Office move into it too, it just seems to me that the industry is going to be swamped in paper. Mr. RAILSBACK. Am I correct then, that you would favor the FCC handling it! Mr. FORD. I think there is no question that on the technical aspects of cable television we must have a uniform system. The FCC must have jurisdiction to regulate certain aspects of cable television, there Is no question about that. Mr. RAILSBACK. Thank you. Mr. FORD. There is one thing I would like to add, if I may. There was a statement to the effect - or a question concerning the Consensus Agreement. Within 3 months after the Consensus Agreement was issued, the Commission issued its statement, it- Rules of 1972, and in the course of that, in my view, they abrogated the Consensus Agreement within 3 months. And not only that, but within the last few weeks they issued another report in Docket No. 19995 in which they repeated that. As far as I am concerned, the Consensus Agreement wasn't an agree ment to begin with, never has been, and shouldn't be recognized at any time by anybody. Mr. KASTEN METER. Mr. Ford, I just have one more question. You were talking about the Commission; do you agree with its rule on exclusivity, 76 151, the rule referred to by Mr. Bradley! Mr. FoRD, I am probably its most ardent foe. I have presently a case pending on behalf of Mr. Baro who will be here in a few moments, before the Court of Appeals, and hopefully they will disagree with about six other circuits that have heid the nonduplication rule vald I think it is invalid, I think it is terrible, and I hope to get it knocked out Mr. KASTEN MEIER The reason I asked yon, to the extent that you and anyone else rely on those is a reason for us not to leg.-'ite in the area of copyright becane the FCC made these rules to protect these people, and therefore we should rely on these rules. But if in fit we can't rely on these rules either, there n ay not be very much to rly upons. Mr FORD. Well, hopefully, within a few weeks, there will be nothing tor's upon Laughter 1 1 sot e of the fry obart to look up wires gry being written din don te obl Mr. KASTENMEEF Ore other question, and it is just a matter of m.formation. I don't know that it really portero to what wenty don The question is, do calde systella le at agerents have the right to deny membership by any appli Antiup of down the box in the city! Mi Fon Th». AACTV Vour grand, try, at issted were two par vgr aplis, one wa mpt the And as the industry matigres, a- new frie et e become n ore mature, then, I think, we W! t.ot tu ot to" het d་、 ཐ ༈ད་ 『《" vena pod ME KASTENmror Certa anybody But to the extent that cal'e ten up on is defferent, that von do have a sutineriber, you could other na the contract with, h per on or not It may do ponterns of the potential market Me Fan I have never lend and I have been pretty at I have never heard of any did. ''y at all because every calle opera for I know will get every conte tion, key get. to Now, there are problems. For example, supposing a particular le is out in the country 8 miles, by itself, and your rate is $4 a mort it costs $4,000 a mile to run a cable out there, then you have problems But probably the franchise is so written as not to include those outly ing areas. Mr. KASTEN MEIER. Well, I think theoretically you might have a problem there, you might have a subscriber who is an electronics ex pert, you might have a subscriber on the system who originates and transmits, who might transmit himself. I don't know if that would be possible, but he would transmit to his neighbors up and down te street for a lesser fee. I was just wondering what the relationship word be of the original cable operator and the subsequent operator in the field who is obviously not paying copyright, other than to retranst. it such signals. Mr. FORD. Well, this raises a bunch of questions. Most cities do reg grant exclusive licenses, or exclusive franchises, at least they have rot in the past. But most of them now have ordinances which prohibit the operation of a system-and they define "system"-without a certif ate from the city. The Commission defines 50 customers as a cable system before you become subject to those various rules. But basically there is no problem at all, most of the ordinan es ex clude apartment houses. And of course the legislation here exen 14apartment houses. Now, some of these apartment houses may have two, or three thousand apartments in them and yet, they will be exer på under the bill which is pending here; whereas a cable system of a ton sand customers in a little small town out here will be liable. So, to that extent it's an inaccurate bill. Mr. KASTEN MEIER. Well. I was looking, theoretically, at what prob lems could arise. Mr. FORD. Yes. Mr. KASTEN MEIER. In any event, the committee thanks you again for appearing this morning. Mr. FORD. I tell you. I hope I'm not going to be back in here in 1o years. Mr. DANIELSON. I hope you are, we'll have a better bill. STATEMENT OF FREDERICK W. FORD ON BEHALF OF THE AD Học COMMITTEE # 1. INTRODUCTION Mr Chairman My name is Frederick W. Ford I am a member of the Wish ington, DC law firm of Pittman Lovett Ford and Hennessey with offices at 1819 H Street, NW. I appear here today on behalf of the Ad Hoc Committee of Concerned Cable Television Operators. For a Fair Copyright Law to suggest an Amendment to the Bill and to support passage of the Bill, as amended HR 2223 is almost identical with S 1361 which was passed by the Servte at the Second Session of the 93rd Congress Serate Report No. 93-983 from the Committee on the Judiciary and Senate Report No. 93–1035 from the Committee on Commerce to accompany. 8–1361 contain the views of the Committees on that Bill The Report of the Judiciary Committee (p 100) contains a history of the Copyright Revision Legislation, a sectional analysis of the Bill and discUISSE P 1 There is attached bereto as Annendly 1 a Menorandim to The Ad He (mmittee of Cancerred Cable Triestetin Operators 1 ir akoretyright law on stat À vender 15 1974 ett'afilee the reskura the fet stri kas tried in the meat fin niet lange All of the efforts were wwuf The 1974 N„preme Ci It Tele Pr my Ter y CPR That tally di@urent out [esin më copyright laade as to distant signals authorized by the FCC to be carrie II. PERTINENT PROVISIONS OF HR. 2223 Briefly, Section 106 gives an exclusive right to a copyright owner to "display" or `perform the copyrighted work publicly" subject to Sections 107 117. Section 111 provides an exemption for certain secondary transmissions, including hotels and apartment houses," institutional material, certain carriers and non profit groups Subsection (b) provides for full liability for the retransmission of a Pay TV work Subsection (c) provides certain compulsory licenses for the community antenna function of cable systems Notwithstanding the compulsory license, full copyright liability is imposed if the secondary transmission is not permissible under the FCC rules or authorizations. In short, the public will ultinately have to respond in cash for an operator's violation of FCC rules which cert sily has bothing to do with copyright subsection (d) provides for flùng certain information with the Office of Copy right, depositing royalty payments there based on a sliding percentage scale of gross receipts from subscribers, and for the distribution of those funds Subsec toti cei confailis various definitions Section S01 provides for a Copyright Tribunal to adrust the royalty base as the arbitrators think, if not overruled by the House or Senate within 90 days III. DIVERSE POSITIONS There are strong differences of opinion between the Register of Copyrights, broadcasters copyright owners and most CAIV operators concerting liability of CATV for copyright fees. The Register of Copyrights, broadcasters and copy right owners favor hability of común grify wifeftis for copyrig† As I under Mand the situation the Register of Copyrights position is not whether but how mach CATV should pay Copyright owners would like the Congress to impose complete liability on community antenna systems. The broadcasters interest, in Whether or not community antennas jaay copyright has always been, obscure to me, unless the more expetises commitility antennas have the higher the rate and the fewer sulme ribers they will have Copyright then becothes a device to protect broadcasters not to compensate the author The broadcasters were not very obscure, however, in 1971 when NCIA and the Copyright owners were about to compromise their differences The National Association of Broadcasters and the Assoc qtion of Maximum Service Tele casters went to the White House Off: e of Telecomtat de af ons Policy * and sparked enough pressure by it and the FCC to cause the NOIA Bard of Directors to capitulate by a one vote mi ority into necepting the Irig Ioups "Corseto118 Agreement without change Apparently the NOTA at 11 feels cortuiffed in pornciple to pay reasonable copyrigha dep te fe cortout, and even though the Þ00 repudiated the "Corsetists. Agrve tuent within three months after it was Ir stigled * as it had to do Bat the con materia of the NOTA Board then or now revay have no bearing on the je ne facing bus. Nghe 『,. Monttu entitiot determate the public interest or in our openion justify this Com Näffee in recotenendtg that the pag? the pay twice to me the sathe show. The Ad Hoc Con faffer opposes the ↑ Avent of onvr g** པ་པིན་སྒོའི་ལྟ་དང་ ར་ ་་? %aན ཡོད པ དེ སྟེ fabetion and suggests an amendment to the Bloem of commeanaty attentias for carriage of television, sig? \!® IV. THE ISSUE The Ad Hoc Committee does not view the matter of copyright payments as it issue between it and the Office of Copyrights, the copyright owners, the NAP AMST, or NCTA, because none of them will pay copyright—only the patie mately pays copyright on television programs. The issue here is better the copyright owners and the subscribing members of the public to community an tennas. That issue is as follows: "Should the Congress, contrary to the reame and logic of the United States Supreme Court, on two occasions' create the legislative fiction that CATV is engaged in the display or performance of ange righted work publicly and is, therefore, liable for the payment of copyright fres which, of course, it would have to collect from the public as a part of its antenna service?" The proposed legislation would create this legislative fiction by defining the right to display or "perform the copyrighted work publicly."' The definiti sa f "perform," "display," "publicly" and "transmit" in Section 101 of the R. intend, according to the Committee Report," to mean that "A cable AAR system is performing when it retransmits the broadcast to its subscribepa right of public performance in the copyright owner is not limited by any profit” requirement. Section 111 of the Bill proposes limited exceptons fre liability of CATV and establishes communications policy—the proper fuis", & of the Commerce Committee." V. THE PUBLIC SHOULD NOT BE REQUIRED TO PAY A SECOND COPYRIGHT FEE FOR THE SAME PROGRAM BECAUSE OF THE TYPE ANTENNA IT USES The Office of Copyright makes its case for CATV copyright liability on the fact that CATV charges its subscribers a fee for its antenna services w makes a profit and failure to share these profits could damage the copyright_The Supreme Court disagreed with these assumptions and found otherwise in Tor PrompTer Corp. v. CBS, supra n.2. If the Office of Copyrights' theory of 1* is correct, which it is not, then anyone who makes a profit, directly or indirett from a performance of a copyrighted work should be able. This liability we of run to wire and receiver manufacturers and countless other business etter; " as which enable the public to view the performance. The fact that CATV makes a profit, by assisting the TV station to delver ta programs to the public it is obligated to serve and for which the copyright - whet has been paid, has no bearing on whether the public should pay copyright fees via CATV. CATV services keeps the copyright owner honest by delivering the signal carrying his program to the public for which he has been paid At the present time, a sponsor who buys a program usually pays the copyrig owner for one performance over one or more stations. The sponsor pays the over right owner, directly or indirectly, for tickets to the show for everyote MON the grade B contour of the stations televising it and as far beyond that con! STAN it can be received. This cost is passed on to the public eventually in the pure" ase price of the product. It is a scientific fact, recognized in the Sixth Report and Order," however over average terrain only 905% of the locations in the Grade A contour revise adequate signal 50% of the time, and within the Grade B contour only 70 the locations receive an adequate signal 50% of the time I will venture fat most sponsors paying for a program think they are getting a potential of 10** of the locations 100% of the time, but that just isn't so, even though the co, 3ætt owner is probably collecting for 100% of the loentions 1000% of the time A community antenna television system within the Grade B contour merelt 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 revile it clearly, and thus increase the potential audience. Certain copyright owbers are not satisfied with this. They collect from the sponsor who recovers his cost fre the public and they would like to collect again from the CATV operator who Bost aiso pass his cost on to the publie Some way or other it does not seem r gift the pubue to have to pay for "two tickets to the same performance. “No ole has attempted successfully, to my knowledge, to refute this argument They merely ignore it and talk about something else The copyright owners by virtue of their access to the air, with no charges by the Government to transport their product to the public compared to CATV companies which pay up to $10,000 a mile for their channels of communication to subscribers, should certainly be required to forgo a second fee from a reception service for the public This is particularly true here when a handful of companies seek this double pay ment from the American people across the country for what Congressional policy and 'udicial rulings now dictate is in the public domain” Canje television or its advertisers will pay for any copyrighted programs. It orig.nates whereas the public would receive nothing for the cash the broadensters would have the copyright owner siphon from the publi- via CATV which otherwise con'd be used for copyright fees for more diverse programming Ihere 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 Communica fiers Commission The Supreme Court has construed the Communications Act to empower the Corin ission to regulate CATV In exercising this power, the Con n,jws,ot, reputres, as a condition of re eiving and carriage of te’evigoti broadcast sigt als that CATV systems carry all local signals. The definition of local signal varies according to the size market where the system is loented. Nevertheiss the Comfilssjefi exercises its jewer to require carriage of certain signls and pern; its the carriage of others Noch regulations now constitute CAIV a supplemental service to make the Commissioni s allocations of frequencies more effective Until set aside, revised or revoked CATV systems reyst comply with those e irriage rules Ise proposed legislation wou'd compel CATV to pry copyright owners for distributing signals carrying their copyrighted works The broadcaster has the right to pick and choo e the copyrighted works he will buy and broad ast ( igress alonid set the record str baht If the Cotatission is confirmed by Con gresit, the power to regaire carriage of part, u ar s grade by CAIV then CALV xon, m wij | fer ental reception service, per tant ng and owe notia ag If it in den red to reju re copyright pays end by CATV for its supplemental ree, **×5, CAIV alon'd be entitled to carry whatever programs it deuren dei'c the advertising and wubstitute its oWIL CAL of uniunt ennichment to coj Valt owners at the eXperise of the p2 METSEN JON & mentis of using copyright to restrict the go wth of CAIN Padam kawale ate, and y cnrich the brisal arter and ཟླ་༄། ན་ནས』༄Zia་རིc% tue CA IV operators. These anti estisulet provinjodin munud not be enacted into law We urge the Cot gress not to er promise the firdsthenital legal principles sued by the United MATERN |