as possible, to all the people of the United States, a rapid, efficient, nation-wide, and world-wide wire and radiocommunications service." Yet, twenty-five years after the FCC commenced fumbling with television allocations, two million housholds or 3 percent of all homes, receive absolutely no over-the-air television signals. It is estimated that over ten million homes, or 15 percent of the population, do not receive the three national network signals,off the air. It is CATV, however, that over the last 25 years has flied gaps in the FCC's allocations volds and lent a boost to UHF television in tandem with your all channel receiver Lnw

It is antithetical, then, to your Communications Act purposes to saddle CATV, and through it, the American television-viewing public with a tax for the privilege of watching

Copyright is a creation of the legislature under a constitutionally delegated power "To promote the progress of science and useful acts by securing for limited times to authors and inventors the exclusive rights to their respective

writings and discoveries **

Also under the Constitution, you have specifically been delegated power to make laws affecting interstate commerce and have done so vis-a-vis broadcasting by passage of the Communications Act Today, the Communications Act and Copyright Act are in a state of apparent tension I say apparent because the program suppliers would have you believe that the main purpose of copyright is to give authors money so that they will have incentive to write. Not true The main purpose is not to reward authors, but to insure that creative works find their way to the public. The Supreme Court has pointed out that in economie terms, copyright grants are made in "the connection that encouragement of individual effort by personal gain is the best way to advance public welfare ・・ Thus the tension dissolves when it is realized that Congress has also established a Communications Act and created the FCC to fuifiil similar, if not identical, purposes those being to secure the general benefits of radio and television programming to all the people of the United States and to encourage their larger and more effective use in the public interest. In these stated purp-mes, it is inConceivable that the FCC's own general counsel could testify before you that CAIV should pay just because the argument has been around for a long time We sub it that if the FCC testifies in support of copyright, it ought to reinte that testimony to some area of concern within its jurisdiction If Mr Hardy desires to see resolution of the issue merely for the sake of resolution, his destre can be accommodated fust as well by deleti g CATV from this bill

There are other voices in and out of the CATV industry who say that "the copyright issue must be solved it must be pit behind us, because until it is laid to rest the investment community will not advance the capital required by cable to expand and grow "*

We have no quarrel with this line of reasoning except when it is expanded to the illogical conclusion that the industry should wimp y pay copyright merely to expedite the removal of this uncertainty when CATV a future is better served by the removal of € ATV from copyright legi=la'loti

And then, there are voices in our industry who say. "We can afford to pay" with remarks like "What is one or two or 2.5 percent of our grows?” Let me tell you what it is

In December 1973 CATA turned into Ser stor John McClellan an economie study of more than 250 CATV system, ranglig in wine from 40 wubscribers to 5800 aghmcribers. In that at de which we w¦¦• Fult for the record, CA 1A found that in the singular "rate level of one percent of gross proceeds to copyright fat antig offer brennd wrn by mystery, a Te aiutartim of 1 (1 1 500 au? ∞ zilain would experience red action of net rever Jew of 13% percent

the industry cunt s′′ rd to pay and that is the truth lest this be considered solely a pitch for a arall system exen.{tion that is a flat dellar exemption myjet, an Stoker it iw z-t } rcopyright will adversely affect larger སཏ མཛོན དང སོ་རྟleཛོ་ it * ¢ tu £]* ! སཱ ༅ ས f ནང། ཡའ མདོང་མོར་སོ་

We also regard as fundamental eut «t ferations the foll whig questions which who-leh hơn makrd of every pro panett of ong yright la? ility for CATV

2 Who will really pay?

1 Who will receive the p-vam etti?

CATV #h 914d not pay expor alt because there is no debt owlig T'ere are *at dreds of thousands of hospital ro mam in this vegetry offering televis, service at a price. Patients rent a television set and the set wippier the 1. mpétal

and maintenance man profit. Rates are as high as $3 a day. There is an urad industry-hospital television-possibly with gross revenues, exceeding (All Why are they not in the copyright bill? Because they are providing the wr of facilitating television viewing. The Supreme Court has twice held same rationale applies to CATV. These cases are instructive. First ate to af at aside the program-supplier sponsored line that the cases are irrelevant leer s they dealt with the 1909 Copyright Act. Of course, the Supreme Court was 5. with a 1909 Copyright Act. But they said, in Fortnightly that the decisit VI made "with due regard to changing technology. *", ie, not based of concepts. The Court held: "** mere quantitative contribution canal the proper test to determine copyright liability in the context of televisione casting. If it were, many people who make large contributions to televison, might find themselves liable for copyright infringement not only the 1,." ment house owner who erects a common antenna for his tenants, but tres g keeper who sells or rents television sets, and, indeed, every televisiofi, sart facturer. Rather, resolution of the issue before us depends upon a defern. of the function that CATV plays in the total process of television broadcas and reception."

The Court reasoned television viewing was a combined activity of brondesator and viewers; that broadcasters perform and viewers do not; broadcasters ATP active performers and viewers passive beneficiaries and CATV “falls oẾ viewer's side of the line."

The Court concluded as a matter of separation of powers not as a matter ¿ copyright policy-that the job of accommodating "various competing cots, 1 ra tions of copyright, communications, and antitrust" belonged to Congress. I'e Court did not intend that Congress, in fact, adopt CATV copy right hat,L'y

Then came Tele PrompTer-CBS, where the Court was faced with macrowave long-distance signal importation-more than 450 miles by CATV systems that also originated their own programs, also sold local advertising and interconnected with other systems. It was contended that this entire package moved CA,V to the broadcaster side of the line. The Court found no copyright significat e h the other CATV activities and found that the distance that signals travelled 11 not "alter the function [CATV] performs for its subscribers." The Court statef "When a television broadcaster transmits a program, it has made pu simultaneous viewing and hearing the contents of that program. The privilege f receiving the broadcast electronic signals and of converting them af to the suck and sounds of the program inheres in ail members of the pubie who have means of doing so. The reception and rechanneling of these signals for mail að taneous viewing is essentially a viewer function irrespective of the distance be tween the broadcasting station and the ultimate tsewer" › Enphasis a 1ded a Mr Chairman, members of this committee, two points: (1) When a fejevas station broadcasts, the broadcast is in the public domain, (2) The Sarne Court's characterization of what CATV does is as true today as it was wirk the Court made its decision. What CATV does its viewer function altered by the words of the 1909 Act or HR 2223

Those advocating CATV liability have a high burden of persuasion, liec a var CATV fulfills Communications Act goals by making televisión lo re available or available for the first time. It is a viewer oriented medim as are translators master antennae, rooftop antennae, and television sets then,se ves None of these entities are prospectively lable for copyri, if under voir faiNote should be, for they are all part of the process of tia'ionwide disselletation of ¡E gramming that you have legislated in the Comment,cations Act

In Tele Prom Tor CBS, the copyright holders argued that CATV prervie que of programs (which would not apply to network televisions would dilute the p*f* ability of reruns and other syndicated properties, tuus removing incentives fo produce television programs. The Court rejected this argument. It reögtied that the app ropriife Lexus was trang that as expyrächt holders ijo hot pocke money from the winate user the television Vitwer tat from the alver wha "who use the drawing power of the copyrighted material to promote fürtz gais and servle****

The Court recognized that distint sigi al carriage does not interfere with the "eopyright holders' means of extracting recompense for their creativity and bahor”, and that, in fact CATV provides a larger viewer market (to the beseft of tooth the ndvertiser and copyrig

We ...affa' CATV J

are paid by advent sets 1

or by those that help the view.

This leads to the second question who will really pay There is no doubt that your imposition of copyright on CATV would be, at least in part, a consumer tax on televisioni Viewing Some have difficulty with the word "tax But it is a form of territorial taxation, that is, a special television viewing charge to be paid only by cabs viewers Just the viewer himself pay it? It could stop at the cable cojany – Bat it will not because there are no free lunches. Is it a large amount? At the national average cable charge of $6 per month per home, the copyright bife is 81 80 per year for the 25 percent rate, irrespective of number of signals carried

In the seven Congressional districts of this Committee, there are approxi mately 73000 cable lines. Under this bill, these 73.000 homes could pay to e pyright holders up to $1.51, 400 per year

What about the television viewers? They care, too. We have already received more than 200 commuiaty resolutions opposing this viewing tax from cities as diverse as Fan Claire, Wisconsin and Granville Village New York

Those resolutions from municipauties will be supp hed for the record. Further, the United States Conference of Mavors and the League of Cities also adopted a jou ↑ resolution oppoeng the inclusion of CATV in the copyright ball Your evrst,fijet's are concerted about higher CATV charges that will result from copyright legislation

The third qjest it, cnticertis to whom copyrig at payment would be made Jack Valerri president of the MPAA, told Setafor McClellan's Committee on the Judiciary on August 1, 1973 that he represetits the Committee of Copyright Owners composed of eight Independent suppliers of copyrighted television pro gratis oli Columbia Pictures Industries le (2) Metro Goldwyn Mayer The; 63) Metromedia Producers Corporation, (4) Paramount Pictures Corporation, 45) Tacrtieth Century Fox Fim Corporation (6) United Artists Corporation, 676 MCA Tre; and is Warter Brothers The Mr Valenti sæd PROGTAILS KU; ↑hed by ner hers of CCO to stators and thereby to cable systems, constitute by far the largest part of all copyright progratus carried by televisiofi and ride... CATA has con, leted a fabulation of copyrig at registrations for television progt kuus Tirona da t 1. New York City during in recent work

the

of ad program, boars telecast by the three networks in New York City, be fweer 5.00pm and 11.30 pm in the sample Week

46.15 percent of aid copyrig. ↑ on file program fine on CBS was owned on record by one of these el,bt (CO firms, subbariy, di » petvent for NBC, and 1667 for vit for AHC

11 Vie copyrights on fle for t) at work reflected that 51 of Gong Viện 190) pozivtity were owned by one of these e Mr. Vaeri im correct in his analysis of Who owns er pyright But to makt the analysis and mar རྩོམnoས་སུ་ Ru-t-P#txa* སྐྱོ་ན་་ ལ་་ ༄ལ་། བཟོnla ་དྲི at tie largest cof Vrill owner of the big

Mr. KASTEN METER Our next witness is Mr. Frederick W Ford, counsel for the Ad Hoc Committee of Concerted Cable Telev ́s on Operators for a Fair Copyright Law Mr. Ford, would you lie to introduce your colleagues t

TESTIMONY OF FREDERICK W FORD COUNSEL, AD HOC COMMIT. TLE OF CONCERNED CABLE TELEVISION OPERATORS FOR A FAIR COPYRIGHT LAW

Mr. Fonts Mr Cherman at 1 menbers of the committee. I am Frederick W Ford a member the Waster pton 'aw firm of Pittnan Lovett Ford & Hennes V, WT 64 asat 1899 H Street NW Labdar here to lay on half of the A... Học Corn, the of Concerted Cg7p Ta'e vis,or, Operators for * 1xw to wggy st at qend ment to the bill wi to support parage of the bil

་

1

Accompanying me are Ben V. Willie of Iowa; C. Warren Frib of New York; Lawrence Flinn of Connecticut, and George Garize of Pennsylvania.

I have conceded 5 minutes of the time alloted to me to Teleprot pe Corp., which is the largest owner of cable television in the country. I have, therefore, cut my statement rather drastically. I would kee have the entire statement incorporated in the record, because I v. eliminate large parts of it in order to confine myself to the allotted time.

Mr. KASTEN MEIER. The chairman appreciates that, Mr. Ford, an without objection the 17-page statement and the appendixes will be received for the record.

Mr. FORD. The ad hoc committee opposes the payment of copyr on the community antenna function, and suggests an amer drent të the bill to eliminate copyright liability of community antennas for carriage of television signals. That suggested amendment is costa.mi in footnote 5.

The ad hoc committee does not view the matter of copyright pay ments as an issue between it and the Office of Copyrights, the gy right owners, the NAB, AMST, or NCTA, because none of them wi pay copyright, only the public ultimately pays copyright on telev, of programs. The issue here is between the copyright owners and the subscribing members of the public to community antennas.

The issue is as follows: Should the Congress, contrary to the reason and logic of the U.S. Supreme Court, on two occasions, create the legislative fiction that CATV is engaged in the display or perform ance of a copyrighted work publicly and is, therefore, liable for the payment of copyright fees which, of course, it would have to court from the public as a part of its antenna service?

The public should not be required to pay a second copyright fre for the same program because of the type of antenna it uses

The Office of Copyrights makes its case for CATV copyright lab" ty on the fact that CATV charges its subscribers a fee for its anterns services which makes a profit and failure to share these profits on "? damage the copyright. The Supreme Court disagreed with the assumptions and found otherwise in Tel Prompler Corporation V CBS, 415 U.S. 394 (1974). If the Office of Copyright's theory of liability is correct--which it is not -then anyone who makes a proft. directly or indirectly, from a performance of a copyrighted work should be liable. This liability would run to wire and receiver many facturers and countless other business enterprises which enable the public to view the performance.

CATV services keeps the copyright owner honest by delivering the signal carrying his program to the public for which he has beer paid.

At the present time, a sponsor who buys a program usually pays t'e copyright owner for one performance over one or more stations The sponsor pays the copyright owner, directly or indirectly, for tickets to the show for everyone within the grade B contour of the stations televising it and as far beyond that contour as it can be received. This cost is passed on to the public eventually in the pur i ve price of the product.

It is a scientific fact, recognized in the Sixth Report and Order, however, that over average terrain only 90 percent of the locations in the grade A contour receive an adequate signal 50 percent of the time, and within the grade B contour only 70 percent of the locations receive an adequate signal 50 percent of the time. I will venture that most sponsors paying for a program think they are getting a potential of 100 percent of the locations 100 percent of the time, but that just isn't so, even though the copyright owner is probably collecting for 100 percent of the locations 100 percent of the time.

A community antenna television system within the grade B contour merely aids the sponsor in getting his money's worth from the copyright owner and the station by assuring the sponsor that anyone who desires the signal will receive it clearly, and thus increase the potential audience. Certain copyright owners are not satisfied with this. They collect from the sponsor who recovers his cost from the public and they would like to collect again from the CATV operator who must also pass his cost on to the public. Some way or other it does not seem right for the public to have to pay for "two tickets to the same performance." No one has attempted successfully, to my knowledge, to refute this argument. They merely ignore it and talk about something else.

Cable television or its advertisers will pay for any copyrighted program it originates, whereas the public would receive nothing for the cash the broadcasters would have the copyright owner siphon from the public via CATV which otherwise could be used for copyright fees for more diverse programing.

There is a basic conflict between communications policy and any copyright law in which a cable antenna system is required to pay Copyright on any signal it is authorized to receive and distribute on its system by the Federal Communications Commission.

The proposed legislation would compel CATV to pay copyright owners for distributing signals carrying their copyrighted works, The broadcaster has the right to pick and choose the copyrighted works he will buy and broadcast.

Congress should set the record straight. If the Commission is con firmed by Congress in the power to requre carriage of particular sig nals by CATV, then CATV will ren.ain a supplemental reception serv ice, perform nothing, and owe nothing.

If it is desired to requere copyright payment by CATV for its supplemental role, then CA IV should be entitled to carry whatever programs it desires, delete the advertising, and substitute its own. This is strictly a communications policy question. The broad aster should not be permitted to have it both ways collect additional revenue from sponsors for the added carriage of CATV and require CATV to pay copyright fees,

In short, the broadcaster is arguing for the morality of unjust enrichment to copyright owners at the expense of the puble CATV serves, as a means of using copyright to restrict the growth of CATV It is the publie who will urstly enrich the broadcaster and or the copyright owner, not the CAIV operators. These anti consumer proVisions should not be enacted into law.

We urge the Congress not to compromise the fundamental legal proto p'ès established by the US Supreme Court on two occasions