On Tuesday the full Judiciary Committee will markup H.R. 3560, a copyright-television proposal. This bill carves up the industry in areas well beyond the scope of copyright policy and to the detriment of our constituents. In the alternative, I am proposing a transition to the free market for the cable industry. Every federal agency with jurisdiction over this area shares my approach, and I hope the following quotes will aid you in your deliberation of this issue.

Mark S. Fowler, Commissioner, Federal Communications Commission (FCC), appointed by President Reagan in 1982:

January 26, 1982

"I believe that the proposed cable copyright compromise is
not a marketplace solution...I am inclined to favor the im-
position of full copyright liability on cable television sys-
tems. I foresee definite benefits flowing from it, benefits
not attainable under the current compulsory licensing system...
"To me the issue is not whether full copyright liability is
better from a public policy perspective. Clearly it is. No,
the real issue is can we go from a compulsory copyright sys-
tem to full copyright liability without sudden and severe
disruption to existing cable services? And I think we can."

David Ladd, Register of Copyrights and Assistant Librarian of Congress for Copyright Services, appointed by the Librarian of Congress, Daniel J. Boorstin, in 1980:

outside of the marketplace for a portion of its programming.
Competition is consequently skewed in favor of cable to the
detriment of the other distribution services and the public.
In short, the basic premises of the 1976 cable regulation
construct have vanished."

Bernard Wunder, Assistant Secretary of Commerce for Telecommunications and Information, National Telecommunications and Information Administration (NTIA), appointed by President Reagan in 1981:

January 25, 1981

"There is no real reason--no real public policy reason--why
the flexibility and efficiency of private bargaining can't re-
place the current Government devised and administered cable
television copyright scheme... We have stated in behalf of the
Reagan Administration that we are not in favor of piecemeal
changes that simply try to "fine-tune" the present cable tele-
vision copyright arrangements."

Clarence L. James, Chairman, Copyright Royalty Tribunal (CRT), appointed by President Carter in 1977 and recently resigned:

March 4, 1981

"In my opinion, The Tribunal is not required or needed and is
clearly unnecessary to determine reasonable terms and rates of
royalty payments... My personal view is that Congress should
eliminate the compulsory license so that the marketplace can
set the true values of secondary transmission. The compulsory
license requires payment to copyright owners for use of the
property by others, preventing free negotiation in the market-
place as to value...It is unwise and unnecessary to continue
to spend taxpayers money on a program which is clearly un-
workable and impractical."

I will be happy to send you a summary of this issue and the proposals involved, or answer any questions that you may have.

Mr. KASTENMEIER. First of all, I accept the analogy of Carter and Camp David. I think it is useful for us in Congress, certainly as far as copyright is concerned, to try to work out something constructive as President Carter did in that case, rather than play the role that Mr. Sawyer advocates.

I also want to correct the apprehension that cable operators support getting rid of the compulsory license as was suggested by him, or that the decision of the NCTA the board related to abolution of the compulsory license. It did not.

It related to whether other concessions agreed to were to be tolerated.

I would also say that abolishing the Copyright Royalty Tribunal as proposed by Mr. James, who is not a member of that tribunal any more, is not relevant here.

There are other compulsory licenses than cable, which have to be handled by some tribunal. Whatever we do.

I might also say that the compulsory license is a recognition that there are equities among these groups and unless the Congress decides to literally have one industry run over another, because cable was in existence, and if you tried to change the polarity, make them wholly liable in the marketplace, you have done a quite radical thing.

I think what this bill does does not approach what the situation is today in any radical sense, but to make the adjustments necessary so that all of these industries can live together and serve the public interest.

Mr. WIRTH. Mr. Railsback.

Mr. RAILSBACK. May I just concur with the remarks about the 14-11 vote, just to make absolutely certain that I am sure you do understand the 14 to 11 vote dealt with the compromise agreement and there are many-and I am sure cable can speak for itself— there were many cable members that were very much concerned about giving up on syndicated exclusivity and some of the other things that they made concessions on.

But I think that-and I imagine when Mr. Sawyer gave his talk out at cable, he was-I think probably many of the people in the audience were dealing in terms, thought he was dealing in terms of the status quo.

In other words, having the status quo which would give them the compulsory license, but also without sending any syndicated exclusivity or distant signal imports.

We wanted to make that very clear.

Mr. WIRTH. Gentlemen, we have a vote on in terms of strengthening of the fabric of the Republic. I think we better go do that. I thank you all very much for being with us. We will feel free to get back in touch with you and your staff people as the subcommittee examines this.

Let me also apologize to my colleagues on the minority side who had wanted to be there but there is a Republican conference going

on on that delicate issue of the budget this morning. They wanted me to convey to you their interests and their apologies for not being able to be with you. We will take a brief recess and come back with Mr. Fowler and Mr. Wunder.

[Brief recess.]

Mr. SWIFT [presiding]. The committee will continue. The chairman will be back shortly.

The second panel consists of Mr. Wunder from the Department of Commerce, and Mr. Fowler from the FCC. We will begin with the statement of Mr. Fowler.

STATEMENTS OF MARK S. FOWLER, CHAIRMAN, FEDERAL COMMUNICATIONS COMMISSION; AND BERNARD J. WUNDER, JR., ASSISTANT SECRETARY FOR COMMUNICATIONS AND INFORMATION, DEPARTMENT OF COMMERCE

Mr. FOWLER. Thank you for giving me the opportunity to testify on H.R. 5949, a bill which would amend both the Copyright Act of 1976 and the Communciation Act of 1934.

With me today is William H. Johnson, who is the Chief of the Commission Cable Television Bureau.

The interplay between communication policy and copyright policy is the focus of my concern over the general approach of H.R. 5949, as well as its specific provisions.

While I believe some of my fellow Commissioners may have different viewpoints on some of the issues raised here as a matter of communication policy, I believe that a majority of the Commission cannot support H.R. 5949 because of its reliance on a regulatory approach rather than a marketplace approach to solve the copyright question.

In recent years the Commission has placed increased emphasis on the regulatory principle that a marketplace approach should be followed unless there is some reason that the market cannot function efficiently.

Similarly, I believe that copyright matters in the cable television field ideally are resolved by the marketplace; that is, by a system of full copyright liability for cable television distant signal carriage.

With full copyright liability, buyers and sellers, rather than government agencies, would set copyright prices and allocate copyrighted works. The benefits are clear. Full copyright liability would better reflect the program preferences of consumers, as well as the intensity of those preferences.

Program choices would be dictated by consumers, not by industry groups. A marketplace approach would allow for change in a way that does not favor existing firms over new entrants and new marketing structures. Full copyright liability would also save the considerable governmental resources now committed to regulation.

I recognize that H.R. 5949 would only preserve the compulsory licensing system that Congress found appropriate to adopt in 1976. Congress enacted the compulsory license because it found that “it would be impractical and unduly burdensome to require every cable system to negotiate with every copyright owner whose work was retransmitted by a cable system."

sion industry continues to need the protection of compulsory licensing, I have reservations as to the specific provisions of the bill that would enact the must-carry, syndicated, network, and sports exclusivity rules into law.

Regardless of how you resolve the copyright issue, I would urge that you give special attention to the bill's individual provisions, which in the name of copyright would profoundly affect communications policy and substantially restrict the programing available to our people.

In terms of the specific provisions of H.R. 5949, probably the most significant copyright change involves the reinstitution of syndicated program exclusivity rules. In 1980 the Commission concluded that they were limiting competition and decreasing program viewing options to the public without serving any legitimate Communications Act purpose. Accordingly, they were eliminated.

I believe it would be administratively inefficient to split enforcement responsibility between the Commission and the courts. For example, section 102(a) of the bill would create a right of action unless the Commission were to certify within 90 days that a failure to provide syndicated exclusivity was due to technical error or other factors beyond the reasonable control of the cable operator. I foresee considerable difficulty in our ability to fulfill that function. I recommend that this burden more properly should rest with the party asserting a copyright infringement or violation, not upon the Commission.

In sum, I urge that new responsibilities not be given the Commission without detailed consideration of the administrative costs imposed, which I fear would be substantial, or without detailed consideration of the underlying mission the agency is intended to

serve.

I am also concerned with those parts of the proposed legislation that would directly amend the Communications Act. In particular, section 201 of the bill would codify our mandatory signal carriage rules, with some provision for so-called saturated systems.

I recognize that some equitable linkage may be thought to exist between the cable carriage of copyrighted programs on local signals and the distant signal carriage of copyrighted programs.

In terms of broad policy considerations, proposals that would create obstacles to greater reliance on market forces in areas where the FCC presently exercises jurisdiction would be unwise.

Because fundamental policy questions remain to be resolved with respect to rules in this area, considerable latitude for the exercise of agency discretion should be preserved.

In sum, I urge that this legislation be considered in light of the growing national consensus favoring reduced governmental involvement in the affairs of business and increased reliance on competitive market forces to protect the public, encourage economic efficiency and allocate goods and services.

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