Proposed Rule2024-02097
Customer Rebates for Undelivered Video Programming During Blackouts
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
February 7, 2024
Issuing agencies
Federal Communications Commission
Abstract
In this document, the Federal Communications Commission (Commission) seeks comment on whether to require cable operators and direct broadcast satellite (DBS) providers to give their subscribers rebates when those subscribers are deprived of video programming they expect to receive during programming blackouts that result from failed retransmission consent negotiations or failed non-broadcast carriage negotiations. When such blackouts occur, subscribers often pay the same monthly subscription fee for a service package that does not include all of the channels for which they signed up to receive. In other words, consumers are paying for a service that they are no longer receiving in full. This proceeding seeks comment on whether and how we should address this customer service shortcoming. We also seek comment on how the market addresses this issue currently.
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<title>Federal Register, Volume 89 Issue 26 (Wednesday, February 7, 2024)</title>
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[Federal Register Volume 89, Number 26 (Wednesday, February 7, 2024)]
[Proposed Rules]
[Pages 8385-8391]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-02097]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 76
[MB Docket No. 24-20; FCC 24-2; FR ID 198390]
Customer Rebates for Undelivered Video Programming During
Blackouts
AGENCY: Federal Communications Commission
ACTION: Notice of proposed rulemaking.
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SUMMARY: In this document, the Federal Communications Commission
[[Page 8386]]
(Commission) seeks comment on whether to require cable operators and
direct broadcast satellite (DBS) providers to give their subscribers
rebates when those subscribers are deprived of video programming they
expect to receive during programming blackouts that result from failed
retransmission consent negotiations or failed non-broadcast carriage
negotiations. When such blackouts occur, subscribers often pay the same
monthly subscription fee for a service package that does not include
all of the channels for which they signed up to receive. In other
words, consumers are paying for a service that they are no longer
receiving in full. This proceeding seeks comment on whether and how we
should address this customer service shortcoming. We also seek comment
on how the market addresses this issue currently.
DATES: Submit comments on or before March 8, 2024. Submit reply
comments on or before April 8, 2024.
ADDRESSES: You may submit comments, identified by MB Docket No. 24-20,
by any of the following methods:
<bullet> Electronic Filers. Comments may be filed electronically by
accessing ECFS at: <a href="http://apps.fcc.gov/ecfs/">http://apps.fcc.gov/ecfs/</a>. Follow the instructions
for submitting comments.
<bullet> Paper Filers. Parties who choose to file by paper must
file an original and one copy of each filing. Paper filings can be sent
by commercial overnight courier, or by first-class or overnight U.S.
Postal Service mail. All filings must be addressed to the Commission's
Secretary, Office of the Secretary, Federal Communications Commission.
[cir] Commercial overnight mail (other than U.S. Postal Service
Express Mail and Priority Mail) must be sent to 9050 Junction Drive,
Annapolis Junction, MD 20701.
[cir] U.S. Postal Service first-class, Express, and Priority mail
must be addressed to 45 L Street NE, Washington, DC 20554.
[cir] Effective March 19, 2020, and until further notice, the
Commission no longer accepts any hand or messenger delivered filings.
<bullet> People With Disabilities: Contact the FCC to request
reasonable accommodations (accessible format documents, sign language
interpreters, CART, etc.) by email: <a href="/cdn-cgi/l/email-protection#c4828787f1f4f084a2a7a7eaa3abb2"><span class="__cf_email__" data-cfemail="276164641217136741444409404851">[email protected]</span></a> or phone: 202-418-
0530 or TTY: 202-418-0432.
In addition to filing comments with the Secretary, a copy of any
comments on the Paperwork Reduction Act proposed information collection
requirements contained herein should be submitted to the Federal
Communications Commission via email to <a href="/cdn-cgi/l/email-protection#2d7d7f6c6d4b4e4e034a425b"><span class="__cf_email__" data-cfemail="8fdfddcecfe9ececa1e8e0f9">[email protected]</span></a> and to Cathy
Williams, FCC, via email to <a href="/cdn-cgi/l/email-protection#4f0c2e3b27366118262323262e223c0f292c2c61282039"><span class="__cf_email__" data-cfemail="743715001c0d5a231d18181d151907341217175a131b02">[email protected]</span></a>.
FOR FURTHER INFORMATION CONTACT: For additional information on this
proceeding, contact Brendan Murray, <a href="/cdn-cgi/l/email-protection#1a58687f747e7b7434576f68687b635a7c7979347d756c"><span class="__cf_email__" data-cfemail="df9dadbab1bbbeb1f192aaadadbea69fb9bcbcf1b8b0a9">[email protected]</span></a>, of the
Policy Division, Media Bureau, (202) 418-1573.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Notice
of Proposed Rulemaking, (NPRM) FCC 24-2, adopted on January 10, 2024,
and released on January 17, 2024. These documents will be available via
ECFS (<a href="http://www.fcc.gov/cgb/ecfs/">http://www.fcc.gov/cgb/ecfs/</a>). (Documents will be available
electronically in ASCII, Word, and/or Adobe Acrobat.) To request these
documents in accessible formats for people with disabilities, send an
email to <a href="/cdn-cgi/l/email-protection" class="__cf_email__" data-cfemail="fc9a9f9fc9ccc8bc9a9f9fd29b938a">[email protected]</a> or call the Commission's Consumer and
Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432
(TTY).
Background. The Communications Act of 1934, as amended (the Act),
requires that cable operators and satellite TV providers obtain a
broadcast TV station's consent to lawfully retransmit the signal of a
broadcast station to subscribers. Commercial stations may either demand
carriage pursuant to the Commission's must carry rules or elect
retransmission consent and negotiate for compensation in exchange for
carriage. If a station elects retransmission consent but is unable to
reach agreement for carriage, or the parties to an existing
retransmission consent agreement do not extend, renew, or revise that
agreement prior to its expiration, the cable operator or DBS provider
loses the right to carry the signal. The same is true if a cable
operator or DBS provider cannot negotiate for carriage with a non-
broadcast network. In both cases, the result is a blackout of that
existing programming on the platform. When these blackouts occur, the
cable operator or DBS provider's subscribers typically lose access to
the station or network's entire signal on the platform, including both
the national and local programming provided by the broadcaster, unless
and until the parties are able to reach an agreement.
Over the past decade, data indicates that the number of blackouts
resulting from unsuccessful retransmission consent negotiations has
increased dramatically. These blackouts often frustrate subscribers
because they lose access to programming from their cable operator or
DBS provider that they had previously received. A leading cause of
these disputes is disagreements over per-subscriber programming fees.
However, subscribers may not see rebates or bill reductions during the
carriage dispute when the cable operator or DBS provider does not carry
the broadcast TV station, even though many cable operators and DBS
providers charge a fee on subscribers' bills that purportedly pays
programmers for subscriber access to the broadcast signal or network.
Discussion. We seek comment on whether and how to require cable
operators and DBS providers to give their subscribers rebates when they
blackout a channel due to a retransmission consent dispute or a failed
negotiation for carriage of a non-broadcast channel. In the event that
we adopt such a requirement, we seek comment below on (i) how to apply
the rule, (ii) whether to specify the method that cable operators and
DBS providers use to offer the rebates and if so, how they should issue
rebates, (iii) our authority to adopt a rebate rule, (iv) how to
enforce a rebate rule, (v) the costs and benefits of such a rule, and
(vi) the effects that such a rule would have on digital equity and
inclusion. We also invite comment on any other proposals to ensure that
subscribers are made whole when they lose access to programming that
they expected to receive in exchange for paying a monthly subscription
fee when they signed up for service.
We seek comment on this proposal at this time because, as discussed
above, data indicates that the number of blackouts has increased
dramatically in the last several years. Why is this? Is increased
consolidation in either the broadcaster or MVPD market leading to an
increase in blackouts? Has the proliferation of streaming services,
including live linear streaming services (vMVPDs) impacted the amount
or duration of blackouts, as these services may provide subscribers
with alternative viewing options during a carriage dispute? Are
broadcasters or programmers with certain categories of programming
(e.g. sports) more likely to have negotiations that result in
blackouts? Are there certain broadcasters or MVPDs whose negotiations
result in blackouts more frequently than others? Are there proposals we
should consider to incentivize both broadcasters/programmers and
distributors to limit programming blackouts?
Applicability. We seek comment on whether to require cable
operators and DBS providers to provide rebates if they blackout video
channels due to a
[[Page 8387]]
retransmission consent dispute or a failed negotiation for carriage of
a non-broadcast channel. Below, we seek comment on whether various
provisions of the Act give us authority to require cable operators and
DBS providers to give their subscribers rebates when the operator or
providers ceases to carry a channel due to a retransmission consent or
program carriage dispute; given that the authority upon which we base
this proposal is cable and DBS-specific, are those the only entities to
which this proposal should apply? If we were to require cable operators
and DBS providers to give rebates to subscribers who are deprived of
programming they expected to receive, should the rule apply to any
channel that is blacked out? What if the parties never reach an
agreement for carriage? Would subscribers be entitled to rebates in
perpetuity and how would that be calculated? Or should the rebate end
when the subscriber renews the contract if the channel is still blacked
out at the time of renewal? Similarly, if a subscriber initiates
service during a blackout, would that subscriber be entitled to a
rebate or a lower rate? Does the ``good faith'' negotiation requirement
in section 325 of the Act confer unique status on broadcast channels
that provides a basis to distinguish broadcast and broadcast-affiliated
channels (that is, those channels that are owned by a company that also
holds or controls broadcast licenses) from non-broadcast or independent
channels? That is, does the ``good faith'' negotiation requirement make
an eventual carriage agreement more likely, and therefore suggest that
a rebate would be temporary? If so, should this affect whether the
rebate policy should apply to such entities, and why? To the extent
that the existing terms of service between a cable operator or DBS
provider and its subscriber specify that the cable operator or DBS
provider is not liable for credits or refunds in the event that
programming becomes unavailable, we seek comment on whether to deem
such provisions unenforceable if we were to adopt a rebate requirement.
Rebates. We seek comment on how cable operators and DBS providers
currently handle this issue. Are there providers who currently provide
subscribers with rebates or credits during a programming blackout? If
so, does the provider proactively grant that rebate or credit to all
subscribers affected, or is the subscriber required to affirmatively
request it? How is the rebate or credit calculated? Are there providers
who grant rebates or credits for the blackout of certain channels, but
not of others? What are the deciding factors in such a case? Are there
providers who do not grant rebates or credits during blackouts? If so,
what is their rationale? How would requiring cable operators and DBS
providers to provide rebates or credits change providers' current
customer service relations during a blackout?
We seek comment on how to calculate the rebate to which a
subscriber is entitled after a channel is blacked out and what
methodology should be used. Would it be reasonable to require a cable
operator or DBS provider to rebate the cost that it paid to the
programmer to retransmit or carry the channel prior to the carriage
impasse? We understand that carriage contracts can be complex; for
example, rates may depend on the number of subscribers reached and the
number of bundled channels being carried, video service providers can
receive advertising time in exchange for carriage, providers' profits
for specific channels may vary depending on the packages and bundles
that they offer, and specific per-subscriber rates may be confidential.
Given these complexities, are there specific nuances that we could
adopt as part of a rule to ensure that subscribers are made whole when
they lose access to a channel? Should we instead simply require cable
operators and DBS providers to provide a rebate or credit to the
consumer that in good faith approximates the value of the consumer's
access to the channel? Should the Commission specify the method for
providing the rebate?
Authority. We tentatively conclude that sections 335 and 632 of the
Act provide us with authority to require cable operators and DBS
providers to issue a rebate to their subscribers when they blackout a
channel. The Commission has relied on this authority to propose and
adopt cable customer service regulations for decades, and recently
proposed to use this authority to adopt a customer service rule that
would apply to DBS as well as cable.
We tentatively conclude that the broad authority we have to adopt
``public interest or other requirements for providing video
programming'' under section 335(a) permits us to require DBS providers
to give subscribers rebates for blackouts. Section 335(a) authorizes
the Commission to impose on DBS providers public interest requirements
for providing video programming. Although section 335(a) requires the
Commission to adopt certain statutory political broadcasting
requirements for DBS providers, the statute is clear that this list is
not exhaustive. We tentatively find that requiring rebates for service
interruptions due to blackouts pertains to the ``provi[sion] of video
programming'' and is in the public interest because the proposed rule
would prevent DBS subscribers from being charged for services for the
period that they did not receive them. Moreover, we tentatively find
that a rebate requirement would ensure that DBS subscribers are made
whole when they face interruptions of service that are outside their
control. Accordingly, we tentatively conclude that we have authority
under section 335(a) to apply our proposed rule to DBS providers. We
seek comment on these tentative findings and conclusions. We also seek
comment on whether there are alternative or additional statutes or
arguments that provide a legal basis for our authority to adopt these
requirements for DBS providers. For example, do we have authority under
other provisions of Title III?
We also seek comment on whether we have--and should exercise--
ancillary authority under section 4(i) of the Act to extend our
proposed rule to DBS providers and whether it is necessary to undertake
this regulation for the Commission to effectively perform its
responsibilities under the foregoing primary sources of statutory
authority. Applying the rebate requirement to such providers would
ensure uniformity of regulation between and among cable operators
(regulated under Title VI and by various state consumer protection laws
and local franchising provisions) and DBS providers (under Title III),
thereby preventing DBS from gaining a competitive advantage over their
competitors because they will not be required to provide rebates to
their subscribers for loss of service due to blackouts.
We tentatively conclude that section 632--which directs the
Commission to ``establish standards by which cable operators may
fulfill their customer service requirements''--grants us the authority
to adopt a rebate requirement that would apply to cable operators.
Sections 632(b)(2) and (b)(3) direct the Commission to establish
standards governing ``outages'' and ``communications between the cable
operator and the subscriber (including standards governing bills and
refunds).'' Although the statute does not define the term ``outages,''
we tentatively find that Congress intended that term to apply not only
to a complete system failure but to broadly cover any interruption of
service under the requirements of 632(b)(2). Moreover, because our
proposed rules seek to address cable operators' billing and refund
practices
[[Page 8388]]
concerning blacked out programming, we tentatively conclude that these
are customer service matters within the meaning of section 632(b)(3).
We tentatively find that this interpretation is supported by the
legislative history. Specifically, when Congress adopted section 632,
it directed us to ``provide guidelines governing the provision of
rebates and credits to customers due to system failures or other
interruptions of service.'' From a subscriber's perspective, when a
cable operator blacks out a signal over failed carriage negotiations,
we tentatively find it to be an interruption of service--that is an
``outage'' within the meaning of (b)(2): the subscriber is paying for a
service in exchange for a particular package of channels, and that
particular package of channels is no longer available in full for a
period of time. Regardless of whether the outage is due to a technical
issue, a breakdown in retransmission consent negotiations, or for some
other reason, we tentatively find that the subscriber's service
interruption may be regulated under (b)(2), and entitled to a rebate.
We tentatively find that we are also authorized under (b)(3) to require
the cable operator to provide a rebate to the affected subscriber for
the service loss during that period. In addition, we tentatively find
that we may regulate blackout-related rebates under our general
authority in 632(b) to establish ``customer service'' standards.
Although the term ``customer service'' is not defined in the statute,
the legislative history defines the term ``customer service'' to mean
``in general'' ``the direct business relation between a cable operator
and a subscriber,'' and goes on to explain that ``customer service
requirements'' include requirements related to ``rebates and credits to
consumers.'' We tentatively conclude that the proposed rebate
requirement satisfies the definition of a ``customer service
requirement'' because billing practices governing an interruption of
service, such as blackouts, involve the ``direct business relation
between a cable operator and a subscriber.'' Furthermore, the list of
topics Congress required the Commission to address in terms of customer
service was not exhaustive. We tentatively conclude that blackout-
related rebates are precisely the type of customer service concerns
that Congress meant to address when it enacted section 632. Thus, we
tentatively find that our proposed rules are within the statute's grant
of authority. We seek comment on this analysis.
We acknowledge that section 623 of the Act limits our authority to
regulate rates for cable service in areas where effective competition
exists, and that nearly all cable operators now face effective
competition and are not subject to rate regulation. However, there is
no such limitation in section 632's customer service provision.
Furthermore, the availability of other service providers offering video
programming in the franchise area may provide some prospective options
for subscribers, or some deterrent effect for the conduct we aim to
address, but we tentatively find that does not prevent a cable operator
offering services under an existing contract from charging a subscriber
for a channel that carries no programming due to a business dispute
that is at least somewhat within the purview of the cable operator to
resolve. We tentatively conclude that a rebate requirement for
interruption of service due to blackouts would not be rate regulation.
The statute does not define the term ``rates'' or explain the meaning
of the phrase ``rates for the provision of cable service'' for purposes
of section 623. Recent court decisions distinguish prohibited rate
regulations from regulations similar to the one we propose here that
provide basic protections for cable customers. In Spectrum Northeast,
LLC v. Frey, the First Circuit upheld a Maine regulation that requires
cable operators to issue prorated credits or rebates for the days
remaining in a billing period after a subscriber terminates cable
service. The court determined that the federal preemption of cable rate
regulation ``did not extend to the regulation of termination rebates''
and concluded that the Maine law is not a law governing ``rates for the
provision of cable service'' but rather is a ``consumer protection
law'' that is not preempted. The New Jersey Supreme Court also recently
upheld a similar New Jersey statute. In Matter of Altice, the Supreme
Court of New Jersey concluded that a requirement that cable operators
issue refunds for the remaining days in a billing cycle is not rate
regulation because ``the plain and ordinary meaning of rate regulation
. . . is not so broad as to encompass all laws that affect or concern
cable prices.'' Both cases involved requirements that addressed cable
operator charges to subscribers for services that were no longer being
provided to the subscriber. Here, too, our proposed requirement would
prohibit cable operators from charging subscribers for the period of
time that particular programming is not being provided by the cable
operator. That contrasts with our common understanding of rate
regulation, which is when the government sets ``the amount charged for
a particular product . . . as defined by a particular unit of
measurement in relation to the product.'' Our proposal contains no
limits on the amount that a cable operator may charge for a channel;
rather, it would simply require the operator to rebate the amount it
charges if it does not deliver the product. Accordingly, we tentatively
conclude that the courts' logic in Spectrum Northeast, LLC v. Frey and
Matter of Altice applies to the rebate requirements for blackouts. We
seek comment on this analysis.
We also tentatively conclude that our proposal to require rebates
in the event of a blackout is consistent with Section 624(f) of the
Act, which provides that ``[a]ny Federal agency . . . may not impose
requirements regarding the provision or content of cable services,
except as expressly provided in this subchapter.'' As an initial
matter, we tentatively conclude that our proposed rebate requirement is
authorized by Section 632, as noted above. In any event, we note that
courts have interpreted Section 624(f) to prohibit regulations that are
based on the content of cable programming (e.g., requirements to carry
or not carry certain programming). Because the blackout rebate proposal
is not content-based (that is, it does not require the cable operator
to carry or not carry certain programming), we tentatively conclude it
does not violate Section 624(f). We seek comment on this analysis.
As noted above, based on the language and structure of section 632,
Congress authorized the Commission to establish customer service
requirements for cable operators, and franchising authorities to adopt
additional laws above and beyond the Commission's baseline
requirements. Therefore, we tentatively find that our proposed rule for
cable operators would not preempt state and local laws applied to cable
operators that require rebates for blackouts or otherwise exceed the
requirements we adopt in this proceeding, so long as they are not
inconsistent with Commission regulations. We seek comment on this
analysis.
Enforcement. The Commission shares authority over cable customer
service issues under the Act: ``the Commission sets baseline customer
service requirements at the federal level, and state and local
governments tailor more specific customer service regulations based on
their communities' needs.'' Given the bifurcated authority we share
with state and local governments, we
[[Page 8389]]
seek comment on how best to enforce a rebate rule. Do state and local
authorities have adequate resources to effectively enforce these rules?
If not, is the Commission best equipped to enforce a rebate requirement
based on consumer complaints? Is there a better enforcement mechanism
to ensure that subscription video providers provide their subscribers
with rebates or credit? Given our shared jurisdiction over cable
customer service issues, we seek specific comment from State and local
authorities regarding their local subscriber complaints and regulation
experiences with respect to service interruptions due to blackouts.
What is the most effective way to enforce a requirement applicable to
DBS providers?
Cost/Benefit Analysis. We invite commenters to address the costs
and benefits of requiring cable operators and DBS providers to offer
rebates to their subscribers when those subscribers are deprived of
video programming for which they paid. What are the burdens and costs
of providing rebates? Would the benefits to subscribers outweigh any
such costs and burdens? Are the costs and benefits different for small
cable entities, and if so, should we impose different obligations on
those entities? How would requiring cable operators and DBS providers
to offer rebates affect carriage negotiations with broadcast stations
and non-broadcast programmers? Specifically, how would this policy
affect the likelihood of blackouts, the duration of blackouts if they
were to occur, and the carriage fee ultimately negotiated?
Digital Equity and Inclusion. Finally, the Commission, as part of
its continuing effort to advance digital equity for all, including
people of color, persons with disabilities, persons who live in rural
or Tribal areas, and others who are or have been historically
underserved, marginalized, or adversely affected by persistent poverty
or inequality, invites comment on any equity-related considerations and
benefits (if any) that may be associated with the proposals and issues
discussed herein. Specifically, we seek comment on how our proposals
may promote or inhibit advances in diversity, equity, inclusion, and
accessibility, as well the scope of the Commission's relevant legal
authority.
Procedural Matters. Ex Parte Rules--Permit-But-Disclose. The
proceeding this NPRM initiates shall be treated as a ``permit-but-
disclose'' proceeding in accordance with the Commission's ex parte
rules. Persons making ex parte presentations must file a copy of any
written presentation or a memorandum summarizing any oral presentation
within two business days after the presentation (unless a different
deadline applicable to the Sunshine period applies). Persons making
oral ex parte presentations are reminded that memoranda summarizing the
presentation must (1) list all persons attending or otherwise
participating in the meeting at which the ex parte presentation was
made, and (2) summarize all data presented and arguments made during
the presentation. Memoranda must contain a summary of the substance of
the ex parte presentation and not merely a listing of the subjects
discussed. More than a one or two sentence description of the views and
arguments presented is generally required. If the presentation
consisted in whole or in part of the presentation of data or arguments
already reflected in the presenter's written comments, memoranda or
other filings in the proceeding, the presenter may provide citations to
such data or arguments in his or her prior comments, memoranda, or
other filings (specifying the relevant page and/or paragraph numbers
where such data or arguments can be found) in lieu of summarizing them
in the memorandum. Documents shown or given to Commission staff during
ex parte meetings are deemed to be written ex parte presentations and
must be filed consistent with section 1.1206(b) of the rules. In
proceedings governed by section 1.49(f) or for which the Commission has
made available a method of electronic filing, written ex parte
presentations and memoranda summarizing oral ex parte presentations,
and all attachments thereto, must be filed through the electronic
comment filing system available for that proceeding, and must be filed
in their native format (e.g., .doc, .xml, .ppt, searchable.pdf).
Participants in this proceeding should familiarize themselves with the
Commission's ex parte rules.
Providing Accountability Through Transparency Act. The Providing
Accountability Through Transparency Act requires each agency, in
providing notice of a rulemaking, to post online a brief plain-language
summary of the proposed rule. Accordingly, the Commission will publish
the required summary of this Notice of Proposed Rulemaking on: <a href="https://www.fcc.gov/proposed-rulemakings">https://www.fcc.gov/proposed-rulemakings</a>.
Filing Requirements--Comments and Replies. Pursuant to sections
1.415 and 1.419 of the Commission's rules, interested parties may file
comments and reply comments on or before the dates indicated on the
first page of this document. Comments may be filed using the
Commission's Electronic Comment Filing System (ECFS).
Electronic Filers: Comments may be filed electronically using the
internet by accessing the ECFS: <a href="http://apps.fcc.gov/ecfs/">http://apps.fcc.gov/ecfs/</a>.
Paper Filers: Parties who choose to file by paper must file an
original and one copy of each filing.
Filings can be sent by commercial overnight courier, or by first-
class or overnight U.S. Postal Service mail. All filings must be
addressed to the Commission's Secretary, Office of the Secretary,
Federal Communications Commission.
Commercial overnight mail (other than U.S. Postal Service Express
Mail and Priority Mail) must be sent to 9050 Junction Drive, Annapolis
Junction, MD 20701.
U.S. Postal Service first-class, Express, and Priority mail must be
addressed to 45 L Street NE, Washington, DC 20554.
Effective March 19, 2020, and until further notice, the Commission
no longer accepts any hand or messenger delivered filings. This is a
temporary measure taken to help protect the health and safety of
individuals, and to mitigate the transmission of COVID-19.
Regulatory Flexibility Act. The Regulatory Flexibility Act of 1980,
as amended (RFA), requires that an agency prepare a regulatory
flexibility analysis for notice and comment rulemakings, unless the
agency certifies that ``the rule will not, if promulgated, have a
significant economic impact on a substantial number of small
entities.'' Accordingly, we have prepared an Initial Regulatory
Flexibility Analysis (IRFA) concerning the possible/potential impact of
the rule and policy changes contained in this Notice of Proposed
Rulemaking. Written public comments are requested on the IRFA. Comments
must have a separate and distinct heading designating them as responses
to the IRFA and must be filed by the deadlines for comments on the
first page of this document.
As required by the Regulatory Flexibility Act of 1980, as amended,
the Commission has prepared this IRFA of the possible significant
economic impact on a substantial number of small entities by the
policies and rule changes proposed in the Notice of Proposed Rulemaking
(NPRM). Written public comments are requested on this IRFA. Comments
must be identified as responses to the IRFA and must be filed by the
deadlines for comments specified in the NPRM. The Commission will send
a copy of the NPRM, including this IRFA, to the Chief Counsel for
Advocacy
[[Page 8390]]
of the Small Business Administration (SBA).
Need for, and Objectives of, the Proposed Rules. In the NPRM, we
address whether subscriber rebates should be offered by cable operators
or direct broadcast satellite (DBS) providers in instances where those
operators and providers fail to agree on carriage terms with a
broadcaster or programming network and, as a result of the dispute,
subscribers lose access to the channels over which the parties are
negotiating. At present, the resulting subscriber blackouts lead to
subscribers often paying the same monthly subscription fee for a
service package that does not include all of the channels that expected
to receive when signing up for service. The NPRMaims to address that
customer service shortcoming, as well as address how such a rebate
program could be implemented in a manner that does not create undue
economic hardship to small and other entities in their efforts at
compliance with the rules proposed in the NPRM, should they be adopted.
Legal Basis. The proposed action is authorized pursuant to sections
1, 4(i), 4(j), 303, 335(a), and 632(b) of the Communications Act of
1934, as amended, 47 U.S.C. 151, 154(i), 154(j), 303, 335(a), and
552(b).
Description and Estimate of the Number of Small Entities to Which
the Proposed Rules Will Apply. The RFA directs agencies to provide a
description of, and, where feasible, an estimate of the number of small
entities that may be affected by the proposed rules, if adopted. The
RFA generally defines the term ``small entity'' as having the same
meaning as the terms ``small business,'' ``small organization,'' and
``small governmental jurisdiction.'' In addition, the term ``small
business'' has the same meaning as the term ``small business concern''
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 Small Business Act. Below, we provide a description
of the impacted small entities, as well as an estimate of the number of
such small entities, where feasible.
Cable Companies and Systems (Rate Regulation Standard). The
Commission has developed its own small business size standards for the
purpose of cable rate regulation. Under the Commission's rules, a
``small cable company'' is one serving 400,000 or fewer subscribers
nationwide. Based on industry data, there are about 420 cable companies
in the U.S. Of these, only seven have more than 400,000 subscribers. In
addition, under the Commission's rules, a ``small system'' is a cable
system serving 15,000 or fewer subscribers. Based on industry data,
there are about 4,139 cable systems (headends) in the U.S. Of these,
about 639 have more than 15,000 subscribers. Accordingly, the
Commission estimates that the majority of cable companies and cable
systems are small.
Cable System Operators (Telecom Act Standard). The Communications
Act of 1934, as amended, contains a size standard for a ``small cable
operator,'' which is ``a cable operator that, directly or through an
affiliate, serves in the aggregate fewer than one percent of all
subscribers in the United States and is not affiliated with any entity
or entities whose gross annual revenues in the aggregate exceed
$250,000,000.'' For purposes of the Telecom Act Standard, the
Commission determined that a cable system operator that serves fewer
than 498,000 subscribers, either directly or through affiliates, will
meet the definition of a small cable operator based on the cable
subscriber count established in a 2001 Public Notice. Based on industry
data, only six cable system operators have more than 498,000
subscribers. Accordingly, the Commission estimates that the majority of
cable system operators are small under this size standard. We note,
however, that the Commission neither requests nor collects information
on whether cable system operators are affiliated with entities whose
gross annual revenues exceed $250 million. Therefore, we are unable at
this time to estimate with greater precision the number of cable system
operators that would qualify as small cable operators under the
definition in the Communications Act.
Direct Broadcast Satellite (DBS) Service. DBS service is a
nationally distributed subscription service that delivers video and
audio programming via satellite to a small parabolic ``dish'' antenna
at the subscriber's location. DBS is included in the Wired
Telecommunications Carriers industry which comprises establishments
primarily engaged in operating and/or providing access to transmission
facilities and infrastructure that they own and/or lease for the
transmission of voice, data, text, sound, and video using wired
telecommunications networks. Transmission facilities may be based on a
single technology or combination of technologies. Establishments in
this industry use the wired telecommunications network facilities that
they operate to provide a variety of services, such as wired telephony
services, including VoIP services, wired (cable) audio and video
programming distribution; and wired broadband internet services. By
exception, establishments providing satellite television distribution
services using facilities and infrastructure that they operate are
included in this industry.
The SBA small business size standard for Wired Telecommunications
Carriers classifies firms having 1,500 or fewer employees as small.
U.S. Census Bureau data for 2017 show that 3,054 firms operated in this
industry for the entire year. Of this number, 2,964 firms operated with
fewer than 250 employees. Based on this data, the majority of firms in
this industry can be considered small under the SBA small business size
standard. According to Commission data however, only two entities
provide DBS service, DIRECTV and DISH Network, which require a great
deal of capital for operation. DIRECTV and DISH Network both exceed the
SBA size standard for classification as a small business. Therefore, we
must conclude based on internally developed Commission data, in general
DBS service is provided only by large firms.
Description of Projected Reporting, Recordkeeping, and Other
Compliance Requirements for Small Entities. The NPRM does not
specifically propose any new or modified reporting or record keeping
requirements for small entities, although comments we receive in
response to the NPRM may potentially lead to new compliance
requirements in the future. The NPRM seeks comment on whether to
require cable operators and DBS providers to give subscribers rebates
for channels that are not provided due to a breakdown in retransmission
consent negotiations. If subscriber rebates are implemented, the
Commission will need to determine how small and other entities may
comply with any adopted rules, what the method used to offer rebates
should be, and how such rebates could be issued to their subscribers.
In assessing the cost of compliance for small entities, at this
time the Commission is not in a position to determine whether, if
adopted, our proposals and the matters upon which we seek comment will
require small entities to hire professionals to comply with the
proposed rules in the NPRM, and cannot quantify the operational and
implementation costs of compliance with the potential rule changes
discussed herein. To help the Commission more fully evaluate the cost
of compliance, in the NPRM we seek comment on the costs and benefits of
these proposals. We expect the comments that we receive from the
[[Page 8391]]
parties in the proceeding, including cost and benefit analyses, will
help the Commission identify and evaluate compliance costs and burdens
for small entities.
Steps Taken to Minimize the Significant Economic Impact on Small
Entities and Significant Alternatives Considered. The RFA requires an
agency to describe any significant, specifically small business,
alternatives that it has considered in reaching its proposed approach,
which may include the following four alternatives (among others): ``(1)
the establishment of differing compliance or reporting requirements or
timetables that take into account the resources available to small
entities; (2) the clarification, consolidation, or simplification of
compliance and reporting requirements under the rule for such small
entities; (3) the use of performance, rather than design, standards;
and (4) an exemption from coverage of the rule, or any part thereof,
for such small entities.''
At this time, the Commission is not aware of any revisions or new
requirements that, if adopted, would impose a significant economic
impact or burdens on small entities. The NPRM invites comment on how to
accommodate entities for which compliance with the proposed rules would
pose an undue hardship.
The Commission expects to more fully consider the economic impact
and alternatives for small entities following the review of comments
and costs and benefits analyses filed in response to the NPRM. The
Commission's evaluation of this information will shape the final
alternatives it considers, the final conclusions it reaches, and any
final actions it ultimately takes in this proceeding to minimize any
significant economic impact that may occur on small entities.
Federal Rules that May Duplicate, Overlap, or Conflict with the
Proposed Rules. None.
Paperwork Reduction Act. This document may contain proposed new and
modified information collection requirements. The Commission, as part
of its continuing effort to reduce paperwork burdens, invites the
general public and the Office of Management and Budget (OMB) to comment
on any information collection requirements contained in this document,
as required by the Paperwork Reduction Act of 1995, Public Law 104-13.
In addition, pursuant to the Small Business Paperwork Relief Act of
2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4), we seek specific
comment on how we might further reduce the information collection
burden for small business concerns with fewer than 25 employees.
People with Disabilities: To request materials in accessible
formats for people with disabilities (braille, large print, electronic
files, audio format), send an email to <a href="/cdn-cgi/l/email-protection" class="__cf_email__" data-cfemail="e1878282d4d1d5a1878282cf868e97">[email protected]</a> or call the
Consumer & Governmental Affairs Bureau at 202-418-0530 (voice).
Accordingly, it is ordered that, pursuant to the authority
contained in sections 1, 4(i), 4(j), 303, 335(a), 632(b) of the
Communications Act of 1934, as amended, 47 U.S.C. 151, 154(i), 154(j),
303, 335(a), and 552(b) this Notice of Proposed Rulemaking is adopted.
It is further ordered that the Commission's Office of the Secretary
SHALL SEND a copy of this Notice of Proposed Rulemaking, including the
Initial Regulatory Flexibility Analysis, to the Chief Counsel for
Advocacy of the Small Business Administration.
Federal Communications Commission.
Marlene Dortch,
Secretary.
[FR Doc. 2024-02097 Filed 2-6-24; 8:45 am]
BILLING CODE 6712-01-P
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