ondly, NCTA suggests a procedure whereby the percentage figure can be adjusted every five years. In order to accomplish this objective, NCTA recommends that Congress by statute provide that every five years the Register of Copyrights should appoint a panel of three experts for the purpose of considering revisions in the percentages paid by CATV operators under compulsory license. In making his appointments, the Register would be required to select one member from a group nominated by the copyright owners, a second from a group nominated by CATV operators, and the third would be a representative of the public designated by the Register of Copyrights. This group would receive expert evidence and would then render a final decision setting the percentage rates for the following five years, subject to appropriate judicial review limited to the questions whether the decision is supported by substantiated evidence. III A great deal of controversy has centered around the subject of CATV origination of its own programs. NCTA has always conceded that this phase of its activities should be fully subject to copyright liability in exactly the same manner as a broadcaster. On this point there is complete agreement between the CATV industry and the copyright owners. Representatives of the broadcast industry, however, are reluctant to have CATV systems originate programs. They urge that if a CATV system does originate its own program, it should lose its copyright exemption involved in the distribution of local programs. The Register of Copyrights does not go this far. He recommends that CATV be permitted to originate news and weather type of programs. Apparently, he would recommend that if CATV originated other types of programs, the CATV system should lose its exemption for carrying local signals. NCTA vigorously opposes this suggestion. It believes that the public interest is served by having a maximum number of entities providing program service to the public. It sees no reason why CATV systems should be precluded from being a source for such programs. The carrying of such programs is certainly not unfair to the copyright owners. The copyright owners should be anxious for CATV systems to originate programs because this would be an additional source of income for them. It is difficult to see what public purpose would be served by depriving copyright owners of the opportunity of selling their programs for local origination by CATV systems. In any event, NCTA urges that the question as to whether CATV systems should be permitted to originate local programs is a communications matter and has nothing to do with the copyright law. It is difficult to see what sense there is from a copyright point of view in telling the copyright owner that he is not entitled to a royalty from a CATV system which is distributing local signals, but then turning around and awarding royalties to the copyright owner if the CATV system deigns to originate its own programs. This is using the copyright law not for the purpose of providing an incentive for authors, but for punitive purposes or to further other policies of a non-copyright nature. By analogy, no one would contend that Congress, for example, should provide that a CATV system would lose its exemption for carrying a local signal if it engaged in unfair labor practices. In that case everyone would agree that the remedy against unfair labor practices should be the subject of proceedings before the appropriate labor relations agency. No one would argue that the copyright law should be a weapon to help administer labor relations policy. By the same token the copyright law should not be utilized as a punitive weapon, or as a means of protecting broadcast stations against competition. The broadcast representatives, however, argue that there is an element of unfairness to them in permitting CATV systems to obtain revenue from the carrying of their local signals and then proceeding to compete with the broadcast stations by originating programs. This argument should be rejected for two reasons. In the first place, if there is any such communications policy involved, it should be the subject of legislation in communications law and not in copyright law. Secondly, upon analysis, there is no element of unfairness to the broadcaster. When a CATV operator distributes local signals over his CATV system, he is merely enabling the television station to do the job that he is required by law to do. This activity helps the local station and does not hurt it. Why, therefore, should this activity be penalized if the CATV system decides to go into the added activity of furnishing programs to viewers. When the CATV system does this job, it competes for programs in exactly the same way as does a broadcast station. The broadcast station is not entitled to protection against competition. NCTA admits that when a CATV system distributes local signals, it obtains revenue thereby. But it does not do this at the expense of a local station. It is performing a service for customers that they themselves are capable of doing for themselves. If they pay a CATV operator to perform this function, it is because they believe that it is in their interest to do so. Both their interests and those of the local television station are advanced by the distribution of the local signals over CATV systems. The broadcaster is no more entitled to be protected against CATV systems competing with them for audience by means of programs distributed over the CATV wire than it would be if the CATV system utilized revenues obtained from its operation in building a local motion picture theatre which might divert audience from the broadcast station. The argument of the broadcast industry is analogous to the situation that could arise if television networks were to insist that the local affiliated stations should not be permitted to originate their own local programs. No one can doubt that when a network furnishes programs to an affiliated station, it enables that station to build an audience not only for the network programs but also for the sale of spot announcements, syndicated programs and local programs. The broadcast of syndicated programs and local programs by the network's affiliate is competitive with the network and diverts audience therefrom. The ability of the station to program high quality syndicated programs and local programs depends in large part upon its network affiliation. No serious argument could be made that public policy would be served by the networks conditioning their affiliation with the local station upon the local station refraining from carrying syndicated programs and local programs. The network is not entitled to this type of protection. Neither are broadcast stations entitled to protection against CATV systems originating their own programs. IV CBS in its statement has recommended that the copyright exemption for the carrying of local programs by CATV should be subject to six conditions. Each one will be discussed in turn. The first condition is that a CATV system should be required to carry during its hours of operation and subject to applicable F.C.C. regulations the entire schedule of the station whose broadcasts it retransmits. NCTA agrees with this recommendation in principle. When a CATV system has sufficient channel capacity to carry all desired stations, it should carry the programming of the stations in their entirety subject of course to applicable governmental regulations. There are, however, situations where existing CATV systems have limited channel capacity and therefore are unable to accommodate all desired stations. Moreover, in many areas, there are so many Grade B signals available that they exceed the channel capacity of even broad band systems. Finally, government regulations require the blackout of certain programs. When any of these situations exist, a CATV system should have the privilege, subject to applicable regulations, to carry programs of stations not regularly distributed over the system in order to avoid blacked out channels or to promote diversity by eliminating duplication. The second condition is that CATV systems should not be permitted to originate local programming. This point has already been commented upon at length under III. Third, CBS recommends that the limits of the normal coverage area in which the copyright exemption would apply should be capable of being determined with precision by reference to a map or chart showing such area. NCTA agrees with this recommendation. However, it believes that this matter should be left for administrative determination by the agency entrusted with administering the exemption. The fourth condition is that CATV systems should not be permitted to make any separate or direct charge for a particular program. This is obviously an attempt to prevent CATV from being utilized for pay television purposes. NCTA does not agree that this is an appropriate subject for inclusion in a copyright statute. The whole subject of pay-TV is pending before the F.C.C. and before the appropriate legislative committees with supervisory jurisdiction over the Commission. No final policy has yet been adopted on that subject. When such a policy is adopted, appropriate consideration will of course be given to what restrictions, if any, should apply to CATV attempting to operate on a pay-TV basis. The fifth condition is that the transmissions which may be carried by CATV should be limited to those encompassed by the term "broadcasting." What CBS fears is that CATV systems might intercept and carry on the CATV system signals sent from a communications satellite to an earth station for relay to and transmission by regular commercial television station. NCTA does not believe that this condition is necessary. Under Section 605 of the Communications Act, a CATV system would not be permitted to intercept such signals any more than it could signals sent by one AT&T microwave station to another microwave relay station for network purposes." The sixth condition is that the copyright exemption should extend only to retransmission to private homes and apartments and to private guest rooms of hotels and similar public establishments. It is the CBS position that any other changes in the provisions of existing law concerning the treatment of hotels and public establishments should wait enactment of legislation providing for a general revision of the copyright law. NCTA had no objection to this recommendation. V The professional sports interests in their appearance before the Committee have objected to the CATV importation of distant signals in violation of the blackout of the program in that market so far as conventional broadcasting is concerned. NCTA admits that the complaint has some merit, but it does not believe that the solution lies in the copyright law. The same subject matter came up during the hearings before the House Commerce Committee in connection with suggested amendments to the Communications Act. NCTA did not object to the provisions of that legislation which would protect the blackout privileges which have been granted to professional sports. Moreover, although NCTA has not taken a formal position with respect to sports, it is expected to cooperate and not object to provisions consistent with present law in appropriate legislation. The 3 Some reference was made during the hearing to the situation that might obtain if and when satellites are utilized for broadcasting as distinguished from relaying. If and when that happens, the signals so broadcast would be available to all people of the United States. The CATV system, if it distributed such signals would simply be doing for the viewer what he could do for himself. It would be performing a true CATV function of making signals available to viewers in the area of normal reception of the station. company broadcasting by means of a satellite would have to obtain a license from copyright owners based upon coverage of the entire country. The networks at the present time obtain such a license, and when the program is retransmitted by the affiliated station, no separate royalty is paid. The royalty which the networks pay cover coverage of the entire country. The same situation would exist if a broadcast satellite were utilized rather than land based stations. COPYRIGHT LAW REVISION-CATV WEDNESDAY, AUGUST 3, 1966 U.S. SENATE, SUBCOMMITTEE ON PATENTS, TRADEMARKS, AND COPYRIGHTS Washington, D.C. The subcommittee met, pursuant to call, at 10 a.m., in room 1318, New Senate Office Building, Senator Quentin N. Burdick, presiding. Present: Senators Burdick (presiding), and Hart. Also present: Thomas C. Brennan, chief counsel; Edd N. Williams, Jr., assistant counsel; Stephen G. Haaser, chief clerk, Subcommittee on Patents, Trademarks, and Copyrights; and George S. Green, professional staff member, full committee. Senator BURDICK. The committee will come to order. The first witness this morning will be Mr. Douglas A. Anello, National Association of Broadcasters. STATEMENT OF DOUGLAS A. ANELLO, GENERAL COUNSEL, NATIONAL ASSOCIATION OF BROADCASTERS Mr. ANELLO. Mr. Chairman, members of the committee, my name is Douglas A. Anello, and I am general counsel of the National Association of Broadcasters, the trade association of the broadcasting industry. The membership of the association consists of 2,215 AM stations, 1,000 FM stations, 488 television stations and the four national radio networks and the three national television networks. Additionally, I have served on the panel of consultants appointed by the Librarian of Congress to work with the Registrar of Copyrights on the general revision of the copyright law, and am a member of Committee 304 of the American Bar Association charged with the same task. The National Association of Broadcasters is grateful for this opportunity to present its view on S. 1006, as it relates to the copyright implications of community antenna television systems (CATV). The interest of broadcasters in copyright matters is primarily that of a user. Since a line of court decisions have held a broadcast of a copyrighted work to be a public performance for profit, we have had to bargain for our program material from the very beginning. The decision of the District Court for the Southern District of New York in United Artists Television, Inc. v. Forthnightly Corporation, now places CATV in a similar position. We assume, therefore, that one of the purposes of this hearing is the possibility of some form of legislative relief which would exempt CATV systems from copyright liability under certain circumstances. 109 69-173-67-8 I will not burden this committee with a description of CATV operations because these are well known to it. I would like, however, to quote a paragraph from Judge Herlands' decision because I believe this puts the problem in proper perspective. Two preliminary observations will place the issues and the record in sharper focus. The term "community antenna,' as used by defendant for self-description, is a misnomer and reflects a fundamental misconception. Defendant's two systems are not "community" ventures. They are large-scale commercial enterprises, advertising and promoting television programs, and making profit out of the exploitation of television programs, including plaintiff's copyrighted motion pictures. Nor are defendant's operations simply that of passive "antennas" used only to receive telecasts. In fact, defendant's two systems, among other processes, receive, electronically reproduce and amplify, relay, transmit, and distribute television programs-operations requiring complex, extensive and expensive instrumentation. These systems function as wire television systems, only one of whose structural components consists of antennas. CATV started as an auxiliary "fill-in" device designed to bring television into communities which could not receive it off the air either because the communities were too distant from television broadcast stations or because terrain made reception difficult or impossible. In this respect, CATV fulfilled an important function as a supplement to free broadcasting. As Judge Herlands' decision has indicated, however, this picture has changed radically. Today, through the use of microwave relay facilities, CATV is capable of bringing multiple television and radio signals from large metropolitan centers over vast distances to practically any city in the United States, large or small. There are approximately 1,600 CATV systems currently in operation, 1,400 franchises granted but not yet in operation, applications pending for some 2,600 more. Many of these are located in major cities where multiple television services already exist. Involved are investments of hundreds of millions of dollars. Indeed, persons familiar with the CATV industry state that in the not too distant future every American city will be wired for CATV. It is little wonder that many no longer think of CATV in its traditional role of a supplement to free broadcasting, but as a substitute for it. It is apparent, therefore, that if any balancing of interests is forthcoming, it should take cognizance of the fact that broadcasters pay performance rights and unless there is compelling logic to the contrary, CATV systems who not only perform a function similar to broadcasting, but are actually in competition with it should be equally liable. Nevertheless, because the first concern of broadcasters must always be the public interest, we are desirous of seeking a fair resolution of the interests of CATV operators, copyright owners, and broad casters. Before getting to the merits, however, I would like to state that we do not subscribe to the belief expressed by the National Community Television Association that affirmation of the Herlands decision would result in literal chaos in the CATV industry with a consequent substantial and unwarranted disruption of the television viewing of millions of Americans, including principally those who have the least and poorest television service. To us, such a belief presupposes that copyright proprietors will be arbitrary and unreasonable in their dealings with CATV operators. There is nothing to indicate copy |