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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

industry.

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.

Cable thus

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.

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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

signal s.

All of that changed with the 1976 Act.

As the House Judiciary

Committee stated:

"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.

The Committee

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.

Specifically, we

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/

(emphasis added)

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

The Commission

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

of choice.

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

expression. "51

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

programming sources.

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.

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