Rural MVPDs Support Retention of Cable Compulsory License for Broadcast Signals

Groups Say Any New Approach Must Occur Concurrently with Retransmission Consent Reform

Washington, D.C. - In comments filed with the U.S. Copyright office (attached), a coalition representing hundreds of rural pay-TV providers is supporting retention of the compulsory license system that allows cable operators to retransmit broadcast TV signals in a cost-efficient manner, fairly compensates copyright holders and shields small pay-TV providers from incurring large costs associated with the negotiation of thousands of copyright transactions on an individual basis.
"This is a classic case of 'If it ain't broke, don't fix it,'" American Cable Association President and CEO Matthew M. Polka said. "The current system has served the needs of everyone well for more than 30 years. All of the proposed alternatives to the current compulsory licensing system would be a step backward and hurt consumers served by ACA members."

Support for current law came in an April 25 filing by the Rural MVPD Group, which includes ACA; the National Telecommunications Cooperative Association (NTCA); the Organization for the Promotion and Advancement of Small Telecommunications Companies (OPASTCO); and the Western Telecommunications Alliance (WTA).

The U.S. Copyright Office has been tasked by Congress with drafting a report on the continued efficacy of the compulsory license regime put in place by federal law in 1976. The Rural MVPD Group's comments came in response to a Notice of Inquiry (NOI) issued by the Copyright Office on March 3, 2011.

In the comments, the Rural MVPD Group stressed that compulsory licensing is an efficient mechanism for copyright clearance of broadcast signals and serves to preserve a multiplicity of information sources. Elimination of compulsory licensing would probably put many financially marginal TV stations that rely on must carry out of business and swell transaction costs for small pay-TV providers forced to conduct a countless number of discrete copyright negotiations, the Rural MVPD Group said.

"Phasing out the cable compulsory license with no clear justification in support would pose a significant costly and disruptive burden on small rural providers-and ultimately the consumers they serve," Shirley Bloomfield, CEO of the National Telecommunications Cooperative Association, said.

To the extent the Copyright Office advances a copyright clearance system in lieu of the compulsory license, the Rural MVPD Group recommended concurrent reform of the retransmission consent laws and regulations because of their close relationship to copyright law, and in light of the broadcasters' escalating cash demands in exchange for pay-TV distribution and the Big 4 networks' and sports leagues' recent demands for a significant cut of the take.

"The Copyright Office must review to what extent copyright holders are already being fully compensated, or even over-compensated, through retransmission consent. The review should also analyze to what extent eliminating the statutory license and replacing it with another regime would be to the detriment of small pay-TV providers," OPASTCO President John N. Rose said.

Any phase-out of the compulsory license should address the harm to smaller MVPDs (Multichannel Video Programming Distributors), the Rural MVPD Group said. At a minimum, a replacement system should prohibit discriminatory license fees charged to small pay-TV providers, and big markets dominated by large cable operators should go first under any staggered approach adopted. Big MVPDs have far more resources to deal with the costs, disruption and uncertainty that will follow any elimination of the compulsory license.

The Rural MVPD Group also explained that the compulsory license for broadcast signals is deeply intertwined not only with retransmission consent but also with other major Federal Communications Commission regulations, including must carry, network non-duplication, syndicated exclusivity, sports blackouts and significantly viewed status. As a result, calls for copyright parity between broadcast signals and cable programming networks (which are not covered by these FCC rules) are an untenable goal.

"Both the Copyright Office and the FCC have recognized the extensive regulatory framework governing pay-TV carriage of broadcast stations, concluding that changes to broadcast signal carriage regulations cannot be considered in isolation. The heavily regulated nature of broadcast signal carriage alone provides ample basis to distinguish broadcast channels from cable channels," Kelly Worthington, Executive Vice President of the Western Telecommunications Alliance, said.

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The National Telecommunications Cooperative Association is the premier association representing over 570 locally owned and controlled telecommunications cooperatives and commercial companies throughout rural and small-town America. NTCA provides its members with legislative, regulatory and industry representation; meetings; publications and educational programs; and an array of employee benefit programs. Visit us at NTCA at 703-351-2037