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
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.
[*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)
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.
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.
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.