AMENDMENT OF PART 74, SUBPART K, OF
THE COMMISSION'S RULES AND REGULATIONS RELATIVE TO COMMUNITY ANTENNA TELEVISION
SYSTEMS; AND INQUIRY INTO THE DEVELOPMENT OF COMMUNICATIONS TECHNOLOGY AND
SERVICES TO FORMULATE REGULATORY POLICY
AND RULEMAKING AND/OR LEGISLATIVE
PROPOSALS
Docket
No. 18397
FEDERAL
COMMUNICATIONS COMMISSION
23 F.C.C.2d 825
RELEASE-NUMBER: FCC 70-677
July
1, 1970 Released
Adopted
June 24, 1970
JUDGES:
BY THE
COMMISSION: COMMISSIONERS BARTLEY AND JOHNSON
CONCURRING IN PART AND DISSENTING IN PART AND ISSUING STATEMENTS;
COMMISSIONERS COX AND WELLS CONCURRING IN THE RESULT.
OPINION:
[*825] 1. We have
before us a number of petitions for reconsideration of our First Report and
Order herein, released October 27, 1969, 20 FCC 2d 201, 34 F.R. 17651. In that
decision, following a Notice o6 Proposed Rule Making and Notice of Inquiry of
December 13, 1968 (15 FCC 2d 417, 33 F.R. 19028), we dealt with certain aspects
of community antenna television (CATV) service. We determined that the public interest would be served by
program origination (cablecasting) over CATV systems, and accordingly adopted a
requirement for such cablecasing after January 1, 1971 by systems with 3,500 or
more subscribers, leaving to further proceedings the question of whether the
requirement should be made applicable to smaller systems. We also authorized advertising on
cablecasts, limited to the beginning and end of each program, and to such
"natural breaks or intermissions" within programs as are beyond the
control of the CATV operator. We
also made applicable to cablecasting requirements similar [**2] to those of Sections 315 and 317 of the Communications Act
with respect to equal opportunities for political candidates, fairness in the
treatment of controversial issues of public importance, and sponsorship
identification. Other issues
raised by the December 13, 1968 Notice (e.g., diversification of control,
common carrier operations by CATVs, importation of distant signals) were left
for subsequent resolution.
2. The joint petition for reconsideration
of Cablecom-General, Inc., Communications Properties, Inc., Pennsylvania
Community Antenna Television Association, Inc., Service Electric Company and
Texas CATV Association, Inc. supports the Commission's objectives of
promoting [*826] multi-purpose CATV operation combining
the carriage of broadcast signals, program origination and common carrier
services. However, it urges that a
compulsory origination requirement, limitations upon advertising, and the
possibility of a dual Federal-State regulatory system are undesirable. With respect to the origination, or
"cablecasting," requirement, it is urged that to compel cablecasting
by systems not adequately prepared to undertake it will not advance the
Commission's aims, but rather will retard [**3] their realization.
The petition urges that there is no valid basis for assuming that CATV
systems not now originating programs do not have a valid reason for failing to
do so; uncertainties over copyright legislation and state public utility
regulation as well as economic problems related to capital requirements are
referred to as possible obstacles to effective cablecasting. To force unprepared systems to undertake
cablecasting, it is said, will result only in poor service and the
discouragement (because of fear of future unknown requirements) of cablecasting
by others who might otherwise undertake it voluntarily. The pleading states that a sound
judgment in this area requires further study of the costs of program
origination, and that substantial outlays should not be required in the face of
so many uncertainties, including the Commission's own statement that unforeseen
impact upon television broadcast service would be remedied in some unspecified
manner. In sum, it is urged that
the industry is making substantial strides in this area upon a voluntary basis,
and that this situation should not be disturbed. n1
n1 The petition is supported by a
resolution adopted by The Pennsylvania Community Antenna Television
Association, Inc. making the same points, and stating particularly that if
cablecasting is not self-supporting, subscribers must either face increased
charges or poorer service. [**4]
3. We have carefully considered these
contentions, but are not persuaded that either the public or the CATV industry
would be better served by deleting the cablecasting requirement. As the petitioners state, there is no
disagreement about the value and importance of cablecasting. Since many systems are now originating,
the general feasibility of origination is no longer in doubt, and we believe
that we adopted a reasonable cut-off point in limiting the applicability of our
rule to systems with at least 3,500 subscribers. The First Report and Order covers this issue in detail, n2 including available data on costs, and the initial
rule adopted in that document is very broad, permitting great flexibility in
cablecasting operations. We have
been given no data tending to demonstrate that systems with 3500 subscribers cannot
cablecast without impairing their financial stability, raising rates or
reducing the quality of service.
We recognize that there are some uncertainties, but these uncertainties
have not prevented the inauguration of cablecasting by many systems. n3
Innovative arrangements are also possible, such as agreements with educational
institutions under which a channel [**5]
is made available for the use of the school which, with its own studio
and other facilities, will produce educational, cultural [*827] and other programming.
The CATV of course would be expected to see to it that local political
and other affairs are covered on that or a different channel, but the costs of
origination to it would be sharply reduced. We do not see, therefore, why a reasonable requirement for
cablecasting should produce less quality origination than would otherwise be
produced. n4 The Rule adopted is minimal in the light of the
potentials of cablecasting and, on our own motion, we are postponing the date
when originations must commence to April 1, 1971, to afford additional
preparation time.
n2 It points out that 70% of the
systems now originating have fewer than 3500 subscribers.
n3 We may note particularly in this
regard that we see no substantial threat to television broadcast service
warranting Commission action in the foreseeable future, particularly since
cablecasting would be of programs bought or produced in the open market. In any event, voluntary cablecasting
would of course be subject to the same caveat of possible remedial action if
television service were threatened in a respect inimical to the public
interest.
n4 There is always the possibility
of waiver in a particular case, but we stress that it will be granted only
because of unusual circumstances. [**6]
4. Indeed, we recognize that there is a
question of whether we should not go beyond the minimal rule and specify a
minimum number of hours for local live origination (as against presenting
primarily film). We adhere to the judgment,
set out in par. 30 of the First Report -- namely, that it is appropriate to
afford a period of free experimentation and innovation by cable operators. However, there is one development which
does require consideration. It has
come to our attention that some cable operators simply lease their origination
channel to a local radio station, which in turn presents its disc jockey shows
over this channel for virtually the entire broadcast day. While the cable operator is perfectly
free to enter into arrangements with local broadcast stations during the period
of experimentation (subject of course to whatever limitations are adopted with
respect to cross-ownership in this filed -- see Notice, par. 23, 33 F.R. 18977,
19032-33), the main purpose is to provide an outlet for local expression. As we stated in the First Report, the
very existence of "available facilities for local production and
presentation of programs..." (74.1111(a)) is a most important contribution
[**7] to the public interest,
since it means that the mayor, the local political candidates, those willing to
discuss controversial issues, etc., have a means of access to the television
viewer. However, if the channel is
unavailable for such presentation because it is leased out to a local broadcast
facility for television presentation of its shows, the above purpose is
frustrated. We therefore have
amended 74.1111(a) to make clear that the CATV may not enter into any
arrangement which inhibits or prevents the substantial use of the cable facilities
for local programming designed to inform the public on issues of public
importance.
5. Finally, Cablecom-General et al. urge
that we conduct further rule making before requiring common carrier service by
CATV's, and that we act to end the possibility of confusing dual State-Federal
regulation. Both of these subjects
require further exploration beyond the bounds of our First Report and Order of
October 27, 1969, and cannot appropriately be dealt with here.
6. Several parties n5 urge that the Commission, in encouraging
cablecasting, has embarked upon a new course with respect to CATV, which was
previously limited to the role of a supplement [**8] to broadcast television service. They say that CATV, still founded upon the carriage [*828] of broadcast signals, but now encouraged to originate
programs independently, will be a greater threat to the public's continued
reception of "free" programs than either previous CATV operations or
subscription television broadcasting.
The latter, they point out, has been channeled so as to give the public
something different from what it receives on free TV and to avoid siphoning the
present free programming fare. We
agree that where cablecasting is accompanied by a per-program or per-channel
fee, it is akin to subscription television and presents the same threat of
siphoning programs away from free television n6 in favor of a service limited to those who can pay and, in the case of
cablecasting, to those to whom the cable is geographically available. Remedial action in this area should not
wait upon the threat becoming actuality.
As was the case with subscription television, protection of the public
requires that action be taken at a time when it involves no disruption of
existing patterns. The adoption of
rules similar to those preventing siphoning television programs from free
television [**9] broadcasting to
subscription television broadcasting will serve to insure that cablecasting
does not merely force the public to pay for what it now receives free. They are additionally warranted here
because of CATV's inability to serve the same audience reached by a television
broadcast station, and they serve the same purpose of protecting those who do
not wish, or cannot afford, to pay for television. Finally, we believe that as is the case with subscription
television, advertising should not be permitted where the public pays directly
for the programs. This additional
economic support should not be necessary, and it would be contrary to the
public interest. Appendix A hereto
adds a new Section 74.1121 to our rules to accomplish these purposes. n7
However, we do not believe that cablecasting unaccompanied by per-program or
per-channel charges presents a substantial threat of siphoning, or that such cablecasting,
which we wish to stimulate, should be restricted to one channel or limited to
sponsorship by local advertisers in small communities. The basis for this judgment is that
when CATV operates in its present fashion (i.e., a flat charge in a generally
well-defined range), [**10] it poses no significant threat of
siphoning programming from the regular television system, and thus, adoption of
the pay-TV restrictions to ordinary cablecasting services would inhibit the
development of such services, without any present basis or need for the
inhibition. The Commission will of
course be prepared to take remedial action if in the future charges for
programs should be hidden in increased general subscriber charges. At the present time, however, we see no
warrant for [*829] placing upon ordinary cablecasting the
restrictions appropriate to pay-TV operations. We stress that should we be mistaken in this regard and
experience show the need for corrective action, we shall take such action at
the first indication of the need therefore.
n5 E.g., American Broadcasting
Company, Association of Maximum Service Telecasters, a group of television
stations (WAVE-TV. et al.), the National Association of Broadcasters, and the
All-Channel Television Society.
ABC also urges full licensing of CATV, and a reexamination of policies
on the carriage of non-local broadcast signals, matters beyond the scope of the
First Report and Order of October 27, 1969.
n6 MST has shown that cable systems
have plans to carry feature films, and sports such as hockey and
basketball. Furthermore, the
potential revenue from cablecasting accompanied by per-program or per-channel
charges is substantial. With such
charges, potential revenues are adequate to make siphoning a real possibility. Thus, as MST points out, with 10 million
subscribers in the United States, an average of $2 per month per home would
generate revenues of $240 million per year, enough to remove all professional
sports from free TV. Slightly
higher charges would give the same revenue with many fewer subscribers. Siphoning in particular areas would
also be a problem. It is pointed
out, for example by WAVE-TV et al., that with 600,000 subscribers in the
Philadelphia area (less than 30% penetration), a CATV system receiving an
average of $7.50 per month per subscriber in fees plus per-program charges
would have revenues above those of all the Philadelphia market television
stations combined. We also note
the affidavit of John A. Dimling, Jr., submitted by the NAB on the siphoning
question.
n7 WAVE et al. propose more severe
restrictions, such as a prohibition of any cablecast of live professional
sports events or any recorded cablecast of these events within one week of
their occurrence, and a prohibition of non-local variety programs. We believe these additional
restrictions, at least without more experience, are too stifling. [**11]
7. We note also other requests by several
parties that we deal with CATV on a more comprehensive basis at this time,
covering such issues as licensing, whether origination by the CATV operator
should be permitted on more than one channel, regulation of common carrier
operations, reporting requirements, and technical standards. We are not persuaded that all of these
questions need be resolved before we proceed with the basic determinations made
in the First Report and Order of October 27, 1969. CATV originations are still in their infancy and, so far as
we know, common carrier operations are still in the future. These various issues are not being
forgotten. Some are being acted on
at this time; the others are beyond the necessary scope of this part of Docket
No. 18397 and are matters we do not feel in a position to resolve at this time. n8
One further matter raised in the Notice of Proposed Rulemaking of December 13,
1968 should be dealt with at this time in view of indications that problems may
now be arising, and that is the prohibition of lotteries. We are adopting a new Section 74.1116
to meet this problem.
n8 The National Association of
Educational Broadcasters has repeated a previous proposal with respect to
priorities of service to be required of CATV systems, i.e., television signals
required to be carried by our rules, State or local requirements, public
service use in conjunction with educational agencies, common carrier
service. Such requirements can
best be considered in the context of some of the issues mentioned above. Its further suggestion that we adopt
standards to require that cablecasters coordinate educational and public
service programming with affected educational organizations is, we believe,
unnecessary in the absence of further experience with the new medium. We have no reason to think that
educational organizations will not be consulted or, on another aspect of this
general question, that commercial continuity will be inappropriately used in
connection with educational programs.
Every conceivable problem, even if of potential importance, cannot be
dealt with in advance of some experience indicating its substantiality and the
best approach to it. [**12]
8. The American Newspaper Publishers
Association has urged that we add a new section to make clear that our
requirements as to equal time for political candidates, the fairness doctrine,
political editorials and personal attacks, advertising, and sponsorship
identification requirements are not applicable to the dissemination of
newspapers. We agree with the
thrust of this petition that we did not intend to apply these requirements to
the distribution of printed newspapers to their subscribers by way of
cable. It does not appear
necessary to amend the rule to make this clear. This opinion will constitute the Commission's definitive
interpretation of the rules adopted in the October 27, 1969 Report and Order in
this respect. However, we should
also make clear that ordinary cablecasting is covered by the rules. It makes no difference on this question
that a newspaper is the originator of the program any more than it would if a
newspaper sponsored a program on a broadcast station. A news or public affairs program on a broadcast station
owned by a newspaper is not exempt from fairness, sponsor identification and
other requirements. The point is
that we have no intention of regulating [**13] the print medium when it is distributed in facsimile by
cable, but we do hold that the publication of a newspaper by a party does not
put it in a different position from other persons when it sponsors or
arranges [*830] for the presentation of a CATV
origination which does not constitute the distribution of its newspaper. n9
n9 W note, of course, that our First
Report and Order did not deal with common carrier services provided by a
CATV. This subject calls for
further independent study. We also
note that the rules adopted in the First Report and Order, as they state, apply
to programs originated by others than the CATV operator, when presented on the
channel or channels controlled by the CATV operator.
9. Accordingly, upon the authority of
Sections 2, 3, 4(i) and (j), 301, 303, 307, 308 and 309 of the Communications
Act, the rules set forth in Appendix A hereto Are adopted, effective August 14,
1970, and
It is further
ordered, That the petitions for reconsideration are in all other respects
Denied.
FEDERAL COMMUNICATIONS COMMISSION, BEN F. WAPLE,
Secretary.
CONCURBY: BARTLEY (IN PART); JOHNSON (IN PART)
DISSENTBY: BARTLEY (IN PART); JOHNSON (IN PART)
DISSENT:
STATEMENT OF
COMMISSIONER ROBERT T. BARTLEY
[**14] CONCURRING IN PART
AND DISSENTING IN PART
I concur in denying
reconsideration of the First Report and Order's provisions for program
origination, advertising, and applicability of Sections 315 and 317 of the
Communications Act. However, I
would apply the program origination requirement to systems with over 7,500
subscribers instead of 3,500.
I dissent to
adoption of Section 74.1121, with its restrictions on programming provided at
special fees, which amounts to complete strangulation of a potentially new
economic base for program origination.
SEPARATE
OPINION OF COMMISSIONER NICHOLAS JOHNSON CONCURRING IN PART, DISSENTING IN PART
I concur with
the Commission majority's denial of the petitions for reconsideration of our
action in the First Report and Order of this docket. However, I dissent to the restrictions placed on the
programming [*832] to be originated by cable systems. The majority treats "pay"
channels on cable systems in an identical fashion to over-the-air subscription
television stations. Similar
restrictions are placed on both.
In my opinion,
the future of cable television lies in the efforts to originate new and unique
programming -- aimed at local communities, ethnic [**15] groups, and minority tastes of all
kinds. Distant signals, automated
services, and all the technical gimmicks promised by cable are secondary to the
providing of greater diversity in programming. Cable systems have much to learn about origination; the
owners, and those who program over their facilities on a leased basis, should
be free to experiment with different forms of financing programming. Therefore, I would not place
restrictions on this emerging industry at this time. If problems similar to those some feel are posed by
over-the-air subscription television appear in cable television at some future
time, I will be ready to take action then. But for now, I would prefer to let the industry develop
independent of such arbitrary government controls as these.
APPENDIX:
APPENDIX A
I. Section 74.1111(a) is revised to read:
§
74.1111 Cablecasting in conjunction with carriage of broadcast signals.
(a) Effective on
and after April 1, 1971, no CATV system having 3,500 or more subscribers shall
carry the signal of any television broadcast station unless the system also
operates to a significant extent as a local outlet by cablecasting and has
available facilities for local production and [**16] presentation of programs other than automated services;
Provided, further, That the system shall not enter into any contract, arrangement
or lease for use of its cablecasting facilities which prevents or inhibits the
use of such facilities for a substantial portion of time (including the time
period 6:00-11:00 p.m.), for local programming designed to inform the public on
controversial issues of public importance.
* * *
II. A new Section 74.1116 is added to read
as follows:
§
74.1116 Lotteries.
(a) No CATV
system when engaged in cablecasting shall transmit or permit to be transmitted
on the cablecasting channel or channels any advertisement of or information
concerning any lottery, gift enterprise, or similar scheme, offering prizes
dependent in whole or in part upon lot or chance, or any list of the prizes
drawn or awarded by means of any such lottery, gift enterprise, or scheme,
whether said list contains any part or all of such prizes.
(b) The
determination whether a particular program comes within the provisions of
paragraph (a) of this section depends on the facts of each case. However, the Commission will in any
event consider that a program comes within the provisions [**17] of paragraph (a) of this section if in
connection with such program a prize consisting of money or thing of value is
awarded to any person whose selection is dependent in whole or in part upon lot
or chance, if as a condition of winning or competing for such prize, such
winner or winners are required to furnish any money or thing of value or are
required to have in their possession any product sold, manufactured, furnished
or distributed by a sponsor of a program broadcast on the station in question.
III. A new Section 74.1121 is added to read
as follows:
§
74.1121 General operating requirements.
(a) Cablecasting
operations for which a per-program or per-channel charge is made shall comply
with the following requirements:
(1) Feature
films shall not be cablecast which have had general release in theaters
anywhere in the United States more than 2 years prior to their cablecast:
Provided, however, That during one week of each calendar month one feature film
the general release of which occurred more than ten years previously may be
cablecast, and more than a single showing of such a film may be made during
that week: Provided, further, That feature films the general release of
[**18] which occurred between two
and ten years before proposed cablecast may be cablecast upon a convincing
showing to the Commission that a bona fide attempt has been made to sell the
films for conventional television broadcasting and that they have been refused,
or that the owner of the broadcast rights to the films will not permit them to
be televised on conventional television because he has been unable to work out
satisfactory arrangements concerning editing for presentation thereon, or
perhaps because he intends never to show them on conventional television since
to do so might impair their repetitive box office potential in the future.
Note: As used in
this subparagraph, "general release" means the first-run showing of a
feature film in a theater or theaters in an area, on a nonreserved-seat basis,
with continuous performances. For
first-run showing of feature films on a nonreserved-seat basis which are not
considered to be "general release" for purposes of this subparagraph,
see note 56 in the Fourth Report and Order in Docket No. 11279, 15 FCC 2d 466.
(2) Sports events
shall not be cablecast which have been televised live on a non-subscription,
regular basis in the community [**19]
during the two years preceding their proposed cablecast: Provided,
however, That if the last regular occurrence of a specific event (e.g., summer
Olympic games) was more than two years before proposed showing on CATV in a
community, and the event was at that time televised on conventional television
in that community, it shall not be cablecast.
Note 1: In
determining whether a sports event has been televised in a community on a
non-subscription basis, only commercial television broadcast stations which
place a Grade A contour over the entire community will be considered. Such stations need not necessarily be
licensed to serve that community.
Note 2: The
manner in which this subparagraph will be administered and in which
"sports," "sports events," and "televised live on a
non-subscription regular basis" will be construed is explained in paragraphs
288-305 of the Fourth Report and Order in Docket No. 11279, 15 FCC 2d 466.
(3) No series
type of program with interconnected plot or substantially the same cast of
principal characters shall be cablecast.
(4) Not more
than 90 percent of the total cablecast programming hours shall consist of
feature films and sports events combined.
[**20] The percentage
calculations may be made on a yearly basis, but, absent a showing of good
cause, the percentage of such programming hours may not exceed 95 percent of
the total cablecast programming hours in any calendar month.
(5) No
commercial advertising announcements shall be carried on such channels during
such operations except, before and after such programs, for promotion of other
programs for which a per-program or per-channel charge is made.