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Mr. HARDY. I do not believe we differ with the decision of the Court in that respect. I think that the Court pointed out that the 1909 legislation, the statute dating back to 1909, could not be construed to cover the industries which developed subsequent to that legislation. I am not sure that we agree with the Court's ruling, but we live with the Court's ruling. The Court has concluded that that statute was not adequate to cover the industry as it developed.

We do support at this time, as I have stated in our prepared remarks, some form of copyright legislation which would impose an obligation on the part of the cablecasters to pay some reasonable copyright royalties. The amount, the details of that legislation, we would leave to the expertise of Congress.

Mr. KASTENMEIER. Ten years ago when the matter came before us in the 1965 hearings the technique and the industry were commonly known as community antenna television, CATV. Now, it is known as cable television. From a service or technological standpoint, has the industry changed in 10 years sufficiently for us to take some special notice of that fact for purposes of copyrights?

Mr. HARDY. Well, Mr. Chairman, as you know, originally community antenna television systems, as it originated, was intended only to extend the signal which it could pick up over the air into the homes of viewers which could not pick up that signal over the air without a very large antenna. It was an antenna put in a location where it could pick up signals off of the air and transmit them over cable into those homes.

The industry has since that time-the technology since that time has developed which allows a cable operator to import from a distant community a signal via microwave facilities, and it now imports from very distant areas programing which would in effect fragment a local broadcast station audience. And I think it is for that reason, the technological developments, that it has become more obvious that copyright legislation is needed.

Mr. KASTENMEIER. Just two other questions. One, your advice to us, and I think it is very good advice, is not to be too specific, to stay away from, insofar as we can, such questions as distant signal limited importation, exclusivity, and sports blackout policies. And would you also include the question of origination? You know, we actually considered that 10 years ago. To what extent does the then CATV originate, and should this have something to do with its copyright policy?

Mr. HARDY. Well, I would also recommend I think on behalf of the Commission, and I am speaking for myself, of course, because the Commission has not taken any position in that sense, but the Midwest Video case was decided, and in the Midwest Video case it decided that the Commission did have jurisdiction and authority to require a cable system to originate programing. Since then, the Commission has had some rulemaking as to whether or not it would be appropriate to impose that obligation on a cable system at this time, because this industry is developing. I believe that would be better left with the Commission, with the administrative flexibility that is intended in the Administrative Procedures Act, rather than to carve it into the stone of a statute. I would recommend, on my own behalf anyway, that it would be my advice to the committee that it would be left better to the Commission's administrative flexibility.

Mr. KASTENMEIER. My last question is, you are aware, of course, of the provisions of H.R. 2223. That is to say, the form in which the Senate passed the bill early last fall. Is that bill acceptable in all respects to the Commission?

Mr. HARDY. Yes, sir. Insofar as it relates, as I began my testimony here today, there are many parts of that overall bill which do not apply to the areas regulated by the Commission, but insofar as that bill touches upon the copyright obligations in the cable industry, it is acceptable to the Commission; yes, sir.

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Mr. KASTEN MEIER. Thank you. I yield to the gentleman from Illinois, Mr. Railsback.

Mr. RAILSBACK. Yes. I take it what you are saying is you generally favor the bill that is pending before us, and you especially appreciate the fact that in contrast to earlier bills it provides certain latitudes that those other bills did not provide?

Mr. HARDY. That is correct.

Mr. RAILSBACK. To your Commission?
Mr. HARDY. Yes; it does.

Mr. RAILSBACK. Would you favor the FCC or the Copyright Office itself administering the fee schedules, in making determinations there? Mr. HARDY. I think that should be left with the Copyright Office. Mr. RAILSBACK. The Copyright Office, right. Are you satisfied that the bill as drafted contains enough authority to permit you to deal with questions of embargoes or exclusivity and so forth?

Mr. HARDY. Well, I think that the jurisdiction that the Commission presently has under the Supreme Court decision in Southwestern Cable is adequate at present. However, I recognize that there are some bills that have been submitted to both Houses of Congress which would question the jurisdiction of the Commission in the cable area, and the Chairman, I believe, has testified on that. And I am not thoroughly familiar with his testimony in those areas, and I would prefer to defer to his judgment on what legislation would be needed in the field of jurisdiction for the Commission. I would prefer not to answer that. Mr. RAILSBACK. The FCC had promulgated certain rules before. How does the bill jibe with those rules that you promulgated earlier after the first court decision?

Mr. HARDY. Well, I may not understand your question, Mr. Railsback. Which rules are you referring to?

Mr. RAILSBACK. Well, I think, for instance, that you saw fit to regulate certain transmissions depending upon the area, the distance, and am I right on that?

Mr. HARDY. Distant carriage?

Mr. RAILSBACK. Right.

Mr. HARDY. The number of signals allowed to be carried, things of that nature; yes, we have.

Mr. RAILSBACK. Do you, or did you then, and how do you now feel about differentiating between the fee schedules as relates to, say, the secondary transmissions within a local area carrying where the primary transmissions reach? Do you think there should be a different fee schedule depending upon the type or the distances involved?

Mr. HARDY. I think that we would defer to the judgment of your committee on that. We would leave that to the committee as to whether

or not a fee schedule should be made-the local signal as opposed to the distant signal?

Mr. RAILSBACK. Right. Exactly.

Mr. HARDY. I think the parties to the consensus agreement, who I understand will be called on to testify before you

Mr. RAILSBACK. Yes; they will.

Mr. HARDY. Will be better able to respond to that, and perhaps they could give you their suggestions. But insofar as the Commission is concerned, we would defer to the judgment of your committee on that.

Mr. RAILSBACK. Perhaps I am mistaken, but as I read the bill before us we do not differentiate in the fee schedule.

Mr. HARDY. That is correct. The same fee would apply to all carried signals, including distant.

Mr. RAILSBACK. Including, as I understand it, including aural transmissions under subsection (c) (1) (A)?

Mr. HARDY. That is correct.

Mr. RAILSBACK. Thank you.

Mr. KASTENMEIER. The gentleman from California. Mr. Danielson. Mr. DANIELSON. Mr. Chairman, I pass and retain my right to interrogate if I may, please.

Mr. KASTENMEIER. The gentleman from Massachusetts, Mr. Drinan. Mr. DRINAN. Thank you, Mr. Chairman. Perhaps we should not mention the Office of Telecommunications Policy to a representative of the FCC. But, I wonder if your recommendations are consistent with the recommendations of the Cabinet Committee report in January 1974 of the OTP?

Mr. HARDY. Father Drinan, I am not familiar with those, intimately familiar with those. I know of them, and I am not sure whether our testimony is consistent with them or not. I do not believe we studied our testimony to compare it with that report to determine whether it was consistent.

Mr. DRINAN. It confirms my suspicion that the FCC and the OTP were not talking very much to each other.

Would you point out anything in H.R. 2223 that either in your personal judgment or in discussions of the FCC that perhaps could be modified? In other words, we want as much help as we can get on the specifics, and I know that you do not want to get into them. You say we express no judgment as to what precise form this legislation should take. But, could you give us any helpful suggestions as to whatever conflicts might exist which could be resolved?

Mr. HARDY. Father Drinan, I think maybe the parties may have testimony that they will submit to you as they testify here before you, and I think in weighing both sides of the issue as presented by those parties you will be able to come up with whatever you believe a balancing of the equities between those parties.

The Commission, insofar as its comments on the bill that was submitted to us, would be that we are in agreement with the general principles, and we would leave the details to your committee.

Mr. DRINAN. All right. Thank you, sir. I have no more questions at this time.

Mr. KASTENMEIER. The gentleman from New York, Mr. Pattison. Mr. HARDY. Father Drinan, if I might, I would not like to leave this record with the impression that there is no ongoing discussions between the FCC and the OTP.

Mr. DRINAN. No. No. I approve of no discussion.

Mr. HARDY. We exchange documents, as I am sure you are aware, and comment on the documents submitted by both offices. We do not always come down on the same side, and I am sure frequently do not, particularly in the field of cable. I think there are, as you are well aware, many differences of opinion between the FCC and the OTP.

Mr. DRINAN. You would not care to take another minute or two to spell those differences out, would you?

Mr. HARDY. I am sure that they are so complex that it would take a great deal more than a minute.

Mr. DRINAN. Thank you, sir.

Mr. KASTENMEIER. Mr. Pattison.

Mr. PATTISON. I also see potential conflicts in your jurisdiction between the copyright law and the FCC's jurisdiction in the area of nonduplication of signals and exclusivity and also in the area of the use of translators, which we have not talked about. And I wonder if you would just comment a little bit more about the problems. I realize that the Southwestern case was decided and said that you have jurisdiction, but that was in the absence of copyright law. Now, suppose we pass a copyright law here that relates and governs cable, is that not going to cause some jurisdictional problems between the FCC and the copyright law?

Mr. HARDY. I am not sure that we will have any problems with our jurisdiction. If we were to feel that there were jurisdictional problems, I am sure that we could submit to Congress proposed legislation to clarify the jurisdiction of the Commission.

Insofar as this bill is concerned as it relates to the areas that you just mentioned, that being the use of translators, the use of microwave facilities, we do not believe that there is anything that you will be carving into statutory stone which would affect our jurisdiction. Were the courts to so construe your statute, then we would, of course, have to come to Congress for some clarifying legislation.

Mr. PATTISON. My point is once the cable system is paying a copyright fee, as they are not now, then questions arise of how they can use their license. It seems to me that our legislation is sort of in the situation, that if then your legislation changes, in other words, your rules change, then our legislation, to the extent that it was based upon your legislation at that time becomes somewhat impractical.

Mr. HARDY. I can only say to you I know of no present rulemakings which would affect it.

Mr. PATTISON. Well, for instance, you establish a fee, for instance, for cable operators based upon the fact that they do have the nonduplication rules. Assume that. And I do not suppose that it is going to happen, but just for the purpose of argument, just as an example. assume that you do away with your nonduplication rules. Then, of course, the fee would have to perhaps be different.

Mr. HARDY. Well, I know of nothing presently pending before the Commission which would indicate the Commission anticipates removing exclusivity protection or nonduplication protection.

Mr. PATTISON. That is not my point. The point is that it is obvious a change in your rules will reflect upon the statute that we ultimately pass, based upon the rules as they exist right now.

Mr. HARDY. I can only respond by saying, I suppose, Congress has to adopt legislation based upon a situation as it exists, leaving as much

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flexibility as possible for future change. I really do not know how to respond to your question, Mr. Pattison, and I am not trying to evade it. Mr. PATTISON. No. I understand.

Mr. HARDY. But I really do not know how to answer that. I can only say to you that all that Congress can do is adopt legislation based upon the present statute, and I know of no plans, I know of no pending rulemakings which would change the statute from the Commission standpoint, from its regulatory standpoint, so I don't know how to respond to that, how you can leave that flexibility.

Mr. PATTISON. I guess the problem is we are dealing in an area that is so rapidly changing, the technology is so rapidly changing that we cannot really foresee what kind of changes in technology will occur and, therefore, what rules you are going to adopt in response to that technology.

Mr. HARDY. I suspect that we have that same problem at the Commission.

Mr. PATTISON. So it would seem to me, knowing that there are probably going to be changes, that maybe we ought to think in terms of building in some sort of a mechanism so that those changes can be coordinated. I do not know how you do that.

Mr. HARDY. I am afraid that I cannot offer you any help because I do not know how you would do it either, sir.

Mr. PATTISON. Well, we will both think about it.

Mr. HARDY. All right.

Mr. PATTISON. I have no further questions.

Mr. KASTENMEIER. The gentleman from Illinois has another question.

Mr. RAILSBACK. Mr. Hardy, I wonder if you could make available to us the Commission's previous rules and orders concerning cable television? Could you do that for the record?

Mr. HARDY. The rules they have presently?

Mr. RAILSBACK. Yes.

Mr. HARDY. Certainly. I am sure we can do that.

Mr. RAILSBACK. I think that some have probably been superseded or preempted. Have there not been a whole series of orders and rules? Mr. HARDY. Yes.

Mr. RAILSBACK. I think that it would be helpful to me personally to see all of them and the sequence.

Let me ask you this

Mr. HARDY. We will make those available to the committee, sir. [The material referred to is in the files of the subcommittee.] Mr. RAILSBACK. Thank you. Was there ever an embargo of sports transmissions that involved minor league franchise areas, or can you give us a little bit of the background of that?

Mr. HARDY. I am afraid I do not know. Are you referring to sports blackouts?

Mr. RAILSBACK. Yes.

Mr. HARDY. That is presently pending before the Commission. It is considering sports blackout rules at the present. The Commission is attempting to make those rules consistent with the intent spelled out by Congress in the sports blackout legislation. We are trying to be consistent with those, or at least that is what the Commission is discussing at present. As to the outcome of those blackout rules, I do not know what those will be. They are presently being studied by the

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