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The National Cable Television Association appreciates this opportunity
to provide the subcommittee with its views on the adminstration of cable
related copyright law.
NCTA is the principal trade association of the cable television
Its members include over 2,000 cable television sy steps operating
throughout the United States, serving approximately 28.5 million homes.
Cable television exercises one of the four compul sory licenses granted
by Congress in its 1976 overhaul of the federal copyright laws.
has extensive experience with the copyright Royal ty Tribunal and with the
Copy right Office of the Library of Congress.
Last year, cable operators
paid 87 million dollars for the use of their com pulsory license in the retransmission of programming from distant communities. NCT A anticipates
that payments for 1985 will exceed 100 million dollars. 1 Ultimately, of
course, it is cable consumers who bear the cost of these copyright fees.
paid by cable operators directly to satellite video programmers, such as
Home Box Office or Nickelodeon, whose programming is carried on cable
systems through inde pe ndent contractual arrangererts.
The CRT-established royal ty rates for distant signals and the Copyright
orrice accounting rules used to compute liability under these royalty rates
have a substantial, composite effect:
they restrain the number of
programming alternatives available to consumers over cable systems by
artificially inflating the price of those distant signal s.
The Copyright Act of 1976 has been used, in effect, to do exactly what
Congress intended that it should not do.
It has been used to cross the
threshold that has divided copyright problems from communications policy.
The consumer has paid the price for this expansive application of the
Copyright Act through less choice in programming at higher cost.
In order to better appreciate the dimensions of this problem, it may be
helpful to review events which have led us to this situation.
Prior to the adoption of the Copyright Act in 1976, the Supreme Court
had beld clearly and unequivocally that under the then-existing copyright
law, cable was subject to no liability for retransmission of program
All of that changed with the 1976 Act.
As the House Judiciary
"In general, the Committee believes that cable systems are commercial
enterprises whose basic retransmission operations are based on carriage
of copyrighted material and that copyright royalties should be paid by
cable operators to the creators of such programs.
recognizes, however, 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. "2/
Accordingly, Congress granted a compulsory license to cable for the
retransmission of broadcast signals and required it to pay royalty fees for
the retransmission of distant, nonne twork programm ing.
In 1976, the Federal Communications Commission had an elaborate series
of rules in effect which restricted the number of distant signals
(generally, a signal whose primary transmitter was located 35 miles or more
from the cable system) which could be imported by a cable operator.
Congress was well aware in 1976 both of the tension between communications
policy and the copyright laws and of the fact that the FCC's distant signal
rules were under review.
while the Committee has carefully avoided including in the bill any
provision which would interfere with the FCC's rules, or which might be
characterized as affecting 'communi cations policy', the Committee has
been cognizant of the interplay between the copyright and the
communications elements of the legislation.
2) H. R. Rpt. 1476, 94 th Cong., 2 nd Sess. 89 (1976).
would urge the Federal Communications Commission to understand that it
was not the intent of this bill to touch on issues such as pay cable
regulations or the increased use of imported distant signals. "3/
On July 22, 1980, the FCC after years of review repeal ed the rules
limiting distant signal carriage by cable systems, finding that they
had caused "significant sacrifices in consumer welfare. "4
went on to note:
"The costs of our current regulations fall on existing and
potential cable subscribers, each of whom is de nied some increase in freedom
The costs. . .
also fall on society as a whole, to the extent
we have inadvertently stifled some partici pa nts in the system of freedom of
By el iminating the rules restricting distant signal carriage, it was the
intent of the FCC to further federal communications policy which promotes
the availability to cable subscribers of the broade st possible diversity of
As FCC Chairman Ferris noted:
"By today's action, the
3/ Id., at 89.
4 Report and Order in Docket Nos. 20988, and 21284, 79 FCC 2d 673 (1980).
5) Id., at 674.