stations of the same type (AM or FM) are also carried. For purposes of this interim procedure, a distant signal is one licensed to a community more than 75 miles from the cable community. Mr. EARL E. MORGENROTH, FISHER, WAYLAND, SOUTHMAYD AND COOPER, President, Rocky Mountain Broadcasters Association, c/o Station KGVO-TV Missoula, Mont. DEAR EARL: This will acknowledge receipt of your letter of June 8 requesting that I compile an RMBA position statement on FM translators, complete the RMBA comments on ascertainment of community needs in Docket 19715, request reconsideration in the license renewal proceeding in Docket 19153, and push the Commission to adopt a decision in the CATV radio signal rule making in Docket 19418. I have obtained from the Commission the text of its attached proposed bill, to amend Section 318 of the Communications Act with regard to translators, and the Commission statement to Congress in justification of this proposed bill. Also, I have obtained the attached text of H.R. 5369 introduced in the House of Representatives on March 7, 1973 by Harley Staggers, the Chairman of its Committee on Interstate and Foreign Commerce, and the attached text of S. 1229 introduced in the Senate on March 14, 1973 by Warren Magnuson, the Chairman of its Committee on Commerce. I will complete and forward to you my draft of a position statement for RMBA within the next few days. As I advised in our conference phone conversation, the date for the submission of comments in Docket 19715 on ascertainment of community needs has been extended to August 1. I will complete and forward to you well in advance of that date the RMBA comments in this Docket. Although the Commission on May 4 announced adoption of its new license renewal requirements in Docket 19153, it stated that the document would not be published in the Federal Register until the Annual Programming Report and Section IV-B of Form 303 are cleared by the Office of Management and Budget; that the Rules will be effective 30 days after Federal Register publication; and that the time for filing Petitions for Reconsideration will also run from the date of such Federal Register publication. As yet, this publication has not occurred because the White House Office of Management and Budget has not yet cleared the new forms. It may be some time yet before the forms are cleared because there is current discussion about some revision in the forms. As a result, we will have ample time to complete and file the RMBA request for reconsideration of the new announcement requirements as set forth in the May 1 Interim Report and Order in Docket 19153. Recently I discussed with Al Cordon, the Assistant Chief of the Cable Television Bureau, the status of the ratio signal importation rule making in Docket 19418. He advised that the matter is presently on dead center, and that it has a low priority among the numerous issues on cable television which await Commission decision. He said, for instance, that such issues as CATV multiple ownership and pay CATV have higher priority insofar as both his staff and the Commission are concerned. I have concluded from this and from other recent contacts at the Commission that if our push for action in Docket 19418 is to succeed, it will have to be directed to the Commission via your influential friends on Capitol Hill rather than by a direct RMBA approach to the Commission. The present low priority of Docket 19418 will not likely be changed without a lot of urging from the Hill. This I think could be most effectively initiated by the RMBA membership out there rather than by me here. With kindest personal regards and best wishes, I remain Sincerely yours, [H.R. 5369, 93d Cong., first sess.] JOHN P. SOUTH MAYD. A BILL To amend section 318 of the Communications Act of 1934, as amended, to enable the Federal Communications Commission to authorize translator broadcast stations to radio translator stations to operate unattended in the same manner as is now peroriginate limited amounts of local programing, and to authorize frequency modulation radio translator stations to operate unattended in the same manner as is now permitted for television broadcast translator stations. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That clause (3) of the first proviso of section 318 of the Communications Act of 1934 (47 U.S.C. 318) is amended (1) by striking out "solely" and inserting in lieu thereof "primarily”, and (2) by striking out "television". [S. 1229, 93d Cong., first sess.] A BILL To amend section 318 of the Communications Act of 1934, as amended, to enable the Federal Communications Commission to authorize translator broadcast stations to originate limited amounts of local programing, and to authorize frequency modulation radio translator stations to operate unattended in the same manner as is no permitted for television broadcast translator stations Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That clause (3) of the first proviso of section 318 of the Communications Act of 1934 (47 U.S.C. 318) is amended (1) by striking out "solely" and inserting in lieu thereof "primarily”, and (2) by striking out "television". PROPOSED BY THE FCC FOR THE 93RD CONGRESS A BILL To amend section 318 of the Communications Act of 1934, as amended, to enable the Federal Communications Commission to authorize translator broadcast stations to originate limited amounts of local programming, and to authorize FM radio translator stations to operate unattended in the same manner as is now permitted for television broadcast translator stations Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That clause (3) of the first proviso of section 318 of the Communications Act of 1934 (47 U.S.C. 318) is amended (1) by striking out "solely" and inserting in lieu thereof "primarily", and (2) by striking out "television". EXPLANATION OF PROPOSED AMENDMENT TO SECTION 318 OF THE COMMUNICATIONS ACT OF 1934, AS AMENDED, TO ENABLE THE COMMISSION TO AUTHORIZE TRANSLATOR BROADCAST STATIONS TO ORIGINATE LIMITED AMOUNTS OF LOCAL PROGRAMMING, AND TO AUTHORIZE FM RADIO TRANSLATOR STATIONS TO OPERATE UNATTENDED IN THE SAME MANNER AS IS NOW PERMITTED FOR TELEVISION BROADCAST TRANSLATOR STATIONS Translator stations are low-power broadcasting stations which receive the incoming signals of a television or FM radio station, amplify the incoming signals, convert-or "translate"-them to a different output frequency and retransmit the signals to the community or area which it is desired to serve. Translators are needed in certain areas of the country where because of terrain or extreme distances, it is not possible to receive directly the signals of the originating television or FM radio station. They were conceived as simple, inexpensive devices which could be made available to small communities where the demand for television or FM radio service was great and financial resources were meager. In such areas, translators frequently provide local residents with their only source of television or FM radio reception. Section 318 of the Communications Act of 1934, as amended, 47 U.S.C. § 318, (clause (3) of the first proviso), limits translators to rebroadcasting the signals of their primary stations without any significant alteration of the characteristics of the incoming signals. Although the Commission has interpreted Section 318 to allow UHF television translators to broadcast twenty seconds of commercial advertising per hour, the origination is restricted to slide announcements, and no program origination is permitted. Consequently, translator stations are not self-supporting and must depend on public generosity for their support. In addition, Section 318's prohibition of program origination in many instances deprives those people dependent on translator stations for their television or FM radio reception of news of local political interest or events which vitally affect them. We believe the proposal's substitution of the word “primarily” for “soley” will the Commisison to authorize limited amounts of local origination in keeping with the public interest. We recognize the proposal does not set any specific limitations as to the amount of local origination to be permitted. We believe, however, that such a limitation could be best determined in a rulemaking proceeding conducted by the Commission to implement this legislation during which the comments received from all interested parties could be analyzed and evaluated. In deciding upon such a limitation the Commission would, of course, he bound by the requirement of Section 318 that origination be limited to the extent necessary to insure that translator stations retain their primary characteristics as rebroadcast stations. It should be noted that cable television interests have expressed their concern to the Commission with respect to what effect our proposal might have on the relationship of translators and cable systems. Cable operators expressed particular concern with regard to possible interference between VHF television translator stations (those operating on output channels 2 through 13) and cable television systems when broadcast channels are authorized for translator use. We cannot perceive that this proposal would have any effect whatsoever on the matter of electrical interference as it would merely enable the Commission to promulgate rules to authorize program origination by translators. This would have no effect on the frequencies on which translators operate. In any event, if the proposal is enacted into law, the cable operators would have ample opportunity to present their views at the rule-making proceeding the Commission would insti tute before adopting any rules to effectuate the statute. We also propose striking the word "television" from Section 318. As previously noted, translators were conceived as simple, inexpensive devices designed to provide broadcast signals to the residents of sparsely populated, rural, remote, or mountainous areas. To make such stations economically feasible, Congress enacted Section 318 in 1960 to enable the Commission to permit television translator stations to operate without a licensed operator. At that time, there were only television translator stations. However, technological advances through the past decade have made FM translator stations possible and, in 1970, the Commisison authorized such stations. Now, in order to make the FM translator stations economically feasible, it is necessary to amend Section 318, as proposed, to authorize the FM translators to operate unattended in the same manner as is now permitted for television translator stations. In sum, the Commission believes the public interest would be served by adoption of the proposed amendment. Adopted: December 20, 1972, Commissioner Johnson concurring in the result. FEE ASPECTS OF THE COPYRIGHT-CATV QUESTION-THE NEED FOR AN INDEPENDENT ARBITRATION TRIBUNAL 1. Payment of adequate copyright fees is essential in the public interest to safeguard the continued production of television programs and to encourage the creation of more numerous and of high quality programs. 2. For more than 12 years CATV (cable) systems had been involved in a controversy with program producers as to whether they are liable to copyright under the archaic 1909 Copyright Act when they retransmit broadcasts of copyrighted television programs and as to whether new copyright legislation should provide for such liability. 3. This controversy has been settled in a "Consensus Agreement" by representatives of cable system owners, television stations and program producers. The parties to this Consensus Agreement have pledged themselves to support full implementation of its provisions by the Congress and the Federal Communications Commission (FCC). 4. The FCC declaring that the terms of the Consensus Agreement were "within reasonable limits" and "of public benefit" promptly implemented it by issuing new cable rules effective March 31, 1972. These rules permit large-scale importations by cable, of programs from distant stations into the markets of local television stations. 5. On March 26, 1973, the Second Circuit in New York over-turned a decision by the District Court in CBS vs. Teleprompter, and declared among other things that cable systems importing distant signals were liable for copyright fees. 6. The Copyright Law Revision Bill, S. 1361, provides a compulsory license to CATV for the use by it of copyrighted programs upon payment of a compulsory license fee which would yield only a small fraction of what the program producers need to continue their production. This rate schedule was inserted into the bill without any prior hearings on this point and without the aid of any supporting economic data. 7. Both prior and subsequent to the Consensus Agreement representatives of copyright owners and of the cable industry have endeavored to agree on a rate schedule for joint recommendation to the Congress. 8. The Consensus Agreement expressly provides that "(u)nless a schedule of fees covering the compulsory licenses or some other payment mechanism can be agreed upon between the copyright owners and the CATV owners in time for inclusion in the new copyright statute, the legislation would simply provide for compulsory arbitration failing private agreement on copyright fees.” 9. The representatives of the copyright owners and the cable industry have had many meetings in which both sides labored long and hard, but in spite of these repeated efforts, no schedule of fees has been agreed upon for joint recommendation to the Congress. 10. The reason for the failure of the parties to agree on a fee schedule is the complexity of determining the value to a cable system of the various types of programs used by CATV and of the losses which the owners of these programs will suffer from the expected diversion of their income from TV to CATV. Moreover, the assessment of these losses and values with respect to the owners of each type of program and each type of cable system requires complex economic data-gathering involving many thousands of variables. 11. As of December 1972, the cable industry rejected out of hand a proposal from the copyright owners to support in the legislation-as agreed upon in the Consensus Agreement-an Arbitration Panel to fix fees. In short, the cable industry refused to do what it agreed to do. THE MECHANICS OF ARBITRATION Chapter 8 of the Copyright Law Revision Bill establishes a Copyright Royalty Tribunal. This Tribunal could serve as the mechanism for the arbitration provided for in the Consensus Agreement. Such a Tribunal would be an objective body and not beholden to either the cable industry or the copyright owners. It would be able to deal equitably and without bias, on the fixing of fees. An Independent Tribunal such as that to be organized pursuant to S. 801 of the Copyright Revision Bill (S. 1361) would seem to fit the definition of fair better than an arbitrary fixing of fees by legislation. Congress usually has believed that it has neither the time nor the expertise to deal with complex ratesetting procedures. An Independent Tribunal is favoring to neither side. Indeed, it is possible the Tribunal may well, after its deliberations, determine that the cable operators ought to pay less fees than what the copyright owners so passionately feel is reasonable. But that is the principal and perhaps winning reason for the Tribunal-it is eminently fair, neither side has an advantage. The Tribunal will hand down its decision after full, complete and possibly mountainous piles of evidence will have been submitted. In that event, neither side can claim it was short-changed. The fairness of the Tribunal is its most valuable asset. This is the compromise proposal that the film industry representatives made to the cable television representatives. They rejected it. The new copyright bill shall contain the following provisions : 1. The Tribunal for compulsory arbitration shall be constituted and begin work no later than 2 months after enactment of the bill. 2. The Tribunal shall be mandated to make its award on the fee schedule within 12 months after enactment of the bill. 3. If the Tribunal should fail to make its award until sometime later than 12 months after enactment, the fees ultimately determined shall be payable from the cut-off date of 12 months after enactment. 4. The charge to the Tribunal shall be to determine "just and reasonable fees" with no limitations on what factors they decide to include in their determination. 5. There shall be no legislative review of any award made at any time by the Tribunal. Judicial reviews shall be limited to those customarily allowed in arbitration awards-fraud, bribery, malfeasance-but not on the merits of the award itself. 2 6. If the Senate has not passed such a copyright bill by January 1, 1974, both CCO1 and NCTA agree to support separate copyright legislation embodying these provisions for cable television. COPYRIGHT REVISION AND CABLE TELEVISION BACKGROUND On March 26, 1973, Senator McClellan introduced a bill for the general revision of the 1909 Copyright Act. S. 1361 is identical, but for certain changes in dates, to a bill reported out of the Senate Subcommittee on Patents, Trademarks, and Copyrights in December, 1969, but which never was reported out by the full 1 Committee of Copyright Owners. 2 National Cable Television Association. Committee on the Judiciary. General revision of the copyright law has been pending in the Congress for over six years. Senator McClellan and others have attributed the delay in passage of a general revision of the copyright law to the controversy over how cable television should be treated under that law. In introducing S. 1361, Senator McClellan indicated that its cable television provisions would in any case have to be revised in light of the events since December, 1969, including, in particular, the adoption of new cable television rules by the Federal Communications Commission in February, 1972. Attached in draft form are proposed changes in Section 111 (the cable tele vision provision) and related Sections of S. 1361. These changes are the most appropriate way of taking care of the cable television issue, thereby clearing the way for the long-delayed general revision of the copyright law. EXISTING LAW Under the existing law, CATV systems that simply retransmit readily available signals from fairly nearby broadcast stations are not liable for copyright. Fortnightly Corp. v. United States, 392 U.S. 390 (1968). Recently it was held that when CATV systems retransmit "distant" stations, the signals of which are not readily available off the air to the cable system, they are subject to normal copyrighted works broadcast by the distant stations. Columbia Broadcasting System, Inc. v. TelePrompTer Corp., (2d Cir., Docket No. 721800, March 8, 1973). Under this decision, many existing cable systems would have to bargain and pay for the right to retransmit many of the programs broadcast by some of the stations whose signals the cable systems have been retransmitting in the past. F.2d PROPOSED CHANGES IN S. 1361 The significant features of the attached changes to S. 1361 are as follows: 1. The Consensus Agreement would and ought to be implemented. In November, 1971, the leading associations representing the cable TV, broadcasting, and the major program producers (copyright owners) agreed to accept a compromise proposal for cable television regulatory and copyright treatment which has come to be known as the "Consensus Agreement" or more simply, the "Consensus." This Consensus was found to be in the public interest both by the FCC and by Senator McClellan. It calls for changes in the FCC regulatory policies, which were duly made and implemented over a year ago, and for copyright legislation consistent with that regulatory policy. In adopting its new rules, the FCC said: "We believe that adoption of the consensus agreement will markedly serve the public interest: "(i) First the agreement will facilitate the passage of copyright legislation. It is essential that cable be brought within the television programming distribution market. There have been several attempts to do so, but all have foundered on the opposition of one or more of the three industries involved... "(ii) Passage of copyright legislation will in turn erase an uncertainty that now impairs cable's ability to attract the capital investment needed for substantial growth. "It is important to emphasize that for full effectiveness the consensus agreement requires Congressional approval, not just that of the Commission. The rules will, of course, be put into effect promptly. Without Congressional validation, however, we would have to re-examine some aspects of the program." In a letter to the FCC incorporated as part of its report on the new rules, Senator McClellan said: "As I have stated in several reports to the Senate in recent years, the CATV question is the only significant obstacle to final action by the Congress on a copyright bill. I urged the parties to negotiate in good faith to determine if they could reach agreement on both the communications and copyright aspects of the CATV question. I commend the parties for the efforts they have made, and believe that the agreement that has been reached is in the public interest and reflects a reasonable compromise of the positions of the various parties." 2. CATV would receive a favorable compulsory license covering retransmissions of all local broadcast stations and certain distant broadcast stations. Consistent with the Consensus, the attached changes would accord cable television systems a compulsory license to retransmit all signals lawfully being transmitted prior to March 31, 1972 (i.e., all "grandfathered" signals), all "local" signals as defined |