United States. Congress. House. Committee on the J.

Cable and satellite carrier compulsory licenses : hearing before the Subcommittee on Intellectual Property and Judicial Administration of the Committee on the Judiciary, House of Representatives, One Hundred Third Congress, first session, on H.R. 759 and H.R. 1103 ... March 17, 1993 online

. (page 1 of 13)
Online LibraryUnited States. Congress. House. Committee on the JCable and satellite carrier compulsory licenses : hearing before the Subcommittee on Intellectual Property and Judicial Administration of the Committee on the Judiciary, House of Representatives, One Hundred Third Congress, first session, on H.R. 759 and H.R. 1103 ... March 17, 1993 → online text (page 1 of 13)
Font size
QR-code for this ebook


CABLE AND SATELLITE CARRIER
COMPULSORY LICENSES



HEARING

BEFORE THE

SUBCOMMITTEE ON INTELLECTUAL PROPERTY
AND JUDICIAL ADMINISTRATION

OF THE

COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES

ONE HUNDRED THIRD CONGRESS

FIRST SESSION
ON

H.R. 759 and H.R. 1103

CABLE AND SATELLITE CARRIER COMPULSORY LICENSES



MARCH 17, 1993



DE£QSITOI?y



M4(? I $ |9<



Printed for the use 6Tthe Comnfittee on the Judiciary

HAMPDEN LAW LIBRARY



72-608



U.S. GOVERNMENT PRUNING OFFICE
^1994



For sale by the U.S. Government Printing Office
Superintendent of Documents. Congressional Sales Office. Washington, DC 20402
ISBN 0-16-043678-8



I Li ; L



Uuo



BOSTON public library

GOVERNMENT DOCUMENTS DEPARTMENT



72-608 0-94-1



M



CABLE AND SATELLITE CARRIER
COMPULSORY LICENSES



HEARING

BEFORE THE

SUBCOMMITTEE ON INTELLECTUAL PROPERTY
AND JUDICIAL ADMINISTRATION

OF THE

COMMITTEE ON THE JUDICIARY
HOUSE OP REPRESENTATIVES

ONE HUNDRED THIRD CONGRESS

FIRST SESSION
ON

H.R. 759 and H.R. 1103

CABLE AND SATELLITE CARRIER COMPULSORY LICENSES



MARCH 17, 1993




the Comnittee on the Judiciary



72-608



U.S. GOVERNMENT PRICING OFFICE
■■1994



For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington. DC 2(1402
ISBN 0-16-043678-8



\



£.Uod



BOSTON PUBLIC LIBRARY

GOVERNMENT DOCUMENTS DEPARTMENT



COMMITTEE ON THE JUDICIARY



JACK BROOKS,
DON EDWARDS, California
JOHN CONYERS, Jr., Michigan
ROMANO L. MAZZOLI, Kentucky
WILLIAM J. HUGHES, New Jersey
MIKE SYNAR, Oklahoma
PATRICIA SCHROEDER, Colorado
DAN GLICKMAN, Kansas
BARNEY FRANK, Massachusetts
CHARLES E. SCHUMER, New York
HOWARD L. BERMAN, California
RICK BOUCHER, Virginia
JOHN BRYANT, Texas
GEORGE E. SANGMEISTER, Illinois
CRAIG A. WASHINGTON, Texas
JACK REED, Rhode Island
JERROLD NADLER, New York
ROBERT C. SCOTT, Virginia
DAVID MANN, Ohio
MELVIN L. WATT, North Carolina
XAVIER BECERRA, California



Texas, Chairman
HAMILTON FISH, Jr., New York
CARLOS J. MOORHEAD, California
HENRY J. HYDE, Illinois
F. JAMES SENSENBRENNER, Jr.,

Wisconsin
BILL McCOLLUM, Florida
GEORGE W. GEKAS, Pennsylvania
HOWARD COBLE, North Carolina
LAMAR S. SMITH, Texas
STEVEN SCHIFF, New Mexico
JIM RAMSTAD, Minnesota
ELTON GALLEGLY, California
CHARLES T. CANADY, Florida
BOB INGLIS, South Carolina
BOB GOODLATTE, Virginia



Jonathan R. Yarowsky, General Counsel

Robert H. Brink, Deputy General Counsel

Alan F. Coffey, Jr., Minority Chief Counsel



Subcommittee on Intellectual Property and Judicial Administration



WILLIAM J.
DON EDWARDS, California
JOHN CONYERS, Jr., Michigan
ROMANO L. MAZZOLI, Kentucky
MIKE SYNAR, Oklahoma
BARNEY FRANK, Massachusetts
HOWARD L. BERMAN, California
JACK REED, Rhode Island
XAVIER BECERRA, California



HUGHES, New Jersey, Chairman

CARLOS J. MOORHEAD, California
HOWARD COBLE, North Carolina
HAMILTON FISH, Jr., New York
F. JAMES SENSENBRENNER, Jr.,

Wisconsin
BILL McCOLLUM, Florida
STEVEN SCHIFF, New Mexico



Hayden W. Gregory, Counsel

Edward O'Connell, Assistant Counsel

William F. Patry, Assistant Counsel

Jarilyn Dupont, Assistant Counsel

Thomas E. Mooney, Minority Counsel

Joseph V. Wolfe, Minority Counsel



(II)



CONTENTS



HEARING DATE



Page

March 17, 1993 1

TEXTS OF BILLS

H.R. 759 8

H.R. 1103 3

OPENING STATEMENT

Hughes, Hon. William J., a Representative in Congress from the State of
New Jersey, and chairman, Subcommittee on Intellectual Property and
Judicial Administration 1

WITNESSES

Boucher, Hon. Rick, a Representative in Congress from the State of Virginia .. 11

Foster, Janet L., co-founder and president, PrimeTime 24, New York, NY 40

Hargrove, Wade H., Esq., Tharrington, Smith & Hargrove, on behalf of Net-
work Affiliated Stations Alliance, Raleigh, NC 49

Hewitt, Charles C, president, Satellite Broadcasting and Communications

Association of America 32

Oman, Ralph, Register of Copyrights and Associate Librarian for Copyright
Services, Library of Congress, accompanied by William Roberts, Senior

Attorney, and Marilyn Kretsinger, Assistant General Counsel 15

Padden, Preston R., senior vice president, affiliates, Fox Broadcasting Co 46

Sonnenberg, Alan, chief executive officer and chairman, ACS Enterprises,
Inc., Bensalem, PA, on behalf of the Wireless Cable Association Inter-
national, Inc 81

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

Boucher, Hon. Rick, a Representative in Congress from the State of Virginia:

Prepared statement 13

Foster, Janet L., co-founder and president, PrimeTime 24, New York, NY:

Prepared statement 42

Hargrove, Wade H., Esq., Tharrington, Smith & Hargrove, on behalf of Net-
work Affiliated Stations Alliance, Raleigh, NC: Prepared statement 51

Hewitt, Charles C, president, Satellite Broadcasting and Communications
Association of America: Prepared statement 33

Oman, Ralph, Register of Copyrights and Associate Librarian for Copyright

Services, Library of Congress: Prepared statement 17

Padden, Preston R., senior vice president, affiliates, Fox Broadcasting Co.:

Prepared statement • 48

Sonnenberg, Alan, chief executive officer and chairman, ACS Enterprises,
Inc., Bensalem, PA, on behalf of the Wireless Cable Association Inter-
national, Inc.: Prepared statement 82

APPENDIXES

Appendix 1.— Letter from G. Todd Hardy, Esq., Hardy and Ellison (with
attachments), to Hon. William J. Hughes, chairman, Subcommittee on In-
tellectual Property and Judicial Administration, March 25, 1993 87



(III)



IV

Page

Appendix 2. — Letter from Paula A. Jameson, senior vice president, general
counsel and secretary, Public Broadcasting Service (with attachment), to
Hon. William J. Hughes, chairman, April 13, 1993 99

Appendix 3. — Letter from David D. Alworth, executive director, Broadcasting,
Office of the Commissioner, Major League Baseball, to Hon. William J.
Hughes, chairman, April 27, 1993 104

Appendix 4. — Statement of position of the Network Affiliated Stations Alli-
ance on H.R. 1103 (with attachments), undated 108

Appendix 5. — Examples of abuse of the Home Satellite Viewier Act by sat-
ellite carriers (14 letters to Wade Hargrove, Esq., Tharrington, Smith &
Hargrove) 118



CABLE AND SATELLITE CARRIER
COMPULSORY LICENSES



WEDNESDAY, MARCH 17, 1993

House of Representatives,
Subcommittee on Intellectual Property

and Judicial Administration,
Committee on the Judiciary,

Washington, DC.

The subcommittee met, pursuant to notice, at 10:09 a.m., in room
2226, Rayburn House Office Building, Hon. William J. Hughes
(chairman of the subcommittee) presiding.

Present: Representatives William J. Hughes, Don Edwards, Jack
Reed, Xavier Becerra, Carlos J. Moorhead, Howard Coble, F. James
Sensenbrenner, Jr., and Bill McCollum.

Also present: Hayden Gregory, counsel; William Patry, assistant
counsel; Phyllis Henderson, secretary; and Thomas E. Mooney, mi-
nority counsel.

OPENING STATEMENT OF CHAIRMAN HUGHES

Mr. Hughes. The Subcommittee on Intellectual Property and
Judicial Administration will come to order.

Good morning and welcome to today's hearing on H.R. 1103 and
H.R. 759. These bills are identical in purpose, though not in scope.
H.R. 759, introduced by our colleague Rick Boucher, a former mem-
ber of the subcommittee, and by Mr. Moorhead, the distinguished
ranking minority member of the subcommittee, amends the defini-
tion of "cable system" in section 111(f) of the Copyright Act to in-
clude wireless cable and other technologies.

Title II of H.R. 1103 also amends section 111(f), but uses a ge-
neric definition to similarly include wireless and other technologies.
This definition was taken from last Congress' H.R. 4511, a general
cable reform bill that Mr. Moorhead, Chairman Brooks, and myself
introduced.

The purpose of both H.R. 759 and H.R. 1103 is to provide a level
playing field for new technologies that offer competition to tradi-
tional cable systems.

By encouraging new forms of delivering television programming,
we will increase consumers' choices, improve service, and, hope-
fully, reduce costs.

Recently, in drafting the new rules for the 1992 Cable Reform
Act, the FCC noted a point Mr. Moorhead and I had emphasized
in the last Congress: competition brings down prices. The FCC and
others studying the industry have found that where there is more
than one multichannel video service available, the costs to consum-

(l)



ers are lower than where there is only one such service. H.R. 1103
and H.R. 759 are based on this simple economic fact.

Finally, let me address title I of H.R. 1103, which contains a pro-
vision not found in H.R. 759: extension of the section 119 satellite
carrier compulsory license. Section 119 of the Copyright Act is a
real success story. It has permitted satellite carriers to deliver net-
work programming to tens of thousands of residents of rural and
other areas that cannot receive over-the-air signals. The provisions
on retransmission of superstations have resulted in the develop-
ment of new program packages for the home satellite dish market.

The compulsory license rates were originally set in the statute.
An ad hoc arbitration panel subsequently adjusted those rates. The
arbitration panel's decision was praised by the parties and was the
precedent for the proposal in H.R. 897 to abolish the CRT and as-
sign many of its functions to arbitration panels.

Extension of section 119 will ensure that satellite dish owners
may continue to receive television programming for private view-
ing. I am very pleased that my colleague Carlos Moorhead joined
with me in introducing H.R. 1103. His leadership, as always, is
very much appreciated.

[The bills, H.R. 1103 and H.R. 759, follow:]



103d CONGRESS
1st Session



H.R.1103



To amend title 17, United States Code, with respect to secondary trans-
missions of superstations and network stations for private home viewing,
and with respect to cable systems.



IN THE HOUSE OF REPRESENTATIVES

February 24, 1993

Mr. HUGHES (for himself and Mr. Moorhead) introduced the following bill;

which was referred to the Committee on the Judiciary



A BILL

To amend title 17, United States Code, with respect to
secondary transmissions of superstations and network
stations for private home viewing, and with respect to
cable systems.

1 Be it enacted by the Senate and House of Representa-

2 tives of the United States of America in Congress assembled,

3 TITLE I— SATELLITE CARRIERS

4 SEC. 101. SECONDARY TRANSMISSIONS BY SATELLITE CAR-

5 RIERS.

6 Section 119 of title 17, United States Code, is

7 amended as follows:



2

1 (1) Subsection (a)(2)(C) is amended in the first

2 sentence —

3 (A) by striking "90 days after the effective

4 date of the Satellite Home Viewer Act of 1988,

5 or"; and

6 (B) by striking "whichever is later,".

7 (2) Subsection (b)(1)(B) is amended —

8 (A) in clause (i) by striking "12 cents"

9 and inserting "17.5 cents per subscriber in the

10 case of superstations not subject to syndicated

1 1 exclusivity under the regulations of the Federal

12 Communications Commission, and 14 cents per

13 subscriber in the case of superstations subject

14 to such syndicated exclusivity"; and

15 (B) in clause (ii) by striking "3" and in-

16 serting "6".

17 (3) Subsection (c) is amended —

18 (A) in the subsection caption by striking

19 "Determination" and inserting "Adjust-

20 MENT";

21 (B) in paragraph (1) —

22 (i) by striking "until December 31,

23 1992,"; and

24 (ii) by striking "compulsory";

25 (C) in paragraph (2) —

•HR 1103 IH



3

1 (i) by striking subparagraph (A) and

2 redesignating subparagraphs (B), (C), and

3 (D) as subparagraphs (A), (B), and (C),

4 respectively;

5 (ii) in subparagraph (A) (as so redes-

6 ignated) by striking "Satellite" in the first

7 sentence and inserting "In accordance with

8 paragraph (3), satellite"; and

9 (iii) in subparagraph (C) (as so redes-

10 ignated) by striking "December 31, 1994"

11 and inserting "adjusted under paragraph

12 (3)"; and

13 (D) in paragraph (3) (A) by striking the

14 first sentence and inserting the following: "On

15 or before June 1, 1995, and in each subsequent

16 fifth calendar year, the Copyright Royalty Tri-

17 - bunal shall cause notice to be published in the

18 Federal Register of the initiation of arbitration

19 proceedings for the purpose of determining a

20 reasonable royalty fee to be paid under sub-

21 section (b)(1)(B) by satellite carriers who are

22 not parties to a voluntary agreement filed with

23 the Copyright Office in accordance with para-

24 graph (2).".



•HR 1103 IH



4

1 TITLE II— SECONDARY TRANS-

2 MISSIONS BY CABLE SYSTEMS

3 SEC. 201. DEFINITION OF CABLE SYSTEM.

4 (a) Definition. — Section 111(f) of title 17, United

5 States Code, is amended by striking the definition of

6 "cable system" and inserting the following:

7 "A 'cable system' is a facility, other than a satellite

8 carrier to which section 119 of this title applies, that in

9 whole or in part receives signals embodying a performance

10 or display of a work, transmitted by one or more broadcast

1 1 stations licensed by the Federal Communications Commis-

12 sion or an appropriate governmental authority of Canada

13 or Mexico, and makes secondary transmissions of such sig-

14 nals to subscribing members of the public who pay for

15 such service."

16 (b) Applicability of Federal Communications

17 Commission Rules and Regulations. — For purposes

18 of determining the royalty fees paid under subsection

19 (d)(1) of section 111 of title 17, United States Code, by

20 a cable system as defined in subsection (f) of such section

21 (as amended by subsection (a) of this section), the rules

22 and regulations of the Federal Communications Commis-

23 sion in effect on the date of the enactment of this Act

24 shall apply on and after such date to all cable systems



•HR 1103 IH



5

1 as so defined to the same extent as such rules and regula-

2 tions applied to cable systems before such date.

o



8



103d CONGRESS
1st Session



H. R. 759



To amend chapter 1 of title 17, United States Code, to include in the
definition of a cable system a facility which makes secondary trans-
missions by microwave or certain other technologies.



IN THE HOUSE OF REPRESENTATIVES

February 3, 1993

Mr. BOUCHER (for himself and Mr. MOORHEAD) introduced the following bill;
which was referred to the Committeemen the Judiciary



A BILL

To amend chapter 1 of title 17, United States Code, to
include in the definition of a cable system a facility
which makes secondary transmissions by microwave or
certain other technologies.

1 Be it enacted by the Senate and House of Representa-

1 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the "Compulsory License

5 Clarification Act of 1993".



2

1 SEC. 2. INCLUSION OP FACILITIES MAKING SECONDARY

2 TRANSMISSIONS BY MICROWAVE OR OTHER

3 TECHNOLOGIES IN DEFINITION OF CABLE

4 SYSTEM.

5 Section 111(f) of title 17, United States Code, is

6 amended in the 3rd paragraph by striking "or other eom-

7 munications channels" and inserting "microwave, or any

8 other technologies employed for the local distribution of

9 secondary transmissions of broadcast programming" .

O



10

Mr. Hughes. The testimony today should be very interesting. We
look forward to receiving it.

The gentleman from California.

Mr. MOORHEAD. Thank you, Mr. Chairman. I would like to com-
mend you on holding these early hearings on two important issues.

Wireless cable has enjoyed the compulsory license since its incep-
tion. The industry was made possible by FCC rule changes in 1983.
The first system became operational in 1986. A 1992 ruling by the
Register of Copyrights, however, would strip the industry of the
compulsory license in 1994, unless Congress acts before then to re-
verse the Copyright Office's ruling.

In my opinion, and that of Rick Boucher, wireless cable's entitle-
ment to the license is fully supported by the Copyright Act and its
legislative history. The act specifically authorizes a compulsory li-
cense for "cable systems," defined to mean systems making trans-
mission "by wires, cables or other communication channels." The
legislative history of the act makes clear that Congress intended
the compulsory license to be technology neutral, as the courts have
consistently held.

In response to the Copyright Office's ruling, Rick Boucher and I
introduced the Compulsory License Clarification Act of 1993. We
introduced the same bill last Congress. I am pleased to see that the
gentleman from Virginia is on the witness list this morning. He
and I are in 100 percent agreement on this issue.

Quick action on these bills will guarantee wireless cable and sat-
ellite carriers' position as strong and significant competitors of
cable. I certainly agree with the statement of our chairman that
wherever there is competition the price to the consumer is down.
We have done all kinds of things to try to control the cost to the
consumer of cable television. But in one area of the country the
price may be twice as high as it is in another area, depending upon
the competition among entertainment channels and the things that
may be available for entertainment for people that live in the area.
For instance, my cable bill in California is about 50 percent of what
it is here in Fairfax County and the systems are no different really
as to what they offer.

Competition is a very, very important thing. And, if we do away
with the competition that can be given by wireless cable, we are
not only going to kill a growing industry but we are also going to
raise the cost of cable television for our consumers. I don't want to
see that happen. I want to see this legislation passed.

Mr. Hughes. I thank the gentleman.

Our first witness this morning is Representative Rick Boucher
from the Ninth District of Virginia. Rick was elected to Congress
in 1982. He has been very active, to say the least, in the copyright
and telecommunications areas, particularly satellites and wireless
cable. For many years he was a very valued member of this sub-
committee and it was just unfortunate in this Congress that as we
bid for various subcommittees, he did not join us. But we are de-
lighted to have his testimony this morning.

Rick, we have a copy of your statement, which, without objection,
will be made a part of the record in full. We hope you can summa-
rize for us, but you may proceed as you see fit.

Welcome.



11

STATEMENT OF HON. RICK BOUCHER, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF VIRGINIA

Mr. Boucher. Thank you very much, Mr. Chairman. It is my
pleasure to return to this subcommittee, and I appreciate the invi-
tation you have extended for me to testify here this morning.

I am pleased, enthusiastically, to endorse the legislation that you
have introduced with Mr. Moorhead, H.R. 1103, which would ex-
tend the section 119 license that is available for the transmission
of superstation and network signals to backyard dish owners, cre-
ated in 1988 as a part of the Satellite Home Viewer Act, and also
to ensure that wireless cable and other technologies for terrestrial
delivery of cable signals enjoy the section 111 compulsory license.

The Satellite Home Viewer Act of 1988 will expire in December
1994, but I think, Mr. Chairman, that it is very appropriate for the
extension of that legislation to occur at an earlier time. The com-
mon carriers need to make investments in new technology, and in
order to have the assurance that the license of section 119 will
apply for them and to get bank financing for those new invest-
ments, it is very appropriate that that license be extended as soon
as possible. So I applaud your early willingness to address that
issue and to have this hearing, and would urge the subcommittee
to move forward with the extension of the section 119 license as
soon as possible.

That license is very necessary so that dish owners across the
United States can receive both network signals and superstation
signals. In 1988, it became apparent to a number of us that some
of the major networks were planning to scramble their signals and
were basically announcing no intention to make an unscrambled
signal available for backyard dish owners who couldn't get that sig-
nal any other way, and we introduced the 1988 legislation for that
reason principally.

What it provides is that if a dish owner lives in what we call a
"white" area and can't get the signal of the network from any other
source, meaning a local broadcast station, then that dish owner has
the privilege, of receiving the network signal over the satellite by
virtue of the section 119 license. That white area provision has
worked reasonably well. It is not entirely without controversy. You
may hear from some sources that there have been some glitches
with regard to it, but I think generally it has worked quite well
and for that reason is worthy of extension.

We have a somewhat different but equally compelling problem
with regard to superstation signals. Many of the superstations are
owned in whole or in part by the cable multiple system operators,
and those that are not owned in whole or in part by cable MSO's
are at least subject to the negotiating leverage and pressure of the
cable companies, virtually all of which would greatly prefer that
the superstation signals be delivered exclusively over cable systems
and not made available to cable competitors, including dish owners.

So we added to the 1988 legislation provisions dealing with
superstations, and as a result of the passage of that law, the
superstation signals are available to dish owners wherever they re-
side, whether in urban areas or in rural locations. The conditions
that led to the 1988 legislation, meaning the white area needs with
respect to network signals and also the need for dish owners wher-



12

ever they are situated to receive signals originated by
superstations, are as apparent today as they were in 1988, and so
I think the section 119 license definitely needs to be extended on
both counts.

I would have two suggestions for the subcommittee with regard
to amendments of the section 119 license. First, I would point out
that the satellite carriers completed on May 1, 1992, an arbitration
with respect to rates that was required in the 1988 legislation.
H.R. 1103 would require another arbitration with respect to rates
on June 1, 1995, and then each 5 years thereafter. That formula-
tion would leave effective the 1992 arbitrated rates only for a pe-
riod of 3 years, and I would suggest that those rates be left avail-
able for a period of 5 years and enjoy that longevity. So I would
suggest that the first arbitration required by H.R. 1103 be set for
June 1, 1997, and then each 5 years thereafter.

Second, I would recommend that the definition of satellite carrier
under the section 119(d) license be expanded so as to ensure that
it covers all satellite services that are delivered to dish owners, in-
cluding the new KU-band services associated with direct broadcast
satellite and several other variations of the KU-band offerings, and
I will provide to the subcommittee some suggested language that
will accomplish that goal.

With regard to the extension of the cable compulsory license to
terrestrial means of delivering cable signals apart from traditional
cable companies, including wireless cable and other forms of tech-
nology, I endorse fully the comments of Mr. Moorhead with regard
to the need for that extension. Wireless cable has always enjoyed
the cable compulsory license. The Copyright Office last year deter-
mined that it should no longer enjoy that because of its reading of
the statute that provides for the section 111 compulsory license.
Frankly, I disagree with that reading. I think it was far too nar-
row.

We are seeking through our legislation, the bill that Mr. Moor-
head and I have introduced, and also H.R. 1103, to correct that
problem and to make sure that wireless cable and other forms of
technology that operate terrestrial means of retransmitting broad-
cast signals will enjoy that license. As a practical matter, that is
very necessary. Wireless cable companies simply could not nego-
tiate one on one with all of the copyright owners and obtain the
clearances necessary to retransmit signals, and so as a practical


1 3 4 5 6 7 8 9 10 11 12 13

Online LibraryUnited States. Congress. House. Committee on the JCable and satellite carrier compulsory licenses : hearing before the Subcommittee on Intellectual Property and Judicial Administration of the Committee on the Judiciary, House of Representatives, One Hundred Third Congress, first session, on H.R. 759 and H.R. 1103 ... March 17, 1993 → online text (page 1 of 13)