decisions that are on the side of the viewer. The broadcaster, whatever his motives are, is wrong in trying to saddle its viewers with extra copyright payments to view its "free" programs through use of a more efficient rented antenna.

Imposing copyright fees on the community antenna function and, in effect, making the American public pay tribute twice to the 28 corporations in New York and Hollywood that own substantially all of the copyrighted material on TV, to watch "free TV" is wrong. If the copyright owners or merchandisers exercise forbearance on the short-term profit of double payment and permit cable television to flourish, they will be amply rewarded with even greater profits from the insatiable requirements of cable television for material to fill its many origination channels in the years to come.

The Commission's power to limit the number of distant signals imported by microwave has been confirmed. No further power is needed to protect the copyright owner and the public interest.

Now that the "unfair competition" shibboleth has been discredited, the only bases for contending that CATV should pay copyright are: One: That it makes a profit from the use of copyrighted material, and

Two: That it really does engage in public performance for profit. Neither one of these positions are sound. There is no principle of copyright law which assesses liability for copyright based on profit alone and certainly none exists in the pending bill.

As to the display or performance of copyrighted works publicly by community antennas, the complete answer is that a reception antenna does not perform. The cable operator does not convert the electronic signal into pictures and sound-he merely delivers a signal to the subscriber who furnishes his own equipment to convert the signal to pictures and sound in order to receive and view the performance. The CATV operator does not use or sell any program or the peformance thereof either publicly or privately. A CATV operator sells a receiving antenna service, just as a manufacturer sells a receiving antenna from which he makes a profit. But, community antennas do not perform anything.

Despite the FCC's push for copyright liability, the copyright law is not the place to bypass the Commerce Committees and embed regulatory flexibility in concrete. The Senate Commerce Committee in its report on S. 1361 stated that "it believes that in view of the potential impact of certain provisions in S. 1361 on our nationwide communication service, ample opportunity should have been afforded it to consider those provisions in-depth and to have held hearings on the communications issues."

Certainly, CATV should be eliminated from this bill, if for no other reason than to permit the Commerce Committees to develop a national communications policy on cable television before any copyright policy on the community antenna function is undertaken.

Based on the foregoing review of the background and the provisions. of this legislation, it must be concluded that the provisions of H.R. 2223 concerning CATV are philosophically unsound. An across-theboard payment, including payment by the public for two tickets to the same performance or for distant signals as limited by the Commission's rules, is, in our opinion, soaking the consumer.

We believe that this subcommittee is justified and should adopt the community antenna industry's historical position by amending this bill to eliminate any copyright liability for the community antenna function, under section 106 or other provisions of H.R. 2223, but not, of course, the origination function of cable television systems for which it should be liable like anyone else.

Thank you.

Mr. KASTEN MEIER. Thank you, Mr. Ford. The Chair yields to the gentleman from New York, Mr. Pattison.

Mr. PATTISON. I have no questions. It seems to me that this statement is basically-there are no substantial disagreements between your position and the position that was stated just a few minutes ago,

Mr. FORD. Well, I haven't heard all of the statement, I haven't seen it. Some of the answers I would not agree with. I think, fundamentally, I am making a very decided distinction between the performer and the viewer.

Mr. PATTISON. I have no further questions.

Mr. KASTEN MEIER. The gentleman from California, Mr. Wiggins. Mr. WIGGINS. Mr. Ford, I am going to make an argument to which I do not expect you to agree, but I would like you to give me your reasons for disagreeing.

I think it can be stated fairly and accurately that there is some relationship between payment of copyright and the market to be served by the copyrighted work. For example, the sale by a playwright to an individual producer for the performance of a play does not carry with it that all other producers may reproduce that play for profit without a further payment.

Similarly, the production of a movie for showing at residential theaters does not carry with it the implication that it can be reproduced on television without the payment of an additional copyright fee.

The reason, I think, is that the owner of a copyright bargained for a particular market, and that he did not bargain for more than that. Now, if there is some validity to this argument, could it not be said that the owner of a copyright, selling copyrighted work, the original transmitter, bargains for a market, and he did not bargain for the expanded market by cable television, and that accordingly, he should get some additional compensation by reason of that expanded market. Mr. FORD. Well, my response is that he does in fact bargain and receives payment for every person who has a receiver within the reach of that television station. So, he makes his bargain, he gets his cash. He intends to sell it, and he dedicates it to the public within the bounds of that station.

And when he figures his price, he knows substantially how many people are there. He knows precisely what he is selling, and who he is dedicating this program to.

Mr. WIGGINS. Well, I am assuming something that you may challenge, that the cable opens up a new market that is not available to normal transmission.

Mr. FORD. But the advertiser receives the benefit of that. And the copyright owner, as the Supreme Court pointed out, will increase his fee to compensate him for the reception of that program by all the people within that area. That was the logic on which the Supreme Court permitted the distant signal to be brought in because it said it

did not the Supreme Court in its logic said-it did not affect the ability of the copyright owner to extract compensation for his product. Mr. WIGGINS. In summary, then, your answer to my argument is that it is the same market.

Mr. FORD. The same market. It has been paid for by the man watching that program simultaneously with its broadcast.

Now, when you get into delayed broadcasts, when you get into some of the other things, then you are getting into the question of origination, the producer; you have the other producer, the books and all those other things which are different.

But what I am talking about is a simultaneous reception, and there is no basis under the Sun for the copyright owner to get paid a second time.

Mr. WIGGINS. In that event, would you differentiate between local and distant signals?

Mr. FORD. No, I would not. I would have up until the Supreme Court decision; and the logic for this can be found in the CBS case. I think, when you look at it, the Commission limits the number of distant signals that can be brought in.

If you look at the cited statistics in my statement-which I did not read-the income of the copyright owners and we are talking about, really, only 28 companies. If we look at their income from copyrights, as near as we can determine from the figures which have been published, they have made a very substantial increase in their income as a result of television.

Now, as a result, if a few distant signals are brought in, they should give something back for this tremendous increase in profits they have made in the last 10 years.

Mr. WIGGINS. To whom?

Mr. FORD. To the public by not charging the public. For instance, about 85 percent of the public is in the first 100 markets. And these distant signals that are brought in are most beneficial to those other markets beyond the first 100 markets.

Mr. WIGGINS. Just to get a direct answer, you would not support the concept of a copyright payment for the importation of distant signals for simultaneous transmission on local television?

Mr. FORD. No, based on the Supreme Court decisions.

Mr. KASTEN METER. The gentleman from Massachusetts, Mr. Drinan. Mr. DRINAN. Thank you very much. Mr. Chairman. Mr. Ford, the statute that you refer to on page 5 does not, as I read it, state categorically that the transmission has to be simultaneous; perhaps it is there. This would allow for delayed broadcast.

Mr. FORD. It is not intended.

Mr. DRINAN. Not intended. But you intend it.

Mr. FORD. "The further transmitting to the public, by means of broadcast receiving equipment of whatever design, including antennas, and related equipment, wherever located, which receives and makes available by means of cable, or wires and related equipment to individual reception sets," there is nothing in here that would permit anything other than simultaneous reception.

Mr. DRINAN. It does not preclude it, though.

Mr. FORD. Probably.

Mr. DRINAN. You should tighten that up.

Mr. FORD. In the "Provided" part it probably does. "The further transmission is made without altering or adding to the content"-there is no specific prohibition against that. It should be tightened up. Mr. DRINAN. Thank you.

Now, I have trouble with the words also "no direct transmission fee is charged" the words "direct admission fee," if an auditorium invited 500 people to see something that they otherwise could not see, I would assume that you would say they should pay the copyright. Mr. FORD. I would say that is logically converting it from a reception service to a production and a performance.

Mr. DRINAN. All right.

Mr. FORD. There should be a copyright paid.

Mr. DRINAN. How can you say there is no direct transmission fee when they pay $5 or $6 a month?

Mr. FORD. What was that, again?

Mr. DRINAN. If they pay a direct admission fee, pay their dollar to get in to see that nice film that otherwise they couldn't see, you would say they have to give the copyright to the original transmitter.

How can you say, if they pay $6 a month for this regular subscribing service, that they are immune from that copyright liability?

Mr. FORD. They are paying for a service, an antenna service, $6 a month. They are paying an admission fee to a performance in the other case; that is the distinction that I make.

Mr. DRINAN. I suppose the transmission fee in that other case just covers the cost of the cable television.

Mr. FORD. Well, the issue is whether it is a performance or isn't a performance. If it just covers the cost, it's still a performance; and it is not a payment for the reception service, or the rental of the antenna. It is the admission charge to a performance, and I would make that distinction.

Mr. DRINAN. Well, while your testimony is persuasive, Commissioner, may I just conclude by asking, is this proposed amendment to section 106, is that all that you want in the law, from this testimony? Mr. FORD. That's correct. There are some things that have to be deleted.

Mr. DRINAN. That's the essential thrust.

Mr. FORD. Yes.

Mr. DRINAN. Thank you very much.

Mr. KASTEN MEIER. The gentleman from California, Mr. Danielson. Mr. DANIELSON. Thank you, Mr. Chairman.

I want to recap again with you my impression, and that impression is from your testimony. In response to Mr. Wiggins' questions, Mr. Wiggins brought out that a copyright owner on a theatrical produetion, for example, charges a royalty fee for a performance within a theater, with which I have no quarrel.

The fee is the same, regardless of whether a theater is sold 10 percent, or 50 percent, or standing room only; the fee is the same. He is paying a fee for the potential audience, which would have to be 100 percent full, that is the potential. Now, that is true if it is a regular, legitimate theater, a motion picture theater, or a drive-in, the same analogy applies.

I think it is your position that where a motion picture is broadcast by television through a broadcasting channel, the royalty rate is in

cluded on the basis of the potential audience of that TV station; whether all the people listen, or part of them, that's the potential audience, potentially 100 percent of the viewing public within both the grade A and the grade B contours.

I think it's your position that cable within those areas simply enhances the possibility that you may get a 100-percent audience. On the other extreme, where cable originates a program, originates a movie, for example, you have no objection in your philosophy to the payment of a royalty.

Mr. FORD. If he becomes the producer of the program, that's right. Mr. DANIELSON. So, you accept that concept.

Mr. FORD. That is on a bargaining basis.

Mr. DANIELSON. I understand both of those, and I have one that gives me a problem, and that is an imported signal. The imported signal is broadcast, but in computing the royalty fee that the advertiser has to pay, in fact, he was computing a full house within the grade A and grade B contour, but he wasn't necessarily computing this outlying area, the area into which it's imported-or into which it's exported, I don't know which it is. I have a problem there, would you help me

out on that?

Mr. FORD. Yes. The Commission requires very detailed reports on what stations are carried by what systems. There is a very definite, specific limitation on the number of distant signals that you can bring in. Any copyrighter, in selling his product to a particular station that is a distant station, for instance Arlington, knows full well that that program is going to be delivered to that community, and he will adjust his rate accordingly.

That is why I believe the Supreme Court said that the importation of a distant signal did not prevent the copyright owner from extracting the full value for his product.

Mr. DANIELSON. On this theater concept, again, with a potential full house, standing room only; if the theater is half empty, I guess the copyright owner prevents the theater owner from giving away the rest of the tickets and bringing in 500 people who might not otherwise have attended. It makes no difference on his royalty.

Mr. FORD. And in addition to that, his next attraction, he will not pay quite as much.

Mr. DANIELSON. That is a matter of bargaining.

One last thing is a comment. I'm glad that you have recognized what bothered me very much in all those hearings, that there seems to be a confusion between a communications policy and a copyright policy. Our committee is charged with the copyright policy, and I think there seems to be an effort to try to have it in the regulations for communications through the device of copyright.

Well, thank you very much.

Mr. KASTEN MEIER. The gentleman from Illinois, Mr. Railsback. Mr. RAILSBACK. Do you think there might be a constitutional problem, by having the Copyright Office too involved in administering this, as it is a kind of quasi-legislative agency, an executive-type agency?

Mr. FORD. I really hadn't considered at any length the Copyright Office involvement except to the extent that I know they are going to ask for a lot of information; and knowing bureaucracies as I do, it will get greater, and greater, and greater. We are already regulated by the FCC, the States are now moving into it, and to have the Copyright