (5 U.S.C. 604(a)(3). Under the Small Business 
Act, a small business concern is one which: (1) is independently owned 
and operated; (2) is not dominant in its field of operation; and (3) 
satisfies any additional criteria established by the SBA (15 U.S.C. 
632). The action taken in this Order will affect television 
broadcasting licensees and DTH satellite operators.
    88. Television Stations. The rules in this Order will apply to 
television broadcasting licensees, and potential licensees of 
television service. The SBA defines a television broadcasting station 
that has no more than $10.5 million in annual receipts as a small 
business. Television broadcasting stations consist of establishments 
primarily engaged in broadcasting visual programs by television to the 
public, except cable and other pay television services. Included in 
this industry are commercial, religious, educational, and other 
television stations. Also included are establishments primarily engaged 
in television broadcasting and that produce taped television program 
materials. Separate establishments primarily engaged in producing taped 
television program materials are classified under another SIC number. 
There were 1,509 television broadcasting stations operating in the 
nation in 1992. That number has remained fairly constant as indicated 
by the approximately 1,579 operating full power television broadcasting 
stations in the nation as of May 31, 1998. In addition, as of October 
31, 1997, there were 1,880 low power television broadcasting (``LPTV'') 
broadcasting stations that may also be affected by our proposed rule 
changes. For 1992 the number of television broadcasting stations that 
produced less than $10.0 million in revenue was 1,155 establishments.
    89. DBS and other DTH satellite operators. The Commission has not 
developed a definition of small entities applicable to geostationary or 
non-geostationary orbit fixed-satellite or DBS service applicants or 
licensees. Therefore, the applicable definition of small entity is the 
definition under the SBA rules applicable to Communications Services, 
Not Elsewhere Classified. This definition provides that a small entity 
is one with $11.0 million or less in annual receipts. The number of 
employees working for a ``small entity'' must be 750 or fewer. 
According to Census Bureau data, there are 848 firms that fall under 
the category of Communications Services, Not Elsewhere Classified that 
could potentially fall into the DTH category. Of those, approximately 
775 reported annual receipts of $11 million or less and qualify as 
small entities. The proposed action in this Order applies to entities 
providing DTH service, including licensees of DBS services and 
distributors of satellite programming. There are four licensees of DBS 
services under Part 100 of the Commission's rules. Three of those 
licensees are currently operational, and each of those licensees has 
annual revenues in excess of the threshold for a small business.

Description of Projected Reporting, Record-keeping, and Other 
Compliance Requirements

    90. The rules adopted today impose no requirement to file any 
information with the Federal Communications Commission. Parties who 
choose to conduct individual household measurements are required to 
reduce to memorialize their test observations and results.

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

    91. We believe that the rules we adopt today will have minimal 
impact on small television stations' ability to serve the public. The 
rule we adopt today has no impact on the number of viewers who are 
``unserved'' or unable to receive the relevant television broadcast 
stations' signals, thus mitigating any economic impact in the market 
place. The rule will primarily affect DTH satellite operators, carriers 
and distributors, as well as full power commercial stations that are 
affiliates of national networks. The latter businesses generally do not 
fall into the category of small entities. Any adverse effect on the 
satellite industry is primarily the result of SHVA itself, and the 
actions we take represent our efforts to maximize competition including 
competition by small businesses consistent with faithfully interpreting 
the Act.

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

    92. None.

Ordering Clauses

    93. It is ordered, pursuant to Sections 1, 4(i), 4(j) of the 
Communications Act of 1934, as amended, 47 U.S.C. 151, 154(i), and 
154(j); and Section 119(d)(10)(a) of the Copyright Act, 17 U.S.C. 
119(d)(10)(a), the terms and rule

[[Page 7127]]

of this Report and Order are adopted. The amendments to 47 CFR 73.686 
shall become effective upon date of publication of this Report and 
Order in the Federal Register.
    94. It is further ordered that the Commission's Office of Public 
Affairs, Reference Operations Division, shall send a copy of this 
Report and Order, including the Final Regulatory Flexibility Analysis, 
to the Chief Counsel for Advocacy of the Small Business Administration 
in accordance with paragraph 603(a) of the Regulatory Flexibility Act, 
Pub. L. 96-354, 94 Stat. 1164, 5 U.S.C. 601 et seq. (1981).

List of Subjects in 47 CFR Part 73

    Antenna, Measurement, Satellite, Signal, Television.

Federal Communications Commission.
Shirley S. Suggs,
Chief, Publications Branch.

Rule Changes

    Part 73 of Title 47 of the Code of Federal Regulations is amended 
to read as follows:


    1. The authority citation for Part 73 continues to read as follows:

    Authority: 47 U.S.C. 154, 303, 334, 336.

    2. Section 73.686 is amended by adding paragraph (d) to read as 

Sec. 73.686  Field strength measurements.

* * * * *
    (d) Collection of field strength data to determine television 
signal intensity at an indvidual location--cluster measurements.
    (1) Preparation for measurements.
    (i) Testing antenna. The test antenna shall be a standard half-wave 
dipole tuned to the visual carrier frequency of channel being measured.
    (ii) Testing locations. At the location, choose a minimum of five 
locations as close as possible to the specific site where the site's 
receiving antenna is located. If there is no receiving antenna at the 
site, choose the minimum of five locations as close as possible to a 
reasonable and likely spot for the antenna. The locations shall be at 
least three meters apart, enough so that the testing is practical. If 
possible, the first testing point should be chosen as the center point 
of a square whose corners are the four other locations. Calculate the 
median of the five measurements (in units of dBu) and report it as the 
measurement result.
    (iv) Multiple signals. If more than one signal is being measured 
(i.e., signals from different transmitters), use the same locations to 
measure each signal.
    (2) Measurement procedure. Measurements shall be made in accordance 
with good engineering practice and in accordance with this section of 
the Rules. At each measuring location, the following procedure shall be 
    (i) Testing equipment. Measure the field strength of the visual 
carrier with a calibrated instrument with a bandwidth of at least 450 
kHz, but no greater than one megahertz. Perform an on-site calibration 
of the instrument in accordance with the manufacturer's specifications. 
The instrument must accurately indicate the peak amplitude of the 
synchronizing signal. Take all measurements with a horizontally 
polarized dipole antenna. Use a shielded transmission line between the 
testing antenna and the field strength meter. Match the antenna 
impedance to the transmission line, and, if using an unbalanced line, 
employ a suitable balun. Take account of the transmission line loss for 
each frequency being measured.
    (ii) Weather. Do not take measurements in inclement weather or when 
major weather fronts are moving through the measurement area.
    (iii) Antenna elevation. When field strength is being measured for 
a one-story building, elevate the testing antenna to 6.1 meters (20 
feet) above the ground. In situations where the field strength is being 
measured for a building taller than one-story, elevate the testing 
antenna 9.1 meters (30 feet) above the ground.
    (iv) Antenna orientation. Orient the testing antenna in the 
direction which maximizes the value of field strength for the signal 
being measured. If more than one station's signal is being measured, 
orient the testing antenna separately for each station.
    (3) Written Record shall be made and shall include at least the 
    (i) A list of calibrated equipment used in the field strength 
survey, which for each instrument, specifies the manufacturer, type, 
serial number and rated accuracy, and the date of the most recent 
calibration by the manufacturer or by a laboratory. Include complete 
details of any instrument not of standard manufacture.
    (ii) A detailed description of the calibration of the measuring 
equipment, including field strength meters, measuring antenna, and 
connecting cable.
    (iii) For each spot at the measuring site, all factors which may 
affect the recorded field, such as topography, height and types of 
vegetation, buildings, obstacles, weather, and other local features.
    (iv) A description of where the cluster measurements were made.
    (v) Time and date of the measurements and signature of the person 
making the measurements.
    (vi) For each channel being measured, a list of the measured value 
of field strength (in units of dBu and after adjustment for line loss 
and antenna factor) of the five readings made during the cluster 
measurement process, with the median value highlighted.

[FR Doc. 99-3464 Filed 2-11-99; 8:45 am]